Greg McGinniss

Greg McGinniss asked about the specific factors that could lead Simon Property Group to achieve the higher or lower end of its FFO per share guidance range, particularly given the absorption of some unexpected bankruptcies since the December budgeting process.

Answer

Brian McDade, Chief Financial Officer, explained that the company typically starts the year with conservative budgeting and builds performance throughout. He identified ancillary businesses, leasing activity, and sales as key potential inputs for outperformance. David Simon, Chairman, Chief Executive Officer, and President, specifically highlighted sales growth as a significant upside driver, noting that the company budgets sales as flat.

Greg McGinniss asked about the factors that could drive Simon Property Group to the higher or lower end of its FFO per share guidance range, especially given the absorption of additional unexpected bankruptcies.

Answer

CFO Brian McDade explained that the company starts the year conservatively, with potential outperformance driven by ancillary businesses, leasing, and sales. Chairman, CEO, and President David Simon highlighted sales growth as a significant upside, noting that if tenant sales grow beyond the budgeted flat-ish rate, the company expects to exceed its estimates, despite anticipated bankruptcies and delays.

Greg McGinniss questioned whether macroeconomic uncertainty is causing Simon to adopt a more defensive capital allocation strategy regarding development, CapEx, or acquisitions.

Answer

CEO David Simon acknowledged that they are 'instinctively... more cautious right now' but are still pursuing long-term opportunities. CFO Brian McDade added that market volatility can create opportunities and they remain 'clinical with our capital.' They are proceeding with the development pipeline but are being thoughtful and mindful of rising construction costs.

Greg McGinniss from Scotiabank asked for details on the planned investments in 'B' malls, including the types of investments, their magnitude, and the expected returns compared to 'A' mall projects.

Answer

Chairman and CEO David Simon explained that investments in 'B' malls involve a mix of adding new anchor boxes, renovating common areas, and upgrading the tenant mix with new restaurants and retailers. He cited the Smith Haven mall project as an example that is expected to generate a 12% return, highlighting a focus on reenergizing these important community assets.

Greg McGinniss asked if the portfolio is now 'functionally full' with occupancy over 96% and sought clarification on the full-year FFO guidance, particularly the impact of Other Platform Investments (OPI) versus core real estate performance.

Answer

David Simon, Chairman, CEO, and President, stated that there is still room to grow occupancy and that the primary focus remains on improving the merchandising mix. Brian McDade, CFO, clarified that the OPI contribution for the year is now expected to be negative $0.05 to $0.10 per share, but this shortfall is being offset by stronger-than-expected performance from the core real estate FFO.

Greg McGinniss asked about the structured investment program, specifically if a recent repayment removed any existing rights of first offer (ROFOs) and the likelihood of repayments versus conversion into acquisition opportunities.

Answer

Ross Cooper, President and Chief Investment Officer, explained that the program's strength lies in being comfortable with all outcomes: acquisition, repayment, or takeover. He noted that ROFOs/ROFRs hold significant value, with one asset already acquired this year and another under discussion, emphasizing that repayments are well-telegraphed and planned.

Greg McGinniss asked about the structured investment program, specifically if a recent repayment removed any existing rights of first offer (ROFOs) and the likelihood of repayments versus conversion into acquisition opportunities.

Answer

Ross Cooper, President and Chief Investment Officer, explained that the program's strength lies in being comfortable with all outcomes: acquisition, repayment, or takeover. He noted that ROFOs/ROFRs hold significant value, with one asset already acquired this year and another under discussion, emphasizing that repayments are well-telegraphed and planned.

Greg McGinniss from Scotiabank asked about the potential to expand the joint venture platform to fund acquisitions, given aggressive market pricing and Kimco's cost of capital.

Answer

President & CIO Ross Cooper described the JV platform as a 'tool in the tool belt' with interested partners. However, he stated the current focus is on capital recycling—selling low-growth assets to fund wholly-owned, higher-growth acquisitions, while keeping the JV option for future scalability.

Greg McGinniss from Scotiabank asked if there are signs of weakening pricing in the transaction market and whether stock buybacks remain an attractive option if cap rates stay low.

Answer

Ross Cooper, President & CIO, observed a 'wait and see' approach in the transaction market since the tariff news. He emphasized that Kimco's 2025 plan is not dependent on external growth, giving them flexibility. He reiterated that they evaluate all accretive capital opportunities, including acquisitions, structured deals, and buybacks, to determine the best use of funds at any given time.

