Anthony Paolone

Anthony Paolone requested clarification on the new economic occupancy metric, specifically whether the 2026 guidance is an average for the year or an end-of-year figure, and if it's comparable to the 86.7% reported for year-end 2025. He also asked about the FFO impact of Worldwide Plaza, inquiring if it is currently operating at an FFO loss or how interest and penalty interest affect the company's earnings.

Answer

Matt J. DiLiberto, CFO, and Harrison Sitomer, Chief Investment Officer, clarified that the 86.7% is for year-end December 2025, while the 2026 guidance was an average for the year, with the year-end 2026 figure expected to be higher. Marc Holliday, Chairman and CEO, SL Green Realty Corp, stated that Worldwide Plaza generates $7 million of FFO.

Anthony Paolone asked about the depth of market demand for high-end rents (over $200/sq ft) at new developments like 346 Madison and One Vanderbilt, contrasting it with rents in older Park Avenue buildings, and the financing plans for Park Avenue Tower.

Answer

Marc Holliday, Chairman and CEO, clarified that Park Avenue rents are generally in the mid-100s or higher. He highlighted strong demand for new, high-quality space, with 25 million+ square feet of tenant activity for properties like 346 Madison. Steve M. Durels, EVP and Director of Leasing and Real Property, noted 72 tenants with requirements over 100,000 sq ft, indicating insufficient supply. For Park Avenue Tower, Marc Holliday mentioned strong lender interest for debt financing (around $475 million, 65% LTV) and plans to close equity through the balance sheet, while also receiving inbound interest from potential equity partners.

Anthony Paolone of JPMorgan Chase & Co. asked if rising interest rates could slow the transaction market and sought clarification on the probability of assets moving from 'designated' to 'active' in special servicing.

Answer

Marc Holliday, Executive, expressed confidence that investor momentum in the transaction market will continue despite interest rate moves, as buyers are focused on strong fundamentals. He clarified that the progression of assets into active special servicing is out of the company's control and cannot be predicted.

Anthony Paolone from JPMorgan Chase & Co. asked about the Giorgio Armani residences, seeking details on the timing of unit closings, expected proceeds, and any FFO impact. He also inquired about the CMBS purchased during the quarter and why they were not included in the DPE disclosures.

Answer

Executive Matthew Diliberto stated that all Armani units are under contract and expected to close within the calendar year, generating roughly $160 million in proceeds earmarked for debt paydown with no direct FFO impact. Regarding the CMBS, he explained that the $109 million investment is in securities, which have unique accounting rules and are therefore not categorized under the DPE line item. He described it as part of the strategy to source opportunities in dislocated debt stacks but declined to share specifics on the strategy for each investment.

Anthony Paolone inquired about the impact of Artificial Intelligence (AI) on BXP's portfolio, specifically whether it is cannibalizing space needs and how the company is tracking this trend, particularly in relation to premier workplaces.

Answer

Owen Thomas, Chairman and CEO, stated that AI has been a net positive for BXP, driving significant leasing in the Bay Area and New York City, and is more likely to displace repetitive tasks not in premier workplaces. Douglas Linde, President, added that both job displacement and growth can occur. Rodney Diehl, Company Representative, highlighted that 36% of San Francisco's 8 million sq ft tenant demand is from AI. Hilary Spann, Company Representative, noted strong demand from financial services and increasing interest from AI-powered tech/media in New York.

Anthony Paolone inquired about the impact of AI on BXP's portfolio, specifically whether it is cannibalizing space needs or if BXP is tracking its effects differently.

Answer

Chairman and CEO Owen Thomas indicated that AI has been a net positive for BXP, driving significant leasing in the Bay Area and New York City, and is more likely to displace repetitive tasks not typically found in premier workplaces. President Douglas Linde added that BXP's markets are experiencing growth. Rodney Diehl, Company Representative, noted that 36% of San Francisco's 8 million sq ft tenant demand is AI-related. Hilary Spann, Company Representative, highlighted strong financial services demand in Midtown, NYC, and increasing tech/media interest in Midtown South, with many tenants being AI-powered.

Anthony Paolone inquired about BXP's confidence in achieving the outlined 2026 occupancy pickup, considering the significant leasing activity already completed this year, and any potential risks of lower retention rates for remaining 2026 expirations.

Answer

President Douglas Linde affirmed confidence in the projected 200+ basis point occupancy increase by the end of 2026 and another 200 basis points by the end of 2027. He noted a dramatic decrease in available tenants with expirations, expecting a 50% renewal rate for the remaining 3.8 million sq ft over two years, and maintaining a 1 million sq ft per quarter leasing velocity.

Anthony Paolone inquired about BXP's confidence in achieving the outlined 2026 occupancy pickup, considering the significant leasing activity already completed in 2025, and the expected retention rate for remaining 2026 lease expirations.

Answer

Douglas Linde (President, BXP Inc) affirmed confidence in the 200+ basis point occupancy increase by the end of 2026, citing a dramatically decreased set of tenant expirations and consistent leasing velocity. He projected a 50% renewal rate for the remaining 3.8 million square feet expiring over the next two years.

Anthony Paolone of JPMorgan Chase & Co. asked about BXP's target leverage level, given it is currently over 8x, and questioned the rationale for waiting to execute on capital raising or deleveraging strategies.

Answer

Michael LaBelle, EVP, CFO & Treasurer, reiterated a target leverage range in the mid-6x to mid-7x. He explained that leverage is expected to come down over time through EBITDA contributions from development deliveries like 290 Binney Street, general occupancy improvements, and proceeds from the $600 million in planned asset sales, indicating that deleveraging actions are already in motion.

Anthony Paolone from JPMorgan Chase & Co. inquired about West Coast leasing activity, asking for details on strengths and weaknesses by tenant type and submarket, and any notable changes in recent months.

Answer

President Douglas Linde observed that the market has shifted from large users to smaller tenants, with early-stage AI and tech companies showing activity. Executive Rodney Diehl added that relocations by law and financial firms are driving volume in San Francisco's Embarcadero Center and noted the growing AI footprint. He contrasted this with slower activity in Silicon Valley.

Anthony Paolone asked for a comparison of BXP's cost of capital versus potential returns on new developments like 343 Madison and other acquisition opportunities, and whether to expect external growth in 2025.

Answer

Chairman & CEO Owen Thomas stated BXP's look-through cap rate is in the mid-6% range. He noted that development yields are now materially higher than pre-pandemic levels, while acquisition bids for premier assets are in the high 6% to 7% range. He suggested that improving debt markets, particularly CMBS, could catalyze more transaction activity, creating opportunities for external growth.

Anthony Paolone asked about the moderating growth in Real Estate Management Services (REMS), specifically property management, inquiring about the reasons for contract churn, the growth trajectory of broader outsourcing and facilities management, and the company's strategy regarding free cash flow conversion, leverage targets, and share repurchases.

Answer

CEO Christian Ulbrich explained that property management's muted growth was due to a strategic evaluation of profitability in globalizing the business, leading to exits from certain low-margin contracts, primarily in Asia Pacific, while the U.S. still showed mid-single-digit growth. He clarified that traditional outsourcing and facilities management (workplace and project management) continue to show strong double-digit growth. CFO Kelly Howe added that the intentional contract exits in property management are expected to continue through mid-next year to drive margin. Ulbrich also noted that the company has ramped up share repurchases in Q3 and expects this trend to continue given low leverage and attractive use of cash in the absence of strong M&A opportunities.

Anthony Paolone asked about the moderating growth in Property Management and broader Real Estate Management Services (REMS), the reasons for contract churn in Property Management, and the company's strategy regarding free cash flow conversion and share buybacks.

Answer

Christian Ulbrich (CEO) explained that Property Management churn is intentional, focused on driving margin by exiting less profitable contracts, primarily in Asia Pacific, while the U.S. still shows mid-single-digit growth. He noted that broader outsourcing (Project Management +24%, Workplace Management +8%) remains strong. Kelly Howe (CFO) added that Property Management contract turnover is expected to continue through mid-next year. Christian Ulbrich (CEO) confirmed that free cash flow conversion is strong, leverage is low, and share repurchases have ramped up and will continue as an attractive use of cash in the absence of strong M&A opportunities.

Anthony Paolone of JPMorgan Chase & Co. inquired about the sustainability of strong growth in the Real Estate Management Services (REMS) segment, particularly in project management, and asked about JLL's primary long-term growth drivers for 2026-2027.

Answer

CEO Christian Ulbrich confirmed the strength in project management is expected to continue due to strategic restructuring and strong demand for mid-sized projects. He reiterated the high single-digit to low double-digit growth outlook for the overall REMS business. For long-term drivers, Ulbrich highlighted Capital Markets' potential as geopolitical noise subsides and the knock-on effect of limited new office supply, which boosts the project management business for upgrading existing assets.

Anthony Paolone inquired about the long-term growth and margin outlook for the Real Estate Management Services segment and the full-year forecast for LaSalle's Assets Under Management (AUM).

Answer

Karen Brennan, CFO, reiterated a medium-term growth target of high single-digits to low double-digits for Real Estate Management Services, expecting full-year margin expansion despite near-term investment pressures. For LaSalle, she noted that while recent dispositions impacted AUM, capital raising has significantly improved ($1.9B in Q1), with a strong pipeline for future deployment.

