Retail Properties of America Inc (RPAI) Q4 2020 Earnings Call Transcript

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Retail Properties of America Inc (RPAI)
Q4 2020 Earnings Call
Feb 17, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Retail Properties of America Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]

It is my pleasure to introduce your host Mr. Mike Gaiden, Vice President of Investor Relations and Capital Markets. Thank you, sir. Please go ahead.

Mike Gaiden -- Vice President, Capital Markets and Investor Relations

Thank you, operator, and welcome to the Retail Properties of America fourth quarter 2020 earnings conference call. In addition to the press release distributed last evening, we have posted a quarterly supplemental information package with additional details on our results in the Invest section on our website at www.rpai.com.

On today's call, management's prepared remarks and answers to your questions may include statements that constitute forward-looking statements under federal securities laws. These statements are usually identified by the use of words such as anticipates, believes, expects and variations of such words or similar expressions. Actual results may differ materially from those described in any forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including without limitation those set forth in our earnings release issued last night, and the risk factors set forth in our most recent Form 10-K, 10-Q and other SEC filings. As a reminder, forward-looking statements represent management's estimates as of today, February 17, 2021, and we assume no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

Additionally, on this conference call, we may refer to certain non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers, and definitions of these non-GAAP financial measures in our quarterly supplemental information package and our previous 2020 earnings releases, all of which are available in the Invest section of our website at www.rpai.com.

On today's call, our speakers will be Steve Grimes, Chief Executive Officer; Julie Swinehart, Executive Vice President, Chief Financial Officer and Treasurer; and Shane Garrison, President and Chief Operating Officer. After their prepared remarks, we will open up the call to your questions.

With that, I will now turn the call over to Steve Grimes.

Steven Grimes -- Chief Executive Officer, Director

Thank you, Mike, and good morning, everyone. I appreciate you joining the call today. As I reflect on 2020 I'm reminded of the unprecedented challenges we faced in the spring and summer that tested nearly every aspect of our platform. At the same time, I have been overwhelmingly impressed by the responsiveness of our people to these trials.

I want to take a moment to thank our employees for answering the call from both our tenants and our communities during the past year and solidifying a major rebound toward normalcy across our business, including 94% cash collections in Q4, which are being adversely impacted by our two multi-tenant assets in California. Notably, cash collections for our small shop space in Q4 were 94.3%, slightly ahead of the portfolio average.

Furthermore, Q4 national and local tenant collections were at 95.1% and 91.4%, respectively. Despite our mix of essential versus non-essential tenants, our cash collection speak volumes about the relevancy and strength of our assets and our team. And equally as important, I believe our Q4 performance showcases our ability to rebound from this pandemic should all things remain on the positive from the macroeconomic front and vaccine distribution and should allow us to emerge even stronger as we and our tenants have adapted strategies that support and enhance the viability of our centers. I am proud of and deeply appreciative of this effort on all fronts.

We built upon our improved third quarter performance in the fourth quarter as leasing volumes remain strong and we increased cash collections and total addressed rent in turn driving our total available liquidity higher. And this further uptick in our fundamental performance enabled us to increase our quarterly dividend to $0.06 per share as declared in December from the $0.05 per share declared in September when we reinstated our dividend. The board will continue to meet quarterly to deliberate our dividend payout balancing our capital structure needs, REIT tax requirements and desire for healthy dividend coverage, that will permit headroom for sustained reinvestment in growing our business and reinforcing our balance sheet.

We are keenly focused on delivering continued improvement in our results to enable our dividend to move higher as warranted in time. Shane will review our operational progress in the quarter and provide an update on our expansion at One Loudoun, which should add incrementally to our growth outlook later this year before becoming a more meaningful driver of our run rate cash flows sometime in 2022. We remain focused on the broader corporate stewardship goals while working to drive our business forward.

To that end, we recently executed power purchase agreements and certified renewable energy certificates to deliver energy from renewable resources to another 19 of our properties. Combined with similar actions we took in early 2020 for our Texas portfolio, our largest concentration of assets, we now hold contracts for clean energy for properties that account for 45% of our total operating portfolio. And we look to advance this and similar efforts as 2021 unfold.

While Julie will detail key aspects of our 2021 financial guidance in just a few minutes, I want to relate some higher level perspective from my vantage point. I've shared with many of you over the past several months that I do not envy your position when it comes to underwriting the sector for 2021. As Julie will articulate, there are many factors to consider when understanding guidance for us and for that matter, the sector before beginning to understand the playing field. Earnings calls to date have proven that. But also, as I have mentioned, we will be transparent and provide you with a framework for understanding the components that can drive our performance for the positive or the negative from our guidance level. We remain committed to supporting you in understanding our guidance and its components given these uncertain times.

The immediate macroeconomic backdrop continues to present challenges for our business, so conditions are currently headed in the right direction. U.S. unemployment rate while elevated by historical standards at 6.3% has declined in eight of the last nine months after peaking at 14.8% in April. Similarly, consumer confidence though well below the level seen in typical economic expansions and still subject to oscillation of late based on COVID-19 case counts and other factors has improved in the month of January and also sit above April cyclical low.

We hold many valid reasons to expect conditions to improve as the year progresses, including the roll out of the vaccine to more and more tiers of the population and pending material stimulus from Washington, D.C. In a time frame when outdoor temperatures govern so much of our ability to connect with people responsibly, we also expect the spring to provide a boost to both sentiment and consumer activity. We see many other reasons much more specific to our business for well founded optimism. The change in consumer behavior brought about by the onset of COVID-19 cause many retailers to dramatically accelerate business plans to become more relevant and accessible, and we have begun to see the fruits of this effort in recent retail earnings reports.

We supported this effort by many of our tenants through enhancing our curbside pickup capabilities and other amenities aligned within increasingly ubiquitous approach to omnichannel retailing that validates the brick and mortar presence. Further, national retailers have steadily accessed large amounts of capital at attractive pricing in the last several quarters adding to their ability to reinvest in their business and to pay owed rents.

Housing remains perhaps the brightest spot in the consumer sector jointly propelled by low interest rates and migration to the suburbs as well at to Sunbelt states. Our portfolio generally positioned in first ring suburbs outside of major U.S. cities is poised to benefit from this population shipped while retailers connected to all things home continue to thrive.

With that being said, in the near term, we expect more shakeout among certain subsets of retail and our tenant base will not be immune. However, after our multi-year effort to reinforce the quality of our rent roll through derisking and diversification, we expect to navigate the challenges ahead of us adeptly. And amid this turbulence, we see demand for retail space at Class A assets increasing. Our quality portfolio should benefit from the narrowing focus of prospective and existing tenants to the states that matter most from a brand accessibility and merchandising standpoint.

