Craig Mailman

Craig Mailman of Citi asked about the current acquisition opportunity set, potential sources of funds like ground lease sales, and where cap rates and IRRs are trending for retail assets.

Answer

President & CIO Ross Cooper explained that 2025 acquisition activity will be match-funded through dispositions of ground leases and development entitlements, rather than dilutive property sales. He noted strong opportunities in various formats and the continued use of the structured investment program. CFO Glenn Cohen added that the company also has approximately $140 million in free cash flow available as a low-cost capital source.

Craig Mailman inquired about whether Kimco's internal views on inflation have changed and how potential policies from different political administrations might affect real estate pricing.

Answer

CEO Conor Flynn responded that inflation remains a key focus, with potential pressures existing regardless of political outcomes. He noted that Kimco's primary goal is to ensure its asset growth outpaces inflation, supported by strong fundamentals like high employment and robust shopping center traffic. He expressed confidence in the Fed's ability to manage inflation toward its targets.

Craig Mailman of Citigroup asked if Kimco's internal views on inflation have changed and how potential political policies might impact real estate pricing going forward.

Answer

CEO Conor Flynn stated that inflation remains a key focus and that their goal is for asset growth to outpace it. He noted that the strong employment market and resilient consumer, with traffic up 2% year-over-year, continue to provide a favorable backdrop for their business.

Craig Mailman asked if Regency's same-store occupancy has room to increase beyond current levels, or if the gap to historical spread will close primarily through commencements. He also asked Mike Mas if Regency is considering term loan debt to potentially reduce the 100-150 basis point refinancing drag anticipated for 2026.

Answer

Alan Roth, East Region President and COO, stated confidence in pushing occupancy higher, noting that a recent 20 basis point drop was due to Rite Aid bankruptcies. He sees opportunities, particularly in anchor leasing, with strong demand from quality tenants. Mike Mas, EVP and CFO, confirmed that Regency considers all forms of capital, including term loans, for refinancing, but emphasized that their A-rated balance sheet allows for competitive pricing on vanilla bond offerings, potentially limiting the additional benefit from other options.

Craig Mailman asked if there's room to push the same-store lease rate higher or if the gap will primarily close via commencements, and if Regency Centers is considering term loan debt to mitigate the 100-150 basis point refinancing drag.

Answer

Alan Roth, East Region President and Chief Operating Officer, believes there is room to increase occupancy, noting that a Q3 drop was due to Rite Aid bankruptcy. He sees opportunities in anchor leasing and proactive strategies. Mike Mas, Chief Financial Officer, stated that all forms of capital are considered for refinancing, but Regency's A-rated balance sheet allows for competitive vanilla bond offerings, potentially limiting the benefit of term loans compared to peers.

Craig Mailman questioned Regency's capital allocation strategy, asking how the company is balancing the desire to deploy capital opportunistically against keeping 'powder dry' amid economic uncertainty from potential tariffs.

Answer

President and CEO Lisa Palmer explained that the company's A-rated balance sheet is intentionally maintained to 'play offense' through all economic cycles. She identified the development program as the current best use of free cash flow due to its superior returns but affirmed that Regency has the capacity and willingness to act on compelling acquisition opportunities as they arise.

Craig Mailman of Citigroup inquired about the additional acquisitions in Brixmor's pipeline, asking about the opportunity set, cap rate trends, and whether these acquisitions are long-term opportunities similar to LaCenterra at Cinco Ranch or near-term FFO boosters.

Answer

Brian Finnegan, Interim CEO and COO, expressed satisfaction with transaction activity and the performance of recent acquisitions. Mark Horgan, EVP and CIO, noted the competitive market with new capital seeking open-air retail, allowing efficient capital recycling. He explained that pipeline deals are value-add, similar to LaCenterra in growth potential but more traditional open-air centers, leveraging Brixmor's platform to drive cash flows through occupancy gains, rent mark-to-market, and redevelopment, with target unlevered IRRs of 9.5% to 10.5%.

Craig Mailman asked about additional acquisitions in the pipeline, the opportunity set, cap rate trends, and whether these acquisitions are long-term value-add like LaCenterra or near-term accretive.

Answer

Brian Finnegan, Interim CEO and COO, expressed satisfaction with transaction activity and the performance of recent acquisitions. Mark Horgan, EVP and CIO, noted the competitive market with new capital seeking open-air retail, allowing Brixmor to efficiently recycle capital from low-IRR assets into value-add opportunities. He clarified that current pipeline deals are similar to LaCenterra in growth potential but are more traditional open-air centers, leveraging the platform to drive immediate rent increases and higher going-in cap rates.

Craig Mailman from Citigroup inquired about the expected cadence of earnings in the second half of the year and sought more details on the financial contribution and financing strategy for the La Centerra acquisition.

Answer

EVP & CFO Steven Gallagher projected an acceleration of same-property NOI growth in the back half of the year as rents from the SNO pipeline commence, though lease settlement income may decelerate. He confirmed La Centerra was financed on a leverage-neutral basis through capital recycling and free cash flow. CEO James M. Taylor added that the initial yield is neutral but positioned for quick accretion.

Craig Mailman noted that Brixmor was one of the few companies not to mention 'tariffs' in prepared remarks and asked how leasing discussions and tenant sentiment have trended since the tariff announcements, specifically regarding concerns about supply chain disruptions.

Answer

CEO Jim Taylor acknowledged tariffs are a concern but expressed confidence in the resiliency of Brixmor's grocery and value-oriented tenants. President and COO Brian Finnegan added that leasing discussions remain robust, with April deal flow ahead of the prior year. He highlighted the portfolio's defensive positioning due to its strong grocery, off-price, and service tenant mix.

