Joshua Dennerlein

Joshua Dennerlein asked for clarification on the $8 billion investment volume guidance, specifically the mix between wholly owned and private fund investments, the deployment timeline for the private fund, and expectations for dispositions in 2026.

Answer

President and CEO Sumit Roy clarified that the private fund has $600 million of dry powder (from an expected $1.7 billion total by March, with $1.1 billion already deployed) that will go towards the fund, with the remainder of the $8 billion being balance sheet investments. He also stated that dispositions in 2026 are expected to be similar to 2025's $740 million.

Joshua Dennerlein asked for clarification on Realty Income's $8 billion investment volume guidance, specifically how much is expected to be wholly owned versus in the private fund, the mix between development and acquisitions, and the anticipated disposition volume for the year.

Answer

Sumit Roy, President and CEO, explained that the fund has approximately $600 million of dry powder equity to deploy, with the remainder of the $8 billion coming from the balance sheet. He expects dispositions in 2026 to be similar to 2025's $740 million.

Joshua Dennerlein asked about policy developments in California, including mayoral and gubernatorial elections and real estate proposals, that could benefit rental housing. He also inquired about the future modeling and growth expectations for the structured finance book now that it is being right-sized.

Answer

Angela Kleiman (President and CEO) noted a shift away from extreme liberal policies in California, with some extreme proposals failing, indicating a public desire for a normal functioning economy. Barbara Pak (EVP and CFO) explained that $175 million of the structured finance book's $330 million value is generating income in 2026. She anticipates future redemptions to be more manageable and confirmed they are seeking new, risk-adjusted opportunities to backfill, expecting a more stable book going forward.

Joshua Dennerlein of Bank of America inquired about the duration of growth for products in the 10%+ growth bucket, asking how long they typically sustain that high level of performance.

Answer

CFO Mike Eastwood provided examples of durable high-growth products, such as Practical Law (acquired 2013) and Dominio (acquired 2014), which continue to grow above 10%. CEO Steve Hasker added that the underlying secular trends, like the talent shortage in tax and the transformation in legal, are multiyear or even decade-long transitions, suggesting the growth trends are durable, contingent on execution.

Joshua Dennerlein of BofA Securities asked about the new solutions being rolled out on the FICO platform this year and the historical growth impact of such rollouts. He also questioned whether the FICO World conference typically translates into a measurable bump in sales.

Answer

CFO Steve Weber mentioned that fraud solutions on the platform are a work in progress, with full availability expected next year. CEO Will Lansing and VP of Investor Relations Dave Singleton both pointed to FICO World for major announcements on platform innovation. Lansing confirmed the event is their '#1 sales pipeline building effort,' driving significant customer engagement and future sales.

Joshua Dennerlein of BofA Securities asked about new solutions being rolled out on the FICO Platform and whether the FICO World conference typically generates a tangible increase in sales.

Answer

CFO Steve Weber mentioned that fraud solutions on the platform are a key focus, with most expected to be available next year. CEO Will Lansing confirmed that FICO World is their '#1 sales pipeline building effort,' as it facilitates deep customer engagement and knowledge transfer that directly drives future business.

Joshua Dennerlein requested an update on the Chief Client Office, asking how conversations with clients are progressing and for examples of any early wins from the initiative.

Answer

CEO Martina Cheung reported 'very nice' progress, with senior leadership actively engaging top clients in partnership with the office. This has strongly positioned the company for vendor consolidation opportunities. She cited several significant new business wins with large banks for products like counterparty manager, primary markets issue book, and corporate actions as evidence of early success.

Joshua Dennerlein from Bank of America questioned if 2022, a year of significant MIS revenue decline and margin compression, was a poor analogy for the current situation if revenues were to slow more than expected.

Answer

CEO Robert Fauber and CFO Noemie Heuland distinguished the current environment from 2022. They explained that 2022 saw a severe revenue decline of around 30%, making margin preservation difficult. The current forecast is within a manageable 'band' where traditional levers like incentive comp and discretionary spending control are more effective. They are not forecasting a 2022-like scenario and still expect a year-over-year increase in the MIS adjusted operating margin to 61-62%.

An analyst on for Joshua Dennerlein asked about Equifax's M&A strategy concerning smaller competitors in the verification space and the overall M&A pipeline view given growing free cash flow.

Answer

CEO Mark Begor reiterated that bolt-on M&A is integral to their strategy, focusing on four priorities: strengthening Workforce Solutions, differentiated data, identity & fraud, and international platforms. He specified that the recent acquisition of a small competitor was not a strategic fit for Equifax. He affirmed that growing free cash flow and leverage capacity support their plans for CapEx, bolt-on M&A, and shareholder returns.

