Rich Hightower

Rich Hightower asked about the role of share repurchases in VICI's capital allocation framework, given that the company's target annual total return of 8%-10% appears to be met by the current dividend yield plus embedded AFFO growth, even without additional unannounced investments.

Answer

Edward Pitoniak (CEO, VICI Properties) stated that while he wouldn't say share buybacks are impossible, they are 'highly unlikely.' He believes a better use of retained cash and incremental capital is to invest in experiential assets for better long-term returns than share repurchases. He acknowledged the compelling total return math but cautioned against assumptions about multiple movements. He encouraged looking at VICI's track record of exceeding initial guidance through active growth efforts, emphasizing the team's hard work to produce results within the year.

Rich Hightower asked about the role of share repurchases within VICI's capital allocation framework, given that the company's 8%-10% total return target is already met by its current dividend yield plus embedded AFFO growth.

Answer

Edward Pitoniak, CEO, stated that share buybacks are considered 'highly unlikely,' as VICI fundamentally believes that retained cash resources are better utilized for investing in experiential assets that offer better long-term returns for investors. He acknowledged the compelling total return math but cautioned against making assumptions about multiple movements in any given cycle. Mr. Pitoniak also highlighted VICI's track record of producing growth within a given year relative to initial guidance.

Richard Hightower from Barclays PLC requested details on the Red Rock deal's collateral, the borrower's identity, and the broader evolution of the tribal lending landscape for REITs.

Answer

CFO David Kieske clarified that the borrower is the tribe, with Red Rock providing a completion guarantee. Executive Samantha Gallagher added that the collateral includes a first priority security interest in the casino's future cash flows. CEO Edward Pitoniak and President John W. Payne explained that VICI's entry into tribal lending is not new but the result of years of study, with this specific deal being compelling due to the high-quality partner and location.

Richard Hightower requested clarification on which loan fundings are included in the 2025 AFFO guidance and asked about the drivers behind the quarterly swings in the allowance for credit losses.

Answer

CFO David Kieske explained that guidance does not include funding for loans that lack an identified draw schedule. He noted ongoing funding for projects like Great Wolf Northeast and Canyon Ranch Austin. Kieske also clarified that the Q4 increase in the allowance for credit losses was driven by macro-economic forecasts from their third-party service provider, Moody's, reflecting a 'higher for longer' interest rate environment, rather than specific tenant issues.

Rich Hightower of Barclays asked about the unlevered cash returns anticipated on the capital expenditures for the recently renovated resort portfolio by the end of 2026, and the ultimate stabilized target for these investments.

Answer

Jon Bortz, CEO and Chairman of the Board, and Raymond Martz, Co-President and Chief Financial Officer, detailed that on 2023 and 2024 projects, they've realized about $20 million, expecting an additional $4 million-$8 million in the next 2-3 years, targeting a 22%-26% cash ROI. Overall, the strategic reinvestment program since 2018 averages 16%-17% annualized cash ROI, driven by increased out-of-room spend from new F&B outlets and revenue-generating areas.

Rich Hightower of Barclays asked about the unlevered cash returns anticipated on the resort portfolio's heavy renovation CapEx, both embedded in current guidance and the ultimate stabilized target.

Answer

Jon Bortz, CEO and Chairman of the Board, and Raymond Martz, Co-President and CFO, detailed that 2023-2024 projects (over $100M ROI capital) have already realized about $20M, with an expected additional $4M-$8M in the next 2-3 years, targeting a 22%-26% cash ROI. The overall strategic reinvestment program since 2018 averages 16%-17% annualized cash ROI, driven by increased out-of-room spend from new F&B outlets and revenue-generating areas.

Rich Hightower asked for clarification on seasonal variations in modeling for 2026, the factors that would lead to the high versus low end of guidance, and insights into potential future M&A, specifically regarding conversations with retailers about expanding into specific centers under different ownership.

Answer

Michael Bilerman (EVP, CFO, and Chief Investment Officer, Tanger) explained that occupancy peaks at year-end and rebuilds, with a typical 150 basis point drop from Q4. He noted that the 200 basis point Same Center NOI range accounts for variables like sales, rent commencement dates, tenant credit, downtime, and operating efficiency. Stephen Yalof (President, CEO, and Director, Tanger) confirmed ongoing positive conversations with retailers who support Tanger's growth strategy, viewing them as partners in evaluating potential acquisitions or greenfield developments.

Rich Hightower asked for details on the sequential occupancy cadence for 2026, including seasonal variations for modeling, and the circumstances that would lead to the high end versus the low end of guidance. He also inquired about potential future M&A, specifically if Tanger is having active conversations with retailers about specific centers for expansion under different ownership.

Answer

Michael Bilerman, EVP, CFO, and Chief Investment Officer, Tanger, explained that occupancy typically peaks at year-end and rebuilds, with an average 150 basis point drop from Q4. The Same-Center NOI range (2.25%-4.25%) accounts for variables like sales, rent commencement dates, tenant credit, downtime, and operating efficiency. Bilerman confirmed constant conversations with retailers who support Tanger's growth and platform, providing positive feedback on prospective centers for acquisitions or greenfield developments.

Rich Hightower from Barclays asked for clarification on any significant tenant move-outs beyond what was known and questioned the long-term sustainability of double-digit leasing spreads.

Answer

President and CEO Stephen Yalof identified the Forever 21 bankruptcy as the most significant recent move-out, noting that five of the nine vacated spaces are already re-leased. He expressed confidence in the sustainability of strong leasing spreads, attributing it to a 'virtuous cycle' where high demand for limited retail space allows Tanger to curate better tenants, which drives sales and, in turn, supports higher rents.

Rich Hightower from Barclays asked for an outlook on midweek transient business for 2026, given improvements in December 2025, and the trends within corporate, transient, and group segments. He also requested clarification on the mechanical calculation of share-based compensation.

Answer

CFO Liz Perkins noted encouraging signs in February for midweek occupancy and GDS bookings, indicating business transient, but remained cautious due to early-year noise. She explained that G&A, including share-based compensation, starts at target compensation and is adjusted based on performance, with 2025 being lower than target due to underperformance, causing the difference in 2026 guidance. CEO Justin Knight added that the delta is less significant when looking at prior years.

Rich Hightower asked for an outlook on midweek transient business for 2026, including observed trends within corporate, transient, and group customer segments. He also requested clarification on the mechanical calculation of share-based compensation, noting its projected increase in 2026.

