Jeffrey Spector

Jeffrey Spector asked for the rationale behind the expectation that the Life Storage (LSI) portfolio will outperform the legacy Extra Space (EXR) portfolio in 2025, and whether the setup for the peak leasing season is similar to last year, with a primary focus on housing.

Answer

CEO Joseph Margolis clarified that LSI's outperformance is relative improvement within its markets, not absolute, as there is still a performance gap to close versus legacy EXR stores in the same markets. He confirmed housing is a key focus but also emphasized the importance of moderating supply and the strength of the existing customer base as significant factors.

Speaking for Joshua Dennerlein, Jeffrey Spector asked how high occupancy positions the company for 2025 and questioned the ability to push rates on LSI customers, who may be more price-sensitive.

Answer

CEO Joseph Margolis stated that high occupancy and moderating new supply position the company well for when the market recovers. He disagreed with the premise of a different LSI customer, noting no significant behavioral differences in bad debt or reaction to rate increases. Executive P. Stubbs added that the recent brand consolidation will also help improve LSI performance.

Jeffrey Spector asked about new or changing portfolio optimization initiatives for 2026, specifically regarding market share, AI, or other beneficial strategies.

Answer

Bryan Smith, Chief Executive Officer, highlighted increased sophistication in analyzing existing assets and investing in growth areas, with the asset management function successfully repositioning assets. He detailed ongoing AI initiatives, starting with an effective tool for the leasing cycle that improves prospect experience and internal efficiency, and future plans for AI to enhance communication platforms for resident retention and service requests. He also mentioned improvements in access solutions and precise investment strategies supporting the diversified portfolio and single-family detached focus.

Jeffrey Spector asked Bryan Smith about portfolio optimization initiatives, specifically if there are any new or changing strategies for 2026, such as those related to market share or AI, that could provide further benefits.

Answer

Bryan Smith, Chief Executive Officer, highlighted increased sophistication in analyzing existing assets and rigorous investment in growth areas, with asset management successfully repositioning assets. He mentioned the rollout of effective AI tools, starting with the leasing cycle to improve prospect experience and internal efficiency, and future AI applications for communication platforms to enhance resident retention and service. He expects the full power of these improvements, along with an improved access solution and more precise investing, to play out in 2026.

Jeffrey Spector of Bank of America asked how advancements in AI are enhancing operational initiatives and whether the company would reconsider entering the third-party management business to leverage its platform.

Answer

CEO Bryan Smith explained that AI is currently being used to enhance the leasing process with a 24/7 automated system, which has improved lease-ups. Future applications are planned for resident communication and maintenance. Regarding third-party management, he stated that while it was tested, the company's current strategic focus remains on its significant internal opportunities, such as the development program.

Jeffrey Spector asked how advancements in AI are aiding AMH's operational initiatives and whether the company would reconsider third-party management to leverage its platform with outside capital.

Answer

CEO & Trustee Bryan Smith detailed that AI is currently being leveraged on the leasing front to manage prospect inquiries 24/7, which has improved efficiency and supported lease-ups in new communities. Regarding third-party management, he reiterated that after testing the model, the company concluded that the strategic focus should remain on the significant internal opportunities within its own development and services platforms.

Jeffrey Spector inquired how advancements in artificial intelligence are enhancing operational initiatives and asked if the company would reconsider offering third-party management services to leverage its platform and the influx of capital into the SFR sector.

Answer

CEO Bryan Smith detailed that AI is currently being deployed in leasing to provide 24/7 responses to prospects, which has improved pre-leasing of new homes without concessions. He stated that while they tested third-party management, the company's strategic focus remains on the significant internal opportunities within its own portfolio and development program, making external services a lower priority for now.

Jeffrey Spector from Bank of America asked about the historical lag between labor market trends and their impact on AMH's business, trying to understand what might change the current strong demand trajectory.

Answer

CEO Bryan Smith responded that there isn't a direct, immediate reaction to job reports in their demand trends. He argued that the unaffordability of homeownership, including high mortgage rates, insurance, and maintenance costs, is a more significant and immediate driver of demand for their rental homes than short-term labor market fluctuations.

Jeffrey Spector of Bank of America followed up on development yields, asking for the stabilized yield and how new development contributes to margin expansion. He also inquired if there was an increase in incoming acquisition opportunities from homebuilders.

