Ronald Kamdem

Ron Kamdem asked for context on National Storage Affiliates' dividend payout ratio for 2026, inquiring when the company anticipates fully covering its dividend. He also asked for more detail on the sequential improvement seen in all but one market, specifically how heavy supply markets compare to lower supply markets in terms of performance and inflection strength.

Answer

David Cramer, President and CEO, stated that the 2026 guidance implies the company will not fully cover its dividend this year, but with positive fundamental inflection, they expect to be covering 100% by Q4 2026 and in a much better position in 2027. Regarding market performance, Mr. Cramer explained that heavy supply markets like Phoenix, Atlanta, and Gulf Coast Florida are not inflecting positively and require time for absorption, with some still experiencing new construction. In contrast, lower supply markets such as Colorado Springs, Wichita, and Portland are showing solid sequential growth in rates, steady occupancies, and some pricing power, contributing to the overall positive inflection of the diversified portfolio.

Ron Kamdem asked for context on National Storage Affiliates' (NSA) dividend payout ratio for 2026 and when it is anticipated to return to full coverage. He also requested more detail on the performance of heavy supply markets versus lower supply markets, given that all but one market saw sequential improvement in Q4 2025.

Answer

President and CEO David Cramer stated that the 2026 guidance implies NSA will not fully cover its dividend, but noted that the company did cover the dividend in Q3 and Q4 2025. He anticipates covering 100% of the dividend by Q4 2026, with a much better position in 2027 if fundamentals continue to improve. Mr. Cramer explained that heavy supply markets like Phoenix and Atlanta are still struggling and will take time to absorb new product, while lower supply markets such as Colorado Springs, Wichita, and Portland are showing solid sequential growth in rates, steady occupancies, and some pricing power.

Ronald Kamdem of Morgan Stanley requested an update on the progress of closing the occupancy and rent gap from the PRO internalization and asked for an outlook on key expense line items like property taxes.

Answer

President & CEO David Cramer reported that while the occupancy gap has not yet been meaningfully closed, they are about 70% through the initial rate harmonization for the PRO portfolio. EVP & CFO Brandon Togashi clarified that underlying property tax growth is stable at 3-4%, marketing spend growth will moderate, and personnel cost growth will turn positive in the second half of the year.

Ronald Kamdem of Morgan Stanley asked about common themes in customer move-outs and how the company ensures its product remains affordable. He also requested clarification on how to interpret the year-over-year change in in-place customer rent disclosed in the new Schedule 7.

Answer

CEO Dave Cramer stated there has been no change in move-out behavior, with bad debt in check and payment activity as expected, suggesting no broad affordability issues. Regarding the in-place rent metric, Cramer explained that its growth is driven by both the strength of the ECRI program on existing tenants and the improved rates on new move-ins, which are cycling into the in-place customer base.

Ronald Kamdem of Morgan Stanley asked about common themes in move-outs, how management assesses customer affordability, and how to interpret the year-over-year change in the newly disclosed in-place customer rent.

Answer

CEO Dave Cramer responded that there have been no changes in move-out behavior, with bad debt in check and no signs of affordability issues. He explained that the improvement in in-place rent is driven by both higher move-in rates for new customers and the continued success and strength of the Existing Customer Rate Increase (ECRI) program.

Ronald Kamdem asked for confirmation of the guidance assumptions, particularly the 250 basis point peak-to-trough occupancy gain, and what makes 2025 different from 2024. He also requested details on property tax and insurance expense assumptions.

Answer

CEO Dave Cramer confirmed the occupancy assumption, attributing the expected improvement in 2025 to a more stable operating environment and a stronger focus on execution without the distractions of the 2024 PRO transition. CFO Brandon Togashi provided expense details, guiding to property taxes in the 3-4% range, insurance in the low single-digits, and marketing as the line item with growth above the overall OpEx range.

Ronald Kamdem asked to clarify if rate cuts are being made into a stabilizing demand environment by inquiring about top-of-funnel trends, and asked about any notable expense items beyond taxes and insurance.

Answer

CEO Dave Cramer characterized top-of-funnel demand as 'stabilizing,' with web traffic stable but an encouraging increase in customers renting due to moving. The strategy is to improve conversion of this stable demand. CFO Brandon Togashi added that besides a tougher Q4 property tax comp, personnel costs are expected to rise from a Q3 low caused by turnover during the PRO transition.

Ronald Kamdem sought clarification on the 2026 occupancy guidance of 80%-82%, asking if it's comparable to the reported 76.3% and about the trajectory, noting it's second-half weighted. He also asked for details on the same-store cash NOI, specifically why it's projected to be negative despite rising occupancy, and requested an update on Washington 1000 leasing.

Answer

Ken Young, SVP of Leasing, confirmed the occupancy guidance is comparable to the 76.3% reported and is back-weighted, with the fourth quarter being the strongest. Harout Diramerian, CFO, explained that the negative same-store cash NOI reflects a drag from the Square lease in Q1 2025 and free rent in some 2026 leases, but anticipates positive same-store cash NOI starting Q2. Victor Coleman, CEO and Chairman, and Art Suazo, EVP of Leasing, updated on Washington 1000, noting increased activity for large blocks (over 100,000 sq ft) and ready-built spaces (8,000-50,000 sq ft), with Bellevue's tightening and Puget Sound's positive absorption driving demand.

Ronald Kamdem asked for clarification on the 80%-82% average in-service office occupancy guidance for 2026, specifically if it's comparable to the 76.3% reported and its trajectory. He also questioned why same-store cash NOI growth is projected to be negative despite anticipated occupancy gains, and requested an update on leasing activity at Washington One Thousand.

Answer

SVP of Leasing Ken Young confirmed the 80%-82% guidance is comparable to the 76.3% reported, with occupancy growth back-weighted to the fourth quarter. Ken Young explained that negative same-store cash NOI in Q1 is due to a drag from the Square lease and free rent in some 2026 leases, but expects positive growth from Q2 onwards. CEO Victor Coleman and EVP of Leasing Art Suazo reported increased activity at Washington One Thousand, with discussions on large requirements (100,000+ sq ft) and strong interest in pre-built spec floors from mid-sized tenants, noting that its contribution to 2026 leasing is small.

Ronald Kamdem of Morgan Stanley requested more commentary on market activity and differentiation for the Washington 1000 project and asked for a high-level outlook on same-store NOI growth into 2026 and 2027.

Answer

EVP of Leasing Arthur Suazo described Washington 1000 as a 'one of one' asset for large, new construction and noted they are in discussions with several large tenants. President Mark Lammas explained that as occupancy recovers, GAAP same-store NOI should improve first, followed by cash NOI, as they believe occupancy has bottomed.

Ronald Kamdem of Morgan Stanley asked for an update on how the company's debt covenants are expected to trend throughout the year based on current projections. He also requested more detail on the expected trajectory of office portfolio occupancy during 2025.

Answer

CFO Harout Diramerian stated that based on granular projections, the company expects to remain compliant with its covenants, noting they have consistently exceeded internal expectations in recent quarters. President Mark Lammas added that office occupancy is expected to dip in the first half of 2025 due to weighted expirations but should stabilize and begin to grow in the second half of the year and beyond.

Ronald Kamdem inquired about the cause of the decline in the office NOI margin during the quarter and whether more pressure is expected. He also asked for an update on Hudson Pacific's remaining leases with Amazon and how that space is being utilized.

