Michael Goldsmith

Michael Goldsmith requested a breakdown of performance between urban and suburban markets, specifically regarding rent change, and how this varies by East Coast, West Coast, and Sun Belt regions. He also asked if condo and townhome (BTR) communities represent a competitive advantage and future opportunity for AvalonBay.

Answer

Sean Breslin, COO, noted that the urban portfolio has outperformed the suburban in rent change for the last couple of quarters, but cautioned that this can be influenced by concessions being less severe than a year ago. Matthew Birenbaum, CIO, confirmed that condo and townhome (BTR) communities represent a strategic advantage and future growth channel for AvalonBay, allowing access to underappreciated niches and aligning with future demand trends, with similar yields but different expense profiles.

Michael Goldsmith asked for a breakdown of rent change performance between urban and suburban markets across East Coast, West Coast, and Sun Belt regions. He also inquired about opportunities in condo and townhome (Build-to-Rent) communities as a competitive advantage for AvalonBay.

Answer

Sean Breslin, COO, stated that the urban portfolio has outperformed suburban in rent change recently, but cautioned that this can be influenced by concessions being 'less bad.' He cited San Francisco and New York City as healthy, while Seattle remains soft. Matthew Birenbaum, CIO, confirmed plans for more townhome BTR and condo communities in 2026, viewing these wider product offerings as a competitive advantage aligned with future demand and niche markets, potentially driving higher yields and profitability.

Michael Goldsmith asked about the specific factors driving the strong performance in Northern California and inquired about the company's expectation for second-quarter blended rent growth.

Answer

COO Sean Breslin attributed Northern California's strength to a combination of accelerated return-to-office mandates, improved quality of life in San Francisco, a pickup in AI-related job growth, and dwindling new supply. He declined to provide specific guidance for Q2 blended rates but noted May/June renewal offers were in the low-to-mid 5% range.

Michael Goldsmith inquired about the performance gap between AvalonBay's suburban and urban markets in Q4 and the outlook for that gap in 2025. He also asked if the 2025 bad debt assumption implies delinquencies will remain elevated and what factors are preventing a return to historical levels.

Answer

COO Sean Breslin confirmed that the suburban portfolio outperformed urban by about 40 basis points on rent change in Q4 and expects this outperformance to continue, driven by very low supply. Regarding bad debt, he stated that a return to historical levels is still 'TBD.' While better fraud screening helps, headwinds from a slower eviction process in tighter regulatory environments are preventing a full normalization, though he expects to get closer over time.

Michael Goldsmith asked about legislative changes related to 'junk fees' and their potential impact on Essex's ability to grow non-rental income. He also inquired about any changes in the pace of move-ins from outside Essex's core markets.

Answer

Angela Kleiman (President and CEO) stated that Essex has reviewed its practices with consultants and does not expect 'junk fees' legislation to have a meaningful impact on its business. She noted an increase in immigration trends, particularly in the northern region, driven more by return-to-office mandates than robust job hiring, which has provided a positive tailwind.

Michael Goldsmith inquired about the impact of 'junk fee' legislation on Essex's ability to grow non-rental income and any changes in the pace of move-ins from outside Essex's core markets.

Answer

Angela Kleiman (President and CEO, Essex Property Trust) stated that Essex has reviewed its practices regarding other fees and does not expect a meaningful impact from 'junk fee' legislation. She noted an increase in immigration trends, particularly in the northern region, driven more by return-to-office than robust job hiring, serving as a positive tailwind.

Michael Goldsmith asked for the rationale behind the statement that West Coast multifamily is well-positioned for various economic outcomes and inquired about any recent changes in domestic or international migration trends.

Answer

Executive Angela Kleiman explained that the West Coast has lower downside risk due to chronically low housing supply, making it less reliant on strong job growth compared to markets like the Sunbelt. Executive Barb Pak noted no significant changes in international migration but highlighted that San Francisco and San Mateo have recently turned positive for domestic migration, supporting Northern California's strong performance.

Michael Goldsmith of UBS questioned why the blended rent growth forecast is only 3% given the favorable operating environment, asking if this is 'as good as it gets.' He also sought to clarify if a normal seasonal curve is assumed for the first half of the year.

Answer

Executive Angela Kleiman explained that while West Coast fundamentals are strong, the forecast is tempered by a moderating overall U.S. economy. She noted that positive indicators like tech job postings have only recently reached pre-COVID levels, suggesting a gradual build in momentum rather than a sharp acceleration. Executive Barb Pak confirmed that the budget assumes a normal seasonal curve for the entire year.

Michael Goldsmith from UBS asked for details on the Georgia Skilled Nursing portfolio acquisition, specifically why its initial yield was higher at 10.6% and if it was an off-market deal or involved a transition to an existing operator. He also inquired about the current outlook for portfolio transactions, including whether they are trading at a premium or discount.

Answer

Vikas Gupta, CIO of Omega Healthcare Investors, confirmed that the Georgia Skilled Nursing deal was an off-market transaction, allowing for a slightly higher yield than the typical 10% for SNF deals, and that the facilities were leased to a current Omega operator. Matthew Gourmand, President, noted that portfolio deals, when they do trade, are typically at a premium in skilled nursing, senior housing, and UK care homes, making selective facility purchases more attractive than larger, premium-priced portfolios.

Michael Goldsmith asked for details on the Georgia Skilled Nursing portfolio acquisition, including its higher initial yield of 10.6%, whether it was an off-market deal or had underlying issues, and if facilities were transitioned to an existing Omega operator.

Answer

CIO Vikas Gupta confirmed the Georgia deal was an off-market transaction, allowing for a slightly higher yield than the typical 10% for SNF deals, with no significant underlying issues. He also confirmed the facilities were leased to a current Omega operator. Michael Goldsmith then asked about the outlook for portfolio transactions, specifically if they are trading at a premium or discount. President Matthew Gourmand noted that portfolio deals, when they do trade, are typically at a premium across skilled nursing, senior housing, and UK care homes, making selective, smaller acquisitions more attractive to Omega.

Michael Goldsmith asked about the expected incremental NOI or FFO contribution in 2026 from projects that stabilized late in 2025 or are scheduled to stabilize in 2026.

Answer

CFO Brian McDade indicated that approximately $30 million in contribution is expected in 2026 from projects scheduled for completion.

Michael Goldsmith asked about the expected incremental Net Operating Income (NOI) or Funds From Operations (FFO) in 2026 from redevelopment projects that are stabilizing either late in 2025 or throughout 2026.

Answer

Brian McDade, Chief Financial Officer, stated that Simon Property Group anticipates approximately a $30 million contribution in 2026 from projects that are scheduled to be completed.

Michael Goldsmith of UBS Group requested quantification of the reported increase in shopper traffic and asked if there were any discernible differences between mall and outlet performance to better understand consumer trends.

Answer

Chairman, CEO & President David Simon quantified shopper traffic growth at 1.5%. He noted performance is not at its peak due to relative softness at assets on the U.S. borders (both north and south) and a lack of outperformance from international tourist-oriented centers, which are currently performing in line with the portfolio rather than exceeding it as they have historically.

Michael Goldsmith from UBS Group requested quantification of the reported increase in shopper traffic and asked if there were any notable differences between mall and outlet centers to better understand consumer trends.

Answer

Chairman, CEO & President David Simon quantified overall traffic growth at 1.5%. He noted that performance is being held back from its full potential due to relative softness at border properties (both U.S.-Canada and U.S.-Mexico) and a lack of growth from international tourism, which typically drives outperformance at certain key centers.

Michael Goldsmith asked about the progress of backfilling former Forever 21 locations, including the types of tenants taking the space and the expected timeline.

Answer

CEO David Simon reported 'really good' demand, with over half of the former Forever 21 boxes already leased to tenants like Primark and Zara, successfully replacing the prior rent. CFO Brian McDade added that they expect to more than double the rent from these spaces over a two-year process, with rent from about half the deals commencing this year and the other half next year.

Michael Goldsmith of UBS sought to bridge the gap between historical 4% NOI growth and the 3% guidance for 2025, asking if it was due to diminished occupancy upside or a higher provision for tenant bankruptcies.

Answer

CFO Brian McDade clarified that the 'at least 3%' guidance is consistent with prior years. He attributed the baseline figure to three factors: a conservative assumption of flat sales impacting overage rent, expected downtime from re-tenanting spaces, and a return to a standard historical approach for bad debt reserves in 2025.

Michael Goldsmith connected several positive themes—high occupancy, focus on merchandising, and favorable upcoming lease expirations—to ask if this combination supports confidence in sustainable mid-single-digit NOI growth for the next few years.

Answer

Brian McDade, CFO, affirmed that the company believes the current momentum in NOI growth will continue. He agreed that the factors mentioned, combined with ongoing capital investment into the portfolio and a lack of new competitive supply, support a positive outlook for sustained growth.

Michael Goldsmith asked about the expected acceleration in seasonal and transient RV business revenue for Q2-Q4 2026, following a projected Q1 decline, and the drivers behind the anticipated expense growth for 2026, including payroll and insurance renewal assumptions.

Answer

Paul Seavey (EVP and CFO) detailed the quarterly revenue composition, noting Q1 earns 50% of seasonal and 20% of transient rent, with Q1 implied rate down 13%. Patrick Waite (EVP and COO) highlighted positive booking pace for Q2-Q4, especially around key holidays and the 250th Fourth of July, and strong demand for annual RVs. Seavey explained 2026 expense growth tracks 50 basis points above CPI, with higher payroll and utility expenses matching revenue, and noted a softening insurance market without disclosing specific renewal assumptions.

Michael Goldsmith asked about the expected acceleration of the seasonal and transient business in Q2-Q4 2026, given a Q1 decline, and inquired about the drivers of the projected increase in expense growth for 2026, specifically regarding payroll and insurance renewals.

Answer

Paul Seavey (EVP and CFO) detailed the quarterly revenue composition and the Q1 decline for seasonal/transient, while Patrick Waite (EVP and COO) explained the anticipated Q2-Q4 growth drivers, including major holidays and favorable early booking pace. Paul Seavey also addressed expense growth, noting assumptions for higher payroll and utilities to match revenue, and mentioned a softening insurance market without disclosing specific renewal assumptions.

Michael Goldsmith asked about the process for setting 2026 rent increases, specifically the convergence of RV and MH rates, and the potential for conservatism. He also inquired about the success rate of outreach efforts to Canadian customers regarding seasonal reservations.

Answer

Patrick Waite, President and COO, explained that MH and RV rate-setting processes are similar, involving competitive review and budgeting. He noted that the moderation in RV annual rates reflects general market forces rather than a direct relationship between property types. Marguerite Nader, CEO, attributed dampened Canadian reservations to a moderate October and a political issue causing customers to pause, emphasizing that cold weather typically drives bookings.

Michael Goldsmith asked about the process for setting 2026 rent increases, particularly the historical trend of RV rates being higher than MH and the current closing of this gap. He also inquired about the seasonal reservation pace for Canadian customers and the success of outreach efforts.

Answer

Patrick Waite, President and COO, explained that the process for MH and RV annual rate increases is similar, involving competitive review and budget setting, with the moderation in RV annual rates attributed to general market forces. Marguerite Nader, CEO, noted that the cold winter season typically drives reservations and that a political issue is causing some Canadian customers to pause.

