Brendan Lynch

Brendan Lynch asked about the customer concentration remaining in the Aurora Networks business and the magnitude of the E&O benefits for Ruckus, either year-over-year or quarter-over-quarter, to understand gross margin impacts given investments.

Answer

Kyle Lorentzen, EVP and CFO, stated that Aurora has high customer concentration, while Ruckus does not, with the top three customers for Vistance representing about 40-45% of the total business. He specified that the E&O benefit for Ruckus was approximately $25 million favorably impacting gross margins, with a net-net EBITDA impact of about $10 million favorable after accounting for higher incentive compensation.

Brendan Lynch asked about the remaining customer concentration within the Aurora Networks business and requested the magnitude of the E&O (Excess & Obsolete) inventory benefits for Ruckus Networks, either year-over-year or quarter-over-quarter, to understand its impact on gross and adjusted EBITDA margins.

Answer

EVP and CFO Kyle Lorentzen stated that the E&O benefit for Ruckus Networks was a $25 million favorable impact on gross margins, partially offset by higher incentive compensation, resulting in a net $10 million favorable impact to the P&L. Regarding customer concentration, Lorentzen noted that Aurora Networks has high concentration, while Ruckus does not, with Vistance Networks' top three customers collectively representing 40-45% of the overall business.

Brendan Lynch asked about the top priorities and concerns Newmark discusses with clients in industrial and retail leasing regarding the AI backdrop, specifically concerning power, robotics, flexibility, and fulfillment. He also inquired about the competitive landscape for talent and how recruiting has evolved throughout the cycle.

Answer

CEO Barry Gosin noted Newmark's robust data center business is well-versed in power, GPUs, and locational issues, advising clients on these factors, with power becoming an increasingly important feature in lease negotiations. On talent, Gosin explained that in capital markets, Newmark typically maintains one team per vertical/geography to avoid internal competition. In leasing, there's room for growth, offering opportunities for brokers from crowded platforms. Newmark aims for higher revenue per capita by providing infrastructure and data, and is not experiencing difficulties in recruiting.

Brendan Lynch asked about the impact of AI on industrial and retail leasing, specifically client priorities regarding power, robotics, and flexibility, and the current competitive landscape for talent and recruiting processes.

Answer

CEO Barry Gosin noted Newmark's robust data center business, advising clients on power, GPUs, and locational issues for 20 years, with power now being an even more critical factor. He described the talent landscape as favorable, with Newmark offering less internal competition and a supportive platform, leading to no issues in recruiting top talent.

Brendan Lynch inquired about the impact of the evolving tariff situation on Lineage's business, specifically concerning seafood, and whether the current 10-15% blanket tariff is more or less favorable than previous tariff policies.

Answer

Greg Lehmkuhl, President and CEO, noted that seafood customers are highly opportunistic, with their ordering influenced by tariffs, ocean rates, and U.S. sales prices. He mentioned the ongoing Supreme Court challenge to tariffs and the potential for lower tariffs on China and Brazil to significantly boost trade, as these countries have been major trading partners. Lehmkuhl highlighted that current import/export volumes are at historic lows, which negatively impacted Q4 and is expected to affect Q1, but normalization in this area could provide meaningful upside, especially given Lineage's strategic port market real estate.

Brendan Lynch inquired about the evolving tariff situation, its impact on Lineage's business, particularly seafood, and whether the current 10-15% blanket tariff is more favorable or detrimental compared to previous tariff policies.

Answer

Greg Lehmkuhl, President and CEO, noted that seafood customers are opportunistic, with decisions driven by tariffs and ocean rates. He highlighted potential upside if tariffs on China and Brazil are lowered, as current import/export volumes are at historic lows, negatively impacting Q4 and Q1 results.

Brendan Lynch from Barclays Capital asked about the pricing strategy in Q2, noting that the storage revenue per pallet metric recovered after apparent concessions in Q1, and questioned what had changed.

Answer

President & CEO Greg Lehmkuhl clarified that the company's pricing strategy has not changed, reiterating a stable outlook. He explained that the metric's quarter-to-quarter volatility is driven by multiple factors, including rate, volume guarantees, commodity mix, and FX. The Q2 sequential increase was partly attributed to favorable European FX and higher collections on volume guarantees during a seasonally low occupancy quarter.

Brendan Lynch inquired about the four assets being acquired from Tyson Foods, asking where they are positioned in the supply chain and what level of long-term commitment Tyson has to those specific facilities.

Answer

CEO W. Lehmkuhl stated that it is a long-term, multiyear agreement, though specific terms could not be disclosed. He characterized the acquired assets as a mix of production-adjacent and distribution facilities, with a stronger orientation towards distribution.

Brendan Lynch asked about the long-term growth outlook, noting the previous 5% organic growth target through 2027 is now lower with DISH's impact, and if the current 4.5% should be anticipated going forward. He also inquired about the extent of actual inferencing demand, specifically low latency, at CoreSite.

Answer

Steven Vondran, President and CEO, clarified that the 5% U.S. and Canada organic growth expectation (2023-2027) was set before DISH's exit and T-Mobile/UScellular actions. He reaffirmed confidence in the long-term growth algorithm: mid-single-digit organic growth in developed markets, higher in emerging markets, double-digit revenue growth in CoreSite, and expanding margins, even in a three-carrier market. For CoreSite, he confirmed an uptick in inferencing demand as a leading new use case, with more demand than current supply, and noted the entire campus is low latency, allowing for curated customer mix.

Brendan Lynch followed up on the long-term U.S. organic growth outlook, asking how the previous 5% target through 2027 is impacted by Dish's situation and if the current 4.5% projection for this year should be anticipated for the future. He also asked about the extent of actual inferencing demand, specifically low latency, at CoreSite.

Answer

Steven Vondran, President and CEO, American Tower, clarified that the original 5% U.S. organic growth expectation was set before Dish's default and T-Mobile's UScellular acquisition. He affirmed confidence in the long-term growth algorithm, including mid-single-digit organic growth in developed markets, higher growth in emerging markets, double-digit CoreSite revenue growth, and expanding margins, even in a three-carrier market. For CoreSite, he confirmed an uptick in inferencing demand, which is a leading new use case, and that the company curates its partners due to demand exceeding supply, maintaining a balance of clouds, networks, enterprises, and inferencing partners.

Brendan Lynch asked about the transition of improving street rates in 16 of 20 markets to same-store NOI, given that about half of Extra Space Storage's markets are still in negative territory, and when more markets might convert to positive NOI. He also followed up on expectations for healthcare costs in 2026, given they were a factor in Q4 2025.

Answer

CEO Joe Margolis noted that it takes time for new rates to impact the rent roll due to customer churn. CFO Jeff Norman added that property taxes were a significant headwind in 2025 for many markets with negative NOI, and this is expected to be more muted in 2026. Regarding healthcare costs, Jeff Norman stated they will remain a headwind but are partially offset by efficiencies in general payroll and staffing, keeping the total payroll line item within expectations.

Brendan Lynch asked about the timeline for improving street rates to translate into positive same-store NOI across more markets, given that about half of Extra Space Storage's markets were still negative. He also inquired about the expectation for healthcare costs in 2026, following their impact in Q4 2025.

Answer

Joe Margolis, CEO, noted that it takes time for new rates to flow into the rent roll due to a monthly customer churn of only 5-6%. Jeff Norman, CFO, added that property taxes were a significant factor in 2025 NOI for many markets and are expected to be more muted in 2026, which should positively impact NOI. Regarding healthcare costs, Jeff Norman confirmed continued pressure but stated that efficiencies in general payroll and staffing would mute the overall impact on the total payroll line item.

Brendan Lynch asked how marketing spend is being allocated between Google and new AI platforms. He also questioned if the strong spring shoulder season occupancy has implications for the fall.

Answer

CEO Joseph Margolis stated that since AI platforms have not yet been monetized, nearly all marketing spend still goes to Google. EVP & CFO Jeff Norman explained that spring occupancy was maintained by being more aggressive on new customer rates and that they will continue to evaluate the rate-versus-occupancy trade-off in the fall.

Brendan Lynch of Barclays asked for an update on the operational and customer impact from the recent fires in Los Angeles. He also questioned the strategy behind the 12.5% year-over-year decrease in marketing spend while occupancy was increasing.

