Jay Kornreich

Jay Kornreich asked about GNL's target percentage for office exposure reduction and if there are any other non-office dispositions planned to reduce specific tenant exposures. He also inquired about the investment outlook for industrial and retail acquisitions, specifically whether the U.S. or European markets present a more favorable opportunity.

Answer

CEO Michael Weil stated that GNL is committed to intentionally lowering office exposure but will not rush sales to maximize value, given the portfolio's strong performance. He confirmed that a subset of the office portfolio will be used to prove value, and other opportunistic non-office dispositions may occur. For acquisitions, Mr. Weil indicated a current lean towards U.S. markets due to less uncertainty compared to the U.K. and Europe, while still valuing existing international assets and considering opportunities there.

Jay Kornreich sought clarification on the company's target range for office exposure reduction and asked if any other non-office dispositions are being considered to reduce specific tenant exposures this year. He also inquired about the more favorable investment outlook between the U.S. and European markets for industrial and retail acquisitions, given the company's shift towards an offensive strategy.

Answer

CEO Michael Weil stated that the company is committed to intentionally lowering office exposure but will not rush sales to maximize value, given the portfolio's strong performance. He confirmed that certain other non-office assets might be disposed of due to potential redevelopment value or tenant plans. Regarding geographic focus for acquisitions, Mr. Weil indicated a slight leaning towards U.S. markets currently due to less uncertainty compared to the U.K. and Europe, while still valuing their existing European assets and team.

Jay Kornreich inquired whether record occupancy levels imply that some shopping centers are nearing their occupancy limits, suggesting a focus on value creation or asset recycling, and asked about the possibility of the $20 million to $30 million redevelopment opportunities, including pad sites, coming online in 2026.

Answer

Christine Mastandrea, President and Chief Operating Officer, believes there is still room for rent increases even with high occupancy due to infill markets and limited competition, along with the ability to re-lease space. Dave Holeman, Chief Executive Officer, added that growing neighborhoods and discretionary spending support rent growth, and capital recycling will continue. Christine Mastandrea, President and Chief Operating Officer, confirmed that 2-3 pad sites are completed annually, with some expected in 2026, while larger developments with additional GLA have longer timelines, potentially coming online later in 2026 or beyond, with timing optimized for construction costs and returns.

Jay Kornreich asked if Whitestone REIT's record occupancy levels suggest that some shopping centers are nearing their occupancy limits, making them more suitable for value creation through asset recycling, or if there's still significant leasing power. He also questioned the possibility of any of the planned $20 million-$30 million redevelopment projects, including five potential pad sites, coming online in 2026.

Answer

Christine Mastandrea, President and Chief Operating Officer, believes there is still room for growth, even with high occupancy, through rent increases and remerchandising efforts. Dave Holeman, Chief Executive Officer, emphasized that properties in growing neighborhoods allow for rent increases despite high occupancy, and they will continue to recycle capital. Regarding redevelopment, Christine Mastandrea confirmed they typically complete 2-3 pad sites annually, with 3 on track for 2026. Larger developments with additional GLA are phased and may not come online in 2026, but some could be completed later in the year, depending on construction costs and approvals.

Jay Kornreich asked how Realty Income's improved equity cost of capital might change its investment outlook, potentially allowing for more aggressive acquisitions at slightly lower cap rates while maintaining healthy deal spreads. He also inquired whether meaningful bottom-line earnings contribution from the private fund is expected in 2026 or more in 2027.

Answer

Sumit Roy, President and CEO, acknowledged the improved cost of capital as an added lever, which can lead to higher spreads or allow the pursuit of lower cap rate assets while maintaining historical spreads. He emphasized that the underwriting focus on day-one accretion and meeting long-term hurdle rates remains unchanged. Jonathan Pong, Chief Financial Officer and Treasurer, stated that the $10+ million in base management fees from the fund will be accretive in 2026, with high margins (70%+) due to leveraging Realty Income's existing platform and 550 employees.

