Richard Anderson • Wedbush Securities

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CFO Peter Seymour explained that cash spreads are volatile and were not a disappointment, while President and CEO Jordan Kaplan expressed that he was impressed rental rates have held firm given market conditions. Kaplan projected that future NOI growth from leasing up the portfolio and potential market rent acceleration could offset the anticipated 100-200 basis point increase in borrowing costs.

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President and CEO Jordan Kaplan explained that while they wouldn't turn down a single large tenant, the company's preference and comfort level is with the distributed risk of multi-tenant buildings. On the balance sheet, he clarified that variable-rate exposure is a function of loan terms, not a strategy, and that the company prefers fixed-rate debt, as evidenced by the two recent fixed-rate financings in the 6% range.

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President and CEO Jordan Kaplan stated that they are seeing a growing pipeline of the types of multi-tenant buildings they prefer to acquire, as distressed sellers are slowly getting 'worn out.' Regarding 2025 FFO growth, Kaplan declined to give guidance but noted that even with successful leasing at Studio Plaza, it takes time for that activity to translate into FFO due to build-outs and rent commencement.

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Chairman and CEO Jay Sugarman explained the cautious tone reflects the frustration of a volatile market where deals can fall apart, though he noted persistence is paying off. Chief Investment Officer Timothy Doherty added that the consistency of their capital is a key advantage. Regarding the S&P rating, CFO Brett Asnas stated they are in a positive outlook period and are in continuous dialogue with the agency, with the hope of securing a third single-A rating.

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Chairman and CEO Jay Sugarman confirmed that creating an accretive transaction that highlights Caret's value is the goal. He stated the dialogue with Park is ongoing but no agreement has been reached. On concentration, Chief Investment Officer Timothy Doherty and Mr. Sugarman explained that while multifamily is a focus due to strong fundamentals, their investment process always starts with a disciplined analysis of the location's quality and long-term dynamics, regardless of property type.

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CEO Eric Mendelsohn stated that while dialogue with NHC is ongoing, the Medicaid and provider tax issues create uncertainty. He noted the board has an independent committee and has retained Blueprint Advisors to ensure a fair market deal. CIO Kevin Pascoe explained the SHOP seasonality was expected, though a one-time expense had a small impact, and reiterated confidence in the full-year guidance. Pascoe also confirmed the SLM situation is largely resolved, with a recent $2.5 million payment received.

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CFO John Spaid projected that 2025 run-rate rent and interest from SLM would be about 55% of 2024 levels, with rent alone at 70%. CIO Kevin Pascoe added that recovery on the SLM mezz loan is expected but the amount is TBD as negotiations continue. CEO Eric Mendelsohn stated the NHC assets are in robust markets and could command market coverage of 1.3x to 1.4x.

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Chief Investment Officer Kevin Pascoe detailed the SLM transition, expecting a return to normal income levels in the second half of 2025, with two cash-flowing properties resuming rent payments sooner. President and CEO Eric Mendelsohn stated that a new Chairman would likely be announced after the current Chairman's retirement at year-end and expressed cautious optimism about the new political administration, citing a previously industry-friendly CMS head.

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CEO Rick Matros confirmed the strategy is a commitment to predictability and simplicity, avoiding 'big swings' while still achieving growth. He stated there is little left to convert to SHOP within the portfolio. On coverage, he believes there is still room for growth, citing continued occupancy gains, moderating labor costs, and expected outsized Medicaid rate increases this summer, which should offset lower Medicare rate growth.

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CFO Michael Costa outlined that a low-to-mid 7% initial yield is breakeven or slightly accretive and that funding would likely be a 60/40 equity-debt split. CEO Rick Matros expressed confidence that the portfolio could withstand potential Medicaid cuts due to its operational strength and the political guardrails in place.

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CEO Rick Matros stated that cost of capital is not a barrier in competing for skilled nursing assets and that Sabra is unique among its peers in pursuing SHOP deals. CFO Michael Costa clarified that debt investments are not a focus. Regarding SHOP growth, Costa explained that a low growth figure earlier in the year was an anomaly due to a tough comp. Matros believes there is more than a year left of strong SNF coverage improvement, driven by outsized rate increases and operating leverage from rising occupancy.