Answer

CEO Joseph Margolis stated that fires do not drive demand like hurricanes do, but the state of emergency has restricted pricing, which is expected to impact portfolio revenue by about 20 basis points for the year. CFO P. Scott Stubbs explained that marketing spend is a tool to maximize revenue and that they will spend more if it drives demand, but they also expect savings from brand consolidation post-LSI merger.

Brendan Lynch asked about the drivers behind the 4.4% year-over-year reduction in vacates and inquired about the opportunity for Existing Customer Rate Increases (ECRI) in the upcoming year.

Answer

CEO Joseph Margolis attributed improved retention to customer acquisition strategies focused on attracting tenants with a higher propensity for long-term stays. Regarding ECRI, he stated the strategy remains consistent: a fair and sustainable program designed to move existing customer rates to prevailing market rates over a reasonable period.

Brendan Lynch followed up on the Capital Markets outlook, asking what factors are needed to sustain growth and return to past cycle levels, and later inquired about the evolution of the customer base and drivers for strong industrial demand, particularly for sites over 500,000 sq ft.

Answer

CEO Michelle MacKay indicated that avoiding dramatic economic events and stable 10-year yields (4%-4.5%) would sustain Capital Markets growth, expecting continued increases in asset values and transaction volume rather than a sharp peak. CFO Neil Johnston highlighted strong industrial leasing in the Americas (up 10%), driven by flight to quality, e-commerce, and last-mile delivery trends for large facilities. MacKay added that large users seek modern logistics for automation and power, supported by steady vacancy rates and reduced construction.

Brendan Lynch followed up on the comment that Capital Markets still has room to run, asking what factors are necessary to sustain this growth and return to past cycle levels, or if simply avoiding a recession is sufficient.

Answer

CEO Michelle MacKay indicated that avoiding any dramatic economic event would help maintain the current pace, noting that a 10-year Treasury yield around 4-4.5% is favorable for transactions. She expects continued growth in asset values and transaction volume over time, rather than a sharp, peak-like recovery. Regarding a follow-up on industrial demand, CFO Neil Johnston highlighted strong Americas industrial leasing (up 10%) driven by flight to quality, e-commerce, and last-mile delivery for large facilities. CEO Michelle MacKay added that large users seek modern logistics for automation and power, supported by steady vacancy rates and significantly reduced construction since 2017.

Brendan Lynch asked about the board's perspective on the dividend policy, considering deleveraging plans and other capital allocation considerations.

Answer

CEO Rob Chambers emphasized that maintaining the investment-grade rating and the dividend are 'mission-critical' for Americold. He stated that the company is focused on capital allocation and deleveraging strategies that support both these objectives while also funding a more rationalized development portfolio.

Brendan Lynch from Barclays asked about Americold's dividend policy in the context of its deleveraging plans and broader capital allocation strategy.

Answer

Rob Chambers, CEO, emphasized that maintaining the investment-grade rating and the dividend are mission-critical. He stated that capital allocation and deleveraging events are focused on achieving both objectives while also funding a more rationalized development portfolio.

Brendan Lynch from Barclays asked about the remaining obstacles preventing the investment sales industry from returning to its pre-crisis transaction pace, despite JLL's 24% growth in 2025. He also sought details on new client wins in Workplace Management, focusing on customer verticals or emerging themes.

Answer

President and CEO Christian Ulbrich indicated that while investment sales are on an upward trend, a 'hockey stick' recovery is not expected, with gradual increases anticipated through 2026, particularly as Europe recovers from very low transaction levels. Regarding Workplace Management, Ulbrich noted continued growth from high-performing companies in sectors like technology and finance, and a geographic acceleration of outsourcing in Continental Europe, the Middle East, and Asia, exemplified by a new joint venture in Saudi Arabia.

Brendan Lynch inquired about the lingering impediments to recapturing the pace of transaction volumes in investment sales, despite 24% growth in 2025. He also asked for details on new client wins in Workplace Management, specifically regarding customer verticals or themes.

Answer

Christian Ulbrich, President and CEO, anticipates a gradual, upward trend in transaction volumes, with significant recovery expected in Europe in 2026, noting global capital flows are active but sensitive to geopolitical stability. He described new Workplace Management client wins as a continuation of past trends, driven by high-performing companies in sectors like technology and finance, with accelerating outsourcing in continental Europe, the Middle East, and Asia.

Brendan Lynch asked Public Storage about the primary Key Performance Indicators (KPIs) used to measure the progress of customer experience enhancements within the PS Next platform and how external observers can track this progress. He also inquired about international growth appetite and platform comparisons.

Answer

Tom Boyle, CFO and CIO, explained that PS Next aims for customer experience, brand, and financial/organic growth performance. Key metrics include move-ins, move-outs, and tenant retention, with an overall focus on organic growth outperformance. Regarding international growth, Boyle confirmed continued appetite to explore opportunities in markets like Australia and Western Europe (via Shurgard), seeking platforms that offer access to growing storage industries, while emphasizing the U.S. remains the deepest market. He noted international platforms are generally smaller scale, lacking the data and platform advantages of larger U.S. operators.

Brendan Lynch asked about the primary Key Performance Indicators (KPIs) Public Storage uses to measure progress in customer experience enhancements under PS Next. He also inquired about the company's appetite for international growth and how international portfolios compare to U.S. platforms in terms of data analytics capabilities.

Answer

Tom Boyle, CFO and CIO, explained that PS Next focuses on customer experience, brand, and organic growth performance. KPIs include operational metrics like move-ins, move-outs, and tenant retention, with an overall focus on organic growth outperformance. Boyle confirmed continued appetite for international opportunities, evaluating markets with growing storage demand (e.g., Australia, Western Europe via Shurgard) for the right entry points to acquire platforms, while emphasizing the U.S. remains the deepest market. He noted that international platforms are generally smaller scale and lack the data and platform advantages of larger U.S. counterparts, presenting a clear opportunity for Public Storage's scale.

Brendan Lynch of Barclays Capital asked why street rates remain negative amid improving fundamentals and whether the timing of the seasonal peak shifted this year.

Answer

SVP & CFO Thomas Boyle explained that negative street rates persist because lower move-in rents have been an effective tool for attracting customers. He anticipates rates will improve over time as demand strengthens further. He also confirmed that seasonality this year is not unusual, with the occupancy peak expected in July, consistent with typical patterns.

Brendan Lynch inquired about the company's acquisition strategy, asking if they are targeting specific markets or property types, and questioned the thought process behind guiding to lower street rates while maintaining relatively stable occupancy.

Answer

Executive Joseph Russell stated that the acquisition strategy is not limited by geography or urban/suburban focus; rather, it is driven by the quality and value creation potential of individual assets. Executive H. Boyle explained that the balance between rate and occupancy is managed to maximize overall revenue. The relatively flat occupancy forecast is based on the expectation of stabilized demand, consistent with the prior year.

Brendan Lynch asked how Public Storage balances labor cost savings from its digital initiatives with the potential risks of reducing on-site staff. He also requested an update on the strongest and weakest performing markets.

Answer

CEO Joseph Russell explained they use sophisticated analytics to optimize staffing property-by-property and supplement on-site staff with a robust customer care center, ensuring service levels are maintained. Executive H. Boyle identified Seattle, DC, and San Francisco as accelerating markets, while markets like Atlanta are still normalizing. He added that even weaker markets like Orlando are showing signs of stabilization.

Brendan Lynch asked for an overview of STAG Industrial's markets, highlighting which ones are currently strong and which are lagging. He also inquired how much stronger markets deviate from the projected 0%-2% average market rent growth for 2026, and if demand is primarily driving absorption rather than aggressive rent increases.

Answer

CEO Bill Crooker identified strong demand in Midwest markets like Minneapolis, Chicago, Milwaukee, Indianapolis, Louisville, and Columbus, while noting weakness in Southeast port markets such as Jacksonville, Savannah, and Charleston. He indicated that rent growth in stronger markets is around 2-3%, but overall, it's a tight band. Crooker expects rent growth to accelerate in 2027, with larger, sophisticated tenants proactively renewing leases to get ahead of anticipated market rent increases.

Brendan Lynch asked Bill Crooker to identify STAG's particularly strong and lagging markets. He then inquired how much the stronger markets deviate from the projected 0%-2% average market rent growth for 2026.