Anthony Paolone of JPMorgan Chase & Co. questioned whether 2025 guidance implies margin expansion, the expected fee revenue growth rate for Work Dynamics, and the top priorities for internal business investment.

Answer

CFO Karen Brennan confirmed that the 2025 outlook anticipates margin expansion and that long-term targets are unchanged. CEO Christian Ulbrich clarified that Work Dynamics is expected to return to a high single-digit to low double-digit growth trajectory after a period of unusually high wins. He identified recurring revenue businesses, technology like AI, and scaling all segments as key investment priorities.

Anthony Paolone questioned the viability of JLL's long-term adjusted EBITDA margin target of 16-19%, asking what market conditions are needed to achieve it, and also inquired about the company's current capital allocation priorities.

Answer

CFO Karen Brennan confirmed that reaching the mid-term 16-19% margin target requires a more significant recovery in the transactional business lines than what has been seen recently. She reiterated that capital allocation priorities are unchanged, focusing on reducing leverage to the midpoint of the target range, reinvesting in the business, and pursuing select M&A and share repurchases.

Anthony Paolone inquired about the organic growth rate for the engineering segment, the underwriting expectations for acquisitions, and the current state and focus of the investment pipeline.

Answer

Jay Hennick (Global Chairman and CEO) reported year-to-date organic growth in engineering at around 8% and discussed acquiring businesses in rapidly growing, fragmented infrastructure-oriented markets. He noted that the investment pipeline is broad, with engineering leading in transaction volume, and aims to double the business in revenue and profitability over the next few years.

Anthony Paolone inquired about the organic growth rate for the engineering segment, the underwriting expectations for acquisitions, and the current state and focus of the investment pipeline.

Answer

Jay Hennick (Global Chairman and CEO) reported year-to-date organic growth in engineering at around 8% and discussed acquiring businesses in rapidly growing, fragmented infrastructure-oriented markets. He noted that the investment pipeline is broad, with engineering leading in transaction volume, and aims to double the business in revenue and profitability over the next few years.

Anthony Paolone asked about the unexpected weakness in industrial leasing, its current trajectory, and its proportion of total leasing revenue. He also inquired about the strategic and economic implications of the Investment Management division's rebranding.

Answer

CFO Christian Mayer acknowledged the leasing softness was anticipated due to tariff impacts but noted a positive trend in July, stating industrial leasing is 40-45% of leasing revenue. CEO Jay Hennick added that the rebranding, particularly integrating Versus Capital, is designed to accelerate growth in the private wealth channel and leverage expertise across the entire platform.

Anthony Paolone inquired about the unexpected weakness in industrial leasing during the quarter and its outlook, as well as the economic implications of the Investment Management division's rebranding.

Answer

CFO Christian Mayer acknowledged the leasing softness, attributing it to tariff impacts in markets like Canada and Australia, but noted a positive trend in July. CEO Jay Hennick explained the rebranding to Harrison Street Asset Management, including the integration of Versus Capital, is designed to accelerate growth in the private wealth channel and leverage expertise across the platform.

Anthony Paolone from J.P. Morgan inquired about the unexpected weakness in industrial leasing during the quarter, its current trajectory, and its proportion of total leasing revenue. He also asked about the economic implications of the Investment Management division's rebranding.

Answer

CFO Christian Mayer acknowledged the softness in industrial leasing, which constitutes 40-45% of leasing revenue, was anticipated due to tariff impacts but noted that activity trended more positively in July. CEO Jay Hennick explained that the rebranding of the investment management division to Harrison Street Asset Management is a strategic move to accelerate growth and better leverage expertise across the platform, particularly through the newly branded Harrison Street Private Wealth channel.

Anthony Paolone asked about the surprising weakness in industrial leasing during the quarter, its outlook for the second half, and the potential economic implications of rebranding the Investment Management division.

Answer

CFO Christian Mayer acknowledged expected leasing softness due to tariff impacts but noted a positive trend in July. He stated that industrial leasing constitutes 40-45% of their leasing revenue. CEO Jay Hennick added that the Investment Management rebranding is a strategic move to leverage expertise across the platform, such as integrating Versus Capital to accelerate growth in the private wealth channel.

Anthony Paolone inquired about the unexpected weakness in industrial leasing during the quarter, its current trajectory, and the strategic and economic implications of rebranding the Investment Management division.

Answer

CFO Christian Mayer acknowledged the leasing softness was anticipated due to tariff impacts in key markets like Canada and Australia but noted a positive trend reversal in July. CEO Jay Hennick explained the Investment Management rebranding, particularly integrating Versus Capital into Harrison Street Private Wealth, is designed to accelerate growth and leverage expertise across the entire platform.

Anthony Paolone asked about the unexpected weakness in industrial leasing during the quarter, its current trajectory, and its proportion of total leasing revenue. He also inquired about the strategic and economic implications of rebranding the Investment Management division.

Answer

CFO Christian Mayer acknowledged the anticipated leasing softness due to tariff impacts but reported a more positive trend in July, noting that industrial leasing constitutes 40-45% of leasing revenue. CEO Jay Hennick added that the Investment Management rebranding, particularly integrating Versus Capital, is a strategic move to accelerate growth in the private wealth channel.

Anthony Paolone inquired about recent market trends, the impact of the macroeconomic environment on different regions and business lines, and the specifics of investment management fundraising, including limited partner (LP) preferences.

Answer

Jay Hennick, Chairman and CEO, noted that while there is still market uncertainty delaying some transactions due to tariff concerns, there are strong pockets in Asia and New York. He expressed cautious optimism about investment management, citing significant pent-up demand. Christian Mayer, CFO, added that the Engineering segment remains robust with strong public sector activity, and fundraising interest is growing despite market volatility.

Anthony Paolone asked about the integration progress of the Engineering business, particularly regarding recent acquisitions, and whether related investments were creating a margin headwind. He also inquired about capital-raising goals for the Investment Management segment in 2025.

Answer

Chairman and CEO Jay Hennick stated that the integration of Englobe in Canada has been simple with no overlap, while the Australian integration is ongoing but proceeding well. CFO Christian Mayer added that while there is some work to integrate tuck-in acquisitions, it is not meaningfully impacting margins. For Investment Management, Mr. Mayer projected $5 billion to $8 billion in capital raising for 2025, noting it's a building year for a new fundraising cycle.

Anthony Paolone asked about the future funding strategy post-self-storage asset sales, specifically regarding non-core assets and internally generated capital sources for next year's deal activity. He also inquired about increased competition from private net lease platforms in W. P. Carey's buy box.

Answer

Jason Fox, Chief Executive Officer, explained that equity would be a larger funding component next year, with dispositions reverting to a more typical run rate. He highlighted significant liquidity, including an undrawn revolver and free cash flow, plus a head start on equity needs with $230 million in forward sales. Regarding competition, Mr. Fox acknowledged a pickup from private equity but stated it feels manageable, emphasizing W. P. Carey's cost of capital and execution track record as competitive advantages.

Anthony Paolone inquired about W. P. Carey's capital sources for future deal activity in 2026, particularly after the completion of operating self-storage asset sales, and also asked about the competitive landscape from private net lease platforms.

Answer

CEO Jason Fox explained that equity would be a larger funding component in 2026, with dispositions returning to a more typical run rate. He highlighted the company's strong liquidity, including an undrawn revolver and forward equity sales, positioning them well for future investments. Regarding competition, Mr. Fox acknowledged an increase from private equity players but emphasized W. P. Carey's competitive cost of capital and established track record in sale-leasebacks as key advantages.

Anthony Paolone of JPMorgan Chase & Co. asked for the specific acquisition and disposition cap rates for the second quarter and for the deals currently in the pipeline.

Answer

CEO Jason Fox stated that year-to-date acquisition cap rates averaged in the mid-7s (7.5%), consistent with last year and the current pipeline. For dispositions, he highlighted a self-storage portfolio sale at a sub-6% cap rate. For the full year, he guided for an investment-to-disposition spread of 100 to 150 basis points, implying an average disposition cap rate approaching 6%.

Anthony Paolone from JPMorgan Chase & Co. asked for the specific acquisition and disposition cap rates for the quarter and the expected cap rates for the investment pipeline.

Answer

CEO Jason Fox reported that year-to-date acquisition cap rates averaged in the mid-7s (7.5%), with the pipeline looking similar. For dispositions, he highlighted a sub-6% cap rate on a recent self-storage sale and reiterated the full-year goal of achieving a 100-150 basis point spread between investments and dispositions, implying an average disposition cap rate approaching 6%.

Anthony Paolone of JPMorgan Chase & Co. asked for the specific acquisition and disposition cap rates for the second quarter and for the deals currently in the pipeline.

Answer

CEO Jason Fox reported that year-to-date acquisition cap rates averaged in the mid-7s (7.5%), with the pipeline looking similar. For dispositions, he highlighted a sub-6% cap rate on a recent self-storage sale and reiterated the full-year goal of achieving a 100 to 150 basis point spread between investment and disposition cap rates, implying disposition cap rates will approach 6% for the year.

Anthony Paolone asked about the cause of the sequential occupancy slippage, any significant known lease expirations in the next 18 months, and the company's appetite for net-leasing versus selling its self-storage assets.