Answer

CEO Bryan Smith declined to give an exact stabilized yield but stated they are moving in the right direction and that the homes are high-quality assets that cannot be bought at their development cost. CFO Chris Lau added that NOI margin expansion is driven by the more efficient development product, strategic asset recycling through dispositions, and core operational improvements. Regarding acquisitions, Lau noted it was a bit too early to see a pickup from homebuilders but highlighted that AMH maintains robust relationships and screened over 15,000 properties from them in the past quarter.

Asked for the rationale behind acquiring Crabtree and its associated CapEx instead of prioritizing debt paydown, and for more detail on the improved team alignment and systems that enabled this.

Answer

The company justified the Crabtree acquisition by its high, accretive NOI growth rate and their confidence in their leasing plan, which is ahead of schedule. The deal does not compromise their deleveraging targets. They credited new, efficient systems and processes for enabling rapid decision-making and a seamless integration, which makes them confident in pursuing similar future opportunities.

Speaking on behalf of Jeffrey Spector, an analyst asked about consumer spending trends, specifically a potential shift back to goods from services, and how the current progress on 2025 lease expirations compares to last year.

Answer

SVP of Leasing, Doug Healey, noted that while a shift to services occurred, the current consumer trend is centered on 'replacement' of goods bought post-COVID, suggesting a return to normalcy. He also stated that progress on 2025 lease expirations, at 84% committed or in LOI, is 'just a little bit ahead' of the same time last year.

On behalf of Jeffrey Spector, Andrew Real asked about current consumer spending trends, specifically if the shift from goods to services was reversing, and inquired how the progress on 2025 lease expirations compares to the same time last year.

Answer

SVP of Leasing Doug Healey responded that consumer behavior is cycling back towards goods, driven by a 'replacement' phase for products purchased post-COVID. He noted this supported sales in Q4. Regarding expirations, he confirmed that with 84% of 2025 expiring square footage either committed or under LOI, the company is slightly ahead of where it was at the same point last year.

Jeffrey Spector from Bank of America inquired about the potential impact of higher interest rates and a slower Fed cutting cycle on Macerich's disposition plans. He also asked for more detail on consumer behavior, specifically regarding any observed weakness at the lower end of the market.

Answer

President and CEO Jackson Hsieh stated that the current rate environment is not a concern and that the company is ahead of its disposition plan, feeling confident about the $1.17 billion in deals already in progress. Senior Executive Vice President of Leasing Doug Healey added that while sales have been flat against high comps, retailer demand remains strong. He noted consumers are focused on essentials but are beginning to increase discretionary spending on innovative products, with a promotional holiday season expected.

Jeffrey Spector from Bank of America inquired about the implied slowdown in investment volume for the second half of 2025 and sought details on new tenant relationships established during the quarter.

Answer

President and CEO Stephen Horn explained that the second-half forecast reflects conservatism due to a lack of Q4 visibility, not a lack of opportunities. He noted that new relationships were primarily in the auto service sector. EVP & CFO Vincent Chao added that cultivating new relationships is key for future deal flow.

Jeffrey Spector from Bank of America inquired about Tanger's merchandising strategy, asking how the effort to upgrade tenancy has directly contributed to improvements in traffic and sales.

Answer

President and CEO Stephen Yalof explained that the strategy of attracting new brands like Sephora and adding food, beverage, and service uses is driving traffic, increasing dwell time, and boosting sales. He noted that the early back-to-school marketing campaign successfully resonated with consumers concerned about potential tariffs, driving early shopping activity, and that retailers are well-inventoried for the holiday season.

Jeffrey Spector asked about the potential impact of tariffs and lower U.S. consumption on the retail environment, and inquired about the progress and learnings from Tanger's 2024 retenanting efforts with aspirational brands.

Answer

President and CEO Stephen Yalof expressed confidence that the outlet channel is well-positioned for a cyclical environment, noting that the discount channel is expected to be a significant contributor to retailer sales. He highlighted the success of their retenanting strategy using Sephora as a case study, which helps attract younger, aspirational shoppers and drives traffic through targeted marketing, reinforcing the company's strategic direction.

Jeffrey Spector of Bank of America asked for an update on leasing velocity and tenant demand, inquiring about the quantity and quality of deal flow given the uncertain macroeconomic environment.

