Connor Mitchell

Connor Mitchell asked about the assumptions underpinning the 2026 revenue guidance, specifically seeking details on blended lease rate growth, its breakdown between new and renewal leases, contributions from other income, and the outlook for the Denver market, including when new lease rate growth might inflect.

Answer

CFO Bhairav Patel detailed the 2026 revenue building blocks, including an 80 basis point earning at year-end, mid-1% blended rent growth, a 40 basis point decline in RUBS due to Colorado regulations, and a 30 basis point impact from lower occupancy. He noted expectations for Midwest markets to align with 2025 growth, while Denver remains pressured with continued concessionary pressure in the first half of 2026. SVP of Investments and Capital Markets Grant Campbell added insights on Denver's supply dynamics, forecasting continued lease-up activity in 2026 with significant drops in new deliveries by 2027, and observed positive foot traffic trends, anticipating true tailwinds by 2027.

Connor Mitchell asked about the assumptions underpinning the 2026 revenue guidance, seeking a breakdown of blended lease rate growth between new and renewals, and the contribution from other income. He also inquired about the Denver market's outlook for 2026 and the expected inflection point for new lease rate growth.

Answer

CFO Bhairav Patel detailed the 2026 revenue building blocks, including an 80 basis point earning, mid-1% blended rent growth, a 40 basis point decline in RUBS due to Colorado regulations, and a 30 basis point impact from lower base case occupancy. He noted Midwest markets are expected to grow in line with 2025, while Denver remains pressured. Renewals are anticipated to lead with high 2% trade-outs, and new lease trade-outs are expected to improve in most Midwest markets. For Denver, Bhairav expects concessionary pressure (2-4 weeks) to continue in the first half of 2026. SVP of Investments and Capital Markets Grant Campbell added that while 9,000 units are expected in 2026, new construction starts are plummeting, with deliveries significantly falling off in 2027, suggesting future tailwinds. He also noted increased foot traffic in downtown Denver comparable to 2019 levels.

Connor Mitchell from Piper Sandler Companies questioned the cap rates on recent acquisitions and the timeline for them to become accretive, the long-term strategy for high-performing tertiary markets, and the company's prioritization between scaling in Salt Lake City, expanding in Colorado, or entering new markets.

Answer

SVP Grant Campbell disclosed acquisition cap rates in the high-4% range, with the Colorado deal benefiting from attractive assumed debt. President & CEO Anne Olson explained that while tertiary markets are stable, the strategic focus is on recycling capital into institutional markets like Salt Lake City to improve the company's valuation and cost of capital. She confirmed that scaling in Salt Lake City is the top priority to achieve operational efficiency before considering other new markets.

Connor Mitchell of Piper Sandler inquired about the drivers behind higher resident retention, the strategy for pricing renewals versus new leases, and how utility reimbursements (RUBS) affect net earnings.

Answer

President and CEO Anne Olson attributed higher retention to the rising cost of homeownership, which has reduced move-outs for home purchases from 25% to around 12-15%. She explained that renewal pricing is handled on a case-by-case basis to maximize total property revenue, balancing retention with market rates. CFO Bhairav Patel clarified that while utility costs and RUBS revenue gross up the income statement, the company is largely hedged on the bottom line as it passes through about 80% of the costs.

Connor Mitchell asked about the expected timing and structure of the Geriatric Behavioral Hospital operator transaction, the company's strategy for balancing transaction levels, funding acquisitions through dispositions, and potential leverage adjustments, and an update on current cap rates for both acquisitions and dispositions.

Answer

CEO Dave Dupuy clarified that the transaction for all six geriatric hospitals is expected to close simultaneously, with no staged closing, and noted increased due diligence activity in Q1 2026. He explained the company's goal is to sequence dispositions, similar to the Q4 2025 1031 like-kind exchange, to fund acquisitions without significantly increasing leverage, acknowledging potential timing gaps. Dupuy also indicated strong demand for disposition assets at around a 7.9% cap rate and opportunities for acquisitions in the 9-10% cap rate range, while emphasizing selective buying due to current stock price levels and highlighting embedded growth from 2026 redevelopment projects.

Connor Mitchell asked about the transaction involving the geriatric behavioral hospital operator, specifically inquiring if the sale of operations and new leases for the six hospitals would occur simultaneously or on a property-by-property basis, and also about the balance between the acquisition pipeline, disposition timing for funding, and potential changes in leverage levels. Additionally, he asked for an update on cap rates for both acquisitions and dispositions.