Jay Kornreich asked how Realty Income's improved equity cost of capital might influence its investment outlook, potentially allowing for more aggressive acquisitions at lower cap rates while maintaining healthy deal spreads. He also inquired about the expected bottom-line earnings contribution from the private capital fund in 2026 versus 2027.

Answer

President and CEO Sumit Roy acknowledged the improved cost of capital as an added lever, which can lead to higher spreads or allow pursuing assets with slightly lower cap rates while maintaining historical spreads, but reiterated the focus on day-one accretion and long-term hurdle rates. CFO and Treasurer Jonathan Pong confirmed that the private fund will contribute accretion in 2026 from over $10 million in base management fees, noting high margins (70%+) due to leveraging the existing platform.

Jay Kornreich of Wedbush Securities asked what might drive more U.S. investment in the second half of the year and inquired about the next frontier countries for European expansion.

Answer

CEO Sumit Roy expressed hope that an improving cost of capital would allow for more U.S. deals, noting they passed on attractive U.S. volume in Q1 due to insufficient initial spreads. For new markets, he reiterated interest in Poland but said the current focus is on deepening their footprint in existing geographies.

Jay Kornreich of Wedbush Securities requested an update on the potential size and deployment timeline for the new private capital fund and asked about the funding strategy for the $4 billion acquisition target in 2025.

Answer

CEO Sumit Roy said it was too early to provide specifics on the fund's size or timeline. CFO Jonathan Pong detailed that the acquisition pipeline would be funded through a combination of cash, unsettled forward equity, free cash flow, and dispositions, confirming the $4B target was based on achieving accretive spreads at the current cost of capital.

Jay Kornreich from SMBC asked about the current investment opportunities in Europe, whether Realty Income is exploring new European countries, and if European acquisition volume is expected to continue outpacing the U.S.

Answer

CEO Sumit Roy stated that Europe has presented the best opportunities year-to-date, representing 56% of volume, which he views as a strategic advantage of the company's global platform. He confirmed that momentum in Europe is expected to continue and that the company is constantly evaluating expansion into new countries for the right opportunity. However, he noted that the investment mix is expected to revert to more historical U.S. vs. international norms in the fourth quarter.

Jay Kornreich from Cantor Fitzgerald & Co. asked about the potential upside to the portfolio from the upcoming FIFA World Cup, including attendance and extended international travel, and the estimated booking window for the games.

Answer

CEO Justin Knight expressed excitement for the World Cup's potential for incremental business, with teams focused on maximizing opportunities through group bookings and rate management. He noted that the booking window is still short, making it too early to quantify the actual impact in guidance, but anticipates it could be a meaningful driver of business.

Jay Kornreich asked about the potential upside to the portfolio from the FIFA World Cup, including attendance and extended international travel, and inquired about the estimated booking window for such events.

Answer

CEO Justin Knight expressed excitement about the World Cup's potential for incremental business, noting that the team is focused on maximizing the opportunity through appropriate business layering and room blocking. He stated that the booking window is still short, making it too early to quantify the actual impact, but anticipates it could be a meaningful driver of incremental business.

Jay Kornreich asked about potential strategies to fill the gap in government demand in 2026 if softness continues, and the updated outlook on the mix shift between corporate occupancy and leisure demand.

Answer

CFO Liz Perkins stated that the team has effectively pivoted to build additional group business, encompassing both leisure and corporate groups, and will continue to explore other demand opportunities to regain market share. CEO Justin Knight noted that the portfolio is currently seeing greater strength in leisure than midweek corporate, partially offset by group improvement, and anticipates corporate demand to build back as the government shutdown resolves. Liz Perkins added that corporate pullback is likely related to shutdown uncertainty, and reopening could benefit both government and corporate transient segments.

Jay Kornreich asked about the strength of the group travel segment, specifically if there have been any changes in booking trends or increased hesitancy from counterparties. He also inquired about the potential speed and scale of asset sales if the company chose to accelerate dispositions to fund share repurchases.

Answer

CFO Liz Perkins responded that group booking trends remain strong, particularly for the smaller, near-term groups typical for their portfolio, with no signs of hesitation. CEO Justin Knight explained that while they are continuously in the market, scaling up asset sales would likely involve a large number of individual transactions over a 3-to-6-month period, as there is currently a lack of portfolio bidders.

