Jana Galan

Jana Galan inquired about specific markets driving the decline in renewal rates during Q4 2025 and January 2026 compared to Q3 2025, and where AvalonBay might be negotiating more to protect occupancy. She also asked for more color on New Jersey's lease-up expectations and the confidence in new starts given market supply.

Answer

Sean Breslin, COO, explained that Q4 moderation in renewal rates was broad-based due to seasonal softening in asking rents, with more negotiation in softer markets like Mid-Atlantic, Boston, and Denver. Matthew Birenbaum, CIO, and Sean Breslin, COO, expressed confidence in New Jersey lease-ups, noting strong January leasing paces and projects tracking pro forma, despite some supply, due to the market's strength within New York City's orbit.

Jana Galan asked about specific markets driving the decline in Q4/January renewal rates, and where AvalonBay might negotiate more to protect occupancy. She also inquired about the other income drag from legislative activity, political initiatives to watch in 2026, and confidence in New Jersey lease-ups and new starts despite supply.

Answer

Sean Breslin, COO, attributed Q4 moderation in renewal rates to seasonal asking rent declines, with Mid-Atlantic, Boston, and Denver being softer markets where they negotiated more. He identified Colorado legislation (impacting fees/utility recovery) and California AB 1414 (bulk internet opt-out) as primary drivers of other rental revenue drag. He mentioned monitoring the Massachusetts ballot initiative and broader transparency efforts. Matthew Birenbaum, CIO, stated New Jersey lease-ups are tracking on plan, with recent completions above pro forma. Sean Breslin, COO, provided strong January lease-up numbers for New Jersey properties.

Jana Galan inquired about potential policy changes from upcoming elections in California that could benefit rental housing and how to model the structured finance book's growth after its expected right-sizing by the end of 2026.

Answer

Angela Kleiman (President and CEO, Essex Property Trust) noted a shift away from extreme liberal policies in California, with recent extreme proposals failing, indicating a sentiment for a normal functioning economy. Barbara Pak (EVP and CFO, Essex Property Trust) explained that the structured finance book will be $175 million generating income in 2026, with future redemptions being more manageable and the company seeking new opportunities.

Jana Galan of Bank of America questioned the strategy behind a new joint venture for structured finance and sought clarity on the expected deceleration in blended rent spreads.

Answer

EVP & Chief Investment Officer Rylan Burns explained the JV allows Essex to remain active in the preferred and mezzanine space, leveraging its expertise while limiting FFO volatility to under 4%. President & CEO Angela Kleiman clarified that the second-half rent spread deceleration is relative to a first half that significantly outperformed expectations, particularly in Northern California. The guidance for the second half simply reverts to their original, more moderate plan.

Jana Galan asked if a potential guidance raise would have applied to FFO, same-store revenue, or both. She also inquired about the likelihood of continued capital recycling from Southern to Northern California and any updates on exploring new markets.

Answer

Executive Barb Pak clarified that a guidance raise would have focused on Core FFO, driven by one-time preferred equity income. On capital allocation, Executive Rylan Burns stated they would like to replicate the successful Q1 dispositions, while Executive Angela Kleiman added that for the next 2-3 years, the upside in their existing markets, particularly Northern California, is more compelling than expanding to new markets.

Jana Galan asked for more details on the demand and touring activity for 343 Madison Avenue, particularly regarding the additional 16% in negotiations, and how increasing New York City market rents for trophy assets might impact future rents for the property.

Answer

Douglas Linde, President, highlighted 343 Madison's unique market position as the only new construction delivering before 2029. Hilary Spann, Company Representative, reported strong demand from financial services tenants (around 150,000 sq ft) for the podium and mid-rises. She noted that Midtown rents have increased by about 15% over the last 12 months, and 343 Madison is at the top of the market, with demand continuing to accelerate and putting pressure on pricing.

Jana Galan asked for more details on demand and touring activity for 343 Madison Avenue, and how increasing New York City market rents for trophy assets might impact future rents for the property.

Answer

President Douglas Linde highlighted 343 Madison Avenue's unique position as the only new construction delivering before 2029, and BXP's strategic approach to leasing the top portion for higher-value tenants. Hilary Spann, Company Representative, reported strong demand from financial services tenants for podium and mid-rise spaces, with rents trending well and meeting pro forma. She noted that Midtown rents have increased by approximately 15% over the last 12 months, and accelerating demand will continue to put pressure on pricing, benefiting 343 Madison Avenue.

Jana Galan asked about the pricing BXP is achieving on its land, residential, and office dispositions relative to initial expectations, following the progress made on the Investor Day priorities.

