Nicholas Thillman • Robert W. Baird & Co.

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President of Americas Rob Chambers explained the strategy is to exit leased facilities in markets where Americold has owned assets, allowing consolidation into owned sites to shed leases and avoid CapEx. CEO George Chappelle added this optimizes the portfolio for when volume returns. CFO Jay Wells noted the NOI benefit would be back-half weighted. George Chappelle declined to predict proceeds, citing negotiation complexities.

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President of Americas Rob Chambers responded that while market-reflective pricing helps, the primary driver of new business is Americold's operational excellence, which is leading to market share gains and new outsourcing from sectors like retail. CFO Jay Wells confirmed the seasonality assumption, noting that lapping a prior inventory build will impact first-half occupancy, with a recovery expected in the back half of the year, complemented by positive throughput trends.

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CEO George Chappelle stated the occupancy decline is broad-based and primarily driven by weak consumer demand, not a specific sector or region, while also noting they are comping against very high mid-80% occupancy levels from 2023. President of the Americas, Rob Chambers, added that fixed commitment contracts continued to grow for the 14th consecutive quarter and that the company is nearing its 60% target ahead of schedule. CFO Jay Wells highlighted that a strong new business pipeline should help grow occupancy next year even in a tough environment.

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President and CEO Colin Connolly confirmed an increase in all types of demand, including new-to-market activity, often from existing companies expanding their hubs in Sun Belt markets. He stated that while enhancing geographic diversification in markets like Dallas is a long-term goal, any investment must first meet strict financial and strategic criteria.

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EVP of Operations Richard Hickson noted the pipeline's mix is skewed towards new and expansion leases, partly due to low near-term expirations, with tenant sizes varying widely. President and CEO Michael Connolly explained that prioritizing occupancy with capital at an asset like North Park is a strategic decision made in specific situations to ultimately drive FFO growth, leveraging the company's competitive advantages.

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EVP of Operations Richard Hickson stated the leasing pipeline continues to lean toward new and expansion deals, partly due to a favorable expiration profile. CFO Gregg Adzema noted that plans for Fifth Third are being finalized but costs will likely mirror past redevelopments like Promenade. Hickson added that amenity upgrades are being considered for Northpark. CEO Michael Connolly emphasized the overall high quality and strong capital position of the portfolio.

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Executive Anthony Saladino clarified the Q4 occupancy dip is from a single tenant, not CTDI, and that no bad debt was utilized in Q1. Executive James Connolly added they are pursuing a longer-term extension with CTDI. Executive Jeffrey Witherell stated that while they always evaluate dispositions, he does not view their single-tenant assets as a risk, citing the successful backfill of a large vacancy in St. Louis.

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EVP James Connolly and President/CFO Anthony Saladino clarified the leasing progress and same-store pool changes, noting the former FedEx space is now in the pool. Executive Chairman and CEO Jeffrey Witherell addressed the Sixth Street deal, stating it was a necessary strategic move to secure capital when the equity markets were unfavorable. He expressed patience and confidence in the strategy. Witherell also commented that Saladino's promotion to President recognizes his broad expertise beyond finance, including acquisitions and operational processes.

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CFO Matts Pinard explained that STAG evaluates a broad mix of acquisition opportunities, from short-term to long-term leases, highlighting a recent purchase of an asset 40% below market rent. On credit loss, Pinard stated Q1 was minimal at 1 basis point and confirmed American Tire is current on rent. He clarified the 75 basis point full-year guidance includes a standard 50 basis point assumption plus a 25 basis point provision specifically for the American Tire situation as a precaution.

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CEO William Crooker clarified that the company still expects mid-6% stabilized yields for the Tampa assets. Regarding Spartanburg, he noted increased tenant urgency and the successful full-building lease of a 474,000 sq. ft. facility at a ~5% yield, which was ahead of schedule. He also mentioned strong tour activity for other assets in that market.

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CEO William Crooker confirmed the early 2025 leasing spreads are indicative of current expectations but noted official guidance would come in February. CFO Matts Pinard reported that year-to-date credit loss was $1.4 million (23 basis points), within the full-year guidance of 50 basis points. He added that the tenant watch list composition is similar to the prior quarter.

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COO Brian Leary explained that a new law firm tenant is growing headcount while taking less, more efficient space. Executive Brendan Maiorana added that leasing has been broad-based across industries. He also expressed confidence that tenant retention rates would return to more normalized levels in 2026, creating a favorable environment for occupancy growth after a dip in 2025.

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CEO Theodore Klinck expressed general optimism for 2025 leasing, but Executive Brendan Maiorana clarified that their official business plan assumes a moderation from 2024's record pace. Mr. Maiorana stated that historical retention is around 60-65% across tenant sizes and confirmed that the 1.1 million square feet of new lease commencements are weighted toward the second half of 2025, driving the expected occupancy recovery.