While our near-term results will continue to reflect current challenges with occupancy likely to worsen incrementally as Shane will articulate and rent commencements to take longer than during pre-COVID times, our intermediate to long-term financial performance will reflect the more enduring elements of our changing consumer and retailer preferences for which we believe we are very well positioned. As I stated earlier, our results from the last few quarters have only served to secure my confidence in our out-year prospects.

With that I will now turn the call over to Julie.

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Thank you, Steve. This morning I will review our fourth quarter and full-year financial results, our rent collection trends and our capital structure positioning. I will also share initial thoughts around our 2021 guidance. During the fourth quarter, we generated operating FFO per diluted share of $0.20, down $0.07 year-over-year. The impact of the pandemic remains evident in our fourth quarter year-over-year lease income decline of $13.6 million or $0.06 per diluted share, which explains the vast majority of our year-over-year operating FFO change and is driven by the combination of occupancy declines, reduced but improving collection levels and collectability assumptions pertaining to uncollected amounts.

In addition, a $2.8 million decrease in straight-line rental income equating to $0.01 per diluted share largely driven by the Q4 movement of certain additional tenants to the cash basis of accounting attributed to this overall decline in lease income. As we continue to evaluate ultimate collectability of amounts due from tenants, our cash basis tenant population grew to nearly 12% of ABR as of December 31, 2020, up from 10% at the end of Q3.

Operating FFO per diluted share decreased $0.01 sequentially, driven by an increase in G&A expense in the fourth quarter as determinations for discretionary incentive compensation were made and therefore accrued. Prior to Q4, we did not have a basis upon which to record these amounts. For the full year, we generated operating FFO of $0.84 per diluted share, which measures $0.24 below the $1.08 per diluted share we delivered for calendar 2019. The full year decline in operating FFO can be explained by the declines in lease income in Q2, Q3 and Q4.

Same-store NOI in the fourth quarter decreased 11% or $9.3 million compared to Q4 2019, continuing to narrow from the 12% decline in Q3 and the 22% decline in Q2. Full-year same-store NOI decreased 11.2% or $36.3 million as declines in the last nine months of the year more than offset our Q1 same-store NOI growth and our base rent expansion from contractual rent increases. Again, occupancy declines, lower collection level and collectability assumptions pertaining to uncollected amounts were all drivers.

I'm pleased to report that in the fourth quarter, we continue to accelerate collection trends reporting last night that as of February 8, 2021, we have collected 94.1% of fourth quarter base rent, 650 basis point improvement over our updated Q3 rate and a 1,600 basis point improvement over our updated 78% rate for Q2. The low point for 2020. Importantly, non-essential categories and restaurants drove this fourth quarter collection improvement. Also encouraging, some of the categories hardest hit by the pandemic climbed to the mid-90% collection level in Q4, including apparel and services, while the soft goods and discount category improved dramatically to nearly 100% collected in Q4.

In addition, health clubs and full service restaurant rent collections climbed to the low-to-mid 80s level during the fourth quarter. Our office tenants which sit adjacent to our retail footprint and are overwhelmingly located in suburban setting continue to demonstrate collection patterns above our portfolio average and correlate strongly with our essential tenant receipts. Again this quarter, previously reported collection levels continued to improve as our teams worked with tenants to collect these past-due balances, contributing significantly to the sequential decrease in net accounts receivable of $12.6 million.

For further context, collection rates for tenant recoveries in Q4 continue to measure approximately in line with our base rent collection levels as we also experienced in Q2 and Q3. While most tenant concessions did not require repayment of any deferred amounts during 2020, there were some that did and I'm happy to report that we have received 98% of those amounts. It's still early in the year, but we have already received the majority of deferrals that were due in January 2021 although currently not at the rate we realized for 2020 amounts to do.

Our teams will continue to actively pursue collection on these deferred and other amounts and per the terms of the agreements, we expect that more than 90% of amounts deferred from 2020 will be repaid by the close of 2021. Also during the fourth quarter, we continue to sign previously agreed upon tenant concessions. The majority of which pertain to Q3 and prior amount, adding further clarity to amounts billed but not yet collected. Shane will provide additional detail on this and other operational progress in just a few minutes.

Turning to the balance sheet, following a very productive third quarter of capital markets activity, we did not engage in any capital markets transactions in the fourth quarter. Validating the reopening of our bonds due 2025 which reestablished their index eligibility, those bonds and our subsequently issued bonds due 2030 have experienced significant spread improvements of 200 basis points and 180 basis points, respectively.

Thanks to our proactive approach to managing cash flow since the onset of the pandemic and our successful $500 million aggregate public bond fund raising during July and August, our total available liquidity improved by $50 million year-over-year to $892 million as of December 31. With no scheduled maturities until April 2022 and no currently outstanding unsecured principal obligations due until November 2023 combined with our robust liquidity position and wide headroom under our covenant commitments, we are evaluating our capital structure options for 2021 from a position of strength.

Turning to guidance, we expect to generate operating FFO of $0.76 to $0.84 per diluted share in 2021. As outlined in last night's release, we have based this forecast on the current outlook for the macro economy and public health among other factors. Further, this range contemplates several assumptions, including among others opportunistic exploration and execution of acquisitions, dispositions and capital markets activities and higher G&A expense in the amount recognized in 2020.

In addition, there are a handful of consideration points that are fairly unique to 2021 that are worth mentioning. First, our cash basis tenant population represented 12% of our ABR as of December 31, which leaves our ability to recognize revenue from these tenants in 2021 completely dependent on the timely receipt of funds from them within any given reporting period. Additionally, the cash basis tenant population is subject to evaluation and adjustment each quarter which could also impact straight-line rent. Second, in our supplemental on Page 4, we disclosed that we recognized $9.9 million in revenue during 2020 pertaining to tenant deferral agreements, which is a component of accounts receivable at year-end. The majority of which is due during 2021. Third, we have roughly $4 million in deferrals for which income was not yet recognized during 2020 due to lease concession structure but for which payment is due in 2021.

Stepping back and evaluating our 2021 operating FFO guidance range of $0.76 to $0.84 and how it compares to 2020 operating FFO of $0.84, the following key drivers should be considered. First, interest expense has not typically been significantly volatile for us and we expect the same to hold true for 2021. Keep in mind, we will continue to advance our efforts at our announced expansions and redevelopments during the year, whereby we capitalize interest in certain payroll costs. Second, the net earnings impact from opportunistic transaction activity, if any, combined with the expected 2021 impact from our expansions and redevelopments should be minimal or modest at best as those projects do not stabilize until 2022.

Third, our G&A expense assumption for 2021 is disclosed in last night's release accounts for $0.01 to $0.02 of impact compared to 2020. This essentially lead same-store NOI, which is impacted by our occupancy assumptions and non-cash items including straight-line rent. These two components contain more inherent volatility than others, especially as we are still navigating through the pandemic, primarily due to some of the same judgments and estimates we've been talking about for the last three quarters, including collectability estimates and cash basis tenant determination.