Answer

Head of Asset Management Brooks Gordon attributed the occupancy dip to partial renewals at two European warehouses. He noted that future expirations are minimal, with one known non-renewal fully embedded in guidance. CEO Jason Fox added that while they have flexibility with self-storage, outright sales are currently more accretive for funding new investments.

Anthony Paolone asked about the long-term plan for the remaining operating property portfolio and sought clarification on the bad debt reserve included in the 2025 guidance.

Answer

CEO Jason Fox projected that W. P. Carey would be mostly, if not entirely, exited from the operating storage business by next year, either through sales or conversions to net lease. CFO ToniAnn Sanzone specified that the 2025 guidance includes an all-inclusive credit loss reserve of $15 million to $20 million, which is conservatively higher than usual and covers all anticipated outcomes for tenants of concern.

Anthony Paolone sought clarification on the 2025 internal growth outlook, the key drivers for expected growth next year, and the rationale behind the specific number of self-storage properties converted to net leases with Extra Space.

Answer

CEO Jason Fox clarified that the 100 basis point credit loss forecast is a component of, not incremental to, the typical spread between contractual and comprehensive growth. He cited 2025 growth drivers as accretive investments funded without new equity, contractual rent bumps, and full-year contributions from the Samsung lease and Lineage dividend. He described the partial conversion of the self-storage portfolio as a strategic decision to diversify outcomes, with future actions likely leaning toward asset sales.

Anthony Paolone asked if the company is legally required to pay a dividend for taxable net income or if it has the flexibility to retain cash. He also questioned whether the current stock price makes stock buybacks a prospect, or if development needs remain the priority. Additionally, he inquired about the expected retention rate for the remaining 1.3 million square feet of leases expiring next year, beyond the 1.2 million square feet of known move-outs, and whether the $15 million in venture gains for Q4 should be considered the new quarterly run rate compared to the previous $32 million.

Answer

Marc Binda, CFO and Treasurer, confirmed that the company does need to pay a dividend and intends to do so. He stated that while the stock price is attractive for buybacks, the primary focus is on securing capital to fulfill existing construction commitments. For the remaining 1.3 million square feet of expirations, Marc Binda indicated these are in the normal course of leasing, and it is too early to predict retention. Regarding venture gains, he clarified that the $15 million for Q4 reflects current market conditions and specific investment portfolio factors, with a clearer outlook for next year to be provided at Investor Day.

Anthony Paolone asked if Alexandria Real Estate Equities is required to pay a dividend for taxable income purposes, if the current stock price makes buybacks attractive despite development needs, and about the expected retention rate for the remaining 1.3 million square feet of 2026 lease expirations. He also questioned if the $15 million venture gain for Q4 2025 represents a new run-rate.

Answer

Marc Binda, CFO and Treasurer, confirmed the company needs to pay a dividend and intends to. He stated that while the stock price is attractive for buybacks, the priority is capital for construction commitments. For the remaining 2026 expirations, he noted they are in the normal course of leasing and it's too early to predict retention. Regarding venture gains, Marc Binda explained the $15 million for Q4 reflects current market conditions and portfolio specifics, with a clearer picture for next year to be provided at Investor Day.

Anthony Paolone sought clarification on the occupancy outlook, specifically the net impact of dispositions, new lease commencements, and future expirations. He also asked about the status of projects that are expected to cease capitalizing interest.

Answer

Marc Binda, CFO & Treasurer, detailed that the year-end occupancy forecast is supported by the sale of vacant, non-stabilized assets. He confirmed a 1.7% future occupancy benefit from signed leases but noted it was too early to quantify the impact of 2026 expirations. Mr. Binda also confirmed that a previously mentioned $1.4 billion portion of the future pipeline is expected to stop capitalizing interest near year-end.

Anthony Paolone of JPMorgan Chase & Co. asked for an update on the pockets of demand mentioned in the previous quarter and inquired about the health of capital markets for the disposition program, including the composition of the buyer pool.

Answer

Executive Chairman Joel Marcus indicated that positive developments are still in progress and to 'stay tuned.' Regarding dispositions, Mr. Marcus and Executive Peter M. Moglia detailed a diverse and healthy buyer pool, including residential developers for land, owner-users, private equity, sovereign wealth funds, and industrial users. They also noted emerging opportunities for JVs within their mega campuses.

Anthony Paolone inquired about the drivers behind the strong Q1 leasing outlook and asked about the 2025 development spending plan, questioning if capital could be shifted from development to share repurchases.

Answer

Executive Joel Marcus deferred detailed leasing commentary to the Q1 call. CFO Marc Binda clarified that the bulk of development spending ($1.2B of $1.75B) is for active projects. Joel Marcus noted that while the current buyback guidance is set, it could be updated in the future.

Anthony Paolone asked about the expected yield on cost for KOP 2 at current rental rates, whether the $1.025 billion cost is fully loaded for tenant improvements and leasing commissions, and if the total project cost is likely to increase.

Answer

Angela Aman (CEO) stated that with only 10% of KOP 2 leased, it's premature to discuss total project economics or yield on cost. She confirmed that supplemental numbers reflect original capital expectations, with updates to follow as more leasing occurs. She reiterated that it's too early to determine if the total project cost will increase, promising further updates in coming quarters.

Anthony Paolone asked for clarification on the lease economics at Kilroy Oyster Point Phase Two (KOP2), specifically the yield on cost at current rental rates and whether the $1.025 billion project cost is fully loaded for tenant improvements, leasing commissions, and pre-builts. He also followed up on whether higher capital costs and in-line rents would likely lead to an increase in the total project cost.

Answer

CEO Angela Aman stated that with only 10% of the project leased, it is premature to discuss the total economics of KOP2. She confirmed that the numbers in the supplemental reflect original capital expectations and updates will be provided as more leases are signed. Regarding the potential increase in total project cost, Angela Aman reiterated that it is still too early to tell and that the company will continue to evaluate and provide updates in coming quarters.

Anthony Paolone of JPMorgan Chase & Co. questioned the rationale for retaining multifamily towers while considering residential conversions for other land parcels. He also asked about the credit strength behind the Cruise lease following news of layoffs.

Answer

Executive Angela Aman explained that the existing multifamily assets are highly integrated with adjacent office and retail properties, making them difficult to sell on a standalone basis. Regarding the lease, Executive Jeffrey Kuehling confirmed that Kilroy holds a full credit guarantee from General Motors (GM) for the entire Cruise lease, mitigating payment concerns.

Anthony Paolone questioned the path for portfolio occupancy over the next few years, given the volume of short-term leases and a spike in 2026 expirations. He also asked if the elongated leasing process at KOP 2 was due to competition and if there was a risk of needing higher concessions.

Answer

CEO Angela Aman acknowledged that 2026 is a larger expiration year but stated that the team is already in discussions on over half of that space. EVP, Chief Leasing Officer Rob Paratte added that tenants are looking further out now. Regarding KOP 2, Angela Aman attributed the elongated process to tenants finalizing their own business plans rather than market competition, expressing confidence that momentum is building as the project nears delivery and shows its quality.

Anthony Paolone asked for clarification on whether Piedmont's projected earnings growth for next year is purely organic or includes potential debt refinancing benefits. He also inquired about the specific gating factors and processes involved in refinancing the 9.25% bonds and the characteristics of typical acquisition opportunities Piedmont is currently evaluating.

Answer

Brent Smith, CEO, clarified that the projected mid-single-digit FFO growth for 2026 and 2027 is purely organic, assuming no acquisitions, dispositions, or refinancings, with any debt refinancing benefits representing additional upside. Sherry Rexroad, Chief Financial Officer, explained that refinancing options for the 9.25% bonds include market purchases, tenders, or make-whole provisions, with processes and market timing being key variables. Brent Smith detailed two acquisition buckets: opportunistic (20%+ IRRs, lower initial yield, higher vacancy, significant capital needs, potentially with partners) and value-add (mid-teens IRRs, on-balance sheet, similar to existing successful repositioning projects, starting with GAAP yields in the 8.5%-10% range and 70% leased).

Anthony Paolone asked for clarification on the conviction level for 2026 earnings growth, specifically whether it's driven by organic leasing or potential debt refinancing. He also inquired about the gating factors for refinancing the 9.25% bonds and the typical profile of potential acquisitions Piedmont is currently evaluating.

Answer

CEO Brent Smith clarified that the mid-single-digit FFO growth projection for 2026 is based solely on organic leasing within a static portfolio, excluding acquisitions, dispositions, or refinancings. CFO Sherry Rexroad explained that debt refinancing, particularly the 9.25% bonds, could provide significant upside (estimated $21 million interest savings or $0.17 FFO per share) and that the gating factors are related to market processes (tender, make-whole, open market purchases) rather than fundamental issues. Brent Smith described two acquisition buckets: opportunistic (20%+ IRRs, lower yield, higher vacancy, requiring partners) and value-add (mid-teens IRRs, 8.5-10% GAAP yields, 70% leased, on-balance sheet, similar to successful Atlanta projects).

Anthony Paolone inquired about the current leasing pipeline, including tenant size and industry mix, and asked about Piedmont's strategic approach to balancing acquisitions and dispositions in the current market.