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Co-CEO Pamela Shelley-Kessler stated there are no current plans for further internal conversions, as SHOP growth will be external. She also noted the focus is on larger, continuum-of-care properties (IL/AL) rather than stand-alone memory care. Clint B. Malin, Executive VP, confirmed that Genesis is current on rent and has not requested any assistance, highlighting the strength of their portfolio with LTC.

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Co-CEO Pamela Shelley-Kessler projected that most RIDEA growth will be external and could eventually comprise 25-50% of the portfolio, driven by strong operator demand. Co-CEO Clint B. Malin explained the timing was influenced by lessons from the pandemic and current deal pricing. He also assured that LTC expects to collect all rent from the non-renewing tenant through the lease maturity in early 2026.

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Co-President and CIO Clint B. Malin stated the conversions would involve multiple operators and that future growth would primarily be external. He also confirmed ALG's rent payments were current net of deferrals. Co-President and CFO Pamela Shelley-Kessler noted there is no catalyst to bring the carefully laddered Brookdale purchase option forward.

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CEO Taylor Pickett reiterated his lack of worry about Genesis, stating that while the letter of credit is less than a month's rent, a non-payment would trigger a default, and the underlying assets are "incredibly viable." SVP Megan Krull addressed the CMS rate, stating the 2.8% proposed rate is the true number and was in line with expectations. She added that Omega's strong operators typically perform well on quality metrics, and the company focuses more on Medicaid, which has been keeping pace with inflation.

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Executive Anthony Saladino stated that while buybacks are compelling, expanding the platform remains the priority, and any repurchases would be balance sheet neutral. Executive Jeffrey Witherell noted that while some tenants are seeking short-term space due to supply chain shifts, the specific ODW leaseback is related to that tenant's campus consolidation, not tariffs. Saladino affirmed confidence in the current guidance range, citing strong leasing and deployment momentum.

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EVP of Asset Management James Connolly explained the St. Louis tenant, a large international distributor, signed the lease based on one contract and has already expressed intent to add more contracts and space. Regarding Cleveland, Connolly noted the market is very tight and they expect to have deals for the remaining space in the next couple of months. President and CFO Anthony Saladino confirmed that the guided acquisitions, combined with the Memphis portfolio purchase in 2024, would get them close to deploying the full amount from the Sixth Street deal.

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James Connolly, Head of Asset Management, explained that the failed tenants were in new, less-established industries and that future deals with similar tenants would require stronger financial backing. Executive Anthony Saladino added that one tenant was already on their watchlist. Executive Jeffrey Witherell defended the 6.2% cap rate, stating it aligns with market trades for similar portfolios and that Sixth Street's investment was a holistic backing of the company. Witherell expressed confidence in significant NOI growth for 2025, driven by leasing up vacancies and contributions from new acquisitions.

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CEO Peter Scott explained that portfolio optimization and deleveraging are near-term priorities intended to be reflected in 2026 guidance, while leasing upside is a 2-3 year goal. He stated that he views joint ventures as a valuable tool for growth through acquisitions but clarified that the current portfolio optimization plan involves outright sales of non-core assets rather than contributing them to JVs.

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Interim CEO Constance Moore asserted the strategy is not a hindrance, as the board has assured candidates that a new CEO will have the latitude to evaluate the team and strategy. COO Robert Hull explained that while they use an IRR-based model that balances rent with occupancy costs, all new leases include annual escalators of 3% or more, embedding stable long-term growth.

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Executive Todd Meredith indicated that while the focus on occupancy gains will continue into 2025, the company will remain transparent about its goals. He described the capital allocation framework as dynamic, not a static pivot. He explained the leadership changes were to align executives with key initiatives: operations (Rob Hull), investments (Ryan Crowley), and bringing a fresh perspective to the CFO role (Austen Helfrich).