Answer

Bill Crooker, CEO, identified strong demand in Midwest markets like Minneapolis, Chicago, Milwaukee, and recently strengthened bulk distribution markets such as Indianapolis, Louisville, and Columbus. He noted weakness in some Southeast port markets (Jacksonville, Savannah, Charleston) but strong performance in Texas (Houston, Dallas). Steve Kimball, COO, added that market rent growth in stronger markets is generally within a 'pretty tight band,' around 2-3%, as there is still some vacancy. He clarified that the demand is primarily driving absorption rather than aggressively pushing rents, with rent growth expected to accelerate into 2027. Mr. Crooker also mentioned that sophisticated tenants are seeking early renewals to get ahead of anticipated market rent growth.

Brendan Lynch asked for historical context on the 70% of 2025 leasing already being addressed, questioning if this pace is normal and if tenant engagement is happening earlier. He also followed up by asking when the company's focus shifts to 2026 expirations.

Answer

CEO William Crooker confirmed that completing 70% of the next year's leasing by this point is consistent with the pace of the last few years. He stated there hasn't been a strategic shift in the timing of tenant outreach. He also revealed that the company is always looking ahead, having already leased about 8% of its 2026 expirations opportunistically.

Brendan Lynch asked about the characteristics of assets in the acquisition pipeline and requested an update on the performance of the El Paso market and other border markets.

Answer

CEO William Crooker said the pipeline is focused on CBRE Tier 1 markets and includes a wide range of assets, from value-add to fully stabilized. He confirmed El Paso remains a strong market and also highlighted strength in Midwest markets like Detroit and Chicago, as well as Tampa and Nashville. He noted continued relative weakness in Columbus and Southern New Jersey.

Brendan Lynch followed up on the Global RIM organic constant currency storage growth of 5.2%, asking for more details on the impact of lower data management revenue and consumer storage effects, and what is factored into the 2026 expectations.

Answer

Barry Hytinen clarified that consumer business was in line with expectations. The sequential dip was due to a stronger US dollar and a particularly strong Q3 2025 data management comp. He emphasized that the traditional physical box business remains healthy, up 8% year-on-year and 1% sequentially despite FX. For 2026, mid-single-digit growth is expected, with all revenue management actions fully implemented in January and modest organic physical volume growth anticipated.

Brendan Lynch asked for clarification on the 5.2% RIM organic constant currency storage growth, specifically the impact of lower data management revenue and consumer storage, and the expectations for 2026.

Answer

Executive Vice President and CFO Barry Hytinen clarified that the consumer business performed as expected and was not a factor. He attributed sequential impacts to a stronger US dollar and lower data management revenue, noting a particularly strong Q3 2025 comp for data management. Hytinen emphasized that the traditional physical box business remains very healthy, growing 8% year-over-year and over 1% sequentially despite FX. For 2026, the company expects mid-single-digit growth for the physical business and modest growth in organic physical volume, with all revenue management actions fully implemented in January, earlier than last year.

Brendan Lynch followed up on the Treasury contract, asking what factors would lead to reaching the high-end versus the low-end of the $714 million over five years.

Answer

President and CEO Bill Meaney clarified that the revenue is primarily dependent on the volume of forms the Treasury sends for digitization, based on the agreed pricing.

Brendan Lynch followed up on the Treasury contract, asking what factors would lead to reaching the high end versus the low end of the 'up to $714 million' value over five years.

Answer

President and CEO Bill Meaney clarified that the contract value is volume-dependent, based on agreed pricing and the specific forms and volume the Treasury sends. He noted positive feedback from the customer regarding the team's capabilities.

Brendan Lynch of Barclays requested clarification on the Department of Treasury contract, including its revenue recognition timeline and the status of the re-bidding process for a larger engagement.

Answer

President & CEO William Meaney confirmed they are executing on the initial contract, with most revenue always slated for 2026 due to seasonality. He also noted they have bid on a subsequent, larger contract. EVP & CFO Barry Hytinen specified that revenue was minimal in Q2 ($1M) and is expected to be under $5M in Q3, consistent with the ramp-up plan.

Brendan Lynch asked about the Asset Life Cycle Management (ALM) business, specifically questioning what triggered the significant volume increase in the quarter and if downstream pricing was a factor.

Answer

CFO Barry Hytinen clarified that the strong ALM volume growth was driven by consistent business wins over the past year, not by pricing, which he noted was flat to slightly down. He explained that new enterprise accounts create a continuous 'flow-oriented' business, and the company has also won more share within its data center decommissioning accounts.

Brendan Lynch followed up on the 'DeepSeek' topic, asking about the potential impact on the ALM business if the U.S. were to implement tighter restrictions on exporting IT hardware to China.

Answer

William Meaney, President and CEO, clarified that most ALM hardware resold to China is several generations old and not currently subject to export restrictions. He highlighted the company's ongoing diversification strategy to reduce reliance on China, which includes focusing more on hard drive resales and reintroducing components directly into OEM supply chains.

Brendan Lynch requested more details on the Wisetek and APCD acquisitions, including their geography, product offerings, and customer focus, and also asked about the company's appetite for larger ALM deals.

Answer

CEO William Meaney explained that Wisetek expands their footprint in Europe and North America, adding a new hyperscale customer, while APCD enhances capabilities in Australia. CFO Barry Hytinen added the deals represent about $75-80 million in run-rate revenue. He noted that the ALM market is highly fragmented, making large acquisitions unlikely, and emphasized the company's strong organic growth.

Brendan Lynch followed up on the Riot Games renewal, asking if there are other unique renewal considerations or fixed-rate options that might impact leasing spreads in 2026. He also inquired about the leasing pipeline, seeking its square footage and historic conversion rate.

Answer

Angela Aman, CEO, stated that while spreads depend on the mix of leases, she doesn't have specific unique considerations to point out for 2026, feeling good about near-term pipeline spreads. She noted that Kilroy typically doesn't provide aggregate square footage for the pipeline due to varying stages of deals, but expressed confidence in the near-term pipeline's ability to meet or exceed occupancy guidance.

Brendan Lynch followed up on the Riot Games renewal, asking if any other unique renewal considerations or fixed-rate options are expected to impact releasing spreads in 2026. He also requested the square footage of the 65% year-over-year increase in the leasing pipeline and the historic conversion rate of that pipeline.

Answer

CEO Angela Aman stated that while spreads depend on the mix of leases in any given quarter, the near-term pipeline looks good, and no specific unique considerations are expected to materially impact 2026 spreads beyond typical variations. She noted that Kilroy does not typically disclose aggregate pipeline square footage or historic conversion rates due to the varying stages of deals within the pipeline.

Brendan Lynch asked for clarification on the 2025 FFO guidance, which calls for a 1% year-over-year contraction despite a 1.4% year-to-date same property NOI growth, and what considerations should be kept in mind for the fourth quarter. He also inquired about leasing progress at the Indeed Tower in Austin and an update on the ground floor space.

Answer

EVP, CFO and Treasurer Jeffrey Kuehling explained that the 1% FFO contraction guidance is largely due to a difficult comparison in Q4 from the previous year, which included $6.7 million in restoration fee income. EVP, Chief Leasing Officer Rob Paratte highlighted a significant accomplishment in Austin with the leasing of the historic POST building at Indeed Tower to a nationally recognized food and beverage operator, which will enhance foot traffic and amenities. He also noted continued strong activity for spec suites and two remaining floors at Indeed Tower.

Brendan Lynch inquired about the guidance for a 1% year-over-year contraction in same property NOI despite 1.4% year-to-date growth, and specific considerations for the fourth quarter. He also asked for an update on Austin's Indeed Tower, particularly the ground floor space.

Answer

Jeffrey Kuehling (EVP, CFO and Treasurer) attributed the NOI contraction to a difficult Q4 comparison from the previous year, which included $6.7 million of restoration fee income. Rob Paratte (EVP, Chief Leasing Officer) highlighted the successful leasing of the historic POST building at Indeed Tower to a nationally recognized food and beverage operator, which will serve as a significant amenity for the building and the Austin CBD. He noted continued strong activity for spec suites and two remaining floors for larger tenants.

Brendan Lynch from Barclays asked about the demand pipeline at KOP2 beyond the 100,000 square feet in negotiation and whether other prospects have advanced to the design and planning phase.

Answer

CEO Angela Aman confirmed a growing pipeline of prospects at KOP2, spanning life science, healthcare, and tech. She affirmed that Kilroy is working with several other tenants on space planning, with prospects at every stage from initial tours to lease drafting, and expressed confidence in signing at least 100,000 sq. ft. in H2 2025.