Craig Mailman asked about the cap rates on Q4 acquisitions, the required returns on stabilized assets versus redevelopments, and whether Brixmor intends to bid for its own boxes at bankruptcy auctions.

Answer

CEO James Taylor stated Q4 acquisitions had initial yields of 6-7% and target high single to low double-digit unlevered IRRs. President and COO Brian Finnegan added that Brixmor is active at auctions to 'control our destiny,' using minimal capital to regain control of boxes and upgrade assets in a high-demand environment.

Craig Mailman from Citigroup Inc. asked about the cap rates on Q4 acquisitions, return requirements for stabilized assets versus redevelopments, and whether Brixmor intends to bid at auction to buy back its own leases.

Answer

CEO James Taylor stated Q4 acquisitions had initial yields of 6-7% and target high single to low double-digit unlevered IRRs. President & COO Brian Finnegan added that Brixmor is active at tenant bankruptcy auctions to control its real estate, mostly using credit bids, viewing it as a prime opportunity to upgrade assets.

Craig Mailman questioned the 2025 same-store NOI growth outlook of 'above 4%', asking what factors might prevent it from matching or exceeding the current year's ~5% growth rate, given the strong SNO pipeline.

Answer

CEO Jim Taylor clarified that 'above 4%' is not formal guidance but a long-term target they expect to exceed, seeing no slowdown in momentum. He pointed to stacking rent commencements, reinvestment deliveries, and embedded rent steps as drivers of highly visible growth. COO Brian Finnegan noted that bad debt, which is currently at historically low levels, could be a potential headwind in 2025 compared to 2024.

Craig Mailman sought clarity on the outlook for same-property NOI growth to be 'above 4%' next year, asking about the factors that might prevent it from matching or exceeding the current year's ~5% rate.

Answer

CEO James Taylor confirmed expectations to exceed 4% but deferred formal guidance. He cited commencing rents, reinvestment deliveries, and embedded rent steps as key drivers of visible strength. President & COO Brian Finnegan noted that bad debt, which is currently running below historical norms, could be a potential headwind in 2025 compared to 2024.

Craig Mailman asked about the muted incremental leasing in EastGroup Properties' development pipeline, specifically mentioning Dominguez. He sought clarification on how much available space has active prospects and whether delays are rent-related or due to broader decision-making concerns.

Answer

Marshall Loeb, CEO, stated that approximately six leases totaling 215,000 square feet were signed during the quarter. He provided an example of Dominguez, where one of five leases returned, leading to a decision to subdivide the building and add office space, which delayed delivery. Loeb also noted an unusual instance of a signed 97,000 sq ft lease in Texas being terminated. He confirmed that nearly every development building has some level of activity, and recent large tenant/pre-lease discussions are promising, though they take time.

Craig Mailman highlighted the muted incremental leasing in the development pipeline, specifically mentioning Dominguez and its pushed-out stabilization date. He asked about the proportion of available development space with active prospects versus quieter interest, and whether rent or concessions were influencing decisions.

Answer

CEO Marshall Loeb reported approximately six leases totaling 215,000 square feet signed during the quarter. He explained that the Dominguez project's delay was due to subdividing the building and adding an office component to attract tenants. Loeb also mentioned an atypical situation where a signed 97,000 sq ft lease in Texas was pulled back by the tenant. He indicated that most buildings in the development pipeline have some activity, and while there's increased interest from larger tenants for pre-leases, the main challenge is prospects making a decision, not pricing.

Craig Mailman of Citigroup posed a two-part question regarding leasing strategy, asking about the use of concessions to drive occupancy and the potential for a rapid lease-up given the current pipeline.

Answer

President and CEO Marshall Loeb stated that the company is not broadly using rent or concession incentives, with the exception of California due to market-specific softness. The focus is on executing deals quickly to avoid delays from corporate uncertainty. He confirmed that while the leasing pipeline is full, the conversion of larger deals has been elongated, though he remains hopeful for a rapid turnaround similar to what was experienced late last year.

Craig Mailman from Citigroup posed a two-part question regarding leasing strategy, asking about the tactics used to prioritize occupancy (rent vs. concessions) and for an assessment of how much of the leasing pipeline is in an advanced stage, ready to close quickly.

Answer

President and CEO Marshall Loeb explained that the focus is on making quick leasing decisions to avoid deals stalling due to market uncertainty, rather than offering significant economic concessions. He noted that development yields are still meeting or beating projections. Loeb stated that while the prospect pipeline is full, deals in the final stages have been prone to delays from tenants' corporate offices, a trend more frequent this year. He expressed cautious optimism for a gradual improvement in leasing velocity.

Craig Mailman inquired about the Dominguez building redevelopment, asking if this was the original plan after the prior tenant left and what timing for backfilling the space is embedded in the 2025 guidance.

Answer

Executive Marshall Loeb detailed the building's history, explaining that a redevelopment was previously planned but deferred when a tenant took the space 'as is'. The current project involves modernizing the dated building. Executive Brent Wood added that the property was already excluded from the same-store pool in the original guidance, and the budget assumes a new tenant will occupy the space in the fourth quarter of 2025.

Craig Mailman of Citigroup asked about the rationale for the company's deleveraging, noting the 3.4x debt-to-EBITDA ratio and recent equity issuance, and questioned if this was positioning for a larger transaction. He also inquired about the tenant pool for available development space.