Answer

CFO Harout Diramerian attributed the margin pressure to a specific tenant moving out mid-quarter. CEO and Chairman Victor Coleman stated they are in active conversations with Amazon regarding both their existing leases and potential future growth within the Pacific Northwest portfolio, expressing confidence in the relationship despite a recent lease termination that was not unexpected.

Ronald Kamdem inquired about FrontView REIT's acquisition pipeline, specifically regarding off-market deals, special situations, and the potential size of the pipeline given improved cost of capital. He also asked if the 50 basis points bad debt expectation for 2026 is a sustainable run rate.

Answer

Stephen Preston, Chairman & CEO, discussed the fluid acquisition market, expecting Q1 cap rates around 7.5%, and highlighted competitive advantages in special situations. Pierre Revol, CFO, added that they target fragmented markets where problem-solving is key. Stephen Preston, Chairman & CEO, confirmed 50 bps bad debt as a good run rate, in line with historical performance, and noted a minimal watch list, proactively addressing concerns about specific tenants like Wendy's and Advance Auto.

Ronald Kamdem asked about the acquisition pipeline, including the prevalence of off-market or special situations, the potential size of the pipeline, and the expectation for bad debt in 2026 given asset management activities.

Answer

Stephen Preston (Chairman and CEO) described a fluid market with Q1 cap rates around 7.5%, noting increased institutional interest and easier leverage for other buyers. He emphasized FrontView's competitive advantages in fragmented markets, such as quick closing and problem-solving. He confirmed the 50 basis points bad debt expectation for 2026 is in line with historical performance, citing minimal watch list additions and proactive management of tenants like Wendy's and Advance Auto.

Ronald Kamdem requested more detail on the projected 7.5% acquisition cap rate, asking if it reflected compression or mix, and sought to quantify the size of the acquisition pipeline. He also asked about long-term bad debt expectations.

Answer

CEO Steve Preston explained the 7.5% cap rate reflects a fluid market with some compression but affirmed the pipeline is robust enough to meet prior, higher guidance if capital costs improve. He projected long-term bad debt would be negligible, around 25-50 basis points, in line with historical performance now that the recent tenant issues are resolved.

Ronald Kamdem asked about tenant health, the reason for the quarterly occupancy decline, and how the 2025 bad debt guidance compares to historical norms. He also followed up on the number of vacant properties and the company's confidence in resolving them by year-end.

Answer

Executive Timothy Dieffenbacher explained that the 2025 bad debt guidance of 2-3% is higher than the historical 1-2% range, primarily due to the specific watch list tenants, and expects a return to normalcy post-2025. Chairman and Co-CEO Stephen Preston added that they are confident in the year-end timeline for resolutions because most current negotiations are for asset sales, which typically close faster than new leases.

Ronald Kamdem asked if the Q4 AFFO guidance of $0.33 per share is a clean run-rate for 2025 and inquired about the company's historical bad debt experience relative to the current watch list.

Answer

Executive Timothy Dieffenbacher advised that Q4 AFFO is not a simple run-rate due to the upcoming replacement of low-cost ABS debt with a higher-rate term loan, which will create a drag on Q1 2025 AFFO. Regarding bad debt, Dieffenbacher noted the full-year run rate is about 91 basis points of cash NOI, in line with the historical 1% target. Co-CEO Stephen Preston added that historically, the company has successfully created net value from re-leasing returned assets.

Ronald Kamdem inquired about the conviction behind Lineage's same-store NOI guidance for 2026, particularly the expected improvement from a Q4 2025 decline of 5%, and sought clarification on how different supply cycle markets contribute to this outlook.

Answer

Robb LeMasters, Chief Financial Officer, explained that the guidance factors in a minor headwind from lower occupancy entering 2026, a slight drag on revenue per pallet due to mix and import/export despite 1-2% net pricing, and efforts to maintain NOI margin against inflation. Greg Lehmkuhl, President and CEO, added that initiatives outlined position the company for improvement throughout the year.

Ronald Kamdem asked about the conviction behind Lineage's same-store NOI guidance for 2026, particularly how it will improve from the Q4 decline, and the expected NOI performance across different supply cycle markets.

Answer

Robb LeMasters, Chief Financial Officer, explained that while Lineage enters 2026 with slightly lower occupancy and faces headwinds from mix and import/export volumes, net pricing is expected to increase by 1-2%. He noted minor pressure on NOI margin due to inflation, offset by productivity efforts, and anticipates a pattern of improvement throughout the year, starting at the lower end of the guidance range. Greg Lehmkuhl, President and CEO, had previously discussed market stabilization.

Ronald Kamdem of Morgan Stanley asked for commentary on the deceleration in same-store throughput and for updated thoughts on the industry's supply pipeline.

Answer

President & CEO Greg Lehmkuhl noted that while same-store throughput was down 3% year-over-year against tough comps, it was up 1% sequentially. Regarding supply, he cited data indicating that new openings peaked in 2023 and will remain elevated in 2025, but announcements for 2026 deliveries show a significant decrease to approximately 1% of existing capacity.

Ronald Kamdem asked about the expected cadence for same-store NOI growth, given the outlook for Q2 to be similar to Q1's decline, and what is assumed for the second-half recovery. He also asked about tenant inventory sentiment post-tariffs.

Answer

CFO Rob Crisci confirmed they are confident in second-half growth driven by easier comps and seasonality but are not providing a specific range due to macro uncertainty. CEO W. Lehmkuhl added that tenants are in a 'wait and see' mode regarding inventory levels and noted that the seafood business, a focus last year, has now stabilized at normal consumption levels.

Ronald Kamdem asked for a breakdown of the drivers behind the same-store NOI guidance and for more details on the $1.5 billion capital deployment pipeline.

Answer

CEO W. Lehmkuhl stated that pricing is expected to be at inflationary levels, complemented by ongoing productivity and energy efficiencies. CFO Robert Crisci clarified that the $1.5 billion represents deployment capacity funded by cash and debt, not a committed amount. He added that the pipeline includes both M&A and development opportunities, and the company is now positioned to accelerate growth post-IPO.

Ronald Kamdem asked if Europe versus the U.S. remains the most compelling region for incremental investments and where capital is best deployed across geographies and capital structures. He also inquired about the evolution of opportunities in gaming, data centers, and retail parks, and if any are performing better than others.

Answer

Sumit Roy, President and CEO, noted a shift in Q4 with 60% US volume, but Europe continues to offer strong visibility and disproportionate volume due to Realty Income's differentiators. He expects momentum in all geographies (US, Europe, Mexico) in 2026, with the addition of new geographies naturally increasing the total addressable market. Regarding specific sectors, Sumit Roy stated that gaming investments have been "super selective" in best assets and are performing well (e.g., Boston asset coverage up 100 bps). The retail park strategy is "bearing fruit" with strong re-leasing spreads and strategic client conversations. Data center investments are selective, partnering with best-in-class developers, and focused on long-term fundamentals, with a desire to accelerate but not at the expense of risk. All three are core to the strategy.

Ronald Kamdem asked if Europe or the U.S. offers more compelling incremental investment opportunities, and where incremental dollars are best spent across geographies and capital structures. He also inquired about the evolution of specific initiatives like gaming, data centers, and retail parks.

Answer

President and CEO Sumit Roy noted a shift in Q4 2025, with 60% US-centric volume, reversing prior trends where Europe dominated, but emphasized strong momentum across all active geographies (US, Europe, Mexico). He confirmed that selective gaming investments (e.g., the Boston asset) are performing well, the retail park strategy is 'bearing fruit' with strong re-leasing spreads, and data center investments are progressing selectively with best-in-class partners, all remaining core to the strategy.