Brendan Lynch asked about the entitlement risk associated with the Santa Fe Summit land sale and questioned the potential for developing the remainder of the site into office space.

Answer

EVP and CIO Eliott Trencher stated that the sold portion has a residential as-of-right use, minimizing entitlement risk. He clarified that the rest of the site is not slated for office development and is being evaluated for sale, as residential is considered its higher and better use. CEO Angela Aman added that while Kilroy is keen to grow in San Diego, this particular site is not suitable for its core strategy.

Brendan Lynch of Barclays asked if Kilroy is observing a trend of life science companies seeking more traditional office space, and whether the supply in South San Francisco is primarily lab space. He also inquired about the company's recently announced investment in Fifth Wall.

Answer

Executive A. Paratte clarified that KOP is a purpose-built life science project, typically seeing a 60/40 lab-to-office split, and can accommodate various tenant needs. Executive Eliott Trencher described the Fifth Wall investment as a modest but strategic partnership with a proptech leader, aimed at integrating technology to drive operational efficiencies and cost savings, aligning with Kilroy's history of innovation.

Brendan Lynch asked if the disposition of Harborview Plaza in Tampa was asset-specific or indicative of a broader view on the Tampa market. He also inquired about the number of other assets in the portfolio with similar characteristics (older vintage, lower occupancy, high CapEx needs) that Cousins Properties might consider recycling. Additionally, he requested an update on the Proscenium repositioning project and the demand for space within that asset.

Answer

Kennedy Hicks, Executive Vice President and Chief Investment Officer, confirmed that the Harborview disposition was asset-specific, and Cousins Properties remains encouraged by the Tampa market. She stated that assets with similar characteristics represent a very small percentage of the portfolio, likely sub-10%. Regarding Proscenium, Kennedy Hicks reported that the repositioning is two-thirds complete, and leasing activity is starting to pick up, with good discussions underway with several prospects.

Brendan Lynch asked whether the disposition of Harborview Plaza in Tampa was an asset-specific decision or indicative of a broader view on the Tampa market. He also inquired about the number of other assets in Cousins Properties' portfolio that share similar characteristics (older vintage, lower occupancy, high redevelopment needs) and could be candidates for recycling. Additionally, Lynch requested an update on the Proscenium repositioning project, including progress and demand for the space.

Answer

Kennedy Hicks, EVP and Chief Investment Officer, clarified that the Harborview disposition was asset-specific, and Cousins Properties remains positive on the Tampa market. She stated that assets with similar characteristics represent a very small percentage of the portfolio, likely sub-10%. Regarding Proscenium, Kennedy Hicks reported that the repositioning is two-thirds complete, and leasing activity is beginning to pick up, with positive discussions underway and encouraging responses to the renovation work.

Brendan Lynch asked where mezzanine financing fits into Cousins Properties' capital allocation priorities, especially with the recent increase in acquisition activity.

Answer

President and CEO Colin Connolly clarified that mezzanine financing is not a core business but is viewed as a creative, entrepreneurial tool to source potential long-term equity investment opportunities. He stated it would remain a non-material part of the balance sheet, likely under $100 million, to avoid creating future earnings volatility if the loans are repaid.

Brendan Lynch asked for a high-level update on where Cousins stands in its multi-year process of redeveloping assets and improving the overall quality of its portfolio.

Answer

President and CEO Colin Connolly estimated that the company is about 75% of the way through its planned redevelopment and repositioning work. He explained that this initiative was intentionally accelerated during the pandemic to minimize tenant disruption. He emphasized that the vast majority of the portfolio is now in excellent condition and its overall quality has never been higher.

Brendan Lynch asked about the market availability of more A+ assets similar to Sail Tower and Vantage South End, and whether Cousins would consider expanding into new geographic markets.

Answer

President and CEO Michael Connolly responded that while few such assets are officially on the market, the investment team is actively working to source off-market opportunities. He reiterated that the company's strategic focus remains on the Sun Belt and growing its presence in existing markets like Dallas, Nashville, and Tampa, rather than entering new ones, as they do not feel opportunity-constrained.

Brendan Lynch of Barclays asked if other tech tenants might scale back their space, inquired about extension options on the Saint Ann Court loan, and questioned the drivers behind the change in same-property NOI.

Answer

EVP of Operations Richard Hickson stated that no other significant tech tenant scale-backs are anticipated. President and CEO Michael Connolly confirmed the Saint Ann Court loan has extension options tied to certain thresholds but could not elaborate. CFO Gregg Adzema clarified that property tax true-ups were by far the largest factor impacting the quarterly same-property NOI figures.

Brendan Lynch inquired about the availability of 'stranded power' in First Industrial Realty Trust's buildings and the potential to reposition it or generate rental revenue for edge data centers. He also asked about the dynamics driving low concessions on renewals versus more aggressive concessions on new leasing, and how this trend compares to the past.

Answer

Peter Schultz, Executive Vice President, clarified that there isn't a significant amount of 'stranded power,' as companies value flexibility for operational increases or technology adoption. He noted that power companies in some jurisdictions might reclaim unused power due to grid constraints. Jojo Yap, Chief Investment Officer, explained that low renewal concessions are driven by tenant investment and moving costs, which deter relocation, leading to historically high renewal rates (65%-75%). He added that renewals are occurring earlier now due to tenants seeking a longer-term view and certainty.

Brendan Lynch asked about opportunities to monetize or reposition 'stranded power' in buildings for uses like edge data centers. He also sought commentary on the dynamic of low concessions for renewals versus more aggressive concessions for new leasing, and what factors are driving this trend.

Answer

Peter Schultz (EVP) stated there isn't a lot of 'stranded power' as companies want flexibility, and in some jurisdictions, power companies may claw back unused power due to grid constraints. Jojo Yap (CIO) explained that tenant investment and moving costs deter relocation, leading to high renewal rates (historically 65%-75%), and tenants are renewing earlier now due to a longer view and a desire to commit earlier amidst potential uncertainty.

Brendan Lynch of Barclays PLC asked about the implied drag on same-store NOI in the second-half guidance. He also inquired about the rationale for granting fixed-rate renewal options and whether more should be expected in the near future.

Answer

EVP and CIO Christopher Schneider attributed the lower same-store NOI growth in the second half to lower average occupancy, a smaller contribution from cash rental rate increases, and assumed free rent concessions. President and CEO Peter Baccile and EVP Peter Schultz clarified that fixed-rate renewals are very rare and the one discussed was negotiated in 2017 for a large, high-credit tenant, and is not reflective of the current market.

Brendan Lynch from Barclays asked about the implied drag on same-store NOI in the second-half guidance and the rationale behind granting fixed-rate renewal options to tenants.

Answer

EVP Christopher Schneider attributed the second-half same-store NOI drag to lower average occupancy, smaller rent-rate contributions, and higher assumed rent concessions. Regarding fixed-rate renewals, CEO Peter Baccile, EVP Peter Schultz, and CIO Johannson Yap emphasized they are done very rarely, noting the example cited was from 2017 for a large, high-credit tenant and is not reflective of current strategy.

Brendan Lynch of Barclays asked about Amazon's reported $15 billion expansion plan and if First Industrial is seeing any changes in their RFP process or a shift to more in-house capacity. He also inquired if the company has a minimum market share target for its operating markets.

Answer

CEO Peter Baccile commented that Amazon's plan is focused on building out its same-day delivery capabilities. EVP Peter Schultz added that Amazon is currently very active in several markets with leasing needs. Regarding market share, CEO Peter Baccile stated they do not have a minimum allocation target, but instead focus on markets with the highest potential for rent growth and value accretion, like South Florida, while ensuring they have critical mass and full organizational capabilities.

Brendan Lynch from Barclays asked about Amazon's expansion plans and whether the company targets a minimum percentage of rent in its key markets to achieve scale.

Answer

CEO Peter Baccile noted Amazon's investment is focused on same-day delivery, and EVP Peter Schultz confirmed Amazon is very active in several markets. Regarding market concentration, Mr. Baccile explained the company does not have a minimum allocation target, instead focusing on markets with the highest rent growth potential, like South Florida, while ensuring full operational capabilities in its 15 target markets.

Brendan Lynch of Barclays asked about the market pricing assumptions embedded in the company's guidance and about demand levels from different tenant types, particularly 3PLs.