Michael Goldsmith questioned the implied reacceleration of annual RV growth in the second half of the year. He also asked about the typical timeline for filling new MH expansion sites and their impact on occupancy metrics.

Answer

EVP & CFO Paul Seavey explained that the projected acceleration in annual RV growth is primarily driven by the timing of ordinary course rate increases that take effect in Q3 and Q4. Regarding new sites, President & COO Patrick Waite stated that MH development projects are scaled to be absorbed over a three to four-year period, at a pace of roughly 25 to 50 sites per year.

Michael Goldsmith questioned the drivers behind the implied reacceleration of annual RV revenue growth in the second half of the year. He also asked about the typical timeline to fill newly developed MH sites that initially create an occupancy drag.

Answer

EVP & CFO Paul Seavey attributed the expected acceleration in annual RV revenue to the timing of standard rate increases that occur in Q3 and Q4. President & COO Patrick Waite explained that MH development projects are scaled to be absorbed over a three-to-four-year period, with typical absorption rates of 25 to 50 sites per year per project.

Michael Goldsmith asked about the drivers of the implied reacceleration in annual RV growth for the second half of the year and questioned the timeline for filling new MH expansion sites.

Answer

EVP & CFO Paul Seavey stated the reacceleration is primarily driven by the timing of rate increases taking effect in Q3 and Q4. President & COO Patrick Waite explained that MH development projects are scaled to be absorbed over a three-to-four-year period.

Michael Goldsmith questioned the drivers behind the implied reacceleration of annual RV growth in the second half of the year. He also asked about the typical lag time for filling new MH expansion sites and their effect on occupancy rates.

Answer

EVP & CFO Paul Seavey stated that the expected acceleration in annual RV revenue is driven by the timing of ordinary course rate increases that take effect in Q3 and Q4. President & COO Patrick Waite added that new MH development sites are typically scaled to be absorbed over a three-to-four-year period.

Michael Goldsmith questioned the drivers behind the implied reacceleration of annual RV revenue growth in the second half of the year. He also asked about the typical lag time for filling newly developed MH sites.

Answer

EVP & CFO Paul Seavey explained that the expected revenue acceleration is primarily driven by the timing of ordinary course rate increases that take effect in Q3 and Q4. President & COO Patrick Waite added that MH development projects are scaled to absorb the new sites over a three-to-four-year period, at a pace of roughly 25 to 50 sites per year.

Michael Goldsmith asked about the assumptions behind the favorable insurance renewal, which saw a 6% premium decrease despite recent storm claims. He also requested clarification on the offsetting factors that led to a smaller reduction in total same-store revenue guidance compared to the cuts in MH and RV guidance.

Answer

Paul Seavey, an executive, explained that they do not disclose budget assumptions for insurance to protect negotiating power but confirmed the 6% decrease was achieved. Marguerite Nader, an executive, highlighted that the renewal came with no change in deductibles or coverage. For the guidance question, Paul Seavey noted that adjustments to other line items, including the timing of insurance proceeds, provided an offset.

Michael Goldsmith asked for insight into the 2025 guidance for transient and seasonal RV revenue, which implied a Q1 decline followed by improvement, and questioned the continued financial impact from recent hurricanes, particularly on home sales volume.

Answer

Executive Paul Seavey stated Q1 guidance reflects current reservation pacing. Executive Patrick Waite added that hurricane disruptions and a lag in Canadian business impacted the Sunbelt season. Waite also attributed lower new home sales volume to hurricane-related delays and a normalization from peak COVID demand. CEO Marguerite Nader confirmed all properties are operational.

Michael Goldsmith questioned why the 2025 annual RV base rent increase is decelerating more than the MH increase and asked about the company's philosophy on issuing equity versus debt, including whether a target leverage ratio exists.

Answer

Patrick Waite, EVP and COO, explained that the mid-5% RV rate growth is still strong but reflects a normalization from the peak demand seen during the COVID period. Paul Seavey, EVP and CFO, stated that ELS does not have a specific leverage target and has historically prioritized financial flexibility to be ready for opportunities, which was a key driver of the recent equity issuance to retire higher-cost debt.

Michael Goldsmith asked about the conversion rates for BXP's leasing pipeline, specifically for the 1.1 million square feet in negotiations and 1.3 million square feet in discussions, and how these rates compare to historical trends.

Answer

Douglas Linde, President, reported a 95% conversion rate for deals in lease negotiation (now 1.2 million sq ft). For the broader discussion pipeline, he estimated a conversion rate of approximately 500,000 sq ft, noting that the pipeline continues to grow, with an expectation to identify 5 million sq ft to achieve the 4 million sq ft leasing goal for the year.

Michael Goldsmith asked about the conversion rates BXP is underwriting for its current leasing pipeline, specifically for space in negotiations and discussions, and how these rates compare to historical trends.

Answer

President Douglas Linde stated a 95% conversion rate for the 1.2 million sq ft currently in lease negotiation. He noted that the broader discussion pipeline has a conversion rate of approximately 500,000 sq ft, but it continuously grows, with BXP expecting to identify 5 million sq ft to achieve its 4 million sq ft leasing goal for the year.

Michael Goldsmith inquired about the current 89% CBD rent concentration in BXP's portfolio, how the outlined suburban dispositions will impact this percentage in the near and long term, and if the ultimate goal is to achieve 100% CBD concentration.

Answer

Michael LaBelle (CFO, BXP Inc) and Owen Thomas (CEO, BXP Inc) agreed that the CBD concentration is expected to grow due to the focus on suburban asset sales and urban new investments. They clarified that the goal is not 100% CBD, as BXP intends to maintain exposure to certain suburban markets where it has a strong presence, amenity-rich environments, and dense demand profiles.

Michael Goldsmith asked about the percentage of BXP's portfolio derived from CBD assets, how the ongoing dispositions of suburban assets will impact this percentage in the near and long term, and if the ultimate goal is to achieve a 100% CBD portfolio.

Answer

CFO Michael LaBelle stated that while BXP aims for CBD concentration to grow, it will not reach 100%. He confirmed that asset sales are focused on suburban properties, and new investments are more urban, which will naturally increase the CBD percentage. He also noted that BXP will maintain exposure to certain suburban markets where they have a strong presence, amenity-filled environments, and dense demand profiles.

Michael Goldsmith of UBS Group questioned why the full-year guidance was not raised more significantly despite the Q2 earnings beat and asked about the expected cadence of earnings in the second half of the year.

Answer

Michael LaBelle, EVP, CFO & Treasurer, explained that while the bottom end of the range was raised, the full-year increase was tempered by higher anticipated interest expense and the deferral of some Q2 expense savings into Q3. He noted Q3 FFO will be seasonally lower due to utility costs, with a ramp-up in Q4 driven by lower expenses and occupancy gains.

Michael Goldsmith asked if the rule of thumb that 3 million square feet of leasing equates to flat occupancy still applies for 2025 and beyond, given the company's changing lease expiration schedule.

Answer

President Douglas Linde confirmed that for 2025, 3 million square feet of leasing would result in roughly flat occupancy. However, he stressed that for 2026, which has much lower expirations, the same leasing volume would lead to a 'meaningful increase in occupancy.'

Michael Goldsmith (UBS) questioned the wider FFO guidance spread for 2026 compared to 2025, asking if new factors contribute to increased sensitivity or a broader range of outcomes. He also sought an update on the health of the Southern California market, noting a 140 basis point pickup in lease percentage.

Answer

CFO Tim Arndt attributed the wider FFO guidance spread to the natural mathematical widening as FFO per share crosses $6. Chris Caton, Managing Director of Global Strategy and Analytics, reported a positive tone shift in Southern California, with improved absorption in the second half of 2025, earlier customer engagement in renewals, and broader lease requirements. He highlighted Inland Empire's outperformance and firming pricing in specific submarkets, indicating a progressing cycle and dissipating short-term weakness.

Michael Goldsmith inquired about the wider FFO guidance range for 2026 compared to 2025, asking if anything adds more sensitivity, and sought an update on the health of the Southern California market, specifically regarding the 140 basis point lease percentage pickup.

Answer

CFO Tim Arndt attributed the wider FFO guidance range to natural mathematical scaling as the FFO per share number grows. Managing Director of Global Strategy and Analytics Chris Caton noted a tone shift in Southern California, with improved gross and net absorption in the latter half of 2025. He highlighted earlier customer engagement, broader new lease requirements, and outperformance in the Inland Empire and Class A properties, indicating dissipating short-term weakness.

Michael Goldsmith inquired about the 47 million square feet of net absorption, asking how much was pent-up demand versus a sustainable run rate, and about the cadence of leasing through the quarter.

Answer

President Dan Letter acknowledged the 47 million square feet of net absorption, noting some catch-up from Q2. He stated that Prologis's own leasing activity shows a clear turning point and step higher in demand, with a full pipeline, and that 60 million square feet is considered a normal quarterly velocity for demand improvement.

Michael Goldsmith of UBS asked about the expected timing for the growing leasing pipeline to convert into signed leases and what specific catalysts might be needed to accelerate this conversion.

Answer

Chris Caton, MD of Global Strategy & Analytics, noted that decision-making remains deliberate due to macro caution, and the pipeline build-up reflects this. CEO Hamid Moghadam added that with every passing day, the ability for large customers to defer decisions diminishes, as evidenced by strong build-to-suit activity, suggesting pent-up demand is growing.

Michael Goldsmith asked about recent reports of Amazon re-entering the market for warehouse space and what this signifies for overall industry demand and pricing power.

Answer

Dan Letter, President, confirmed that Prologis has seen renewed activity from Amazon and has signed some significant deals with them this year. He stated that the broader e-commerce segment remains very strong, accounting for a high-teens to 20% share of their overall leasing activity.

Michael Goldsmith of UBS asked for quantification of the post-U.S. election leasing acceleration and the primary drivers behind the improvement, such as increased certainty or spending.

Answer

President Dan Letter described the post-election period as a 'boom' with 10 weeks of solid decision-making that unlocked previously stalled deals across broad-based demand. Managing Director Christopher Caton quantified the improvement, noting the leasing pipeline was up 17% year-over-year in January. CFO Timothy Arndt added that this acceleration was particularly notable as it occurred during a typically slower period.

Michael Goldsmith inquired about the potential speed of a demand recovery once current macroeconomic uncertainties subside, asking how quickly tenant demand could rebound based on past cycles.

Answer

An executive advised a 'measured outlook,' stating that the primary catalyst for new demand will be the absorption of existing spare capacity within supply chains, rather than an immediate reaction to reduced macro uncertainty. They noted that utilization rates are already rising from below 84% to the mid-80s, which will eventually compel customers to lease new space.

Michael Goldsmith asked for more detail on the shop deals acquisition strategy, including the company's view on independent living versus assisted living versus memory care, and whether they target unstabilized or stabilized deals, or are agnostic. He also inquired about the acquisition process and focus, specifically if they prioritize the operator or build a data platform to analyze micro markets, demographics, incomes, or home values.