Ronald Kamdem from Morgan Stanley asked about the impact of potential tariffs on tenant health and sought context for the significant investment skew towards Europe over the U.S. market.

Answer

CEO Sumit Roy stated that the 4.6% credit watch list already incorporates potential tariff impacts and that the portfolio has minimal exposure to the most susceptible industries. He attributed the European focus to superior risk-adjusted returns, driven by less competition and a significant cost of debt advantage, with euro borrowing costs being substantially lower than U.S. dollar debt.

Ronald Kamdem of Morgan Stanley asked for commentary on cap rate trends and inquired about the strategy to increase the portfolio's overall rent escalators.

Answer

CEO Sumit Roy stated that Q1 cap rates were just over 7% and expects them to remain in that range due to market uncertainty. He outlined a twofold strategy for increasing rent growth: targeting asset types like industrial and data centers with higher organic escalators, and acquiring assets in Europe with below-market rents to capture significant mark-to-market upside upon renewal.

Ronald Kamdem of Morgan Stanley asked about the presence of large-scale deals in the pipeline, activity in the data center and gaming verticals, and sought clarification on the bad debt guidance.

Answer

CEO Sumit Roy confirmed no very large ($500M+) deals were in the current pipeline. He described gaming as episodic and data centers as a space requiring deliberate partner selection. CFO Jonathan Pong clarified the bad debt guidance includes conservatism and that a Q4 straight-line rent write-down was tied to the same few tenants driving the reserve.

Ronald Kamdem of Morgan Stanley asked if the private fund would have a different dividend policy or geographic scope and whether its investor base would overlap with the public REIT's. He also requested an update on the company's data center initiatives.

Answer

CEO Sumit Roy stated the fund's strategy will align with the public company's, as Realty Income will be a massive co-investor. He believes the fund will primarily attract institutional investors who lack the mandate for public securities but want to access Realty Income's platform. On data centers, Roy confirmed seeing immense demand and is optimistic about crafting a compelling value proposition for operators, viewing it as a core business of allocating capital to high-credit tenants on long-term leases.

Ronald Kamdem asked about Extra Space Storage's operating platform philosophy regarding having people at stores, the potential for long-term replacement of store managers, and other changes to re-accelerate growth. He also followed up on the lower operating expense guidance, asking for details on marketing spend and other line items contributing to the forecast.

Answer

Joe Margolis, CEO, emphasized that the company's philosophy is to allow customers to choose how to interact (online, call center, in-store), noting that 31% of leases are from walk-ins and many online/call center reservations require an in-store visit. Store managers are crucial for sales, asset care, and security. While efficiencies are sought to reduce hours, eliminating managers is not foreseen as long as customers demand in-person interaction. Jeff Norman, CFO, reiterated property taxes and insurance as primary drivers for the expense guidance. Marketing is a variable expense and revenue driver, adjusted based on returns, while other line items are generally inflationary.

Ronald Kamdem asked about Extra Space Storage's operating platform philosophy regarding having people at stores, the long-term potential to replace staff, and any big changes planned to re-accelerate growth. He also followed up on the lower-than-anticipated operating expense guidance, specifically asking about marketing spend and other contributing line items.

Answer

CEO Joe Margolis emphasized customer choice, noting that 31% of leases come from in-store interactions, and many online/call center reservations require a store visit. He highlighted store managers' importance for sales, asset care, and security, contributing to higher occupancy and rents. While seeking efficiencies to reduce hours, he does not foresee eliminating store managers. CFO Jeff Norman reiterated property taxes and insurance as primary expense drivers, with marketing spend being a variable revenue driver that can be adjusted based on returns, and other expenses generally inflationary.

Ronald Kamdem from Morgan Stanley asked if the increased discounting implied less efficient marketing spend and inquired about opportunities for further expense savings beyond property taxes in the coming years.

Answer

CEO Joseph Margolis affirmed that marketing spend ROI had not declined, viewing it as an investment. CFO Jeff Norman explained that property taxes normalized in Q3 2025 after outsized increases in the first half, particularly from legacy Life Storage properties. He also noted that payroll and benefits growth was closer to 3% year-to-date, aligning with expectations, and that R&M and marketing are viewed as long-term investments.

Ronald Kamdem from Morgan Stanley questioned if increased discounting implied less efficient marketing spend, asking about changes in online marketing ROI. He also asked about opportunities for expense savings beyond property taxes, given the year-to-date outsized expense growth.

Answer

CEO Joseph Margolis affirmed no decline in marketing ROI, viewing it as an investment with a required return. CFO Jeff Norman clarified that property taxes normalized in Q3 after a first-half spike from legacy Life Storage properties, and payroll/benefits were normalizing. He reiterated that R&M and marketing are strategic investments for long-term revenue.

Ronald Kamdem asked for more detail on the high property tax expenses and their future outlook. He also requested context on why same-store revenue was lighter than expected and what that implies for customer health.

Answer

EVP & CFO Jeff Norman explained that they have now lapped the high property tax comps from legacy Life Storage properties and expect normalization in the second half. He stated that lighter revenue was offset by stronger ancillary income. CEO Joseph Margolis added that demand appears steady and the market is incrementally improving.

Ronald Kamdem from Morgan Stanley inquired about the expense outlook for the remainder of the year, particularly regarding property taxes. He also asked if any macro factors, such as tariffs, were beginning to impact customer behavior or bad debt.

Answer

CFO P. Scott Stubbs identified property taxes and casualty insurance as primary pressure points, noting the Q1 tax increase was partly due to a tough prior-year comparison. CEO Joseph Margolis stated there has been no discernible impact on customer behavior, demand, or delinquency to date. He added that while the future effects of tariffs are unknown, they could potentially reduce new supply by increasing construction costs.

Ronald Kamdem sought more detail on the unexpected increase in property tax expenses during the quarter and asked about the outlook for property insurance. He also inquired about potential near-term opportunities in artificial intelligence (AI).

Answer

Executive P. Stubbs explained that Q4 property taxes were driven by aggressive reassessments in Georgia, Illinois, and Indiana, and the 2025 budget assumes a 6-8% increase. He also noted a budgeted ~20% increase for property insurance. CEO Joseph Margolis commented on AI, stating the company is taking a cautious approach, particularly with customer-facing applications, while exploring internal uses for data analytics.

An analyst on behalf of Ronald Kamdem of Morgan Stanley asked about the magnitude and consistency of Existing Customer Rate Increases (ECRIs) across the LSI and EXR pools and whether the company continues to prioritize occupancy over pricing.

Answer

CEO Joseph Margolis confirmed that both portfolios are now on the same ECRI program, with no difference in pace or amount. He reiterated that the primary goal is maximizing long-term revenue, and while current data supports leaning into occupancy, this strategy is dynamic and subject to change based on performance.

Ronald Kamdem asked for an update on the Bally's Chicago development project, including milestones and remaining funding, and inquired about the broader pipeline, specifically the resolution of lender consent for the Lincoln acquisition and general tribal/non-tribal opportunities.