Answer

CFO Liz Perkins noted encouraging signs of midweek occupancy growth in December 2025 and February 2026, along with an improvement in GDS bookings, indicating potential for business transient growth. She explained that share-based compensation starts at a target and is adjusted based on performance, with 2025's lower expense reflecting underperformance, leading to a recalibration for 2026 guidance.

Rich Hightower asked whether hitting the high end of guidance for EBITDA or FFO would be revenue-driven or expense-driven, given the embedded expense growth assumption, and later inquired about the company's appetite and balance sheet capacity for another acquisition similar in size to Desert Ridge.

Answer

Jennifer Hutcheson, Chief Financial Officer, stated that the top line will largely depend on group performance, including attrition, cancellations, and meeting volumes in response to macroeconomic factors, while expense growth (just under 3%) is manageable and not expected to be a major driver. Mark Fioravanti, President and Chief Executive Officer, confirmed balance sheet capacity for a transaction but emphasized focus on current renovations. He noted that any new acquisition would need to be a "bullseye" given the high returns from reinvesting in their existing portfolio. Colin Reed, Executive Chairman, added that Desert Ridge and Hill Country were long-term targets, and there are few other assets with similar appeal, highlighting tremendous growth opportunities within their current portfolio and entertainment business.

Rich Hightower asked about the flex points to hit the high end of guidance (EBITDA or FFO), inquiring if it would be revenue or expense driven. He also questioned the company's appetite for another acquisition similar to Desert Ridge, considering balance sheet capacity and the transaction market.

Answer

Jennifer Hutcheson, Chief Financial Officer, stated that hitting the high end is largely revenue-driven, depending on group performance, attrition, cancellations, and meeting planner sentiment, noting that the expense growth assumption (under 3%) is manageable. Mark Fioravanti, President and Chief Executive Officer, confirmed balance sheet capacity but emphasized focus on current renovations, stating any new asset must be a 'bullseye' given high returns from reinvesting in the existing portfolio. Colin Reed, Executive Chairman, added that Desert Ridge and Hill Country were long-term targets, and there isn't another asset with the same appetite, highlighting growth opportunities within the existing portfolio and entertainment business.

Rich Hightower asked for a breakdown of the portfolio's RevPAR growth cadence across the quarters of 2026, given the flat to 2% guide. He also questioned the flexibility of the 2-3% total OpEx guidance, especially considering potential 4-5% labor cost increases and the upcoming New York union renegotiation.

Answer

Sean Dell'Orto, COO and CFO, outlined that Q1 is expected to be the weakest, Q2 and Q3 should pick up due to easier comparisons and World Cup impact, while Q4 is projected to be at the lower end due to an 8% decline in group pace. Regarding expenses, he noted that mid-single-digit labor growth is offset by lower revenue-based fees, full-year benefits from prior deep dives, and stable fixed costs, insurance, and taxes. Tom Baltimore, Chairman and CEO, added that New York's strong performance and unique positioning are encouraging, with assumptions for the union contract embedded in guidance.

Rich Hightower inquired about the quarterly cadence of RevPAR growth for the portfolio in 2026, within the flat to +2% guidance range. He also asked about the flexibility of the 2-3% total OpEx guidance, considering 4-5% labor growth and the upcoming New York union renegotiation.

Answer

Sean Dell'Orto, COO and CFO, outlined the quarterly RevPAR cadence: Q1 is expected to be the weakest (down slightly/flat), Q2 and Q3 should pick up due to easier comparisons and World Cup impact (30-35 basis points for the year), while Q4 is projected to be at the lower end of the range due to an 8% decline in group pace. Regarding expenses, Sean Dell'Orto explained that while labor costs are expected to grow mid-single digits, offsets include lower revenue-based fees, the full-year impact of operational deep dives, below-inflationary fixed costs, and a favorable insurance market, which collectively support the low single-digit OpEx growth guidance. Tom Baltimore, Chairman and CEO, added that the New York operating team is excellent, and they have assumptions for the union impact in their guidance.

Rich Hightower asked for more details on the robust performance observed in Federal Realty's California portfolio, which was highlighted in the prepared remarks, and the specific drivers behind this strength.

Answer

Jeff Kreshek, President, West Coast, explained that California is projected to be the largest source of growth for Federal Realty over the next few years. This is attributed to a significant backlog of leasing and development activity, coupled with strategic capital recycling efforts at properties like Santana Row and Grossmont.

Rich Hightower asked for more details on the robust performance in California, which was highlighted in the prepared remarks, and what specific factors are driving this strength.

Answer

Jeff Kreshek, President, West Coast, stated that California is expected to be Federal Realty's largest source of growth for the next few years, driven by a backlog of leasing and development activity, as well as strategic capital recycling from properties like Santana Row and Grossmont.

Rich Hightower from Barclays sought clarification on the updated FFO guidance, asking about the drivers and the performance cadence between the first and second halves of the year, and if a comparable POI for H1 was provided.

Answer

President, CEO & Director Donald Wood clarified that comparable POI growth was in the mid-to-upper threes for H1 and is expected to be in the mid-threes for H2. He explained the quarterly FFO cadence, noting a significant pickup is expected in Q4 driven by occupancy gains and rent commencements.

Rich Hightower followed up on the comfort level with approaching the 6x upper limit on leverage if market conditions necessitate it for growth. He also asked about the expected mark-to-market or recapture rate for early vintage Darden leases coming due in 2027.

Answer

CEO Bill Lenehan stated that approaching the 6x leverage limit is a distant concern, as FCPT has significant dry powder for acquisitions before needing to consider it, and its track record shows it has consistently stayed well below this ceiling. He expects the vast majority of Darden leases expiring in 2027 to renew at their contractual 1.5% escalator, as they have multiple five-year extension options.

Rich Hightower questioned FCPT's comfort level with potentially approaching the 6x upper limit on leverage to execute its 2026 growth plan. He also asked about the expected mark-to-market or recapture rate for the early vintage Darden leases set to expire in 2027.

Answer

Bill Lenehan (CEO) indicated that reaching 6x leverage is a distant prospect, noting FCPT has significant acquisition capacity before needing to consider it. He highlighted the company's consistent leverage ceiling since inception, which has rarely been approached, underscoring a strong track record. For Darden leases expiring in 2027, Mr. Lenehan explained they have multiple five-year extension options at 1.5% growth, and he expects the vast majority to renew at this contractual escalator.