Answer

CEO Dave Dupuy explained that the buyer remains interested in all six hospitals, and the transaction is expected to close all at once, not in stages, despite some delays in Q4 2025 due to buyer due diligence and government dependencies. Regarding capital recycling, Mr. Dupuy detailed the strategy of sequencing dispositions with acquisitions, utilizing 1031 like-kind exchanges to maintain current leverage levels and avoid adding meaningful debt. He noted high demand for disposition assets, expecting similar pricing to the 7.9% cap rate achieved on a recent sale, and identified acquisition opportunities in the 9-10% cap rate range, though the company is being selective due to current stock price levels. Mr. Dupuy also highlighted embedded growth from redevelopment projects expected to come online in mid-to-late 2026.

Connor Mitchell asked about the company's leverage threshold for its revolving credit facility and sought confirmation that capital recycling is the preferred funding method over the ATM. He also inquired about the status of other outstanding notes receivable and the overall health of the tenant watch list.

Answer

EVP & CFO Bill Monroe stated that while there is significant cushion on the revolver, the plan is to use capital recycling to fund the pipeline and maintain leverage at current levels, confirming this is the preferred approach over using the ATM. President & CEO Dave Dupuy added that two other notes totaling ~$4.1M are performing as expected and that the tenant watch list remains consistent at 15-20 names, with no other top-10 tenants included.

Connor Mitchell from Piper Sandler Companies inquired about the company's leverage thresholds for its revolver, the strategy of using capital recycling instead of the ATM, the status of other notes receivable, and the company's tenant watch list.

Answer

CFO Bill Monroe stated that while CHCT has significant cushion on its credit facility, the plan is to keep leverage at current levels by timing dispositions with acquisitions, confirming this is the preferred method over using the ATM. CEO Dave Dupuy added that the remaining ~$4.1M in notes receivable are performing well and that providing large tenant loans is not a core strategy. He also noted the tenant watch list remains stable at 15-20 names with no other top-10 tenants included.

Connor Mitchell asked for an update on the troubled geriatric psychiatric hospital operator, including the timing of a potential asset sale or tenant replacement. He also inquired about the acquisition outlook, capital allocation strategy given the low stock price, and the potential for share buybacks.

Answer

David Dupuy, an executive, stated that they expect more clarity on the operator's sale process by the end of Q2 or early Q3 2025. He confirmed that while the acquisition pipeline is healthy, the company is avoiding equity issuance at current prices and will instead use selective asset sales and revolver draws to fund deals. Dupuy noted that share buybacks are a board-level discussion but executing on the existing deal pipeline is the primary focus, making buybacks a lower priority.

Connor Mitchell inquired about the geriatric tenant issue, asking for a resolution timeline, potential re-leasing scenarios, and the status of rent versus interest payments. He also asked about the near-term funding strategy for acquisitions, specifically the role of the revolver, asset recycling, and potential share buybacks.

Answer

Executive David Dupuy explained that while a small payment was received, the focus is on achieving consistent payments or a sale of the tenant's hospitals, with more clarity expected in coming quarters. Regarding funding, Dupuy stated that all options are considered, but the immediate plan for the $33 million in Q1 acquisitions is to use the revolver and then deleverage through asset sales to maintain modest leverage, while ATM issuance remains an option if the share price improves.

Connor Mitchell asked for an update on the geriatric tenant issue, inquiring about potential lease openings, backfilling confidence, and returns on the outstanding loan. He also asked about other tenants on the watch list, other outstanding loans, and whether the company would consider more development projects given its capital position.

Answer

CEO David Dupuy explained that consultants have stabilized the geriatric tenant's operations, leading to improved census and optimism for a resolution within a couple of quarters. He confirmed that while there are 15-20 watch list tenants, no other top 10 tenants are on it, and detailed other modest loans. Dupuy also noted that the company is focused on its five ongoing redevelopment projects, which are like 'embedded acquisitions,' and will continue to evaluate capital recycling to fund growth while maintaining low leverage.

Connor Mitchell asked about Brixmor's bad debt outlook, specifically regarding the general watchlist within the portfolio. He sought to understand if concerns were primarily one-off situations, related to upcoming debt maturities, or if they clustered around specific themes or service types.