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CEO Theodore Klinck confirmed that larger users are returning to the market across Highwoods' footprint, citing renewed build-to-suit interest as evidence. CFO Brendan Maiorana clarified that the Symphony Place renovation costs are part of the normal, planned capital budget and that the property will remain in the same-store pool during the project, with all costs expensed normally.

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CEO W. Lehmkuhl noted that same-store warehousing costs declined in the quarter due to ongoing labor productivity and lean initiatives, with future benefits expected from LinOS. CFO Rob Crisci added that wage inflation is stable at around 3.5%. Crisci declined to provide a specific EBITDA breakdown for the acquisitions but reiterated they were done at a low double-digit multiple.

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CEO W. Lehmkuhl reiterated the company's strategy to achieve inflationary-level price increases over the long term while partnering with customers. He noted that they are successfully securing such pricing in nearly all markets and cautioned that external metrics can be skewed by shifts in commodity mix, masking underlying price improvements.

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President and CEO Christopher Smith explained the dividend suspension was a proactive decision to fund significant leasing momentum, calling retained earnings the lowest cost of capital. He confirmed there was no pressure from banks and that rating agencies were supportive of the move to strengthen the balance sheet. He prioritized capital use for: 1) funding leasing (generating >25% returns), 2) improving the balance sheet, and 3) potential future acquisitions. COO George Wells added that Atlanta, Dallas, and Minneapolis are driving proposal activity as they contain most of the firm's vacancy.

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COO George Wells confirmed the new activity pipeline contains 2 million square feet, with significant portions in Atlanta (35%) and Minneapolis (28%), and includes 15 deals over 50,000 square feet. President and CEO Brent Smith added that the expected New York City renewal is included in the 2025 guidance and provided updates on 2026 expirations. CFO Sherry Rexroad affirmed that the projected 100 basis point improvement in year-end lease percentage is a clean, apples-to-apples comparison, with no major assets moving to out-of-service status.

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COO George Wells and CEO Brent Smith clarified that 25% of the late-stage pipeline is new activity and that the company's 60-70% renewal rate feels sustainable. Smith noted strong cash roll-ups have averaged 7-8% since the pandemic and expects that strength to continue. EVP of Investments Chris Kollme and CEO Brent Smith described the assets for sale as smaller, non-core but well-leased, with potential proceeds of $50-60 million in 2025. CFO Bobby Bowers stated that approximately $10 million in redevelopment spending remains for the year.

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Executive Brent Wood provided the exact Q1 bad debt figure as 0.49%. Executive Marshall Loeb then explained that recent development yield strength, such as a 9% yield on delivered projects, has been driven more by strong market rent growth than by cost savings. He expressed optimism for continued rent growth given low vacancy and a limited new supply pipeline.

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Executive Brent Wood explained that the rise in leasing costs was not due to specific leases but rather a combination of inflationary pressures on tenant improvements (TIs) and higher leasing commissions resulting from significant rent increases. Regarding retention, he noted Q4 was strong at 78% and expects the 2025 rate to be similar to the recent average of around two-thirds, with no major known vacates anticipated.

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President and CEO Marshall Loeb confirmed that starts are planned for strong markets including Florida, Houston, Arizona (near Mesa airport), and South Carolina. He noted this represents a nice mix of geographies where there is currently limited availability, positioning the new developments well for when they deliver.

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CFO Mike Fitzmaurice directly addressed the spending component, stating that the company has earmarked approximately $275 million for repositioning and development projects in 2025.

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CFO Laura Clark declined to forecast 2026 leasing spreads but highlighted the current portfolio's strong cash mark-to-market of 19%. Regarding the redevelopment pipeline, she and Co-CEO Howard Schwimmer referred to the property-specific stabilization dates in the supplemental report, stating those timelines reflect their current market view.

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Chief Investment Officer Jojo Yap opined that L.A. County would likely benefit the most from rebuilding efforts due to the need for nearby storage of materials. Executive Vice President Peter Schultz stated that build-to-suit activity has not seen a significant increase, as tenants currently have choices among existing inventory, making speculative or pre-leased developments more common.

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President Dan Letter stated that he expects U.S. development starts to pick up in 2025 after a slow 2024, but it's too early to provide a specific mix as decisions are made on a deal-by-deal basis. He noted that the company hopes to reach its long-term average of 40% build-to-suits, supported by some large projects that moved from 2024 into 2025.

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Timothy Arndt, CFO, explained that the trend is driven by two factors: some tenant uncertainty, but more significantly, a proactive strategy by Prologis. In specific markets where the company anticipates a quicker rent recovery, it is intentionally using shorter lease terms to recapture the upside sooner.

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