Joshua Dennerlein asked for more color on the new partnership with Moody's, including how it came about and its expected impact on growth.

Answer

Chairman and CEO Henry Fernandez explained that the partnership evolved from their successful ESG collaboration and focuses on combining Moody's credit risk models with MSCI's extensive private credit investment data to create a joint product for assessing creditworthiness. Chief Financial Officer Andrew Wiechmann added that the financial impact in the current year is expected to be immaterial.

Joshua Dennerlein inquired about FrontView's acquisition pipeline, including current activity levels, cap rate trends, and the specific industries the company is targeting for growth.

Answer

Co-CEO and Co-President Randall Starr responded that the pipeline is robust, with acquisitions averaging in the high 7% cap rate range due to their niche, entrepreneurial approach. He stated they are targeting essential services, health, and wellness—specifically medical, dental, vet, and auto services—while avoiding casual dining and pharmacies. Starr noted that a decrease in 1031 exchange buyers has created favorable pricing opportunities.

Joshua Dennerlein of Bank of America questioned Welltower's approach to talent retention as a driver of its culture and asked if the company is currently facing a retention problem.

Answer

CEO Shankh Mitra emphasized that talent retention is his top priority and stated with a "resounding no" that Welltower does not have a retention problem. He elaborated that his focus is on proactive measures to maintain a positive environment, or 'keeping the grass wet,' to prevent future issues amid high industry demand for talent.

Joshua Dennerlein questioned the 'Path to Recovery' slide, asking what other factors should be layered in beyond a simple return to pre-COVID occupancy and margins at today's rates.

Answer

Shankh Mitra (CEO & CIO) agreed that simply returning to pre-COVID levels would be a 'complete failure.' He explained the analysis should also factor in the cumulative effect of revenue growing faster than expenses over time, as well as achieving a new, higher stabilized occupancy level driven by platform initiatives.

Joshua Dennerlein asked for more detail on the unique aspects of the Trilogy platform that could be leveraged across American Healthcare REIT's other SHOP operators and inquired about the source of the insurance benefit mentioned in the financial results.

Answer

Gabe Willhite, COO, explained that as the new 100% owner of Trilogy, AHR can now leverage Trilogy's best-in-class proprietary strategies in revenue management, marketing, and employee retention to support its other regional operators. Chief Financial Officer Brian Peay clarified that the insurance benefit is part of a miscellaneous collection of non-real estate income, with proceeds from property losses being the largest component.

Joshua Dennerlein asked about Americold's technology strategy, questioning why partnering with outside resources is preferable to an in-house approach. He also inquired about any significant technology rollouts planned for the next 12 months.

Answer

CEO George Chappelle defended the partnership strategy, stating it's more efficient to leverage the massive R&D investment of major tech companies in areas like AI rather than trying to compete for talent and resources. He highlighted that this approach delivered bottom-line results just months after the ERP (Project Orion) went live. Looking ahead, he mentioned the continued ERP rollout in Europe and plans to explore embedded and generative AI capabilities to drive further productivity gains.

Joshua Dennerlein asked about discussions around refreshing the Board of Directors due to long tenures and whether Gary Shiffman would step down from the Board and his Chairman role upon a new CEO's appointment.

Answer

Gary Shiffman, Executive, highlighted that the Board has added four new members in the last four years and is actively examining further refreshment, with one member set to step down. He stated that conversations about his future role as Chairman and Board member will be held with the search committee as part of the transition process.

Speaking on behalf of Joshua Dennerlein, Farrell Grant asked about the outlook for the same-store SHOP portfolio, specifically regarding future occupancy levels and the ability to push rental rates. A follow-up question concerned the potential impact of the new political administration on labor costs across the senior housing and skilled nursing industries.

Answer

Chief Investment Officer Kevin Pascoe responded that the goal is to reach 90%+ occupancy, which would allow incentives to burn off and lead to margin expansion. He anticipates mid-single-digit revenue increases on street rates. Regarding labor, he noted that while wage rates are not expected to decrease, the growth rate has stabilized, and a potential modification of the minimum staffing rule could be a positive for the skilled nursing sector.

Joshua Dennerlein from Bank of America requested color on the deceleration in lease rate growth in the Pacific Northwest and Northern California. He also asked if AvalonBay is observing increased traffic or benefits in Seattle following Amazon's return-to-office mandate.

Answer

COO Sean Breslin explained that the deceleration was a strategic move across all regions to stabilize occupancy heading into the slower season. He noted that Seattle is typically more seasonal, which can require more aggressive pricing on new move-ins. Regarding return-to-office, Breslin confirmed they have seen positive impacts in Seattle since Q2, driven by Amazon and other employers, which has contributed to the region's outperformance in 2024.