Answer

Owen Thomas (CEO, BXP Inc) indicated that pricing for dispositions is generally in line with, or slightly better than, expectations. He noted that land pricing is variable but BXP has created value by re-entitling parcels for residential use. For residential assets, cap rates are below 5%, which is considered very attractive, while office pricing depends on location and quality.

Jana Galan inquired about the pricing BXP is achieving on its land, residential, and office dispositions relative to initial expectations.

Answer

CEO Owen Thomas indicated that pricing for dispositions is generally in line with, or slightly better than, expectations. He noted that land pricing is variable but BXP has created value by re-entitling office land parcels for residential use, capitalizing on housing shortages. For residential assets, cap rates are below 5%, which is attractive. Office pricing depends on location and quality.

Jana Galan from Bank of America requested details on the terms of the MTA ground lease for the 343 Madison Avenue development.

Answer

Hilary Spann, EVP of the New York Region, described it as a 99-year ground lease with knowable, documented payment increases. Michael LaBelle, EVP, CFO & Treasurer, added a key detail: the lease has no market value resets, with increases tied to the property's performance, making it attractive for underwriting and financing.

Jana Galan from Bank of America Securities asked for current pricing indications for BXP's unsecured debt, secured debt, and CMBS, given the recent volatility in capital markets.

Answer

CFO Michael LaBelle reported that while credit spreads widened, they are now tightening for high-quality issuers like BXP. He estimated a 10-year unsecured bond could be issued at a spread of approximately 180 basis points, or a ~6% fixed rate. He noted that while the CMBS market also saw volatility, high-quality, lower-leverage deals remain financeable, and the commercial paper market has stabilized.

Jana Galan asked about the incoming interest and valuation for 555 California or The Mart, and if Vornado's strategic thinking about these assets has changed due to improvements in San Francisco. She also inquired about Vornado's thoughts on developing future residential projects, specifically regarding for-sale versus for-rent components in New York City.

Answer

Steven Roth, Chairman and CEO, Vornado Realty Trust, stated that 555 California is a 'great asset' they are delighted to own or sell for the right price, while the Chicago market (The Mart) is not as strong. For residential development, he mentioned a planned 475-unit *rental* project at 34th Street and 8th Avenue, and that Vornado constantly analyzes the economics of office versus residential for its land holdings.

Jana Galan from Bank of America asked about the timing for the redevelopment of the 34th Street retail corridor and for more detail on the revenue ramp leading up to the full FFO impact from PENN1 and PENN2 in 2027.

Answer

Chairman and CEO Steven Roth described the 34th Street project as a long-term plan to redevelop 700 front feet of retail, stating the timing is 'now' but specific lease-up timelines are not set. President and CFO Michael Franco reiterated that while revenue will build, the earnings growth will be back-end loaded, with a steep increase from 2026 to 2027.

Jana Galan asked about Equity Residential's experience in the San Francisco market, specifically how quickly rents can increase when demand accelerates and if seasonality still holds given job growth. She also inquired if there would be additional Wi-Fi related expenses in 2026 or if the 2025 impact would be smoothed out.

Answer

Michael Manelis, Chief Operating Officer, stated that the supply-demand imbalance in San Francisco (low supply, high demand) creates pricing power, noting rents are just returning to 2019 levels while incomes are up 22%. He expects strong growth for the next couple of years, though seasonality may still lead to some softening. Bret McLeod, Chief Financial Officer, clarified that the 40 basis points of Wi-Fi expense impact was primarily for 2025, with the company anticipating revenue from the initiative in 2026.

Jana Galan asked about the San Francisco market, specifically how quickly rents can increase when demand accelerates and if seasonality still holds given job growth. She also inquired about additional Wi-Fi expenses related to the initiative in 2026.

Answer

Michael Manelis (COO) explained that the supply-demand imbalance in San Francisco creates pricing power, especially as rents are just returning to 2019 levels while incomes are up 22%. He expects strong growth for the next couple of years, though seasonality may still cause some softening. Mark Parrell (President and CEO) clarified that the 40 bps higher expense in 2025 is primarily for this year, and they look forward to realizing the revenue in 2026.

Jana Galan asked about the core FFO guidance range for Q4 and the full year, specifically if there's an expectation of greater volatility. She also inquired about opportunities in the MH sector, including potential for more site development or acquisitions.

Answer

Paul Seavey, EVP and CFO, stated there was nothing specific to call out regarding the FFO guidance range, as it simply carried forward the convention used all year. Marguerite Nader, CEO, noted the difficulty in sourcing high-quality MH portfolios for acquisition due to fragmented ownership and strong asset performance. Patrick Waite, President and COO, discussed the development strategy, aiming for 500 to 1,000 expansion sites annually, with approximately 400 to 500 sites delivered this year.