Answer

COO George Wells detailed the leasing pipeline, noting 2.6 million square feet in proposals, with strong activity from the insurance, legal, accounting, and technology sectors. President and CEO Brent Smith explained the disposition strategy, which involves selling smaller, non-core assets to fund accretive growth opportunities. He noted that potential acquisitions would likely be opportunistic, low-basis assets pursued through joint ventures, targeting 20-plus percent IRRs, thereby creating a future acquisition pipeline for the balance sheet.

Anthony Paolone asked for details on the 3 million square foot leasing pipeline, including its market concentration and tenant types. He also inquired about any significant known tenant move-outs for 2025 and the recovery outlook for the Washington D.C. and Northern Virginia portfolio.

Answer

George Wells, Chief Operating Officer, detailed that the pipeline is concentrated in Minneapolis, Dallas, Atlanta, and Boston, with 70% being new activity from sectors like finance, healthcare, and insurance. President and CEO Brent Smith confirmed a known 112,000 sq. ft. move-out in Dallas for Q1 2025 but noted limited other large expirations and a strong revenue backlog. Smith added that while Northern Virginia shows good activity, the D.C. submarket remains challenged due to the federal government's slow return to office.

Anthony Paolone inquired about potential pull-forward of Q4 activity into Q3, the timing of more challenging year-over-year growth comparisons across business lines, and the company's M&A pipeline and its influence on share repurchase decisions.

Answer

CFO Emma Giamartino stated no significant pull-forward occurred, but noted tougher Q4 comps, particularly in leasing and project management, with sales growth expected to decelerate from high Q3 levels. She reiterated capital allocation priorities, emphasizing M&A and co-investment, with share repurchases for remaining free cash flow, and confirmed the company's belief that its share price is undervalued.

Anthony Paolone asked about potential pull-forward of Q4 2025 activity into Q3 2025 and the timing of more challenging year-over-year comparisons across CBRE's business lines, particularly given the high growth rates. He also inquired about the M&A pipeline and its impact on share repurchase activity in the quarter.

Answer

CFO Emma Giamartino stated that no significant activity was pulled forward, but tough Q4 comps are expected in advisory (leasing, sales) and project management. Regarding capital allocation, Ms. Giamartino reiterated that M&A and co-investment remain priorities, followed by share repurchases, noting the company's belief that its shares are undervalued and patience in finding the right M&A targets.

Anthony Paolone of JPMorgan Chase & Co. inquired about the moderation in U.S. office leasing growth compared to prior quarters and asked for more context on the potential synergies within the Building Operations and Experience (BOE) segment.

Answer

Robert Sulentic, President, CEO, and Chairman, explained that while office leasing comps are getting tougher, momentum remains strong and is broadening geographically. He noted that CBRE is not yet ready to quantify synergies in the BOE segment but is actively working to integrate functions like engineering and procurement across its management portfolio.

Anthony Paolone asked for details on how the business pipeline has changed recently due to tariff uncertainty and inquired about the long-term growth drivers for the combined Project Management business.

Answer

CEO Robert Sulentic clarified that business conditions went from "really good to not as good," not a severe downturn. He noted that while capital raising and some corporate projects have slowed, office leasing remains robust due to scarcity. For Project Management, he emphasized that growth is driven by the synergistic capabilities of the combined CBRE and Turner & Townsend entity, which allows them to capture larger, more complex projects they previously could not, providing a growth trajectory beyond general market conditions.

Anthony Paolone asked about CBRE's guidance for a 'muted' capital markets recovery, questioning if recent rate volatility has caused a pause, and inquired about the drivers of SOP growth in the Advisory segment.

Answer

CFO Emma Giamartino explained that CBRE views leasing and capital markets activity in combination and noted that while they are cautious on interest rates, U.S. sales activity grew 20% in the first six weeks of 2025. She stated that for the Advisory segment, growth will come from low double-digit revenue increases coupled with margin expansion.

In a follow-up, Anthony Paolone asked where CBRE sees its largest revenue opportunity within the rapidly growing data center ecosystem.

Answer

Chair and CEO Bob Sulentic detailed a multi-faceted exposure to data centers, including land development via Trammell Crow, project management of over 110 hyperscale centers via Turner & Townsend, facilities management for 700-800 data centers, small project work via the Direct Line acquisition, and a dedicated data center sales team. He indicated that the company is actively strategizing on how to further leverage these capabilities.

Anthony Paolone inquired about the sustainability of strong office leasing growth from its record Q3 level and asked for an update on cost-saving initiatives and the potential for further margin expansion into next year.

Answer

Chair and CEO Bob Sulentic expressed confidence in sustained office leasing strength, attributing it to broad-based demand that will extend beyond prime space as occupiers seek to create better workplace experiences. CFO Emma Giamartino confirmed that cost actions taken in Q2 and Q3 have not yet shown their full run-rate impact, and investors should expect continued margin benefits in GWS through Q4 and a steady improvement into next year.

Anthony Paolone questioned the sustainability of the positive cap rate spread between acquisitions and dispositions and sought more detail on the Q2 acquisitions, which featured high cap rates and rent escalators.

Answer

CEO Steve Preston stated he expects a 50-75 basis point positive spread to continue. He attributed the attractive acquisition yields to sourcing deals from motivated, non-institutional sellers in a fragmented market. CFO Pierre Revolt clarified that the higher NOI in the NAV calculation includes other income streams not captured in base rent.

Anthony Paolone from JPMorgan asked for a bridge of the reported $62 million annual base rent to account for non-paying properties, questioned the steady-state net NOI growth considering rent bumps versus bad debt, and inquired about the company's 'Plan B' if the cost of capital remains high for the next 12-18 months.

Answer

Randall Starr, Co-CEO & CFO, clarified that the $62 million ABR is a net number and that another 2%+ should be deducted to account for the 7 properties, with ABR expected to increase as they are backfilled. He noted a historical bad debt recovery rate of 75-100%. Regarding 'Plan B,' Starr stated that if the stock price remains depressed after several quarters of executing their current strategy of prudent operations and asset recycling, the company would have to begin considering M&A and other strategic options.

On behalf of Anthony Paolone, an analyst asked about FrontView's willingness to increase leverage for acquisitions given its current cost of equity. A second question concerned the reasons for the higher-than-expected G&A guidance for 2025.

Answer

Executive Timothy Dieffenbacher stated that while the current cost of equity is not ideal, the company has sufficient liquidity to fund its 2025 plan while staying near its 6x net debt-to-EBITDA target. He affirmed they can adjust acquisition pacing if needed. Regarding G&A, he clarified the increase is not from new executive hires but reflects a holistic view of the full costs of operating as a public company.

Anthony Paolone asked for clarification on the tenant watch list, inquiring if the properties were confirmed returns. He also asked about other monitored tenants or categories and sought more detail on the acquisition pipeline's property types, tenants, and rent escalations.

Answer

Co-CEO and Co-President Stephen Preston confirmed the noted tenants are on the watch list with an expectation of return, adding that On The Border and pharmacies are also being monitored. Co-CEO and Co-President Randy Starr specified the new pipeline contains zero pharmacy or fast-casual tenants and is diversified across medical, dental, and automotive sectors with 11 new tenants. Starr also noted that 99% of pipeline properties have rent bumps averaging about 1.7% annually.

Anthony Paolone of JPMorgan Chase & Co. inquired about the UK single-family rental (SFR) market, including its maturity, strategy, and returns. He also asked about the potential expansion of the debt platform beyond residential development and sought clarification on the magnitude of planned non-core asset sales for the remainder of the year.

Answer

Mike Pegler, President of Europe, described the UK SFR market as being in its "early days" and primarily a build-to-rent strategy focused on acquiring discounted lots from house builders, targeting mid-teens asset-level returns. Matt Windisch, President, stated that while the debt platform's primary focus will remain on residential construction lending, they see opportunities to expand into bridge lending and other property types over time. William J. McMorrow, Chairman & CEO, confirmed they are on track to meet or exceed their $400 million asset sale goal for the year, having already generated $275 million in cash proceeds.

Anthony Paolone inquired about KW's confidence in achieving its 20-25% annual fee growth target, the impact of rising competition on partner capital costs, and where stock buybacks rank in priority given the expected increase in cash from dispositions.

Answer

President Matt Windisch clarified the 20-25% growth target applies to fee revenue, not fee-bearing capital, and expressed confidence based on the current pipeline. He acknowledged that competition has compressed lending spreads but stated KW remains competitive through strong relationships. CEO William J. McMorrow emphasized that the primary focus for cash is reducing unsecured debt, specifically the 2025 bond. Both executives suggested that if the stock remains undervalued after deleveraging, buybacks would be reconsidered, highlighting the significant gap between public and private market valuations for their assets.

Anthony Paolone asked for clarification on the $400 million in 2025 disposition proceeds, the competitive landscape for the debt platform, the importance of adding longer-duration equity capital, and details on an Irish debt refinancing.

Answer

CEO William J. McMorrow confirmed the $400 million disposition target and discussed the significant institutional capital partnerships being cultivated for future equity deployment. President Matthew Windisch elaborated that proceeds will be used to pay down unsecured debt and fund co-investments, noting the construction lending space remains compelling. He also detailed the Irish refinancing, with the new rate in the mid-4s replacing a sub-3% rate.