Answer

CEO Danny Prosky described an 'all of the above' approach, noting a higher acuity portfolio (more AL/memory care) compared to peers, but also acquiring IL. They seek quality buildings with strong earnings growth for the next five years, acquiring a mix of newer (last 10 years) and some unstabilized assets (offering lower in-place cap rates, more growth opportunity, and a discount to replacement cost), alongside stabilized properties. Danny Prosky and CIO Stefan Oh emphasized identifying the operator *before* the building, working hand-in-hand with existing operators to find and underwrite properties, often through off-market opportunities, rather than finding a building and then seeking an operator.

Michael Goldsmith asked for more details on American Healthcare REIT's SHOP acquisition strategy, including preferences for independent living, assisted living, or memory care, and whether they target unstabilized or stabilized deals. He also inquired about the acquisition process, focusing on operators and data platforms for market analysis.

Answer

CEO Danny Prosky stated that the strategy is 'all of the above,' with a tendency towards higher acuity (AL and memory care) compared to peers, but also acquiring IL. The focus is on quality buildings providing long-term earnings growth, often newer products (last 10 years) but also some unstabilized assets for growth opportunity and discount to replacement cost. He emphasized identifying the operator before the building, often working with existing partners to find off-market opportunities. CIO Stefan Oh reinforced this, explaining that they partner with operators who have regional expertise, underwrite properties together, and ensure full alignment throughout the acquisition and transition process.

Michael Goldsmith from UBS asked about the expected timeline for new customer rate growth to translate into improved same-store revenue growth and inquired if the strategic discounting strategy would continue into the fourth quarter.

Answer

CFO Jeff Norman noted that the specific timing depends on churn but highlighted accelerating positive rate trends from May into October. CEO Joseph Margolis explained that discounting was a new strategy to optimize long-term revenue, particularly in states with emergencies, and its continuation depends on testing results.

Michael Goldsmith from UBS inquired about the timeline for new customer rate growth to translate into same-store revenue growth and whether the strategic use of discounts and promotions would continue into the fourth quarter.

Answer

CFO Jeff Norman explained that the specific timing for revenue inflection depends on churn but noted an accelerating positive rate trend from May into October. CEO Joseph Margolis clarified that discounting strategies, particularly in states with emergencies, were a short-term headwind but an investment for long-term revenue optimization, and their continuation depends on testing results.

Michael Goldsmith inquired about the trend in street rates and occupancy into July and asked for clarification on why the benefits of positive rate growth are expected to materialize more significantly in the fourth quarter.

Answer

EVP & CFO Jeff Norman reported that July occupancy remained flat sequentially at 94.6% and new customer rates improved to over 2% year-over-year. He confirmed the fourth-quarter benefit is due to the cumulative 'snowball' effect of positive new customer rates rolling through the tenant base over several months.

Michael Goldsmith of UBS Group AG asked about the drivers behind the significant improvement in street rates during Q1, April's performance, and the sustainability of same-store revenue growth relative to the full-year guidance.

Answer

CFO P. Scott Stubbs confirmed that April's performance was slightly ahead of expectations and that street rates had improved from negative 9% in Q3 2024 to flat by April 2025. He stated that achieving the upper end of the guidance range depends on gaining rate power during the leasing season, while the midpoint or below is possible if rate power remains limited.

Michael Goldsmith inquired about the performance uplift from consolidating to a single brand and the growth of the bridge loan program, including its strategic interplay with acquisitions and overall earnings.

Answer

CEO Joseph Margolis reported tangible benefits from the single-brand strategy, including a $2 million Q4 reduction in paid search spending and a 5.5% increase in rentals at rebranded LSI stores. He described the bridge loan program as a strategic capital allocation tool that fuels the third-party management business and creates a pipeline for future acquisitions, with flexibility to adjust capital commitment as needed.

Michael Goldsmith asked for details on the benefits of consolidating the Life Storage portfolio to a single brand and questioned the factors driving the implied FFO deceleration in the fourth quarter.

Answer

CEO Joseph Margolis explained that the single brand strategy is already showing early benefits like improved SEO and website conversion rates for former Life Storage (LSI) stores, expressing confidence based on a successful 2023 pilot program. Executive P. Stubbs clarified that the primary factor for the Q4 FFO guidance deceleration is simply the expected property performance within the guided range.

Michael Goldsmith asked for an early look at the puts and takes for 2026, specifically regarding the record signed-not-open (SNO) pipeline, implied Q4 guidance, and upcoming debt refinancing.

Answer

Glenn Cohen, CFO, outlined that approximately 60% of the current SNO pipeline, representing about $24 million, is expected to contribute to results in 2026, with an additional $12 million from Q4 2025 commencements. He noted low bankruptcy visibility and identified $825 million of debt maturing in 2026 at an average rate of 0.8% as a potential interest expense headwind.

Michael Goldsmith asked for an early look at the puts and takes for 2026, specifically regarding the record signed-not-open (SNO) pipeline, implied Q4 guidance, and upcoming debt refinancing.

Answer

Glenn Cohen, CFO, outlined that approximately 60% of the current SNO pipeline, representing about $24 million, is expected to contribute to results in 2026, with an additional $12 million from Q4 2025 commencements. He noted low bankruptcy visibility and identified $825 million of debt maturing in 2026 at an average rate of 0.8% as a potential interest expense headwind.

Michael Goldsmith from UBS Group AG asked about the implied deceleration in same-property NOI growth for the second half of 2025 and the anticipated occupancy trajectory.

Answer

CFO Glenn Cohen explained the updated '3% or better' guidance accounts for the H2 impact of Party City and Joann bankruptcies, offset by quicker rent commencements. COO David Jamieson added that Q2 represented the occupancy trough and expects momentum to build in H2, driven by record small shop occupancy.

Michael Goldsmith from UBS asked for context on Kimco's Q1 credit loss of 56 basis points, which is below the full-year guidance of 75-100 basis points, and inquired about visibility into the tenant watch list.

Answer

Kathleen Thayer, an executive, clarified that major bankruptcies (Party City, Big Lots, JOANN) are factored into the minimum rent line, not the credit loss assumption. The credit loss guidance covers potential uncollectable receivables and unbudgeted vacates. She noted that potential vacates from watchlist tenants like At Home and Rite Aid are covered within their 20-25 basis point buffer for unexpected events, justifying the confidence in the 75-100 basis point range for the full year.

Michael Goldsmith of UBS inquired about Kimco's 2025 credit loss guidance of 75-100 basis points, asking for details on the tenant watch list and how current risks compare to pre-pandemic levels.

Answer

COO David Jamieson detailed the status of tenants like Big Lots, Party City, and Jo-Ann's, noting robust demand for their spaces and that many are 'repeat offenders' from prior bankruptcies. CFO Glenn Cohen framed the guidance, stating the $17-$22 million reserve is a comfortable starting point based on historical levels, excluding the pandemic. Executive David Bujnicki clarified this reserve includes potential lost rent from future bankruptcies.

Michael Goldsmith inquired about the progress on RPT's small shop leasing, the potential to close the occupancy gap with the core portfolio, and how Kimco's scale is aiding this effort for 2025.

Answer

COO David Jamieson confirmed a significant opportunity exists to close the RPT small shop occupancy gap. He credited the progress to a strong operating team, high-quality retained assets, broad tenant demand, and a lack of new supply. Jamieson highlighted that compressing the signed-not-open pipeline and integrating talented RPT personnel have been key drivers of the outperformance.

Michael Goldsmith of UBS inquired about the significant progress in RPT's small shop leasing and the potential to close the occupancy gap with the core Kimco portfolio in 2025.

Answer

COO David Jamieson confirmed the strong momentum, attributing it to the operating team, the quality of the retained RPT assets, broad tenant demand, and a lack of new supply. He noted that compressing the signed-not-open pipeline and integrating key RPT personnel have been major contributors to the outperformance.

Michael Goldsmith inquired about the factors changing the environment for the mid-3% same-property NOI growth outlook for 2026 and clarified the credit loss expectations for 2026 compared to 2025.

Answer

Mike Mas, Chief Financial Officer, clarified that 2026 credit loss provision is expected to be similar to late 2025, better than historical averages. He attributed 2025's strong growth to record commenced occupancy and a significant uptick in recovery rates, noting that 2026's mid-3% growth, primarily from base rent, is strong on top of 2025's performance. Lisa Palmer, President and CEO, reiterated confidence in future growth.

Michael Goldsmith inquired about the factors driving the mid-3% same-property NOI growth outlook for 2026 and sought clarification on whether the expected credit loss environment for 2026 aligns with the historically low bad debt seen in 2025.

Answer

Mike Mas, EVP and CFO, confirmed that the 2026 credit loss provision is expected to be similar to 2025's historically low levels, reflecting a healthy tenant base. He attributed the 2026 same-property NOI growth primarily to base rent, driven by continued commenced occupancy absorption and a strong recovery rate, building on exceptional 2025 performance. Lisa Palmer, President and CEO, reinforced confidence in the future growth outlook.

Michael Goldsmith of UBS Group AG asked about the future drivers of the same-property NOI growth algorithm as leased occupancy approaches peak levels, particularly the role of contractual rent steps.

Answer

EVP & CFO Mike Mas highlighted that while leased occupancy is high, there is still significant runway for commenced occupancy to grow. He also pointed to redevelopments as a key contributor, expecting them to add over 100 basis points to same-property NOI growth in 2025 and potentially 2026. COO Alan Roth added that the team is efficiently backfilling the S&O pipeline, accelerating rent commencements.

Michael Goldsmith from UBS asked about the forward-looking same-property NOI growth algorithm, questioning how growth will be sustained as leased occupancy hits peak levels.

Answer

CFO Mike Moss clarified that while leased occupancy is high, commenced occupancy still has room to grow, providing a continued tailwind into 2026. He also emphasized that redevelopments are expected to contribute over 100 basis points to same-property NOI growth in 2025 and potentially again in 2026. COO Alan Roth added that the signed-not-opened (SNO) pipeline is being consistently backfilled with new leases.

Michael Goldsmith inquired about the potential impact of tariffs on Regency's tenant base, specifically asking about changes to the watch list, accounts receivable trends, and the company's exposure to Rite Aid.

Answer

Alan Roth, East Region President and COO, stated that the tenant watch list exposure remains consistent and the team is proactively managing it. He specified that Rite Aid exposure is 30 basis points of ABR and confirmed that accounts receivable levels are currently below historical averages.

Michael Goldsmith from UBS requested insight into the thought process for the 75 to 100 basis point credit loss reserve for 2025. He also asked to quantify any tenant pressures observed in Q4 or being monitored for the upcoming year.

Answer

CFO Michael Mas detailed that the range combines historical bad debt averages (around 50 bps) with a more speculative 25-50 bps for potential lost rent from bankruptcies. Alan Roth, East Region President and COO, added that known credit risk exposure is manageable due to strategic asset management and that the overall retail environment remains healthy, with strong demand for their properties.

Michael Goldsmith asked about the timeline for lease expirations at the newly acquired Brighton Mills and the potential for monetizing redevelopment opportunities, as well as a breakdown of one-time items in 2025 that might not recur in 2026, specifically regarding real estate tax and G&A benefits.