From where we sit today, we believe this initial guidance range is appropriate and we commit as always to clear transparent disclosure as the year progresses. We accept that we continue to operate in an environment that poses a wider range of dispersion and outcome. However, the sustained acceleration of our cash collection, the high quality of our assets as demonstrated by our positive aggregate leasing spreads for the fourth quarter as well as the full year and our balance sheet strength reinforce my confidence in our forward progress to come in 2021.

And now, I will turn the call over to Shane.

Shane Garrison -- President & Chief Operating Officer

Thank you, Julie. Our fourth quarter results reflect the ongoing improvement in our operational metrics as well as provide for a framework as we outline our limited but improving 2021 outlook and fundamentals in this unique operating environment. As Julie detailed, in Q4, we achieved a second straight quarter of accelerating collections with 19 of our 24 tenant use categories now above the 90% collections level, including 17 categories at 95% or better. And we continue to convert tenant negotiations and design deals with in-process amendments falling to just 40 basis points of billed base rent in Q4. These efforts also brought our total addressed rent statistics to the 96% to 97% range for each of the last three quarters, and in turn also helped fuel our sequentially higher volume of lease signings.

While leasing volume in Q3 was our highest on a trailing 12-month basis, we increased our total number of lease signings by 12% in Q4, demonstrating continued interest in our high quality portfolio and solid execution within the platform. In aggregate, our ongoing dialog with existing and potential tenants helped us drive fourth quarter executed GLA within 3% of year ago levels. Notably, we accomplished this velocity, while continuing to sustain aggregate positive spreads which also accelerated for the second consecutive quarter heading incrementally closer to stabilize patterns before the onset of the pandemic.

Looking deeper, new leasing spreads, which measured 3.3% in Q4 continue to show heightened quarter-to-quarter volatility given an incrementally modest sample size and reflect our effort to balance duration, occupancy and economics in the current environment. Our renewal spreads of 3.8% sustained a positive comp seen throughout the pandemic. More importantly, we continue to focus on forward growth with annual bumps of approximately 200 basis points on comparable new leases executed in the quarter.

Notably, our lifestyle mixed use assets drove the average higher at 230 basis points for the segment, and our fourth quarter leasing effort also help reduce our total ABR expiring in 2021 by 22% and our anchor ABR expiring in 2021 by 37%. While our leasing velocity continues to improve, we anticipate occupancy to continue a downward trend for the next few quarters. In Q4, retail portfolio occupancy declined by 50 basis points to 91.7% accelerating from Q3's 140 basis point sequential decline, helped by moderating impacts of COVID-19 and favorable seasonality. Our anchor occupancy of 94.7% and leased rate of 96% continue to serve as an indicative foundation for our overall portfolio that will provide for cash flow and help us drive small shop signings in 2021.

While we faced an outsized year in 2020 on the bankruptcy front, we are left with a fundamentally stronger rent roll and we'll look to build on that solidified base over the next few years. Of note, bankrupt tenants accounted for just 1.3% of our ABR at December 31, down from 2.6% as of September 30. And announced bankruptcies thus far in 2021 have accounted for just four locations in our portfolio. During Q4 bankruptcy backfills accounted for eight deals or 7% of leases executed with demand driven by medical and other uses.

While focused on optimizing the fundamentals of our existing operating portfolio continue to advance our redevelopment and expansion projects in the quarter. At One Loudoun with conviction in the broader non-cyclical strengths of Loudoun County and Northern Virginia, driven heavily by the technology sector, we elected to continue construction and as a result avoided a surge in lumber and other structural costs and delays in 2020 and are now poised began leasing this month driving incremental cash flow that will aid in our return to historical earnings levels as we track toward our existing stabilization target in 2022.

Specifically, at our largest expansion project to date, we continue to advance toward our goal of an opening this spring at Pad G's multi-family residential branded Vyne. These 99 units will serve to further expand and diversify our cash flows in the multi-family as we continue to execute on our meaningful air right entitlements created over the past few years.

Turning to the commercial portion of Loudoun, we continue to complete interior finishes for Pad G's 33,000 square feet of office space, which now in lease or negotiation for approximately 90% of the GLA. Across the street at Pad H, we are installing drywall and other finishes for the remaining 279 multi-family units scheduled to deliver later this year. At Circle East, Ethan Allen opened in January, and Shake Shack, our other anchor looks set for opening this month.

Our leased rate continues to improve at a cadence of one to two deals per quarter and our pipeline represents over 50% of the GLA of the project. We remain patient in this difficult environment, but are encouraged by increasing fundamentals and interest as tenants start to open and the macro appears more favorable.

Pivoting to our 2021 transaction outlook, we'll remain vigilant for opportunities, balancing asset specific valuation factors against broader portfolio positioning and capital allocation opportunities. While Julie outlined many of the financial specifics embedded within our guidance assumptions, I want to emphasize a few points underlying our guidance and assumptions for 2021. First, be like most, anticipate some form of recovery in the back half of the year, largely driven by vaccine distribution. With that, we also believe that leasing volumes will be volatile, but continue to generally trend positively as the year goes on. However, with some level of uncertainty and structural overhang, we continue to believe that economic occupancy will be delayed while overall leased volumes increase.

In summary, we will see the majority of the economic benefit from the fundamental progress we will make this year specific to leasing volumes and leased rate after 2021. We remain confident in the relevancy of our assets and our platform which our results in the last two quarters have only reinforced. However, our climb back to normalized levels of occupancy, we'll take a straightforward combination of time, hard work and pragmatism and while I am confident in this broader path forward, the exact timing of these developments will only crystallize in the coming quarters as we remain focused on our goals of rent roll durability and improving our foundation for sustained growth in our cash flows within intermediate and long-term.

With that, I will turn the call back to Steve.

Steven Grimes -- Chief Executive Officer, Director

Thanks, Shane and Julie, for your reports. Loads of information to digest and we appreciate your time today. I think, at best, we turn the call over to questions at this time. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question today is coming from Derek Johnston of Deutsche Bank. Please go ahead.

Derek Johnston -- Deutsche Bank -- Analyst

Thank you and good morning. Just wanted to dig in on the occupancy a little more that Shane mentioned, really where do you envision occupancy troughing and what level may occupancy settle especially for shop tenants. So, when I look at the model and kind of when I look at the opportunity set, is a trough likely in 3Q '21 or 4Q '21 and then thus setting the table for resumed growth albeit from a lower base?