Richard Hightower asked how potential policy changes are affecting underwriting for new investment verticals and inquired about the company's philosophy on not providing forward guidance.

Answer

CEO William Lenehan responded that while they are monitoring policy changes, nothing has yet altered their acquisition scorecard or sourcing strategy. He explained that FCPT does not provide guidance because its core strategy is to modulate acquisition volume based on its cost of capital (i.e., stock price), which is inherently unpredictable and would make any guidance difficult to provide meaningfully.

Rich Hightower asked about the impact of hiccups in the broader private credit market on the company's business, specifically if it creates new opportunities or reduces sponsor-backed deal flow. He also inquired about the long-term target for car wash exposure, given the recent dispositions.

Answer

Pete Mavoides, President and Chief Executive Officer, stated that private credit market issues have not materially impacted their business, as those borrowers are typically larger and not in their target industries. Regarding car wash exposure, he clarified that they operate with a soft ceiling of 15% for any industry and do not intend to materially drive it down to 10%, remaining open to compelling risk-adjusted opportunities in the sector.

Rich Hightower asked about the impact of recent hiccups in the broader private credit market on Essential Properties' business, specifically if it creates new opportunities or reduces sponsor-backed deal flow. He also inquired about the long-term target for car wash exposure, given the recent dispositions.

Answer

Pete Mavoides, President and CEO, stated that private credit market issues have not materially impacted their business, as those borrowers typically operate at a larger scale and in different industries. He does not expect a material reduction in car wash exposure, reiterating a soft ceiling of 15% for any single industry and a willingness to continue investing in the sector if compelling risk-adjusted opportunities arise.

Rich Hightower asked about the impact of added private market competition on deal negotiation features, underwriting, and guidance. He also sought specifics on why Essential Properties Realty Trust might lose a transaction, focusing on terms and price.

Answer

Peter Mavoides, President and CEO, acknowledged constant competition but emphasized Essential Properties Realty Trust's competitive edge through reliability, execution, and ability to deliver capital, believing their reputation for certainty and relationships is rewarded. He clarified that they typically 'lose' on price, specifically the initial cap rate, which is the highest point of sensitivity. He views it as choosing not to pursue a deal due to a different risk-adjusted return dynamic, opting to deploy capital elsewhere.

Rich Hightower asked about the impact of increased private market competition on the marketplace, deal negotiation features, underwriting, and guidance. He also asked where Essential Properties Realty Trust typically loses out on transactions and on what terms.

Answer

President and CEO Peter Mavoides acknowledged a competitive market but emphasized that Essential Properties Realty Trust competes on reliability, execution, and relationships, which he believes are rewarded, especially against new entrants. He stated that if they 'lose' a deal, it's typically on price, specifically the initial cap rate, which is the highest point of sensitivity. He framed it as choosing not to pursue a deal due to different risk-adjusted return dynamics rather than outright losing.

Rich Hightower of Barclays requested more color on tenant credit trends and asked where deal terms would likely change first if competition were to intensify.

Answer

CEO Pete Mavoides described tenant credit as durable and stable, with no major concerns emerging. He stated that if competition increases, he expects the initial going-in cap rate would be the first term to compress, followed by rent escalations, with the lease term being the least sensitive component.

Richard Hightower questioned the company's capital needs for the year, asking for details on any remaining equity required to meet investment targets. He also asked for guidance on how to model the timing and cadence of acquisition volume throughout the year.

Answer

CFO Mark Patten stated that minimal new equity issuance is needed, citing growing retained free cash flow, disposition proceeds, and a significant unsettled forward equity balance as primary funding sources. He noted that the guidance could be achieved with just normal ATM activity, placing the company in an opportunistic position. Executive Robert Salisbury addressed acquisition timing, suggesting that while Q4 has historically been larger, modeling a ratable pace over the course of the year is a reasonable assumption given current visibility.

Rich Hightower asked about the private market activity Kimco Realty is observing, specifically regarding new buyers, their motivations (e.g., tax laws, accelerated depreciation), and the implications for cap rate compression.

Answer

Dave Jamieson, COO, noted a compelling time for open-air retail investors, with generalist and real estate investors taking notice of strong fundamentals. He explained that increased demand, coupled with improved financing liquidity and spreads, has led to competitive bidding and cap rate compression. He highlighted that positive leverage is still achievable for retail, differentiating it from other asset classes, and that strong supply-demand dynamics are expected to continue.

Rich Hightower asked about the activity in the private market for open-air retail, specifically regarding new buyers, their motivations (e.g., new tax laws, accelerated depreciation), and how cap rates are trending in this environment.

Answer

President and Chief Investment Officer Ross Cooper stated that it's a compelling time for open-air retail investors, with fundamentals at all-time highs. He noted increased competition from private investors, improved financing, and positive leverage as key drivers, leading to cap rate compression. He emphasized that the supply-demand dynamics suggest continued strong fundamentals and investor interest for the foreseeable future.

Rich Hightower questioned the predictability of flows within the structured investment program (SIP) and the role of share repurchases in Kimco's overall capital allocation framework, noting the absence of buybacks in Q3.

Answer

Ross Cooper, President and Chief Investment Officer, explained that SIP repayments are well-notified and planned, with capital spread across multiple deals. Glenn Cohen, CFO, stated that share buybacks are opportunistic, driven by stock price performance (Q2 average $19.61), and Kimco utilizes all available tools for the highest yield.

Rich Hightower questioned the predictability of flows within the structured investment program (SIP) and the role of share repurchases in Kimco's overall capital allocation framework, noting the absence of buybacks in Q3.

Answer

Ross Cooper, President and Chief Investment Officer, explained that SIP repayments are well-notified and planned, with capital spread across multiple deals. Glenn Cohen, CFO, stated that share buybacks are opportunistic, driven by stock price performance (Q2 average $19.61), and Kimco utilizes all available tools for the highest yield.

Rich Hightower of Barclays PLC questioned where accelerating the share repurchase program fits among capital priorities, given the stock's attractive 9% FFO yield.

Answer

CFO Glenn Cohen stated the 9% yield was a 'line of demarcation' to act opportunistically in April. CEO Conor Flynn added they constantly monitor the public-private valuation disconnect but must balance buybacks with capital needs for leasing and internal growth.