Greg McGinniss of Scotiabank asked if the lower development and redevelopment spend indicates a reduced focus in favor of acquisitions, and also questioned the perceived drop in the stabilized yield for the Coulter Place project.

Answer

COO David Jamieson clarified that the Coulter Place yield range was simply tightened, not lowered, as it's the only mixed-use project currently posted. He affirmed that redevelopment remains a focus but is retail-driven, and backfilling space with less capital is often a better option. CEO Conor Flynn added that while mixed-use development is beneficial, its returns are currently lower than other uses of capital, leading to creative structuring to mitigate costs.

Greg McGinniss asked what is motivating sellers in the current market and how cap rates may have shifted since the Waterford transaction was initially agreed upon.

Answer

President & CIO Ross Cooper suggested sellers are often driven by liquidity needs, leading them to sell their most liquid assets like open-air retail centers. Regarding the Waterford deal, he noted that while pricing might be different today, the long-term value of the asset and the favorable assumed CMBS loan were key factors, making short-term market fluctuations less critical.

Greg McGinniss of Scotiabank asked what is driving sellers to the market and how cap rates may have moved since the initial agreement for the Waterford transaction.

Answer

President & CIO Ross Cooper suggested sellers are motivated by factors like liquidity needs, with open-air retail being a liquid asset class. Regarding Waterford, he noted the deal was complex and included assuming a favorable 4.86% CMBS loan, emphasizing the long-term value of the asset at the agreed-upon price.

Greg McGinniss asked about the disposition cap rate achieved on self-storage assets and whether the company expects to fully sell out next year at similar cap rates, including any factors like operations or geography that might cause differences. He also sought clarification on the expected investment pace for 2026.

Answer

Brooks Gordon, Head of Asset Management, stated that self-storage assets have transacted just inside a 6% cap rate, with the total exit expected to be around 6%, acknowledging some variability between sub-portfolios. He confirmed the intention to exit the full operating storage platform over the medium near term. Jason Fox, Chief Executive Officer, expressed the intention to maintain the current investment pace in 2026, citing existing infrastructure, team, liquidity, and an improved cost of capital as supporting factors.

Greg McGinniss asked about the disposition cap rate achieved on self-storage assets and whether the company expects to fully sell out next year at similar cap rates. He also sought clarification on whether the current investment pace is expected to be maintained in 2026.

Answer

Head of Asset Management Brooks Gordon stated that self-storage assets have transacted just inside a 6% cap rate thus far, with the total exit expected to be around 6%. He confirmed the company's intention to exit the full operating storage platform over the medium term. CEO Jason Fox indicated that while macro factors are unpredictable, the company intends to maintain its investment pace, citing strong liquidity, free cash flow, and an improved cost of capital as enablers.

Greg Mcginniss from Scotiabank questioned the AFFO guidance, which implies lower quarterly results in the second half of the year, and asked about anticipated headwinds. He also sought insight into WPC's credit underwriting for non-brand name tenants and the drivers behind the current deal flow.

Answer

MD & CEO Toni Sanzone clarified that the second-half AFFO normalization is due to the timing of lease termination income and the assumption that the full rent loss reserve will be taken in Q3 and Q4. CEO Jason Fox explained that their underwriting focuses on large, sub-investment grade companies with critical real estate, a long-standing practice. He attributed strong deal flow to a stable interest rate environment and WPC's reputation for execution certainty.

Greg McGinniss from Scotiabank questioned the implied drop in back-half AFFO results, asking for anticipated headwinds. He also inquired about the credit underwriting process for lesser-known tenants and the market factors driving increased deal flow.

Answer

MD & CEO Toni Sanzone identified the normalization of other lease-related income and the assumption of the full rent reserve in H2 as the primary drivers for the back-half AFFO outlook. CEO Jason Fox explained their strategy focuses on sub-investment grade, large companies with critical real estate, a discipline they have honed over time. He attributed the strong deal flow to a stable interest rate environment and WPC's reputation for execution.

Greg McGinniss from Scotiabank asked for clarification on the AFFO guidance, which seems to imply lower results in the second half of 2025. He also questioned how W. P. Carey assesses the credit quality of lesser-known tenants and what market factors are driving the current increase in deal flow.

Answer

MD & CEO Toni Sanzone clarified that the back-half AFFO forecast is impacted by the timing of lease-related income and the conservative assumption that the entire rent loss reserve will be taken in Q3/Q4. CEO Jason Fox explained their disciplined underwriting process focuses on large, sub-investment grade companies with operationally critical real estate. He attributed the strong deal environment to a more stable interest rate climate, which has narrowed bid-ask spreads and increased transaction activity.

