Ravi Vaidya

Ravi Vaidya inquired about the expected trend of rent per occupied square foot in Q1 2026 and throughout the balance of 2026, asking if it would be stable, accelerating, or decelerating. He then asked about potential levers for upside or elements of conservatism embedded in the guidance, given the choppy operating environment.

Answer

David Cramer, President and CEO, stated that the company anticipates continued modest improvement in the achieved rate throughout 2026, despite facing challenging low to mid-thirties rent rolldowns, which will be offset by the strength of the ECRI program. Regarding guidance, Mr. Cramer identified asking rents as a primary factor that could move the guide, with a strong spring leasing season and ability to drive street rates up potentially leading to upside, while a volatile competitive environment could push it lower. Brandon Togashi, CFO, added that regulatory environments and state of emergency declarations (like Oklahoma restrictions in 2025) are external factors that could also play a role.

Ravi Vaidya asked about the expected trend of rent per occupied square foot in Q1 2026 and throughout the rest of the year, inquiring if it will be stable, accelerating, or decelerating. He also asked about potential levers for upside or elements of conservatism embedded in the same-store revenue guidance, given the current choppy operating environment.

Answer

President and CEO David Cramer expects continued modest improvement in the achieved rate throughout 2026, despite challenging low to mid-30s rent rolldowns, which will be offset by the strength of the ECRI program. Regarding guidance, Mr. Cramer identified asking rents and the success of the spring leasing season as primary factors that could influence the guide upwards or downwards. CFO Brandon Togashi added that regulatory environments and state of emergency declarations (like those in Oklahoma in 2025) are external factors that could also impact results.

Ravi Vaidya from Mizuho Financial Group questioned the drivers behind the strong performance in the Portland market and the rationale for lowering acquisitions guidance while maintaining the disposition forecast.

Answer

President & CEO David Cramer explained that Portland's outperformance is due to the market rebalancing after a pre-COVID oversupply cycle, which now allows for stronger pricing. Regarding guidance, he stated the company is being disciplined with its capital, finding it difficult to match acquisition pricing with its cost of capital and is prioritizing reinvestment in its own portfolio.

Ravi Vaidya of Mizuho Securities inquired if capital recycling is being used to shift market exposure and asked about the primary demand drivers for storage given the weak housing market.

Answer

CEO Dave Cramer confirmed that dispositions are aimed at improving the portfolio by exiting markets with single assets or where operational efficiencies are limited. He identified diverse demand drivers, including small businesses and residential customers needing extra space. He acknowledged that the lack of housing-related transition is a headwind but believes NSA is well-positioned to benefit when the housing market recovers.

Ravi Vaidya from Mizuho Securities asked if the company's capital recycling program is an opportunity to adjust market exposures. He also inquired about the current primary demand drivers for self-storage, given the portfolio's sensitivity to the housing market.

Answer

CEO Dave Cramer confirmed that the disposition strategy is focused on improving operational efficiencies and margins, which includes exiting markets with single assets or low growth potential. He explained that current demand comes from diverse sources like small businesses and residential customers needing extra space for various reasons. Cramer acknowledged that the lack of housing-related transition is a headwind but believes NSA is well-positioned to benefit when the housing market recovers.

Ravi Vaidya asked for color on Extra Space Storage's discounting strategy and the broader promotional environment in Q4 2025, and what is embedded in the 2026 guidance. He also inquired about how the team is using AI or agentic technologies to potentially lower marketing or other operating expenses.

Answer

Joe Margolis, CEO, explained that the discounting strategy is channel-based: online discounts are seldom offered as data shows long-term customers don't respond, while selective in-store discounts are offered based on unit type and occupancy, with no change envisioned. Regarding AI, Joe Margolis discussed its external influence on search (providing advantages to large companies) and internal uses in pricing models, marketing spend, software development, call centers, and operations, noting the formation of an internal platform team to manage these opportunities.