Jana Galan inquired about the core FFO guidance range for the fourth quarter versus the full year, seeking clarification on any expected volatility or share count changes. She also asked about opportunities for more manufactured housing (MH) site development or acquisitions, following the CEO's earlier comments.

Answer

Paul Seavey, EVP and CFO, stated there was nothing specific to call out regarding the FFO guidance range, as it simply carried forward the $0.10 range convention used all year. Marguerite Nader, CEO, noted the difficulty in sourcing high-quality MH portfolios for acquisition. Patrick Waite, President and COO, discussed plans to add 400-500 expansion sites for the year, aiming for a sustainable 500-1,000 sites annually, despite recent administrative headwinds.

Jana Galan inquired about the revised outlook for the core RV and Marina annual revenue, asking for details on what drove the downward guidance revision during the second quarter.

Answer

CEO Marguerite Nader provided context on the resilience of the annual RV customer base, which resembles a second-home owner. President & COO Patrick Waite specified that the guidance reduction was driven by an occupancy miss, not rate. He attributed this to higher-than-expected attrition at approximately 20 properties in the North and Northeast, and storm damage taking some marina slips offline, which are expected to be repaired in coming quarters.

Jana Galan inquired about the reasons behind the downward revision to the core RV & Marina annual revenue guidance, asking what specific factors in the second quarter prompted the change.

Answer

CEO Marguerite Nader provided context on the stability of the annual RV customer base, while President & COO Patrick Waite explained the guidance change was driven by an occupancy miss. He specified that higher-than-expected attrition at approximately 20 properties, primarily in the North and Northeast, and storm-related slip damage at two marinas were the main causes.

Jana Galan inquired about the revised outlook for core RV and Marina annual revenue, asking for details on what drove the downward guidance revision during the second quarter.

Answer

CEO Marguerite Nader provided context on the resilience of the annual RV customer base. President & COO Patrick Waite specified that the guidance change was driven by an occupancy miss, primarily due to higher-than-expected attrition at approximately 20 properties in the North and Northeast, and storm damage taking some marina slips offline.

Jana Galan inquired about the revised, lower guidance for core RV and Marina annual revenue, asking for specifics on what drove the change during the second quarter and for the forward outlook.

Answer

CEO Marguerite Nader provided context on the resilience of the annual RV customer base. President & COO Patrick Waite specified that the Q2 miss was driven by lower occupancy, primarily from higher-than-expected attrition at approximately 20 properties in the North and Northeast. He also noted that storm damage took some marina slips offline, impacting marina annual revenue.

Jana Galan inquired about the revised outlook for core RV and Marina annual revenue, asking what drove the downward guidance revision and whether it was related to lower renewals or specific geographies.

Answer

CEO Marguerite Nader contextualized the annual RV customer base as a resilient, long-term revenue stream. President & COO Patrick Waite specified that the Q2 revenue miss was driven by lower occupancy, not rate. He attributed the weakness to higher-than-expected attrition at approximately 20 properties in the North and Northeast, and storm damage taking some marina slips offline.

Jana Galan requested details on the manufactured housing (MH) occupancy trends embedded in the guidance for the remainder of the year. She also asked for color on trends in MH home sales, including the mix of new and used homes.

Answer

Paul Seavey, an executive, stated that the guidance assumes a modest increase in MH occupancy through year-end. Patrick Waite, an executive, added that while Q1 home sales faced headwinds from Florida hurricanes, underlying demand is consistent, highlighted by a 14% mark-to-market on new leases. He noted new home sales are the primary driver of occupancy, with used sales being a small part of the business.

Jana Galan sought clarification on the 'mid to high 7% range' for cap rates, asking if it represents the current pipeline or is embedded in the 2026 guidance. She also asked for details on the scenarios considered for 2026 credit loss, given the historical 30 basis points.

Answer

President and CEO Peter Mavoides confirmed that the 'mid to high 7% range' applies to both the current Q4 pipeline and 2026 expectations. He anticipates cap rates to be sticky, not sharply declining, and driven by capital markets, with an aim to maintain spreads. Chief Financial Officer Mark Patten explained that the guidance range incorporates a wide array of credit assumptions, starting with the historical 30 basis points, supplemented by deep dives into the portfolio and general assumptions. Mr. Mavoides added that their credit loss experience has been better than anticipated, contributing to guidance increases.

Jana Galan sought clarification on the mid to high 7% cap rate range, asking if it applies to the current pipeline or the 2026 guide. She also asked for details on the credit loss scenarios considered for 2026, given the historical 30 basis points.

Answer

Peter Mavoides, President and CEO, confirmed that the mid to high 7% cap rate range applies to both the current Q4 pipeline and 2026 expectations, reiterating that cap rates are expected to be sticky and driven by capital markets. Mark Patten, CFO, explained that the guidance range incorporates a wide range of credit assumptions, starting with the historical 30 basis points, with deep dives and risk mitigation built in. Mr. Patten added that credit loss experience has been better than anticipated, driving guidance increases.

