Anthony Hau • Truist Securities

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CEO Marc Ganzi explained that based on a historical average hold period of about seven years, meaningful and non-episodic carried interest from their 2019 vintage fund should materialize in 2026-2027. For the private wealth channel, he confirmed the launch of their second product, which is AI-centric. The company is now engaging with multiple banks for distribution and aims to begin taking subscriptions in the fourth quarter, following a similar successful timeline as their first product.

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CEO Marc Ganzi stated that the current amount of committed capital not yet earning fees is $4 billion. He explained that this capital is activated as it's deployed into co-investments and, significantly, into the private credit strategy. Ganzi noted that credit is a major driver for activating new FEEUM in Q2 and Q3 as loans are originated. He also pointed to the large CapEx requirements for the 2.3 gigawatts of signed but not-yet-commenced data center leases as another significant source of future fee activation.

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CEO Marc Ganzi stated that while LPs subscribe more to the flagship fund, co-investments are a critical part of a multi-product client solution, often stapled to a fund commitment. He noted co-invest carry is typically 10-15%. Ganzi described the digital energy strategy as building power infrastructure to solve grid bottlenecks for data centers, while the stabilized data center strategy is a real estate fund designed to acquire investment-grade assets and tap into the large real estate allocator capital pool.

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CEO Marc Ganzi explained the private wealth channel was built with minimal new SG&A, making it highly profitable, with plans to hire 4-6 more staff in 2025. He deferred a detailed breakdown of underperforming products but noted the private wealth uptake was much faster than expected. He confirmed the new sales reps have started generating revenue, citing recent account wins and emphasizing that all global regions and product lines are contributing to the fundraising momentum.

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Executive Gary Shiffman and Executive John McLaren both emphasized the strategy of maintaining a balanced portfolio of all-age and age-restricted communities to cast a wider net for residents. Executive Fernando Castro-Caratini clarified that the higher move-out rate refers to resident turnover, not homes leaving, which creates opportunities for brokered home sales. For the FFO run rate, he advised building up from the provided same-property NOI and other non-marina guidance line items.

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Executive Fernando Castro-Caratini clarified the notes receivable balance, noting it primarily consists of a developer note in Florida and seller financing from a Canadian disposition, with no immediate concerns. Regarding the U.K., he explained the expense growth is driven by government-mandated increases in the national minimum wage and employer-paid payroll taxes.

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Fernando Castro-Caratini, Executive, attributed the increase in 'other expenses' to advertising spend that did not successfully convert to transient stays. Gary Shiffman, Executive, added that while the transient market is challenging, it remains a strategic feeder for the growing annual RV business, and the focus is on managing this exposure while converting sites to the more stable annual income stream.

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Co-CEO Howard Schwimmer attributed the resilience to the extreme scarcity of space in the fully built-out Southern California market. Unlike markets with available land, new supply doesn't enter and depress prices. He stated the market is driven by consumption from a population of 24 million, and historically, downturns have impacted leasing timing more than causing significant drops in occupancy.

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COO Christine Mastandrea noted a positive upward dynamic for the Regis space due to strong demand for boutique office properties in Houston's Uptown Galleria area. CEO David Holeman added that Regis represents only 0.4% of revenue and they welcome the re-leasing opportunity. Regarding Pillarstone, Mr. Holeman confirmed the process is nearing its end with all properties sold, under contract, or with offers, and expects proceeds to be 'well north of' the $45 million carrying value. CFO J. Scott Hogan stated guidance will be updated upon receipt of proceeds.

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Executive Paul Seavey explained the lower non-core NOI guidance is due to properties moving to the core portfolio, the timing of insurance recoveries received in 2024, and assumptions about properties returning to stabilized operations. He noted that a specific business interruption income figure is not disclosed as it toggles with the actual NOI generated by recovering properties.

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Paul Seavey, EVP and CFO, quantified the 2024 revenue from displaced residents at just over $1.5 million, which is expected to ease over time. Patrick Waite, EVP and COO, explained that the large gap between new and existing rents was created over the past few years when high demand and inflation allowed for significant market rate increases, while increases for long-term residents remained more moderate, creating the double-digit mark-to-market opportunity upon turnover.

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James Connolly, Head of Asset Management, stated they are confident the existing tenant at Leti will expand into the remaining space by year-end. For the Exchange property, he noted they are applying for a 6B tax status to reduce taxes and make the building more attractive. Connolly and Executive Jeffrey Witherell explained that redeveloping the large St. Louis building for more than two tenants is not ideal due to high costs and logistical complexities. Regarding the evicted tenants, Executive Anthony Saladino advised not to model any rent recovery, as they will pursue legal action but cannot guarantee a return.

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