Ravi Vaidya asked for color on Extra Space Storage's discounting strategy and the broader promotional environment in Q4 2025, and what is embedded in the 2026 guidance. He also inquired about how the team is using AI or agentic technologies and their potential to lower marketing or other operating expenses.

Answer

CEO Joe Margolis explained that the discounting strategy is channel-based; discounts are seldom offered online as data shows long-term customers don't respond, but are selectively offered in stores based on unit type and occupancy. He does not envision changes to this strategy. Regarding AI, he discussed its external influence on search (providing advantages to large companies) and internal uses, including machine learning in pricing, marketing, software development, and call centers, with an internal platform team vetting numerous opportunities for future operational improvements.

Ravi Vaidya from Mizuho asked how a lower-rate environment might impact the growth of the bridge lending program, specifically if it would lead to more traditional financing options for borrowers and a greater proportion of mezzanine lending converting into acquisitions.

Answer

CEO Joseph Margolis suggested a lower-rate environment could loosen the acquisition market, potentially making the bridge loan program countercyclical as fewer sellers need bridge solutions. He noted the program's flexibility across market cycles. CFO Jeff Norman added that as interest rate spreads tighten, the required spread for A-note buyers also tightens, providing flexibility to optimize yields, especially with mezzanine notes.

Ravi Vaidya from Mizuho asked how a lower-rate environment would impact the growth of the bridge lending business and if a greater proportion of mezzanine lending might convert into acquisitions.

Answer

CEO Joseph Margolis suggested a countercyclical relationship, where a lower-rate environment could loosen the acquisition market, potentially reducing demand for bridge loans from sellers who can then sell their assets directly. CFO Jeff Norman added that tightening interest rate spreads would also affect the required spread for A-note buyers, offering flexibility to optimize yields on mezzanine notes.

Ravi Vaidya asked about the competitive dynamics in the acquisitions market and which markets are seeing an easing of new supply headwinds.

Answer

CEO Joseph Margolis stated they remain disciplined on acquisitions as prices are still high, but they are not 'done' for the year. EVP & CFO Jeff Norman identified markets like Portland, Seattle, Chicago, and Denver as areas where supply pressures have eased, allowing for an earlier revenue recovery.

Ravi Vaidya from Mizuho Financial Group asked which markets are expected to show strong or weak demand during the peak leasing season and what factors would drive this performance.

Answer

CEO Joseph Margolis responded that market performance would primarily relate to new supply. He expects markets still absorbing new supply, such as Atlanta, parts of Florida, and Phoenix, to face more difficulty than markets with less supply pressure.

Ravi Vaidya asked about the drivers behind Public Storage's expense forecast, which came in 100 basis points below last year's inaugural forecast, and if there's any conservatism built in. He also inquired about the current ECRI (Existing Customer Rate Increase) policy, potential regulatory or legislative restrictions outside California, and if a buffer is included in the guidance.

Answer

Joe Fisher, President and CFO, attributed the constrained expense growth to ongoing initiatives across various line items, including personnel (hours reductions with increased pay), R&M (insourcing pilots), utilities (solar efforts), and centralization of functions like sales and customer relations. Tom Boyle, CFO and CIO, explained the ECRI policy considers customer health (low vacates, consistent price sensitivity) and replacement costs (occupancy, demand, marketing), using a data-driven, unit-by-unit approach. He confirmed awareness of California's SB 709 and recent pronouncements in New York and other states regarding pricing transparency, with Public Storage monitoring and ensuring compliance, aligning with PS 4.0's customer focus.

Ravi Vaidya asked Public Storage to elaborate on the drivers behind the relatively low expense forecast for 2026, which came in about 100 basis points below last year's inaugural forecast, and if there's any conservatism built into the numbers. He also inquired about the ECRI policy and potential regulatory restrictions.

Answer

Joe Fisher, President and CFO, explained that the constrained expense growth (2.2% midpoint) is a continuation of multi-year initiatives, with property tax leading growth but offsets from payroll optimization (using machine learning for hours reduction while increasing pay), R&M insourcing pilots, and consistent solar investments reducing utility costs. Centralization efforts for sales, customer relations, and bad debt also contribute to better outcomes. Tom Boyle, CFO and CIO, described the ECRI program as data-driven, considering customer health, price sensitivity, and replacement costs. He acknowledged monitoring regulatory environments like California's SB 709 and recent New York pronouncements, ensuring compliance and transparency.