Greg McGinniss inquired about the specifics of W. P. Carey's investment pipeline, including cap rates, property type splits, and geographic distribution, and sought confirmation on the assumed spread for dispositions.

Answer

CEO Jason Fox stated that the investment pipeline is priced at a mid-7% weighted average cap rate, consistent with Q1 and the prior year. The pipeline is split roughly 50/50 between North America and Europe and is weighted towards industrial and warehouse properties. Fox also confirmed that the company's guidance model assumes a 100 basis point spread between asset sales and new investments.

Greg McGinniss asked for an expansion on why U.S. retail is considered 'complementary' to industrial and requested a breakdown of the current investment pipeline.

Answer

CEO Jason Fox explained that the U.S. retail strategy is an addition to, not a replacement for, their core focus on warehouse and industrial, aimed at expanding the overall opportunity set. He noted that the current ~$300 million pipeline has a 10-20% retail component, with cap rates in the 7s but slightly lower rent escalators compared to industrial assets.

Greg McGinniss questioned the motivation for the pivot to retail, asking if it stemmed from increased competition in industrial or a general need for more deal flow. He also asked for details on the current $500 million investment pipeline.

Answer

CEO Jason Fox clarified the retail focus is about expanding the opportunity set for growth, not a decline in industrial prospects. He noted U.S. retail is the largest net lease market where WPC can gain share. Regarding the pipeline, he expressed confidence that most of the over $500 million in deals will close by year-end, helping to achieve the midpoint of investment guidance, with cap rates generally in the 7% range.

Greg McGinniss inquired about tenant health commentary, specifically the bad debt expense guidance being maintained despite Q3 being up versus Q2, asking for insight into this increase and the outlook for the year-end range.

Answer

Brian Finnegan, Interim CEO and COO, emphasized reduced exposure to office supply and drugstore tenants, and strong underlying credit quality of new tenants, with 17% of ABR from local tenants. Steve Gallagher, Chief Financial Officer, explained that bad debt expense, as a percentage of total revenue, is typically lower in the first half due to out-of-period cash collections on real estate taxes, and higher in the back half, confirming comfort with the year-end range.

Greg McGinniss from Scotiabank asked about tenant health, specifically the bad debt expense guidance being maintained despite an increase in Q3 versus Q2, and management's general feeling about the year-end range for bad debt.

Answer

Brian Finnegan, Interim CEO and COO, reiterated confidence in tenant health, citing halved office supply exposure, low drugstore exposure, and strong underlying credit quality of new tenants. Steve Gallagher, CFO, explained that Q3 and Q4 typically have slightly higher bad debt as a percentage of total revenue compared to the first half, due to out-of-period cash collections on real estate taxes, but confirmed the company is trending towards the lower end of the range and sees a favorable trend compared to the prior year.

Greg Mcginniss of Scotiabank asked about the bad debt expense, which was tracking at the low end of guidance, and whether there were any potential headwinds. He also inquired about leasing demand trends following the April tariff announcements.

Answer

EVP & CFO Steven Gallagher confirmed continued satisfaction with the portfolio's underlying credit quality and noted no significant concerns regarding bad debt. President & COO Brian Finnegan stated that leasing demand has remained robust post-tariff announcements, with conversations from ICSC converting into leases. He also highlighted an accelerating trend of more elevated brands moving into grocery-anchored centers.

Greg McGinniss inquired about the 'interesting growth opportunities' mentioned in the prepared remarks, asking for an update on the transaction market, how it has changed in April, and what might drive compelling opportunities later in the year.

Answer

CEO Jim Taylor highlighted that tenant disruption creates opportunities for integrated platforms. CIO Mark Horgan added that while the market has slowed as participants assess volatility, some deals are still pricing well. He anticipates the transaction pipeline will build, creating opportunities for well-capitalized firms like Brixmor in the second half of the year.

Greg McGinniss requested a breakdown of the same-store NOI growth guidance, including the known and unknown factors built into the bad debt expense, and the expected magnitude of the growth acceleration in the second half of the year.

Answer

CFO Steven Gallagher detailed the guidance, which includes a 200 basis point drag from tenant disruption at the midpoint: 100 bps from known lease rejections and 100 bps for potential future disruption. He noted that the stacking of rent commencements provides excellent visibility for growth through this disruption.