Jana Galan of Bank of America asked about the scalability of the platform and whether the company targets a specific G&A level as a percentage of revenue or assets.

Answer

CEO Pete Mavoides explained that G&A is an output of their primary goal: driving sustainable earnings growth. He stated that the company invests in its teams to support the growing portfolio and execute its business plan, rather than managing to a specific G&A ratio.

Jana Galan from Bank of America asked for quantification of the headwind to the full-year AFFO per share guidance resulting from the treasury stock method accounting for unsettled forward equity.

Answer

CFO Mark Patten estimated the headwind in the guidance was no more than $0.01 to $0.02, assuming the stock price remains relatively stable. Executive Robert Salisbury directed her to new disclosure on page 25 of the supplemental package, which shows the specific share impact from the dilution, noting it was 1.1 million shares for Q1.

Jana Galan with Bank of America inquired about the company's same store guidance, noting it was trending at the low end, and asked about Q4 timing-related items to reach the middle of the range. She also sought clarity on rental revenue visibility for year-end, current rental rate increases, and the percentage of lease expirations in Q4.

Answer

Amanda Lombard, Chief Financial Officer, clarified that Q3 same store NOI growth was an anomaly due to non-controllable expenses and expected low expense growth from Q1 and Q2 to continue into Q4, affirming confidence in the guidance range. Anna Malhari, Chief Operating Officer, added that Q4 has limited lease expiration exposure, strong renewal visibility with only 0.5% of NOI outstanding, and renewal rates are being sent out in the 4-5% range, settling slightly below. Occupancy, excluding Liberty Towers, was 95.8%.

Jana Galan inquired about the maintained same store guidance ranges, noting they were trending at the low end, and asked about any timing-related items that might impact Q4 to bring results into the middle of the range. She also asked about visibility into rental revenue for year-end, current rental rate increases, and the typical percentage of expirations in Q4.

Answer

Amanda Lombard (CFO, Veris Residential) clarified that Q3 same store NOI growth was an anomaly due to non-controllable expense resetting. She anticipates the low expense growth trend from Q1 and Q2 to continue into Q4, combined with a small percentage of open revenue, providing confidence in the guidance range. Anna Malhari (COO, Veris Residential) added that Q4 has limited expiration exposure and strong visibility into renewals, with only about 0.5% of NOI outstanding. Renewal rates are being sent out in the 4%-5% range, settling slightly below, and occupancy remains strong at 95.8% (excluding Liberty Towers).

Jana Galan of Bank of America asked for commentary on the potential impact of the New York City mayoral election on the Jersey City market and for an update on blended rent spreads for July.

Answer

CEO Mahbod Nia suggested that while it's too early for conclusions, potential NYC policies could make the Jersey City Waterfront a beneficiary due to its proximity and existing tax advantages. COO Anna Malhari noted that while it was only three weeks into the new quarter, renewal notices were being sent out at mid-single-digit increases, consistent with recent trends.

Jana Galan asked about Veris Residential's primary strategic focus following the recent simplification and Sable transaction, and questioned the decision to maintain guidance despite strong year-to-date performance, probing for any specific negative operational trends like increased bad debt or lease breaks.

Answer

Chief Executive Officer Mahbod Nia stated the strategic focus remains on the previously announced plan to sell $300-$500 million in non-strategic assets and recycle the capital into debt repayment and share repurchases. Nia and Chief Financial Officer Amanda Lombard explained that while no negative operational trends are currently visible, the decision to maintain guidance is a prudent measure given significant macroeconomic uncertainty. Lombard also noted that Q3 same-store NOI faces a difficult comparison to the prior year's favorable tax and insurance results, which tempers the full-year outlook.

Jana Galan asked for details on the seasonal cadence of blended rent spreads and occupancy embedded in the 2025 guidance and inquired about the pacing of revenue-enhancing redevelopment projects, questioning if capital was a constraint.

Answer

COO Anna Malhari explained that with approximately two-thirds of leases rolling in Q2 and Q3, they expect the strongest lease growth during the summer, following a typical Q1 slowdown. CEO Mahbod Nia added that the pace of redevelopments like Liberty Towers is determined by unit availability and the need to minimize disruption for residents, confirming that capital is not a constraint and the company has plenty of liquidity.

Jana Galan asked about the composition of Agree Realty's growing external growth pipelines, specifically the mix of current versus new tenants, and the anticipated cap rate trends for Q4 2025 and into 2026. She also sought an update on the 25 basis points credit loss guidance for Q3.

