Question-and-Answer Session
Operator
(Operator instructions) Our first question comes from Paul Adornato from BMO.
Paul Adornato – BMO Capital Markets
Hi, good afternoon.
Mark Zalatoris
Hi, Paul.
Paul Adornato – BMO Capital Markets
The property that you acquired for IREX this quarter is in suburban Chicago. I was wondering why that didn't fit into your core portfolio, why didn't you keep it for yourselves?
Mark Zalatoris
Paul, this is Mark. We always look at those properties with the intention of seeing if it works for our portfolio first. But, given today's cap rates, where sellers still have what I consider a little bit unreasonable expectations, the returns off of that particular property would not necessarily be accretive to adding to our own portfolio. However, it did lend itself readily to the profile that is looked for by the tenant and common investors. So in a sense, we underwrite for our portfolio first and then for IREX second and it just fit IREX's return profile better.
Paul Adornato – BMO Capital Markets
Okay. And I was wondering if you could talk about the small mom and pop restaurants that you might have in your portfolio, how are they doing in this environment especially given what we are all hearing about food inflation?
Scott Carr
Paul, it is Scott. We are seeing a little bit of strain from those tenants. They are definitely mentioning the pricing pressures. But, for the most part, they are very value oriented in their price points and a lot of them are specific to market. So, we have a lot of ethnic driven stores that cater to neighboring areas. So, thus far as I mentioned earlier, we haven't seen an extraordinarily high failure rate in those concepts and there are still some new restaurant players coming to bear with the quick serve concept. But there's definitely slowness in that area of the business.
Paul Adornato – BMO Capital Markets
Okay. And you got some nice spreads on your new leases this quarter. I was wondering where you see market rents going especially given the stress that we are seeing in the retail environment?
Scott Carr
There is definitely a lot of downward pressure on rents and retailers are driving harder bargains. I think we are in a unique situation because a lot of our spaces are in a position to be mark-to-market because they have been under long-term leases for such a period of time that when we are getting control, even though there may be some downward pressure in the marketplace, we are still able to come up to that market rate. So we anticipate still maintaining growth on both renewals and new leases, perhaps not to this magnitude, but we still expect positive momentum.
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