Linda Yu Tsai • Jefferies

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CFO Daniel Guglielmone attributed the positive result to a combination of factors: lower concern about bankruptcies due to a strong tenant base, better-than-expected rent collections, and higher tenant retention. This led to a lower utilization of the credit reserve than forecasted, contributing to the quarter's outperformance.

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CFO Daniel Guglielmone indicated that while several projects will begin contributing (e.g., Huntington, Darien, 915 Meeting Street), there could be a modest earnings drag as capitalized interest falls off upon delivery, potentially before rent fully commences. However, he expressed confidence that strong growth from the core comparable portfolio would more than offset this, leading to 'very, very solid' FFO growth in 2025.

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President and CEO Jackson Hsieh attributed the accelerated pace to the new streamlined organizational structure, clear strategy, and strong tenant demand for Macerich's top-tier properties. Doug Healey, SVP of Leasing, added that the pool of potential uses has broadened significantly beyond traditional retail to include medical, entertainment, and digitally native brands.

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CFO Daniel Swanstrom confirmed $27 million of the $66 million SNO pipeline would be realized in 2025. CEO Jackson Hsieh added that the SNO pipeline will grow substantially due to a strategic focus on new leases. For tenants under 10,000 sq. ft., new lease spreads were 17.6% versus 5.8% for renewals. SVP of Portfolio Management, Brad Miller, clarified that 90% of the leasing activity in their plan is focused on high-demand 'A' rated spaces.

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CFO Vincent Chao confirmed that Q1 had minimal bad debt. He clarified that 'at home' is the primary tenant on the watchlist but has no credit loss associated with it yet, and the 60 basis point reserve for the year is sufficient. For 'at home' properties, he highlighted the low rent basis, large lots offering redevelopment optionality, and early inbound interest from quality tenants as positive factors.

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CFO Kevin B. Habicht confirmed NNN intends to pursue the FRG guarantee to offset any rent loss from Badcock. Executive Stephen Horn described being at a stalemate with Frisch's management and pursuing legal rights. Regarding TI, Habicht explained NNN's preference is to offer lower rent rather than fund large TI packages. He also stated that lease termination income is too lumpy to forecast for 2025, though it remains a part of their active portfolio management strategy.

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David Jamieson, COO, confirmed that the occupancy trough is expected in Q2. He anticipates that improvement will begin to materialize in Q3 and continue into Q4 as new tenants from the signed-but-not-occupied (SNO) pipeline open and begin to offset the vacancies.

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CFO Glenn Cohen detailed the remaining 2025 maturities, including a $240 million bond due in June, which can be handled with free cash flow, dispositions, or the credit facility. He noted the $750 million in 2026 maturities don't begin until August, providing ample time to address them. CEO Conor Flynn added that the positive outlooks from S&P and Moody's could lead to better pricing on future refinancings.

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Executive Vice President Reginald Livingston stated it's early to define the seller pool but noted that opportunities often arise from institutions needing liquidity or specialized operators. President & CEO Kenneth Bernstein added that current volatility is unlike the GFC and opportunities are more about value-add releasing. Regarding tenants, Bernstein and CFO John Gottfried explained that the post-COVID mix includes a confluence of high-quality, digitally-native and legacy brands with stronger balance sheets and healthier occupancy cost ratios than in 2019.

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President and CEO Kenneth Bernstein explained that scale is most effective in key corridors, enabling Acadia to drive rents and curate the tenant mix, but emphasized that each acquisition must be accretive on its own. A.J. Levine, an executive, added that scale can contribute approximately 10% to rent growth upside. Regarding 2025 volume, CIO Reginald Livingston stated that while core acquisitions could potentially match the prior year's volume, the Investment Management platform's activity is more opportunistic and thus harder to forecast.

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CEO Kenneth Bernstein confirmed the potential for a continued acquisition pace, provided deals are accretive and market conditions align. He noted that competition is professional and that Acadia's expertise allows it to move quickly. CFO John Gottfried stated that NYC currently represents about one-third of core NOI, but the company has no set concentration target and will pursue the best opportunities across its key markets. Executive Alexander Levine added that the leasing pipeline includes a healthy mix of domestic and international brands, with international retailers increasingly expanding into markets beyond SoHo.

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CEO Mark Manheimer stated they will continue recycling capital to meet diversification goals, after which they would explore other alternatives if the stock price remains undervalued. CFO Daniel Donlan added that the company can operate comfortably within its target leverage range of 4.5x to 5.5x well into next year.