Answer

Chairman, CEO & President David Simon described tenant demand as "unabated," stating that the physical shopping environment remains strong despite geopolitical and economic uncertainty. He highlighted Simon's consistent operational track record and stable management, noting that traffic is up, sales are holding steady, and the properties continue to improve.

Jeffrey Spector of Bank of America asked for an update on leasing velocity and tenant demand, inquiring about the quantity and quality of deal flow given the uncertain macroeconomic environment.

Answer

Chairman, CEO & President David Simon described tenant demand as "unabated," emphasizing that the physical retail environment remains strong. He highlighted Simon's consistent operational excellence and stable management, contrasting it with competitors that have undergone restructurings, and stated the company is bullish despite headline risks.

Jeffrey Spector of BofA Securities inquired about Simon's initiatives to drive shopper traffic to its malls, such as the 'Tomorrow's Stars' and 'Meet Me @themall' programs, and asked about their effectiveness during the holiday season.

Answer

Chairman and CEO David Simon stated that Simon leads the industry with its national advertising campaigns, the rebranding of Premium Outlets to ShopSimon, a forthcoming loyalty program, and thousands of traffic-driving events. He emphasized a strong ROI from these digital-first marketing efforts, asserting they are 'leaps and bounds' ahead of peers in data and digital commerce.

Jeffrey Spector asked for an expansion on key initiatives designed to engage customers and drive traffic, such as the 'Meet Me at the Mall' campaign and the evolution of the company's omnichannel strategy.

Answer

David Simon, Chairman, CEO, and President, highlighted the mall's role as a gathering place and discussed the strategic importance of digital commerce. He explained the rebranding of their digital marketplace to 'Shop Simon' after proving the concept. The long-term strategy involves creating a 'flywheel' effect by integrating a loyalty program and 'Simon Search' to facilitate services like ship-from-store and in-mall pickup, reinforcing the physical mall's value while capturing digital sales.

Jeff Spector from Bank of America asked about the underlying assumptions in the Witten Advisors 2026 forecast, particularly regarding job growth, and whether lower supply alone can achieve the projected rent growth.

Answer

An executive detailed Witten's forecast for a significant decline in new completions in Camden's markets through 2027. Chairman & CEO Ric Campo added that while Witten's model assumes slowing job growth, less job creation is needed to drive strong rent growth given the dramatic drop in new supply and the high affordability of apartments relative to homeownership.

Jeffrey Spector followed up on the transaction market discussion, questioning the comparison to the post-GFC era by pointing out the apparent lack of widespread financial distress in the market today.

Answer

Chairman and CEO Richard Campo clarified that today's market dynamics differ from the GFC. He stated that instead of widespread financial distress, the opportunity lies in better pricing compared to the market peak, with cap rates now in the 4.5% to 5% range versus the prior 3% range. He used the recent Camden Leander acquisition in Austin as an example of buying a high-quality asset below replacement cost in a market with temporary supply pressure but strong long-term growth prospects.

Jeffrey Spector from Bank of America questioned the 2026 forecast for 3,000 occupied development homes in light of a more muted job growth outlook. He also sought confirmation that development delays were not related to tariffs or material shortages.

Answer

CIO Matthew Birenbaum clarified the 2026 occupancy forecast is driven by project delivery schedules set years ago, not a short-term macroeconomic view. CEO Benjamin Schall added that these projects are running above pro forma rents, providing a cushion. Birenbaum confirmed delays were due to normal course issues like inspections, not systemic supply chain problems.

Jeffrey Spector asked if recent demographic shifts are impacting the company's 80% suburban allocation target. He also inquired about the potential risk of tariffs on future development costs and sought an update on the Boston market, particularly regarding supply, demand, and the impact of the pharma/biotech sector.

Answer

CEO Benjamin Schall confirmed the company remains committed to its 80% suburban and 25% expansion market targets, driven by long-term demographic trends. CIO Matthew Birenbaum downplayed the risk of tariffs, stating that labor and subcontractor margins are far more significant drivers of construction costs, where they currently see tailwinds. COO Sean Breslin clarified that their outlook for Boston is positive, as their suburban portfolio is well-insulated from new supply and performing strongly.

Jeffrey Spector of Bank of America sought clarity on the scenarios driving the high and low ends of the same-store revenue growth guidance and asked about the current use of street rates and promotions to manage occupancy.