Answer

Jeff Olson (Chairman and CEO) explained that leases at Brighton Mills expire over 22 years, with an expectation of exceeding 3% NOI growth, describing it as a 'textbook covered land play.' Mark Langer (CFO) identified approximately $2 million in one-time collections from old receivables and $1.5 million from old CAM recovery billings as non-recurring items. He noted that G&A would stabilize with normal inflationary increases but no material moves, and real estate taxes were managed through a repetitive appeal process.

Michael Goldsmith from UBS inquired about the timeline for monetizing redevelopment opportunities at the newly acquired Brighton Mills property, specifically regarding lease expiration dates. He also asked for a breakdown of one-time financial items in 2025 to project the 2026 run rate, including real estate tax and G&A benefits.

Answer

Chairman and CEO Jeff Olson stated that while some leases have terms up to 22 years, the company expects to exceed 3% NOI growth over that period, potentially sooner through negotiations. CFO Mark Langer identified approximately $2 million in one-time old receivable collections and $1.5 million in CAM recovery billings as non-recurring items for 2025. He noted that real estate taxes are managed through a repetitive appeal process, and while G&A has trended downwards due to efficiencies, a slight reversion is expected next year due to stabilization and normal inflationary increases.

Michael Goldsmith with UBS Investment Bank inquired about the implied acceleration of same-store NOI growth in the fourth quarter, seeking clarification on contributing factors such as the signed but not yet commenced (SNOC) pipeline activation, the role of comparisons, and the sustainability of this growth.

Answer

Steve Gallagher, CFO, explained that the acceleration is driven by the stacking of $22 million in commenced rent from the prior quarter, providing a partial benefit in Q3 and full benefit in Q4, plus an additional $19 million expected to commence by year-end. He also noted that prior year tenant disruption starts to fall off in Q4, improving comparisons. Brian Finnegan, Interim CEO and COO, added that larger redevelopments like Block 59 and backfilled anchor boxes are coming online, contributing to the growth.

Michael Goldsmith asked about the implied acceleration of same-store NOI growth in the fourth quarter, inquiring about contributing factors, the role of comparisons, and the sustainability of this trend.

Answer

Steve Gallagher, Chief Financial Officer, explained that the acceleration is driven by $22 million of rent commenced in the quarter, providing partial and then full benefits in subsequent quarters, along with an additional $19 million expected to commence by year-end. He also noted that prior year tenant disruption rent starts to fall off in Q4. Brian Finnegan, Interim CEO and COO, added that larger redevelopments and backfilled anchor boxes are coming online, contributing to the growth.

Michael Goldsmith of UBS Group AG asked about the strategic opportunity presented by the La Centerra acquisition in Houston, focusing on market scale, remerchandising potential, and the acquisition cap rate.

Answer

An executive, likely EVP & CIO Mark Horgan, described the acquisition as a classic value-add investment made at an opportunistic time. He noted the property has 90% occupancy with high-profile vacancies and significant rent mark-to-market potential. The going-in yield was stated to be in the low-6% range, with projections for high single-digit to low double-digit IRRs under conservative assumptions.

Michael Goldsmith asked about Welltower's strategy for managing the execution risk associated with the extensive announcements, including acquisitions, dispositions, and new leadership, and where the company is operationally focused to ensure successful implementation, as well as potential pitfalls.

Answer

CEO Shankh Mitra explained that risk management on the deal side relies on an experienced team, while operational risk is mitigated by building out the Welltower Business System and recruiting executives from industries with higher standards. He emphasized that the ultimate risk mitigation is attracting and retaining top talent and fostering a vibrant, owner-oriented culture.

Michael Goldsmith inquired about the funding strategy for Alpine Income Property Trust's significant investment activity and how the company plans to manage potential lumpiness from loan and lease expirations to maintain stable AFFO.

Answer

CEO John Albright explained that funding comes from asset sales (recycling to improve credit quality), maturing loans, and net growth. He also addressed AFFO stability, noting that the company has successfully replaced maturing loans at attractive rates, often through existing relationships, and plans to sell senior pieces of these 'bite-size' loans to manage earnings consistency.

Michael Goldsmith asked about the funding strategy for Alpine Income Property Trust's significant investment activity and how the company plans to manage potential lumpiness from loan and lease expirations to ensure stable AFFO.

Answer

CEO John Albright explained that funding comes from asset sales, increasing credit quality, loan maturities, and net growth. He also stated that the company is not concerned about replacing loans due to a strong pipeline and the ability to sell senior pieces of loans, ensuring earnings stability.

Michael Goldsmith from UBS Group questioned the market dynamics for selling Walgreens and At Home assets, including potential buyers and cap rates, and asked for an update on Alpine's capital allocation priorities.

Answer

John Albright, President & CEO, described the Walgreens disposition market as active, with cap rates from the high 7s to low 10s. Regarding capital allocation, he emphasized a balanced approach, pursuing accretive opportunities while opportunistically selling assets to manage leverage and grow enterprise value.

Michael Goldsmith inquired about the primary drivers for the AFFO guidance increase, sought clarification on the updated investment guidance versus Q1 activity, and asked about capital allocation priorities between acquisitions, loans, and share repurchases for the remainder of the year.

Answer

Philip Mays, an executive, detailed that the guidance increase was equally driven by opportunistic stock buybacks, a favorable interest rate swap, and strong investment volume and timing. He also clarified that Q1 funded investment volume was approximately $60 million, aligning with the new guidance. John Albright, an executive, added that capital allocation is a balance; share repurchases are attractive at the current stock price, but the company also has a strong acquisition pipeline funded by free cash flow and future loan payoffs.

Michael Goldsmith of UBS inquired about the current transaction environment, the specifics of the insurance arrangement for the recently acquired Tampa properties, and the strategic thinking behind balancing a longer lease term with a lower investment-grade tenant percentage. He also asked about the potential size of the loan portfolio.

Answer

John Albright, an executive, confirmed that an improved liquidity environment is creating more transaction opportunities. He detailed that the Tampa properties have robust insurance, including two years of business interruption and full replacement coverage, and are expected to reopen soon. Albright explained their strategy of acquiring high-quality real estate with below-market rents, even with shorter lease durations. He also noted that the loan portfolio, typically targeted at 10% of total assets, could scale up to capitalize on current high-yield opportunities.

Michael Goldsmith followed up on cap rate expectations, asking if the 2026 outlook contemplates compressing spreads. He also inquired about the decrease in ABR with less than one-time rent coverage, seeking color on properties sold, remaining assets in that bucket, and plans for further disposals.

Answer

President and CEO Peter Mavoides indicated that cap rates are expected to come down, with a typical 60-90 day lag behind interest rate movements. He anticipates a static spread, possibly some compression, with conservatism in early assumptions. On rent coverage, Mr. Mavoides clarified that the sale of seven assets for $11 million was not a material driver, and the decrease reflects general improvement in underlying operating conditions, with many assets in that bucket being transitional. He noted they assess assets individually for permanent impairment.

Michael Goldsmith followed up on the expectation for cap rates to come down, asking if the 2026 outlook contemplates compressing spreads. He also asked for color on the decrease in ABR with less than one-time rent coverage, details on properties sold, and plans for further disposals of such assets.

Answer

Peter Mavoides, President and CEO, stated that while cap rates are expected to decline with a 60-90 day lag to interest rates, the forward yield curve suggests a static spread, possibly some compression from historically wide spreads, with conservatism baked into early 2026 assumptions. Regarding ABR under one-time rent coverage, Mr. Mavoides clarified that the sale of seven assets for $11 million was not a material driver; the decrease reflects general improvement in underlying operating conditions, as many assets in this bucket are transitional.

Michael Goldsmith from UBS Group questioned what catalysts are needed for expected competition to materialize and impact cap rates, and asked if recent portfolio deals signal a shift from the company's granular acquisition strategy.

Answer

CEO Pete Mavoides stated that while he has long expected competition to increase, it has not yet materialized, crediting EPRT's consistency and reliability. He affirmed that the company's core strategy remains focused on granular deals, typically $10-15 million, and that Q2 activity was consistent with this approach.

Michael Goldsmith from UBS followed up on the Dave & Buster's investment, questioning the comfort level with the tenant's softer operating trends. He also asked for an update on the portfolio's watchlist and any other evolving tenant dynamics.

Answer

CEO Peter Mavoides expressed strong conviction, emphasizing their 20-year investment horizon and the security of owning the underlying real estate, noting Dave & Buster's history of closing very few sites. Regarding the watchlist, CIO A.J. Peil stated it was at 1.6% of ABR, down 50 basis points quarter-over-quarter, with no thematic issues and any credit events already factored into guidance.

Michael Goldsmith asked if the financial pressure in the carwash industry is broad-based or specific to certain operators like Zips. He also questioned why the 2025 acquisition guidance midpoint of $1 billion is lower than the $1.2 billion achieved in 2024, despite management's optimistic tone.

Answer

CEO Peter Mavoides asserted that the pressure is operator-specific, not systemic to the carwash industry. He noted that across their portfolio, carwash sales and EBITDA are roughly flat with healthy coverage. Regarding the acquisition guidance, he explained that it reflects a conservative view, acknowledging that 2024's high volume was driven by a unique opportunity to deploy capital at historically wide spreads. He anticipates a normalization of capital markets and increased competition in 2025, which will likely lead to lower cap rates and a more measured acquisition pace.

Michael Goldsmith asked if the lower implied acquisition run-rate for 2025 signals a turning point due to competition or if it reflects conservatism, and also inquired about the decrease in sale-leaseback transaction percentage.

Answer

CEO Peter Mavoides affirmed the 2025 guidance is driven by a conservative and prudent approach, anticipating a potential shift in the competitive landscape. He noted the slight dip in sale-leaseback volume to 89% was not material and represented a normalization from previously high levels, as the company took advantage of some attractive existing lease opportunities.

Michael Goldsmith asked if the recent moderation in the 10-year treasury yield is influencing cap rate discussions and seller motivation, about balancing transaction volume versus acquisition cap rates, and for an update on the car wash industry.

Answer

Chris Constant, CEO, stated no significant cap rate move has been observed, and the recent shift is too quick to impact Q4. He emphasized selecting the right assets over volume, focusing on accretively priced transactions. Chris Constant and Brian Dickman noted increased rent coverage in car washes, with new builds trending ahead of their three-year stabilization schedule.

Michael Goldsmith asked about the impact of the moderating 10-year treasury on cap rate discussions and potential seller motivation, the trade-offs between transacting in volume versus acquisition cap rates, and an update on the car wash industry, particularly the stabilization of newer sites.

Answer

Chris Constant, CEO, stated no significant cap rate movement has been observed, and the recent treasury shift is too quick to impact Q4, but a longer-term shift might change asks. He emphasized selecting the right assets and accretively priced transactions over volume. Chris Constant and Brian Dickman, CEO and CFO respectively, discussed increased rent coverage in car washes, with new builds trending ahead of their three-year stabilization schedule, leading to healthy ramp-ups and car wash coverage now exceeding C-store coverage.

Michael Goldsmith sought clarification on whether 'new investment opportunities' meant expanding beyond current verticals and asked for details on the large environmental expense accrual.

