Jason Wayne

Jason Wayne asked for the company's home sales assumptions for 2026 and how they are factored into G&A, also inquiring about changes in ancillary NOI guidance.

Answer

President John McLaren explained that the focus is on real property income, with home sales expectations driven by high occupancy (nearly 98%) and low resident turnover, leading to stable long-term cash flow. He expects 2026 volumes and margins to be similar to 2025, noting home sales are not as material to FFO. CFO Fernando Castro-Caratini clarified that ancillary NOI guidance is ex-marina, primarily from the RV portfolio and UK platform.

Jason Wayne asked about the decline in home sales volumes in 2025, the assumptions for 2026 home sales, and their impact on G&A, as well as changes in ancillary NOI guidance related to marinas.

Answer

President John McLaren explained that the focus is on real property income, and home sales are a product of high occupancy (nearly 98%) and low resident turnover, leading to stable long-term cash flow. He expects 2026 volumes and margins to be similar to 2025. CFO Fernando Castro-Caratini clarified that the ancillary NOI guidance is exclusive of marinas, primarily reflecting contributions from the RV portfolio and the U.K. platform.

Jason Wayne of Barclays inquired about the impairment charges recorded in the quarter, asking about the underlying strategic shift and whether the UK write-downs were related to the ground lease acquisitions. He also asked if the company plans to sell its UK operations.

Answer

EVP & CFO Fernando Castro-Caratini clarified that the impairment charges were not related to the ground lease deals but stemmed from a strategic shift to halt new greenfield development projects in both the US and UK. Chairman & CEO Gary Shiffman stated there are no current plans to sell the UK operations. The focus remains on supporting the UK team and executing the strategy of growing recurring property income, which is creating value.

Jason Wayne asked for color on which tenants or industries contribute to the identified portion of credit loss assumed in Realty Income's guidance, and which pose risks for the high end of the range. He also inquired if the lower year-over-year occupancy guidance includes any Q1 lease terms and what a good run rate for quarterly lease termination fees would be.

Answer

Jonathan Pong, Chief Financial Officer and Treasurer, declined to name specific clients but mentioned "a couple of restaurants, restaurant chains" as part of the identified minority, reiterating that the unidentified piece is considerably larger and lacks specific color. He stated "no, nothing material" for Q1 lease terms impacting occupancy. He described lease termination fees as "opportunistic, episodic," making a quarterly run rate difficult, but expects $30 million-$40 million for the 12-month period due to proactive asset management.

Jason Wayne asked for color on the identified properties contributing to the credit loss assumed in guidance, specifically which tenants or industries are known risks. He also inquired if lower year-over-year occupancy guidance includes any Q1 lease terms and what a good run rate for quarterly lease termination fees would be.

Answer

CFO and Treasurer Jonathan Pong declined to name specific clients but mentioned 'a couple of restaurants, restaurant chains' as part of the identified credit loss, reiterating that the unidentified piece is considerably larger. He stated no material lease terms are included in Q1 occupancy guidance and described lease termination fees as 'opportunistic, episodic,' but a $30-$40 million annual forecast is reasonable given proactive asset management.

Jason Wayne of Barclays asked for a breakdown of the increase in lease expirations by cause, such as bankruptcies, and inquired about the portfolio's exposure to Family Dollar after its separation from Dollar Tree.

Answer

CEO Sumit Roy did not provide a specific breakdown but noted a high 93% renewal rate suggests natural expirations were the main driver. He clarified that post-separation, the combined exposure is about 3% (2% Family Dollar, 1% Dollar Tree), with minimal near-term risk as only 10 basis points of leases for each brand expire through 2026.

Jason Wayne asked about the geographical distribution of American Homes 4 Rent's development pipeline, specifically where deliveries are located this year (Midwest, West Coast, Sun Belt), and the company's preference for starting new developments.

Answer

CEO Bryan Smith stated that the Midwest development program is focused on Columbus, and the company also favors markets in the Carolinas and Seattle, where the pipeline is strong. He expressed confidence in long-term prospects for other significant development markets, acknowledging short-term pressures in places like Arizona and Las Vegas.

Jason Wayne asked about the location of AMH's development pipeline, specifically where deliveries are expected this year, given lots outside the Sun Belt (Midwest, West Coast), and the company's preference for starting new developments.

Answer

Bryan Smith, Chief Executive Officer, indicated that the Midwest development program is focused on Columbus, a market the company favors, along with several markets in the Carolinas and Seattle, which has shown strong performance. He noted that the lot pipeline is detailed in the supplemental materials and expressed confidence in the long-term prospects of markets like Arizona and Las Vegas, despite some short-term pressures.

Jason Wayne with Barclays requested more details on how the ResiBuilt team will function as an in-house development contractor to grow the build-to-rent platform, and the longer-term growth profile of ResiBuilt's fee-based business.