Answer

SVP & CFO Thomas Boyle outlined that the high end of the guidance assumes higher occupancy and narrowing move-in rent declines (to -3%), while the low end assumes modest occupancy drops and further rent declines. He stated that the use of street rates and promotions in July remained consistent with recent trends.

Jeffrey Spector asked for an update on the business customer segment, including its size and any recent behavioral changes. He also inquired about performance differences across markets by income or density in April and how the month's seasonality compared to historical norms.

Answer

Joseph Russell stated that business customers, representing about 15% of the base, have shown no meaningful behavioral changes. He also noted no performance differentiation across market types, seeing broad-based strength. H. Boyle added that April's performance was driven by demand bouncing off the bottom rather than typical seasonality, which remains muted similar to last year.

Jeffrey Spector asked for details on the assumptions behind the 2025 guidance, specifically the projected 5% decline in street rates and the drivers of broader market stabilization.

Answer

H. Boyle, an executive, detailed the operational metrics, noting that while move-in rates started the year down 8%, the full-year forecast of a 5% decline assumes improvement. He added that average occupancy is expected to dip only 10 basis points, reflecting stabilization. Executive Joseph Russell attributed market stabilization to moderately improving demand, evidenced by increased top-of-funnel Google searches, and enhanced customer conversion techniques.

Jeffrey Spector questioned Public Storage's optimistic outlook for 2025, asking for the drivers behind the expected 'improvement' beyond mere 'stabilization' and whether this outlook is contingent on a recovery in the housing market.

Answer

CEO Joseph Russell confirmed the confident outlook, stating that the progressive stabilization seen throughout 2024 naturally leads to improvement and positions the company for a stronger 2025 regardless of external factors. Executive H. Boyle added that while overall revenue growth is still slightly negative for the year, leading markets like Seattle are showing consistent quarter-over-quarter improvement, signaling a positive trend.

Jeffrey Spector asked about the specific company initiatives driving the record move-ins in the SHOP portfolio. He also sought commentary on the potential impact of recent major healthcare legislation on Ventas' various asset classes.

Answer

J. Justin Hutchens, EVP - CIO of Senior Housing, credited the Ventas OI data analytics platform for driving top-line growth and optimizing sales, particularly in collaboration with partners like Atria. Debra Cafaro, Chairman & CEO, addressed the legislative question, noting that any impacts would be minimal in the short term due to delayed implementation and that the trend toward outpatient care, which benefits their MOB portfolio, could even be accelerated.

Jeffrey Spector from Bank of America asked about navigating macroeconomic uncertainty during the key leasing season and inquired about the strategy for the research portfolio.

Answer

CEO Debra A. Cafaro expressed confidence in senior housing due to powerful demographic demand and muted supply, noting strong affordability for residents. For the research portfolio, she stated the strategy is to maximize performance, emphasizing its stability due to 75% credit tenants and a 9-10 year weighted average lease term.

Jeffrey Spector from Bank of America asked if Ventas planned to increase investment in life sciences and requested an explanation for the sequential margin changes in the SHOP portfolio.

Answer

CEO Debra Cafaro affirmed that the company's primary focus remains on investing in senior housing. CFO Robert Probst explained that while year-over-year SHOP margins expanded by 150 basis points, the sequential change was influenced by typical third-quarter seasonality and insurance renewals.

Jeffrey Spector of Bank of America Merrill Lynch asked for clarification on the modest 6% rent rollover for new leases in Q1, inquiring about the deal mix and expectations for the coming quarters.

Answer

COO Wendy Seher explained the low rate was primarily due to the timing of deal closings, with several leases finalizing just after the quarter's end. CEO Donald Wood added that if the reporting period had extended to April 10, the quarter's leasing volume would have appeared as a record, confirming it was a timing anomaly and not a trend.

Jeffrey Spector asked if the increase in acquisition opportunities is due to Federal Realty expanding its search to new markets, using a recent transaction in Cleveland, Ohio as an example.

Answer

EVP & CIO Jan Sweetnam confirmed the increase is twofold: more assets are available overall as sellers capitulate to higher debt costs, and Federal Realty is also looking in new markets. He confirmed they did look at the Cleveland asset, which they would not have considered previously, but it did not fit their specific criteria.