Rich Hightower questioned the factors influencing the sizing of the forward equity component of total capital sources, asking what might prevent increasing unsettled shares beyond the current $700+ million. Hightower also asked if the issuance of forward shares serves as a signal that the deal pipeline is growing beyond current targets. Lastly, he sought to understand the geographical and compositional nature of Agree Realty's development and DFP projects, specifically whether they are infill, redevelopment, or greenfield, and how they relate to new residential development.

Answer

President and CEO Joey Agree explained that the sizing of forward equity is primarily driven by the uses of capital, emphasizing the company's liquidity and balance sheet flexibility to be opportunistic. CFO Peter Coughenour added that staying ahead of uses is paramount. Mr. Agree clarified that while there's no direct causation, the issuance of forward shares is correlative to investment pipeline growth, and they consider all capital sources (debt, equity, free cash flow, dispositions) to match uses. Regarding development and DFP, Mr. Agree stated that projects span from the West Coast to the East Coast, across tertiary and primary markets, including redevelopments (splitting larger boxes), ground-up projects, hard corners for C-stores, and commercial fueling locations. He noted that the constraint is cost and project feasibility, not retailer desire, as retailers have a 'voracious appetite' for growth to optimize their omni-channel strategies.

Rich Hightower asked about the factors influencing the sizing of the forward equity component of total capital sources, specifically what would prevent increasing unsettled shares beyond current levels. He also sought clarification on the geographic and structural composition of development and DFP projects, asking if they are infill, redevelopment, or greenfield opportunities.

Answer

President and CEO Joey Agree explained that forward equity sizing is primarily driven by capital uses, emphasizing flexibility and opportunistic capital raising across all four quadrants of longer-term capital. He noted that development and DFP projects are highly diversified, spanning coast-to-coast in tertiary and primary markets, including redevelopments, ground-up projects, hard corners for C-stores, and larger commercial fueling locations, all driven by retailers' appetite for growth in an omni-channel world.

Rich Hightower asked if the increased size of Agree Realty's investment team implies a sustained pace of acquisitions and deal volumes similar to Q3. He also inquired about the reasons for the decreased exposure to Dollar Tree quarter-over-quarter and the general view on the Dollar Store concept.

Answer

President and CEO Joey Agree confirmed the team's size and scale are designed to accommodate all transaction types, not as a constraint, with incremental capacity and ongoing investments in systems and processes. He attributed the Dollar Tree exposure decrease to the separation of Family Dollar and some dispositions, stating they will be discerning and not materially increase exposure to Dollar Store or Pharmacy sectors.

Rich Hightower asked if the increased size of Agree Realty's investment team suggests a sustained pace of acquisitions and deal volumes similar to Q3. Hightower also inquired about the moving parts behind the decrease in Dollar Tree exposure and the general sentiment towards the Dollar Store concept.

Answer

Joey Agree, President and CEO, confirmed that the expanded team, along with ongoing IT improvements (ARC 3.0), is designed to accommodate all transaction types and has incremental capacity, though volume remains opportunity-dependent. He attributed the Dollar Tree exposure decrease to the Family Dollar separation and dispositions, noting that both Dollar Store and Pharmacy exposures have consistently declined and are not a top investment appetite for new capital.

Rich Hightower asked about asset management, specifically if there are changes in lease structures, such as escalators or term lengths, during renewals, given the current shortage of quality retail space.

Answer

President and CEO Joey Agree pushed back on the premise that investment-grade tenants imply weaker lease terms, stating the portfolio has approximately 1% internal growth. He emphasized that the company's focus is on the tenant's long-term ability to pay rent, dismissing long-term leases with non-credit tenants as mere financing structures rather than sound real estate investments.

Richard Hightower of Barclays followed up on why Agree Realty didn't issue more equity given its strong stock performance and growing acquisition pipeline. He also asked for clarification on whether the bad debt forecast is a bottoms-up calculation or includes a general overlay.

Answer

CEO Joey Agree explained that after accounting for settled forward equity, the company's position was effectively neutral for the quarter, and they maintain substantial liquidity and hedged capital to execute their strategy. CFO Peter Coughenour clarified that the bad debt forecast is a bottoms-up calculation based on specific, identified tenant situations like Big Lots, with an added cushion for other monitored tenants, rather than a broad macroeconomic overlay.

Richard Hightower of Barclays questioned why Agree Realty didn't issue more equity in the quarter, given the strong stock performance and growing acquisition pipeline. He also asked for clarification on whether the bad debt guidance is a bottoms-up calculation or includes a general credit overlay.

Answer

CEO Joey Agree explained that while deploying significant capital, the company's equity issuance and settlement activity resulted in a neutral leverage position, maintaining a strong balance sheet with nearly $2 billion in liquidity and over $1.2 billion in hedged capital. CFO Peter Coughenour clarified the bad debt guidance, stating it is a location-by-location, tenant-by-tenant buildup based on known issues, but the 50 basis point total also includes a cushion for other potential issues not yet identified.

Richard Hightower from Barclays asked about the gating factors for scaling the Developer Funding Platform (DFP) and the likelihood of a 'do-nothing scenario' in 2026.

Answer

CEO Joey Agree identified achieving appropriate risk-adjusted returns as the key gating factor for DFP, as longer-duration projects require a premium. He expressed high confidence that 2026 would not be a 'do-nothing' year, citing the company's 'pole position' with its pre-funded balance sheet.

Richard Hightower of Barclays asked about the gating factors that would allow the Developer Funding Platform (DFP) to scale into a larger part of the business and questioned the likelihood of a "do-nothing scenario" in 2026.

Answer

CEO Joey Agree explained that the primary gating factor for DFP growth is achieving appropriate risk-adjusted returns, which must be higher for longer-duration development projects compared to acquisitions. He expressed high confidence that 2026 would not be a "do-nothing scenario," citing the company's "unprecedented" balance sheet strength and pre-funded capital position.

Rich Hightower asked for insights into the anticipated recovery curve and exit velocity for Camden Property Trust's core markets, particularly Austin, as they look towards the end of 2026 and into 2027.

Answer

Executive Vice Chairman Keith Oden highlighted unprecedented flat to down rent growth over the past four years, despite 4% annual wage growth for residents, suggesting a strong rebound is due. Chairman and CEO Ric Campo noted that markets like Austin and Nashville, with high supply, will take longer to recover, but others are well-positioned for demand to outpace supply, leading to significant rent increases as concessions are eliminated.