Jay Kornreich questioned where the potential for outperformance on the 2% RevPAR growth guidance for 2025 lies—midweek business or weekend leisure—and asked for the expected quarterly cadence.

Answer

CFO Liz Perkins explained that while outperformance could come from both segments, the guidance midpoint relies more on midweek occupancy and ADR growth. She projected a slower start to the year, partly due to weather, with RevPAR growth expected to accelerate as the year progresses and the newly acquired Madison Embassy Suites hotel continues to ramp up.

Jay Kornreich from Wedbush Securities inquired about the current hotel transaction market dynamics, including the impact of interest rate volatility, and Apple Hospitality's appetite for acquisitions. He also asked about trends and booking visibility for the group business segment.

Answer

CEO Justin Knight described the transaction market as having ample opportunities but noted that a wide bid-ask spread persists, with sellers reluctant to adjust pricing, making share repurchases relatively more attractive. He observed that most activity is in smaller, individual assets. CFO Liz Perkins addressed the group segment (14% of demand), stating it has a short booking window, making long-term visibility limited, but performance has been consistently strong and is expected to remain so.

Jay Kornreich asked about the positive momentum from meeting planners and how room rate and overall bookings are trending for out years like 2027 and 2028, which will benefit from completed CapEx projects.

Answer

Patrick Chaffin, Chief Operating Officer, stated that 2026 and 2027 are in good positions, and for future years, they are very encouraged, with rate being the major driver. Colin Reed, Executive Chairman, added that the rate for 2028 and beyond is up over 5%, which Patrick Chaffin confirmed as holding mid-single-digit rate growth for 2028, 2029, and subsequent years.

Jay Kornreich asked about the positive momentum from meeting planners, specifically how room rate and overall bookings are trending for out years (2027, 2028) which benefit from completed CapEx projects.

Answer

Patrick Chaffin, Chief Operating Officer, stated that 2026 and 2027 are in good positions, and out years show solid growth driven by rate, which is sticky. Colin Reed, Executive Chairman, and Patrick Chaffin added that rates for 2028 and beyond are up over 5%, maintaining mid-single-digit growth.

Jay Kornreich of Wedbush Securities inquired about the leisure transient customer, asking if any softness or changes in behavior have been observed since the beginning of April and what the outlook is for this segment.

Answer

Executive Patrick Chaffin responded that spring break performance was very encouraging and that they are seeing a positive 'halo effect' in the Orlando market from the upcoming Epic Universe opening. He noted that while they are watching trends closely, they are managing rate effectively and believe their properties are well-positioned as 'staycation' destinations if consumers pull back on international travel.

Jay Kornreich asked if there is an opportunity to increase the 4.5% ADR growth currently on the books for 2026 as the booking window shortens, and also inquired about future investment plans for the Entertainment segment.

Answer

EVP and CFO Mark Fioravanti confirmed the opportunity to push rates higher for 2026 as more high-rated corporate business is booked closer to the travel date. For the Entertainment segment, executives highlighted excitement around the recent investment in Southern Entertainment, while Mark Fioravanti and Chairman and CEO Colin Reed hinted that other significant opportunities are currently being evaluated but are not yet ready to be announced.

Jay Kornreich from Wedbush Securities inquired about the demand segmentation behind the robust future group bookings and where rate has been pushed the most. He also asked about the cause of sequential softness in Q3 Entertainment segment EBITDA and if a Q4 pickup is expected.

Answer

EVP & COO Patrick Chaffin, President & CFO Mark Fioravanti, and CEO Colin Reed explained that rate growth has been a 'full court press' across all segments (Corporate, Association, SMERF), with nearly identical growth rates. Mark Fioravanti attributed the Q3 Entertainment softness to planned construction disruption at the W Austin and the future Category 10 venue. He and Colin Reed expressed excitement for a Q4 pickup, driven by the successful soft opening of Category 10.