Answer

President & CEO Christopher Constant confirmed there are no plans to expand beyond their four core sectors; the comment referred to adding new tenant relationships. EVP, CFO & Treasurer Brian Dickman explained the accrual relates to a legacy litigation case from decades ago and that its booking is a positive sign of progress toward a resolution.

Michael Goldsmith from UBS sought clarification on whether 'new investment opportunities' meant expanding beyond current verticals and asked for details on the large environmental expense accrual.

Answer

President & CEO Christopher Constant confirmed they are not expanding beyond their four core sectors and that the comment referred to adding new tenant relationships. EVP & CFO Brian Dickman explained the accrual relates to a long-standing litigation case and that its booking is a positive sign of progress toward a resolution.

Michael Goldsmith of UBS sought clarification on the assumptions for the Zips resolution baked into guidance, the potential impact of tariffs on redevelopment costs, and the company's strategic appetite for expanding its Quick Service Restaurant (QSR) portfolio.

Answer

CFO Brian Dickman confirmed the anticipated Zips outcome is within the range of scenarios assumed in the original 2025 guidance. Regarding costs, CEO Christopher Constant and COO Mark Olear explained that development agreements include protections like cost caps and contingencies to mitigate inflationary risks from tariffs. Mr. Constant described the growing QSR exposure as a natural, gradual evolution of entering a new sector, similar to their past approach with car washes.

Michael Goldsmith questioned the recent uptick in acquisition cap rates and whether Agree Realty is observing increased competition in the market, seeking insight into their navigation strategy. Goldsmith also asked about the flat sequential implied AFFO per share for Q4, inquiring about any contributing one-time items.

Answer

Joey Agree, President and CEO, stated that Agree Realty has not seen a material change in cap rates year-to-date, attributing the slight Q3 increase to transaction composition and emphasizing their differentiated, bespoke approach. Peter Coughenour, CFO, explained that Q3 benefited from front-loaded acquisition volume and non-recurring lease termination fees, which are not expected in Q4.

Michael Goldsmith inquired about the recent uptick in acquisition cap rates, the narrative of increased competition, and how Agree Realty navigates these market dynamics. He also asked about the flat implied AFFO per share from Q3 to Q4 and any contributing one-time items.

Answer

President and CEO Joey Agree clarified that the slight cap rate increase was due to composition, not a material market change, emphasizing their differentiated, bespoke transaction approach. CFO Peter Coughenour attributed the flat sequential AFFO per share to Q3 lease termination fees, which are not expected in Q4.

Michael Goldsmith asked how the integration of development and DFP activities provides more stability to the earnings algorithm and sought details on the recent Albertsons portfolio acquisition and its strategic fit within the company's grocery thesis.

Answer

President and CEO Joey Agree explained that the development and DFP platforms are additive, creating a differentiated, full-service real estate company rather than just a 'spread investor.' Regarding the grocery portfolio, he clarified the Albertsons deal was a unique off-market acquisition, not a sale-leaseback, and aligns perfectly with their strategy of focusing on the largest, most dominant grocers with strong balance sheets and store-level performance.

Michael Goldsmith from UBS asked if there have been any changes in the transaction market, such as competition or pulled deals, due to recent tariff uncertainty. He also asked about the company's experience with private equity-sponsored tenants, which Agree's presentation notes it avoids.

Answer

CEO Joey Agree stated that no deals have been pulled and competition remains 'extremely limited,' creating a significant opportunity for Agree to leverage its balance sheet and cost of capital, similar to the GFC and pandemic periods. On private equity sponsorship, he explained that Agree avoids it because PE firms' short-term perspectives, which can lead to special dividends and high leverage, are misaligned with Agree's strategy of partnering with retailers who have a long-term operational view.

Michael Goldsmith of UBS asked about any observed changes in the transaction market, such as competition or pulled deals, following recent tariff announcements. He also inquired about the company's rationale for avoiding private equity-sponsored tenants.

Answer

CEO Joey Agree stated that competition in the transaction market remains 'extremely limited,' creating a significant opportunity for Agree Realty to leverage its balance sheet and cost of capital. Regarding private equity, Agree explained their avoidance stems from a strategic preference for partnering with retailers that have a long-term operational perspective, contrasting with the shorter-term, leverage-focused strategies often employed by PE firms.

Michael Goldsmith of UBS asked for the investment thesis behind increasing exposure to the auto parts sector and about the expected transaction cadence for 2025.

Answer

CEO Joey Agree cited strong fundamentals for the auto parts sector, including the record age of cars and desirable real estate characteristics. Regarding cadence, he stated he couldn't predict the year's flow due to market volatility but emphasized their 'war chest' of capital allows for both patience and decisiveness.

Michael Goldsmith of UBS inquired about the investment thesis for increasing exposure to the auto parts sector and asked for expectations on the transaction cadence for 2025 compared to the back-half loaded pattern of 2024.

Answer

CEO Joey Agree detailed the strong thesis for auto parts, citing the record-high average age of cars and the desirable real estate characteristics of the properties. Regarding cadence, he stated he had "no idea" for the full year due to market volatility but emphasized the company's "war chest" of capital allows it to be both decisive and patient as opportunities arise.

Michael Goldsmith requested details on the 'early signs of improvement' regarding new home delivery impacts and asked about the company's expectations for new supply throughout 2025.

Answer

Chief Executive Officer Dallas Tanner stated that leasing has seen reacceleration heading into the spring season as supply moderates from its summer 2024 peak. He acknowledged that some markets, like Florida and Phoenix, still face pressure. Tanner noted that elevated mortgage rates could increase builder spec inventory, creating a headwind for new leases but a tailwind for renewals, which constitute about 80% of recent leasing volume.

Michael Goldsmith of UBS Group posed a bigger-picture question on how a potential Fed rate cut and a subsequent increase in home sales activity would impact INVH's rent growth.

Answer

CEO Dallas Tanner stated that increased transaction volume in the for-sale market is generally a net positive for INVH's business. He explained that it provides clear valuation marks for the portfolio and creates near-term rental demand. A more active for-sale market would also reduce the number of homes that convert from for-sale to for-lease, thus reducing rental competition.

Michael Goldsmith of UBS posed a broader question about how a potential interest rate cut, leading to increased home sales, would impact Invitation Homes' ability to achieve strong market rent growth.

Answer

CEO Dallas Tanner stated that increased transaction volume in the for-sale market is generally a net positive for their business. He explained that it provides clear valuation marks for their portfolio and creates near-term rental demand as people move. Furthermore, a more active for-sale market can reduce the number of homes that might otherwise convert to rentals, thus lessening competitive supply. He concluded that a healthy housing market with choice and flexibility is a tailwind.

Michael Goldsmith of UBS Group AG inquired about the sequential decrease in renewal rent growth from 5.2% in Q1 to 4.5% in April, seeking to understand the underlying dynamics.

Answer

President Charles Young explained that this moderation is a typical seasonal pattern. He noted that renewals tend to peak in Q1, soften during the summer leasing season, and then recover by year-end. Young emphasized that this trend was anticipated and that overall blended rent growth has been accelerating monthly since December, aligning with company expectations.

Michael Goldsmith from UBS inquired about the weaker-than-expected leasing spreads and occupancy, questioning the lack of pricing power despite a strong housing market and asking for a performance breakdown between markets with and without new supply pressures.

Answer

President and COO Charles Young acknowledged that new supply pressures in markets like Phoenix, Tampa, Orlando, and Dallas are forcing the company to compete on price for new leases. He noted that outside of these markets, performance is as expected with normal seasonality. Young emphasized that turnover remains at historic lows and the renewal book is healthy, expressing confidence that the company can work through the temporary supply issues over a few quarters.

Michael Goldsmith of UBS Group asked for the cap rates on the Industrial Outdoor Storage (iOS) properties acquired and the office properties sold during the quarter. He also questioned how the company plans to allocate proceeds from future office sales between debt reduction and new acquisitions, and whether competition has intensified in the iOS acquisition market.

Answer

CEO, President & Trustee Michael Escalante stated that while individual cap rates are not disclosed, the aggregate data is available in company filings for calculation. He emphasized a balanced approach to capital allocation, citing the net debt to EBITDAre ratio moving from 7.0x to 6.4x and then to 6.6x post-acquisitions as a 'microcosm' of their strategy. He acknowledged that the iOS market is active with increasing capital, but asserted that Peakstone's experience and national platform provide a competitive edge.

Michael Goldsmith inquired about the allocation of proceeds from the 'Other' segment sale between debt repayment and new investments. He also sought clarification on whether 'noncore assets' exclusively refers to office properties or includes some industrial assets, and asked about the status of renewal conversations for industrial leases expiring in 2026.

Answer

Executive Javier Bitar explained that roughly two-thirds of the full-year disposition proceeds were used to extinguish AIG debt, with the remainder boosting cash. He noted a future balanced approach between deleveraging and growth. Executive Michael Escalante clarified that while the focus is on maximizing value, office properties constitute the larger part of the 'noncore' pool due to return and CapEx considerations. Regarding 2026 lease expirations, Escalante mentioned that discussions are positive but still in early stages.

Michael Goldsmith from UBS Group questioned the reason for a decrease in retail's share of quarterly acquisitions and asked for an update on the company's strategy in the data center sector.

Answer

CEO Sumit Roy explained the lower retail mix was an opportunistic result of finding more compelling industrial and credit deals, but affirmed retail remains the portfolio's core. He reiterated strong and accelerating interest in data centers, emphasizing that the company maintains high selectivity on partners and assets and will not compromise its underwriting standards to deploy capital.

Michael Goldsmith of UBS asked for more detail on the "tail risk" that led to passing on some U.S. investment opportunities and requested an explanation for the dip in portfolio occupancy.

Answer

CEO Sumit Roy clarified that the company avoids deals where tenant credit is questionable and re-leasing would disrupt value creation. Regarding occupancy, he stated the dip was expected and in line with guidance for the mid-98% range. He noted some outsized vacancies in Q1 were largely resolved and highlighted strong renewal performance with tenants like Dollar General.

Michael Goldsmith of UBS Group asked for specific examples of cities Federal Realty might target to better understand its new market strategy, and also inquired about any incremental G&A expenses associated with the expansion.

Answer

President, CEO & Director Donald Wood declined to name specific cities to maintain a competitive advantage in active negotiations. He assured that there would be no incremental corporate G&A, as the strategy leverages existing corporate expertise and local property management teams.

Michael Goldsmith of UBS questioned the drivers behind the expected acceleration in same-store NOI growth from 2.8% in Q1 to the full-year guidance of 3% to 4%.

Answer

CEO Donald Wood identified continued gains in occupancy throughout the year as the primary driver for the growth. CFO Daniel Guglielmone emphasized that this forecast is not speculative, as it is based on leases that have already been signed and are scheduled to commence.

Michael Goldsmith sought clarification on the 2025 comparable POI guidance, noting that after accounting for a headwind from prior period rent collections, it implies a fundamental acceleration from 2024.

Answer

EVP & CFO Daniel Guglielmone confirmed the interpretation was correct, stating the 3% to 4% guidance is after the headwind, so the underlying growth is stronger. He identified continued strength in occupancy gains as the primary driver of this expected acceleration in the comparable portfolio.

Michael Goldsmith of UBS questioned why the implied Q4 FFO guidance range of $0.10 was wider than the $0.08 range from the same period in the prior year.