Rich Hightower asked for insights into the recovery curve and 'exit velocity' for core markets, especially Austin, as the company looks towards the end of 2026 and into 2027.

Answer

Keith Oden, Executive Vice Chairman, expressed optimism, noting that rents for properties built in the last five years are back to 2021 levels, representing nearly 4.5 years of flat rental growth, which is unprecedented. He highlighted that average renter wages have increased by 4% annually over this period, suggesting strong financial health and potential for a sharp rebound. Ric Campo, Chairman and CEO, added that Austin and Nashville are slower due to oversupply, but other markets are positioned for demand to outpace supply once current inventory is absorbed, leading to rent increases, especially as concessions are eliminated.

Rich Hightower from Barclays asked what factors could cause the current high resident retention and renewal rates to reverse, and later asked for Ric Campo's perspective on the economic forecasting abilities of his counterparts at the Dallas Fed.

Answer

Chairman & CEO Ric Campo identified a significant recession with job losses as the primary risk to retention, while downplaying the threat from the housing market. Regarding the Fed, he praised the institution's meticulous, data-driven, and apolitical process, noting that the diverse business perspectives gathered provide valuable insights that help Camden navigate the economy.

Richard Hightower of Barclays asked for projections on Class A versus Class B asset performance in the Sunbelt and inquired about the buyer pool, cap rates, and capital sources for the planned $750 million in dispositions.

Answer

President and CFO Alex Jessett noted that while Class B suburban assets previously outperformed, Class A and urban assets are now performing slightly better as supply dynamics shift. Regarding dispositions, he described the buyers as value-add funds, often local operators, with a cap rate spread of about 100 basis points on an FFO basis compared to acquisitions. Chairman and CEO Ric Campo added that there is ample capital from private equity, family offices, and agency lenders for these assets.

Richard Hightower questioned the risk of the market being incorrect about the anticipated decline in new supply and asked how much of a buffer for this risk is incorporated into Camden's current same-store guidance.

Answer

An executive, likely Chairman and CEO Ric Campo, responded that the supply pipeline for the next two years is largely fixed, with new construction starts down 50-60%. He sees minimal risk of a supply surge due to persistent high construction and financing costs. He identified a potential economic recession as a greater risk to the outlook than a miscalculation of future supply deliveries.

Rich Hightower asked about Equity Residential's current rent position relative to market, specifically a 'Loss-to-Lease' concept, particularly in strong markets like San Francisco and New York, to understand the relative market strength.

Answer

Michael Manelis, Chief Operating Officer, stated that Equity Residential is starting 2026 with a portfolio-wide gain-to-lease of 1.2%. He noted that in strong markets like San Francisco, there's opportunity for rents to continue rising, and while currently in a moderate loss-to-lease position, this will shift as rents increase, with the portfolio gain expected to flip to a loss by the end of Q1.

Rich Hightower with Barclays asked about Equity Residential's current "Loss-to-Lease" position in San Francisco and New York, seeking to understand where the company's in-place rents stand relative to current market rates and the overall market strength.

Answer

Michael Manelis, Chief Operating Officer, stated that the portfolio started 2026 with a 1.2% gain-to-lease. He noted that in strong markets like San Francisco, there's an opportunity for rents to continue rising through the spring and peak leasing season, indicating a moderate loss-to-lease position that is expected to flip to a loss-to-lease for the overall portfolio by the end of Q1 as market rents increase.

Rich Hightower asked if Equity Residential expects a normal seasonal curve in expansion markets starting in spring 2026, and if positive market rents are anticipated. He also requested an explanation for the $0.04 swing in the 4Q midpoint guidance.

Answer

Mark Parrell, President and CEO, linked the return to normal seasonality and positive market rents to decent job growth, stating that if job growth improves, coastal markets would accelerate and expansion markets would begin a more profound recovery. He noted that the timing of job growth, particularly by April/May, is crucial for the leasing season. Bret McLeod, Chief Financial Officer, attributed the $0.04 swing in 4Q guidance to other income growth and rental income, with Mark Parrell adding that year-end factors like bonuses and medical reserves also contribute to the variability.

Rich Hightower asked about the expected seasonal curve and positive market rents in expansion markets for next year. He also inquired about the swing factors for the $0.04 swing on a dollar for the 4Q midpoint guidance.

Answer

Mark Parrell (President and CEO) linked the seasonal curve and market rents to job growth, believing that decent job growth next year would lead to normal seasonality and a profound recovery in expansion markets. Bret McLeod (CFO) attributed the guidance swing to other income growth and rental income contributing in Q4. Mark Parrell added that overhead, bonuses, and medical reserves are determined in the current period and are relatively unpredictable, contributing to the range.

Rich Hightower from Barclays asked for a quantification of how adding new expansion market assets to the same-store pool next year would have impacted 2025's results, for modeling purposes. He also asked for clarification on how the same-store pools are composed.

Answer

EVP & CFO Robert Garechana explained that adding the new assets would have been modestly dilutive to 2025 growth but will provide better portfolio balance and smoother performance in 2026. President & CEO Mark Parrell added that about 4,000 units will be added. Robert Garechana then clarified they use three same-store definitions: full-year, quarterly, and sequential, based on ownership periods.

Rich Hightower from Barclays asked for a quantification of how adding newly acquired properties to the same-store pool next year would have impacted 2025's results and what the resulting comparison will look like for 2026.

Answer

EVP & CFO Robert Garechana explained that including these assets in the 2025 pool would have been modestly dilutive to growth, consistent with underwriting, but that they will provide balance and upside in 2026. President & CEO Mark Parrell added that about 4,000 units, mostly in expansion markets, will be added. While these markets are growing slower than legacy markets now, the new assets will improve the quality and stability of the results within those expansion markets.

Richard Hightower of Barclays requested a deeper analysis of the Washington, D.C. market amid potential government layoffs and asked if the current record-low resident turnover represents a 'new normal'.

Answer

CEO Mark Parrell and COO Michael Manelis quantified their D.C. exposure at 10-15% of residents tied to government and related consulting jobs, but stressed the market's growing economic diversification. Manelis attributed the low turnover to both macro uncertainty causing residents to 'bunker down' and the success of the company's centralized renewal process and customer experience initiatives, which they expect to continue.