Jay Kornreich asked about the recent strength in out-of-room food and beverage (F&B) spend from customers and groups, and the anticipated revenue growth from this segment for the current year.

Answer

Sean Dell'Orto, COO and CFO, confirmed the strong performance of out-of-room F&B, noting it's approximately 40-50 basis points above RevPAR and is expected to maintain this trend in the current year. He highlighted in-house group business, SMuRF (Small Meetings, Under 50 Rooms, Flexible), and strong outlet spend in resorts, exemplified by the Dorada restaurant at Casa Marina, which drove a 40% increase in outlet spend at that property.

Jay Kornreich asked for more detail on the drivers of Orlando's exceptional performance, the potential impact of the new Epic theme park, and whether there have been any recent changes in transient customer behavior.

Answer

Chairman and CEO Thomas Baltimore expressed strong bullishness on Orlando, citing massive tourism numbers, significant investments from Universal and Disney, and the enhanced meeting space at the Bonnet Creek complex, stating he expects to exceed the $90M EBITDA forecast. On transient behavior, he noted that while there is caution, they are not seeing a recessionary environment, with April results coming in strong.

Jay Kornreich asked for the key factors that would lead to the high or low end of the wide 2025 adjusted EBITDA guidance range and for comments on specific market performance in Q1, such as New Orleans during the Super Bowl.

Answer

CFO Sean Dell'Orto explained the EBITDA range reflects uncertainty around the pace of Hawaii's recovery and the impact of a soft Q1. Chairman and CEO Thomas Baltimore noted New Orleans was very strong, with the headquarter hotel seeing mid-teens RevPAR growth during the Super Bowl, contributing to an expected 5-7% RevPAR growth for the market in Q1.

Jay Kornreich asked about the performance outlook for Hawaii in the first three quarters of 2025, considering tough comps, and requested the portfolio's RevPAR growth figure for October.

Answer

Chairman and CEO Thomas Baltimore did not provide a specific 2025 quarterly outlook for Hawaii but reiterated his long-term bullish thesis based on barriers to entry and the eventual return of international travel. CFO Sean Dell'Orto reported that October RevPAR was trending flat to down 1%, but would be approximately flat after adjusting for an 80-basis-point negative impact from Hurricane Milton.

Jay Kornreich asked if declining interest rates are opening up new conversations in the gaming transaction marketplace, prompting WholeCo owners to consider selling real estate more seriously.

Answer

Steven Ladany, Senior Vice President and Chief Development Officer, stated that these conversations are typically long-lived and not solely driven by small changes in Treasury rates. He suggested that market comps influence sentiment more, and a significant increase in credit market rates would be more likely to drive interest in alternative financing like sale-leasebacks.

Jay Kornreich asked if the recent decrease in interest rates has opened up new conversations with whole-co owners about selling real estate in the gaming transaction marketplace.

Answer

Steven Ladany, Senior Vice President and Chief Development Officer, stated that interest rate changes typically don't immediately pivot these long-lived conversations. He suggested that market comps, rather than minor debt rate fluctuations, more significantly influence sellers' perceptions of cap rates. He added that a substantial increase in credit market rates might drive more interest in sale-leasebacks as alternative financing.

Jay Kornreich from Wedbush Securities inquired about the potential impact of tariffs on the Bally's Chicago project cost and stabilized rent coverage. He also asked about the progress of the Ion investment and the broader opportunity in tribal gaming.

Answer

CEO Peter Carlino noted it's early to assess tariff impacts, but many expensive components like steel were already ordered and domestically sourced, as highlighted by President & COO Brandon Moore. SVP & Chief Development Officer Steven Ladany added that GLPI's funding commitment is a locked number, so any cost overruns would impact Bally's return, not GLPI's rent. Regarding tribal gaming, Brandon Moore stated the Ion investment is proceeding as expected and that interest from tribes in GLPI's financing structure is 'robust'.

Jay Kornreich followed up on the New Mexico office property, asking about its value and disposition opportunity now that new leases are in place, and the ideal use of potential proceeds.