Anthony Paolone inquired about the drivers for the projected 2025 fee revenue, specifically the required origination volume. He also sought details on the new UK single-family rental platform, including expected cash yields, operational strategy, and the economics of the partnership with CPPIB.

Answer

President Matthew Windisch explained that deploying the existing $6 billion in committed but not-yet-fee-bearing capital is sufficient to hit fee revenue targets at the current pace. President of Europe Michael Pegler detailed the UK SFR strategy, noting the CPPIB partnership aims to deploy over $1 billion, targeting initial cash yields of high-5s to 6%. He added that operations will leverage internal expertise while outsourcing property management.

Anthony Paolone of JPMorgan Chase & Co. questioned the full-year occupancy guidance, noting that first-half results were at the low end of the range, and asked about the expected yield on cost for the updated 10900 Wilshire conversion project.

Answer

VP of IR Stuart McElhinney confirmed the company remains comfortable with its full-year average occupancy guidance. CEO Jordan Kaplan addressed the project yield, stating that despite the revised budget, they still expect the yield on cost for the 10900 Wilshire conversion to be 'right around' the 10% they initially targeted.

Anthony Paolone asked for the specific lease rate at Studio Plaza and inquired about the timing of refinancing 2026 debt maturities, questioning if their impact was included in current guidance.

Answer

Stuart McElhinney declined to provide a lease rate for an individual asset but confirmed that leasing at Studio Plaza contributed to new leasing outside the in-service portfolio. President and CEO Jordan Kaplan confirmed they are actively working on the 2026 debt, which informed his interest rate forecast. However, Stuart McElhinney clarified that the impact of these future refinancings is not included in the 2025 guidance.

Anthony Paolone of JPMorgan Chase & Co. asked about the company's plans for its 2026 debt maturities, totaling around $1.3 billion, and whether any refinancing activity was included in guidance. He also asked if the 10900 Wilshire acquisition should be seen as a one-off or if the deal pipeline is building more broadly.

Answer

President and CEO Jordan Kaplan confirmed they are 'very focused' on addressing the 2026 maturities now, but prospective deals are not included in guidance until they are completed. CIO Kevin Crummy added that while larger single-tenant buildings have traded, the 10900 Wilshire deal was a 'perfect fit' for their multi-tenant platform, and he is optimistic more such opportunities will arise.

Anthony Paolone inquired about the strategic review process, asking for context on market liquidity and bidder interest at different deal sizes and asset qualities. He also asked for an estimate of the total transaction costs, including advisory fees and transfer taxes.

Answer

CEO Paul T. McDermott explained that the board conducted a thorough evaluation with advisors, contacting over 80 potential counterparties. He noted the process did not yield a viable entity-level offer that was more attractive than the current plan of a portfolio sale and liquidation. Both he and CFO Steven Freishtat stated that more detailed information on the process and transaction costs would be provided in the upcoming proxy statement.

Anthony Paolone inquired about the potential impact of the new administration on the Washington D.C. market, asking for historical context on how similar government changes have affected leasing and rents. He also asked for an update on current market capitalization rates for Elme's asset types.

Answer

CEO Paul T. McDermott explained that unlike during past events like sequestration, the D.C. economy is now driven more by the technology sector than the federal government, which has not been a primary growth engine for a decade. Executive A. Grant Montgomery added that direct exposure to non-DoD federal jobs is low at 6.2%. Paul McDermott also provided a detailed breakdown of current market cap rates, stating they are seeing 4.5%-5% for core deals, 4.75%-5.25% for core-plus, and 5%-5.5%+ for value-add assets, noting strong liquidity in the debt markets.

Speaking on behalf of Anthony Paolone, an analyst asked about the slower-than-anticipated improvement in bad debt in Atlanta, the expected tailwind from this into 2025, and whether low occupancy in the region was driven more by evictions or supply pressures. A follow-up question concerned the use of concessions in the Atlanta portfolio.

Answer

COO Tiffany Butcher explained that while Washington D.C.'s bad debt is normalizing below 1%, Atlanta's was higher due to eviction delays. She noted a recent acceleration in eviction processing and a drop in new delinquencies in October, which should create a tailwind for 2025. She confirmed Atlanta's low occupancy is a combination of both supply pressures and the timing of evictions. Regarding concessions, she stated they are used on 58% of new leases in Atlanta, averaging about 12 days, while the D.C. market remains largely non-concessionary.

Anthony Paolone asked for an update on the letters of intent (LOI) pipeline, referencing the $386 million figure from the prior quarter, and inquired about the duration and purpose of the new leasehold loans.

Answer

Chief Investment Officer Tim Doherty confirmed the LOI pipeline has grown significantly since the last quarter, reaching its highest level since 2022, and is heavily weighted towards multifamily. CEO Jay Sugarman described the leasehold loan program as a test to accelerate closings, with loans intended as short-term (under three years) transitional capital, not a permanent business line.

Anthony Paolone inquired about the specifics of affordable housing ground lease transactions, asking how the value proposition and deal structure might differ for a sponsor compared to conventional assets. He also requested guidance for 2025 overhead expenses on both a gross and net basis.

Answer

Chief Investment Officer Timothy Doherty stated that the fundamental value proposition of providing low-cost capital is the same, but for affordable housing, it serves as a crucial 'gap filler' that is cheaper than alternatives and helps developers secure bond allocations. Chief Financial Officer Brett Asnas projected net G&A for 2025 to be in the low $40 million range, noting the year-over-year decrease in the management fee paid to Star Holdings would be a key factor.

Anthony Paolone requested more details on the leasehold loan fund, asking for a broader picture of the financing package offered to sponsors, including total leverage and loan duration. He also asked for guidance on the forward run rate for the unconsolidated equity and earnings line.

Answer

Chief Investment Officer Timothy Doherty explained the leasehold loan was a market-driven construction loan with a '3 plus 1 plus 1' structure, providing financing up to roughly 75% of the total capital stack. Chairman and CEO Jay Sugarman added it's a useful tool for speed, but they typically work with many third-party lenders. Chief Financial Officer Brett Asnas stated that the Q3 figure for unconsolidated equity earnings, excluding one-time provisions, is an appropriate run rate going forward.

Anthony Paolone from J.P. Morgan asked for more context on leasing trends across property types, particularly industrial, and for an update on the profitability of the Services business following recent strategic shifts.

Answer

CEO Michelle MacKay detailed that industrial leasing continues to outperform expectations, driven by solid demand, higher transaction values from lease rollovers, and a flight to quality. CFO Neil Johnston added that Services profitability is a key focus, with margin expansion expected from operating leverage and ongoing efficiency investments.

Anthony Paolone of JPMorgan Chase & Co. asked about the potential impact of a recession on the office leasing business and requested more detail on the company's recent talent recruitment and retention efforts.

Answer

CEO Michelle MacKay stated that office leasing demand remains strong with occupiers signing longer-term leases, and while models account for potential softening, no significant downturn is expected. She also highlighted the company's aggressive and consistent talent acquisition strategy, noting the recent hiring of numerous capital markets and leasing teams.

Anthony Paolone inquired about the specifics of the mid-single-digit Leasing growth outlook, seeking details by property type and geography, and asked how new investments and recruiting efforts create margin headwinds.

Answer

CEO Michelle MacKay detailed the leasing environment, noting that office net absorption is improving and sublease space has peaked, while industrial leasing is normalizing but remains healthy. She highlighted Brooklyn, Tampa, and Nashville as standout markets. On margin headwinds, MacKay clarified that the pressure comes not just from recruiting but from broader investments in organic growth, market share capture, and infrastructure improvements across the platform.

Anthony Paolone asked for an update on the Q3 margin impact from compensation expenses and the outlook for Q4, and also inquired about the normalization of Leasing growth after a strong quarter.

Answer

CFO Neil Johnston stated the Q3 compensation headwind was $20 million, at the low end of guidance, and projected a smaller $5-10 million impact for Q4. On Leasing, Johnston noted the quarter's strength was aided by some large deals and that while performance is strong, quarterly lumpiness is expected, advising a focus on the longer-term trend.

Anthony Paolone inquired about the underwriting details for The Link acquisition in Dallas, including its cash yield, growth prospects, and replacement cost, and also asked about the broader attractiveness of the current acquisition deal flow.

Answer

President and CEO Colin Connolly explained that The Link acquisition was compelling due to its below-market rents, strong rent roll, minimal CapEx needs, and its accretive, leverage-neutral nature. EVP and Chief Investment Officer Kennedy Hicks added that the firm is actively evaluating more opportunities and anticipates increased deal flow as capital markets continue to open up.

Anthony Paolone requested an update on leasing traffic for the spaces being vacated by OneTrust and Bank of America, and also asked about the estimated FFO impact from the Neuhoff asset in 2025 as it moves toward stabilization.

Answer

President and CEO Michael Connolly reported encouraging leasing activity on the modern OneTrust space and noted that redevelopment plans for the Fifth Third Center (BofA space) are underway to generate buzz. CFO Gregg Adzema explained that Neuhoff will be a headwind to 2025 earnings because interest capitalization is ceasing on various components before the asset is fully stabilized and generating income.