Jeffrey Spector from Bank of America asked for the outlook on expansion markets for the second half of 2025 and 2026, and about the lag time between economic weakness and its impact on operating metrics.

Answer

COO Michael Manelis expects muted pricing in expansion markets for the first half of the year, with potential for improvement in the second half and stronger growth in 2026 as new supply is absorbed. CEO Mark Parrell reiterated that Equity Residential is a lagging economic indicator, as residents don't immediately move out upon job loss. He noted their highly employable resident base often mitigates severe impacts, leading to slower rent growth rather than a sharp reversal.

Jeffrey Spector asked for the reasoning behind the expectation for continued record-low turnover, whether the company is exploring office-to-residential conversions, and for a preview of the upcoming Investor Day.

Answer

COO Michael Manelis attributed the low turnover expectation to persistently low move-outs for home purchases, strong job growth, and a focus on customer experience. CIO Alec Brackenridge said that while they look at all opportunities, office-to-resi conversions are generally too difficult and costly to be a focus. CEO Mark Parrell previewed that the Investor Day will focus on strategy and showcase the broader team.

Jeffrey Spector asked if CubeSmart is concerned about a potential 'street rate war' in 2025 given current conditions. He also questioned whether any recent events, like housing softness or policy uncertainty, prompted the cautious outlook.

Answer

President and CEO Christopher Marr responded that while the last three months have been more constructive for new customer rates, the company is being cautious rather than concerned. He explained the guidance reflects a lesson from 2023 and 2024, where optimistic hopes for a demand recovery proved unfounded. Marr emphasized that 'hope is not a strategy' and the current outlook is based on realism given the choppy environment, despite encouraging recent trends.

Jeffrey Spector of Bank of America Merrill Lynch inquired about the current state of the self-storage market, the outlook for the remainder of 2024 and into 2025, and the move-in versus move-out rate spread for the quarter.

Answer

President and CEO Christopher Marr described the market as a 'relatively high beta environment' with significant week-to-week volatility, making it difficult to predict with conviction. He stated that the churn gap, or the spread between move-in and move-out rates, was negative 27.4% during the third quarter.

Jeffrey Spector questioned if the midpoint of the 2025 guidance reflects true market improvement or company-specific initiatives, expressing caution about a 2025 recovery. He also asked for confirmation that the PRO internalization is complete and which markets remain third-party managed.

Answer

CEO Dave Cramer stated the guidance reflects a mix of both factors: seeing stability and less supply pressure in some markets, combined with improved operational effectiveness from the recent consolidations. He confirmed the major operational aspects of the PRO internalization are complete. The two PROs remaining in place manage assets in the Mid-Atlantic (Pennsylvania area) and in Puerto Rico and the Southeast.

Jeffrey Spector asked for NSA's view on the current operating environment and into 2025, contrasting it with a peer's comment on national improvement, and questioned if normal seasonality has returned.

Answer

CEO Dave Cramer described a mixed environment, with Sunbelt markets remaining challenged by new supply while other markets like Portland are stabilizing. He highlighted that the customer base is healthy and the ECRI program is strong. He noted that October occupancy, at 85.8% (-190 bps YoY), showed an improvement from September, which 'bucks the seasonality' trend of occupancy typically declining in the fall.

Jeffrey Spector asked for clarification on management's comment about being near the end of major tenant bankruptcies and how the portfolio can be insulated from future risk. He also requested more detail on the conservative guidance assumption of only 5 of 29 impacted anchor leases being assumed.

Answer

Chairman and CEO John Kite explained the strategy is to reduce exposure to certain power center assets and tenants that have not reinvested in their business. CFO Heath Fear clarified the guidance is conservative, assuming only 5 of 29 leases are assumed, to provide flexibility to make optimal long-term tenant decisions rather than accepting quick fixes. President and COO Tom McGowan noted more clarity on the Jo-Ann situation is expected in April.

Jeffrey Spector of Bank of America asked for a connection between CEO Steven Roth's forecast of a rent 'spike' and CFO Michael Franco's guidance for significant earnings growth in 2027, and also inquired about the primary industries driving demand for anchor tenant space.

Answer

Steven Roth, Chairman and CEO, reiterated that shrinking availability of high-quality space and no new supply create a landlord's market poised for aggressive rent growth. Michael Franco, President and CFO, added that while 2026 will see improvement, the full positive impact of new leasing will materialize in 2027. Glen Weiss, EVP of Office Leasing, identified financial, legal, and tech sectors as the main drivers of large tenant demand.