Answer

President and CEO John Albright stated that with the State of New Mexico and Fidelity as tenants, the asset is marketable. He noted patience for higher values closer to the State's rent commencement and the intention to reinvest proceeds into open-air or larger shopping centers, potentially accelerating a sale if a strong acquisition candidate emerges.

Jay Kornreich inquired about the timing of rent commencement for the 10 backfilled anchor centers, specifically for leases already signed in 2026, and the expected timeline and potential leasing spread increases for the three remaining unsigned leases. He also asked about the valuation and disposition strategy for the New Mexico office property following its new lease, and the ideal use of any sale proceeds.

Answer

President and CEO John Albright explained that the remaining vacancies, particularly at Carolina Pavilion, are expected to be resolved within six months, with tenants typically taking a year to become operational. CFO Philip Mays clarified that only two Boot Barns contributed in Q4 2025, with about half of the signed leases ramping up in 2026 and all online by 2027. Albright added that the New Mexico office property is now a marketable asset, with early discussions underway, but the company is being patient for higher values closer to the State of New Mexico's rent commencement. Proceeds would ideally be reinvested into open-air centers or larger acquisitions.

Jay Kornreich asked about the balance between growing with current partners and forming new ones, and whether the 85% relationship business provides sufficient runway for future investment and earnings growth. He also inquired about the investment pipeline outlook, specifically if there's ample opportunity to expand investment volume if the cost of capital improves.

Answer

Pete Mavoides, President and Chief Executive Officer, stated that they ideally aim for a 75-25 split between existing and new relationships, actively investing in sourcing new partners as existing ones may outgrow their platform. He emphasized that the opportunity set is not a constraint on investment volume; rather, their desire for stable, compelling growth (6-8% AFFO per share, $1B-$1.4B investments) drives their measured pace, ensuring a long runway for the company.

Jay Kornreich asked about the balance between growing with existing partners (85% of business) and forming new relationships, and if the current relationship base provides sufficient runway for future investment and earnings growth. He also inquired about the overall investment pipeline outlook, specifically if an improved cost of capital would allow for expanded investment volume or if it's constrained.

Answer

Pete Mavoides, President and CEO, stated that they ideally aim for a 75-25 split between repeat and new business, actively investing in new relationships as existing ones may eventually grow beyond their platform. He affirmed ample pipeline and demonstrated ability to source capital. He clarified that the opportunity set is not a constraint on investment volume; rather, their desire for stable, compelling shareholder growth (6%-8% AFFO growth, $1B-$1.4B investments) drives their measured pace.

Jay Kornreich asked about the prioritization of obtaining new tenants, such as Primrose Schools, for continued business growth, and if more additions to the top 10 tenant quadrant are expected. He also inquired about the drivers of the increased lease escalations (2.3%) and whether this trend can continue in a lower interest rate environment.

Answer

Max Jenkins, COO, explained that Primrose Schools became a top 10 tenant through partnership with their largest franchisee, noting that Essential Properties Realty Trust consistently adds 5-10 new tenants each quarter while also focusing on repeat business. Peter Mavoides, President and CEO, stated that lease escalations are a key economic term, and while they negotiate the best terms, he doesn't anticipate escalations going higher, expecting downward pressure over time, especially with lower interest rates and increased competition. He also highlighted the balance of higher escalations with potential inherent credit risk if rent growth outpaces tenant profitability.

Jay Kornreich asked about the prioritization of obtaining new tenants, such as Primrose Schools, for future business growth, and if more additions to the top 10 tenant list are expected. He also inquired about the factors driving the increase in lease escalations to 2.3% and if this trend can continue even with lowering interest rates.

Answer

Chief Operating Officer Max Jenkins explained that Primrose Schools became a top 10 tenant through partnership with their largest franchisee. He noted that Essential Properties Realty Trust consistently adds new tenants (5-10 per quarter) while also focusing on repeat business, employing a two-pronged approach. President and CEO Peter Mavoides stated that 2.3% is a key economic term, and they negotiate the best possible terms. He does not anticipate escalations going higher and expects downward pressure over time, especially if interest rates were lower and competition higher, as seen in 2020-2021 when escalators were around 1.4-1.5%.