Shane Garrison -- President & Chief Operating Officer

Hi, Derek. Good morning. This is Shane. I'll start us off here. I think, one of the reasons we have such a wide range is, it's a tough to say when and where we trough. I would tell you that consistent with my prepared remarks, we certainly see continued downward pressure on occupancy at least through Q2 if not through Q3, we do have some rent commencements coming online. That 130 bps spread most of that comes on in the second half. It's about $5 million annualized. So, it will take some pressure as far as accretion up in occupancy, but it's a little speculative right now as to how far each segment goes and where we actually trough. But it does look like from an ARC perspective, Q2 to Q3 is the time period.

Derek Johnston -- Deutsche Bank -- Analyst

Okay. Thank you. That's helpful. And I guess, kind of, staying on this trend is what can you share about your watchlist as it stands now? I mean, you guys did take back a lot of space in 4Q and it was largely due to expected bankruptcies, is the watchlist basically washed out at this point, is Bed, Bath & Beyond now like firmly off the list at the rest of your centers and any color on the updated watchlist would be very helpful. Thank you.

Shane Garrison -- President & Chief Operating Officer

Yeah, it's a great question. And we have obviously had some issues around our watchlist exposure historically, I think, one of the upsides from what has gone on in the last year specific to our portfolio is exactly what you touch on. And then our rent roll continues to dramatically change and certainly be more tangible and hard and a lot of respect. So, Ascena is obviously out of our top 25 at this point. Dick's has moved into our top 20, Alta has moved up, Total Wine has moved up. So, you can see sort of the hardening of our top 25 from a credit perspective and to your very point our watchlist exposure has diminished greatly albeit painfully in the short term.

As far as what's remaining on the watchlist, I would tell you it's more categorically than it is any one name tenant at this point. Movie theaters, which I'm sure will be a broad based topic on this call and certainly through the rest of the year is paramount to us, it's diminished, it's 260 basis points at this point. We elected to offensively take one of our theater boxes back in South Lake in the quarter. So, it's diminished, but as a category certainly high on our list and certainly -- restaurants and certain gyms remain, those are the three buckets. So, much less a named tenant and as you would expect more categorically focused at this point.

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

And Derek, this is Julie. Good morning. I would just add to that the disclosure that we've included in the supplemental around our cash basis tenants, so that figure has migrated up again in Q4 to 12%. It's up from about 10% at the end of Q3 and 8% at the end of Q2. And that subset of tenants, even though we collected over 94% for the portfolio in aggregate, the cash basis tenants we only collected about 65% from them during the fourth quarter. And I think when I think about that element and certainly great question on occupancy as it relates to how we're thinking about OFFO for 2021, I think, occupancy is certainly a variable and a factor, but things like cash basis tenants with 12% of our ABR on the cash basis knowing that I can only record revenue to the extent they pay in the quarter or in the year for that example -- for that matter also leads to some of that variability.

So, January is, I can share, off to a strong start. We've got 93% collected from our tenants in January, but again that cash basis tenant population we only have about 65%. And that 93% I'm referring to kind of new 2021 rent. There is also this layer, if you will, of deferrals. So, we didn't really have much of any deferred amounts due in 2020. And I mentioned in my prepared remarks that we did collect on 98% of those, much of what is due from those deferrals starts in January. So, we haven't yet collected that 93% from that subset, which is just another element of variability that we've contemplated in that $0.08 wide range.

Derek Johnston -- Deutsche Bank -- Analyst

Thank you very much.

Shane Garrison -- President & Chief Operating Officer

Thank you.

Operator

Thank you. Our next question is coming from Chris Lucas of Capital One Securities. Please go ahead.

Christopher Lucas -- Capital One Securities -- Analyst

Hey, good morning everybody. Hey, Julie, if I could, can we go back to fourth quarter G&A, I don't know if you touched on this, but could you maybe give us some color around the meaningful spike?

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Sure, Chris. Good morning. As I mentioned in our -- in my prepared remarks, the company elected to award discretionary incentive compensation. Now, historically, our incentive compensation is based on kind of standard metrics and it's not of a discretionary nature and think us and many others were in the boat in 2020 where it was a very different year and that historic practice whereby we would have been accruing quarterly was not something that was -- that we have support to accrue frankly until fourth quarter.

So, you see the effects of the results of the evaluations made for incentive compensation for the executives as well as employees reflected all in the fourth quarter. So it is much, much outsized compared to the buildup for the year and that was one of the reasons that we chose to guide in 2021 because of the lumpiness, if you will, of the quarter-to-quarter G&A in 2020.

Steven Grimes -- Chief Executive Officer, Director

Chris, this is Steve. And I'm...

Christopher Lucas -- Capital One Securities -- Analyst

And [Speech Overlap]

Steven Grimes -- Chief Executive Officer, Director

Chris, I'm going to add on to that one. Thank you. I had mentioned at the onset of the pandemic that we were going to be sharpening our pencils from a G&A perspective and we did do that. If you'll see year-on-year decline in G&A from 2019, obviously the guide at the midpoint is a bit higher than what we experienced, not only in '20, but also in '19. And I would just -- as Julie had mentioned in terms of the lumpiness, I would caution people from taking the Q4 and annualizing. From our perspective, we're trying to get back to some level of pre-COVID levels in terms of G&A, which include things like travel and conferences, which we're hopeful we can get to in the back half of the year as well as bonuses not on a discretionary basis, but at a target level basis.

So, should those things go, I would say, adversely, if you will, meaning, we're not traveling, you could see that number come to the lower end of the range to the extent that you get to the higher end of the range, means that we're just having a bang-up year, and all things are great. So, just wanted to get some perspective on the range vis-a-vis the fourth quarter print.

Christopher Lucas -- Capital One Securities -- Analyst

Thanks, Steve, for that. I guess, just wanted to make sure though that for '21 then should we be thinking about volatility in that number as it -- or should it be a smoother number through the course of the year?

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Good question, Chris. I would say, it would be a smoother number as we've seen in the past. I would point out that Q1 tends to be slightly elevated for G&A for some other compensation related reasons. And then as we get -- frankly, as we get toward, call it Q3 and certainly in Q4, we are truing up or truing down any sort of expected payouts off of target in those quarters. So, I would expect less lumpiness than what you saw Q4 versus the previous quarters this year.

Christopher Lucas -- Capital One Securities -- Analyst

Okay. Thanks for that. And then Shane, just wanted to talk specifically about Ascena, I guess, it going into the bankruptcy you have roughly 28 units, where does that stand now, and how does the, I guess, the protest that the landlords have posted against the settlement impact either positively or negatively the potential outcome for whatever remaining units there are?

Shane Garrison -- President & Chief Operating Officer

Yeah. Our Ascena exposure, Chris, is fairly diminished. I want to say, we're 50 basis -- 60 basis points, something like that now. So, the protests around the final bankruptcy resolution, I think, remains to be seen. But I think for us all things considered much less impactful than it was pre-bankruptcy. That's really the only color I could have on the tenant as it relates to us.