Answer

CEO Brian Finnegan stated that Brixmor's watchlist screens very favorably compared to peers, with stringent underwriting standards for small shop tenancy attracting stronger credit profiles. He noted positive trends with no uptick in delinquencies or move-outs, and historically low normal course move-outs, indicating overall portfolio health.

Connor Mitchell asked about Brixmor's bad debt outlook for the year, the general watchlist, exposure to pharmacies or theaters, and whether watchlist issues are primarily one-off situations (e.g., debt maturities) or thematic within specific service groups.

Answer

CEO Brian Finnegan stated that the team is proactive in addressing potential credit events, screens favorably against peer watchlists (low drugstore/theater exposure), and benefits from stringent underwriting standards for small shop tenancy, resulting in more multi-unit operators. He reported positive trends with no uptick in delinquencies or move-outs (historic lows excluding bankruptcies), increased retention rates, and mid-teens renewal growth, indicating a very low watchlist.

Connor Mitchell asked how Brixmor's tenant watch list has changed recently and requested color on any potential pending credit issues.

Answer

CEO James Taylor responded that the portfolio's underlying credit base is the best it has ever been, evidenced by record-low small shop move-outs for the second consecutive year. He noted the watch list is smaller than in the past and is more focused on categories like drugstores and theaters, which each represent less than 1% of ABR.

Connor Mitchell of Piper Sandler inquired about recent changes to the tenant watch list, potential credit issues, and the likely outcomes for leases involved in recent bankruptcy proceedings like Big Lots and Party City.

Answer

CEO James Taylor stated the portfolio's credit base is the strongest it's ever been, with a smaller watch list focused on categories like drugstores and theaters. President & COO Brian Finnegan provided a fluid update on bankruptcy processes, noting some leases are in bidding processes while others were already acquired at auction, expressing confidence in re-leasing prospects due to strong demand.

Connor Mitchell requested a regional breakdown of market performance, identifying areas of strength and weakness, particularly concerning retention rates and new tenant pipeline activity. He asked for a ranking or general feel for how each market is performing.

Answer

CEO Marshall Loeb identified the Eastern region (Florida, Nashville, Raleigh) as the strongest. He noted Dallas and Arizona (Phoenix, Tucson) are 100% leased despite broader market vacancy in Arizona. Conversely, California markets, especially Los Angeles, have been slower, with LA experiencing 11 consecutive quarters of negative absorption. Denver was also mentioned as a slower market for development leasing.

Connor Mitchell requested a regional breakdown of market strengths and weaknesses for EastGroup Properties, including Texas, Florida, and California, in terms of tenant retention and new tenant acquisition, and asked for a ranking of these markets.

Answer

Marshall Loeb, CEO, indicated that the Eastern region, broadly speaking, has been the strongest since mid-year, with Florida, Nashville, and Raleigh performing well. He noted that Dallas, Texas, is 100% leased, requiring expansion space, and praised the Arizona team for achieving 100% occupancy in Phoenix and Tucson despite overall market vacancy. Conversely, California markets, particularly Los Angeles, remain slower with 11 consecutive quarters of negative absorption, and Denver has also experienced slower development leasing.

Connor Mitchell of Piper Sandler & Co. asked about the recent trend of larger acquisitions in the sector, such as Federal Realty's purchase of Del Monte, and inquired about the potential duration of this cycle.

Answer

CEO Donald Wood explained that Federal Realty has always favored larger centers for their densification potential. He noted that current market unpredictability makes underwriting difficult, causing him to seek more visibility over the next 30-90 days. This suggests a cautious approach to new large deals until the economic landscape becomes clearer.

Connor Mitchell inquired about the factors enabling the rapid re-leasing of the Michigan property, the specific financial impact from defaulted tenants' security deposits and rent for modeling purposes, and whether regulatory delays for certain properties alter the company's market investment thesis.

Answer

CIO Ben Regin stated the quick re-leasing reflects a strong track record and robust inbound interest. CFO David Smith quantified that $5.8 million in security deposits were applied in Q1, which are now exhausted for key defaulted tenants, and that about $4.5 million in cash rent was collected from them. Ben Regin also noted that regulatory approval timelines are a normal part of the business and do not change their market views.

Connor Mitchell inquired about the future leadership structure for the MPC business, the specific steps to achieve an investment-grade credit rating, and whether the $900 million cash infusion is intended to pay down existing debt.