Answer

President and CEO Peter Baccile explained their guidance is built from a 'ground-up' lease-by-lease analysis rather than top-down economic inputs. Executive Vice President Peter Schultz described tenant demand as broad-based, with 3PLs remaining active. He reiterated that activity is generally stronger in the small and midsize ranges across the country.

Brendan Lynch followed up on California's AB 98 legislation, asking if the bill is considered finalized or if there is gray area for future adjustments. He also asked if First Industrial rushed to submit entitlement requests before the deadline.

Answer

Chief Investment Officer Jojo Yap acknowledged that the bill could benefit from more clarification but has enough detail to assess impacts. CEO Peter Baccile added that since municipalities oppose the state law, it will likely be litigated, suggesting future changes are possible. Jojo Yap confirmed the company did not submit any last-minute entitlement requests, as all their relevant sites were already well into or had completed the process.

Brendan Lynch asked about the factors influencing EastGroup's decision to toggle between debt and equity issuance for capital allocation, particularly for scaling the development pipeline and potential acquisitions.

Answer

EVP and CFO Staci Tyler explained that EastGroup continuously monitors debt and equity markets to maintain flexibility. While 2026 guidance assumes $300 million in debt issuance, the company has significant balance sheet capacity (low 3x debt to EBITDA, over $650 million available on credit facility) to fund additional opportunities, with decisions based on market conditions and accretive investments.

Brendan Lynch asked CFO Staci Tyler about the factors that would influence EastGroup's decision to toggle between debt and equity issuance for capital allocation, especially when considering scaling the development pipeline or pursuing additional acquisitions.

Answer

CFO Staci Tyler explained that while 2026 guidance assumes $300 million in debt issuance, EastGroup continuously monitors debt and equity markets to maintain flexibility and a balanced approach. She highlighted the company's strong balance sheet, with a debt to EBITDA ratio of 3x at year-end and over $650 million in available credit facility capacity, providing ample dry powder for accretive growth opportunities without capital constraints.

Brendan Lynch asked if EastGroup Properties' historical focus on stabilized acquisitions to limit lease-up risk would change, given the current reduction in its development pipeline, potentially leading to more acquisitions of vacant properties.

Answer

Marshall Loeb, CEO, explained that EastGroup Properties aims to own well-located shallow bay buildings near consumers, with the risk-reward shifting at different points in the cycle. He noted that recent acquisitions have been strategic, in strong submarkets, immediately accretive, and typically yield 6% or more. Loeb indicated that in a flatter market, acquisitions are more attractive. He also observed an increase in inbound calls from local developers seeking equity partners, suggesting a lack of capital for development, which could lead EastGroup to become a more active developer when the market heats up, leveraging its strong balance sheet and patient approach.

Brendan Lynch noted EastGroup's historical focus on stabilized acquisitions to limit lease-up risk. He asked if the recent reduction in the development pipeline changes the company's perspective on acquiring vacant properties going forward.

Answer

CEO Marshall Loeb stated that the company aims to own well-located shallow bay buildings, and the risk-reward shifts with market cycles. He observed that cap rates have been sticky, and recent acquisitions have been strategic, in strong submarkets, and immediately accretive, typically yielding 6% or more. Loeb mentioned an increase in inbound calls from local developers seeking equity partners, indicating a lack of capital for new development starts. He emphasized being nimble to adjust strategy, preferring to be patient and slightly late rather than too early in development.

Brendan Lynch of Barclays Capital requested an update on the tenant watch list and the company's performance relative to its bad debt assumptions.

Answer

President and CEO Marshall Loeb reported that tenant health remains good, with the watch list stable quarter-over-quarter. Bad debt was 30 basis points in Q2, and the company is maintaining its full-year guidance of 35-45 basis points. He noted that California-based tenants account for about half of the bad debt, and a high concentration of the Q2 total came from just five tenants.

Brendan Lynch from Barclays Capital requested an update on the company's tenant watch list and how bad debt is tracking against full-year assumptions.

Answer

EVP & CFO Brent Wood reported that the tenant watch list has remained steady quarter-over-quarter, with about 30 of over 1,500 tenants on the list. Bad debt in Q2 was 30 basis points of revenue. The company is maintaining its full-year guidance for uncollectible rents at 35 to 45 basis points. He noted that California-based tenants continue to represent about half of the bad debt, with the issue contained to a small number of tenants.

Brendan Lynch asked about the correlation between tenants serving similar end markets and how they might perform collectively in a recessionary environment.

Answer

Executive Marshall Loeb acknowledged that a broad consumer-led recession is their primary risk. However, he highlighted the portfolio's defensive positioning, including its focus on high-growth markets, secular e-commerce trends, and the push for last-mile delivery. With high occupancy and minimal lease expirations remaining in the year, he believes the company is well-insulated, though a significant consumer downturn would inevitably affect their tenant base.

Brendan Lynch inquired about the potential to convert some of the company's land bank into data center assets, asking which markets might be suitable and what considerations are being weighed.

Answer

President and CEO Marshall Loeb confirmed they are exploring opportunities to sell land for data center use in markets like Dallas, Austin, and Phoenix to maximize value. However, he was clear that EastGroup would stick to its core industrial business and would not take on the operational or development risk of building a data center itself, preferring to 'flip the land' if an attractive opportunity arises.

Brendan Lynch inquired about the size and revenue split of CoCounsel products between legal and tax segments, and the adoption progress and expected uplift from Westlaw Advantage.

Answer

CEO Steve Hasker stated that specific dollar ACV numbers for CoCounsel are not provided due to early stages, but expressed encouragement regarding its reception in both legal and tax/audit sectors. CFO Mike Eastwood noted that Westlaw Advantage's adoption trajectory is pacing higher than prior Westlaw releases, and highlighted GenAI offerings like CoCounsel Legal, CoCounsel for Tax and Audit, Ready to Advise, and Ready to Review as key drivers for confidence in 2026 revenue guidance.

Brendan Lynch asked for insights into the size and split of CoCounsel revenue between legal and tax, and the adoption progress and expected uplift from Westlaw Advantage.

Answer

CEO Steve Hasker stated that specific ACV numbers for CoCounsel are not provided due to its early stage, but expressed strong encouragement regarding its reception in both legal and tax/audit. CFO Mike Eastwood noted that Westlaw Advantage's adoption trajectory is higher than previous Westlaw releases and is a key driver for confidence in 2026 revenue guidance. He also clarified the impact of one-time GenAI content licensing revenue on Reuters' comparisons.

Brendan Lynch asked for a longer-term organic growth outlook beyond 2026, referencing a previous 4%-5% growth guide through 2027, and commentary on how software upgrades might affect the industry by potentially reducing the need for new leasing for spectrum deployment.

Answer

Sunit Patel, CFO, stated that Crown Castle does not provide outlook beyond the current year but expressed confidence in the long-term outlook due to mobile data demand, client spectrum purchases, and future spectrum availability. Chris Hillabrant, President and CEO, explained that while software upgrades can enable rapid spectrum rollout in some cases (e.g., AT&T's 3.45 GHz), other spectrum bands (e.g., 600 MHz) typically require new radios and antennas, necessitating new deployments.

Brendan Lynch from Barclays asked for a longer-term organic growth outlook beyond 2026, noting that the previous guidance of 4%-5% through 2027 might not be achievable post-DISH. He also inquired about the potential impact of software upgrades on the industry, specifically if they could act as a headwind to new leasing by allowing carriers to deploy more spectrum without new physical infrastructure.

Answer

Sunit Patel, CFO, stated that Crown Castle typically does not provide outlook beyond the current year but expressed confidence in the long-term outlook due to mobile data demand growth, MNO spectrum acquisitions, and future spectrum availability. Chris Hillabrant, President and CEO, addressed software upgrades, explaining that while some spectrum (like AT&T's 3.45 GHz) can be deployed via software on existing radios, other spectrum (like 600 MHz) typically requires new radios and antennas due to physics, meaning software upgrades are not a universal solution and new deployments will still be necessary. Sunit Patel added that there are limits to data rates and power with software upgrades, necessitating physical replacements over time.

Brendan Lynch of Barclays inquired about the methodology for allocating costs to discontinued operations and asked for details on the significant increase in maintenance CapEx expected in the second half of the year.

Answer

Interim President and CEO Daniel Schlanger explained that cost allocations to discontinued operations are largely complete and any future changes will be minor, not part of a systematic quarterly shift. Both he and CFO Sunit Patel attributed the back-half ramp in maintenance CapEx to normal timing and seasonality of spending rather than a specific new project.