Answer

Executive Brent Wood clarified that the lower leverage is a byproduct of equity being the most attractive capital source recently, not a strategic move to delever for a specific purpose. Marshall Loeb added that while tenant decision-making has been elongated, urgency is returning, noting active negotiations on key vacancies and instances of tenants losing out on space for the first time in nearly two years.

Craig Mailman inquired about the specifics of the nearly $240 million in acquisitions implied in guidance, asking for details on timing, expected yields, and asset type, and also questioned the source of the ~$35 million difference between acquisition guidance and total expected capital proceeds.

Answer

President and CEO Marshall Loeb explained the acquisitions consist of three projects involving newer, stabilized buildings with below-market rents, targeting a blended initial cash cap rate in the 'higher 5s' on existing rents. CFO Brent Wood clarified that the variance in capital proceeds is due to normal operational cash flow fluctuations and development spending, with acquisitions being the primary driver for the increase.

Craig Mailman asked for clarification on the data center growth rate (same-store growth of hyperscale portfolio vs. industrial) and when average occupancy should inflect quickly back up to 95% given re-accelerated leasing.

Answer

Managing Director Chris Caton clarified that Prologis views data center contributions primarily as value creation reinvested into the core business, not as a significant driver of same-store growth from an owned perspective. President Dan Letter addressed occupancy, stating that the market is 7.5% vacant and expected to remain there for a period before improving through 2026, highlighting that the market is entering this phase with a substantially lower vacancy compared to prior cycles, setting up a strong rent dynamic.

Craig Mailman of Citigroup asked when a larger percentage of tenants might become comfortable with uncertainty and accelerate leasing, given offsetting forces like tariffs and stimulus.

Answer

CEO Hamid Moghadam stated that short-term predictions are difficult and dependent on policy, but he is very comfortable with the 2-3 year outlook due to a significant lease mark-to-market and rising replacement costs. He emphasized that delayed business will translate to more business later and that a 'FOMO' effect could quickly shift sentiment once a few tenants start competing for space.

An analyst on behalf of Craig Mailman asked for more detail on how Prologis intends to take advantage of opportunities that may arise from the current market disruption.

Answer

Hamid Moghadam, CEO, stated that it is too soon for significant opportunities to materialize, as potential sellers are likely to wait for more clarity in the market. He estimated it could take six to nine months for compelling opportunities to emerge, depending on how market conditions evolve.

Craig Mailman of Citigroup Inc. sought more detail on the occupancy guidance, asking to distinguish between seasonality and potential bad debt, and questioned if the company is prioritizing occupancy over rate.

Answer

CFO Timothy Arndt explained that the company expects to maintain its significant occupancy outperformance relative to the market by year-end, with the lower average occupancy reflecting timing on backfilling specific lease expirations. He stated that the decision to push rate versus occupancy is made on a lease-by-lease basis. CEO Hamid Moghadam added that credit loss is not a major driver and that due to the high mark-to-market, re-leasing a space within 15 months of a default is value accretive.

Craig Mailman asked about capital deployment, specifically what portion of the land bank is viable for development at current rents, and where the best global acquisition opportunities are and how they would be funded.

Answer

Timothy Arndt, CFO, stated that the balance sheet has ample capacity for funding due to strong EBITDA growth, and that improving fundraising in the strategic capital business will allow for a return to normal capital recycling. Dan Letter, President, added that with an average land vintage of 4.5-5 years and a 120% mark-to-book value, many opportunities are currently profitable. He emphasized that deployment decisions are made on a deal-by-deal basis rather than by targeting specific regions.

Craig Mailman from Citigroup inquired about the source of the $5.7 million in 'other income' and its impact on AFFO. He also asked about potential near-term catalysts for inventory restocking and the company's core growth outlook for 2026.

Answer

CFO Jay Wells explained the 'other income' was from benefits on sale transactions and hedging activities, with a portion from the SuperFrio disposition being adjusted out of AFFO. CEO George Chappelle stated that a combination of macroeconomic headwinds is suppressing demand and that improvement in these factors is needed for a rebound. He and President Robert Chambers emphasized that the company is focused on operational levers, value-added services, and capital deployment in stronger global markets to drive growth.

Craig Mailman of Citigroup inquired about the value creation from the capital recycling strategy, asking for the expected IRR on new acquisitions, the timeline to achieve it, and the capital required for remerchandising.

Answer

President, CEO & Director Donald Wood indicated that the company targets an unlevered IRR of approximately 9% on new acquisitions, which is significantly higher than the returns on assets being sold. He noted that while timing varies by project, the strategy represents a very solid use of capital.

Craig Mailman of Citigroup Inc. sought clarification on the $250 million in assets on the market for disposition and asked about the intended use of proceeds, specifically regarding share buybacks versus development funding.

Answer

CFO Daniel Guglielmone confirmed that $150 million of the $250 million is under contract and stated proceeds would be deployed opportunistically. CEO Donald Wood added that with debt-to-EBITDA at a comfortable level, proceeds are available for the best capital allocation choice, including share repurchases if the valuation spread versus acquisitions becomes sufficiently wide.

Craig Mailman asked about the company's appetite and capacity for large-scale mixed-use deals and whether it was the right time to consider joint venturing on major existing assets.

Answer

CEO Donald Wood confirmed that Federal Realty has both the appetite and capacity for large mixed-use deals, but the decision is driven by the specific asset's IRR, not its format. He affirmed that using a joint venture partner for a large acquisition is a possibility and that JV capital appears to be available, fitting their balanced approach to managing the balance sheet.

Craig Mailman from Citigroup asked for clarity on the 100 basis point credit loss assumption for the next year and inquired about specific tenant risks, particularly in the office portfolio with bluebird bio.