Christopher Lucas -- Capital One Securities -- Analyst

Okay.

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Yeah. I mean, numerically we were down to 18 spaces at year-end.

Steven Grimes -- Chief Executive Officer, Director

Yeah.

Christopher Lucas -- Capital One Securities -- Analyst

Okay.

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Off the pace of top 25 tenants in the supplemental, for sure.

Christopher Lucas -- Capital One Securities -- Analyst

Sure. Okay. Thank you for that. And then, Shane, just sticking with you for a second, when you think about how you break down your sort of various spot sizes, if you will, where is the most strength that you're seeing in terms of leasing activity and where is the most challenging size right now?

Shane Garrison -- President & Chief Operating Officer

It's a great question and I'll peel a few layers here. But let me give you the set up from a pipeline standpoint, so our pipeline is significant, we are pushing about 400 basis points of ABR in the pipeline right now. And there is a lot of the sprouts, as you know, Chris, in the economy that are just waiting for kind of that last spot to in the form of really a path forward on vaccine distribution and hopefully resolution later in the year. So, I think, the foundation is set there. We see, outside of the pipeline, there is other indicatives I was reading over the weekend looking at kind of new business applications.

The US, January was up 73% year-over-year with retail far and away by a factor of 2 to 1 in the first place with a little over 100,000 applications. So, and that's what we see. The anchor space we're still over 96% leased and it's a little more stable than the headline would tell you and real Class A space, I'd say, is much tighter than the broader denominator would kind of indicate. But the in-line space is interesting, I would say, one in four of our tenants in the shop space pipeline is restaurant.

And it's counter intuitive until you really think about the availability of broad-based cheap debt and the entrepreneurial spirit is still alive and well and it's the restaurant category has always been very resilient. So, in some ways, it's surprising, in some ways, it isn't, when you kind of do the math and put the pieces together. That is the one piece of our industry that is really kind of at the middle of the creative destruction process. So, we see a lot of lessons learned quickly. And on the back of that space today that has relatively new black iron and relatively new build outs. There is a considerable demand for those and we anticipate turning around a lot of that space pretty quickly this year, again, with an increasingly indicative macro healing.

So, the toughest space, conversely, I would say, continues to be kind of that 5,000 feet to 10,000 feet. There is less and less users that will take a clean 10,000 feet and that's been increasing over the last couple of years. But at the top and bottom smaller shop and the larger space continues to be -- demonstrate considerable demand.

Christopher Lucas -- Capital One Securities -- Analyst

Okay. Thanks for that. And then just on the restaurant demand that you're talking about, is that coming from international or multi-regional teams versus sort of the entrepreneur or sort of the localized entrepreneur or is it pretty broad based?

Shane Garrison -- President & Chief Operating Officer

I would say, it leans more toward the individual or smaller regional players than it does nationals.

Christopher Lucas -- Capital One Securities -- Analyst

Okay. Interesting. Thank you. That's all I had this morning.

Shane Garrison -- President & Chief Operating Officer

Thank you.

Steven Grimes -- Chief Executive Officer, Director

Thanks, Chris.

Operator

Thank you. Our next question is coming from Todd Thomas of KeyBanc Capital Markets. Please go ahead.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi. Good morning. Shane, first question, I guess, just following up on that commentary, perhaps around food and restaurants and maybe merchandising your centers, in general, is that likely to change at all going forward your lifestyle and mixed-use segment skews more toward food and experiential maybe local shops as well. How should we think about leasing and merchandising the centers going forward?

Shane Garrison -- President & Chief Operating Officer

Hi, Todd. Good morning. I'm hesitant to commoditize the commentary, I think that it depends on, it's less about the configuration of the center, mixed use or neighborhood in this case and more about what makes the corridor the center is in tick, what drive sales. So, and those assets in corridors where we see historically have been driven by daytime population inordinate office attendance in this case versus those that are driven more kind of an 18-hour and have a broader nightlife.

As a contrast, we have been hit harder by those assets that have historically relied on daytime population than the broader 18-hour type assets that have a much more lively night component. So, it depends, I think that we still very much view restaurant regardless of format as a significant driver of traffic. We just need to understand longer term what the stickiness is a behavior, especially as it relates to office attendance and how that impacts us and we won't understand that even by the end of next year. But, again, I think looking at the pipeline and the indicative momentum build up in specifically that category. We still feel great about getting a lot of those deals executed hopefully here in short order.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. And then, Julie, I guess, a couple of questions around the '21 guidance. So, the $0.20 of OFFO in the quarter or $0.80 annualized, that's the midpoint of the '21 guidance. What are the key drivers in the model that would result in a sequential decrease in OFFO. It seems like G&A and maybe straight-line rent were a bit outsized in the quarter relative to where they may be on balance during '21. Just curious if you could talk about that and what the downside impact might be coming from?

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Sure, Todd. Thanks for the question. And we tried to share about our framework around guidance in both the release and then also in our prepared remarks. And you're right, we -- G&A as we put out there is certainly an element. When I think about same-store NOI and, again, we're not issuing same-store NOI guidance today. But some of the variables within there are, of course, figure occupancy assumptions, which I think Shane alluded to and we've had a question on already. And then really for the balance, a lot of it's around collections.

And it's keeping in mind that we have $9.9 million that we recognized last year in 2020 that's kind of fair way -- down the fairway deferrals that we need to collect on in 2021. And on top of that I mentioned an additional $4 million in deferrals that didn't qualify for that preferential revenue recognition treatment. So, it's not been revenue yet, but it's due in 2021. So, it's collections on the existing 2021 amount but also these deferrals. It's also heavily dependent on collections from our cash basis tenants. And, again, cash basis is what it sounds like, literally, I cannot record revenue if it comes in a day after the quarter, have to record it in the next quarter.

And with 12% of our ABR on the cash basis, it's something that I -- we can influence and we will certainly continue to try to collect from tenants timely. But it's a little bit out of our control as well with that timing factor. And I think those are some of the same store NOI components that have the most variability outside of same store, though, and you mentioned this non-cash and specifically within non-cash, it's straight-line rent.

That is a figure that I'd say is probably one of the more significant variables in our guidance that is hard to kind of see, I guess, and it's hard to call out a runway -- a run rate. If I look back a few years and think about straight-line rent, we had amounts in the $4 million, $5 million range. And those were some of our record leasing year. So, historically for us, I'd say, the single driver, largest driver for positive straight-line rent has been new tenants taking occupancy and the impact of those tenants that have rent bumps especially if they're offered a couple of months of free rent those can be material contributors to straight line rent.