Jeffrey Spector of Bank of America sought to connect management's expectation of a "rent spike" to the earnings growth outlook for 2026 and inquired about the sources of demand for large anchor tenant spaces.

Answer

Chairman and CEO Steven Roth reiterated his view that limited new supply and strong demand in the high-quality office submarket will create a landlord's market and drive rents up. President and CFO Michael Franco noted that while 2026 will see improvement, the most significant earnings impact from new leasing will be in 2027. Executive Glen Weiss identified financial, legal, and tech sectors as the primary drivers of large tenant demand.

Jeffrey Spector of Bank of America asked for a connection between CEO Steven Roth's comment about a potential rent 'spike' and the company's earnings growth forecast for 2027. He also inquired about the sources of demand for large anchor tenant spaces.

Answer

Chairman and CEO Steven Roth reiterated his view that limited new supply and shrinking availability of quality space create a landlord's market poised for aggressive rent growth. President and CFO Michael Franco added that while 2026 will see improvement, significant earnings growth from leasing up vacancies will materialize in 2027. Executive Glen Weiss identified the financial, legal, and tech sectors as the primary drivers of large tenant demand.

Jeffrey Spector asked for clarification on how to reconcile the forecast for a near-term "rent spike" with significant earnings growth not materializing until 2027, and also inquired about the primary industries driving demand for large anchor tenant spaces.

Answer

Chairman and CEO Steven Roth explained that a landlord's market is forming due to shrinking quality supply, which will drive rents up. President and CFO Michael Franco clarified the earnings timeline, noting that while 2026 will improve, the full GAAP impact of new leasing at Penn 1 and Penn 2 will be most significant in 2027. Executive Vice President Glen Weiss identified the key demand drivers as the financial, legal, and tech sectors.

Jeffrey Spector of BofA Securities asked about Vornado's main priorities for 2025 and for an expansion on the 'landlord's market' comment, specifically when it might translate into lower tenant improvement allowances and free rent.

Answer

President and CFO Michael Franco identified the top priority as executing on leasing at PENN1 and PENN2 to drive earnings growth, followed by managing the balance sheet and exploring internal and external opportunities. Chairman and CEO Steven Roth explained that a 'landlord's market' is defined by evaporating vacancy in Class A buildings and a complete shutdown of new supply, which is now occurring and driving rents higher.

Jeffrey Spector of Bank of America asked about leveraging the balance sheet for faster growth, how InvenTrust's competitive profile has changed with more aggressive acquisitions, and the key drivers behind the 2025 same-store NOI guidance range.

Answer

President and CEO Daniel Busch stated that while capital recycling from California is a key strategy, the company is positioned to use its balance sheet capacity to lever up when compelling opportunities arise, similar to their actions in late 2024. He acknowledged the competitive environment for Sun Belt assets but noted that InvenTrust's cost of capital allows them to be 'appropriately aggressive.' Chief Financial Officer Michael Phillips clarified that the main variable in the same-store NOI guidance range is the level of uncollectible lease income and bad debt.

Jeffrey Spector of Bank of America requested management's message on the 2026 occupancy outlook. He also asked for more detail on the 'material acceleration in leasing,' inquiring about its timing, geographic strength, particularly in San Francisco, and the types of tenants driving the demand.

Answer

Executive Angela Aman declined to provide 2026 guidance but highlighted proactive leasing on major 2026 expirations and significant upside in high-quality vacant assets. She noted Q4 2024 had the highest leasing volume since 2019. Executive A. Paratte added that markets like Bellevue, San Diego, and Austin are strong, while San Francisco is seeing a notable increase in AI-related deals. Both executives emphasized that tenants are showing a greater willingness to make long-term commitments.

Jeffrey Spector asked for a comparison of the market recovery and tenant space reduction trends on the West Coast versus New York City. He also questioned if the Junction at Del Mar acquisition signals a change in external growth strategy under the new CEO.