Answer

President and CEO Joey Agree confirmed that the pipelines primarily involve existing tenants, with no material deviation expected in Q4 cap rates, and a strong Q4 pipeline including ground leases. CFO Peter Coughenour stated Q3 credit loss was approximately 21 basis points, reiterating the 25 basis points assumption for the full year, and clarified the comprehensive definition of credit loss.

Jana Galan asked about the composition of Agree Realty's growing external growth pipelines, specifically regarding current versus new tenants, and sought projections for cap rate trends in Q4 2025 and into 2026. Galan also inquired about the 25 basis points credit loss assumption in guidance, seeking an update on the current standing as of Q3.

Answer

Joey Agree, President and CEO, confirmed that Agree Realty is primarily working with existing tenants across all platforms and does not anticipate material cap rate deviations in Q4 2025, noting a strong pipeline including significant ground leases and accelerated development. Peter Coughenour, CFO, clarified that Q3 experienced 21 basis points of credit loss, with 25 basis points anticipated for the full year, emphasizing the comprehensive nature of their credit loss calculation.

Jana Galan requested clarification on the 25 to 50 basis point bad debt guidance, asking if it reflects any specifically identified risks or if it primarily provides a cushion for potential issues.

Answer

CFO Peter Coughenour stated that credit loss was near the low end of the range (25 bps) in the first half of the year and is expected to remain there based on known issues. The high end of the range (50 bps) includes a cushion for unknown events. CEO Joey Agree added that their definition of credit loss is 'fully loaded,' encompassing lost rent plus all operating expenses on vacant properties to provide a true picture of economic loss.

Jana Galan from Bank of America asked for quantification of the pricing spread on the new commercial paper program relative to the revolver and whether this benefit was included in guidance. She also asked if current investment spreads are at historic highs.

Answer

CFO Peter Coughenour stated that they can issue commercial paper at rates 40+ basis points inside of their revolver's borrowing cost (which was ~5.2%) and confirmed this benefit is contemplated in the updated guidance. CEO Joey Agree affirmed that investment spreads are indeed wide, stating that 'absent the depths of the pandemic,' there is 'no doubt' that current spreads are wide and the company will be a beneficiary.

Jana Galan from Bank of America Corporation asked for quantification of the pricing spread for the new commercial paper program relative to the revolver, whether this benefit was included in guidance, and for commentary on whether current investment spreads are at historic highs.

Answer

CFO Peter Coughenour stated that the commercial paper program is expected to price 40-plus basis points inside of their revolver's borrowing cost (which was ~5.2%) and confirmed the anticipated savings are included in the updated guidance. CEO Joey Agree concurred that current investment spreads are wide and beneficial for the company, absent the zero-interest-rate period during the pandemic.

Jana Galan inquired about the current capital allocation strategy and transaction market, asking whether acquisition opportunities are primarily from portfolios, build-to-rent (BTR) communities, or one-off MLS sales.

Answer

Chief Executive Officer Dallas Tanner emphasized a focus on acquiring new homes through builder partnerships. Chief Investment Officer Scott Eisen elaborated that the single-asset MLS market is quiet, but they are actively evaluating bulk portfolios, end-of-quarter inventory from builders, and stabilized BTR communities from sponsors seeking liquidity. He confirmed they continue to execute forward-purchase projects with national builders.

Jana Galan of Bank of America inquired about the transaction market, specifically the potential for large portfolio deals and the characteristics of INVH's dispositions, including cap rates and buyer profiles.

Answer

EVP & CIO Scott Eisen stated that the cadence of portfolio opportunities remains consistent and the company is focused on dialogues with homebuilders for bulk purchases. He confirmed that dispositions are primarily sold one-by-one to end-users, particularly in markets like California and Florida, to recycle capital effectively.

Jana Galan of Bank of America inquired about the transaction market, specifically the potential for large portfolio acquisitions and the characteristics of current dispositions, including cap rates and buyer profiles.

Answer

CIO Scott Eisen responded that the cadence of portfolio opportunities remains consistent with recent years and that the company continues to find attractive, modest-sized opportunities with homebuilders. Regarding dispositions, he confirmed that the market is primarily end-user focused, with sales concentrated in markets like California and Florida, executed mostly on a one-by-one basis.

Jana Galan from Bank of America asked about the potential for further improvement in bad debt, which reached a new post-pandemic low, versus taking a more cautious stance.

Answer

President Charles Young expressed cautious optimism, attributing the improvement to both team execution and high resident quality. He noted that while the trend is positive across the board, they are closely monitoring markets like Atlanta, Chicago, and Southern California where court processing times can affect outcomes. The overall outlook remains positive but watchful of the macro environment.