Answer

Steven Ladany, Senior Vice President and Chief Development Officer, reported that the Chicago project is over 20% complete, with the hotel tower on level 21 and curtain wall glass starting. Carlo Santarelli, Senior Vice President, Corporate Strategy and Investor Relations, confirmed the first half 2027 opening timeline. Steven Ladany also noted that Ares' refinancing resolved the Lincoln lender consent issue. Desiree Burke, Chief Financial Officer and Treasurer, highlighted the $1.9 billion remaining pipeline, with $575 million to $650 million in development funding anticipated for 2026, including the Aurora project.

Ronald Kamdem asked for an update on the Bally's Chicago development project, including milestones and funding, and inquired about the broader pipeline, specifically the resolution of lender consent for the Lincoln acquisition and general tribal/non-tribal opportunities.

Answer

Steven Ladany, Senior Vice President and Chief Development Officer, provided details on Bally's Chicago construction progress, noting it's over 20% complete and on schedule for a first-half 2027 opening. Carlo Santarelli, Senior Vice President, Corporate Strategy and Investor Relations, confirmed the development timeline aligns with GLPI's internal expectations. Regarding the pipeline, Mr. Ladany explained that Ares' refinancing resolved the lender consent for Lincoln. Desiree Burke, Chief Financial Officer and Treasurer, highlighted the $2.6 billion pipeline, with $700 million completed and $575 million-$650 million in development funding anticipated for 2026.

Ronald Kamdem from Morgan Stanley asked for clarification on the reduction in the 2025 development funding guidance to $375 million and inquired about the latest gaming trends in the Chicago area and regional markets overall.

Answer

CFO & Treasurer Desiree Burke explained the reduction in development funding guidance was purely due to the timing of projects being pushed out, a point CEO Peter Carlino reiterated as a 'guesstimate'. SVP & Chief Development Officer Steven Ladany commented on regional gaming, noting consistent trends with a resilient customer base, similar to what other operators have reported, while acknowledging the recent market share impact of Wind Creek's opening in the Chicago area.

Ronald Kamdem of Morgan Stanley asked for an update on the M&A pipeline and the status of conversations, considering recent rate volatility. He also requested more detail on the interest cost and NOI growth assumptions within the 2025 guidance.

Answer

SVP & Chief Development Officer Steven Ladany explained that while large-scale M&A is quiet due to rates, the broader market is active across various deal types, including domestic sale-leasebacks, development, tribal, and international opportunities. He noted major operators are currently focused on redeveloping their own properties. CFO Desiree Burke detailed that interest costs are based on fixed-rate bonds and variable-rate debt using the SOFR forward curve plus a 1.3% spread.

Speaking on behalf of Ronald Kamdem from Morgan Stanley, an analyst asked about GLPI's pipeline for other initiatives, such as non-gaming deals, and requested more specific details on the funding schedule for Bally's Chicago in 2025.

Answer

CEO Peter Carlino stated that the company is not actively pursuing opportunities outside of gaming, having found no other sector as 'stable, dependable and rock solid.' He affirmed their focus remains on sourcing transactions within their core competency. CFO Desiree Burke reiterated that the funding timeline for Chicago in 2025 is still being finalized and will be released with full-year 2025 guidance.

Ronald Kamdem (Morgan Stanley) asked about the timeline for Project Triboro to secure a tenant, specifically what milestones are needed before a tenant commits. He also inquired about Broadstone Net Lease's capital recycling strategy, asking if the company plans to increase non-core sales and about current cap rate and return trends for both acquisitions and build-to-suit projects.

Answer

President and COO Ryan Albano stated that key milestones for Project Triboro include zoning (expected near-term), power infrastructure progress, and ongoing site work, with the company expecting to be actively in the market for tenants in the first half of the year. CFO Kevin Fennell and CEO John Moragne explained that non-core sales are opportunistic, with a wide spectrum of assets, aiming for accretive trades. They noted build-to-suit cap rates remain strong (mid-7s to high-6s cash yield), while traditional acquisition cap rates, especially for larger industrial portfolios, have seen some compression due to high demand.

Ronald Kamdem asked about the timeline for Project Triborough to secure a tenant, what additional steps are needed, and when a tenant might commit. He also inquired about Broadstone Net Lease's capital recycling strategy, specifically if they plan to increase non-core sales, and asked about cap rate and return trends for both acquisitions and build-to-suit projects.

Answer

President and COO Ryan Albano stated that key focal points for Project Triborough are zoning (near term), ongoing power discussions, and site work commenced in Q4. He expects to be officially in the market for tenant/leasing in the first half of the year, noting that hyperscalers are already showing interest. CFO Kevin Fennell explained that capital recycling is opportunistic, with a wide spectrum of assets available, aiming for accretive trades. CEO John Moragne added that build-to-suit cap rates remain attractive (mid-7s to high-6s cash yield), while compression has been observed in larger portfolio deals and regular acquisitions due to significant demand and dry powder.

Ronald Kamdem asked for more detail on the Prologis relationship's potential scale and value proposition, and inquired about recent price changes in construction commodities.

Answer

CEO John Moragne reiterated that the Prologis relationship is expected to be a source of repeat business, with deals likely being larger than average. He explained BNL acts as the long-term owner for Prologis's fee-focused 'customer-led' development team. While acknowledging price volatility in materials like steel, he stated BNL mitigates this risk through budget contingencies, fixed-price contracts, and change order processes.

Ronald Kamdem sought more color on the nature and potential scale of the Prologis relationship and asked for an update on any recent pricing changes for construction commodities like steel.

Answer

CEO John Moragne reiterated the hope for a recurring, multi-deal relationship with Prologis, driven by BNL's role as a long-term capital partner for their customer-led development projects. He acknowledged price volatility in construction inputs but stated that BNL mitigates these risks through structural protections like budget contingencies, GMP contracts, and change order processes.

Ronald Kamdem asked if the economics of the potential $500 million in new build-to-suit projects would be similar to the current pipeline. He also inquired about the disposition strategy for the 'other assets' category, which includes office and healthcare properties.

Answer

CEO John Moragne confirmed the target economics for the new build-to-suit pipeline are consistent with current projects: mid-7% cash yields, mid-to-high 8% straight-line yields, and 2.5%-3.5% rent bumps, primarily in industrial. For 'other' assets, he stated that office properties will likely be held to term, while some clinical assets will be sold in 2025-2026. However, he emphasized they will not sell any asset below its perceived value and will hold properties long-term if necessary to preserve value.

Ronald Kamdem asked if the economics of the new $500 million build-to-suit goal—including yields, rent escalators, and property type—are consistent with the currently committed pipeline. He also inquired if the market for BNL's non-core 'other' assets, like office and healthcare, is becoming more attractive for dispositions.

Answer

CEO John Moragne confirmed the target economics for the new build-to-suit pipeline are consistent with current projects: primarily industrial assets with mid-7% cash yields and mid-to-high 8% straight-line yields. Regarding non-core assets, he stated that office properties will likely be held to term, while some clinical assets will be sold and others retained long-term if target pricing cannot be achieved.

Speaking on behalf of Ronald Kamdem from Morgan Stanley, an analyst asked if BNL is open to build-to-suit opportunities with new tenants, how development risk is mitigated, and for an update on the Green Valley Medical Center.

Answer

CEO John Moragne confirmed BNL is open to build-to-suits with both new and existing tenants, from large to small scale. He explained that risk is mitigated by avoiding speculative projects and structuring deals to protect BNL from traditional development risks. Regarding Green Valley, he stated it is a vacant property expected to be sold soon.

Speaking on behalf of Ronald Kamdem, an analyst asked if BNL is open to build-to-suit projects with new tenants and how it mitigates development risk for investors. A second question concerned the status of the Green Valley Medical Center property.