Greg McGinniss of Scotiabank asked for the components of the same-store NOI growth guidance, details on bad debt assumptions, and the expected magnitude of the growth acceleration in the second half of the year.

Answer

EVP & CFO Steven Gallagher detailed the guidance, which includes a 200 basis point drag from tenant disruption (100 bps known, 100 bps potential) and a normal-course bad debt assumption of 75-110 basis points. CEO James Taylor added that strong leasing momentum positions them to achieve the 3.5% to 4.5% growth guidance despite these headwinds.

Greg McGinniss noted that acquisitions through existing relationships hit 70% this quarter, which is relatively lower than usual, and asked if this indicates the growth of Essential Properties Realty Trust's name as a source of capital or how non-relationship deals originate. He also asked for confirmation on whether increased competition is being observed today, or if it's similar to last year's expectations.

Answer

Peter Mavoides, President and CEO, stated that the 70% figure is good and reflects more investment opportunities, with the underwritten pipeline growing (e.g., $7 billion vs. $5 billion last year). He attributed this to active sourcing and their reputation for execution and reliability. He confirmed that they are seeing other buyers and competition but continue to be successful where they choose, leveraging their good reputation to pick and choose deals.

Greg McGinniss noted that acquisitions through existing relationships hit 70% this quarter, which is relatively lower than usual, and asked if this indicates the growth of Essential Properties Realty Trust's name as a capital source or how non-relationship deals originate. He also asked if the company is seeing any indications of increased competition today, or if it's similar to last year's expectations.

Answer

President and CEO Peter Mavoides confirmed that the company is experiencing more investment opportunities, with the underwritten pipeline growing consistently. He attributed this to proactive efforts like attending conferences, mailers, and calls to find new relationships, as well as a strong reputation for execution and reliability. He stated that 70% from existing relationships is good, and a lower percentage would not be concerning as finding new partners is important. Mr. Mavoides acknowledged the presence of other buyers and competition but affirmed that Essential Properties Realty Trust continues to be successful where it chooses, leveraging its good reputation.

Greg Mcginniss of Scotiabank asked for more details on the quarter's industrial acquisitions, noting their larger average rent, and also inquired about the potential use of the ATM program at current stock prices.

Answer

CEO Pete Mavoides clarified that the industrial investments were granular deals, not a single large bet, and did not represent outsized risk. Regarding the ATM, he stated that the company is in a strong liquidity position and will use the program opportunistically based on market conditions to maintain its balance sheet strength.

Greg McGinniss of Scotiabank sought clarification on the reported reduction in casual dining exposure, asking if it was due to dispositions or a reclassification of assets. He also asked how a potential worsening of the lending environment might impact deal flow.

Answer

CEO Peter Mavoides confirmed the change in casual dining exposure was a mix of dispositions and a reclassification of some properties to fast-casual. Regarding the lending environment, he noted that while challenging financial markets can increase tenant demand for sale-leasebacks, this is often mitigated by lower overall transaction activity. He concluded that the year is off to a great start and they remain aggressive in deploying capital.

Greg McGinniss noted the positive cash re-leasing spreads and asked if there was anything unique in the quarter to drive that result and if it was achievable going forward. He also asked for color on the apparent doubling of tenant exposure in the CCC+ credit bucket.

Answer

Executive A. Peil explained that the positive re-leasing stat was episodic, driven by a high number of contractual lease renewals with larger-than-usual rent bumps during the trailing 12-month period. CEO Peter Mavoides added that future results will depend on the mix of renewals versus re-letting vacant assets. Regarding the CCC+ bucket, A. Peil clarified that while tenants move between categories, the company focuses on the unit-level coverage, noting that more than half of that bucket has coverage greater than 2x, which provides confidence.

Greg McGinniss questioned why the company expects greater competition with the 10-year Treasury at elevated levels and asked what was driving the wide Q4 AFFO guidance range.

Answer

CEO Peter Mavoides explained that the company is conservatively planning for potential 10-year volatility and noted that tightening credit spreads are an equally important factor fueling competition. He confirmed a sustained high 10-year would be favorable. He attributed the wide Q4 AFFO guidance primarily to the timing uncertainty around settling the $600 million of outstanding forward equity.

Greg Mcginniss from Scotiabank asked for more specific context on Q3 and Q4 occupancy expectations and questioned if any factors, aside from broad macroeconomic improvements, could spur customers to increase inventory levels.