So, Shane commented on our expectations around the leased to occupied spread, widening the straight line rent balances for those 12% of tenants on the cash basis are essentially frozen. So, they will not grow. So, if I were to point you to one element outside of some of our assumptions within same store NOI, it's this straight line component and I can tell you that several points within our guidance range contemplate negative straight line amounts for 2021. So, hopefully, that's helpful to understand some of the components.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. With regard to the cash basis tenants, I guess, Steve you touched on the capital that's been raised by many of your tenants which has enabled companies to reinvest in their business, reduce leverage. Some of your tenants have raised significant capital even in some of the categories like theaters that I suspect are not paying rent over the last few months. Does that change the conversation at all around rent payments? Are you able to engage in more constructive conversations with some of these tenants that publicly disclose their capital raising activity? And I guess, Julie, relative to the 65% cash basis collections that you reported in the fourth quarter and I think you said were consistent in January. Does that lead to higher collections going forward?

Steven Grimes -- Chief Executive Officer, Director

Well, I'll start, Todd, thanks for the question. Yeah, I did say in my opening remarks that there were a number of tenants retailer specific that were accessing the debt markets which obviously implies that there is some level of comfort in lending to those folks. And I also said that while debt doesn't necessarily mean payment of rent and I think debt issuance means there is a little bit of help to that business where we should fully expect the rent. That being said on the theater side, as Shane had pointed out, theaters are still a watchlist for us as well as well as health clubs. And then there is just a number of other retailers that have been out there that are pretty much at the top of our list that are just giving us even more certainty around anchor occupancy and ability to pay. But with that, I'll turn it over to Julie to the second part of the question.

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Sure. The collection levels from our cash basis tenants have certainly improved during 2020. If I look back at Q2, we were collecting about 30% in the 30s, low 30s in Q3, for the cash basis tenant population at that time we collected in the low 50%. So, it's improving when I get to the mid-60s. And I can share with you within that 65% collection level, we do have all of our theaters on the cash basis, for example, and we collected 38% from them during the quarter, a little bit more came in after year-end, as you see in our supplemental disclosure.

So, setting theaters aside, the balance of non-theater cash basis tenants we collected about 80% from them in Q4. So, certainly improving, and again, it's one of the more significant components that we flexed and provide some different scenarios, as we went ahead and went to set guidance. But again it's early, I think, what I can commit to is being transparent as we report first quarter results and going forward to be very clear on how the subset of our tenant population fared.

And I think just if I haven't mentioned yet, there is certainly the possibility that some of these tenants come off the cash basis. But I can tell you that that is a much higher hurdle we typically need to see some demonstrated several quarters of paying in full and paying on time from these folks to move them off. It's much easier to move on. And I know we have increased that population from where we sit today, we're very confident that 12% today is the right amount, but that number could grow. I've seen it grow each of the last two quarters, and it's early in the year, but it's something that, again, we'll continue to report on each quarter going forward.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. All right. Great. Thank you.

Steven Grimes -- Chief Executive Officer, Director

Thanks, Todd.

Shane Garrison -- President & Chief Operating Officer

Thank you.

Operator

Thank you. Our next question is coming from Paulina Rojas Schmidt of Green Street3. Please go ahead.

Paulina Rojas Schmidt -- Green Street -- Analyst

Good morning. And I was wondering how should view on the long-term growth and for any of the markets you're in changed in the recent 12 months. And if so in what markets has it improved or worsened, any major -- any comment on major trends would be very helpful.

Shane Garrison -- President & Chief Operating Officer

Sure. I'll start that. I think, it's an evolving picture and certainly in a pandemic struck-in environment it's hard to have any broad-based takeaways that extend with permanency. So, I can tell you from a collection standpoint kind of recent indications, our collection have stabilized, but for California really, there is no other disparity. I mean, even in New York, we're almost at 100% collections. California though which only has two remaining multi-tenant assets, we've been pretty vocal since just after IPO that that the state itself is not a market, we are going to be in long term, but our collective or our collections experience there in the quarter was probably a blended in the 70s somewhere, including the theater.

So, that remains a very tough environment unsurprisingly from a collection standpoint. Long-term growth, I think that story continues to be written. We have about 30% of our portfolio in Texas, Texas continues to have in order net [Phonetic] population growth, Phoenix continues to do well, which is one of our top 10 markets. Seattle, Atlanta still does very well for us as well as the mid-Atlantic. So, it's early, I think, there is some structural change going on. We'll see what kind of permanency this has, as it relates to remote office and other things that would kind of shape some of this long term. But what we can look at right now is population growth and collections experience. And for our current portfolio and the top 10 markets, the lion's share of where we are and where we want to be long-term.

Paulina Rojas Schmidt -- Green Street -- Analyst

Thank you. And then another question, some of your peers have engaged in percentage rent arrangements and with some of our tenants and as a form to provide them some flexibility and help them get to the other side of the crisis, have you done something similar at all and any color on the topic would be helpful.

Shane Garrison -- President & Chief Operating Officer

Yeah. We absolutely have but the -- and I would say that the hurdle to that is that to the extent we've agreed on some interim percentage rent as a bridge back to normalcy. Those tenants have to be tenants that we believe it's prudent to continue to invest in because that's what it is, it's not only time it's also capital that we are theoretically foregoing. So, we've done it. Unsurprisingly, we've done it with some of our restaurant categories, the larger format restaurants that we have. We certainly engaged in other categories. I think, we've done it with one theater as an example of one-off operator, and certainly a few gym.

So, the categories that continued below our 94%-plus in the quarter are the ones that we have certainly done percentage rent interim deals to get them, it's kind of the other side. And generally we try to do that at a quarter no longer than two quarters forward. So, most of that, if not all of that, should burn off March or the latest June this year as we look at again a forward kind of ramp on the macro. So, we'll see what happens, but we're positioned for a bridge the other side without encumbering that space long term with below market structure.

Paulina Rojas Schmidt -- Green Street -- Analyst

Thank you. Very helpful.

Steven Grimes -- Chief Executive Officer, Director

Thank you.

Operator

Thank you. Our next question is coming from Katy McConnell of Citi. Please go ahead.

Katy McConnell -- Citi -- Analyst

Hey, thanks. Good morning, everyone. Can you talk about your outlook for the mark to market upside on the bankruptcy exposure that you have left at this point? And to what extent is the bankruptcy backfill helped drive the improvement in new leasing spreads in 4Q?

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Katy, I'll start with just a quick mention of our bankruptcy exposure, it's just lower than it has the last two quarters at about 1.3% of our ABR as of the end of the year.

Steven Grimes -- Chief Executive Officer, Director

And I'm sorry, Katy, the question was specific to our remaining exposure?

Katy McConnell -- Citi -- Analyst

Yeah, the exposure you haven't addressed yet or that's done quite.

Shane Garrison -- President & Chief Operating Officer

We haven't addressed yet. What do we have a 1.5% left then?

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Yeah. 1.3%.