Jay Kornreich from Wedbush Securities inquired if potential new tenants are showing more caution in pursuing sale-leaseback transactions. He also asked if the company is looking to strategically increase or decrease exposure to any specific portfolio segments.

Answer

CEO Peter Mavoides noted that with 86% of Q1 investments coming from repeat business, the focus is on serving existing relationships, and the mix reflects their focus more than tenant cautiousness. CFO Mark Patten added that even if tenants slow growth, they still look to monetize real estate for liquidity. Regarding portfolio exposure, Mavoides stated the goal is for the industry 'pie' to grow ratably, given their long-term conviction in their curated list of service-based industries, though they continue to lighten up on casual dining and avoid movie theaters.

Jay Kornreich asked for the rationale behind increasing exposure to the casual dining sector, which has faced headwinds. He also questioned how loyal existing tenants are to Essential Properties' platform versus chasing the best cost of capital from new market entrants.

Answer

CEO Peter Mavoides explained that their conviction in casual dining is driven by the fungibility of the real estate and their positive historical recovery and credit loss experience in that sector. Executive Max Jenkins addressed tenant loyalty by pointing to the consistent 80% of business from existing relationships, driven by referrals and strong service. Peter Mavoides added that while tenants are sophisticated about pricing, they place a high value on the reliability and execution certainty that an incumbent capital partner provides.

Jay Kornreich asked about the competitive landscape for net lease assets, specifically if elevated competition is expected to compress cap rates in 2026, and if non-rated tenant investments face less competition. He also inquired about the expected cost of capital improvements from the Fitch Investment Grade rating and any updates on timing or impact from further ratings.

Answer

Mark Manheimer (CEO, NETSTREIT Corp.) stated that competition has not changed, as larger groups typically don't chase smaller opportunities. He noted that pricing has remained sticky due to a tight band in the 10-year Treasury, expecting similar cap rates through Q1 and into Q2 2026. Dan Donlan (CFO, NETSTREIT Corp.) explained that the Fitch rating resulted in a 20-25 basis point pricing reduction on term loans, saving $2 million annually. He mentioned that an upgrade could yield another 10 basis points. With no need for long-term debt until mid-2027, there's no rush for additional ratings, though dialogue with agencies will continue.

Jay Kornreich asked about the competitive landscape for net lease assets, inquiring if elevated competition is expected to compress cap rates in 2026, and if the focus on non-rated tenant investments is due to less competition and better yields.

Answer

CEO Mark Manheimer stated that competition hasn't changed, primarily being with seller expectations or 1031 buyers, as larger groups don't chase smaller opportunities. He expects cap rates to remain sticky through Q1 and into Q2, similar to 2025. CFO Dan Donlan added details on the cost of capital improvements from the Fitch rating.

Jay Kornreich asked about the potential to add new tenants to the top 20 list if the cost of capital improves and whether competition for safer, investment-grade assets is increasing due to economic uncertainty.

Answer

CEO Mark Manheimer responded 'absolutely' to growing with new tenants, highlighting the recent addition of Gerber Collision and a focus on improving diversification. He noted that while they haven't seen a significant increase in competition for investment-grade assets yet, they would expect it to materialize if economic uncertainty persists.

Jay Kornreich of Wedbush Securities questioned the extent of tenant diversification planned beyond getting the top three tenants under 5% ABR and asked if the company would consider deploying its unsettled forward equity earlier in the year for compelling acquisition opportunities.

Answer

CEO Mark Manheimer explained the goal is for a 5% concentration to be the exception, with most tenants ideally kept below 3%, and noted that dispositions are opportunistic. CFO Dan Donlan stated that deploying the forward equity more aggressively would require a more attractive cost of equity. Mark Manheimer added they could accelerate dispositions to fund a compelling acquisition.

Jay Kornreich followed up on the 20% threshold for loan investments, questioning why Alpine wouldn't push beyond it given its strong growth and significant contribution to investments. He also asked about the company's capital raising strategy, specifically the $10 million tapped from the ATM, and how management assesses the cost of equity and deal spreads when deploying capital at current stock prices.