Answer

CEO John Moragne confirmed BNL is open to build-to-suits with new tenants and manages risk by ensuring every project has an identified tenant and structuring deals to be the 'pocket of last resort' for overruns. He clarified that Green Valley Medical Center is a vacant property with no rent contribution, and the company expects a sale resolution soon.

Ronald Kamdem asked about how Cushman & Wakefield considers the risks of AI across different property types like office, industrial, and retail, and how this influences their positioning.

Answer

CEO Michelle MacKay referred to an upcoming webcast where their research on AI's impact across various sectors and asset classes (GDP, employment, demand, vacancy, rent, values) would be presented, including a first look at their new AI Impact Barometer.

Ronald Kamdem inquired about how Cushman & Wakefield assesses AI risks across different property types like office, industrial, and retail, and if this influences their positioning.

Answer

CEO Michelle MacKay referred to an upcoming webcast where the company's researchers will present findings on AI's impact across various sectors, including a new 'AI Impact Barometer' to help clients make long-term real estate decisions. CFO Neil Johnston later addressed a follow-up on guidance, confirming 2026 service line growth trends are expected to be similar to 2025, with strong leasing performance and no specific full-year margin guidance.

Ronald Kamdem of Morgan Stanley requested an update on the margin outlook, considering reinvestments, and asked about capital markets trends in July and the potential impact of tariffs.

Answer

CEO Michelle MacKay stated that tariffs have created volatility but have not yet disrupted capital markets flow, which remained compelling in July. CFO Neil Johnston noted that while H2 margins will be slightly below H1 due to increased investment, they still expect full-year margin expansion, reflecting strong operational performance.

Ronald Kamdem of Morgan Stanley inquired about the drivers behind the unexpected Q1 margin improvement and the impact of recent tariff uncertainty on the business environment and client decision-making.

Answer

CFO Neil Johnston attributed the margin beat to stronger-than-expected leasing and services revenue, with some expense timing benefits expected to reverse. CEO Michelle MacKay added that tariff talks have not materially affected client behavior, with the vast majority proceeding with decisions, supporting the full-year outlook.

Ronald Kamdem sought more detail on the drivers behind the 20% Q4 Capital Markets growth forecast and asked for high-level commentary on the margin implications of a recovery in brokerage and services.

Answer

CFO Neil Johnston attributed the Capital Markets forecast to strong pipeline visibility and early momentum. CEO Michelle MacKay added that it's part of a long, multiyear recovery. Regarding margins, Johnston explained that while brokerage recovery brings strong incrementals, they will be partially reinvested for growth, with a focus on defending margins while positioning for the long cycle.

Ronald Kamdem asked for more detail on the go-forward portfolio NOI growth of 1.7% year-over-year, excluding lease termination income, inquiring about the magnitude of impact from closures and proactive space conversions. He also asked if any other pieces of the plan, beyond leasing, were contributing to the mid-year inflection point.

Answer

Dan Swanstrom, Senior EVP and CFO, explained that excluding Forever 21's impact, the go-forward portfolio NOI growth would have been 2.7% for Q4 2025 and 2.5% for the full year. He reiterated the Path Forward Plan's midpoint CAGR of 5.2% for 2025-2028, implying significant future growth, with 2026 expected to be at least 3% (back-end weighted). Jackson Hsieh, President and CEO, stated that the organization is operating as business as usual, with the new acquisition lead creating new activity, and the inflection point is primarily tied to the ongoing leasing initiative.

Ronald Kamdem asked about the impact of tenant closures and proactive space take-backs on the go-forward portfolio's NOI growth, and if any other organizational pieces are contributing to the mid-year inflection point.

Answer

Dan Swanstrom, Senior EVP and CFO, explained that 2025 was transitional, noting that excluding Forever 21's impact, Q4 NOI growth would have been 2.7%. He reiterated the Path Forward Plan's 5.2% CAGR for 2025-2028, implying significant future growth. Jackson Hsieh, President and CEO, stated it's 'business as usual' with the new acquisition lead, focusing on executing the leasing initiative.

Asked about near-term headwinds for NOI growth, the expected normalized growth rate for the core portfolio, and the specifics of the CapEx plan for Crabtree mall.

Answer

Near-term NOI growth is impacted by Forever 21 closures and other repositioning efforts. The company reiterated a four-year NOI CAGR target of 5.2% for the go-forward portfolio, with growth accelerating significantly after 2026. The Crabtree CapEx is for cosmetic upgrades, common area reimagining, and tenant build-outs, while major flooding issues were already being addressed by the prior owner.

Ronald Kamdem of Morgan Stanley requested an update on the same-store NOI outlook, given that the company is running ahead of its plan, and asked about long-term occupancy targets for 2027-2028.

Answer

Jackson Hsieh, President and CEO, updated his outlook for the go-forward portfolio, stating an expectation for same-store NOI growth of 3% to 4% in 2026, with significantly higher growth in 2027 and 2028. He projected reaching close to 89% physical permanent occupancy, plus the impact of 26 new anchor locations.

Ronald Kamdem asked Public Storage if the anticipated re-acceleration of organic growth under the PS Next platform would require a large new capital or reinvestment plan, or if it could be achieved with the existing platform and systems. He also inquired about top-of-funnel demand indicators.

Answer

Tom Boyle, CFO and CIO, explained that PS Next represents continuous evolution, building on past digital and operational transformations. Future investments will focus on AI-infused experiences for customers and teams, across technology platforms and personnel, with strong expected returns. He noted that top-of-funnel activity has been consistent at the start of the year, with good trends in move-in demand and existing customer performance, despite unique weather patterns.

Ronald Kamdem asked if Public Storage's re-acceleration of organic growth, particularly with the PS Next platform, would require a large new capital plan or if it could be achieved with the existing platform. He also inquired about top-of-funnel demand indicators and their correlation with slow housing activity.

Answer

Tom Boyle, CFO and CIO, explained that PS Next represents a continuous evolution from traditional operations to an omni-channel, digital-first, and now AI-infused customer experience. Investments will be made in team and technology platforms, with strong expected returns. Regarding demand, Boyle noted consistent top-of-funnel activity, with January and early February showing unique weather-related fluctuations but overall good trends in move-in demand and existing customer performance. Move-in rents were trending better in January, and move-outs were down, demonstrating the strength of the storage consumer.

Ronald Kamdem requested an update on top-of-funnel demand indicators like Google Trends for April and asked about performance trends across different customer types and regions, particularly in light of recent tariff news.

Answer

H. Boyle noted that top-of-funnel indicators like web visits and search trends remained positive in April, bouncing off 2024 lows. Joseph Russell stated there has been no significant change in customer behavior due to recent macro events and highlighted returning demand in markets like Florida, expressing encouragement at the lack of disruption.

Ronald Kamdem inquired about low-hanging fruit for applying AI to improve efficiency beyond the mobile app and asked if the completed property enhancement spending was cyclical and if energy efficiency spending would also eventually conclude.

Answer

Executive Joseph Russell explained that AI is being cautiously integrated into customer care, website interactions, and other digital tools to enhance efficiency and customer satisfaction. He clarified that the 'Property of Tomorrow' branding program was a 20-year cycle, not a recurring event, but investments in energy efficiency like solar and lighting are ongoing, evaluated on a case-by-case basis for their returns.