Jana Galan of Bank of America inquired about the board's rationale for the new dividend level, asking for clarification on how it aligns with the cash flow of an industrial portfolio and at what scale a more conventional payout ratio might be considered. She also asked about the 2026 lease expiration schedule for the Industrial Outdoor Storage (iOS) portfolio, including typical renewal discussion timing and historical renewal rates.

Answer

CEO, President & Trustee Michael Escalante explained that the dividend adjustment is a forward-looking decision to reflect the company's accelerated shift to a pure-play industrial REIT, anticipating a future without office assets. Regarding lease expirations, he noted very low rollover, with only one lease expiring in 2025 and eight in 2026, representing about 9% of ABR. He added that most of these 2026 leases have tenant-favorable fixed-rate renewal options, leading to an expectation of a high renewal rate.

Jana Galan inquired about the potential Annualized Base Rent (ABR) opportunity from the company's remaining Industrial Outdoor Storage (IOS) redevelopment sites and asked about the current market for additional acquisitions.

Answer

Executive Michael Escalante explained that while specific guidance on ABR for the remaining sites isn't provided due to location variety, the company is comfortable with its previously stated return ranges. He noted that capital spending has often been lower than anticipated. Regarding acquisitions, Escalante confirmed the company has liquidity but will maintain a balanced approach between growth and managing leverage, actively pursuing compelling risk-adjusted returns from a full pipeline of deals.

Jana Galan from Bank of America asked for details on Kennedy Wilson's preferences within its multifamily investment strategy, specifically regarding affordable versus market-rate and U.S. versus European assets. She also inquired about the specific timing of the planned €300 million loan repayment in October.

Answer

Matt Windisch, President, explained that the company is actively pursuing residential opportunities across geographies and the capital stack, noting a recent shift toward more equity acquisitions in the U.S. William J. McMorrow, Chairman & CEO, added that the long-term goal is to grow the number of units owned or financed from 70,000 to between 90,000 and 100,000. Justin Enbody, CFO, confirmed the October 3rd loan repayment timing is driven by the expiration of prepayment penalties and the company's strong cash position.

Jana Galan from Bank of America asked if positive catalysts like university investments and the World Cup are increasing leasing demand. She also questioned why cash releasing spreads were lower than their recent trend.

Answer

CEO Jordan Kaplan stated that while the leasing pipeline is 'very good,' he attributes it more to the broad return-to-office movement than specific events. VP of IR Stuart McElhinney explained that quarterly cash spreads fluctuate with the mix of leases and pointed to the positive straight-line spread as a more stable indicator of lease value, given their high built-in annual rent escalators.

Jana Galan asked about the company's capital allocation priorities, weighing opportunistic acquisitions against redevelopments and share buybacks, and whether acquisitions would be done with partners or on-balance sheet.

Answer

President and CEO Jordan Kaplan clarified that redevelopment commitments are already in motion. He noted that share buybacks are reserved for extreme valuation dislocations. For new acquisitions, he expects to continue including partners to maintain those key relationships, stating that partners have historically participated in deals presented to them.

Jana Galan from Bank of America inquired about the expected cap rates for the potential acquisition of two multifamily assets and the planned disposition of a mixed-use property.

Answer

CEO Shawn Tibbetts stated that the combined cap rate for the multifamily acquisitions would be around 6%, with opportunities for operational synergies. For the disposition of the fully-leased office and retail asset, he estimated a cap rate in the mid-6% range. Tibbetts emphasized that the primary goal is to execute transactions that are accretive relative to their recent private placement debt cost of 5.86%.

Jana Galan asked for clarification on which market experienced a decline in releasing spreads, following the highlight of Atlanta's 17% increase, and inquired about the potential scale and bidder interest for non-core asset dispositions.

Answer

EVP of Operations Richard Hickson identified Phoenix as the market with a negative rent roll-up, attributing it to a single challenging lease comparison. President and CEO Colin Connolly stated that any dispositions would be driven by new investment opportunities rather than a formal program, prioritizing older, high-CapEx assets and non-core land.

Jana Galan of Bank of America asked about the renewal timing for annual RV memberships, questioning if they are seasonal or spread throughout the year. She also inquired about the outlook for manufactured housing (MH) home sales and the role of rental homes in driving occupancy gains.

Answer

President John McLaren explained that while there is a concentration of annual RV renewals in the early part of the year in southern markets, renewals are generally pro-rata for the remainder of the year. Regarding manufactured housing, he stated the focus is on real property income, and with occupancy near 98% and low turnover, home sales trends in the second half are expected to be similar to the first half.

Jana Galan from Bank of America asked for the reasons behind the downward revision in RV guidance, questioning the impact of return-to-office trends and lower Canadian travel, and requested visibility on Memorial Day bookings.