Answer

CFO Daniel Guglielmone clarified that the 100 bps assumption is a historical average used as a conservative placeholder for a potentially moderating economy, not due to specific near-term risks. Regarding bluebird bio, he stated that the existing security structure provides a comfortable runway into 2026. He also mentioned the expected return of buybuy BABY stores but noted they have backfills already teed up for those low-rent spaces.

Craig Mailman of Citigroup challenged the outlook, asking if it's wishful thinking to expect an inventory inflection given consumer pressures, and whether the market might be operating off a permanently lower inventory base.

Answer

CEO Greg Lehmkuhl and CFO Rob Crisci conceded the point, clarifying their guidance does not assume a fundamental market inflection. Instead, it reflects a muted seasonal pattern off the current low base. They stressed that their focus is on driving performance through internal initiatives like LINOS and cost controls, with any macro improvement representing potential upside.

Craig Mailman noted that guidance would have been lowered without the Tyson deal and asked about the biggest pressure point from tariff risks. He also questioned whether lower pricing was driven by renewals or by poaching clients from competitors.

Answer

CEO W. Lehmkuhl identified the primary pressure as the 'unknown and the uncertainty' of tariffs, which is causing customers to delay decisions. CFO Rob Crisci added that disruption could also create upside. On pricing, Lehmkuhl explained that existing customers lowered their volume guarantees, but this was offset by record new business wins that came with strong guarantees, reflecting a strategic focus on volume.

Craig Mailman from Citigroup asked about Tanger's long-term organic growth potential, recent leasing at the Huntsville asset, and whether reported occupancy is based on leased or commenced leases.

Answer

President and CEO Stephen Yalof pointed to 15 consecutive quarters of positive rent spreads as a key indicator of rent growth potential. EVP of Leasing Justin Stein detailed new tenants at Huntsville and Pinecrest, including L.L. Bean and Madewell, noting their financial impact will annualize in 2026. CFO Michael Bilerman clarified that Tanger reports physical occupancy, meaning the tenant has taken possession, as is the case with Main Event at Deer Park.

Craig Mailman questioned the drivers of the occupancy decline at the Huntsville asset, its current yield versus the acquisition cap rate, and whether Tanger has observed a 'trade-down' of higher-income shoppers to its centers.

Answer

CFO and CIO Michael Bilerman attributed the Huntsville occupancy dip primarily to a 30,000 sq. ft. former Bed Bath & Beyond space that is being re-leased, and he expects the asset's yield to grow beyond its 8.5% acquisition cap rate. President and CEO Stephen Yalof confirmed that Tanger is attracting a new, higher-demographic customer, driven by an upgraded tenant mix and the channel's value proposition.

Craig Mailman inquired about Tanger's capital needs for 2025, the rationale behind using the ATM for a forward equity sale, the acquisition pipeline, the sustainability of sourcing acquisitions at 8% cap rates, and tenant credit risk, specifically exposure to Forever 21.

Answer

Michael Bilerman, CFO & CIO, explained that the $70 million in forward equity proceeds provides future liquidity for both internal and external growth opportunities. He emphasized that acquisitions are evaluated on long-term growth potential, not just initial yield, and that the company can be selective. He also noted that the tenant watch list is at reasonable levels and the exposure to Forever 21 is minimal, with significant rent upside potential in those few locations.

Craig Mailman of Citigroup asked for an updated view on the macro environment and its impact on guidance, questioning if the company would still point to the midpoint of its FFO range and if there were concerns for 2026.

Answer

Chairman, CEO & President David Simon confirmed they remain cautious due to tariff uncertainty but are optimistic about U.S. growth, suggesting 2026 could see less volatility. CFO Brian McDade added that raising the low end of guidance is consistent with past practice after a strong first half, reflecting cautious optimism for the remainder of the year.

Craig Mailman of Citigroup asked for an updated macro view, questioning if the company remains cautious despite raising guidance and if there are concerns about 2026 growth due to policy or geopolitical factors.

Answer

Chairman, CEO & President David Simon confirmed they remain "very cautious" due to tariff uncertainty but are optimistic about U.S. growth. He suggested 2026 could have less volatility as tariff impacts become clearer. CFO Brian McDade added that raising the low end of guidance reflects cautious optimism after a strong first half.

Craig Mailman inquired about retailer inventory levels amid tariff uncertainty, potential for consumer pull-forward demand, and the impact of the de minimis rule change.

Answer

CEO David Simon called the de minimis rule change a 'great outcome' and a 'material benefit' for their retailers. He stated they have not yet seen a significant pull-forward of consumer demand. He estimated retailers have about a month to make decisions on Q4 inventory from China, which could affect future stock levels. He also noted that year-to-date traffic is up after adjusting for the Easter holiday shift.

Craig Mailman inquired if the 'Shop Simon' concept is part of a broader strategy to convert portions of malls into last-mile distribution centers, thereby integrating a logistics component into the business.

Answer

David Simon, Chairman, CEO, and President, confirmed that Simon can play a role in facilitating local search, distribution, and in-store pickup for its retailers. He mentioned the possibility of developing selective micro-distribution facilities at certain centers and exploring last-mile opportunities, given the prime location of their real estate. However, he clarified that this would be a selective endeavor and not a dominant part of the business model.

Craig Mailman from Citigroup asked about the process for portfolio acquisitions, specifically whether Curbline can cherry-pick assets or if it must accept entire portfolios, potentially leading to future dispositions. He also questioned the strategy for achieving critical mass in new markets.