Answer

CFO Daniel Guglielmone advised not to read too much into the width of the guidance range. He stated that while there is some variability heading into the final quarter, narrowing the range from $0.18 to $0.10 felt appropriate given that unforeseen events can always occur in a given quarter.

Michael Goldsmith from UBS Group asked for the key assumptions underpinning the Q3 and Q4 guidance and what provides confidence in the expected material step-up in Q4.

Answer

CEO Greg Lehmkuhl and CFO Rob Crisci explained the guidance assumes a muted but present seasonal occupancy build, which has already begun. They emphasized that pricing and productivity assumptions are unchanged. Confidence in Q4 stems from this expected seasonality, which mirrors the pattern from the second half of last year, alongside continued progress on internal cost and efficiency initiatives.

Michael Goldsmith asked how much capacity tenants have within their current commitments before needing more space. He also inquired about the amount of unabsorbed new supply in the market and the delivery pipeline for 2025.

Answer

CFO Rob Crisci and CEO W. Lehmkuhl explained that since volume guarantees were just reset, any inventory increase would be upside at strong incremental margins. On supply, Lehmkuhl detailed that new capacity peaked in 2023 (4%), is ~2% in '24-'25, and will halve again in '26 to pre-COVID levels. He stressed that Lineage's scale and cost advantages position it well against new, high-cost entrants.

Michael Goldsmith asked for a direct clarification on whether competitive supply in 2025 will be lower, higher, or the same as in 2024.

Answer

CEO W. Lehmkuhl clarified that new supply coming online in 2025 is expected to be lower than in previous years. He stated that overall competitive supply dynamics should be consistent with last year, with the key trend being a continued decrease in new deliveries moving forward.

Michael Goldsmith of UBS Group inquired about the macroeconomic assumptions underpinning the revised 2025 guidance and the company's capital allocation strategy regarding share buybacks versus acquisitions.

Answer

EVP & CFO Brandon Togashi detailed the updated guidance, noting the midpoint assumes seasonal occupancy declines similar to the prior year and is less reliant on macro improvements. He also stated that while share repurchases are attractive, the company will remain disciplined, balancing them against acquisitions and balance sheet health.

Michael Goldsmith of UBS questioned the dynamic between improving street rates and softer occupancy in Q1, and requested an update on the transaction market, including acquisition targets and disposition cap rates.

Answer

CEO Dave Cramer explained the company is balancing rate and occupancy to maximize total revenue, noting that improved rates lessen the pressure on occupancy. On transactions, he stated NSA remains patient and disciplined on acquisitions, working with JV partners, and is making good progress toward its $200 million disposition target for the year, with more details expected after Q2.

Michael Goldsmith from UBS questioned the dynamic between improving street rates and declining occupancy in Q1, asking how this trade-off is expected to evolve during the peak leasing season. He also requested an update on the transaction market, including acquisition and disposition plans and cap rates.

Answer

CEO Dave Cramer explained the company is balancing rate and occupancy to maximize total revenue, and the team has successfully improved contract rates sequentially. He noted that while they are working to drive occupancy, the strong rate growth lessens the pressure. On transactions, Cramer stated that deal flow is steady but the company remains patient and disciplined. He confirmed good progress on the guided $200 million of dispositions for the year, with more details expected after Q2.

An analyst on behalf of Michael Goldsmith asked for context on the near-term supply outlook for 2025 versus 2024 and whether the G&A guidance was on a core basis, excluding one-time costs.

Answer

CEO Dave Cramer stated that new supply as a percentage of stock is expected to decline from 3.5% in 2024 to 3.0% in 2025, though absorption of already delivered supply remains a challenge in markets like Phoenix and Atlanta. CFO Brandon Togashi confirmed the G&A guidance is on a core basis, largely excluding internalization costs, and reflects approximately $9 million in annualized savings versus the pre-internalization run rate.

Michael Goldsmith asked for an update on October street rates, which were expected to worsen from the 17% decline in Q3, and inquired about the path forward for rates versus occupancy.

Answer

CEO Dave Cramer stated that the year-over-year street rate decline widened from low-teens in July to the low-20s in September, and reached the mid-20s in October. He attributed this to competitive positioning and the integration of PRO stores. He suggested that much of the rate adjustment work has been done and the gap to the prior year may flatten out, rather than continue to widen significantly.

Michael Goldsmith from UBS asked what factors would be needed to generate more pricing power, given that demand appears solid. He also questioned the potential impact of San Francisco's ban on algorithmic pricing on the company's operations.

Answer

EVP & COO Michael Manelis explained that improved consumer confidence and accelerated job growth would be needed for more pricing power, though easier comps and less supply could mitigate normal seasonal slowing. President & CEO Mark Parrell stated that the algorithmic pricing ban is not a major issue, as it's just one of many pricing tools, and argued the focus should be on the root cause of housing costs: supply shortages.

Michael Goldsmith from UBS Group AG asked what factors would be needed to generate more pricing power in the current environment. He also questioned the operational impact of San Francisco's ban on algorithmic pricing.

Answer

EVP & COO Michael Manelis explained that improved consumer confidence and accelerated job growth would be needed for more pricing power, though easier comps and less supply could mitigate normal seasonal deceleration. President & CEO Mark Parrell stated that the algorithmic pricing ban is not a major issue, as it's just one of many pricing tools. He argued such regulations address a symptom (high rents) rather than the root cause (housing shortages).

Michael Goldsmith asked about the recurring seasonality of a weaker Q4 and stronger Q1, the confidence in sustained momentum through 2025, the potential revenue benefit from 421-A tax abatements expiring, and the amount of Sunbelt assets entering the same-store pool.

Answer

COO Michael Manelis described the Q4 slowdown as normal seasonality but noted that stronger macro indicators support confidence in better pricing power in 2025. CIO Alec Brackenridge explained the 421-A revenue upside is significant but hard to time as it depends on tenant turnover. CFO Bob Garechana clarified that the 2025 same-store pool will not see a material change in Sunbelt assets, with the bulk of recent acquisitions entering in 2026.

Michael Goldsmith from UBS Group asked about the recent increase in the leverage ratio, the CFO's target leverage, and the rationale for issuing shorter-term five-year debt.

Answer

EVP & CFO Vincent Chao attributed the temporary leverage increase to the timing of acquisitions. He stated his goal is to operate with leverage below 5.5x. He explained the five-year bond was chosen for asset-liability management, as it helped align the company's debt duration more closely with its average lease duration.

Michael Goldsmith of UBS Group AG asked about the expected trend for acquisition cap rates following the Q1 dip and inquired about the long-term outlook for NNN's car wash holdings, particularly those with Mr. Carwash.

Answer

CEO Stephen Horn stated that Q2 acquisition pricing is expected to remain in line with Q1's 7.4% cap rate, noting they passed on large portfolio deals priced below 7%. He expressed strong confidence in their car wash holdings, emphasizing their low-cost basis in Mr. Carwash assets acquired before the market overheated and their disciplined avoidance of financially engineered deals.

Michael Goldsmith requested details on the assumptions for timing and recovery rates for the Frisch's and Badcock assets baked into the 2025 guidance. He also sought context for the reduced 60 basis point credit loss assumption for 2025 compared to historical norms.

Answer

CFO Kevin Habicht noted that while specific figures are a work in progress, the resolution of the Badcock and Frisch's vacancies is proceeding faster than the typical 9-12 months. Regarding the credit loss assumption, he explained that with the two largest credit concerns (Badcock/Frisch's) now being resolved, a 100 basis point reserve was not necessary, and the 60 basis point figure is considered appropriate given the current health of the remaining portfolio.

Michael Goldsmith questioned whether NNN would approach its 2025 bad debt assumption differently from the typical 100 basis points. He also asked about the drivers behind the increased acquisition guidance and whether the recent sequential decline in acquisition cap rates signaled further compression.

Answer

CFO Kevin B. Habicht acknowledged that the 2025 bad debt assumption would likely be above 100 basis points but deferred specifics until Q4 provides more clarity. Executive Stephen Horn stated that Q4 cap rates are expected to be in line with Q3. He attributed the strong acquisition pipeline primarily to relationship-driven deals and noted an increasing average deal size due to M&A activity from private equity groups seeking sale-leasebacks.

Michael Goldsmith from UBS Group AG asked for clarification on how the 5% monthly customer turnover rate affects the pace of financial recovery, leading to a projected dip in Q3 revenue growth, and also inquired about current conditions in the property transaction market.

Answer

CFO Timothy Martin clarified that positive operating trends take time to impact revenue due to the 5% monthly churn and difficult comps from last year's fee structure changes. He also noted that while deal volume is up, the risk-adjusted returns on currently marketed transactions are not yet compelling for CubeSmart.

Michael Goldsmith asked for a connection between the 5% monthly customer turnover and the projected pace of recovery, particularly why Q3 revenue growth is expected to be more negative than Q2. He also inquired about the current state of the transaction market.

Answer

CFO Timothy Martin clarified that while operating fundamentals are improving, the 5% monthly churn means it takes time for these positive trends to impact revenue. He cited bumpy year-over-year comparisons, prior-year fee changes, and the timing of rate increases as factors affecting the near-term revenue flow. Regarding transactions, Martin noted that while deal volume is up, returns on available deals have not yet met the company's criteria on a risk-adjusted basis.

Michael Goldsmith of UBS Group AG sought to understand the factors behind the significant improvement in street rates in April and requested more detail on the timing of operating expenses, particularly marketing.

Answer

CEO Christopher Marr attributed the rate improvement to strong rental activity and a gradual sequential rate increase since January, but cautioned they are taking it 'day to day' given macro uncertainty. CFO Timothy Martin explained that marketing spend was lighter in Q1 but is expected to increase later in the year as opportunities arise, meaning the full-year marketing budget expectation is unchanged.

Michael Goldsmith inquired about the 'lack of an obvious catalyst' mentioned for 2025, asking what specific factors, such as housing or economic clarity, CubeSmart is monitoring to potentially accelerate demand. He also asked if the Q4 revenue inflection point implies accelerating growth through 2025.

Answer

President and CEO Christopher Marr stated that a combination of clarity on mortgage rates and broader economic direction is needed to boost consumer confidence and decision-making. He noted that while trends since December are encouraging, the company is being 'prudently cautious' after overly optimistic forecasts in the past two years. Marr confirmed the expectation is for a slow improvement from the Q4 2024 revenue trough, but the back half of the year remains uncertain.

Michael Goldsmith from UBS asked about CubeSmart's strategy for balancing marketing spend against pricing to maximize opportunities and whether the competitive environment is showing signs of easing.

Answer

President and CEO Christopher Marr explained that the company's marketing spend growth is consistent with the prior year and that they continuously adjust the mix of marketing, price, and existing customer rate increases (ECRIs) on a weekly basis to attract high-quality tenants. He noted that while pricing competition has stabilized in some markets, it remains intense in others, such as the West Coast of Florida, due to new supply.

Michael Goldsmith from UBS Group requested an assessment of the current supply impact across the portfolio and asked about the ideal long-term occupancy level, particularly if the for-sale housing market strengthens.