Ronald Kamdem asked for additional data points, like website traffic, to confirm the stabilization trend. He also inquired about the 75% e-rental adoption rate, asking if there is further room for growth and associated cost savings.

Answer

Executive H. Boyle confirmed that web visits are in positive territory year-over-year with strong conversion rates, supporting the stabilization narrative. He expressed optimism that the 75% e-rental adoption will continue to grow, leading to more optimization opportunities. CEO Joseph Russell added that the 2 million PS App users also represent a key part of their enhanced digital customer engagement strategy.

Ronald Kamdem asked about the challenges and "sticking points" Safehold faces in expanding its affordable housing origination activity beyond California to other states, inquiring if these relate to finding partners, regulatory hurdles, or jurisdictional differences. He also sought an update on the timing for a resolution regarding the Park Hotels situation.

Answer

Executive Vice President, Head of Investments Steve Wylder acknowledged that affordable housing volume has been concentrated in California, the largest market. He stated that Safehold is actively studying state-specific mechanics and regulatory regimes in other states, making good progress, with several transactions under LOI expected to translate into closings in coming quarters. Chairman and CEO Jay Sugarman confirmed a court date in Q1 2027 for the Park Hotels litigation, noting the unfortunate delay and anticipated multi-million dollar cost, but expressing a clear timeframe to pursue contractual rights.

Ronald Kamdem asked about the challenges and frictions in expanding affordable housing origination beyond California and sought an update on the timing and resolution of the Park Hotels litigation.

Answer

EVP, Head of Investments Steve Wylder explained that while California is the largest affordable market, Safehold is actively studying state-specific mechanics and regulatory regimes in other states, with several transactions under LOI expected to close in coming quarters. Chairman and CEO Jay Sugarman provided an update on the Park Hotels litigation, stating a court date is set for Q1 2027, acknowledging the unfortunate delay and associated costs but providing a target for resolution.

Ronald Kamdem asked about the potential for repeat business from the four new sponsors, sought more detail on the quarter's hotel deal, and inquired about the economic yields on both ground leases and the new leasehold loans.

Answer

Chief Investment Officer Tim Doherty stated they see future potential with the new sponsors and are already in talks with one for another deal. He explained that the hospitality and office sectors are seeing more activity as capital markets free up. CEO Jay Sugarman added that ground lease yields are targeted at a spread over benchmarks, while leasehold loan returns are based on SOFR plus a spread, making them a tool for acceleration rather than a core business.

Ronald Kamdem of Morgan Stanley inquired about the specifics of Safehold's non-binding LOI pipeline, including sponsor types, markets, and closing expectations, and also asked about the strategic benefits and capacity for making leasehold loans.

Answer

Chief Investment Officer Timothy Doherty detailed the pipeline's diversity, noting it's majority multifamily across the West Coast, Southeast, Northeast, and Midwest, with many new clients. Chairman and CEO Jay Sugarman added that leasehold loans are a useful, selective tool to provide certainty and kickstart deals in volatile markets, emphasizing they will be kept to a small percentage of the balance sheet.

Ronald Kamdem asked for an update on Safehold's investment pipeline, particularly regarding the affordable housing sector and any signs of activity in other property verticals. He also inquired about the new share buyback program, including its potential pace and funding sources to maintain leverage neutrality.

Answer

Chief Investment Officer Timothy Doherty confirmed strong activity in affordable housing carrying into 2025 and noted momentum in market-rate multifamily in supply-constrained markets, as well as early positive signs in office and hospitality. Chairman and CEO Jay Sugarman explained that the buyback is a response to a materially undervalued stock and would be funded through capital recycling from asset sales or JVs, and potentially by unlocking value from Caret, all while remaining leverage-neutral.

Ronald Kamdem asked about the composition of new originations, noting the focus on multifamily, and inquired if there were plans to expand into other property types like office or hospitality, given recent market data.

Answer

Chief Investment Officer Timothy Doherty responded that the investment pipeline includes all major property types. He noted that while multifamily was the first sector to recover, capital is now increasingly flowing into hospitality and office. Improving fundamentals in these sectors, such as clarity on return-to-work plans and post-COVID performance data, are creating more opportunities, with rate volatility being the primary remaining hurdle.

Ronald Kamdem inquired about current tenant health trends, asking if there are any specific retailers or categories that warrant attention or are performing better or worse than the previous year.

Answer

Chief Operating Officer Dave Jamieson stated that the portfolio's credit quality is better than in several years, citing Michaels' successful repositioning and 24 Hour Fitness's leadership changes as encouraging signs. He highlighted high demand and strong retention rates for anchor leases as indicators of tenant strength and continued opportunities within the sector.

Ronald Kamdem inquired about the current transaction environment, including the volume of deals coming to market and trends in cap rates for open-air retail properties.

Answer

Ross Cooper, President and Chief Investment Officer, and Conor Flynn, CEO, highlighted the extremely competitive market, Kimco's diversified strategy, and the advantage of their structured program for deal flow and market intelligence. They noted aggressive cap rates driven by private capital and Kimco's focus on accretive recycling.

Ronald Kamdem inquired about the current transaction environment, including the volume of deals coming to market and trends in cap rates for open-air retail properties.

Answer

Ross Cooper, President and Chief Investment Officer, and Conor Flynn, CEO, highlighted the extremely competitive market, Kimco's diversified strategy, and the advantage of their structured program for deal flow and market intelligence. They noted aggressive cap rates driven by private capital and Kimco's focus on accretive recycling.

Ronald Kamdem from Morgan Stanley asked for more detail on the acquisition environment, including product availability, competition, and what Kimco needs to do to win more deals.

Answer

President & CIO Ross Cooper noted an increase in both product and demand, with aggressive pricing from competitors. He highlighted Kimco's advantage in its large structured and JV portfolios, which provide proprietary deal flow. CEO Conor Flynn added that a more offensive stance on acquisitions is tied to their cost of capital.

Ronald Kamdem of Morgan Stanley asked for a bridge from 2024's 3.5% same-store NOI growth to the 2%+ guidance for 2025, and also inquired about the potential quantum of dispositions for the year.

Answer

CFO Glenn Cohen explained the 2%+ guidance is a starting point that bakes in vacancies from late 2024 and uncertainty around bankruptcies, establishing a comfortable floor. David Bujnicki added that assumptions around the signed-not-open pipeline also create variability. Regarding dispositions, President & CIO Ross Cooper reiterated that volume will be dependent on new investment opportunities, as it is a match-funding mechanism.

Ronald Kamdem asked about the sustainability of same-store NOI growth, questioning if bad debt is the primary potential headwind for next year.

Answer

CFO Glenn Cohen pointed to strong underlying drivers, particularly the robust signed-not-open pipeline, 90% of which is expected to commence rent in 2025. While credit loss is monitored closely, he noted that current levels are at the low end of the historical 75-100 basis point range, suggesting this is a reasonable starting point for modeling future performance.

Ronald Kamdem of Morgan Stanley asked about the outlook for same-store NOI growth, questioning if bad debt was the only significant potential headwind for next year.

Answer

CFO Glenn Cohen highlighted strong drivers for 2025, particularly the signed-not-open (SNO) pipeline, with 90% expected to commence rent. He noted that while credit loss will be monitored, it is currently at the low end of its historical range, providing a solid starting point for next year's assumptions.

Ronald Kamden asked about CBRE's competitive moats in replicating its extensive CRE data advantage, particularly with AI tools, and the expected timeline for concrete evidence of gains. He also sought clarification on free cash flow expectations for 2026 and the reason for the delta between the previously discussed $1.8 billion and the reported $1.7 billion for 2025.