Answer

CEO David Lukes clarified that the company does not have a disposition pipeline and is not acquiring assets it doesn't intend to own long-term, confirming that all portfolio deals to date involved individually selected properties. Regarding market scale, he explained that operating leverage is less critical for their small-format properties, allowing them to enter promising markets like New York and Dallas with single assets and grow methodically over time.

Craig Mailman of Citigroup inquired about Curbline's strategy for funding its significant acquisition pipeline, including the potential use of an ATM, the cost of capital, and preferences among various debt sources like the bank, bond, and insurance markets. He also asked about the typical rent bumps being achieved in new leases, any tenant pushback, and the possibility of pushing for higher same-store growth, as well as whether the bad debt reserve in guidance had changed.

Answer

CFO Conor Fennerty explained that 2025 investments would be funded 50/50 with cash and debt, leveraging the company's net cash position and unencumbered asset pool. He noted they are exploring the bank, bond, and insurance markets and will be patient to secure the best terms, with a preference for the private placement market. CEO David Lukes added that rent bumps are typically 3% for shop leases, though some national tenants negotiate 10% every 5 years. He emphasized that mark-to-market on renewals is a more significant driver of growth than rent bumps. Fennerty confirmed the bad debt reserve guidance is unchanged.

Craig Mailman of Citigroup Inc. asked about funding the significant acquisition pipeline, the potential timing for an ATM program, the cost and preference among various debt sources, details on leasing economics like rent bumps, and the bad debt reserve assumption in guidance.

Answer

CFO Conor Fennerty outlined a strategy to fund 2025 acquisitions 50/50 with cash and debt, leveraging the company's net cash position to patiently explore bank, bond, and insurance markets. He noted a preference for the private placement market. CEO David Lukes explained that typical rent bumps are 3% for shop leases, but mark-to-market on renewals is a more significant growth driver. Fennerty confirmed the bad debt reserve in guidance is unchanged.

Craig Mailman asked about acquisition pricing expectations post-spin, the blended cap rate for Q4 deals, the impact of low CapEx on valuation, and the strategy for including larger, anchor-like tenants.

Answer

CEO David Lukes stated that while cap rates are 'flat to down a little bit,' growing market rents have kept unlevered IRR expectations stable. He reported a 6.25% blended cap rate on recent deals. Lukes explained that the sub-10% CapEx load, compared to over 20% for anchored retail, justifies lower cap rates for the same IRR. He added that while the focus is on small shops, they will acquire properties with larger tenants if the real estate quality is high, but it will not be a large portion of the portfolio.

Craig Mailman of Citigroup Inc. requested context on the 501,000 sq. ft. lease at Camelback, asking about the speed of the transaction. He also inquired about the reasons for longer lease-up periods for certain assets like First Aurora, questioning if it was a leasing strategy, product, or market demand issue.

Answer

CIO Johannson Yap revealed the Camelback lease came together quickly, in about 45 days, with an immediate commencement. President and CEO Peter Baccile attributed longer lease-up times on other assets to a demand-side issue, specifically finding the right tenant at the right time, and noted that uncertainty around tariffs has caused some potential tenants to pause their decision-making.

Craig Mailman from Citigroup asked about the timeline of the recent 501,000 sq. ft. lease to gauge deal velocity and questioned whether longer-term vacancies are due to leasing strategy, product, or market issues.

Answer

CIO Johannson Yap revealed the large lease came together quickly, in about 45 days. CEO Peter Baccile attributed longer lease-up periods to demand-side issues, specifically finding the right tenant at the right time, noting that uncertainty around tariffs has caused some tenants to pause decision-making.

Craig Mailman of Citigroup sought clarification on the timing of 1.5 million square feet of development leasing, asking if it was shifted to Q4 and about the current visibility. He also asked about the strategy for incremental development starts beyond the two announced, particularly regarding underwriting in the face of rising costs.

Answer

CFO Scott Musil confirmed the 1.5 million square feet of development leasing is now assumed for Q4, a minor adjustment from the previous 'second half' timeline. EVP Peter Schultz noted that while some tenants have paused due to tariff uncertainty, they have more prospects for most spaces than a few months ago. CEO Peter Baccile added that future starts will remain opportunistic, focusing on pockets of unmet demand in markets like Texas, Florida, and Pennsylvania, while being cautious about tariff impacts.

Craig Mailman of Citigroup asked for clarification on the timing of 1.5 million square feet of development leasing, the visibility of that pipeline, and the company's strategy for new development starts given the high yield on a Dallas project.

Answer

CFO Scott Musil confirmed the 1.5 million square feet of leasing is assumed for Q4 2025 and that a delay would have a minimal impact of about $0.02 per share. EVP Peter Schultz noted that while tariff uncertainty has slowed some decisions, prospect activity is strong. CEO Peter Baccile added that the company will remain opportunistic and cautious, focusing on markets with unmet demand like Texas, Florida, and Pennsylvania.

Craig Mailman of Citigroup sought clarification on the composition of the 1.6 million square feet of development leasing in guidance and asked for management's view on broader demand trends and a potential inflection point for net absorption.

Answer

Chief Financial Officer Scott Musil clarified the guided leasing relates to developments already placed in service or completed, not future 2025 completions. President and CEO Peter Baccile described the market recovery as a 'U-shape,' not a 'V-shape,' noting that while decision times are long, tenant alternatives are shrinking. Executive Vice President Peter Schultz added that they are seeing higher engagement and momentum from tenants, but it needs to become more persistent.