Richard Hightower sought clarification that the 'asking 7%, achieve 5%' renewal rate comment was for the entire portfolio and asked for a prediction on when new lease growth might turn positive in the Sunbelt expansion markets.

Answer

COO Michael Manelis confirmed the renewal rate guidance applied to the whole portfolio. CEO Mark Parrell declined to predict the exact timing of positive new lease growth in the Sunbelt, stating the recovery will be uneven and that a sustained improvement in same-store revenue growth for those markets is more of a 2026 or 2027 story.

Rich Hightower sought an update on the D.C. market and surrounding areas, particularly the impact of D.O.G.E. (Department of Government Employment) and whether its effects were previously understated. He also asked about the drivers of cap rate compression in the transaction environment, specifically segmenting between capital flows, debt availability, and optimism around fundamentals.

Answer

Sean Breslin, COO, attributed Mid-Atlantic softness to 60,000 job losses in H2 2025, but expects improvement in H2 2026 due to a 60% reduction in new deliveries. Matthew Birenbaum, CIO, explained that cap rate compression is driven by competitive debt markets, ample equity dry powder, and buyer optimism for future recovery, despite current NOI headwinds. Sean Breslin, COO, added that AvalonBay sees cap rates in the 4.7-4.8% range for desirable assets.

Rich Hightower asked for an update on the D.C. market and surrounding areas, specifically the impact of D.O.G.E. (job losses), and what is driving cap rate compression in the current transaction environment, segmenting between capital flows, debt availability, and optimism around fundamentals.

Answer

Sean Breslin, COO, reported that the Mid-Atlantic lost about 60,000 jobs in the last six months of 2025, driving softness. He expects a 60% reduction in deliveries in 2026 to support improvement if demand stabilizes. Matthew Birenbaum, CIO, attributed cap rate support to competitive debt markets, abundant equity, and buyer optimism for a robust recovery in 2-3 years, noting a bifurcated market. Sean Breslin, COO, added that cap rates for desirable assets are in the 4.7-4.8% range.

Rich Hightower asked about potential delayed impacts from D.C. job cuts on tenants and the broader effect of weakness in the entry-level job market on AvalonBay's portfolio.

Answer

COO Sean Breslin indicated that any D.C. DOGE impact is likely being felt now due to lag effects, and the supply picture for D.C. in 2026 looks significantly better. Regarding the entry-level job market and AI, he noted AvalonBay's average resident age is in the mid-30s, reducing exposure to entry-level job market weakness. He also highlighted strong demand for high-value-add jobs, particularly in AI, in coastal regions like San Francisco and Seattle.

Rich Hightower inquired about the potential for delayed impacts from layoffs in the Washington D.C. market and how weakness in the entry-level job market broadly affects AvalonBay's portfolio.

Answer

Sean Breslin, Chief Operating Officer, suggested that any direct impact from D.C. government layoffs would likely be felt around the current time, given typical lag effects, and highlighted the significantly improved supply picture for D.C. in 2026. Regarding the entry-level job market, he noted AvalonBay's resident demographic (average age mid-30s) is less exposed, and demand in coastal regions like San Francisco and Seattle is increasingly driven by highly educated individuals in high-value-add sectors like AI, which are less susceptible to automation.

Rich Hightower from Barclays asked what the development yield would be if less-seasoned projects were marked to market today. He also questioned the sequential trend in effective rent change for the 'other expansion regions' portfolio.

Answer

CIO Matthew Birenbaum responded that while they don't mark those projects to market yet, costs are trending under budget and rents are not below underwriting. COO Sean Breslin explained that the rent change in expansion regions reflects a defensive strategy to maintain high occupancy amid significant new supply in certain submarkets.

Richard Hightower requested a detailed breakdown of the cost of capital math for the Texas portfolio acquisition relative to its yield, considering the equity issuance and potential future CapEx for the 11-year-old assets.

Answer

CEO Benjamin Schall clarified the Dallas portion was funded with downREIT units at a cost of capital around 5%, aligning with the 5.1% stabilized yield, and highlighted the strategic benefits of scale. CIO Matthew Birenbaum confirmed that initial CapEx was included in the stabilized yield calculation and that ongoing CapEx is expected to be below the portfolio average.

Richard Hightower requested a breakdown of the new and renewal lease blend expectations for established versus expansion markets. He also asked about the competitive dynamics in the Structured Investment Program (SIP) or mezz lending market and how AvalonBay can remain selective while still hitting its growth targets.

Answer

COO Sean Breslin provided a detailed breakdown, stating that established regions will see healthier rent growth. He gave specific forecasts for expansion markets like Dallas (positive 2-3%) and urban Charlotte (flat to negative). CIO Matthew Birenbaum explained that for SIP, the main challenge is finding quality deals, not competition. He noted their unique development expertise makes them a preferred capital provider for deals they target, and their growth goal of 3-4 deals per year is modest and achievable.

Rich Hightower questioned the conservatism embedded in the guidance regarding structured investment redemptions, specifically if the assumption of non-redeployment was unrealistic given the pipeline.

Answer

Barbara Pak (EVP and CFO, Essex Property Trust) explained the conservatism in 2026 guidance, noting that 90% of expected redemptions are tied to two large assets. Accrual was stopped on one in Q4, and discussions are ongoing for the other, implying potential upside but no further downside in the guidance.

Rich Hightower asked about the conservatism in Essex's guidance regarding structured investment redemptions not being redeployed, and if this view is unrealistic given what's in the pipeline.

Answer

Barbara Pak (EVP and CFO) explained that 90% of expected 2026 redemptions are tied to two large assets. For one, accrual was stopped in Q4 due to valuation concerns if continued. For the other, discussions are ongoing, so no redemption proceeds were assumed, creating potential upside but no further downside in the guidance.

Rich Hightower of Barclays inquired about bad debt trends, noting the overall improvement and asking if weakness in LA was being offset by strength elsewhere.

Answer

EVP & CFO Barb Pak confirmed that the current bad debt level is about 10 basis points above the long-term average. The higher-than-average rate in Los Angeles is being offset by better-than-average performance in Northern California and the Pacific Northwest. She stated that the full-year guidance assumes this level persists, with potential for improvement representing the high end of the guidance range.

Richard Hightower sought confirmation that the decision not to raise guidance was a conservative risk overlay rather than a sign of operational weakness. He also asked for an explanation of the large difference in resident turnover rates between Essex and a peer.