Ravi Vaidya from Mizuho Financial Group asked for details on the existing customer rate increase (ECRI) program and the potential impacts of recent tax legislation on development and demand.

Answer

SVP & CFO Thomas Boyle declined to quantify specific ECRI magnitudes but reiterated that the overall contribution would be modestly lower this year due to LA's restrictions, though customer price sensitivity remains predictable. Regarding legislation, he noted the restoration of bonus depreciation is a positive, allowing for more cash flow reinvestment into growth.

Ravi Vaidya asked if the stabilization period for newly acquired lease-up properties is expected to be longer given current demand levels, and inquired about the stabilized cap rate and IRR targets for these acquisitions.

Answer

H. Boyle responded that lease-up trends were encouraging in Q1 and they are not changing their underwriting assumptions. He confirmed that return expectations remain consistent, with going-in yields in the 5s to low 6s, stabilizing at a higher level under the Public Storage platform.

Ravi Vaidya inquired about tenant credit, specifically the conservatism of reserves, the amount realized in 2025, any watch list tenants/categories, and the mark-to-market opportunity for recent bankruptcies like Saks and Container Store.

Answer

Daniel Guglielmone, CFO, stated that the 60-85 basis point reserve guidance is lower than the previous year's 75-100 basis points, with 2025 finishing around 80-85 basis points. He noted limited exposure to credit issues. Donald Wood, CEO, highlighted Saks OFF 5TH at Assembly Row as a significant opportunity with potential for 100% rent roll-up, and a Saks Fifth Avenue flagship in Greenwich, CT, as a highly productive location. He also mentioned monitoring Container Store, with all five locations currently paying rent.

Ravi Vaidya inquired about Federal Realty's tenant credit, specifically the conservatism of reserves, the amount realized in 2025, watch list tenants/categories, and the mark-to-market opportunity from recent bankruptcies like Saks and Container Store.

Answer

Daniel Guglielmone, Chief Financial Officer, stated that the 60-85 basis point reserve guidance is lower than the previous year's 75-100 basis points, with about 80-85 basis points realized in 2025. He highlighted Saks OFF 5th at Assembly Row as a significant mark-to-market opportunity with a potential 100% rent roll-up, and noted that all five Container Store locations are currently paying rent.

Ravi Vaidya of Mizuho Financial Group, on for Haendel St. Juste, requested an update on the signed-not-occupied (SNO) pipeline, including the total embedded rent and the expected timing for its commencement.

Answer

President, CEO & Director Donald Wood detailed a total SNO pipeline of approximately $39 million in rent. He projected that about 50% would commence in the remainder of 2025, 40% in 2026, and the balance in 2027.

Ravi Vaidya, on behalf of Haendel St. Juste at Mizuho, asked about the acquisition pipeline, changes in the transaction market, and trends in cap rates and risk premiums.

Answer

CEO Donald Wood confirmed they are actively looking at deals but are underwriting cautiously. CIO Jan Sweetnam added that while the transaction market remains strong, the flow of new deals has slowed as both buyers and sellers seek more clarity. He noted that cap rates appear to have flattened after a period of decline.

Ravi Vaidya asked about the impact of the 'one big beautiful bill' (referring to bonus depreciation) on the single-tenant transaction market, including its effect on broader industry pricing, volumes, and the company's specific operating environment.

Answer

Pete Mavoides, President and Chief Executive Officer, stated that the bill, including bonus depreciation, has not had a material impact on their business or the way they operate. He acknowledged that bonus depreciation allowed them to sell some car washes to tax-motivated buyers at the margin, but it is not a primary driver for their industry.