Shane Garrison -- President & Chief Operating Officer

Yeah. So, about 1.3% currently, it's still very fluid. I think, the good news is that when you look at our occupancy, which has winnowed obviously down to the 91% plus pushing 92% at this point. And again, the remaining tenants and the tangible increase in credit in conjunction with we were over 500 basis points of bankruptcy last year and now we're 140 basis points, 150 basis points. So, it's a fluid process, albeit much smaller and it's hard to say kind of where this ends up in 2021.

It's hard to believe that looking at the current environment that with 16,000 plus stores closing last year, we would be anywhere near that number, but again that assumes like we have in our broad-based modeling that there is some macro improvement midyear. So, still fluid but markedly diminished bankruptcy activity. And our outlook is that it should be, again, with some improvement in the macro economy midyear.

Katy McConnell -- Citi -- Analyst

Okay. Got it. Thanks. And then can you discuss how you're thinking about the timeline for starting some of the projects you've already entitled in your shadow pipeline? And has that changed at all over the last few months as we've gotten more clarity around your leasing capex needs in the down time?

Shane Garrison -- President & Chief Operating Officer

Sure. Let me, I guess it's worth just starting kind of where we're at right now. So development continues to be a bigger piece for us as a company and a brand and obviously that's something we spent years positioning for in regards to monetizing non-core assets and creating that air right and entitlement value. So, we've got the four projects on the page right now. That $0.06 on a stabilized basis. And I think that's one of the more unique stories in our space that should be stabilized at the end of '22.

Southlake is 100% leased, we will deliver that shortly on track on budget, just a single-tenant pad deal. The Shoppes at Quarterfield, we delivered all the, in the quarter, the remaining national fitness user, we have pushed the rent start out and that was part of a broader portfolio negotiation with still 100% leased, a bit more carry. So, the overall return bandwidth has come down, but still double-digits and really related to just more carry as we pushed out rent start, which turns to our two biggest projects.

Circle East, we continue to add one to two leases a quarter. We're 17% now, and that's an asset that continues to garner more interest. And I think that prospectively with the two colleges coming back directly adjacent to us. And in addition to the multi-family taking off across the street and just the corridor continuing to mature, we expect great things from that asset this year. And we are certainly on track for a Q3, Q4 '22 stabilization there.

And then turning to Loudoun, far and away our largest project, very important to our shareholders and certainly to our brand. Happy to report that we delivered Pad G early, as I said in my prepared remarks, we've actually leased our first department before we even went live with leasing. And looking at the office and the commercial portion of that, our office has -- we're in lease or all life for about 90% of the space already, largely tech driven in that corridor.

And the other retail 35,000 feet or so, we have about 30% of that in active -- some form of active negotiation. So, again, all in $0.06 of accretion. But it's taken a lot to get there. And to your point, we want to stay in the accretion as far as delivery cycle goes. So, we have Naperville teed up, we'll talk through that as the year progresses. That was entitled last year. We also still have about 4 million square feet of commercial, in general. So, we continue to look at Loudoun Uptown. We continue to look at Merrifield as far as our ability to go vertical there and finish that entitlement.

So, it's -- I'm hesitant to give you a date as to when we will tie into the next generation of projects, but I would tell you, we're looking at it and we're trying to balance staying in the accretive delivery cycle with risk and the macro developing. So, stay tuned, but we're certainly contemplating our next project as we speak.

Katy McConnell -- Citi -- Analyst

That's really helpful. Thank you.

Shane Garrison -- President & Chief Operating Officer

Thank you.

Operator

Thank you. Our next question is coming from Linda Tsai of Jefferies. Please go ahead.

Linda Tsai -- Jefferies -- Analyst

Hi, good afternoon. Apologies if I missed this. When you say leasing will be volatile, are you implying a little bit of a pullback for 2Q, generally, would you expect to sustain the run rate of the last two quarters in 2021?

Shane Garrison -- President & Chief Operating Officer

Hi, Linda. Good morning. It's hard to say. I think that when we say leasing as volatile, I think, it's all things leasing and including occupancy and lease rate. I think from just an overall top line trend as we talked about earlier, what we see, all things considered, as a continued momentum at the top line. Hard to say what the volume is quarter-to-quarter, but just generally throughout the year, we should increase our leased rate certainly by year-end from where we're at. But we think occupancy will be lumpy, right. And if we think we won't trough until Q2 or Q3, but continue to kind of gap out on the leased rate, that's some of the volatility we talk about. And we think -- and I think more importantly when you think about the ARC and bandwidth over our earnings this year, that's certainly a component of that.

When we obviously put a lot of thought into that bandwidth and some of the scenarios we contemplated where just how deep is the structural overhang around labor or permitting process, especially if kind of everybody comes to the table at once and that's certainly part of our consideration there. So, it will be lumpy but again as a trend and we certainly see momentum at the top with occupancy playing catch up throughout the year.

Linda Tsai -- Jefferies -- Analyst

Thanks for that color. And then the bankruptcy backfills, you said there were eight of them, what kind of tenants were they?

Shane Garrison -- President & Chief Operating Officer

Kind of all over the board really. We've done, believe it or not, with little health and beauty, we actually had fitness in there, a little bit of restaurant. And I think we had one of the larger like a Total Wine type concept. So, depending on the size kind of all over. But, great space is still in demand and like we talked about earlier, I think that Class A space it's truly hard to appreciate just how constricted that supply is. But I think it will continue to demonstrate throughout the year.

Linda Tsai -- Jefferies -- Analyst

Thank you.

Shane Garrison -- President & Chief Operating Officer

Thank you.

Operator

Thank you. Our next question is coming from Floris van Dijkum of Compass Point. Please go ahead.

Floris van Dijkum -- Compass Point -- Analyst

Thanks for taking my question guys. Wanted to talk a little bit about the capital allocation, if you will. I mean, you have $170 million pipeline, which you're making some good progress on, $100 million has basically been spent already. So, you got incremental $70 million to go. You're probably going to retain, call it $30 million to $40 million of cash after dividends this year. And as you're thinking about building up, Shane you sort of alluded to the shadow pipeline, by the way, you haven't mentioned Carillon yet, curious to see where that stands as well, because that's obviously significantly more spend. As you're thinking about doing the future projects as well, which appear to be decent returns on the invested capital. Have you thought about more non-core sales and maybe if you can comment also potentially on the opportunity on the -- any ground rent monetizations in your portfolio?

Shane Garrison -- President & Chief Operating Officer

Sure, Floris. Good morning. Look, I think, obviously first and foremost, our best capital allocation is to get this portfolio back to stabilization through leasing capital, and I think you agree. After that though we're going -- we mentioned we would be opportunistic on the transaction side. We'll talk about development in a minute. And to that point, we would -- anything we do on the transaction side, there is a couple of things to think about. One, to the extent we acquire anything, it would be more of the same that we've done historically, which would be phenomenal that's kind of in a short to medium term covered land play that we think we can densify it longer term.

