Hong Zhang

Hong Zhang inquired about Phillips Edison & Company's potential to proactively take back space to push rents higher in the long term, asking if any such opportunities might create short-term occupancy headwinds this year.

Answer

President Bob Myers stated that he does not anticipate any headwinds to occupancy. He explained that decisions to recapture space are made selectively on a case-by-case basis, primarily when a neighbor is unwilling to meet market rent or lacks viability. Myers emphasized that with 93% retention and low tenant improvement costs for renewals, it is often more economically favorable to renew existing tenants than to replace them, while still maintaining flexibility to remerchandise.

Hong Zhang asked about Phillips Edison & Company's potential to proactively take back space to push rents higher in the long term and if any such opportunities this year could create a headwind to occupancy.

Answer

President Bob Myers stated that he does not anticipate any headwinds to occupancy. He explained that PECO will be very selective in recapturing spaces, making case-by-case decisions when a neighbor doesn't meet market rent or viability is low. He emphasized that with 93% retention and low tenant improvement costs for renewals ($0.24/foot), renewing is often a better economic decision than replacing a neighbor, which can incur $22-$28/foot in TIs. He affirmed that PECO maintains flexibility to remerchandise and maximize portfolio value without weakening occupancy.

Hong Zhang asked about Weyerhaeuser's strategy and pace for share buyback activity, given the recent rally in the stock. She also inquired about the expected timeline for China export volumes to normalize, following the resumption of shipments, and whether this is a near-term or longer-term expectation.

Answer

CFO David Wold stated that share repurchase is a useful tool, and the company views it as an attractive lever at recent trading ranges, having completed $160 million in 2025 and authorized a new $1 billion program. He emphasized balancing it with a strong balance sheet and growth opportunities. CEO Devin Stockfish expects China export volumes to ramp up over the year but not return to previous levels due to lower real estate activity in China, expressing excitement about the program's resumption for Western system flexibility.

Hong Zhang asked about Weyerhaeuser's pace of share buyback activity, considering the recent rally in the stock. She also inquired whether the company expects export volumes to China to normalize this year or if that is a longer-term prospect, given the resumption of shipments.

Answer

CEO Devin Stockfish stated that China export volumes are expected to ramp up over the year but not return to previous levels due to lower real estate activity. CFO David Wold affirmed that share repurchase is an attractive lever, with $160 million completed in 2025, but the company will continue to weigh all capital allocation opportunities, including growth and balance sheet strength.

Hong Zhang asked about the sustainability of market share gains in Japan and whether log exports to China are expected to remain paused until the broader trade dispute is resolved.

Answer

CEO Devin Stockfish expressed confidence that market share gains in Japan are sustainable, citing rising European log costs and a key customer's new low-cost mill. He agreed it is a reasonable assumption that China exports will remain paused pending a trade resolution, but highlighted the successful pivot to India as a growing export market from the U.S. South.

Hong Hang asked what market changes are needed for OSB prices to stabilize and how recent government actions to increase timber harvesting on public lands might impact the broader timber market.

Answer

CEO Devin Stockfish stated that OSB pricing feels relatively stable at present, with a balanced supply-demand dynamic. He expects the typical seasonal pickup in building activity to support the market. Regarding federal lands, he noted Weyerhaeuser does not harvest there and believes a significant increase in log supply is unlikely due to a lack of appropriate mill infrastructure and other logistical challenges.

Hong Zhang asked about the sustainability of InvenTrust's historical mid-single-digit same-store growth, questioning if occupancy might become a headwind in the near term based on previous comments.

Answer

DJ Busch, President and CEO, clarified that he wouldn't call occupancy a headwind. He explained that while occupancy gains contribute to same-store growth, a higher retention rate, embedded escalators, redevelopment, and strong renewal spreads (even if same-store NOI growth moderates slightly from its strong run) would lead to stronger free cash flow growth due to less tenant churn and associated costs.

Hong Zhang from JPMorgan Chase asked about the lease-to-occupied spread, noting it has decreased but remains above historic levels, and whether it is expected to return to more historic levels by the end of 2026 or 2027 given strong rent commencements.

Answer

Brian Finnegan, Interim CEO and COO, stated that he expects the lease-to-occupied spread to remain wide. He acknowledged that while record ABR commencements would naturally tighten the spread, Brixmor is also actively leasing a significant amount of space, with a strong legal pipeline and elevated demand. This continuous leasing activity is expected to keep the spread somewhat elevated, despite the commencements.

Hong Zhang noted that the lease-to-occupied spread has decreased throughout the year but remains above historic levels, asking if it's expected to return to more historic levels by the end of 2026 or 2027 given strong rent commencements.