Answer

Scott Eisen, Chief Investment Officer, described ResiBuilt as a general contractor with capabilities in land sourcing and construction management oversight. He explained that ResiBuilt historically built for institutional partners and acted as a fee builder for third parties. They will continue to generate revenue through third-party work and will explore opportunities to perform work for Invitation Homes' joint venture partners and eventually for Invitation Homes directly when the cost of capital improves.

Jason Wayne asked for more details on how the ResiBuilt team will function as an in-house development contractor for Invitation Homes' build-to-rent platform and the longer-term growth profile of ResiBuilt's fee-based business.

Answer

Chief Investment Officer Scott Eisen explained that ResiBuilt operates as a general contractor with capabilities in land sourcing and construction management oversight. Historically, they built for institutional partners and acted as a fee builder for third parties. ResiBuilt will continue its fee-based business, generating revenue by working with third parties, and will explore opportunities to perform work for Invitation Homes' joint venture partners and eventually for Invitation Homes directly when the cost of capital improves. Eisen described ResiBuilt as a full-service general contractor developer.

Jason Wayne asked for details on the cap rate for the $60 million in dispositions year-to-date, the assumed cap rates for full-year dispositions, and further color on the non-core assets identified for potential sales beyond the initial guidance range.

Answer

Jason Fox, CEO, explained that the average disposition cap rate for the year will depend on the mix of assets sold, including normal course dispositions (e.g., HELVIGs) and opportunistic non-core assets, potentially aligning with 2025 execution. Brooks Gordon, Head of Asset Management, added that a recent Q1 warehouse sale (formerly JOANN) was at an "extremely attractive price" relative to prior rent. Mr. Fox listed examples of non-core assets, including a final property in Japan, an operating student housing asset, a leased hotel, and properties where tenants regularly seek repurchases at aggressive pricing, emphasizing flexibility to fund additional investments through these sales or equity.

Jason Wayne asked about the cap rate for the $60 million in dispositions year-to-date and the assumed cap rates for full-year dispositions. He also inquired about the specific non-core deals identified that could allow the company to exceed the high end of its initial disposition guidance range.

Answer

CEO Jason Fox explained that the full-year disposition cap rate will depend on the mix of assets sold, including normal course, non-core, and vacant properties. Head of Asset Management Brooks Gordon highlighted a vacant warehouse formerly leased to JOANN that was sold at an 'extremely attractive price relative to the prior in-place rent.' Mr. Fox provided examples of non-core assets that could be sold, such as a final property in Japan, an operating student housing asset, a leased hotel, and properties where tenants regularly seek repurchases at aggressive pricing, emphasizing the company's flexibility to fund additional investments.

Jason Wayne asked about W. P. Carey's strategy for managing occupancy given known move-outs that led to a sequential drop, and the expected pricing for debt raises in the U.S. and Europe next year.

Answer

Brooks Gordon, Head of Asset Management, explained that the occupancy decline was a temporary spike due to known vacates (Tesco, True Value, Helveg warehouses) which are actively being resolved, with 30% already closed or closing imminently and 50% in active negotiations. He expects the vacancy rate to normalize within the next quarter or quarter and a half. Jason Fox, Chief Executive Officer, provided expected debt pricing for 2026 refinancings: low 5% in the U.S. and high 3% to around 4% in Europe.

Jason Wayne asked about the strategy for managing occupancy when known vacates occur, specifically regarding the recent sequential drop in occupancy. He also inquired about the expected pricing for debt raises in the U.S. and Europe for 2026.

Answer

Head of Asset Management Brooks Gordon explained that the recent vacancy uptick was temporary, primarily due to known vacates like Tesco and True Value warehouses, and Hellweg properties. He stated that roughly 30% of vacant square footage is resolved or closing imminently, with another 50% in active negotiations, expecting occupancy to normalize within a quarter or two. CEO Jason Fox indicated that U.S. debt pricing is anticipated in the low 5% range, while European debt is expected to be around high 3% to 4% for 2026 refinancings.

Jason Wayne inquired about the reasons for the sequential decline in same-store growth in Europe, asking if it was driven by changes in the property pool or lease escalator structures.

Answer

CFO ToniAnn Sanzone attributed the change primarily to moderating CPI. She explained that a majority of leases have rent bumps in the first quarter based on prior months' inflation data, which had been trending lower. The decline was therefore more a function of lower inflation than any specific tenant or property-type issue.

Jason Wayne inquired about the strategy for the rental home business, its growth prospects, and how rental home operating expenses are expected to trend, particularly after a Q4 increase.