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President and CEO Dave Sedgwick explained that while the company is focused on the UK, it remains patient in looking for the right entry into the SHOP model. He confirmed the $500 million pipeline is exclusively for US deals, which are mostly higher-yielding skilled nursing facilities. He stated the net CMS rate increase for CareTrust's portfolio is approximately 2.2%, which is considered manageable and in line with historical trends.

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President and CEO David Sedgwick indicated a likely 'holding pattern' on new deals with PACs until they release earnings. On SHOP, he stated all options are on the table. He explained that a simple breakdown of 2024 investments is difficult, as large deals like the Tennessee portfolio are not included in the quoted pipeline until they are highly certain.

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President and CEO David Sedgwick expressed confidence that risk is managed by maintaining a strict underwriting discipline focused on operator quality. He characterized the current environment as stable, with the key difference from the past being the start of a major demographic tailwind that will drive occupancy. He identified CPI-based escalators with floors and ceilings as optimal. Chief Investment Officer James Callister added that there will be a ramp-up period for new operators to reach stabilized coverage.

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COO Mike Lacy attributed the record-low turnover to a transformational shift towards focusing on the lifetime value of a resident, enabled by new tools and training for associates. CEO Tom Toomey emphasized that the goal is optimizing total revenue, not just one metric like turnover, and that dynamic pricing ensures they don't sacrifice revenue. Regarding guidance, CFO Joe Fisher stated that it is UDR's standard practice not to adjust guidance after Q1, regardless of the strong start, as they focus on finishing the year.

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CEO Tom Toomey explained the program's shift is a market-driven response, as few new development projects currently make financial sense. On the Sunbelt, CFO Joe Fisher stated UDR's analysis points to equilibrium by mid-2025 as supply moderates, though job growth is a wildcard. SVP Mike Lacy added that UDR's strong other income growth in the Sunbelt (12-13%) is a key differentiator supporting its relative performance in the region.

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CEO Debra A. Cafaro, after a connection issue, briefly responded that the entire Brookdale portfolio is improving. She noted that while the 45 assets are moving to SHOP, the remaining leased assets are also improving NOI through a significant rent increase on lease renewal.

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CEO Debra A. Cafaro and Executive J. Hutchens explained the strategy is about balanced portfolio construction, as the existing SHOP portfolio already contains significant value-add opportunity. Hutchens confirmed that over half the portfolio has already surpassed pre-pandemic occupancy, and the industry is just entering a period of strong demographic-driven demand.

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CEO Debra Cafaro affirmed that Ventas' scale, data analytics, and experience provide a significant competitive advantage. On the Brookdale lease, she confirmed that the November 30 date is the contractual deadline for Brookdale to exercise its renewal option.

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Executive Angela Kleiman cited long-term rent growth CAGR data and the resilience of the tech sector, which has already retrenched, as evidence of the West Coast's defensive characteristics. Executive Rylan Burns responded that while they underwrite all opportunities, recent downtown San Francisco transactions have occurred at low cap rates that already price in recovery, making suburban Peninsula markets a better relative value at present.

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Executive Angela Kleiman confirmed that 2024 investment activity was heavily focused on the northern regions due to superior fundamentals and recovery potential, a trend that will continue. Regarding structured finance, she explained the business was attractive when construction costs were high but is now being rightsized. It is being maintained at a smaller scale to provide visibility into local developer activity and supplement returns.

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Executive Chairman Joel Marcus clarified they will use a 'scalpel, not a sledgehammer,' monetizing non-strategic land while holding onto parcels critical to their mega campuses. Executive Peter M. Moglia stated that while seller financing was used last year, none is currently in process, though they remain open to it on the right terms.

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Executive Joel Marcus confirmed leasing is "ahead of plan" and detailed that G&A savings are broad-based, covering legal, IT, and payroll. He expressed strong optimism about the new administration, citing a more favorable FTC and skilled FDA appointees as significant positives for the industry.

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CFO Marc Binda clarified that while 24% of ARR is outside mega campuses, not all of it is for sale, and noted that a portion of the land bank is also a potential capital source. He also corrected the analyst's year-to-date realized gains figure, stating the $85.2 million reported puts them on track to meet guidance without a large Q4 event.