Brendan Lynch asked about the potential consequences of a regulatory hiccup in a few states on the asset sale. He also inquired about the portion of growth stemming from MLAs versus new demand and how increased carrier spending would be treated under those MLAs.

Answer

Interim CEO Daniel Schlanger stated that the company does not expect any regulatory hiccups but that the deal would likely still close even if a minor one occurred. He noted that about 90% of 2025 growth is already contracted. He explained that whether incremental carrier activity falls within or outside an MLA depends on the specific structure of each agreement, but the company believes there is upside potential beyond what is currently contracted.

Brendan Lynch inquired about the timing of the $3 billion share repurchase program, the rationale for buybacks over a special dividend, and sought clarification on Sprint churn beyond 2025.

Answer

CEO Steven Moskowitz outlined capital priorities, with buybacks following CapEx and debt reduction. CFO Dan Schlanger added that the repurchase is planned for post-closing and offers opportunistic flexibility. Steven Moskowitz clarified that the long-term 1-2% churn forecast includes approximately $20 million annually (40-50 bps) of lingering Sprint churn from 2026 onward.

Brendan Lynch asked for clarification on the expected reversal from pre-qual to hard inquiries due to trigger legislation, and whether the low single-digit decline refers to originations or hard inquiries. He also inquired about the biggest incremental opportunity for the Twin Indicator across Equifax's product lines.

Answer

John Gamble, Chief Financial Officer, clarified that the low single-digit decline refers to inquiries, excluding Equifax's share gains and the impact of trigger legislation. He explained that trigger legislation, effective in March, might lead some lenders to purchase hard pulls earlier in the marketing cycle instead of soft pulls, as hard pulls cannot be shared. Mark Begor, Chief Executive Officer, identified mortgage as the largest incremental opportunity for Twin Indicator due to its size and the critical use of income/employment data. Offering Twin Indicator free with the credit file differentiates Equifax, driving credit file share in pre-qual applications by providing early visibility into employment and income. Auto and card also present significant opportunities.

Brendan Lynch asked for clarification on mortgage market trends, specifically the expected reversal from pre-qual to hard pulls due to trigger legislation, and whether originations or inquiries are projected to be down. He also asked about the biggest incremental opportunity for the Twin Indicator across Equifax's product lines.

Answer

CFO John Gamble clarified that the 'down low single digits' refers to inquiries, noting that trigger legislation might lead some customers to purchase hard pulls earlier, potentially reducing soft pull usage. CEO Mark Begor identified mortgage as the largest incremental opportunity for Twin Indicator due to its size and the critical role of income/employment data, driving share gains for Equifax's credit file. Auto and card also present significant opportunities with strong adoption.

Brendan Lynch asked about the factors that could lead to a return to pre-COVID tight spreads in the credit markets, distinguishing between macro-related and office sentiment-related drivers, and sought the company's view on the trajectory and timeline for spread tightening. He also inquired about the trends in concessions, noting an uptick in TI packages and free rent in the second half of the year despite strong demand, and asked for expectations on these packages going forward.

Answer

Harrison Sitomer, Chief Investment Officer, indicated that the return to pre-COVID spreads is more macro and relative yield focused, expecting continued tightening over the next 6-12 months driven by new entrants. Marc Holliday, Chairman and CEO, SL Green Realty Corp, stated that concessions have been stable, with free rent expected to decrease slightly and TI to be the last to change, noting the Q4 uptick reflected larger new deals.

Brendan Lynch inquired about the trends in concessions, noting that TI packages and free rent ticked up in the second half of the year despite strong demand, and asked how the company expects these packages to evolve going forward.

Answer

Marc Holliday, Chairman and CEO, SL Green Realty Corp, stated that concessions have been very stable, with opportunities to tighten them in instances of landlord leverage, particularly for renewals and small-to-medium-sized tenants. He expects free rent to start coming down, with TI being the last to change, though improvements are seen for small-to-mid-size and retail transactions. He added that the uptick in the particular quarter was a reflection of the complexion of deals, with larger new transactions naturally carrying bigger TI packages.

Brendan Lynch asked about the recent 5% stake sale in One Vanderbilt to MORI, specifically if MORI had an option to purchase it, what drove the transaction, why the valuation remained the same as late 2024, and if SL Green intends to maintain its current 55% stake.

Answer

Matt DiLiberto, CFO, clarified that MORI did not have an option; the deal was made in January and closed last quarter, as SL Green had always intended to sell an additional 5% stake. He confirmed that the current 55% stake represents the final piece of dispositions for SL Green's One Vanderbilt interest.

Brendan Lynch of Barclays Capital inquired about trends in special servicing designations and whether more distress is expected. He also asked if SLG has identified additional office-to-residential conversion opportunities within its own portfolio.

Answer

CIO Harrison Sitomer confirmed that special servicing assignments have grown consistently to $17 billion and are expected to increase further, generating more fee income. Chairman & CEO Marc Holliday stated that since SLG's portfolio is highly leased, it contains few attractive conversion candidates; future conversion activity will focus on new pipeline assets, not their existing buildings.

Brendan Lynch asked how announcements from Fortune 500 companies shrinking headcount might impact BXP's portfolio, considering both potential needs for less space and increased return-to-office mandates for retained employees.

Answer

Douglas Linde, President, acknowledged that job losses are not positive but stated BXP is not seeing weakness in leasing activity from clients, who are generally growing. He noted that layoffs often involve specific business units or non-premier workplace jobs, and BXP's leasing is tied to earnings growth, projected to be higher in 2026. Rodney Diehl, Company Representative, added that demand in Reston Town Center is driven by corporate growth and talent location, not return-to-office mandates.

Brendan Lynch asked how announcements of Fortune 500 companies shrinking headcount might impact BXP's portfolio, considering both potential space reduction and increased return-to-office mandates.

Answer

President Douglas Linde acknowledged that job losses are not positive but stated that BXP is not experiencing weakness in leasing activity, with clients generally growing rather than shrinking. He suggested that layoffs often affect specific business units or non-premier workplace jobs. He also noted that leasing activity historically correlates with earnings growth, which is projected to be higher for 2026.

Brendan Lynch of Barclays Capital asked about the trend of clients initiating early renewal discussions for leases expiring in 2028-2031, questioning how common this is compared to past cycles.

Answer

Douglas Linde, President & Director, explained that while it's common for large tenants to look 2-3 years ahead, the current early discussions are an indication of market tightness. In a supply-constrained environment like Midtown Manhattan, tenants are acting sooner to secure their footprints in an improving market.

Brendan Lynch from Barclays followed up on comments about redeveloping assets, asking for a timeline on when redevelopment plans might be finalized and when construction could begin.

Answer

President Douglas Linde described it as a fluid and time-consuming process dependent on entitlements and user demand. He used a potential office-to-multifamily rezoning as an example of the complexities involved. He stated it was unlikely any of these major redevelopments would begin in 2025, with 2026 or 2027 being more realistic start dates.

Brendan Lynch asked for color on BXP's playbook for its growing residential development and acquisition pipeline.

Answer

Chairman & CEO Owen Thomas explained the residential strategy differs from office; BXP will act as a developer, often with significant third-party capital partners, to generate fees, minority interest profits, and carried interest, rather than pursuing long-term holds. President Douglas Linde added that the company is actively re-evaluating its entire land bank for highest and best use, including residential, townhomes, and other uses to create value.

Brendan Lynch (Barclays) asked for details on Prologis' five-plus gigawatts of power access, specifically inquiring about its geographic and asset-level fragmentation and the locations of the largest power blocks.

Answer

CEO Dan Letter explained that Prologis' power bank is widely distributed across Tier 1 and Tier 2 markets in both the U.S. and Europe. He listed key U.S. Tier 1 markets including Northern Virginia, Silicon Valley, and Chicago, and European markets such as Amsterdam, London, and Paris, along with various Tier 2 locations, indicating a very dispersed opportunity set.

Brendan Lynch asked for details on the 5+ GW of power access for Data Centers, specifically its geographic dispersion, fragmentation across assets, and the locations of the largest power blocks.

Answer

CEO Dan Letter explained that the land and power bank is distributed across Tier 1 and Tier 2 markets in the U.S. (e.g., Northern Virginia, Silicon Valley, Chicago, Dallas) and Europe (e.g., Amsterdam, London, Paris, Frankfurt, Dublin), as well as other Tier 2 cities like Austin, Las Vegas, and Milan, indicating a very dispersed range of opportunities.