Answer

Executive Angela Kleiman confirmed his summary was 'excellent,' stating that fundamentals are in good shape and the guidance decision was based on macro uncertainty. Regarding turnover, she explained the large delta is likely due to definitional differences in how companies calculate the metric, similar to variations in calculating blended lease rates. She noted Essex's 35% turnover was actually low relative to its own history.

Richard Hightower of Barclays asked about the transaction market, noting the implication of negative leverage with cap rates in the mid-4s and financing in the mid-5s. He also inquired about the outlook for the next insurance renewal cycle, given the timing of the wildfires.

Answer

Executive Rylan Burns confirmed that buyers are underwriting negative leverage in year one, but the market remains healthy and competitive with deep bidder pools. Executive Barb Pak addressed insurance, stating that since their policy was renewed in December, there is no risk to 2025 results. She noted it's too early to predict the next renewal's outcome but highlighted that Essex's insurance costs had already risen 50% over the prior two years.

Rich Hightower asked about MAA's share repurchase philosophy, specifically what changes in the sources and uses of capital in Q4 2025 led to the first share repurchases since 2001.

Answer

Brad Hill, President and CEO of Mid-America Apartment Communities, clarified that MAA's philosophy hasn't materially changed, but shares are trading at a persistent and sizable discount to underlying value, a unique situation not seen since 2001. He indicated a limited appetite for repurchases but will continue to monitor and execute if it drives long-term shareholder returns.

Rich Hightower inquired about MAA's new lease growth in Q1 2026 and the rationale behind the company's share repurchase activity in Q4 2025, the first in a long time.

Answer

Brad Hill, President and CEO of Mid-America Apartment Communities, declined to provide specific monthly new lease rates but noted expectations for better Q1 blended pricing year-over-year. Regarding share repurchases, he stated it's not a material change in philosophy, but rather a response to MAA's shares trading at a persistent and sizable discount to underlying value, a unique historical situation.

Rich Hightower of Barclays asked when the impact of slower lease-ups on new deliveries would peak and how that timing affects the recovery of new lease pricing, and also inquired about the transaction environment.

Answer

EVP Timothy Argo projected that the full positive impact of declining supply on pricing will likely materialize in the spring of 2026. President and CEO A. Bradley Hill noted the transaction market remains quiet with low volume and no significant distress, citing that Q2 cap rates were actually down from Q1 to around 4.7%.

Rich Hightower asked about MAA's appetite and capacity to expand its development pipeline beyond the current $1 billion target, especially given the anticipated slowdown in market-wide new supply.

Answer

Brad Hill, President and CEO, affirmed that development is a prime use of capital and that the team has successfully grown the pipeline from $450 million to nearly $900 million. He expressed a desire to keep the pipeline elevated and sees potential for further growth, particularly through their JV pre-purchase platform where they can step into shovel-ready deals. He noted the company's capacity for development exposure is around 5% of enterprise value, or approximately $1.2 billion.

Rich Hightower asked for clarification on Simon Property Group's $100 million investment in Saks Global, its influence on outcomes, and the write-off. He also inquired about the exchangeable euro debt due later in 2026 and the potentiality of putting Klépierre shares to debt holders.

Answer

Chairman, CEO, and President David Simon explained that the Saks Global investment granted Simon Property Group rights to terminate two leases, acquire two buildings, and build what they want across the portfolio without Saks/Neiman approval. He noted the investment was written off in Q4 but provided upside through IP ownership. CFO Brian McDade added that 1.5 million Klépierre shares have been issued to satisfy bond redemptions.

Rich Hightower asked for clarification on Simon Property Group's $100 million investment in the Saks entity, its potential control over outcomes, and an update on the exchangeable euro debt due later in the year, specifically the possibility of putting Klépierre shares to debt holders.

Answer

David Simon, Chairman, Chief Executive Officer, and President, stated that 1.5 million Klépierre shares have been issued to satisfy bond puts for the euro debt. Regarding the Saks investment, he explained it was part of funding for the Neiman Marcus acquisition, securing Simon Property Group rights to terminate two leases, acquire two buildings, build without approval at REAs, and convert the investment into IP ownership for Saks, Neiman, and Bergdorf. Simon noted the investment was written off in Q4 but believes the company is "ahead of the game" due to the secured rights.

Richard Hightower asked for the company's view on the thesis that the core multifamily renter cohort is expanding and whether this creates a more zero-sum competition between multifamily and single-family rentals.

Answer

President and Chief Operating Officer Charles Young responded that Invitation Homes serves a unique market segment of families who need 3-5 bedroom homes in good school districts, a product distinct from typical multifamily offerings. He emphasized the value proposition, noting it's nearly $1,100 cheaper per month to lease with INVH than to own in their markets. He believes the demand for their product is healthy and differentiated, as evidenced by low turnover, high renewal rates, and an average length of stay of 38 months.

Richard Hightower of Barclays PLC questioned the potential risk to demand from a release of 'pent-up demand' for homeownership if mortgage rates were to fall significantly.

Answer

CEO Dallas Tanner expressed confidence, reminding that the business thrived with high occupancy even during periods of historically low mortgage rates. He views a healthier for-sale market as a net positive, as it improves price discovery and rising home values are a leading indicator for future rent growth. A return to normal move-out-to-buy rates would be a sign of a healthy housing market, not a threat to their model.

Rich Hightower of Barclays pointed out the sequential increase in ABR and GLA from tenants on a cash basis and asked if this was primarily due to the At Home bankruptcy.

Answer

EVP & CFO Vincent Chao confirmed that the quarter-over-quarter increase in tenants paying on a cash basis was almost entirely attributable to the At Home bankruptcy filing.

Richard Hightower asked for details on the tenant mix that is backfilling the vacant Badcock spaces. He also questioned whether NNN's properties leased to top tenants like Mister Car Wash, Dave & Buster's, and Camping World have unique characteristics that make them less risky than average.

Answer

CFO Kevin Habicht and CEO Stephen Horn explained that the Badcock spaces are attracting a variety of users, including home furniture, medical, and hardware tenants. Horn elaborated that their exposure to tenants like Mister Car Wash is de-risked by a very low cost basis from early investments and strong property-level rent coverage (over 4x). Similarly, long-term relationships with Camping World and Dave & Buster's have allowed for portfolio culling to retain only strong, desirable assets.