Answer

CEO George Chappelle stated that the second half of the year will look a lot like the first, with no seasonal uplift factored in. CFO Jay Wells added that they removed a previously expected 200 bps sequential occupancy build. Chappelle explained that while transitory macroeconomic factors like interest rates and inflation need to improve, Americold is actively pursuing alternative growth in its retail and QSR business and in international markets to counteract the headwinds.

Greg McGinniss of Scotiabank asked how Q1 results compared to initial forecasts and how much of the guidance change was due to performance-to-date versus future conservatism. He also asked about Q1 renewals for customers with large occupancy gaps.

Answer

CFO Jay Wells confirmed that Q1 results were in line with expectations and the guidance revision was driven by a more muted outlook for the seasonal inventory build in the second half of the year. CEO George Chappelle added that the absolute dollar value of fixed commitments increased, indicating that new deals and positive renewals outweighed any reductions from customers with occupancy gaps.

Greg McGinniss from Scotiabank inquired about the development pipeline, asking about the relative attractiveness and returns across different project types and their respective sizes within the $1 billion-plus pipeline. He also asked how the Port St. John project came to involve two strategic partners.

Answer

CEO George Chappelle stated that all development projects are underwritten to a standard 10-12% return, regardless of type. President of Americas Rob Chambers added that the current projects in progress span all strategic priorities. Regarding Port St. John, Chappelle described it as a unique and fortuitous opportunity where a DP World port project had a CPKC railhead, allowing for a powerful combination of capabilities.

Greg Mcginniss of Scotiabank inquired about Federal Realty's pipeline of potential acquisitions, asking if they align with the new strategy of targeting market-dominant centers in new geographies and what the expected initial and target cap rates are.

Answer

President, CEO & Director Donald Wood confirmed the strategy, noting one pending deal is in a new market while another is in a historical one. He stated the acquisitions would be immediately accretive, with going-in cap rates in the high-sixes to low-sevens range.

In a follow-up, Greg McGinniss of Scotiabank asked how the changing underwriting environment for acquisitions has affected the company's view on its redevelopment and residential development pipeline.

Answer

CEO Donald Wood explained that the impact is significant. For development, uncertainty around construction costs due to tariffs creates a lack of predictability that makes it hard to commit to new projects, especially stick-built residential. For acquisitions, underwriting now requires factoring in a downside economic scenario, which disproportionately impacts the IRR in the early years of a deal.

Greg McGinniss asked for clarification on the projected FFO contribution from Santana West, specifically if the $0.12 to $0.14 per share is net of the capitalized interest burn-off and assumes full stabilization.

Answer

EVP & CFO Daniel Guglielmone confirmed that the FFO impact is a matter of timing, with the hit from ceasing capitalized interest occurring in 2025. The projected $0.12 to $0.14 benefit is indeed net of that burn-off and is expected to flow to the bottom line, primarily in 2026 as rents commence.

Greg McGinniss of Scotiabank asked why same-store NOI guidance was maintained despite the better-than-expected leasing velocity and occupancy growth during the quarter.

Answer

CFO Daniel Guglielmone explained the discrepancy by noting that occupancy is a point-in-time metric at quarter-end, and the weighted-average occupancy for Q3 was lower because many move-ins occurred late in the quarter. He also mentioned that some temporary, one-time expenses hit the comparable pool in Q3, leading to a more conservative stance on the full-year guide, but he anticipates a strong Q4 as the higher occupancy is fully recognized.

Greg Mcginniss of Scotiabank asked if the lower seasonal occupancy is affecting all commodity categories equally and requested specific comments on import/export-focused categories and the impact of tariffs.

Answer

CEO Greg Lehmkuhl described the pressure as broad-based across categories. CFO Rob Crisci quantified the tariff impact, stating that an estimated $10 million NOI headwind is embedded in the second-half guidance. This reflects a mixed impact where some locations see higher inventory due to tariffs while others see less, resulting in a net negative effect.

Greg McGinniss asked what signs Lineage is seeing from customers or the economy that provide confidence in a market recovery, given its importance for future same-store NOI growth.

Answer

CEO W. Lehmkuhl stated that despite current inventory rationalization, the company is hearing directly from customers who are seeing demand and using discounts to move products. He believes that historically low inventory levels will necessitate restocking, positioning Lineage to benefit from its productivity and tech investments.

Greg Mcginniss of Scotiabank asked for more context on the remerchandising process, questioning how far along Tanger is and if potential tenants are hesitant to sign leases due to tariff uncertainty.