Craig Mailman asked for details on the boohoo lease situation, including the accounting treatment, the company's strategy for the asset, and whether rent payments were included in guidance. He also sought clarity on the timing and activity related to the 400,000 square feet of development leasing assumed in Q4 guidance.

Answer

CFO Scott Musil confirmed boohoo is on a cash accounting basis and that rent payments are included in guidance, backed by a letter of credit covering about one year of rent. Executive Vice President Peter Schultz added that boohoo intends to sublet the entire building and feels positive about its prospects. Regarding development leasing, Scott Musil stated the 400,000 square feet is a macro assumption for leases commencing by year-end, with decent prospects but work still to be done.

Craig Mailman of Citigroup followed up to ask if the 80% leasing activity figure represents unique tenant interest and requested a breakdown of the portfolio by submarket strength.

Answer

COO Laura Clark confirmed the 80% activity is from unique tenants and not double-counted. She noted that spaces under 50,000 sq. ft. are performing well across all submarkets, while some weakness exists in larger spaces in Mid-Counties, Central LA, and North Orange County. Co-CEO Michael Frankel added that ~75% of the portfolio is in top-tier markets and that submarkets are adjusting to new conditions at varying speeds.

In a follow-up, Craig Mailman of Citigroup asked if the 80% leasing activity figure double-counts tenants and requested a breakdown of the portfolio by submarket strength.

Answer

COO Laura Clark confirmed the 80% figure represents unique interest. She noted that spaces under 50,000 sq. ft. are stable across all submarkets and identified Mid-Counties, Central LA, and North Orange County as having some pockets of weakness. Co-CEO Michael Frankel added that over 75% of the portfolio is in their strongest long-term markets and that submarkets are adjusting to post-pandemic conditions at different paces.

In a follow-up, Craig Mailman of Citigroup asked if the 80% leasing activity figure on vacant space involves double-counting and requested a breakdown of the portfolio's performance by submarket strength.

Answer

COO Laura Clark confirmed the 80% figure represents unique tenant interest with no double-counting. She noted that smaller spaces (under 50,000 sq. ft.) remain stable across all submarkets. Pockets of weakness exist in the Mid-Counties market for larger spaces due to supply, as well as in Central LA and North Orange County. Co-CEO Michael Frankel added that over 75% of the portfolio is in top-tier markets that are adjusting to post-pandemic conditions at varying paces.

In a follow-up, Craig Mailman of Citigroup asked if the 80% leasing activity figure on vacant space involved double-counting and requested a breakdown of the portfolio by submarket strength.

Answer

COO Laura Clark confirmed the 80% figure represents unique interest with no double-counting. She noted that spaces under 50,000 sq. ft. are stable across all submarkets and identified Mid-Counties, Central LA, and North Orange County as having some pockets of weakness. Co-CEO & Director Michael Frankel added that 75% of the portfolio is in strong long-term markets that are adjusting to post-pandemic conditions at varying paces.

In a follow-up, Craig Mailman of Citigroup asked if the 80% leasing activity on vacant space involved double-counting and requested a breakdown of Rexford's portfolio by submarket strength.

Answer

COO Laura Clark confirmed the 80% activity represents unique interest. She noted that smaller spaces under 50,000 sq. ft. remain stable across submarkets. She identified Mid-Counties, Central LA, and North Orange County as having some pockets of weakness due to supply. Co-CEO Michael Frankel added that over 75% of the portfolio is in the strongest long-term markets and that different submarkets are adjusting to post-pandemic conditions at varying paces.

Craig Mailman of Citigroup questioned the timing of recent asset sales, given the company's strong cash position, and asked if these dispositions were driven by unsolicited offers.

Answer

Co-CEO Howard Schwimmer confirmed the two dispositions were unsolicited offers from owner-users who paid a significant premium. The assets traded at an attractive low 4% cap rate, which compares favorably to the broader market trading in the mid-4s to 5% range. He characterized it as an excellent opportunity for accretive capital recycling.

Craig Mailman of Citi questioned the rationale for a December acquisition given the company's depressed stock price, suggesting the capital could have been better used for higher-yielding redevelopments or share buybacks.

Answer

Co-CEO Howard Schwimmer defended the acquisition, highlighting the property's A+ location and functionality. He stressed that the purchase was funded with forward equity raised at approximately $49 per share, making the transaction accretive with a 4.8% initial yield growing to 5.5% by year four. He reiterated that hurdle rates for any new transactions would be significantly higher.

Craig Mailman questioned the drivers behind redevelopment yields, citing the DuPont project's 5.5% yield, and asked why the 3-year FFO guidance was withdrawn. He also inquired about plans for the LL Flooring space and the current acquisition pipeline's return profile.

Answer

Co-CEO Howard Schwimmer described the DuPont project's yield as a 'one-off' due to softness in the Inland Empire West for that specific product size. CFO Laura Clark attributed the withdrawal of 3-year guidance to market uncertainty and a desire to focus on annual guidance. Co-CEO Michael Frankel affirmed the acquisition pipeline remains focused on opportunities that are accretive to their cost of capital.

Craig Mailman of Citigroup Inc. inquired if capital expenditure spending for new leases is also ahead of plan, similar to leasing progress, and asked when the company might resume providing formal guidance.

Answer

Jackson Hsieh, President and CEO, explained that capital spending is slightly higher and being deployed faster than initially envisioned in the Path Forward plan, particularly for anchor deals. He noted this will result in a significant FFO and EBITDA uplift in 2027 and 2028 due to the time required for project delivery.