Anthony Paolone of JPMorgan Chase & Co. inquired about the potential for near-term build-to-suit projects or land development and asked for an outlook on the mark-to-market for leases expiring in 2025.

Answer

President and CEO Michael Connolly acknowledged that discussions around build-to-suits are increasing but noted that cost challenges make them less immediate than acquisitions. He believes development is not far off, especially in prime submarkets. Regarding 2025 lease renewals, Connolly expressed confidence in continuing the trend of positive rent roll-ups, highlighting the company's 42 consecutive quarters of growth, but did not provide a specific forecast.

Anthony Paolone of J.P. Morgan asked about the strong volume of dispositions at low cap rates, inquiring about the potential for more such sales and any common characteristics of the assets being sold.

Answer

CEO Dallas Tanner explained the strategy involves identifying assets, often in California, where the retail value to an end-user is high, resulting in a low cap rate for INVH as a seller. This capital is then recycled from low-cap-rate sales (high 3s/low 4s) into acquisitions of new properties at approximately 6% cap rates. This strategy allows INVH to de-risk the portfolio by selling older homes and reinvesting in new ones.

Anthony Paolone of JPMorgan Chase & Co. asked about the strong pace of dispositions at low cap rates, inquiring about the potential for future sales and any common characteristics of the assets being sold.

Answer

CEO Dallas Tanner explained that the disposition strategy targets assets, often in California, where the retail value for an end-user is high, resulting in a low cap rate for Invitation Homes as a seller. This capital is then recycled into acquisitions of new homes at attractive yields, such as selling in the high-3% to mid-4% cap rate range and buying around a 6% cap rate. He noted they feel good about their guidance and view this as a key part of their capital recycling and risk management strategy.

Anthony Paolone of JPMorgan Chase & Co. questioned the opportunity set for debt investments versus property acquisitions and asked for an explanation of the seemingly high transaction costs in a relatively quiet quarter.

Answer

CEO Edward Pitoniak acknowledged that in the current market, there generally appear to be more credit opportunities than real estate transactions, and VICI is focused on the cadence of capital deployment and return. EVP & CFO David Kieske explained that the transaction costs were related to writing off pursuit costs from prior quarters for opportunities that did not reach completion.

Anthony Paolone from JPMorgan Chase & Co. questioned how the investment pipeline has been affected by macro volatility and asked for the amount of committed capital that is not yet included in the 2025 guidance.

Answer

CEO Edward Pitoniak explained that market volatility has 'somewhat diminished animal spirits' for M&A, a key driver for VICI's capital deployment. President and COO John W. Payne noted that approximately $130 million of committed capital is included in the current guidance, while acknowledging that 'a lot' more in committed capital is not yet reflected due to uncertain draw schedules.

Anthony Paolone inquired about the 2024 deal flow for property acquisitions compared to prior years and asked for current cash yield estimates on Las Vegas Strip versus regional gaming assets.

Answer

CEO Ed Pitoniak explained that 2024 lacked a plentiful flow of compelling real estate acquisition opportunities, leading VICI to focus on development funding. President & COO John Payne added that the deal funnel is currently wider and busier than ever, spanning both gaming and experiential sectors. Regarding yields, Pitoniak noted a lack of recent trades on the Strip makes pricing uncertain, while Payne commented that strong operator performance in Las Vegas makes sales unlikely at this time.

Anthony Paolone of JPMorgan Chase & Co. asked about the composition of VICI's investment pipeline, questioning the balance between reinvestments in existing properties versus new acquisitions. He also inquired about the impact of recent interest rate volatility on the willingness of counterparties to transact and on asset pricing.

Answer

President and COO John W. Payne explained that VICI's growth strategy rests on three pillars: new real estate acquisitions, Partner Property Growth Funds, and VICI Experiential Credit Solutions, with no single pillar being prioritized over the others. CEO Edward Pitoniak added that the significant market volatility has led to a level of "indecision and inaction" on both sides of the transaction table, affecting deal flow as parties struggle to determine fair market pricing.

Anthony Paolone from JPMorgan Chase & Co. asked for a definition of 'larger deals' in dollar terms, the competitive landscape for these transactions, the potential for action on the company's in-the-money convertible preferreds, the cap rate spread between large and small deals, and the strategy for the breakeven Kartrite Hotel.

Answer

CEO Greg Silvers and CIO Greg Zimmerman defined 'larger deals' as those over $100 million and noted that while some deals previously went to competitors, these opportunities are now opening up for EPR. CFO Mark Peterson stated no action is expected on the non-callable preferreds. Management also indicated a 25-50 basis point higher cap rate on larger deals. Regarding Kartrite, Greg Silvers acknowledged struggles with high operating costs and said they continue to work on improving its performance.

Anthony Paolone asked for details on the new golf investment, including yields and deal structure, and also inquired about the buyers for recent dispositions and the status of upcoming mortgage receivable maturities.

Answer

CEO Gregory Silvers highlighted the scarcity in the golf market and the reliable income from the private club investment. EVP & CIO Gregory Zimmerman added that deal structures will be flexible and that the operator is a growing partner. Regarding dispositions, Silvers noted a robust bidding process with a private fund specializing in education acquiring the assets. EVP & CFO Mark Peterson clarified that of two maturing mortgages, one is expected to be repaid and is in guidance, while the other will likely be extended.

Anthony Paolone questioned what investment yield spread is necessary for EPR to deploy capital beyond its guidance and asked about the long-term strategy for the sizable Kartrite operating property.

Answer

CEO Gregory Silvers noted that deal flow is consistent but the company remains disciplined. CFO Mark Peterson specified that with a cost of capital in the low 8s, EPR would need a 100-150 basis point spread to deploy incremental capital, which they have not yet reached. Regarding Kartrite, Silvers explained that while they would like to exit the operating component eventually, its performance must improve first, and he reminded that the asset's primary purpose was to activate the adjacent gaming ground lease, which is performing well on a combined basis.

Anthony Paolone of JPMorgan Chase & Co. asked for clarity on the run-rate for net other income and JV FFO going into 2025, and questioned if any tenants were on a watch list due to rising cost pressures.

Answer

CFO Mark Peterson stated that the removal of the St. Pete properties will have a modest impact on JV FFO and that the EBITDA from those assets will be removed from future results. CEO Gregory Silvers responded that no specific tenants are causing concern, noting that overall portfolio coverage remains strong and the company's watch list is smaller than it has been in years.

Anthony Paolone of JPMorgan Chase & Co. questioned if the quarter's high concentration of acquisitions in the auto services sector was an intentional strategic focus or simply a result of deal flow. He also sought clarification on the math behind how a 25 basis point change in acquisition yields would impact deal volume.

Answer

William Lenehan, President, CEO & Director, stated the auto service concentration was precisely where the deal flow happened to be. He elaborated that FCPT prioritizes consistent quality and accretive pricing, and will only increase volume when its cost of capital is favorable, rather than compromising on asset quality for higher yields.

Anthony Paolone of JPMorgan Chase & Co. questioned if the quarter's high concentration of auto service acquisitions was an intentional strategy or simply a result of deal flow. He also sought clarification on the investment spread math and whether a higher cap rate would significantly open up deal volume.

Answer

President, CEO & Director William Lenehan confirmed the auto service concentration was a function of where deal flow happened to be. He clarified that FCPT's investment volume is governed by finding deals that are accretive at its current cost of capital, emphasizing a consistent focus on quality and price rather than chasing higher yields by acquiring lower-quality assets.

Anthony Paolone of JPMorgan Chase & Co. asked for color on the difference in risk and quality between FCPT's high-6% cap rate deals and peers' deals in the mid-7% range. He also inquired if the current pipeline includes any larger portfolio transactions.

Answer

CEO William Lenehan explained that deals with higher cap rates, such as 7.5% and above, typically involve 'measurably more risk,' such as being in undesirable subsectors (e.g., pharmacy), having poor credit, or high rents. He contrasted FCPT's transparent approach with peers' 'barbell strategies.' Regarding the pipeline, Lenehan confirmed it's a mix of individual and larger deals, but noted that larger transactions do not necessarily come with portfolio discounts and can often face more competition.

Anthony Paolone asked about underlying performance trends across the portfolio's various sectors and inquired about the company's timeline for a potential public bond issuance.

Answer

CEO William Lenehan stated that portfolio performance is consistent across sectors, with casual dining brands growing and other sectors remaining defensive. He noted that becoming a public bond issuer is a key focus for 2025, explaining that while public bonds currently offer more attractive pricing, the company has a 'buffet of options' including private notes and term loans.

Anthony Paolone of JPMorgan Chase & Co. asked about the drivers for FCPT's renewed acquisition activity, the composition of the current pipeline, and broader trends regarding growth and credit risk in the restaurant sector.

Answer

CEO William Lenehan explained that the increased acquisition pace is driven by both a more favorable cost of capital and greater market liquidity. He characterized the pipeline as a typical mix of individual properties and small portfolios. Lenehan also noted that FCPT's strategy of focusing on large, creditworthy public companies with strong unit economics, like Chili's and Darden, has proven successful, as these brands provide value to consumers and have performed well.

Anthony Paolone inquired about the drivers behind the low cap rate on a recent property sale, the potential scale and market dynamics of future dispositions, and the current leasing traffic for LXP's large vacant industrial boxes.