We would certainly more likely acquire first than later. And that's simply because the market is tight and that product is very tough to find. But also the capital we would use to fund that is very much from the pool you are touching on. So, we've got 500 basis points or so of ABR and ground leases, we view that as a very liquid pool with very sticky pricing and those two things combined in addition to the dynamics on the acquisition side kind of mandate that we would buy before we sell, assuming we transact.

As it relates to development, again, we think these returns are very compelling, especially with the larger mixed-use projects, these projects that have scale and mass and you can -- the basket better. We very much of U.S. as more of a rarity than they were historically, which gives us an ordinary pricing power, especially through the vertical. So, love to keep building that pipeline. And we'll certainly keep that in mind, as an allocation goes, but we certainly need to stabilize leasing first.

Carillon, specifically, I didn't mention it, it is very much still in our thoughts. It is still entitled obviously with considerable commercial and multi-family. The hospital will open in late spring. We continue to have conversations around medical office have not gotten anything off the ground to where we would feel comfortable going, right. We would have to be highly leased on the medical office building to go at this point. We haven't gotten there, although we still have very fluid conversations around that and we still have conversations on the multifamily, right.

I think, we could go with any number of partners that would still like to go on the multi-family. What has changed, unsurprisingly, has been the retail, right. Retail has changed dramatically since we started that project. The good news is the wet and dry infrastructure in the ground is still at a point where it's very malleable we can kind of go wherever we want. So, there's not a lot of lost investment in the infrastructure. So, I'm not saying we will or won't, I think, it depends on how the year shapes up.

I also think that to the extent we do go on the multifamily as an example. And we've talked about this before you would expect us to contribute the land to a joint venture where and we would own up to 50% of that with no further capital allocation, which would obviously continue to demonstrate the value and certainly be accretive in short order. So, we have optionality, Floris, and that's really what we're structured for, right. We have options and we will take them into consideration as the year develops.

Floris van Dijkum -- Compass Point -- Analyst

That's great color, Shane. Just to make sure that I -- so you are looking at a couple of acquisition potentials and those would primarily be funded through things like ground lease dispositions, is that the way to think about?

Shane Garrison -- President & Chief Operating Officer

Yeah. That's correct, Floris.

Floris van Dijkum -- Compass Point -- Analyst

Great. Thanks. That's it for me.

Shane Garrison -- President & Chief Operating Officer

Thank you.

Operator

Thank you. Our last question today is coming from Mike Mueller of J.P. Morgan. Please go ahead.

Michael Muller -- J.P. Morgan -- Analyst

Yeah, hi. Just want to go back to guidance, again, so if the quarter was $0.21 when you add back the straight line write off that annualizes to about $0.84. I know Shane talked about losing occupancy, but I'd imagine that's reserved against already or not paying anything in terms of cash. So, it's the implicit assumption that I guess there is no improvement in reserves or collections or maybe they take a step back, is that part of the scenario?

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Good afternoon, Mike. Thanks for the further question. I can't stress enough the variability in our expectations around really two main concepts. And within same-store NOI, it's collections, right. So, we model various scenarios, we're being aware that we've got a significant portion of our tenant base on the cash basis of accounting and that we are collecting at levels far below the portfolio average there. And I think for some -- at least some point into 2021, those trends could continue, again, we're all I think talking about a back half of the year improvement. Again, we could move additional tenants to the cash basis, which can be quite a noisy on the straight-line rent front. So, no outside of same-store NOI, but on earnings.

And we've afforded for some possibility there, again, our 12% is certainly far below many of the peers. It's not to say that our 12% is right for our business today, but that is a figure that could change. So, I think, as I was trying to note in an answer previously today, straight line rent has been strongly benefited by, in the last couple of years. So, call it 2019, 2018 by those strong leasing years that we had moving tenants in, tenants with rent steps tenants with some element of free rent significantly boosted those figures.

And then the negative, what are we, negative $2 million or so in straight line for 2020 was impacted, of course, by moving more tenants to the cash basis, but again these tenants now can't grow, their straight line can't grow. So if they were elements of growth prior, we're not seeing that in 2021. So, again, just trying to point you to the variability and potentially I don't want to say a logical, but non-linear nature of straight-line rent and what that can do. Again, committed to transparent disclosure every quarter and I'll be sure to speak to this point on calls going forward as well.

Michael Muller -- J.P. Morgan -- Analyst

Got it. And maybe lastly, so does it feel like '21 is the trough year or I know Shane talked about stabilization in '22. Should we think of '22 as the trough year where you begin to inflect?

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Shane's stabilization comments, I think, were related to our developments...

Shane Garrison -- President & Chief Operating Officer

For us. Yeah.

Steven Grimes -- Chief Executive Officer, Director

...as opposed to the [Speech Overlap].

Michael Muller -- J.P. Morgan -- Analyst

Okay. Got it.

Shane Garrison -- President & Chief Operating Officer

We think -- we still feel '21, some point in '21 is trough occupancy and building leasing momentum should push us well into '22 on stabilization benefit.

Michael Muller -- J.P. Morgan -- Analyst

Got it. Okay. That was it. Thank you.

Shane Garrison -- President & Chief Operating Officer

Thanks.

Steven Grimes -- Chief Executive Officer, Director

Thanks, Mike.

Operator

Thank you. At this time, I would like to turn the floor back over to Mr. Grimes for closing comments.

Steven Grimes -- Chief Executive Officer, Director

Thank you everybody for your time today. We know that there is a lot of information in here to digest, I pretty much say this every quarter, but this quarter for sure, there is quite a bit to digest. And offer up to any of you that need further clarification as you start to digest this information more we're always available to help you in this process.

We are encouraged by everything that we put out today in terms of what I think we have in terms of disclosure and that will only be solidified as quarter-on-quarters or the quarters pass. Q1, I think, can be incredibly telling and it -- the most part is right around the corner. So, we will be talking with you all very soon, hopefully with continued progress. So, thanks again for your time today.

Operator

[Operator Closing Remarks]

Duration: 68 minutes

Call participants:

Mike Gaiden -- Vice President, Capital Markets and Investor Relations

Steven Grimes -- Chief Executive Officer, Director

Julie Swinehart -- Executive Vice President, Chief Financial Officer & Treasurer

Shane Garrison -- President & Chief Operating Officer

Derek Johnston -- Deutsche Bank -- Analyst

Christopher Lucas -- Capital One Securities -- Analyst

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Paulina Rojas Schmidt -- Green Street -- Analyst

Katy McConnell -- Citi -- Analyst

Linda Tsai -- Jefferies -- Analyst

Floris van Dijkum -- Compass Point -- Analyst

Michael Muller -- J.P. Morgan -- Analyst

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