Answer

President and CEO Stephen Yalof described remerchandising as a perpetual process with no defined end, focused on constantly bringing in new brands. He stated that tariff uncertainty has not deterred retailers, who are making long-term decisions. He highlighted that with over 2.8 million square feet leased in the past year, demand remains strong, partly due to the scarcity of new retail development.

Greg McGinniss inquired whether the recent focus on non-outlet acquisitions is due to a lack of outlet opportunities or a strategic shift in the portfolio, and if there is a limit to how much non-outlet retail Tanger is willing to own.

Answer

President & CEO Stephen Yalof explained that acquisitions are currently more cost-effective than development and that the company is confident in its ability to add value to full-price centers. He stated there is no set limit on non-outlet ownership; the focus is on strategic acquisitions where Tanger can leverage its platform to create significant value, regardless of the center type.

Greg Mcginniss from Scotiabank asked which non-gaming experiential sectors offer the most opportunity and what might attract new operators to sale-leasebacks. He also followed up on the potential to co-invest with private equity in the youth sports sector.

Answer

President & COO John Payne listed theme parks, indoor water parks, ski resorts, and sports (professional, collegiate, and youth) as key focus areas, emphasizing education and partnership. CEO Edward Pitoniak added that growth-minded operators looking to expand their 'store count' are the primary drivers of sale-leaseback activity. Payne confirmed VICI is actively building relationships in youth sports and is open to partnering with private equity or competing, depending on the situation.

Greg McGinniss asked about VICI's competitive positioning in its new partnership with Cain and Eldridge and inquired about operator CapEx trends, specifically regarding the Venetian's capital commitment.

Answer

CEO Ed Pitoniak emphasized the strong cultural and strategic alignment with Cain and Eldridge, suggesting VICI will be a partner of choice for them. President & COO John Payne noted that the scale of VICI's assets, like the Venetian, provides significant opportunities for partner property growth funding. He added that operators continue to show excitement for reinvesting capital, particularly in Las Vegas, with 2025 trends looking similar to 2023 and 2024.

Inquired about the competitive landscape for the recent Southern California portfolio acquisition and what factors gave Regency an advantage. The question was asked by Victor Faiti on behalf of Greg McGinnis.

Answer

The transaction was off-market. Regency's competitive edge came from three key factors: the quality of its stock for an UPREIT transaction, its reputation as a high-quality operator, and the potential for future development partnerships with the seller.

Greg McGinniss from Scotiabank asked for an update on the transaction market, acquisition opportunities, and prevailing cap rates. He also sought to understand the value creation from development by asking where ground-up projects might trade upon completion.

Answer

President and CEO Lisa Palmer reiterated that development remains the top priority, but the company will pursue compelling acquisitions. Nicholas Wibbenmeyer, West Region President and CIO, added that investor appetite is strong for their asset class. He noted they target ground-up development yields north of 7%, which creates a spread of 150+ basis points over market cap rates for similar stabilized assets, implying a trading cap rate in the mid-5% to 6% range.

Greg McGinniss of Scotiabank asked if discussions with Penn Entertainment about the Joliet funding also covered other potential investments and sought to clarify the nature of the $2.5 billion commitment letter for Bally's New York project.

Answer

CFO & Treasurer Desiree Burke confirmed the $225 million for Penn's Aurora project is a definitive obligation, while funding for the M and Columbus projects is at Penn's discretion. Regarding New York, Senior VP & Chief Development Officer Steven Ladany and President & COO Brandon Moore clarified the letter was a non-binding indication of willingness to consider financing, contingent on due diligence and many other factors, not a firm commitment.

Greg McGinniss of Scotiabank inquired about the construction timeline for the Bally's Chicago project, the potential for future complications, recent conversations with Penn National Gaming regarding capital for their projects, and GLPI's interest in a co-investment in the Cordish Petersburg, Virginia casino.

Answer

CEO Peter Carlino stated that the Bally's Chicago project is well underway with 272 of 331 caissons installed and steel ordered, but acknowledged that delays are always possible in a massive project. CIO Matthew Demchyk added that GLPI's exposure is capped and they receive returns during construction. Regarding Penn, SVP & Chief Development Officer Steven Ladany noted a constant dialogue but no expectation for a capital draw in the current calendar year. On the Cordish project, President & COO Brandon Moore indicated it was too early to comment on any potential investment.

Greg McGinniss from Scotiabank questioned the drop in rent coverage for the amended Pinnacle lease and whether the 2025 guidance assumes the rent escalator is achieved. He also asked why funding assumptions for the Stadium project are not higher and about the likelihood of PENN taking its committed capital.