Craig Mailman asked for a quantification of efficiencies gained from the new leasing dashboard and 5-year Argus plans. He also questioned if the increased annual leasing goal was driven more by improved internal capacity or strong market demand.

Answer

President and CEO Jackson Hsieh explained that the new dashboard acts as a CRM, eliminating time-consuming re-budgeting and providing real-time visibility, thus boosting efficiency. SVP of Leasing, Doug Healey, attributed the higher leasing goal to both a strong retailer environment and internal process improvements, such as consolidating all leasing functions under one roof and maintaining a laser focus on permanent leasing to meet 2028 targets.

Craig Mailman asked for a quantification of the benefits from the new leasing dashboard and improved processes, and questioned whether the increased annual leasing goal was driven more by internal capacity improvements or external market demand.

Answer

President and CEO Jackson Hsieh explained that the new leasing dashboard functions as a CRM, creating tremendous efficiency by improving visibility and eliminating thousands of man-hours previously spent on manual re-budgeting and communication. SVP of Leasing Doug Healey added that the increased leasing goal is a result of both a strong retailer environment and internal process changes, such as unifying leasing teams under a single leadership structure to focus on permanent leasing goals for 2028.

Craig Mailman from Citigroup Inc. questioned how CapEx is trending relative to the strategic plan's expectations. He also followed up on the use of equity, asking for insight into recouping potential NAV dilution from the recent issuance and how the company thinks about equity as a funding source going forward.

Answer

Senior Executive Vice President and CFO Scott Kingsmore stated that CapEx trends are not substantively different from expectations and that the amount of large, uncommitted anchor space is narrowing. President and CEO Jackson Hsieh addressed the equity question by noting the attractive 6.8% cap rate for the Washington Square and Los Cerritos acquisitions. He believes any initial NAV dilution will be offset by consolidating high-growth assets and unlocking value through redevelopment and refinancing, adding that the company will reload its ATM facility but has no immediate pressure to issue equity.

Craig Mailman questioned the shift in the bad debt reserve from anchor bankruptcies to general reserves and inquired about the transaction environment for power center assets.

Answer

CFO Heath Fear explained the shift was a precautionary measure due to general economic uncertainty, not specific tenant issues, as outcomes from anchor bankruptcies were better than expected. CEO John Kite described the transaction market for assets as healthy, citing a recent deal in Los Angeles that went under contract at expected pricing, supported by good liquidity and competitive cap rates.

Craig Mailman followed up on acquisition strategy, asking if any deals were imminent or if the commentary was purely about capacity. He also questioned if share buybacks were being considered given the current stock valuation.

Answer

Chairman and CEO John Kite stated that while KRG is actively underwriting assets, nothing is ready to be announced. CFO Heath Fear added that their low leverage provides significant flexibility to acquire assets before dispositions. Regarding buybacks, Kite acknowledged they are always evaluated but the current priority is reinvesting capital into high-return (30-40%) leasing opportunities created by recent vacancies.

Craig Mailman asked for an outlook on tenant credit, specifically mentioning The Container Store, and how Kite Realty is thinking about potential risks. He also questioned how comfortable management would be with increasing leverage to fund accretive growth, especially if the company's stock continues to trade at a discount.

Answer

CFO Heath Fear stated there are no specific tenant issues causing pause for 2025 and that any fallout can be managed within the general bad debt reserve. Regarding The Container Store, he noted positive developments like a new investment and expressed confidence in re-leasing the high-quality locations if necessary. CEO John Kite and CFO Heath Fear confirmed they could 'absolutely increase leverage' toward their 5.5x target for accretive deals, with Fear quantifying that they could acquire $500-$600 million in assets and remain within their long-term leverage goals.

Craig Mailman questioned if there has been any slowdown in leasing negotiations since early April and inquired about the appetite of investment management partners to deploy capital in the current environment.

Answer

Executive Vice President A.J. Levine stated there has been no noticeable change in leasing velocity, as tenant demand remains strong for mission-critical locations. On the investment side, CEO Kenneth Bernstein and EVP Reginald Livingston explained that institutional partners' appetite remains high, particularly for value-add and opportunistic deals where a skilled operator is required. They noted receiving inbound interest from capital partners looking to deploy funds with a trusted group like Acadia.

Craig Mailman inquired about the potential magnitude and deployment speed for the nearly $300 million of forward equity, and asked about the relative attractiveness of using ATM equity versus debt for funding, given the company's current FFO yield.

Answer

President and CEO Kenneth Bernstein stated that Acadia would not provide a forward-looking pipeline to maintain negotiating leverage but confirmed strong deal flow. Executive John Gottfried estimated 10-year debt costs would be near 6% and stressed that any new equity-funded acquisition must have a growth profile exceeding the core portfolio's 5%+ growth to be accretive long-term. CIO Reginald Livingston added that street retail cap rates remain attractive relative to other retail types given their superior growth prospects.

Craig Mailman from Citigroup asked about the expected funding mix of debt, equity, and asset sales for future acquisitions to maintain leverage targets. He also inquired about risk mitigation strategies for the Henderson development, such as pre-leasing targets, and sought an update on the potential sale of the North Michigan Avenue property.

Answer

CFO John Gottfried stated that future acquisitions will be funded on a leverage-neutral basis to maintain balance sheet strength. CEO Kenneth Bernstein added that capital from monetizing investment management assets provides another funding source. Regarding Henderson, he explained that the project can be developed in phases to mitigate risk, and tenant demand is currently strong. For the North Michigan Avenue asset, leasing demand is improving, and while monetization is a possibility, no significant earnings dilution is expected.