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EVP and CFO Anthony Mifsud explained that full-year same-store NOI guidance is unaffected by the quarterly timing of tax refunds. President and CEO Stephen E. Budorick opined that market fear, not fundamental weakness, was affecting the stock price, creating an investment opportunity. He also stated that government retirement offers were targeted broadly and are not expected to impact the priority missions COPT supports, noting that DoD is actively recruiting.

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EVP Britt Snider suggested that 95% to 96% represents the portfolio's natural occupancy level. EVP Anthony Mifsud confirmed the 2024 same-property NOI growth normalization and stated there are no similar one-time items anticipated in the 2025 forecast. Regarding acquisitions, Mr. Snider noted they are seeing some distressed opportunities, but CEO Stephen E. Budorick emphasized that any purchase would be opportunistic and must meet strict criteria related to Defense/IT use.

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President and CEO Stephen E. Budorick confirmed the Rogers Road property will be fully SCIF'd and was previously a call center. He stated that recent successes do not change the timeline for regional office sales, as the broader debt markets for office investment remain unsupportive of achieving good value. He also affirmed that the return framework for the Des Moines project will be in the 'same basic framework' as prior developments.

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CEO Shankh Mitra confirmed the strategy is to concentrate on fewer, high-performing partners to reduce complexity and enhance regional density. He stated there is no specific target number, but the focus is on partners who are philosophically aligned with Welltower's vision. He reported no pushback and highlighted the strong growth in its Canadian and U.K. businesses.

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CEO Shankh Mitra affirmed that these segments play an "extraordinarily important role" in long-term portfolio construction and creating sustainable, diversified cash flow growth. He mentioned that future capital allocation to medical office depends on where long-term inflation settles, but both segments are core to the company's strategy.

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Tim McHugh (EVP & CFO) clarified that the $0.045 is from incremental capital activity since the last guidance update. Outperformance from prior-year acquisitions is captured in the fundamental operating segments' guidance increase. Shankh Mitra (CEO & CIO) added that the full earnings impact of recent deals will be felt in future periods.

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Executive Marshall Loeb distinguished the current 'man-made' situation from past crises, suggesting it could resolve more quickly. The current strategy emphasizes speed and decisiveness, with a motto of 'done is better than perfect' to secure leases. Executive Brent Wood added that they are sticking to their proven 'recipe' of disciplined execution, relying on their strong balance sheet, and staying alert for opportunities created by market dislocation.

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Executive Marshall Loeb confirmed it is a combination of both. The traditional model of starting a new project once an existing one is leased remains key. However, they are also strategically positioning for a market tightening in late 2025, aiming to capitalize on the lack of new supply and the slower reaction time of private developers who face permitting and financing hurdles.

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President and CEO Marshall Loeb clarified that there was no reversal in trend, describing the environment as 'two steps forward, one step back' due to tenant deliberation amid election and interest rate uncertainty. He expressed increased optimism for 2025, anticipating a 'V-shaped' recovery once business confidence returns, driven by strong fundamentals like low vacancy and a shrinking construction pipeline.

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CFO Scott Musil clarified that the developments under construction are not included in 2025 guidance. CEO Peter Baccile explained the development cap is based on market cap and is a limit, not a target, stating there's no reason to reduce it as starts are based on risk-adjusted returns, not available capacity. He affirmed they are always open to build-to-suits but will proceed with speculative starts where there is unmet demand, and EVP Peter Schultz added that projects are flexibly designed for single or multi-tenant use.

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CEO Peter Baccile explained that the speculative development cap is a governor based on market capitalization, not a target, and there is no plan to reduce it. He stated the company proceeds with starts based on market opportunity, not available capacity. He and EVP Peter Schultz also noted that projects are designed with flexibility for multi-tenant use and that the company is always open to build-to-suit opportunities.