Answer

CFO Desiree Burke explained that the guidance range accounts for both scenarios (achieving the escalator or not) and noted that the Plainridge property is excluded from the actual escalator calculation, making the true coverage ratio higher than the reported 1.79%. President & COO Brandon Moore addressed the Stadium funding, stating that while $175 million is committed, the master plan for the integrated resort is still developing, making the timing and amount of further draws unclear. He added that PENN is not required to take funding for three of its projects, and the timing is dependent on their construction schedule.

Greg McGinniss of Scotiabank asked about the incentives for the Ione tribe to extend their lease beyond 25 years, the risk profile of development deals versus acquisitions of cash-flowing assets, and whether the NIGC letter provides a blanket approval for future tribal deals.

Answer

President and COO Brandon Moore confirmed the lease includes escalators but declined to detail extension incentives, citing confidentiality. Chairman and CEO Peter Carlino addressed the development strategy, stating GLPI actively pursues both acquisitions and developments, leveraging its in-house expertise to create opportunities. Moore clarified that the NIGC letter is deal-specific, but it establishes a repeatable framework that should streamline future approvals.

Greg Mcginniss of Scotiabank asked about the delays in rent commencements for repositioning projects and sought confidence in achieving the new targets, given that leasing activity levels were similar to the prior quarter.

Answer

COO Laura Clark expressed confidence, noting 900,000 sq. ft. of redevelopment space has been leased year-to-date. While lease-up timing was pushed out by about one month on average, she highlighted that there is active interest on 80% of the remaining 1.5 million sq. ft. CFO Michael Fitzmaurice added that a worst-case scenario of no further leasing would only impact FFO guidance by one cent.

Greg Mcginniss of Scotiabank asked for details on the delays in rent commencements for redevelopment projects and the basis for confidence in the revised targets, noting that leasing interest on vacant space remained flat at 80%.

Answer

COO Laura Clark stated that while lease-up timing has been pushed out by about one month on average, the company has already leased 900,000 sq. ft. year-to-date and has activity on 80% of the remaining 1.5 million sq. ft. CFO Michael Fitzmaurice added that a worst-case scenario of no further leasing on these projects would only impact FFO guidance by one cent.

Greg Mcginniss from Scotiabank asked for details on the delays in rent commencements for repositioning projects and the company's confidence in achieving its new leasing targets.

Answer

COO Laura Clark stated that while lease-up timing was pushed out by about one month on average due to market dynamics, the company feels good about its progress, having leased 900,000 sq. ft. year-to-date. She expressed confidence in leasing the remaining 1.5 million sq. ft., noting active proposals on 80% of that space. CFO Michael Fitzmaurice added that a worst-case scenario of no further leasing would only impact FFO guidance by one cent.

Greg Mcginniss from Scotiabank asked for details on the delays in rent commencements for repositioning projects and sought to understand the company's confidence in achieving its new targets.

Answer

COO Laura Clark expressed confidence, noting that while lease-up timing has been pushed out by about one month on average, 900,000 sq. ft. has been leased year-to-date and there is active interest on 80% of the remaining 1.5 million sq. ft. CFO Michael Fitzmaurice added that a worst-case scenario of no further leasing would only impact FFO guidance by one cent.

Greg Mcginniss from Scotiabank asked about the delays in rent commencements for repositioning projects and sought assurance on achieving new targets, given that leasing activity levels were similar to the previous quarter.

Answer

COO Laura Clark expressed confidence, stating that while lease-up timing was pushed out by about one month on average, there is active negotiation on 80% of the remaining 1.5 million square feet. CFO Michael Fitzmaurice added that in a worst-case scenario where none of that space was leased, the impact to full-year guidance would only be about one cent per share.

Greg McGinniss from Scotiabank asked whether the lower average rent escalator of 3.6% in Q1, compared to 4% previously, indicates tenants are beginning to push back on escalators.

Answer

COO Laura Clark confirmed there is some pressure on lease terms, but it is concentrated in specific submarkets and size ranges. She explained that the 3.6% average was primarily influenced by leases for spaces over 100,000 square feet, which averaged 3.4% escalators, while smaller-format spaces continue to achieve rent steps closer to 4%.

Greg McGinniss of Scotiabank asked for a reconciliation between the commentary on improved leasing activity early in the year and the simultaneous push-out of development lease-up timelines.