Answer

President and CEO John Albright stated that while there's volume to exceed 20%, the company doesn't want to 'flip the script' from its primary net lease property business, viewing the loan portfolio as complementary but not a distraction. Regarding capital raising, John Albright explained that ATM proceeds fund highly accretive investments, and the math works despite the stock price, emphasizing it's prudent funding rather than massive dilution.

Jay Kornreich asked why Alpine maintains a 20% threshold for loan investments, despite its strong growth, and whether the company considers exceeding this limit. He also questioned the strategy for deploying equity capital from ATM programs at current stock prices, assessing the cost of equity against deal spreads for investment loans.

Answer

President and CEO John Albright stated that the company does not intend to exceed the 20% threshold, as it aims to keep net lease properties as its primary business, viewing the loan segment as complementary. Regarding equity deployment, John Albright explained that capital from ATM programs is used to fund highly accretive investments, and while the stock price is not ideal, the financial math supports these investments, noting it's not a massive dilution given prior share repurchases.

Jay Kornreich asked whether the $25 million EBITDA guidance raise was a portfolio-wide story or specific to key markets like Maui, and requested commentary on how November and December are shaping up following strong October RevPAR growth of 5.5%.

Answer

CFO Sourav Ghosh provided a detailed bridge for the $25 million EBITDA guidance increase: $26 million from comparable operations lift ($21M in Q3, $5M in Q4) across the portfolio (Maui's full-year guide unchanged due to variable costs offsetting top-line outperformance), $3 million from The Don CeSar, and $6 million from interest income. Deductions included $5 million from dispositions and $5 million from Four Seasons condos (due to villa closings shifting to 2026). For November/December, he noted they are expected to be slightly negative due to tougher comps (Christmas/Hanukkah overlap last year, short-term group pickup post-elections in 2024), but the increased Q4 guide includes a one-third contribution from improved November/December expectations.

Jay Kornreich asked whether the $25 million EBITDA guidance raise was a portfolio-wide story or driven by specific key markets like Maui, and requested commentary on how November and December RevPAR is shaping up following a strong October, which was up 5.5%.

Answer

Sourav Ghosh, Executive Vice President and Chief Financial Officer, provided a detailed breakdown of the $25 million EBITDA guidance increase. He explained that $26 million came from comparable operations lift across the portfolio ($21 million in Q3, $5 million in Q4), noting that Maui's full-year guide remained unchanged due to incremental variable costs offsetting top-line outperformance. Additional increases included $3 million for The Don CeSar and $6 million in interest income. Deductions included $5 million from dispositions and $5 million from Four Seasons condos due to villa closings shifting to 2026. For November and December, Ghosh stated that the blended RevPAR is slightly negative, which is expected due to tougher comps from the prior year (Christmas/Hanukkah overlap and short-term group pickup post-elections). He clarified that the increased Q4 guide reflects improvements in both October and the blended November/December period.

Jay Kornreich requested more detail on business transient and group demand, asking if the moderation in group bookings was for the current year or for future years.

Answer

EVP and CFO Sourav Ghosh clarified that the moderation in group lead volume is an 'in the year, for the year' phenomenon, primarily affecting government and association groups. In contrast, bookings for 2026-2028 are pacing up in the high single digits. For business transient, he noted Q1 volume was down 5%, but rate was up 6.5%, and the outlook assumes this trend continues for the rest of the year.

Jay Kornreich of Wedbush Securities inquired about Host's capital deployment priorities for 2025 across acquisitions, share buybacks, and internal ROI projects.

Answer

President and CEO James Risoleo described the approach as 'opportunistic,' enabled by the company's investment-grade balance sheet. He confirmed that key priorities include share repurchases, strategic acquisitions that make financial sense, and continued reinvestment in the existing portfolio, with a specific focus on the Hyatt Transformational Capital Program.

Jay Kornreich inquired about the drivers behind the downward revision to the full-year outlook, asking if it stems from a current slowdown in bookings or from concerns about a potential future recession. He also asked about the business transient segment and whether any spending hesitation is visible.