Ravi Vaidya asked about the impact of the 'one big beautiful bill' on the single-tenant transaction market, including broader industry pricing and volumes, and its effect on Essential Properties' operations. He also questioned if it's creating more liquidity or tax-motivated buyers.

Answer

Pete Mavoides, President and CEO, stated that while bonus depreciation had some impact, the bill itself is not expected to materially affect their business or operations. He noted that while they were able to sell some car washes to tax-motivated buyers at the margin, it's not a significant driver for their industry.

Ravi Vaidya inquired about the size of Kimco Realty's ground lease portfolio, as well as the company's appetite, cadence, and forecast for dispositions within this category going forward.

Answer

Ross Cooper, President and Chief Investment Officer, stated that ground leases represent approximately 9% of Kimco's annual base rent (ABR). He noted that over $100 million was disposed of last year, with plans to accelerate this pace to $300 million to $500 million this year. Conor Flynn, CEO, added that it's a recurring program, with the development team working on separately parceling these assets to optimize pricing and enhance FFO and same-site NOI.

Ravi Vaidya inquired about NETSTREIT's strategy for balancing tenant credit and yield in capital deployment, noting changes in the top tenant list and asking if the focus is shifting towards four-wall coverage or lease term.

Answer

CEO Mark Manheimer explained that while Academy is BB+ and near investment grade, the company is seeing better risk-adjusted returns in the non-rated bucket, often with stronger leases and direct tenant relationships. He emphasized evaluating corporate credit and unit-level performance for productive stores.

Ravi Vaidya from Mizuho inquired about NETSTREIT's current acquisition criteria, expected minimum investment spreads, the status of tenants on their watchlist like Big Lots, and target exposure levels for tenants such as Walgreens and CVS.

Answer

CEO Mark Manheimer reiterated that the investment criteria remain unchanged, focusing on corporate credit, unit-level cash flow, and real estate quality to maximize risk-adjusted returns. CFO Dan Donlan indicated that current acquisition spreads are less than 100 basis points. Manheimer provided an update on Big Lots, expecting 6 of 7 stores to be assumed, and stated the goal is to have all tenants below 5% of ABR.

Ravi Vaidya, on behalf of Haendel St. Juste, asked for commentary on the disposition market, the use of seller financing for Walgreens assets, and the company's sustainable long-term acquisition run rate.

Answer

CEO Mark Manheimer noted an improving disposition market with the return of 1031 buyers. He explained that seller financing was used tactically in Q3 for a better outcome but is not expected to be a primary tool going forward. He also stated that while the team is built for significant investment volume, the current cost of capital does not support the recent acquisition pace with sufficiently accretive spreads.

Ravi Vaidya asked about the factors contributing to renewal spreads exceeding new spreads in the quarter, along with lower tenant improvement allowances.

Answer

Alan Roth, East Region President and Chief Operating Officer, attributed the strong renewal spreads to supply and demand dynamics and the opportunity to mark well-below-market leases to current market rates. He noted that while new transactions generally lean higher, the quarter benefited from specific expiring leases, and the trend can be lumpy.

Ravi Vaidya inquired about Regency's leasing spreads, specifically why renewal spreads exceeded new spreads this quarter and had lower tenant improvements, asking for the underlying puts and takes.

Answer

Alan Roth, East Region President and Chief Operating Officer, attributed the higher renewal spreads to strong supply and demand dynamics, coupled with opportunities to mark well-below-market expiring leases to market. He noted that while new transactions generally lean in more, results can be lumpy quarter-over-quarter.

Ravi Vaidya asked for more commentary on the decision to sell an asset in Miami, including the competitive process and specific reasons for the disposition.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, explained that the Miami asset was deemed non-strategic from a future IRR perspective, despite Regency's overall satisfaction with its portfolio. The high demand in the Miami market led to a deep pool of bidders and favorable pricing, allowing for accretive capital recycling where dispositions (over $100M at 5.5%+ cap rate) fund acquisitions (over $500M at 6% cap rate).