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CEO Joey Agree projected the Big Lots vacancies would be resolved by the end of Q2 2025, highlighting significant net effective rent lifts on re-leased properties. He explained the drug and dollar store reduction was driven by concerns over the relevance of large-format pharmacies and overbuilding in the dollar store sector. He also noted that the dozen new hires were spread across the entire organization to support growth and that AI is being used to significantly reduce legal costs and for lease abstraction, a practice dating back to 2022.

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CEO Joey Agree anticipates the Big Lots situation will be resolved by the end of Q2, much sooner than year-end. He clarified the 50-150% rent uplifts were on a net effective basis with minimal CapEx. He explained the reduction in pharmacy exposure was due to the irrelevance of their large-format stores, while dollar stores were seen as overbuilt. The new hires were spread across the entire organization, from acquisitions to IT and asset management, to support growth. He also highlighted the successful deployment of AI to reduce legal costs.

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CEO Joey Agree explained they don't receive store-level rent coverage for most large tenants but noted sector-wide challenges in areas like experiential retail. Regarding the credit rating, he stated the recent BBB+ upgrade was overdue and believes the primary remaining hurdle for an A- rating is simply scale, given their strong balance sheet and portfolio.

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CEO Joey Agree noted that while they don't get store-level rent coverage for most tenants, sectors like experiential retail are facing challenges, though this has little impact on Agree's portfolio. Regarding the credit rating, he stated the upgrade to BBB+ was overdue and believes the company's balance sheet and portfolio quality already warrant an A- rating, with company size being the primary remaining hurdle for rating agencies.

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President and COO Tom McGowan explained that each lease designation right will be evaluated individually; they might accept a deal to maintain cash flow in a less-desirable location but would reject a short-term fix if a better long-term tenant is an option. Chairman and CEO John Kite added that the competitive landscape for acquisitions is very deep, including pension funds, sovereign wealth funds, insurance companies, and other REITs, reflecting strong institutional demand for open-air retail.

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CEO John Kite responded that all seven Container Store locations are in high-quality properties and expressed confidence in re-leasing them productively if necessary, though he believes the tenant will continue to operate. CFO Heath Fear addressed the reporting question, stating that providing GAAP spreads is 'under consideration.' He acknowledged that with strong embedded rent bumps, the GAAP spreads would be 'much higher' than the currently reported cash spreads.

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President and CEO Daniel Busch described the buyer pool for California assets as broad and competitive, including public, private, and international funds, noting strong initial demand. He emphasized that sales are contingent on finding accretive redeployment opportunities and declined to give specific cap rates, but stated the goal is a positive spread. Regarding new acquisitions, he highlighted that the Sun Belt portfolio is perpetually below market, citing a recent example where tenants who missed option dates were re-signed at spreads near 30%, indicating strong embedded rent growth potential.

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President & COO Brian Finnegan explained that the first half of 2025 faces tougher year-over-year comparisons due to significant out-of-period collections and a one-time tax benefit in H1 2024. He stated that growth will accelerate as the year progresses and new rents from the signed-but-not-commenced pipeline begin to stack up, driving base rent growth.

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Executive Jonathan Pong reported that year-to-date bad debt was about 40 basis points of rental revenue, but sub-20 basis points when excluding the one-time C-store issue, which is below the historical average of 25 basis points. He noted the AFFO impact from the C-store operator is approximately $1 million per month and is already factored into guidance. He pointed to the company's historical 84-85% recapture rate on impacted rent as a precedent for potential recovery.

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Brian McDade, CFO, attributed the strong quarterly NOI performance to continued rent growth, occupancy gains, and the successful conversion of temporary leases to permanent ones, all reflecting strong execution of their business plan. While confirming that this momentum is expected to carry into the next year, he stated that formal 2025 guidance would be provided in February.

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COO Michael Manelis explained that new lease spreads follow a predictable seasonal pattern. He expects them to decelerate through Q4 and then begin to accelerate, likely turning positive again late in the first quarter of the new year, consistent with typical trends.

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CFO Conor Fennerty stated that SITE will withdraw its credit rating after paying off its bonds, so Curbline would be a new, unrated entity. He noted scale is the biggest factor for a public investment-grade rating. Regarding rents, he explained that mark-to-market potential is driven more by unit type and vintage than by region, with the greatest upside in recapturing seasoned restaurant pads and units with drive-thrus.

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