Answer

CEO Angela Aman and EVP, Chief Leasing Officer Rob Paratte noted a palpable positive shift in West Coast markets, driven by return-to-office mandates and tenants re-evaluating space needs after prior downsizing. Rob Paratte provided specific positive anecdotes for Bellevue, Seattle, and San Francisco. Angela Aman clarified that the external growth strategy remains focused on disciplined, risk-adjusted returns, and the Del Mar deal was a compelling example of this existing strategy, not a fundamental shift.

Jeffrey Spector asked about management's sentiment on tenant demand and external growth opportunities compared to a year ago, and how the company balances its high occupancy with tenant retention.

Answer

CEO Jeffrey Edison stated that the company feels better about its acquisition pipeline now than a year ago, with a larger backlog, though increased competition is pressuring pricing. He explained that PECO is taking a more aggressive approach to remerchandising, which may temporarily lower occupancy and retention but will create greater long-term value. President Bob Myers added that strong renewal spreads of 20.8% with minimal tenant improvement costs make retention attractive, but decisions are ultimately made on a case-by-case basis to maximize asset value.

Jeffrey Spector inquired about the strategy behind the third-quarter acquisitions, noting their lower occupancy, and asked for an outlook on the restaurant tenant category.

Answer

CEO Jeffrey Edison described the transaction market as having more product and more buyers. President Robert Myers added that the acquired properties, anchored by grocers like King Soopers and Big Y, offer significant upside with unlevered returns targeted above 9% and include development opportunities. On restaurants, Mr. Edison noted that quick-service restaurants, PECO's majority, remain strong, a view supported by Mr. Myers, who cited robust expansion plans from brands like Starbucks, Chipotle, and CAVA.

Jeffrey Spector inquired if the company's three-year plan has changed given recent market improvements, asked about the strategic approach to markets like Tampa and Phoenix, and sought details on year-to-date leasing conversations with technology firms.

Answer

President and CEO Michael Connolly stated that the company's plan is unchanged, remaining focused on organic portfolio growth, capitalizing on external investment opportunities, and maintaining a best-in-class balance sheet. He also expressed a desire to grow market share in cities like Tampa, Dallas, and Nashville. EVP of Operations Richard Hickson confirmed that leasing momentum from 2024 has continued into the new year, with technology companies being an active part of the conversation.

Jeffrey Spector of Bank of America inquired about Cousins Properties' investment strategy, asking if the company plans to expand into new Sun Belt markets and sought more color on the comparison of current performance to 2019, particularly regarding future occupancy goals and leasing concessions.

Answer

President and CEO Michael Connolly confirmed that while Cousins is evaluating markets like Raleigh-Durham and South Florida, the immediate focus remains on its existing Sun Belt footprint where opportunities are plentiful. He explained the 2019 comparison highlights that leasing volumes and net effective rents are at or above pre-pandemic levels, expressing confidence that the portfolio can return to occupancy levels north of 90% as the market for high-quality office space tightens.

Jeffrey Spector asked about the confidence level in supply abating in late 2025 and how that impacts the guidance range. He also inquired about any new and exciting technology initiatives on the horizon.

Answer

CFO & CIO Joe Fisher expressed confidence in declining supply benefiting the second half of the year, noting that the back-half weighted blend growth assumption primarily impacts 2026 earn-in, not the 2025 revenue forecast. COO Mike Lacy highlighted the implementation of Funnel as a new CRM and the success of AI-based fraud detection as key tech initiatives. CEO Tom Toomey added that owning their data warehouse is critical for mining trends and improving operations.

Jeffrey Spector of Bank of America requested more details on the company's 'growth mode,' including acquisition plans, cap rates, and IRR expectations. He also asked for historical context on the pickup in demand seen in January.

Answer

Executive Angela Kleiman reiterated the focus on accretive transactions, highlighting 2024's acquisitions in outperforming northern regions. Executive Rylan Burns noted that while marginal buyers target 8% unlevered IRRs, Essex aims to do better. Angela Kleiman added that the January occupancy pickup was consistent with expectations and driven by strength in Northern California, as planned.

Jeffrey Spector of Bank of America Securities asked about the sentiment of foreign capital towards New York City post-election and inquired about other policy changes that could benefit the company.

Answer

Marc Holliday, Executive, noted that while he awaits direct feedback from an upcoming trip, recent major transactions show continued investor momentum. He also highlighted the federal return-to-office mandate as a significant positive policy shift that reinforces the value of office space.