Answer

Executive John McLaren explained the RV softness is due to a shift toward shorter booking windows and challenges with Canadian guests, which became more pronounced in early April. He noted that while the company is following the current pacing data for its revised forecast, the transient business remains a key pipeline for converting sites to more stable annual revenue. He emphasized the focus is on retaining existing annual guests.

Jana Galan inquired about the background and timing of the strategic shift to sell Safe Harbor Marinas, asking why the decision was made now given the marina business's strong momentum and why it didn't wait for the ongoing CEO search to conclude.

Answer

Executive Gary Shiffman explained that the sale was an opportunistic deal that the entire board evaluated. He emphasized that the transaction allows Sun to monetize a successful investment, sharpen its focus on core MH and RV segments, and enhance its balance sheet, positioning the company well for the future.

Jana Galan of Bank of America asked for clarification on the financial impact of consolidating the Philadelphia (Broadridge) property and whether the initial guidance accounted for it. She also asked for details on how blended lease spreads are calculated.

Answer

President & CIO Joseph Fisher explained that while the initial guidance factored in the non-accrual drag from the loan, it did not include the subsequent $4 million income recapture from the developer, which was a positive variance. SVP & COO Michael Lacy added that the team has already increased the property's occupancy from 83% to 93% since the takeover. On lease spreads, Lacy confirmed UDR captures all leases, and a like-for-like comparison (88% of leases) would yield a result within 10-20 basis points of the reported figure.

Jana Galan of Bank of America asked for expectations in Dallas and Austin, specifically questioning if the first quarter could represent the trough for new lease growth in those markets.

Answer

COO Mike Lacy indicated that Florida markets like Tampa and Orlando are likely at or past their trough and are showing positive momentum. He expects Texas and Nashville to lag, with Nashville potentially seeing positive momentum late in 2025 or early 2026. Lacy identified Austin as the laggard of the group due to significant supply, projecting it will be the end of 2025 or into 2026 before that market sees a positive inflection.

Jana Galan of Bank of America asked about the sustainability of mid-4% renewal rates and whether resident turnover is expected to change in the second half of the year.

Answer

EVP Timothy Argo attributed the durable renewal strength to high customer service, thoughtful pricing analysis, and steady portfolio churn. He expects turnover to remain low in the second half, noting that renewal acceptance rates in Q3 are trending slightly better than in 2024 and key drivers of turnover remain subdued.

Jana Galan from Bank of America asked for color on how rent coverage varies across different property types and inquired if the trend of lower per-visit spending at 'eat and play' venues was continuing.

Answer

CEO Greg Silvers explained that while the overall coverage improvement was largely driven by the theater recovery, other segments remain stable. He acknowledged that consumers are value-conscious, but noted that 'eat and play' tenants are actively responding with promotions to engage customers, and the consumer remains resilient in seeking out experiences.

Jana Galan from Bank of America inquired about the higher fixed rent bumps on new leases (2.8%) versus the portfolio average, asking if this was due to property mix or a broader tenant acceptance. She also asked about targeted yields and strategy for development projects.

Answer

CEO Jason Fox explained the higher bumps are a combination of pushing for stronger fixed escalators on new deals and the current focus on industrial properties, which command higher bumps than retail. He emphasized the attractive mid-9% average yield over the lease term. For developments and build-to-suits, he noted they target a 25-50 basis point premium over standard acquisitions, with even higher spreads on expansions for existing tenants, an area they are actively looking to grow.

Jana Galan of Bank of America inquired about the drivers behind the higher fixed rent escalators (2.8%) on new leases. She also asked about the strategy and target yields for development projects like build-to-suits.

Answer

CEO Jason Fox explained that the higher 2.8% fixed bumps are a result of both doing fewer inflation-linked deals and the current focus on industrial properties, which command higher escalators than retail. Regarding developments, he noted that build-to-suits typically yield a 25-50 basis point premium over acquisitions, with even higher spreads on portfolio expansions, a segment they are actively looking to grow with their in-house team.

Jana Galan from Bank of America inquired about the higher fixed rent escalators (2.8%) on new leases, asking if this was due to the industrial property mix or broader tenant acceptance. She also asked about the strategy and target yields for development and build-to-suit projects.

Answer

CEO Jason Fox explained that the higher fixed bumps are a result of both the industrial-heavy deal mix and a strategic push for stronger fixed escalators in lieu of inflation-linked ones. Regarding developments, he noted W. P. Carey has a $300 million pipeline of projects, which typically yield a 25-50 basis point premium over standard acquisitions, with even higher spreads on expansions within the existing portfolio, leveraging their in-house project management team.

Jana Galan sought clarification on whether the guided $15 million to $20 million for potential rent loss also accounts for operating expenses on vacant assets and any associated repositioning capital.

