Federal's CEO Don Wood on Mad Money | August 11, 2020

Doing fine. I hope your family's doing well.

Well, let's—boy, you gotta unpack a lot there, Jim. There's a lot to talk about. And, you know, are things a mess in the middle of a pandemic? Of course they are. But to me, it's not about today. It's about a number of things: whether we'll be able to make our way—probably more important to investors as a component of their total return than it is to most C-corp companies, I would think. And so there should be, at least in my view, a real robust attempt to continue to effectively go through with the bargain that those investors paid for when they invested in the company. So the notion of continuing investments is a real important part to Federal, so much so, as you pointed out, 53 years—that's since 1967. And well, there hasn't been a pandemic like this since 1967, but there's been a whole bunch of recessions, there's been a whole bunch of interest rates in the high teens, all kinds of other things. And this company was able to continue to pay its dividend. Why and how? We're built for this, and we're built to power through this. The development that we're going to do, even with paying the dividend continually, by February of next year—which I think you would agree we'd have an awful lot more visibility to the future—we'll still have $1.4 billion worth of liquidity at the company.

Right. So let me get there for a second. Okay, if you believe we can, then what? Why should we? It's all about our confidence and what happens on the other side of this. And that's all based on not just the real estate itself, but more importantly, every conversation that we're having these days with tenants, prospective tenants, about where we're trying to get to on the other side of this. It's all about—to about the mall side, I'll get there in a second if you'd like to—but not for us, not in the shopping centers, not in the mixed-use, not in the lifestyle stuff. Rather, what we're talking about is, if you've been operating in that B or that C shopping center, here is that opportunity to improve your location. Now why would you do that? Not only because it's a proven retail location, but more importantly, today, think about it from a tenant's perspective: they don't know who their co-tenancy is going to be over the next few years, they don't know who their landlord is in terms of needing to have a landlord that is liquid, that is visionary, that knows they'll be their partner in terms of an uncertain future. So I'm in the restaurant business—

Jim, there's no question that we entered into this whole mess in an over-retail environment in the U.S., right? Well, certainly, no matter what category you're talking about, this will exacerbate failings, this will exacerbate the oversupply. That's the macro condition, there's no question about that. But to me, that means not everybody can be a winner here, so you better be pretty careful. You have to ask me, but where's your demand gonna come from to be able to backfill and to grow and to create value on the other side of this? That's where I'm saying, look at the—first of all, I hope every strategy in my view of a company, any company that's been hurt by this, needs a vaccine. Okay, so let's get that off the table. Absolutely, there needs to be a vaccine. But absent that, it doesn't mean from my point of view that we won't get through this and be able to create everything I'm thinking about. It's not about today, it's about later, in twenty years. But David Simon says the same thing to me, but then you know he had to adjust his dividend. You know, look, the enclosed small business is a different business, right? Just going back to the Amazon—I mean, can you? I mean, the whole notion of last-mile delivery of a good has been the bane—frankly, than getting the right tenant in that space. But to me, Jim, nobody argues about this: the best way to deliver a good to the end user is to have that end user go to the store and pick it up. That's why what we're doing with the pickup, which as far as I know is the most comprehensive landlord-organized program out in the street, and that's not something for this month or next month—that's forever. That's the way you engage the community with your bricks-and-mortar retail.