Ravi Vaidya asked for more details on Regency's decision to sell an asset in Miami, including the competitive process and any specific market or asset characteristics that influenced the sale.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, explained that Regency, liking its portfolio, only sells non-strategic assets. The Miami asset was sold because its future IRR didn't align with strategic goals, and the high demand in that market allowed for strong pricing. He noted a deep pool of bidders and highlighted that current capital recycling is accretive, with dispositions at a 5.5% cap rate and acquisitions at 6%.

Ravi Vaidya, on for Haendel St. Juste, asked about the timing of rent recognition from the SNO (signed-not-opened) pipeline and whether commencements might be pulled forward or pushed back in the current environment.

Answer

CFO Mike Mas explained that while 80% of the SNO pipeline is set to commence in 2025, only about one-third of that income will be recognized this year, creating a significant tailwind for 2026. He noted that the timing risk is minimal as most leases have contractual commencement dates, and the team actively works to accelerate openings.

Ravi Vaidya, on for Haendel St. Juste, questioned the cadence of capital deployment, asking if Q2's origination level is a sustainable run rate, and inquired about the impact of recent tariff legislation on ground lease demand.

Answer

Chief Investment Officer Tim Doherty noted that deal flow is typically lumpy and weighted towards year-end, but market volatility has recently settled, and the current pace is ahead of last year. CEO Jay Sugarman commented on the legislation, stating that while it creates near-term uncertainty for new development projects, Safehold's core focus on good locations is largely unaffected, though broader economic impacts are still being assessed.

Ravi Vaidya asked about CubeSmart's appetite for acquisitions in the second half of the year, potential funding sources, and the benchmark returns or IRRs the company is targeting.

Answer

CEO Christopher Marr stated that while deal flow is increasing, high-quality assets are not yet trading at prices that are accretive or meet their risk-adjusted return requirements. He confirmed the company has ample capacity to fund potential deals through its line of credit, balance sheet capacity, and free cash flow, without needing to issue equity. He anticipates a future wave of opportunities from merchant developers who will eventually need to sell their assets.

Ravi Vaidya of Mizuho Financial Group asked about the transaction market outlook for the second half of the year, CubeSmart's acquisition appetite, potential funding sources, and the benchmark returns or IRRs the company is targeting.

Answer

President & CEO Christopher Marr noted that while transaction volume is seasonally expected to increase, high-quality assets are not yet trading at prices that meet CubeSmart's risk-adjusted return criteria. He highlighted funding flexibility from their credit line, free cash flow, and balance sheet capacity, and anticipates a future wave of opportunities from merchant developers needing to sell.

Ravi Vaidya from Mizuho Securities USA LLC asked about CubeSmart's current strategy for existing customer rate increases (ECRI) as market fundamentals show signs of improvement.

Answer

CEO Christopher Marr stated that the ECRI strategy has been consistent for over a year and remains data-driven, balancing customer experience with revenue optimization. He noted that the rate increases in Q1 were fairly consistent with the prior quarter and the prior year, and he does not envision any meaningful changes to the program at this time.

Ravi Vaidya from Mizuho Financial Group asked for an update on the Red Rock Resorts deal, including whether capital has been drawn and the potential for expanding the partnership, possibly involving Red Rock's extensive land holdings.

Answer

EVP & CFO David Kieske confirmed that just under $80 million was drawn initially, with the funding schedule set to resume later in the year. He referenced Red Rock's recent earnings call, where their management spoke positively about the long-term relationship with VICI and their own development capabilities, suggesting that while no sale-leasebacks are imminent, future opportunities may arise as VICI is thrilled to partner with them.

Ravi Vaidya from Mizuho Financial Group asked for commentary on why new lease spreads in the multifamily portfolio were below renewal spreads, the demand drivers for the Waikiki hotel amid the weak yen, and which segments would first realize the previously guided $0.30 leasing upside.

Answer

President & CEO Adam Wyll and VP of Multifamily Abigail Rex attributed the multifamily rent spread dynamics to market normalization and new supply in both Portland and San Diego, while highlighting the portfolio's strong locations. Regarding the hotel, Wyll and EVP & CFO Robert Barton noted that the strong dollar continues to impact Japanese tourism, viewing it as a temporary headwind, and emphasized that the property still outperforms its competitive set. Wyll confirmed the $0.30 upside is predominantly from leasing up the major office developments.