Rich Hightower of Barclays asked for an explanation of the moving parts in UDR's expense growth, particularly the divergence between controllable and non-controllable items, and inquired about lessons learned from the 1300 Fairmount investment for the DPE program.

Answer

SVP & COO Michael Lacy attributed higher controllable expenses to planned WiFi costs, specific water remediation projects, and higher incentive compensation due to strong performance. He expects controllables to moderate in the second half. President & CIO Joseph Fisher detailed lessons from the Fairmount deal, including the impact of rate hikes and project delays. He said future DPE strategy will involve more scenario analysis, finite investment terms without extensions, and a pivot towards safer recapitalization deals over higher-risk development equity.

Rich Hightower of Barclays PLC followed up on the tightened credit loss guidance, asking about any leading indicators for potentially troubled tenants heading into 2026.

Answer

EVP & CFO Mike Mas explained the improved 2025 outlook was driven by increased clarity on bankruptcy outcomes, such as CVS assuming several Rite Aid leases, rather than a change in the forward-looking tenant environment. He stated that tenant health remains 'extraordinarily healthy,' with historically low past-due receivables. While bankruptcies are a normal part of the business, Regency has a strong track record of retaining stores or re-leasing them quickly at higher rents.

Rich Hightower of Barclays followed up on the tightened credit loss guidance, asking about any leading indicators of tenant trouble heading into 2026.

Answer

CFO Mike Moss explained the improved outlook was due to greater clarity on recent bankruptcies, such as CVS assuming some Rite Aid leases. He stated that there are no significant negative indicators for 2026, pointing to historically low accounts receivable and strong tenant health. While bankruptcies are a normal part of the business, Regency has a strong track record of managing these situations effectively.

Rich Hightower asked if anchor closures like Kroger's trigger co-tenancy issues in the portfolio and whether any incremental debt issuance is factored into the current financial guidance.

Answer

President Robert Myers explained that co-tenancy issues are not a significant concern in their grocery-anchored format, as it's more common in power centers. CFO John Caulfield stated that while no specific bond offering is planned, it remains a possibility to opportunistically manage their debt profile and maturity ladder.

Rich Hightower of Barclays questioned the value of a parent guarantee from a balance-sheet-constrained operator and asked what GLPI received in return for accommodating a tenant's request to move assets between credit groups.

Answer

President & COO Brandon Moore and Senior VP & Chief Development Officer Steven Ladany emphasized that they underwrite properties on a standalone four-wall coverage basis, making the parent guarantee a secondary, though important, support. The core focus is ensuring the asset itself is strong enough for any tenant to operate profitably. Chairman & CEO Peter Carlino added that accommodating the request strengthened their partnership with Bally's, positioning GLPI as a 'sensible friendly source of financing' for the future.

Rich Hightower of Barclays asked for details on the composition of the deal pipeline (e.g., expansions vs. sale-leasebacks) and questioned what GLPI's leverage would be after a hypothetical debt-financed exercise of the Lincoln Bally's option.

Answer

SVP & Chief Development Officer Steven Ladany clarified that his comments on increased counterparty interest were directed more at traditional sale-leaseback and M&A opportunities. Regarding leverage, CFO & Treasurer Desiree Burke stated that even after funding the Lincoln option with debt, leverage would remain well within their target, likely around 5.0x. SVP & CIO Matthew Demchyk added that the balance sheet is positioned to handle such commitments without straying from their leverage targets.

Richard Hightower from Barclays asked for guidance on modeling interest income for 2025, noting the company's lower cash balance and the cessation of interest accrual from a zero-coupon bond.

Answer

CFO Desiree Burke confirmed that interest income will be significantly lower in 2025 compared to 2024. She explained that the company's large cash balance will be substantially reduced by the $850 million bond repayment in March. The remaining interest income will be fluid, depending on free cash flow, the pace of development funding, and the timing of the forward share settlement. She also confirmed the zero-coupon bond was previously accruing to interest income.

Richard Hightower from Barclays asked for specifics on the types of higher-yielding opportunities the company has avoided and requested an update on the investment in the indoor farming company, Plenty.

Answer

CEO Sumit Roy explained that the company is cautious about discretionary sectors, assets with highly specialized use, and tenants with purely financial private equity sponsors. Regarding Plenty, he stated the company is restructuring to emerge stronger, the capital at risk is circa $40 million, and the site has alternative use potential as a distribution or data center.

Richard Hightower of Barclays asked about the drivers of recurring CapEx per home and how that metric influences disposition decisions. He also inquired if AMH acquires properties directly from other homebuilders.

Answer

COO Lincoln Palmer attributed the year-over-year CapEx increase to a low prior-year comp and incremental move-outs from the lease expiration initiative. CEO Bryan Smith confirmed that home age and expected CapEx are factors in disposition decisions. CFO Christopher Lau added that while AMH actively screens thousands of properties from national builders, over 80% fall outside their buy box, and yields are less attractive than their in-house development, underscoring the value of their development program.

Richard Hightower of Barclays asked about the key drivers for the moderation in property tax growth and the potential risks from state and municipal budget pressures. He also inquired about opportunities in non-rental revenue for the upcoming year.

Answer

CFO Chris Lau explained that property tax moderation was driven by better-than-expected final values from large states like Texas, Florida, and Georgia, bringing growth back to the long-term run rate of 4-5%. While monitoring budget pressures, he noted the value side is the larger driver. Regarding other income, Lau stated it had a modest 8-10 basis point contribution to same-store revenue in 2024 and expects similar modest growth in 2025, likely in line with overall rent growth.

Richard Hightower questioned the 55% resident retention assumption for 2025 and asked for an explanation on why controllable expenses are projected to grow faster than non-controllables.

Answer

CFO James Sebra clarified that 55% retention is a consistent annual target, with quarterly figures fluctuating around that level in 2024. He explained that the non-controllable expense growth rate is lower primarily because the guidance assumes a 0% increase in property taxes for 2025.

Richard Hightower inquired about the expected cadence of same-store rent growth through 2025 and the strategy for allocating capital to Europe, given the advantageous debt costs.

Answer

CFO ToniAnn Sanzone confirmed that same-store rent growth is expected to be highest in Q1 2025 in the low-to-mid 2% range, before moderating to the low 2s for the full year. CEO Jason Fox added that Europe remains a key market where WPC can generate wider investment spreads, noting that euro-denominated debt is currently about 150 basis points cheaper than U.S. debt, which accounts for any perceived incremental risk.