Brendan Lynch asked about the biggest changes in leasing across Prologis's customer segments (basic daily needs, cyclical demand, structural trends like e-commerce) and which buckets currently show more or less strength.

Answer

Managing Director Chris Caton identified e-commerce as a strong area, accounting for nearly 20% of new leasing, a global and infill phenomenon. Stable growth businesses (food and beverage, medical) are also strong, investing in supply chains for service and cost management. He noted softness in cyclical spending categories like auto and housing-related (e.g., furniture) due to high interest rates.

Brendan Lynch of Barclays asked for an update on regional occupancy expectations for the second half, noting that Asia's occupancy was up while other regions were down in Q2.

Answer

CEO Hamid Moghadam stated that Asia is past its bottom and improving, though numbers can be volatile. He feels better about the China market, but noted its impact on overall numbers is small due to Prologis's ownership share. CFO Tim Arndt added that the small size of the Asia portfolio can lead to more volatile occupancy figures, and the recent increase was due to success in leasing up chunks of the portfolio.

Brendan Lynch highlighted the strong 6.2% cash same-store NOI growth in Q1, which outpaced the annual guidance of 4.5%, and asked about the expected cadence for the rest of the year.

Answer

Timothy Arndt, CFO, attributed the strong quarter to factors like free rent timing but cautioned that the metric can be volatile. He stated that future performance will be heavily influenced by year-over-year occupancy changes, which are expected to decline. Hamid Moghadam, CEO, added that the primary driver is the existing mark-to-market on leases, not new market rent growth.

Brendan Lynch of Barclays asked about discussions with tenants regarding tariffs and whether they are accelerating inventory pull-ins to the U.S.

Answer

CEO Hamid Moghadam responded that some customers, particularly those affected by de minimis rules, have pulled trade into the U.S. in anticipation of policy changes. However, he characterized this as a short-term shift of volumes by a quarter or two that will not affect the long-term fundamentals, which he expects to take over starting in the second quarter.

Brendan Lynch asked how to reconcile the current outlook of flat rent growth and higher vacancy with the forecasts from the December Investor Day, and what this implies for the company's core FFO compound annual growth rate over the next three years.

Answer

Timothy Arndt, CFO, advised setting aside the Investor Day forecast due to significant market changes. He emphasized that the portfolio's substantial 34% lease mark-to-market will alone sustain strong mid-single-digit same-store growth for many years. He added that long-term growth will be further supplemented by capital deployment and expansion in higher-use businesses like data centers and energy.

Brendan Lynch asked about Vornado's involvement with government agencies regarding the delayed Penn Access project (bringing Metro North into Penn) and the prospects of getting the project timeline back on track for completion prior to the current 2030 target.

Answer

Barry Langer, EVP and Head of Development, Vornado Realty Trust, confirmed Vornado's intimate involvement with the MTA. He stated that the MTA plans to begin Metro North service using existing tracks in 2027, with the delay primarily affecting the construction of new stations and tracks, not the initial service commencement.

Brendan Lynch from Barclays asked for an update on leasing progress at 555 California Street in San Francisco and inquired if tenant demand has shifted from long-term planning to more immediate needs.

Answer

EVP of Office Leasing Glen Weiss reported that the San Francisco market is markedly improved, comparing it to New York 18 months ago, with strong tour volume at 555 California. He confirmed a shift towards urgency, citing the recent Verizon headquarters deal as a prime example of a tenant acting quickly to secure space, which he described as a feature of a 'landlord's market.'

Brendan Lynch of Barclays inquired about renewal discussions for the significant lease expirations at the 555 California Street property in San Francisco.

Answer

Glen Weiss, EVP of Office Leasing, expressed strong optimism for 555 California, calling it the best building in the city. He noted that Vornado has already leased nearly 700,000 sq. ft. since 2021 to address upcoming expirations. While some of the tenants with 2025 expirations may not stay, he feels great about the building's market-leading rents and five-star tenant roster.

Brendan Lynch of Barclays asked for details on renewal discussions for the significant 2025 lease expirations at 555 California Street in San Francisco and whether the large Q3 expiration was a single tenant.

Answer

Executive Glen Weiss expressed strong optimism for 555 California, calling it the best building in the city and highlighting nearly 700,000 square feet of leasing success since 2021. He confirmed that the 2025 expirations involve multiple tenants throughout the year, not one single large tenant.

Brendan Lynch of Barclays inquired about upcoming lease expirations at the 555 California Street property in San Francisco, asking for details on renewal discussions and the general outlook for that asset.

Answer

Executive Glen Weiss expressed a very bullish outlook on 555 California, calling it the best building in the city. He noted that Vornado has already leased nearly 700,000 square feet since 2021 to address upcoming rolls and is actively working on the 2025 and 2026 expirations. He affirmed that rents achieved are market-leading and the tenant roster remains five-star.

Brendan Lynch inquired about the significant upcoming lease expirations at 555 California Street in San Francisco and asked for an update on renewal discussions and the general outlook for that market.

Answer

Executive Vice President Glen Weiss expressed strong optimism for 555 California, calling it the best building in the city. He noted that despite upcoming expirations in 2025 and 2026, Vornado has already leased nearly 700,000 sq. ft. since 2021 and continues to achieve market-leading rents, maintaining a five-star tenant roster. He feels "great about 555" and its position in the market.

Brendan Lynch of Barclays inquired about the impact of engaging an expanded group of brokers, specifically Cushman & Wakefield, on leasing activity and the pipeline for the PENN District.

Answer

Chairman and CEO Steven Roth responded that bringing on Cushman & Wakefield at the beginning of the year was a 'very good add' to the team. He noted that the partnership has strengthened Vornado's outreach both across the country and within New York City, and the company has been very pleased with their additive performance.

Brendan Lynch of Barclays asked about the impact of engaging an expanded brokerage group on leasing demand and the pipeline for the PENN District.

Answer

Steven Roth, Chairman & CEO, stated that bringing on Cushman & Wakefield at the beginning of the year was a 'very good add' to the team. He noted that the partnership has significantly strengthened Vornado's leasing outreach across the country and within New York City, contributing positively to performance.

Brendan Lynch (Barclays) asked whether carriers would be able to deploy spectrum from the SEC's potential auction of 180 MHz in the 3.9-4.2 GHz band via software upgrade, or if it would necessitate incremental physical deployments.

Answer

Brendan Cavanagh, President and CEO of SBA, stated that carriers would likely not be able to deploy the 3.9-4.2 GHz spectrum via software upgrade. He believes it would require incremental deployments, probably massive MIMO, and new antennas and radios, viewing it as an adjacent upper C-band spectrum.

Brendan Lynch from Barclays inquired about the current impact of AI applications as a growth driver and asked for details on the Canadian asset sale, including the rationale for the exit and its implications for other smaller markets.

Answer

President and CEO Brendan Cavanagh described the AI comments as thematic, based on customer conversations and engineering reviews, noting it's a strong future driver. Regarding Canada, he explained that despite having good assets, SBA struggled to achieve meaningful scale due to market structure. The sale was a strategic financial decision to realize a high valuation, and he noted that portfolio reviews are ongoing for all markets, with a preference to scale up where possible but an openness to exit if not.

Brendan Lynch inquired about the potential for future spectrum auctions and whether SBA plans to exit additional international markets following the sale of its Colombia portfolio.

Answer

President and CEO Brendan Cavanagh expressed support for more spectrum auctions but noted that any deployment is still years away, so current customer conversations focus on optimizing existing spectrum. Regarding the portfolio, he clarified that exiting markets is not the company's intention. The preference is to find ways to achieve scale, and they would only consider an exit if no viable path to scale exists. There are no such plans currently in progress.

Brendan Lynch asked for details on the Millicom asset portfolio, specifically the mix of towers versus rooftops, and whether Millicom had previously restricted co-location on these sites for competitive reasons.

Answer

President and CEO Brendan Cavanagh clarified that the portfolio consists almost entirely of towers, with about 90% being ground-based and the remainder being towers on rooftops. He confirmed the belief that Millicom had strategically limited co-location on some of its better sites to maintain a competitive advantage, which now presents a clear lease-up opportunity for SBA as an independent operator.

Brendan Lynch asked about the company's current position on the spectrum of prioritizing occupancy versus pushing rental rates, comparing it to their approach over the past 18 to 24 months.