Craig Mailman inquired about the timing of recent new lease executions and sought details on demand variations across STAG's submarkets, particularly comparing manufacturing-focused versus distribution-heavy regions.

Answer

CEO William Crooker clarified that the 1 million square feet of new leasing was signed within the last 30-60 days. He noted that while macroeconomic uncertainty is lengthening lease negotiation times, demand remains strong in Midwest markets like Chicago and Minneapolis, as well as in the Sun Belt. He identified Atlanta and Indianapolis as slower markets and mentioned a notable trend of tenants seeking early renewals for 2026 expirations.

Craig Mailman inquired about the lower leasing spreads in Q4 2024 compared to the full year and the expected reacceleration in 2025. He also asked for clarification on the reduction in the total planned leasing volume for 2025 from approximately 15 million to 14 million square feet.

Answer

CEO William Crooker explained that Q4's lower spreads were anticipated and caused by fixed-rate renewal options; excluding these, spreads would have been 34%. He affirmed that the 24-25% range is a reasonable expectation for 2025. Mr. Crooker attributed the lower leasing volume forecast to the sale of a New Hampshire property previously slated for leasing and a lease renewal that was pushed from late 2025 into 2026.

Craig Mailman inquired about the drivers behind the increased activity in the acquisition market, STAG's competitive advantages, and the potential valuation implications of a recent competitor transaction.

Answer

CEO William Crooker attributed the acquisition momentum to pent-up seller demand and stabilized interest rates narrowing the bid-ask spread. He stated STAG's competitive edge comes from a combination of its cost of capital, reputation, and surety of close, particularly against smaller private equity firms. He declined to comment on specific competitor deals but expressed confidence in the value of STAG's portfolio.

Craig Mailman inquired about Curbline's strategy for mixing stabilized deals with assets that have vacancy, the potential yield difference for taking on lease-up risk, interest in West Coast assets given wage pressures, and the post-spin structure of SITE Centers for a potential sale.

Answer

CEO David Lukes stated that Curbline is primarily a 'renewals business' focused on stabilized assets with mark-to-market opportunities, as there is little yield difference for lease-up risk. CFO Conor Fennerty added that the goal is a diversified portfolio without mandates to avoid specific geographies. Lukes confirmed the post-spin SITE Centers will be structured to be 'very clean' with multiple options for value creation.

Craig Mailman of Citigroup Inc. asked about the impact of recent capital markets volatility on disposition negotiations, whether buyers were slow-rolling deals, and what the potential quarterly acquisition pace for Curbline could be if it were the primary focus.

Answer

CEO David Lukes stated that while rising rates are a factor, strong equity formation and rising rents have muted the impact on cap rates, with the company tilting towards unlevered buyers. CFO Conor Fennerty added that debt availability is materially better than six months ago, improving underlying deal structures. Regarding acquisitions, Mr. Lukes reiterated a baseline target of at least $500 million per year for Curbline post-spin.

Inquired about the pace and volume of asset sales beyond the current pipeline, the hit rate on marketed properties, and the future management and G&A structure for SITE and Curb post-spin.

Answer

The company has $750 million under LOI or negotiation and another $800 million being marketed. A lull in closings is expected in Q1, with more volume in Q2 and Q3. The bid-ask spread has tightened due to increased institutional interest. The G&A structure will evolve, starting with a shared services agreement, with the goal of making Curb as efficient as SITE Centers over time. More details will be provided closer to the spin date.

Inquired about the cap rates on recent asset sales, how Curbline's acquisition strategy will be accretive given current interest rates, the pricing of the preferred investment between the two entities, and the long-term management structure, including potential conflicts of interest and change of control provisions.

Answer

The cap rate on sales is a forward 12-month NOI, and values are holding up due to unlevered, strategic buyers. Curbline is expected to acquire assets with a positive spread to borrowing rates. The preferred investment's form and terms are not finalized and could evolve. Management stated that a long-term external management structure is not the intent; the board is waiting to see the relative size of the companies post-asset recycling. Independent boards will mitigate conflicts, and change of control is not a current consideration.

Asked for details on the anchor leasing opportunity, potential rent spreads, the outlook for same-store NOI growth in 2025, and specifics on upcoming debt refinancings and interest rate expectations.

Answer

Significant mark-to-market potential exists on upcoming anchor renewals, with spreads expected to increase. Same-store NOI growth is projected to be stronger in 2025, in the 3-4% range, with full benefits in 2026. The company plans to refinance its term loan and bonds together, aiming for a rate in the high 5% to 6% range, which would clear near-term debt maturities.

Asked about rent escalators in new anchor leases, details on a new anchor concept, the sensitivity of guidance to acquisition volume, and whether operational strength could offset lower acquisition contributions.

Answer

Rent escalators for anchors remain historically typical (10-12% every 5 years), though one new deal had better terms due to high tenant demand. The new anchor concept is from a very strong, established U.S. tenant. The acquisition guidance depends on market conditions and equity market favorability; they are currently funding through capital recycling. The company feels comfortable with its position on both the operational and acquisition fronts.

Asked about the reason for an increase in lease amortization, the assumptions behind the bad debt guidance, and whether the ability to acquire assets at high 6% cap rates changes the company's view on its NAV discount and investment strategy.

Answer

The increase in lease amortization is a one-time event in Q1 related to a specific anchor lease where an option was not exercised. The bad debt guidance is a standard placeholder and not specific to Rite Aid. The company believes its stock is significantly undervalued and that the acquisition opportunities are off-market, principal-to-principal transactions that don't reflect the broader market but rather the management team's ability to source deals with strong internal growth profiles of around 3% or better.