Answer

CFO ToniAnn Sanzone explained that the guided range refers to top-line revenue loss, but a factor for downtime-related property expenses is built into a separate assumption. Head of Asset Management Brooks Gordon added that repositioning capital needs are expected to be moderate and are not a major factor, as tenants typically handle their own fit-outs.

Jana Galan of Bank of America inquired about the current buyer landscape for Kilroy's assets, including the types of buyers and valuation discussions. She also asked about the planned use of proceeds from dispositions, specifically regarding the company's share buyback authorization.

Answer

EVP & CIO Eliott Trencher noted a diverse buyer pool, including institutional, high-net-worth, and owner-users, with good depth across recent transactions. CEO Angela Aman added that more institutional buyers are returning, signaling growing conviction in the West Coast office recovery. Aman also confirmed the share buyback program has approximately $400 million in remaining authorization.

Jana Galan asked for commentary on the Q1 leasing volume, questioning if activity was pulled forward from Q4 or impacted by Los Angeles fires, and requested an overview of the forward pipeline's geographic distribution.

Answer

CEO Angela Aman confirmed that an exceptionally strong Q4 2024 pulled some deals forward and a few others slipped into April, affecting Q1 volume. EVP and Chief Leasing Officer Rob Paratte highlighted that the forward pipeline is robust, with San Francisco and Bellevue being particularly active, while Los Angeles is slower but showing signs of recovery. Aman emphasized that portfolio-wide tour activity was up 40% year-over-year.

Jana Galan asked about the process for early lease renewals and the typical notice period from tenants, specifically concerning the small percentage of ABR expiring in 2026.

Answer

President & CEO Mark Manheimer explained that while the typical notice period is six months, the company is proactive in renewal discussions, especially when engaging with tenants on other matters. He expressed high confidence that nearly all leases expiring in 2026 will renew at their option rent.

Jana Galan asked about the small percentage of leases expiring in 2026, inquiring about the typical process and timing for renewal discussions and when NetStreet usually receives notice from tenants.

Answer

CEO Mark Manheimer explained that lease notice periods are typically six months, but they proactively engage in renewal discussions when appropriate, without waiting for the deadline. He expressed high confidence that nearly all of the leases expiring in 2026 will be renewed by the tenants.

Jana Galan asked about the small percentage of leases expiring in 2026, seeking details on the typical timing for renewal discussions and when the company receives notice from tenants.

Answer

President & CEO Mark Manheimer explained that while formal notice periods are typically six months, the company is proactive in discussing renewals earlier, especially when engaging with tenants on other matters. He expressed high confidence that nearly all of the leases expiring in 2026 will be renewed by the tenants.

Jana Galan asked about the small percentage of leases expiring in 2026, seeking details on the typical timing for starting renewal discussions and receiving notice from tenants about their intentions.

Answer

CEO Mark Manheimer explained that while formal notice periods are typically six months prior to expiration, the company is proactive in its discussions, often looping them into other ongoing conversations with tenants. He expressed strong confidence that nearly all of the leases expiring in 2026 will be renewed at their option rents.

Jana Galan asked if NETSTREIT has recently modified its credit underwriting criteria and inquired about the company's strategy regarding property size, particularly whether they are moving away from larger boxes.

Answer

CEO Mark Manheimer explained that their underwriting filter remains the same, but different opportunities are passing through it as cap rates have moved more for non-investment-grade tenants. He confirmed a strong preference for smaller, fungible boxes and stated they are very cautious with larger assets due to the difficulty and cost of repositioning them.

Jana Galan from Bank of America asked about the expected investment spread between recycling portfolio assets and acquiring new ones, and also inquired if the company discloses average or median tenant rent coverage.

Answer

Randall Starr, Co-CEO & CFO, stated that he expects about a 100 basis point spread on average between the cap rates on dispositions and acquisitions. Stephen Preston, Chairman & Co-CEO, added that this recycling strategy also serves to increase the portfolio's weighted average lease term. In response to the second question, Randall Starr confirmed that FrontView does not disclose tenant rent coverage metrics at this time.

Jana Galan from Bank of America asked about the historical take rate on renewal offers, seeking to understand the typical difference between the initial offer and the final signed lease rate after negotiations.

Answer

An executive explained that there is typically a 50 basis point decline from the initial renewal offer to the final signed lease. President and CFO Alex Jessett added that for the second quarter, they are assuming renewal rates will be in the high 3% range, which is consistent with the offers being sent out and the expected take rate.

Jana Galan asked if deals in the 1.1 million square foot leasing pipeline were following typical timelines and inquired about trends for free rent and tenant improvements (TIs).

Answer

Executive Steven Durels responded that there has been no material change in leasing timelines or tenant sentiment. Regarding concessions, he stated they have been stable, but noted that rising face rents on Park and Sixth Avenues could lead to future pressure on concessions in those strong submarkets.