Jeffrey Spector from Bank of America requested an update on the opportunity for office-to-residential conversions in New York City. He also asked for more clarity on the timing for when leasing concessions, particularly free rent, might begin to tighten.

Answer

CEO Marc Holliday reaffirmed his view on conversions, stating that an accelerated city program has received applications representing over 25 million sq. ft. He believes this trend will be a major contributor to net absorption in the office market. Executive Steven Durels addressed concessions, reiterating that rents will likely rise materially first. He believes free rent will be the next concession to tighten, likely starting in the strongest submarkets like Park and Sixth Avenues, while TI allowances will be the last to change.

Jeffrey Spector of Bank of America requested an update on the potential impacts of tariffs and recent executive orders on the business.

Answer

Managing Director Christopher Caton emphasized that the business revolves around consumption and that historical precedent shows supply chains adapt, pointing to an 75% increase in trade with Asia ex-China over 8 years. CEO Hamid Moghadam added that tariffs are inflationary given U.S. labor limitations and that while more tariffs are likely, he expects them to be moderated to achieve other political objectives without crippling the economy.

Jeffrey Spector asked about the acquisition strategy for lifestyle centers, questioning if the focus is on specific markets and demographics or if market dominance is the primary criterion.

Answer

President & CIO Ross Cooper responded that Kimco's diversified platform allows it to create value across all formats and geographies. He specified that the current focus is on larger format, higher price point assets because there is less competition, which allows Kimco to leverage its operational expertise and capital to achieve better pricing and yields.

Jeffrey Spector of Bank of America inquired about Kimco's acquisition strategy for lifestyle centers, asking whether the focus is on select markets or if market dominance is the primary criterion.

Answer

President & CIO Ross Cooper stated that Kimco's diversification is a key differentiator, but the focus on larger format assets is strategic. He explained there is less competition for these assets compared to grocery-anchored centers, allowing Kimco's platform to create more value.

Jeffrey Spector inquired about the skepticism surrounding return-to-office mandates on the West Coast, asking if there are fundamental cultural differences with New York City that will delay tech firms' space decisions.

Answer

President Douglas Linde acknowledged a cultural difference but believes it won't ultimately change space utilization, as companies increasingly demand more in-person presence. Senior EVP Rodney Diehl provided anecdotal evidence of a shift, citing Salesforce's new policy and increased commuter traffic on the BART system, indicating a tangible pickup in office return.

Jeffrey Spector asked whether rising interest rates and fewer expected rate cuts might dampen the transaction market, or if a fundamental shift has narrowed the buyer-seller gap and sparked activity.

Answer

CIO Mark Horgan stated that any current market slowness is driven by the election cycle rather than rate movements. He anticipates a healthy investment market will continue, particularly for smaller assets, and expects a significant increase in inbound inquiries and activity after the election.

Jeffrey Spector asked whether rising interest rates might dampen the transaction market or if a fundamental shift has occurred, narrowing the buyer-seller gap and encouraging activity.

Answer

EVP & CIO Mark Horgan stated that any current market slowness is more attributable to the election cycle than to interest rate movements. He anticipates a healthy investment market going forward, particularly for smaller assets, and noted a significant increase in inbound inquiries for assets expected to come to market.

Jeffrey Spector of Bank of America Securities questioned the primary drivers behind the current strength in leasing demand, asking if it was due to luxury sales, a shift from wholesale, or other factors. He also asked if the quarter's renewal rental spread was skewed by any particular transaction.

Answer

CEO Kenneth Bernstein attributed the strong demand to a combination of factors, including retailers' recognition of the physical store's importance, the e-commerce halo effect, a significant shift to direct-to-consumer (DTC) models, and a resilient economy. CFO John Gottfried confirmed that the quarterly renewal spread was influenced by a single, small deal involving a suburban quick-service restaurant.

Jeffrey Spector asked if excess tenant space was contributing to slower decision-making, sought clarification on the 34% embedded NOI growth figure, and inquired about leasing expectations for current redevelopment projects.

Answer

Co-CEO Michael Frankel explained that excess space is less of a factor for Rexford's smaller-tenant base compared to the big-box market. CFO Laura Clark clarified the 34% figure represents total embedded NOI growth over three years from multiple sources, not just market rent growth. Co-CEO Howard Schwimmer stated that while leasing timelines are extended, there is reasonable activity on redevelopment projects.