Joshua Dennerlein of Bank of America followed up on renewals, asking about the seemingly wide gap between the 7% renewal 'ask' mentioned on the Q2 call and the achieved rate around 4% for October, and whether this negotiation spread is normal.

Answer

President and COO Charles Young responded that in markets with supply and absorption noise like Tampa and Phoenix, teams were instructed to adjust and compete on price to avoid excessive turnover. He indicated that as absorption improves, they are regaining confidence to hold rates. Young suggested that month-to-month adjustments are normal and that they are now capturing higher rates as they build the book back.

Joshua Dennerlein of Bank of America asked for clarification on whether short-term lease volume was unusually high and how this dynamic relates to the customer experience project.

Answer

SVP of Operations Mike Lacy confirmed that short-term lease volume was slightly higher than normal, particularly in coastal markets, driven by an increase in summer interns. He explained that while this impacts turnover statistics, the company pursues these leases for their profitability, as they command a premium rent. The overall exposure is managed and remains less than 1% of total units.

Joshua Dennerlein asked for clarification on the bad debt assumption for Q4 2024, given the challenges with tenants Frisch's and Badcock. He also followed up on potential one-time items affecting the run-rate and the expected downtime for properties that might be returned.

Answer

CFO Kevin B. Habicht explained that while Frisch's and Badcock represent 2.1% of ABR, the company would still land in the middle of its guidance range even with a worst-case 200 basis point rent loss. He noted no other major tenants of concern and stated that downtime for re-tenanting is typically 6-12 months, although strong interest in the properties could shorten this period.

Joshua Dennerlein from Bank of America asked to quantify the impact of new supply on new lease rate growth and whether high-supply markets also skewed renewal rates lower.

Answer

Tim Argo, EVP and Chief Operating Officer, explained that Austin was the most challenged market, significantly impacting overall new lease rates. He noted that excluding Austin, new lease rates would have accelerated from Q2 to Q3. He confirmed that high-supply markets do impact renewals, citing Austin's renewal rate of 1.5% compared to the portfolio's average of around 4.1% for the quarter.

Joshua Dennerlein asked about the common reasons for passing on other portfolio deals that were recently reviewed and inquired about the typical composition of portfolios currently on the market, specifically regarding attached versus detached homes.

Answer

COO Bryan Smith explained that AMH passed on some portfolios due to a higher-than-desired proportion of townhomes and attached product, as the company believes single-family detached homes offer better long-term returns. He noted that many recently available portfolios have been heavily weighted towards more recent build-to-rent product, which often includes more attached homes, whereas scattered-site portfolios, like the one acquired, tend to have a higher proportion of detached homes.

Joshua Dennerlein sought more detail on the AFFO per share dilution from the treasury stock method in 2024 and 2025, and asked if the strategy to reduce car wash exposure was due to diversification or industry-specific issues.

Answer

Executive Robert Salisbury quantified the dilution at approximately $0.01 in Q3, likely totaling $0.02 for 2024, and suggested a $0.01-$0.02 headwind is a reasonable starting point for 2025 models. CEO Peter Mavoides confirmed that lightening up on car washes is a portfolio construction decision to maintain industry concentration below a 15% soft ceiling, not a reaction to negative industry trends.

Joshua Dennerlein asked for clarification on the valuation difference between the 4.9% cap rate on a core Seattle asset sale and the ~7.5% cash cap rate on pending stabilized, non-core asset sales.

Answer

CFO Marc Binda and executive Peter M. Moglia explained that the pending sales at higher cap rates involve non-traditional or suburban assets requiring capital, whereas the 4.9% cap rate sale of a core asset to a user is more representative of the high value of Alexandria's mega campuses. Executive Joel Marcus added that the company is strategically recycling capital from older assets that no longer fit the core mega campus strategy.

Joshua Dennerlein inquired about the 2025 preliminary rate growth guidance, specifically asking for a comparison to 2024's initial notices, the uplift from new customers, the current mark-to-market on rents, and the drivers behind recent payroll expense trends.

Answer

Paul Seavey, EVP and CFO, stated that the mark-to-market on new resident rents is approximately 13%, moderating from 16% earlier in the year, and confirmed the preliminary 2025 rate growth includes this impact, consistent with prior methodology. Patrick Waite, EVP and COO, explained that payroll favorability was driven by a 5% lower headcount at RV properties year-over-year, achieved through efficient scheduling, cross-training, and managing overtime, while maintaining high customer experience scores.

Joshua Dennerlein observed a step-back in occupancy in the Asia and Latin America regions and asked if there were any specific trends to highlight there compared to the more stable U.S. market.

Answer

An executive provided a concise answer, stating that the occupancy decline was primarily driven by market impacts in China, with some oversupply issues in Japan also contributing to a lesser extent.