Answer

Patrick Waite (EVP and COO) stated that the rental home business strategy is demand-driven, with the primary goal being to sell homes. Rentals are accepted when demand allows, serving as a positive business that exposes prospects to future homeownership, noting 15-20% of sales are to current residents (renters or upgraders). Paul Seavey (EVP and CFO) explained that rental home expenses are embedded in overall operating expense guidance. He noted that incremental rental homes lead to higher expenses, and the mix of new vs. previously occupied rental homes can influence expense levels, with previously occupied homes potentially incurring higher costs.

Jason Wayne inquired about the strategy for the rental home business, asking if the company intends to continue growing it. He also asked about the trend and drivers of rental home operating expenses, particularly the Q4 increase and subsequent expected decrease.

Answer

Patrick Waite (EVP and COO) explained that rental homes are primarily used to expose prospects to future homeownership, with sales being the first priority, and that 15-20% of sales are to current residents. Paul Seavey (EVP and CFO) clarified that rental home expenses are embedded in overall operating expense guidance, with increases tied to incremental rental homes and the mix of new versus previously occupied units affecting expense levels.

Jason Wayne asked about the weaker-than-expected RV and Marina annual performance, specifically if it was still impacted by storm-damaged properties and whether those properties are now back online.

Answer

Patrick Waite, President and COO, confirmed that three specific Marina properties are still impacted by storm damage, with permitting and construction taking longer than expected. These properties are anticipated to be fully online in 2026, causing reduced capacity rather than an overall demand issue.

Jason Wayne asked about the sales strategy for the two-to-four-year membership subscriptions, noting that the campground membership count was stabilizing after several quarters of decline.

Answer

CEO Marguerite Nader explained that the membership count saw a slight increase due to strong paid origination sales and a rise in promotional memberships from RV dealers. She detailed a new dues-based upgrade product, launched based on customer feedback, which offers benefits like advanced booking windows for an increased annual due of $1,500 to $3,500, shifting away from large one-time upgrade payments.

Jason Wayne asked about the stabilizing campground membership count and the sales strategy behind the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader highlighted the first increase in member count in roughly ten quarters, driven by strong sales and promotional originations. She explained that a new dues-based upgrade product, with annual dues of $1,500-$3,500, was launched based on customer feedback to replace a one-time payment model, offering enhanced benefits.

Jason Wayne noted the stabilization in campground membership counts and asked about the sales strategy for the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader confirmed a slight increase in member count for the first time in roughly ten quarters, driven by strong paid origination sales and a recovery in promotional memberships. She detailed the new dues-based upgrade product, which offers enhanced benefits for an increased annual fee of $1,500 to $3,500, shifting away from a large one-time payment model based on customer feedback.

Jason Wayne noted the stabilization in campground membership counts and asked for details on the sales strategy behind the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader confirmed a slight increase in member count after ten quarters of declines, driven by strong origination sales and promotional memberships. She detailed the new dues-based upgrade product, which replaces a large one-time payment with higher annual dues ($1,500-$3,500) in exchange for benefits like advanced booking windows and discounts, a change made based on customer feedback.

Jason Wayne noted the stabilization in campground membership count and asked for details on the sales strategy for the new two-to-four-year membership subscriptions.

Answer

CEO Marguerite Nader confirmed a slight increase in member count after about ten quarters of negative growth, driven by strong paid origination sales and a rise in promotional memberships from RV dealers. She detailed the new dues-based upgrade product, which offers enhanced benefits for an increased annual fee of $1,500 to $3,500, shifting away from a large one-time payment model based on customer feedback.

Jason Wayne of Barclays noted a recent acquisition of a veterinarian retail property and asked for the company's outlook on that industry. He also inquired about what made FCPT comfortable pursuing more deals in this space, given the deal's cap rate was above recent levels.

Answer

William Lenehan, President, CEO & Director, positioned veterinarian properties within the company's medical retail strategy, calling it an interesting space. He acknowledged being cautious about private equity's role in the industry but confirmed that FCPT expects to do more deals in the sector, attracted by reasonable property bases and decent returns.

Jason Wayne of Barclays noted a recent acquisition of a veterinarian retail property at a relatively high cap rate and asked for FCPT's outlook on the industry and its comfort level with pursuing more deals in that sector.

Answer

President, CEO & Director William Lenehan positioned veterinarian properties within the company's medical retail strategy. He described the industry as an interesting space with decent returns, and while FCPT is wary of private equity's role, he confirmed that the company expects to do more deals in the sector going forward.

Jason Wayne of Barclays inquired about the small number of tenants not paying rent and asked about the historical re-leasing spreads FCPT has achieved on such properties.

Answer

CEO William Lenehan clarified that the non-payment issue is related to 'basically one tenant' in a couple of buildings, which he described as a 'very, very small, one-off thing.' The company is pursuing a personal guarantee and is already making progress on re-leasing the properties. He declined to comment on specific re-leasing spreads for the ongoing negotiations, given the small number of properties involved.