Answer

Laura Clark, Chief Operating Officer, stated that the focus on driving occupancy and immediate Net Operating Income (NOI) has been consistent throughout the year, without a significant shift from the beginning of the year. She reiterated that decisions regarding rate, term, tenant improvements (TIs), and rent steps are made to capture immediate cash flow, which remains a key focus.

Brendan Lynch of Barclays Capital asked for clarification on the rise in leasing activity on vacant space to 80% from 65% a year ago, questioning if it reflects longer decision times or true demand growth, and inquired about conversion rates.

Answer

COO Laura Clark explained that while conversion is taking longer, the majority of interest is converting into leases. As an example, she noted that two-thirds of the leasing interest on repositioning projects from the prior quarter has either been executed or is expected to be, demonstrating strong conversion over time.

Brendan Lynch of Barclays Capital asked for details on the 80% leasing activity on vacant properties, questioning if it reflects longer decision times versus higher demand, and inquired about conversion rates.

Answer

COO Laura Clark clarified that while conversion is taking more time, the majority of activity is expected to convert to executed leases. As an example, she noted that from last quarter's redevelopment activity, about two-thirds has either leased or is still in negotiation, and some new leases were signed on spaces that had no activity previously.

Brendan Lynch of Barclays Capital asked for clarification on the 80% leasing activity on vacant properties, questioning if this reflects higher demand or longer decision times, and requested data on conversion rates.

Answer

COO Laura Clark provided an example from the prior quarter's repositioning pipeline, where about two-thirds of the leasing activity has either converted to a lease or remains in negotiation. She acknowledged that conversion is taking more time but affirmed that the majority of activity is expected to result in executed leases, demonstrating solid underlying demand.

Brendan Lynch of Barclays Capital asked for clarification on the 80% leasing activity on vacant properties, seeking to understand if this reflects longer decision times or an actual increase in demand, and inquired about conversion rates.

Answer

COO Laura Clark explained that while conversion is taking more time, the majority of leasing activity is expected to convert to executed leases. She provided an example from the prior quarter's repositioning projects where two-thirds of the activity has either been leased or remains in negotiation, demonstrating a strong conversion trend.

Brendan Lynch of Barclays Capital asked for clarification on the 80% leasing activity on vacant properties, seeking to understand if it reflects longer decision times versus a true increase in demand, and inquired about conversion rates.

Answer

COO Laura Clark explained that while conversion is taking more time, the majority of activity is expected to convert to executed leases. As an example, she noted that from the prior quarter's repositioning pipeline, about two-thirds of the activity has either been leased or is still in active negotiation.

Brendan Lynch from Barclays inquired about the company's philosophy on the pace of redevelopment, asking if they would accelerate activity during a period of market weakness due to lower opportunity costs.

Answer

COO Laura Clark stated that the capital allocation strategy remains focused on accretion and long-term value. Since repositioning projects generate high incremental returns (around 15-20%), they are considered a prudent use of capital to drive outsized cash flow growth, regardless of the cycle. CFO Michael Fitzmaurice added a recent example of a project stabilization that yielded a 20% incremental return.

Brendan Lynch asked about LL Flooring's status on the tenant watch list and the overall size of that list. He also inquired about the characteristics of assets sold year-to-date to better understand the company's disposition strategy.

Answer

CFO Laura Clark confirmed LL Flooring was on the watch list due to its bankruptcy but noted the overall list remains small and stable, with bad debt levels staying low. Co-CEO Howard Schwimmer explained that dispositions typically involve management-intensive assets with limited growth potential or properties where a sale offers a more attractive return than holding.

Brendan Lynch from Barclays inquired about Plymouth's capital allocation priorities between acquisitions and share repurchases, the amount of capital remaining from the Sixth Street transaction, and the status of build-to-suit development opportunities.

Answer

Jeffrey Witherell, Chairman & CEO, stated the priority is to deploy the remaining ~$91 million through a blend of acquisitions and share repurchases. Anthony Saladino, President & CFO, clarified this is the remaining capital from the strategic capacity created by the Sixth Street deal. Witherell added that while build-to-suit activity is currently limited, the company continues to market its infill land parcels in Memphis and Cincinnati and is confident about future opportunities.

Brendan Lynch inquired whether the influx of capital into PLYM's markets was primarily for acquisitions or if it was also funding new development. He also asked about any observable impacts from tariffs or reshoring initiatives on their customer base.

Answer

Executive Chairman and CEO Jeffrey Witherell stated the capital influx is mostly for acquisitions, noting that development is market-dependent, with some areas like Columbus being overbuilt while others like Cleveland could see new spec development soon. EVP of Asset Management James Connolly responded that they are seeing a significant increase in demand from BPO companies for bulk storage, driven by a rush to get products into the country ahead of potential tariffs.

Brendan Lynch from Barclays requested an update on the leasing process for the large St. Louis vacancy and inquired about the company's strategy for balancing occupancy versus rental rate growth, especially given the recent uptick in vacancy.

Answer

James Connolly, Head of Asset Management, explained that with other deals closing in the St. Louis submarket, Plymouth now has one of only two buildings available for users over 500,000 sq. ft., creating a strong competitive position. Regarding the balance of occupancy and rate, Connolly noted that Q2 rent growth was moderated by two large renewals in Indianapolis where tenants also took expansion space, justifying a less aggressive rate increase to secure the larger footprint and long-term tenancy.

Brendan Lynch of Barclays Capital asked how the return of auction authority to the FCC might impact NextNav's process and requested a summary of the differences between the economic analyses from the Brattle Group and the one filed by E-ZPass.

Answer

CEO Mariam Sorond explained that the new auction authority is not expected to have a significant impact, as it targets higher frequency bands, whereas NextNav's proposal is for low-band spectrum to solve a national security need. Regarding the economic reports, she stated the opposing analysis made flawed assumptions, assigning zero value to GPS resiliency and positing 'outrageous' and unnecessary costs for toll and unlicensed operators.

Brendan Lynch of Barclays Capital inquired about the current effectiveness of NSA's technology suite compared to its ultimate potential and whether closing the data gap with larger peers is primarily a function of time.

Answer

President & CEO David Cramer described their technology implementation as being in the 'middle innings,' with the foundational tools now in place and the current focus on optimizing them with data. He expressed confidence that they can close any data gap with peers relatively quickly due to the advanced learning capabilities of modern AI and machine learning systems.

Brendan Lynch asked about the company's leverage, which is at the high end of its target range at 6.5x, and how the ATM and share repurchase programs might be used to manage it going forward.

Answer

CFO Brandon Togashi confirmed the 5.5x to 6.5x target range and acknowledged leverage will likely drift above it temporarily in the coming quarters, which they are comfortable with. He noted that proceeds from planned asset sales could help reduce leverage. The ATM and share repurchase programs were described as opportunistic tools to provide flexibility depending on the stock's valuation.

Brendan Lynch asked about the drivers and durability of longer customer stays and how that impacts the ECRI strategy. He also questioned what might make today's price-focused customers less sensitive to rates.

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CEO Dave Cramer attributed longer stays (over 40 months for the current tenant base) to sticky pandemic-era behaviors like home offices, which provides a long runway for the ECRI program. He suggested that current customer price sensitivity was partly driven by the industry's shift to sharp entry pricing post-pandemic. He believes sensitivity will decrease as improving fundamentals reduce market competitiveness, allowing for stronger street rates.

Brendan Lynch of Barclays PLC inquired about CubeSmart's testing of marketing channels beyond paid search and the strategy behind using high-level brand advertising versus targeted digital spend.

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CEO Christopher Marr explained that their marketing efforts span a wide gamut, including organic search (SEO), social media, satellite radio, and out-of-home advertising, though paid search remains the highest expenditure. He described brand marketing, like ads on buses, as a way to build 'top of mind' awareness, which complements the physical presence of their stores, so that when a need arises, customers search directly for CubeSmart.

Brendan Lynch from Barclays asked how the lease-up of the two recently delivered development stores in New York compares to expectations and past trends, and also inquired about the company's appetite for new development starts.

Answer

President and CEO Christopher Marr confirmed that the occupancy ramp-up at the two new development properties is performing in line with the company's expectations. Regarding new development, he stated that while CubeSmart remains interested, it is currently challenging to find sites that make economic sense due to high capital costs and the competitive rental rate environment.