Answer

CEO Jon Bortz explained the revised outlook is influenced by both current factors, like reduced government and international travel, and the potential for a future economic slowdown. He clarified that for the second half, the revision is primarily a precaution against heightened economic uncertainty. Bortz noted that while they have not yet seen a decline in business transient demand, commentary from corporations suggests potential for future cost-cutting in travel.

Jay Kornreich from Wedbush Securities sought clarification on the outlook for leisure rates in 2025 and asked if the financial impact from the Los Angeles wildfires was sufficiently de-risked in the company's guidance.

Answer

Jon Bortz, Chairman and CEO, expressed confidence that significant leisure rate deceleration is over, citing strong on-the-books data and performance at redeveloped resorts. Regarding the L.A. wildfires, Bortz described the guidance impact as their 'best guess,' acknowledging the situation is unpredictable. While he sees potential for future demand from rebuilding efforts, he noted that this would likely benefit lower-priced hotels more directly in the near term.

Jay Kornreich from Wedbush Securities asked for more details on the 2025 outlook, specifically concerning the leisure customer and the company's ability to increase room rates at its resort properties.

Answer

Jon Bortz, Chairman and CEO, explained that the post-pandemic normalization of leisure demand is largely complete. He noted that while a planned increase in group business at resorts might affect the overall average daily rate (ADR), leisure rates are stabilizing. Bortz anticipates that as occupancy continues to build, the company will achieve greater pricing power and be positioned to grow rates again, particularly at recently redeveloped properties.

Jay Kornreich questioned what is driving the enhanced interest from prospective build-to-suit tenants and whether there have been changes to cap rates or lease terms. He also asked for a breakdown of the $75 million disposition guidance between healthcare assets and general portfolio pruning.

Answer

CEO John Moragne attributed the build-to-suit interest to the 'renaissance of American manufacturing,' including onshoring and nearshoring trends. He stated that economics remain attractive, with initial cap rates in the mid-7% range and straight-line yields in the mid-to-high 8% range. Regarding dispositions, he confirmed the guidance includes remaining clinical assets and general pruning, with the potential for additional opportunistic sales to fund growth.

Asked about the drivers of build-to-suit demand, current deal economics, and the composition of the 2025 disposition guidance.

Answer

Build-to-suit demand is driven by onshoring and the need for specialized facilities. Deal economics remain attractive with mid-7% initial yields and mid-to-high 8% straight-line yields. The 2025 disposition plan includes remaining clinical assets and general pruning, with potential for opportunistic sales to fund growth.

Jay Kornreich questioned what is driving the increased tenant interest in the $700 million build-to-suit pipeline and whether returns or lease terms are changing. He also asked for a breakdown of the 2025 disposition guidance between remaining healthcare assets and other portfolio pruning.

Answer

CEO John Moragne attributed the strong build-to-suit interest to trends like onshoring and supply chain consolidation, noting that BNL's returns remain attractive with straight-line yields in the mid-to-high 8% range. He stated the disposition guidance includes a mix of remaining clinical assets and general pruning, with the potential for additional opportunistic sales to fund growth.

Jay Kornreich of Wedbush Securities asked about the company's strategy for issuing equity capital following a recent forward issuance and inquired about the target scale and funding plan for the growing build-to-suit platform.

Answer

CEO John Moragne stated that while the environment for equity issuance is more constructive, BNL will remain cautious and is not dependent on it for funding. He explained the goal is to make the build-to-suit platform as large as possible, creating a laddered growth pipeline funded through existing capacity and normal course financing strategies.

Jay Kornreich asked about BNL's strategy for issuing equity capital for growth, following its first equity forward in two years. He also inquired about the long-term size goals for the build-to-suit platform and the funding plan for its commitments.

Answer

CEO John Moragne stated that while the equity issuance was a positive step, the company is not trading at a level that encourages large-scale issuance and will remain cautious. He explained the goal is to make the build-to-suit platform as large as possible, creating a predictable growth engine. Funding will be managed through existing balance sheet capacity, with leverage expected to remain comfortably below 6x.