Answer

Chairman and CEO Wilson Eglin explained the low 4.3% cap rate was achieved by selling directly to a user-buyer. He also noted LXP may test the market with approximately $100 million in further dispositions. EVP James Dudley added that leasing activity has picked up significantly in Indianapolis, while Central Florida is slower but showing renewed interest.

Anthony Paolone asked about potential known move-outs and headwinds from lease expirations in 2026 and 2027, the current state of rents and yields for the three large vacant boxes, and any further disposition plans for the remainder of the year.

Answer

Executive Vice President James Dudley stated it's too early to identify specific 2026-2027 move-outs but noted that any space returned has strong mark-to-market potential. On the big boxes, he observed that while face rents are stable, concessions like free rent and tenant improvement allowances have increased. CIO Brendan Mullinix confirmed the stabilized yield guidance of around 6% remains unchanged. Chairman and CEO T. Wilson Eglin added that disposition activity is paused due to market uncertainty around tariff policy, and the company currently prefers holding cash.

Anthony Paolone of JPMorgan Chase & Co. questioned whether current build-to-suit opportunities were tied to the Golden Dome or Space Command initiatives and asked if 2026 was shaping up to be a stronger year for development. He also asked about the cause for a data center shell project delay.

Answer

President & CEO Stephen Budorick clarified that current build-to-suit talks are incremental to any potential Golden Dome or Space Command projects and affirmed his high expectations for 2026. He and EVP & COO Britt Snider attributed the project delay to a cumbersome county permitting process, noting a resolution was imminent.

Anthony Paolone questioned the tenant mix at Columbia Gateway between defense/IT and traditional office, and asked about the impact of macroeconomic factors on construction costs and development yields.

Answer

President and CEO Stephen E. Budorick estimated that COPT's properties in Columbia Gateway are approximately 75% leased to Defense/IT tenants. He expressed confidence in managing construction costs, citing past performance during inflationary periods and proactive measures to lock in pricing. EVP and COO Britt Snider added that the newest development project has a guaranteed maximum price contract in place.

Anthony Paolone of JPMorgan Chase & Co. inquired about the 2025 development start plans, whether the Iowa data center project would see significant spending in 2025, the potential impact of a Space Command relocation delay, and if there was any change in the disposition strategy for the regional office portfolio.

Answer

CEO Stephen E. Budorick confirmed that spending on the Iowa data center land would be minimal in 2025. He stated that a new building in Redstone Gateway is a definite start, with other build-to-suit opportunities being evaluated. EVP Anthony Mifsud clarified that a potential Space Command development is not included in 2025 capital guidance. Mr. Budorick also noted that the investment sales market is not currently conducive to selling regional office assets.

Anthony Paolone from J.P. Morgan asked for an update on progress toward a tribal gaming deal and inquired about the company's debt refinancing strategy for the next 18 months.

Answer

President & COO Brandon Moore confirmed GLPI is in 'advanced discussions' with a couple of tribes but noted any deal is contingent on a lengthy NIGC review process. Senior VP & Chief Development Officer Steven Ladany added that GLPI would not fund a transaction before final NIGC approval. On refinancing, CFO & Treasurer Desiree Burke mentioned they are actively reviewing options and have already placed $200 million in forward-starting swaps.

Anthony Paolone of JPMorgan Chase & Co. questioned if GLPI's required yield on new deals has changed recently and asked about the rationale for assuming a mid-year settlement for its forward equity sale.

Answer

SVP & Chief Development Officer Steven Ladany responded that while GLPI aims to maintain spreads as its cost of capital changes, counterparties seem more interested in transacting now due to market volatility. Regarding the equity settlement, CFO & Treasurer Desiree Burke clarified that the mid-year timing is a placeholder for modeling purposes, as the forwards expire by August.

Anthony Paolone questioned the company's dividend policy, asking about the flexibility to adjust it given the focus on balance sheet improvement, and also inquired about the liquidity and depth of the office asset sales market.

Answer

President & CEO Gerard Sweeney explained that the dividend is reviewed continuously with the board, considering factors like core portfolio performance, NOI timing from developments, and the execution of project recapitalizations. EVP & CFO Thomas Wirth added that the company has room to reduce the dividend without violating REIT requirements, with flexibility provided by tax losses from asset sales. Sweeney also noted that the office sales market is improving, with a return of significant private investors for high-quality assets, which are beginning to trade more frequently.

Anthony Paolone inquired about the composition of Brandywine's leasing pipeline, particularly in Austin, and asked for real-time anecdotes on how the macroeconomic environment is affecting tenant decision-making.

Answer

Executive Vice President Jerry Sweeney explained that the pipeline includes a mix of technology, financial services, and life science companies. He noted that while the macro environment creates uncertainty, it hasn't caused major prospects to pause, though decision-making remains protracted. Executive Vice President George Johnstone added that Brandywine's internal teams and unencumbered assets allow for quicker transaction turnarounds, and that life science decisions have seen a slightly more elongated timeline than office deals.

Anthony Paolone of JPMorgan Chase & Co. asked for the bottom-line difference between the projected negative JV FFO in 2025 and the expected FFO upon stabilization of the development pipeline. He also questioned the risk of an equity impairment given the significant accounting drag.

Answer

CFO Thomas E. Wirth explained that stabilized income from the JVs could exceed $50 million, a significant ramp-up from the current level. He noted that high-cost construction loans and preferred equity will be recapitalized as projects approach stabilization, which will improve FFO. Wirth stated that based on current projections and achievable capitalization rates, the company does not currently anticipate an equity impairment, but this is contingent on successful lease-up.

Anthony Paolone asked whether a widely rumored large tech requirement in Austin was included in the Uptown ATX pipeline and inquired about the extent of the life science lab conversion at Cira Centre, including its physical limits within the building.

Answer

Executive Jerry Sweeney confirmed they are pursuing every potential tenant in the Austin market without naming specific prospects. Executive Vice President of Operations George Johnstone detailed that the life science conversion at Cira Centre is targeted for the lower nine floors, with the ninth and eighth floors nearly complete, leaving the seventh and part of the sixth floor as potential future lab space.

Anthony Paolone of JPMorgan Chase & Co. questioned the strategy for addressing 2026 debt maturities, the balance between deleveraging and share buybacks, and the drivers behind the company's very low rent-to-income ratio.

Answer

CFO Amanda Lombard outlined a plan to address 2026 maturities using sale proceeds, revolver capacity, and asset-level refinancings for JV properties. CEO Mahbod Nia emphasized that leverage reduction is the absolute priority over share buybacks to help close the stock's discount to NAV. He attributed the low rent-to-income ratio to a high-earning resident base, viewing it as a sign of cash flow resilience rather than a license for aggressive rent hikes.

Anthony Paolone asked about the anticipated timeline for the first acquisitions under the new holding company structure and how capital will be allocated between new ventures and the traditional Howard Hughes real estate business.

Answer

Executive Chairman Bill Ackman explained that while substantive discussions have not yet occurred, the company has tested the concept with a potential counterparty and aims to announce a transaction by the fall, with a high priority on building an insurance operation. Ackman assured that the legacy Master-Planned Community (MPC) business will not be starved of capital for new investments. He noted that over time, the MPCs are expected to generate excess cash that can be repatriated to the holding company for other investments.

Anthony Paolone of JPMorgan Chase & Co. asked for a breakdown of the company's 2025 sources and uses of cash, the expected recurring spend on horizontal MPC development, and an update on the Nevada film studio legislation.

Answer

CEO David O'Reilly outlined that the projected $350 million in adjusted operating cash flow stems from MPC and operating asset earnings, which will fund existing construction, condo equity, and CapEx. He clarified that horizontal development is not a major cash drain, with new projects like Teravalis designed to be self-funding. He also confirmed his active involvement in advancing the Nevada film tax credit bill, expressing optimism about its passage.

Anthony Paolone inquired about the methodology used to calculate the $3.9 billion valuation for the Master Planned Communities (MPCs), the timeline for the Board's special committee process, and the potential for NOI upside in the Summerlin retail and Columbia office portfolios.

Answer

CEO David O'Reilly explained the MPC valuation is a discounted cash flow model based on remaining acres, price per acre, and margins, consistent with prior NAV updates. He declined to comment on the special committee process. For the operating portfolio, O'Reilly noted that Summerlin retail is undergoing a tenant upgrade cycle that may cause short-term NOI lag but drive long-term value, while the Columbia office portfolio is seeing positive leasing momentum after recent amenity investments.

Anthony Paolone of JPMorgan Chase & Co. asked about the next likely development project in the PENN District, considering apartments versus office. He also inquired about the potential impact of federal government involvement in Penn Station's planning and requested the remaining par value and yield on the Fifth Avenue JV preferred equity.

Answer

Chairman and CEO Steven Roth declined to pre-announce the development mix but confirmed a small apartment project on Eighth Avenue is in progress. Roth and an Unknown Executive welcomed federal involvement in improving the below-ground Penn Station. President and CFO Michael Franco stated the remaining retail JV preferred equity is approximately $150 million with a blended yield around 5%.

Anthony Paolone of JPMorgan Chase & Co. asked about the current all-in cost to build a new office tower and the required yield, given management's view of the Hotel Penn site's land basis as a sunk cost.