Answer

CFO Mike Fitzmaurice stated that guidance reflects current market realities, including recent positive momentum. COO Laura Clark added that while greater clarity on interest rates is unlocking pent-up demand, tenants remain thoughtful and are taking longer to make decisions, which extends the lease-up period for new development projects despite the overall increase in activity.

Greg McGinniss of Scotiabank asked for more detail on the source of tenant demand, how the end-user mix compares to recent years, and why build-to-suit clients prefer new construction over existing vacant space.

Answer

Chris Caton, MD of Global Strategy & Analytics, highlighted diverse demand from food & beverage, e-commerce, light manufacturing, and auto parts, with 3PLs also returning. President Dan Letter explained that build-to-suit users are large, long-term focused Fortune 500 companies seeking large, modern buildings (1M+ sq. ft.) that are not available in the spec market, making Prologis's land bank a key differentiator.

Greg McGinniss of Scotiabank asked for the expected percentage of new deals versus renewals in 2025-26, how that compares to historical averages, and whether the increase in new deals is due to more retailer interest or Macerich's strategy. He also asked about the drop in redevelopment yields.

Answer

Doug Healey, SVP of Leasing, stated the executive leasing committee reviews a mix of new and renewal deals, sometimes taking space offline to enhance merchandising. Brad Miller, SVP of Portfolio Management, noted the percentage of new leases is expected to be higher than the historical average. Regarding yields, Doug Healey attributed the change to marginal cost increases at the FlatIron and Green Acres projects.

Greg McGinniss from Scotiabank asked for details on the European retail parks, including the potential yield at market rent, total investment to date, and if there's a ceiling to this strategy, as well as the associated vacancy risk and CapEx needs.

Answer

CEO Sumit Roy explained the strategy evolved from a value play to a strategic approach of controlling retail footprints, which attracts major retailers and creates value uplift. He noted significant cap rate compression since the initial investments and rents that are 5-6% below market. He estimated vacancy risk at 1-2% and stated CapEx is not substantially different from U.S. assets.

Greg McGinniss of Scotiabank asked about the expected investment split between the U.S., Europe, and debt for 2025, and for an update on the company's expansion progress in Continental Europe.

Answer

CEO Sumit Roy projected a roughly 50/50 split between U.S. and international investments for 2025, similar to the 2024 outcome. He clarified that the current focus is on maturing the platform in existing European markets like the U.K., Spain, and Germany, rather than entering new geographies.

Greg McGinniss of Scotiabank questioned the rationale for launching a private capital fund, asking if capital raising was the primary constraint on 2024 acquisition volume and how the fund's investment philosophy would differ to avoid conflicts.

Answer

CEO Sumit Roy clarified that the private fund is a complementary vehicle designed to pursue opportunities with higher long-term total returns but lower initial yields, which are difficult for the public REIT to acquire due to the market's focus on first-year accretion. He cited industrial and data center assets as examples of opportunities the fund could pursue. Roy stated this structure allows Realty Income to expand its investable universe and monetize its platform.

Greg McGinniss sought clarification on whether the current net investment pace would lead to exceeding guidance, recent changes in the transaction market, and whether the guidance's bad debt allowance was for specific tenants.

Answer

CEO Mark Manheimer clarified that acquisition volume would not increase without an improvement in their equity price. He stated the transaction market has not changed significantly and confirmed the 75 basis points of potential rent loss in guidance is a general provision for unknown events, not tied to any specific tenant.

Greg McGinniss requested details on non-investment-grade acquisitions, clarification on the Big Lots rent relief period, and an update on any communications from CVS regarding store closures.

Answer

CEO Mark Manheimer described the non-IG acquisitions as having longer lease terms and contributing to the portfolio's internal rent growth, which now exceeds 1%. He clarified that Big Lots is expected to resume paying rent in January. Regarding CVS, he stated the company has a strong relationship, many assets are from blend-and-extend deals, and the previously announced CVS closure program should be winding down.

Greg McGinniss, on behalf of Scotiabank, asked about leasing trends in the Denver market, future geographies for development, and the funding strategy for development given lower planned dispositions.

Answer

Executive Vice President Peter Schultz acknowledged that Denver is working through elevated supply but noted improving market occupancy and increased tenant urgency. President and CEO Peter Baccile identified Pennsylvania, Texas, and Florida as key focus areas for new development starts. Chief Financial Officer Scott Musil confirmed the funding strategy remains consistent, utilizing excess cash flow, asset sales, and borrowings on the line of credit.