Answer

Bob Sulentic, Chair and CEO, expects concrete evidence by the end of 2026 that CBRE has made significant gains in extracting, assimilating, and delivering data to professionals using AI, which will also reduce data collection costs and research efforts. Emma Giamartino, CFO, explained that the $1.7 billion free cash flow for 2025 was strong, exceeding the target range due to high-converting development gains. The $0.1 billion delta was attributed to timing related to onboarding large enterprise clients, impacting working capital, which is expected to reverse in 2026. She anticipates 2026 free cash flow to be solidly within the 75%-85% conversion range, with a headwind from higher cash compensation related to strong 2025 performance.

Ronald Kamdem asked about CBRE's data advantage in commercial real estate, the 'moats' protecting it from replication, and the expected timeline for demonstrating AI-driven gains. He also inquired about free cash flow expectations for 2026 and the reason for the $0.1 billion delta in 2025 free cash flow.

Answer

Bob Sulentic (Chair and CEO) stated that by the end of 2026, there will be concrete evidence of significant AI-enabled gains in extracting, assimilating, and delivering data to professionals, leading to cost savings. Emma Giamartino (CFO) explained that 2025 free cash flow was strong at $1.7 billion, exceeding targets due to development gains. The $0.1 billion delta was a timing issue related to onboarding large enterprise clients, expected to reverse in 2026, with 2026 free cash flow projected within the 75%-85% conversion range.

Ronald Kamdem inquired about the talent landscape within the advisory segment, including staffing levels, hiring plans, and competitive dynamics amidst the market recovery. He also sought an update on the project management business, specifically regarding the integration of Turner & Townsend and the outlook for margin opportunities.

Answer

CEO Robert Sulentic affirmed appropriate staffing levels with ongoing talent additions, highlighting market share gains in leasing due to upgraded leadership, technology, and data. He explained that the project management business is now viewed as one integrated entity following the successful integration of Turner & Townsend's operating model, with expected cost synergies next year and growing client recognition of enhanced capabilities.

Ronald Kamdem inquired about CBRE's talent strategy within the advisory segment, specifically regarding staffing levels, hiring plans, and competition, in the context of the gradual market recovery. He also asked for an update on the project management business, including the integration of Turner & Townsend and the near-term and long-term margin opportunities.

Answer

CEO Robert Sulentic stated that CBRE is appropriately staffed but actively adding talent, with capacity in leasing, sales, and mortgage origination. He highlighted market share gains in leasing due to leadership upgrades, technology, and data. Regarding project management, Mr. Sulentic explained that the Turner & Townsend integration is well underway, with the T&T operating model being adopted globally, and cost synergies expected next year from integrating financial, HR, and technology platforms.

Ronald Kamdem from Morgan Stanley asked about the timeline for realizing benefits in the BOE segment and sought details on the trend in property sales activity from April through the strong recovery seen in July.

Answer

CFO Emma Giamartino clarified that significant new operating leverage benefits in BOE are expected in 2026, not 2025. She also detailed that U.S. property sales were strong in April, saw a slight slowdown in May and June, and then picked up materially in July, tracking above April's levels.

Ronald Kamdem asked about the long-term margin profile for the Project Management business and how M&A conversations are progressing in the current uncertain market.

Answer

CFO Emma Giamartino stated that the long-term margin for the Project Management segment is expected to trend towards the mid-to-high teens, similar to the legacy Turner & Townsend business, driven by future cost synergies. CEO Robert Sulentic added that market choppiness is actually building momentum for M&A, as potential targets are more attracted to CBRE's stable platform, positioning the company well to capitalize on a downturn.

Ronald Kamdem asked about the drivers of the strong 2024 margin in Global Workplace Solutions (GWS), the outlook for the pipeline, and the competitive advantages of the new Building Operations and Experience segment.

Answer

CFO Emma Giamartino attributed the strong 2024 margin to successful cost-reduction initiatives, with benefits expected to continue into 2025. CEO Bob Sulentic described the Building Operations opportunity as vast and fragmented, stating that combining businesses creates synergies and a unique capability to manage diverse asset classes at scale, enhanced by the 'experience' focus from Industrious.

Ronald Kamdem asked for details on the GWS new business pipeline, particularly the mix of first-generation outsourcing versus existing client expansions, and whether clients were increasingly engaging across multiple business lines.

Answer

CFO Emma Giamartino confirmed an increase in first-generation outsourcing wins. Chair and CEO Bob Sulentic emphasized that expansions with existing clients remain a major growth driver. He also confirmed that clients engage across multiple business lines, noting that solutions for capital markets clients are typically less integrated than the comprehensive solutions offered to occupiers.

Ronald Kamdem asked if there were any fundamental drivers, beyond sales dilution and financing, impacting the 2025 versus 2026 guidance. He also inquired about the new leasing bogey required to grow occupancy, noting lighter activity in Q4 but a pickup post-quarter.

Answer

Brendan Maiorana, EVP and CFO, mentioned a $0.05 headwind on the 'other income' line item year-over-year, as 2025 was elevated and 2026 is expected to be more normalized. He stated that adjusting for one-time items and normalizing other income reveals a healthy core growth rate. He reiterated the need for 700k-750k sq ft of new leasing (about 300k sq ft per quarter) to achieve the 87.5% year-end occupancy target, which he believes is very attainable.

Ronald Kamdem asked about any fundamental factors, beyond sales dilution and financing, influencing the 2026 guidance. He also sought clarification on the new leasing targets required to achieve occupancy growth and recent leasing activity.

Answer

Brendan Maiorana, EVP and CFO, identified a $0.05 headwind from the normalization of "other income" in 2026, which was elevated in 2025, indicating healthy core growth. He detailed the need for 700-750k sq ft of new leasing (approximately 300k sq ft per quarter) to reach the year-end occupancy target, accounting for expirations and signed but not yet occupied leases.

Ronald Kamdem from Morgan Stanley asked for clarification on the markets targeted for capital recycling, specifically if they would be existing markets, and requested an update on the Ovation development, including its timing and current thinking.

Answer

CEO Ted Klinck reiterated that capital recycling efforts are focused on existing markets to upgrade the portfolio, with no plans to enter new markets. COO Brian Leary provided an update on Ovation, stating that Highwoods now controls the entire site and has re-entitled it for integrated mixed-use, including additional residential density. He anticipates utility and site work next year, with vertical construction of the first phase (office, retail, multifamily, potential hotel) potentially starting in 2027 for an opening in fall 2028, noting strong rent growth for mixed-use office in Nashville.

Ronald Kamdem asked about the markets targeted for capital recycling in the next six months, specifically if new markets would be entered or if focus would remain on existing ones like Dallas and Atlanta. He also requested an update on the Ovation development, including its timing and current strategic thinking.

Answer

CEO Ted Klinck reiterated that capital recycling efforts would focus on existing markets to upgrade the portfolio, without entering new ones. COO Brian Leary provided an update on Ovation, stating that the company now controls the entire site, has re-entitled it for integrated mixed-use, and is lining up partners. He projected utility and site work next year, with vertical construction (office, retail, multifamily, hotel) potentially starting in 2027 for an opening in fall 2028, noting a 20% premium for mixed-use office rents in the market.

Ronald Kamdem from Morgan Stanley sought more specifics on acquisition targets, including markets, situations, and return profiles, and asked if improving capital markets accelerate the timeline for the Pittsburgh portfolio sale.