Answer

An executive, likely Bill Ackman, clarified that David O'Reilly will remain CEO of the overall company, focusing on the real estate operations, while Ackman and Ryan Israel will focus on acquiring new businesses. Ackman stated that achieving an investment-grade rating will be aided by the $900 million capital infusion and the diversification into durable, cash-flowing businesses, which strengthens the parent company's credit profile. The cash is intended for acquiring new businesses, not for paying down debt at the real estate subsidiary, which is expected to become increasingly self-funding.

Connor Mitchell of Piper Sandler inquired about the evolution of the company's asset sale strategy in the current market and asked for color on the expected occupancy cadence for the remainder of the year.

Answer

CEO Victor Coleman stated the disposition strategy remains consistent: selling non-core assets that don't materially impact FFO to a steady market of users and high-net-worth buyers. President Mark Lammas projected that Q1 2025 could represent the bottom for occupancy, with stabilization and growth expected to begin in Q3, driven by significantly lower lease expirations. EVP of Leasing Art Suazo added that an 18% increase in tour activity supports this optimistic outlook.

Connor Mitchell from Piper Sandler sought to clarify the drivers for the negative 13% cash NOI guidance, asking if it was primarily due to occupancy dips or free rent concessions. He also asked how management views the actual value of the Quixote business versus its book value following the recent goodwill impairment.

Answer

CFO Harout Diramerian confirmed the cash NOI guidance reflects a combination of occupancy timing and the structure of new deals with upfront free rent. Regarding Quixote, he explained the impairment was a non-cash GAAP accounting requirement on goodwill, stemming from a slower-than-anticipated post-strike recovery, and does not impact their positive view of the business's future or the value of its physical assets.

Connor Mitchell asked if macroeconomic uncertainty and tariff discussions have led to any tenant fallout or canceled deals, and also requested an update on the development timeline for the recently acquired Westwood property.

Answer

President and CEO Jordan Kaplan confirmed they have not yet seen macro volatility impact their tenants, though they remain watchful for a potential recession. Regarding the Westwood development, Kaplan stated that planning is already underway with a goal to complete the new building within the next 3-4 years, as it is a by-right project.

Connor Mitchell asked about the persistence of negative leverage in the transaction market and whether buyers might be too aggressive in underwriting rent growth for 2026 and 2027 to justify current pricing.

Answer

Chairman and CEO Richard Campo acknowledged that buyers are betting on outsized rent growth in 2026-2027, a pattern supported by historical post-downturn recoveries. He believes rising NOIs in 2025 will help bridge the valuation gap, even with stable cap rates. However, he conceded that if this NOI growth fails to materialize and interest rates do not decline, cap rates would need to rise, or the market could face a stalemate.

Connor Mitchell inquired about the performance of office leasing, the outlook for retail and industrial properties, the reasons for the updated adjusted EBITDA guidance, and the strategy behind Newmark's international expansion.

Answer

Executive Michael Rispoli stated that the office leasing pipeline remains strong and attributed the adjusted EBITDA guidance change to the treatment of legal settlements, noting a large favorable settlement in the prior year. Executive Lou Alvarado confirmed continued tailwinds for industrial and retail, including data centers. CEO Barry Gosin detailed the European expansion strategy, emphasizing hiring top talent in new markets like Germany and France, replicating their successful U.S. model.

Connor Mitchell from Piper Sandler asked for clarification on the bullish high-street retail outlook in light of reports of Sephora negotiating lower rent, and questioned if the 7.5% rate on the 640 Fifth Avenue refinancing is a good proxy for future deals.

Answer

Executive Glen Weiss characterized the Sephora deal as a non-market, very short-term transaction. President and CFO Michael Franco added that the location was not in the prime Madison Avenue corridor. Regarding financing, Franco stated the 7.5% rate is likely higher than what could be achieved today and expects the 731 Lexington refinancing to be done at a much tighter rate.

Connor Mitchell from Piper Sandler asked for clarification on bullish high-street retail commentary versus reports of a large rent reduction for Sephora, and whether the 7.5% rate on a recent refinancing is a benchmark for future deals.

Answer

Glen Weiss and Michael Franco explained the Sephora deal was a short-term, non-market transaction outside the prime retail corridor. Franco added that the 7.5% refinancing rate is already outdated, with current rates likely 50 bps lower, and that the 731 Lexington refinancing will be at a much tighter spread due to the long-term Bloomberg lease.