Answer

Steven Roth, Chairman and CEO, estimated that a new Class A building costs around $1,900 per square foot, excluding land. He and Michael Franco, President and CFO, calculated that achieving a 7% yield on a total cost of ~$2,500/sf would require rents in the high $100s, making new construction uneconomic and 'frozen,' which in turn supports future rent growth for existing high-quality buildings.

Anthony Paolone of JPMorgan Chase & Co. asked about the current all-in cost to build a new Class A office tower and the required yield, as well as for an update on a nonperforming B note investment made last year.

Answer

Chairman and CEO Steven Roth estimated the development cost at around $1,900 per square foot plus land, suggesting that required rents would need to be in the high $100s, making new construction largely unfeasible. He declined to provide an update on the B note investment.

Anthony Paolone of JPMorgan Chase & Co. asked about the incremental construction cost and target yield for a new development like the Hotel Penn site. He also requested an update on a nonperforming B note that Vornado had purchased.

Answer

Chairman and CEO Steven Roth estimated new construction costs at around $1,900 per square foot, excluding land, which would require rents in the high $100s to be viable, reinforcing why new supply is frozen. He stated that viewing the land cost as sunk changes the development calculation for Vornado. He declined to provide an update on the B note investment.

Anthony Paolone asked for the current all-in cost to build a new office tower and the required yield, and also requested an update on a nonperforming B-note investment Vornado made.

Answer

Chairman and CEO Steven Roth estimated that a new Class A office building costs around $1,900/sq. ft. excluding land, requiring rents in the "high 100s" to achieve a 7-8% yield, which he believes freezes new supply. He declined to provide an update on the B-note investment.

Anthony Paolone of JPMorgan Chase & Co. asked how much of the 75 basis points of guided bad debt for the year has been used and if the deal flow pipeline has changed recently.

Answer

CFO Jonathan Pong stated that while Q1 bad debt was trending lighter, the company is conservatively reiterating the full-year 75 basis point forecast. CEO Sumit Roy added that the deal pipeline hasn't changed, and the decision not to raise guidance is a matter of prudence, preferring to wait for signed contracts rather than chasing deals.

Anthony Paolone asked about Broadstone's approach to monitoring credit risk within its industrial portfolio, particularly manufacturing tenants, due to potential tariffs, and inquired about the full-year bad debt guidance.

Answer

CEO John Moragne explained that the company uses both top-down industry analysis and bottom-up tenant-specific reviews to assess tariff impacts. He noted that while some tenants face pressure, others are well-positioned. Moragne confirmed the 2025 bad debt guidance is maintained at 125 basis points, stating that despite a favorable resolution with Zips Car Wash, it is prudent to hold the guidance steady amid macroeconomic uncertainty.

Anthony Paolone asked about Broadstone's credit monitoring process for its industrial tenants, particularly manufacturing, in light of potential tariffs, and inquired about the bad debt allowance included in the 2025 guidance.

Answer

CEO John Moragne explained that the company uses both top-down industry analysis and bottom-up tenant-specific reviews to assess tariff risks, noting that many tenants have experience managing such costs. He confirmed the 2025 bad debt guidance remains at 125 basis points, stating that while the successful resolution of the Zips bankruptcy provides a cushion, maintaining the current guidance is prudent given macroeconomic uncertainty.

Anthony Paolone asked for clarification on the $400-$600 million investment guidance, questioning how much represents immediate rent-contributing assets versus capital for future build-to-suit projects. He also inquired about the credit loss assumption for 2025 compared to 2024.

Answer

CEO John Moragne explained that the investment guidance is for 'money out the door,' comprising a mix of regular-way acquisitions and build-to-suit funding. He noted that $103.5 million in regular-way deals are already under control for Q1. For build-to-suits, interest is capitalized into the asset's basis rather than paid currently by the tenant. CFO Kevin Fennell clarified that the 125 basis points of bad debt guidance for 2025 is an increase from the 75 basis points guided for 2024 (excluding a specific known event), reflecting an incremental 50 basis points.

Anthony Paolone asked for clarification on the 2025 investment guidance, questioning how much of the $400-$600 million is immediately accretive versus funding for future build-to-suit projects. He also inquired about the economics of build-to-suit funding and whether the 2025 bad debt guidance of 125 basis points represents a new baseline.

Answer

CEO John Moragne clarified that the investment guidance represents total capital deployed, including both immediately rent-paying acquisitions and funding for the build-to-suit pipeline. He confirmed that interest is capitalized during construction with no current pay from tenants. CFO Kevin Fennell added that the 125 basis points bad debt guidance for 2025 is 50 basis points higher than the 2024 baseline, reflecting specific front-loaded tenant issues.

Anthony Paolone of JPMorgan Chase & Co. asked about the expected scale of investment spending in 2025 with a focus on build-to-suits, and questioned which other portfolio assets besides healthcare could be targeted for disposition.

Answer

CEO John Moragne stated that while near-term capital deployment might seem smaller, the committed build-to-suit pipeline aligns with historical investment levels over its funding period. He clarified that future dispositions will follow a traditional asset management strategy, which includes evaluating the 5.8% office portfolio over time without a rush to sell.

Anthony Paolone inquired about the expected scale of investment spending in 2025, asking if traditional acquisitions will become a much smaller component. He also asked about the disposition strategy beyond the remaining clinical healthcare assets and if other portfolio segments are targeted for sale.

Answer

CEO John Moragne stated that while near-term capital deployment might appear smaller, the long-term view shows the build-to-suit pipeline aligns with historical investment levels, providing more certainty than the traditional market. Regarding dispositions, he explained that beyond the remaining clinical assets, the company will revert to a traditional asset management strategy, which includes patiently evaluating its office portfolio without a rush to sell.

Anthony Paolone asked for Anywhere Real Estate's perspective on the NAR's Clear Cooperation Policy, how its franchisees and brokers are approaching it, and its potential impact on investors. He also inquired about the drivers behind the slight year-over-year decline in commission rates and the extent of pressure on buy-side commissions.

Answer

CEO Ryan Schneider stated that the company strongly advocates for the broad, public distribution of listings, believing it secures the best price for sellers and is the right long-term strategy, which also aids in agent recruiting. He confirmed they are still building private listing capabilities for franchisees as a defensive measure. Regarding commissions, Schneider noted the drop was minimal (a few basis points) and occurred on both the buy and list sides, with slightly more pressure in the luxury segment. CFO Charlotte Simonelli added that the increased volume of high-priced luxury sales naturally puts some downward pressure on the overall commission rate due to mix.

Anthony Paolone asked for commentary on the current state of the housing market, Anywhere's position on the Clear Cooperation policy, and any early data on buy-side commission rates following recent industry changes.

Answer

CEO Ryan Schneider expressed strong optimism for the housing market, highlighting that October's closed volume was up 9% and open volume was up 16% year-over-year. Regarding the Clear Cooperation policy, he stated that while Anywhere would be advantaged by a repeal due to its scale, the company does not support it and prefers a "relax but not repeal" approach. On commission rates, he noted a minimal 4-5 basis point decline in the quarter, which CFO Charlotte Simonelli attributed to prior-year comps and business mix, not new industry pressures.

Anthony Paolone inquired about the current state of the private acquisition market, including IRR expectations and liquidity, and asked for the potential FFO contribution from stabilizing JV development projects once they are fully leased up.

Answer

CIO Alec Brackenridge characterized the transaction market as 'frozen' but with significant eager capital. He noted buyers are targeting around a 5% cap rate and a 7.5% IRR but are hesitant. CFO Bob Garechana explained that the JV projects will become NOI positive by year-end 2025 but may not be FFO accretive until 2026, when they are fully stabilized and can be recapitalized with more favorable debt.

Anthony Paolone asked about the new 10-year lease durations with the USPS, questioning if this would become a standard term and whether the improved leasing process is at risk from political changes.

Answer

CEO Andrew Spodek clarified that the 10-year term is not a default but a positive development resulting from successful negotiations and achieving rent escalations. He stated the goal is to utilize longer terms when mutually beneficial and expressed confidence that the leasing process is not influenced by politics or elections.

Asked for early data on buy-side commission trends, what RE/MAX is doing to help agents with new buyer agreements, and the status of franchisee credit, particularly in relation to the Motto mortgage business.

Answer

Executives stated that it's too early for firm conclusions on commissions, but initial changes are negligible. RE/MAX is heavily focused on agent education for navigating new buyer conversations. Franchisee credit on the real estate side remains strong due to experienced operators. The mortgage side (Motto) is facing more headwinds, leading to a slight decline in open offices, but franchise sales saw a strong September, indicating cautious optimism.

Anthony Paolone asked for early data on buy-side commission trends since the NAR settlement and how RE/MAX is helping agents with buyer agreements. He also questioned the status of franchisee credit and its relation to the decline in open Motto offices.

Answer

Brand Leader Amy Lessinger reported that early data shows negligible changes in buy-side commission rates and that agents are embracing the opportunity to articulate their value. CEO Erik Carlson highlighted the company's extensive training programs. CFO Karri Callahan noted continued strength in RE/MAX franchisee collections, while acknowledging the tougher mortgage environment for Motto. Brand Leader Ward Morrison added that Motto continues to support its franchisees with education and tools.