Answer

Brian Finnegan, Interim CEO and COO, stated that he expects the lease-to-occupied spread to remain wide. Despite record ABR commencements, strong leasing activity, a large legal pipeline, and elevated demand continue to fill the pipeline, suggesting the spread will remain somewhat elevated.

Hong Zhang from JPMorgan Chase & Co. asked about the implied deceleration in same-store NOI growth for the second half of the year and the potential use for the remaining forward equity if no acquisitions occur.

Answer

CFO Michael Bilerman stated that the full-year guidance range accounts for general macroeconomic uncertainty rather than a specific negative factor in the second half. Regarding the $70 million in forward equity, he explained that Tanger has ample time to settle it and can deploy the capital for either internal or external investments, supplementing the company's existing balance sheet capacity.

Hong Zhang asked about the financial impact of moving the back-to-school sales campaign to June and whether Tanger plans to increase marketing spend amid economic uncertainty.

Answer

President and CEO Stephen Yalof positioned the early campaign as a strategic move to drive traffic. CFO and CIO Michael Bilerman clarified that while the timing of marketing spend may shift, it is not expected to have a meaningful impact on full-year guidance, as revenues are largely fixed. He also indicated that marketing spend is not a significant driver of financial variability.

Hong Zhang inquired about the expense recovery ratio, which was in the high 80s, and whether this level is sustainable or has further upside given the ongoing conversion of tenants to fixed CAM leases.

Answer

CFO & CIO Michael Bilerman explained that the high recovery rate is driven by strong total rent growth outpacing operating expense growth. He expects the rate to remain around the 87% level for the full year 2025, though he cautioned that Q1 2025 will have a tougher comparison due to expense refunds in Q1 2024, which could temporarily lower the ratio for that quarter.

Hong Zhang from JPMorgan asked about the expected trend for the dollar amount of expense recoveries moving into next year.

Answer

CFO and CIO Michael Bilerman explained that expense recoveries are increasing due to a dual focus on driving higher revenues through increased base rents and fixed CAM, alongside efforts to minimize operating expenses. He noted the tenant recovery rate for the year might exceed the mid-80s level and expects this focus on driving lease spreads and operational efficiency to continue into the next year.

Hong Zhang from JPMorgan Chase & Co. asked if the positive migration trends benefiting Miami have created a corresponding negative impact on Simon's New York-area centers.

Answer

Chairman, CEO & President David Simon stated he does not believe migration will negatively affect its Long Island properties. He expressed more concern for New York City's urban core, suggesting that suburban markets in New York and New Jersey have experienced a renaissance and could actually benefit from shifts away from the city.

Hong Zhang of JPMorgan Chase & Co. asked if the positive demographic shifts benefiting the Brickell asset in Miami have had a corresponding negative impact on Simon's New York-area centers.

Answer

Chairman, CEO & President David Simon stated he does not believe the trend will negatively affect suburban assets on Long Island. He suggested any potential negative impact is more of a "New York City issue," noting that New York's suburbs have experienced a renaissance and could actually benefit from shifts away from the urban core.

Hong Zhang from JPMorgan Chase & Co. asked if CubeSmart is seeing more demand for its third-party management platform and how the business would perform in a potential recession.

Answer

CEO Christopher Marr confirmed that demand for third-party management is increasing, with a shift in the pipeline from new developments to existing operating stores whose owners are seeking the CubeSmart brand. He reiterated the industry's resilience, explaining that recessions typically generate demand from life events like downsizing or moving, and that vacates do not usually increase materially.

Hong Zhang of JPMorgan Chase & Co. asked about the outlook for pricing power and demand in 2025 and for any quantifiable near-term cost savings from the single-brand strategy.

Answer

CEO Joseph Margolis stated that the 2025 outlook depends on macro factors but expressed confidence in the company's ability to optimize performance. He quantified a potential $10 million annual savings in paid search marketing for LSI stores once brand parity is achieved, in addition to other less quantifiable benefits from increased brand strength.

Hong (Jung) Zhang asked about the expected normal lease-to-occupied gap for the Curbline portfolio and how lease options in Curbline properties differ from those in traditional anchored centers.

Answer

CFO Conor Fennerty estimated the normal lease-to-occupied gap would be tighter than for anchored centers, around 100 basis points, due to the shorter time needed to backfill small shop spaces. He explained that while lease terms are similar, the key difference is that Curbline leases have far fewer options, preventing tenants from controlling space for decades and allowing for more frequent mark-to-market opportunities.