Answer

CEO Bryan Smith stated that supply impact is limited, and the portfolio is performing well even in markets with pressure, like Phoenix, due to superior product and location. He noted the new target occupancy is in the 96% range, up from pre-COVID levels, and expressed confidence in maintaining this level due to strong execution and the persistent value proposition of renting versus owning.

Michael Goldsmith requested an assessment of the impact from new housing supply across the portfolio and asked about the ideal occupancy level, questioning if it could revert to pre-COVID levels with a stronger for-sale market.

Answer

CEO & Trustee Bryan Smith stated that while some markets like Phoenix and parts of Florida have supply pressure, AMH's portfolio is performing well due to its specific product type and location, with occupancy in Phoenix still above 95%. He noted the new target occupancy is in the 96% range, higher than pre-COVID levels, and expressed confidence in maintaining this level due to strong execution and the favorable rent-versus-own value proposition.

Michael Goldsmith requested an assessment of the impact from new housing supply across the portfolio and asked about the ideal long-term occupancy level, questioning if it could decline if the for-sale housing market strengthens.

Answer

CEO Bryan Smith stated that supply impact is limited in most markets, and the portfolio is performing well even in areas with more supply like Phoenix due to superior product and location. He noted the new target occupancy is in the 96% range, up from pre-COVID levels, and expressed confidence in maintaining this level due to strong execution and the favorable rent-versus-own proposition, even in a stronger for-sale market.

Michael Goldsmith of UBS inquired about any performance differences, such as rent growth or turnover, between build-to-rent (BTR) communities and scattered-site homes. He also asked if there were any underlying changes to the assumptions for the full-year guidance.

Answer

CEO Bryan Smith explained that stabilized BTR communities show lower maintenance costs and quicker turn times, with rent growth consistent with scattered-site homes but with potential future upside. CFO Christopher Lau confirmed there were no significant changes to the underlying assumptions for the full-year guidance on revenue or expenses, with building blocks for occupancy, rent growth, and expenses remaining largely unchanged.

Michael Goldsmith from UBS asked if there has been any tenant pushback on renewals given the 4% growth target. He also inquired about any recent changes on the regulatory front.

Answer

CEO Bryan Smith stated that the company has not seen any change in tenant behavior or excess negotiation on renewals, attributing the smooth process to supportable pricing and improved communication. On the regulatory front, Smith said that while many things are happening broadly, nothing has affected the company's high-quality operations, which are focused on proactive and transparent engagement with residents and stakeholders.

Michael Goldsmith inquired about any signs of increased price sensitivity from customers amid market uncertainty and asked if demand typically strengthens after major weather events.

Answer

COO Bryan Smith acknowledged that recent uncertainty and events temporarily slowed overall housing activity, leading to a moderation in new lease rates. However, he emphasized the strong performance through Q3 as evidence of limited price sensitivity for AMH's quality product. Regarding weather, he confirmed that there is typically a catch-up in activity after storms pass, though the recent back-to-back nature of storms in Florida has made the pickup more gradual.

Michael Goldsmith of UBS Group requested an update on the company's restructuring and expense savings initiatives, asking about the progress made in the quarter and where future opportunities for savings lie.

Answer

President John McLaren reported that the company has expanded its cost savings beyond the initial $17 million target, with significant progress in payroll, utilities, and procurement standardization. He provided an example of renegotiating with a major supplier to achieve better pricing and rebates. McLaren emphasized that these efforts are balanced with a strong focus on driving top-line growth, particularly in the manufactured housing segment, to achieve strong bottom-line results.

Michael Goldsmith from UBS inquired about the specific drivers behind the upward revision to the manufactured housing (MH) NOI guidance and asked about the strategic intent of the new stock repurchase authorization.

Answer

Executive John McLaren attributed the stronger MH outlook to a combination of occupancy gains, strong rental home renewal performance, improved rent collections, and disciplined expense savings. Executive Gary Shiffman added that long resident tenures are reducing turnover-related costs. Regarding the buyback, Shiffman described it as one part of a larger, thoughtful capital allocation plan that provides flexibility following the successful Safe Harbor transaction.

Michael Goldsmith inquired about the U.K. home sales environment, noting that the FFO contribution guidance for 2025 seems similar to 2024's results, and asked for the outlook and signs of improvement in that market.

Answer

Executive John McLaren responded that despite a challenging macro environment, the company is executing its strategy of reshaping the U.K. revenue mix. He emphasized the focus is on increasing the number of home sales to drive more durable, real property rental income, which is reflected in the guidance.

Michael Goldsmith sought clarification on the G&A outlook, asking if the new guidance for G&A (excluding nonrecurring items) represents the correct baseline for 2025 before applying the announced restructuring savings.

Answer

Fernando Castro-Caratini, Executive, confirmed that the announced run-rate expense savings will be realized on a 2025 basis and will be a reduction from the recurring G&A expense base.

Michael Goldsmith of UBS Group asked about new customer demand trends and the impact of lower residential real estate turnover on the self-storage business.

Answer

SVP & CFO Thomas Boyle noted that top-of-funnel demand is modestly better than last year, with healthy and consistent customer conversion rates. CEO Joseph Russell explained that lower apartment turnover is not a headwind, as self-storage benefits from both housing market dislocation (moves) and stability (renters needing extra space), highlighting the business's resilience.

Michael Goldsmith sought clarification on the cadence of the 100 basis point headwind from L.A. fire restrictions and asked about the strategy behind using promotional sales, questioning if it's a market reaction or a market share play.

Answer

H. Boyle clarified that the impact from L.A. restrictions will ramp up throughout the year. He explained that promotional sales are a long-standing, dynamic tool used to optimize long-term revenue by driving volume, not a recent shift in strategy, with examples like a planned Memorial Day sale being 'business as usual'.

Michael Goldsmith asked about the drivers of increased liquidity in the transaction market, current acquisition cap rates, and what factors are needed for the company to regain pricing power on new move-in rents.

Answer

Executive Joseph Russell noted that after a multiyear low in 2024, transaction activity is picking up with smaller, one-off deals. Executive H. Boyle stated that stabilized cap rates remain in the 5% to 6% range. Regarding pricing power, Boyle explained that while demand has stabilized, the 2025 outlook does not assume a significant demand uptick, which would be the primary ingredient for higher move-in rents.

Michael Goldsmith asked about the factors driving the improvement in move-in rents, which were down only 5% in October, and requested an update on October occupancy. He also inquired about the specific sources of customer demand, such as housing turnover versus apartment renters.

Answer

Executive H. Boyle attributed the better move-in rents to stabilizing demand, which is now roughly flat year-over-year after being down 20% at the start of the year. He reported October occupancy was down 90 basis points year-over-year. Boyle noted that while housing-related demand has softened, activity from apartment renters and customers needing more space remains strong. CEO Joseph Russell added that customer length of stay continues to be above pre-pandemic levels.

Michael Goldsmith of UBS Group inquired about the competitive pricing environment and the reasons for a slowdown in same-store revenue growth in Northern Virginia.

Answer

EVP Timothy Argo noted that competing operators have been pushing for occupancy, impacting pricing. He explained the Northern Virginia slowdown is due to tougher comps after a multi-quarter strong run and some localized prospect choosiness, rather than a unique market issue.

Michael Goldsmith asked if MAA is still on track to achieve positive new lease growth this year and inquired about plans to exit other smaller markets following the sale of assets in Columbia, SC.

Answer

EVP & COO Tim Argo confirmed they still expect new lease growth to turn slightly positive around mid-Q3. CEO Brad Hill stated that MAA will continue its strategy of recycling capital by evaluating the sale of assets in smaller markets where they lack scale, such as Panama City and Las Vegas, to improve portfolio efficiency.

Michael Goldsmith asked if MAA's ability to regain pricing power depends on occupancy improving at competing properties and requested details on the new lease rent trajectory required to move from negative to positive during 2025.

Answer

Tim Argo, EVP and Chief Strategy Officer, stated that while market-level occupancy is a factor, MAA's strong position with 95.6% occupancy and low forward exposure gives them confidence to push pricing. He detailed that January's new lease rate was -7.1%, and they expect a typical seasonal acceleration to a slightly positive rate of 1-1.5% by July, noting the curve's shape is normal but its slope is slightly steeper due to the added tailwind of declining supply.

Michael Goldsmith from UBS asked about absorption trends, concession levels from merchant developers, and the price differential between MAA properties and new developments.

Answer

Tim Argo, EVP and Chief Operating Officer, confirmed that strong absorption is expected to continue, supported by robust demand metrics. He noted that concessions were consistent with Q2, typically half a month to a month, but higher (up to 3 months) in high-supply submarkets like Central Austin and Midtown Atlanta. He also stated that new supply is priced, on average, $250 to $300 higher than MAA's portfolio.

Michael Goldsmith from UBS Group asked for insights into the buyer pool for retail real estate, including what buyers are looking for and their thinking on cap rates. He also inquired about the leasing status of the remaining 20% of boxes recaptured from recent bankruptcies.

Answer

CEO John Kite noted very strong institutional demand for open-air retail as investors rebalance portfolios, viewing it as an undervalued asset class. CFO Heath Fear added that demand is broad, with specific interest in core grocery, larger formats due to yield, and generational lifestyle assets. Regarding the remaining vacant boxes, John Kite emphasized that KRG is focused on creating long-term value, not just filling space quickly.

Michael Goldsmith from UBS Group inquired about the current buyer profile for retail real estate, their investment criteria, and the status of leasing the remaining 20% of recently recaptured bankruptcy boxes.

Answer

CEO John Kite noted strong institutional demand as investors rebalance portfolios into open-air retail. CFO Heath Fear added that buyer interest is broad, covering core grocery, larger-format centers for yield, and premier lifestyle assets. Regarding the unleased boxes, Kite emphasized that the company is prioritizing long-term value and the right merchandising mix over speed, and will not execute unfavorable deals simply to fill space quickly.

Michael Goldsmith from UBS Group AG inquired about KRG's insights into the current buyer pool for retail real estate, including what buyers are seeking and their view on cap rates. He also asked about the leasing prospects for the remaining 20% of recaptured bankruptcy boxes.

Answer

CEO John Kite described institutional demand for open-air retail as "very strong" as investors rebalance portfolios. CFO Heath Fear added that demand is broad, covering core grocery, larger-format centers due to yield, and lifestyle assets. Regarding the remaining vacant boxes, Mr. Kite emphasized their focus is on long-term value creation, not a "race to fill space," and they will wait for the right high-quality tenants.

Michael Goldsmith from UBS Group asked if the recent acquisitions of Olive Garden properties signal that FCPT has reached a comfortable level of Darden exposure amidst its diversification strategy. He also questioned whether to expect an acceleration in acquisition activity in the second half of the year, similar to the prior year's pattern.

Answer

President, CEO & Director William Lenehan responded that while diversification from Darden continues, the company will still acquire high-quality, well-priced Darden assets due to their strong credit profile. He noted that second-half acquisition pace depends on cost of capital and market conditions, acknowledging that Q4 is historically a strong quarter but it's too early to predict.

Michael Goldsmith from UBS asked if the recent acquisition of Olive Garden properties indicates FCPT has reached a comfortable level of Darden exposure. He also questioned whether acquisition activity would accelerate in the second half of the year, similar to the prior year's pattern.