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CEO Peter Baccile explained that election-related uncertainty about the broad economic landscape, not specific candidates, is causing delays in new growth investments. CFO Scott Musil declined to give 2025 guidance but pointed to strong leading indicators, such as a 33% cash rental rate increase on 37% of 2025 expirations already leased. Peter Baccile stated that market rents are currently 'flattish to up a little bit' (or up 2-3% excluding Southern California) and that a recovery could begin in the second half of 2025 as new supply diminishes.

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EVP & COO Brett Taft explained that the confidence in hitting the 800-home rental target comes from a stronger starting inventory position compared to the prior year and robust demand in key markets. He acknowledged that many inventory homes could be sold, which is a welcome outcome, and the company would simply replace them. President & CEO Samuel Landy elaborated on the renter-to-owner dynamic, stating that while some residents will always be transient renters, there is a significant opportunity to convert long-term residents to homeowners, a trend that would be dramatically accelerated by favorable changes to financing laws.

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EVP and COO Brett Taft quantified storm costs from the Midwest at approximately $240,000, noting that even without them, NOI growth would have been around 9%, but other one-time charges were also a factor. He and President and CEO Samuel Landy attributed flat occupancy to normal fluctuations and regional differences, expressing confidence in future growth. Samuel Landy stated that since the rental program began in 2011, virtually no homes are obsolete. EVP and CFO Anna Chew confirmed that expansion sites are included in same-store community calculations immediately, but their impact has not been material.

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CEO Benjamin Schall stated that the company is taking a measured approach and expects to increase its expansion market allocation by another 2-3% in 2025, similar to the prior year. He clarified that he views growth as an 'and' proposition, not 'either/or.' The company is in a strong position to grow through both acquisitions and development, with the specific choice being made at the submarket level based on relative economics like replacement cost.

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CEO Benjamin Schall outlined that consensus forecasts show slowing but still positive job growth in 2025, with a potentially favorable mix of higher-income jobs. He noted that while job growth may slow, so is new supply. The bull case for AvalonBay, he explained, rests on the continued outperformance of its suburban coastal portfolio, its ability to lean into accretive external growth through development, and potential for increased transaction activity.

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H. Bolton, Executive Chairman, described his future role as a 'dimmer switch,' where his involvement will gradually decrease while he remains available to support the new CEO, Brad Hill, and the board. He expressed strong optimism for 2026, agreeing that the severity of the current supply cycle could indeed set the stage for a significant recovery. He believes the dramatic fall-off in new supply against a backdrop of strong demand will have a 'hugely positive' impact on performance.

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CEO Mark Parrell clarified that the target remains a range of 20% to 25% and he was merely using shorthand; there has been no change in strategy. He agreed with the analyst's math that executing the 2025 transaction plan could bring their expansion market exposure to around 15% by the following year, expressing a desire to complete the strategic rotation as quickly as value-accretive opportunities allow.

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CFO Bob Garechana clarified that the commercial paper balance will be paid down with proceeds from dispositions planned for Q4. CEO Mark Parrell explained the strategic shift was driven by a combination of rising regulatory risk in coastal markets, the migration of their affluent customer base, and significantly higher homeownership costs in the Sunbelt, which creates a more durable renter demographic.

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Chairman & CEO Owen Thomas confirmed that accelerating return-to-office is helping leasing, alongside strong corporate earnings. He argued that even in a hybrid model, companies need space for all employees on the same collaboration days, which makes it difficult to reduce footprints. Therefore, the specific number of days per week is less critical than the need for a centralized, collaborative workplace.

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Chairman and CEO Richard Campo attributed low cap rates to multifamily becoming the number one investment choice for institutional capital, driven by the expected moderation in supply in 2026-2027. He noted that recent deals have priced in the mid-4% cap rate range due to more buyers than sellers. Campo stated that Camden will transact in the 4.5% to 5% range if they can buy below replacement cost and underwrite future rent growth, but also noted that rising Treasury yields could push cap rates back toward 5%.

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Co-CEO Michael Frankel reiterated the company's view of moderate rent normalization rather than dramatic declines and stated that redevelopments are underwritten with a granular, bottoms-up approach. He confirmed tenant space utilization remains high. Regarding the CFO search, he reported 'great progress' and said an announcement would be made once a decision is finalized.

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