Ravi Vaidya from Mizuho Financial Group asked for color on American Assets Trust's multifamily leasing spreads, the impact of the weak Japanese yen on its Waikiki hotel's performance, and the expected timing for realizing its office lease-up upside.

Answer

President & CEO Adam Wyll and VP of Multifamily Abigail Rex attributed the multifamily leasing spread dynamics to market-specific supply absorption in both Portland and San Diego, while noting their properties' strong locations. Regarding the Waikiki hotel, Wyll and EVP & CFO Robert Barton cited the unfavorable yen-to-dollar exchange rate and global uncertainty as headwinds, viewing them as temporary and highlighting the hotel's outperformance versus its competitive set. Wyll confirmed the previously mentioned $0.30 FFO upside is predominantly from leasing up its major office developments.

Ravi Vaidya of Mizuho Securities inquired about the specifics of non-comparable office leases, the near-term outlook for office portfolio occupancy, and the company's appetite for acquisitions.

Answer

Steve Center, SVP of Office Properties, clarified that non-comparable leases were for spaces vacant over six months, with TIs in line with market rates for new long-term deals. He noted a positive trend with new leasing outpacing renewals and rising tour activity, but deemed it premature to provide a 2025 occupancy target. Robert Barton, CFO, added that full 2025 guidance would be provided later. Regarding acquisitions, Executive Chairman Ernest Rady stated that the company is continuously evaluating opportunities, primarily within its existing markets, but any action depends on the specific opportunities that arise.

Ravi Vaidya, on for Haendel St. Juste, inquired about trends among luxury tenants, including their sales performance, foot traffic, and any potential pullback in leasing demand.

Answer

CEO David Simon stated there has been no significant change in commitment from luxury brands, as they plan for the long term. He characterized their overall sales as 'relatively flat,' noting that while some brands are performing very well, others are in a refresh cycle. He confirmed there has not been a major pullback in demand or a change in their outlook for the segment.

Ravi Vaidya, on for Haendel St. Juste from Mizuho Securities, asked for commentary on consumer trends at GLPI's properties and about the likelihood of Penn National Gaming taking the full $150 million commitment for its Council Bluffs project.

Answer

CFO & Treasurer Desiree Burke explained that GLPI does not receive non-public, property-level data, but noted that public reports from tenants like Boyd have been positive. CEO Peter Carlino added he has high confidence in tenant performance. Regarding the Penn commitment, President & COO Brandon Moore stated that the option is Penn's to exercise and GLPI has not yet heard from them on the final spend or structure.

Ravi Vaidya, on behalf of Haendel St. Juste at Mizuho, asked for details on the new funding agreement with PENN, specifically the 7% rate and the likelihood of funding. He also inquired about the rationale for amending the Rockford loan to a lower rate and shorter term.

Answer

President & COO Brandon Moore explained the 7% rate for the PENN funding was not a market rate but part of a broader negotiation related to waiving a non-compete clause for the Bally's Chicago project. SVP & Chief Development Officer Steven Ladany addressed the Rockford loan, stating the property performed well, attracting refinancing offers. GLPI negotiated to keep the loan outstanding at a slightly lower but still accretive rate rather than being fully repaid.

Ravi Vaidya, on for Haendel St. Juste, asked for clarification on the 2024 core FFO guidance update, questioning the offsets that led to only a $0.01 increase, and inquired about the funding strategy for future acquisitions.

Answer

CFO John Caulfield clarified that the modest guidance increase was due to offsets, including approximately $0.02 less in anticipated lease buyout income and the late-in-the-year timing of new acquisitions. CEO Jeffrey Edison addressed funding, stating that this year's acquisition targets can be met with minimal balance sheet impact and that while there are no current plans for an equity raise, it would be considered for outsized opportunities if pricing is accretive.