Answer

President, CEO & Director William Lenehan responded that while FCPT continues to diversify away from Darden, it will not hesitate to buy high-quality, well-priced Darden assets given the tenant's strong credit. Regarding H2 acquisitions, he stated that activity depends on the cost of capital and market opportunities, acknowledging that Q4 is often the largest quarter but it is too early to predict.

Michael Goldsmith asked if management still feels FCPT is in the 'green zone' for acquisitions given interest rate movements and questioned the reason for a sequential decline in rent collection.

Answer

CEO William Lenehan confirmed FCPT is currently in the 'green zone' and, more importantly, has substantial pre-funded capital to deploy. He clarified that the slight dip in rent collection was not material and was likely due to timing issues with rent payments for assets acquired late in December.

Michael Goldsmith from UBS Group AG inquired about the investment opportunity set in Europe versus the US, noting the recent concentration of acquisitions in the US. He also asked about the industrial versus retail acquisition split, considering the company's previously stated goal to increase its retail presence.

Answer

CEO Jason Fox clarified that while year-to-date investments were US-heavy, the forward-looking pipeline is split about 50/50 between North America and Europe, with European activity expected to increase. Regarding property types, he affirmed the strategy to grow the retail vertical remains, but current market conditions offer better risk-adjusted returns in the industrial sector. He cited the US retail market as more competitive on pricing but expects to close some retail deals in the second half of the year.

Michael Goldsmith from UBS Group inquired about the investment opportunity set in Europe versus the US, given the quarter's focus on US deals. He also asked for an update on the retail versus industrial acquisition strategy, noting the recent heavy weighting towards industrial.

Answer

CEO Jason Fox clarified that while Q2 was US-heavy, the forward-looking pipeline is split roughly 50/50 between North America and Europe, with European activity expected to increase. On property types, he affirmed no change in strategy but noted that industrial currently offers better risk-adjusted returns than the more competitive US retail market. He stressed the value of their diversified model to pivot to the best opportunities.

Michael Goldsmith from UBS Group AG asked about the investment opportunity set in Europe versus the U.S., questioning if the quarter's U.S.-heavy volume was timing-related. He also inquired about the industrial-heavy acquisition mix and whether it signaled a strategic shift away from retail.

Answer

CEO Jason Fox confirmed that the U.S.-centric volume in Q2 was due to timing, as European deals can take longer to close, and noted the forward pipeline is split more evenly. He clarified there is no change in strategy regarding retail; however, the company is currently finding better risk-adjusted returns in the industrial sector. He emphasized that this highlights the strength of their diversified model to allocate capital to the best opportunities.

Michael Goldsmith questioned the differential impact of tariffs on W. P. Carey's U.S. and European portfolios and asked if there were any notable changes to the tenant watch list beyond the three previously highlighted names.

Answer

CEO Jason Fox clarified that the European portfolio is not a headwind from tariffs, as most European tenants operate domestically and are insulated from U.S. trade dynamics. Both Fox and Head of Asset Management Brooks Gordon confirmed no new direct tariff impacts on the portfolio and noted the watch list has shrunk, emphasizing that investors should focus on the overall guided credit loss reserve.

Michael Goldsmith asked about the rationale for investing in dollar stores at this time and the potential for future data center deals.

Answer

CEO Jason Fox described the Q4 Dollar General investment as an opportunistic move to enter a sector that was out of favor, allowing for a sizable investment without creating outsized tenant concentration. Regarding data centers, he characterized a recent $100 million acquisition as a unique deal with an attractive basis and below-market rent, and noted that while the company is exploring the space, no firm commitments have been made for future volume.

Michael Goldsmith asked about W. P. Carey's strategic decision to increase its focus on U.S. retail investments, the target portfolio mix, and the expected outcomes for the True Value bankruptcy and any exposure to American Tire.

Answer

CEO Jason Fox explained the move into U.S. retail is to expand the investment opportunity set, targeting 30-40% of annual deal volume over time. He noted the portfolio is currently 25% retail, mostly in Europe. Regarding tenant credit, Mr. Fox and Head of Asset Management Brooks Gordon stated it is too early to predict the 2025 impact of the True Value bankruptcy but expect a transition period to mute near-term effects. They confirmed exposure to American Tire is minimal at less than 20 basis points of ABR.

Michael Goldsmith questioned whether ATM equity issuance is contingent on achieving high acquisition cap rates and what investment spread is considered acceptable. He also asked if the potential for share dilution from the treasury stock method is factored into the AFFO guidance.

Answer

CFO Daniel Donlan clarified that they are comfortable issuing equity for spreads over 100 basis points and that current opportunities offer spreads of 150-160 basis points above their WACC. He also confirmed the guidance midpoint conservatively assumes slightly less than one cent of dilution from the treasury stock method.

Michael Goldsmith asked if the company's willingness to issue equity via its ATM program is contingent on achieving high acquisition cap rates and what investment spread is considered acceptable. He also inquired about mitigating factors in the guidance, such as potential share dilution.

Answer

CFO & Treasurer Daniel Donlan stated that the company is comfortable issuing equity for investment spreads north of 100 basis points over its WACC. He noted that even at a more normalized 7.4-7.5% cap rate, spreads are currently 150-160 basis points. He also confirmed the guidance midpoint conservatively assumes slightly less than one cent of dilution from the treasury stock method.

Michael Goldsmith asked about the investment spread at which NetStreet is comfortable issuing equity via its ATM program, particularly as cap rates might decline. He also sought to understand mitigating factors in the guidance, such as potential dilution from the treasury stock method.

Answer

CFO & Treasurer Daniel Donlan stated the company targets spreads north of 100 basis points over its WACC for equity issuance, noting current spreads are around 150-160 basis points for deals in the 7.4%-7.5% cap rate range. He also confirmed the guidance midpoint conservatively assumes slightly less than $0.01 of dilution from the treasury stock method.

Michael Goldsmith inquired whether the company's comfort with issuing equity via its ATM program is contingent on achieving the high cap rates seen recently. He also asked about the investment spreads NetStreet is comfortable with as cap rates potentially normalize, and about mitigating factors in the guidance, such as dilution from the treasury stock method.

Answer

CFO Daniel Donlan clarified that the company is comfortable issuing equity when it can achieve spreads over 100 basis points relative to its WACC. He calculated that even at a 7.4%-7.5% cap rate, current spreads are approximately 150-160 basis points. He also noted that the guidance midpoint conservatively assumes slightly less than one cent of dilution from the treasury stock method.

Michael Goldsmith requested more details on the expected disposition volumes, tenant types, and cap rates for the second quarter, and asked about the specific types of grocers NETSTREIT is acquiring to increase its portfolio exposure.

Answer

CEO Mark Manheimer outlined a Q2 disposition pipeline including Dollar General, Family Dollar, and pharmacies at mid-to-high 6% cap rates, with acquisitions targeting yields above 7.5%. He added that recent grocery acquisitions include large, cash-flow-strong operators, such as a major ESOP-owned grocer.

Michael Goldsmith of UBS asked about the cap rates being achieved on dispositions of Dollar General, CVS, and Walgreens properties, and the competitive landscape for acquiring investment-grade versus non-investment-grade assets.

Answer

CEO Mark Manheimer noted that Walgreens disposition cap rates have varied widely, from the 6% range to much higher, depending on asset quality and lease term. He added that CVS properties can likely be sold at lower cap rates and that the market for Dollar General assets is robust. Manheimer also stated that competition is higher for investment-grade assets, whereas recent non-investment-grade acquisitions involved direct negotiations rather than auctions.

Michael Goldsmith inquired about the disposition strategy for different healthcare asset types and asked if there were concerns about tenants in the food processing space.

Answer

CEO John Moragne clarified the strategy is to reduce their 'clinical surgical' assets to zero over the long term, while intending to hold and potentially grow their 'healthcare services' (medical retail) portfolio. Regarding food processing tenants, he noted that unlike third-party cold storage operators, BNL's tenants own the product in their single-tenant facilities, insulating them from broader utilization volatility.

Michael Goldsmith asked about the disposition strategy for different healthcare asset subtypes and inquired about the health of tenants in the food processing and warehousing space, given recent volatility.

Answer

CEO John Moragne clarified that the long-term strategy is to reduce exposure to clinical and surgical healthcare assets to nearly zero, while intending to hold its 'medical retail' type properties. Regarding food processing tenants, he noted that while some face incremental concerns, others may benefit from the current environment, and differentiated BNL's single-tenant properties from third-party logistics operators.

Michael Goldsmith asked if the 125 basis points bad debt reserve for 2025 is a new normal or elevated due to specific known risks. He also inquired about the future focus within the expanded retail category following the portfolio reclassification.

Answer

CEO John Moragne expressed hope that the 125 basis points of bad debt is not the new normal, explaining it is elevated due to known credit events like Zips occurring early in the year, maximizing their annual impact. Regarding retail, he stated the reclassification was to clarify their identity as an industrial-focused REIT. He expects the investment mix to remain around 70% industrial and 30% retail, with a recent focus on food production-related distribution within the industrial segment.

Michael Goldsmith asked if the 125 basis point bad debt reserve for 2025 should be considered a new normal or if it's elevated due to specific, known credit issues. He also inquired about the company's go-forward strategy within the newly expanded retail category.

Answer

CEO John Moragne responded that he hopes the 125 basis point reserve is not the new normal, explaining it is elevated due to the timing of known issues like Zips early in the year. He clarified that the portfolio strategy remains focused on being an industrial-focused REIT, with an approximate 70% industrial and 30% retail investment mix expected to continue, consistent with the past several years.

Michael Goldsmith inquired about the credit loss assumption embedded in the 2025 guidance and asked for details on the plan to fund investments and a $300 million debt maturity.

Answer

CFO Mark Peterson stated that the company has baked in a bad debt cushion of about 1% of EBITDA, or roughly $5 million, which CEO Gregory Silvers noted is consistent with prior years. For funding, Peterson detailed a plan where free cash flow and dispositions would cover part of the need, with the remainder potentially drawn on the revolver. However, the ultimate intention is to term out the debt with a new bond deal, providing flexibility on timing and tenor.

Michael Goldsmith asked about the trade-off between occupancy and rate during peak leasing season and whether any lumpiness is expected in the cadence of same-store revenue growth throughout the year.

Answer

COO Mike Lacy explained the strategy is to build occupancy in shoulder seasons to maximize pricing power during peak season, noting a 30-40 bps drop in occupancy requires 100 bps of rent growth to break even. CFO & CIO Joe Fisher added that lower turnover from customer experience initiatives also boosts occupancy. Lacy confirmed no significant lumpiness is expected in revenue growth, with a steady progression from H1 to H2.

Michael Goldsmith of UBS asked if recent rental growth choppiness is within normal seasonal patterns and inquired about the absorption pace of new developments in UDR's markets.

Answer

SVP of Operations Mike Lacy stated that while the trajectory feels seasonal, the magnitude of choppiness is exacerbated by record-high supply levels, which is not a normal pre-COVID dynamic. CFO Joe Fisher noted that broader market absorption is at a 30-40 year high, alongside deliveries, driven by strong demand and the significant affordability advantage of renting versus owning a home.