Answer

CEO Ted Klinck stated that acquisition opportunities are emerging across their footprint, with cap rates for trophy assets around 7% and IRRs in the high-single to low-double-digit range. Regarding Pittsburgh, he confirmed they are 'closer' to a sale than before but will remain patient to optimize timing, while actively marketing other non-core assets to meet 2025 disposition goals.

Ronald Kamdem asked for an update on the potential disposition of Pittsburgh assets, the status of the acquisition pipeline, and the expected quarterly cadence for same-store NOI growth.

Answer

CEO Theodore Klinck reported no new update on the Pittsburgh assets, reiterating the plan to sell when capital markets are more favorable. He confirmed the company is actively underwriting acquisitions but has nothing to announce. Executive Brendan Maiorana projected that same-store NOI growth would likely weaken in Q2 and Q3 due to challenging prior-year comps, with a relative improvement expected in Q4.

Ronald Kamdem asked for an update on the business plan for the 625 Liberty Avenue property in Pittsburgh following its impairment charge. He also questioned if there were any changes to the company's leasing strategy for 2025, such as an increased focus on TIs or targeting smaller tenants.

Answer

CEO Theodore Klinck stated that the Pittsburgh asset remains non-core with a long-term goal to exit the market, but they will remain patient given the difficult financing environment for such properties. Regarding leasing strategy, Mr. Klinck confirmed no significant changes, highlighting the continued success of their spec suite program for smaller users and noting a recent return of larger prospects to the market. He expressed optimism for continued robust leasing activity.

Ronald Kamdem asked whether the strong leasing performance was due to market share gains or overall market activity, inquired about the expected occupancy trough in 2025, and sought updates on the potential for acquisitions and distressed opportunities.

Answer

CFO Brendan Maiorana confirmed the strong leasing is primarily driven by market share gains, with Highwoods outperforming its markets. He projected year-end 2024 occupancy between 86.5% and 87%, with a trough in early 2025 before recovering to a similar level by year-end 2025. CEO Theodore Klinck added that while few 'wish list' assets are for sale, he is optimistic that future rate cuts will narrow the bid-ask spread and bring more opportunities to market.

Ronald Kamdem asked about NNN REIT's expected occupancy trend throughout 2026. He also sought clarification on the confidence level in the 75 basis points bad debt guidance, specifically asking what gives management confidence that another major tenant issue won't arise.

Answer

CEO Stephen A. Horn Jr. expects occupancy to trend slightly higher in Q1/early Q2 2026 due to additional vacant asset sales, eventually plateauing around the historical average of 98%. Regarding bad debt, Mr. Horn cited the portfolio's history of navigating various cycles with realized bad debt typically between 30-50 basis points. He also emphasized that NNN REIT is not currently seeing any imminent material issues from a watchlist perspective, which provides confidence in the 75 basis points as a prudent starting point for the year.

Ronald Kamdem asked about NNN REIT's expected occupancy trend throughout 2026 and the confidence level in the 75 basis points bad debt guidance, particularly in avoiding another major tenant issue similar to the previous year.

Answer

CEO Stephen A. Horn Jr. expects occupancy to trend up slightly in Q1/early Q2, then plateau around the historical average of 98% ±. CFO Vincent H. Chao expressed confidence in the 75 basis points bad debt assumption, citing the portfolio's history of navigating various cycles with historically realized bad debt of 30-50 basis points. He also emphasized that NNN REIT is not currently seeing any imminent material issues on its watchlist, providing a basis for the prudent starting point.

Representing Ronald Kamdem from Morgan Stanley, an analyst asked about the refinancing strategy for the November 2025 debt maturity and the current timeline for re-leasing vacant properties compared to historical averages.

Answer

EVP & CFO Vincent Chao confirmed the recent $500 million bond offering pre-funded the upcoming maturity. President and CEO Stephen Horn stated that while the historical 9-12 month re-leasing timeline holds for properties needing redevelopment, some recent vacancies like former furniture stores have been resolved much faster.

An analyst on behalf of Ronald Kamdem from Morgan Stanley asked if NNN is looking to reduce exposure to any specific retail concepts and inquired about recent changes in the competitive landscape for acquisitions.

Answer

CFO Vincent Chao responded that they proactively manage exposure to tenants on their watchlist or dark-but-paying list, like AMC, but it's not specific to a concept and depends on achievable economics. CEO Stephen Horn described the acquisition landscape as similar to last year, with some private buyers re-entering, but noted it remains a consistently competitive market where they can meet their targets.

Ronald Kamdem sought further justification for the 60 basis point bad debt guidance for 2025, asking what provided the comfort to use a lower figure. He also asked about the rent mark-to-market on re-leased assets and plans for the debt maturing in 2025.

Answer

CFO Kevin Habicht reiterated that comfort with the 60 basis point guidance comes from having the two most acute credit issues (Badcock/Frisch's) cleared out and no other tenants posing immediate concern. For debt, he estimated a 10-year refinancing rate around 5.5%. On re-leasing, he highlighted that the combined re-lease and disposition of the initial Badcock assets resulted in a rent recovery of 113% of prior rent.

Ronald Kamdem asked if the experience with Badcock and Frisch's has altered NNN's view of its watch list or led to other tenants being placed on a cash basis. He also inquired about the impact of rising interest rates on transactions and how the acquisition pipeline is shaping up for next year.

Answer

CFO Kevin B. Habicht stated there is no read-through to other tenants, noting the cash basis list is highly concentrated. Executive Stephen Horn explained that the acquisition pipeline remains strong, supporting the guidance increase. He mentioned that deal timelines of 60-90 days have insulated recent closings from the most recent rate hikes and that sellers are motivated to close by year-end, with Q4 and early Q1 pricing expected to be stable.

Ronald Kamdem sought updated insights into Welltower's occupancy performance, specifically how they drive move-ins versus move-outs, and the contribution of WBS to their outperformance compared to the industry.

Answer

CEO Shankh Mitra highlighted Welltower's 400 basis points occupancy growth compared to NIC 99's 250 basis points. Co-President and CIO Nikhil Chaudhri attributed this outperformance to execution, focusing on marketing, customer experience, speed to lead, and optimizing operations at each site.

Ronald Kamdem asked for updated insights on Welltower's occupancy performance, specifically how move-ins versus move-outs are driven, and the contribution of WBS to the company's outperformance compared to the industry.

Answer

Shankh Mitra (CEO, Welltower) highlighted Welltower's 400 basis points of occupancy growth compared to the Nick99 average of 250 basis points. Nikhil Chaudhri (Co-President and CIO, Welltower) attributed this outperformance to focused efforts on marketing, customer experience, speed to lead, and site-level optimization.

Ronald Kamdem asked a two-part question: first, whether it was feasible for all 12 executives (five named officers plus seven EVPs) to fully participate in the new Welltower 3.0 incentive structure, and second, how Welltower plans to protect its competitive moat in terms of talent and technology against increasing capital and competition over the next decade.

Answer

CEO Shankh Mitra stated that the company is working with the board on retention strategies for all colleagues, emphasizing the importance of the team. Regarding competition, he noted that the GP/LP structure common in the industry is not conducive to the long-term, multi-year technology investments Welltower makes, which require "forever capital" and a long attention span, thus creating a natural moat that others struggle to replicate.

Ronald Kamdem of Morgan Stanley requested an update on the performance gradient within the SHOP portfolio, specifically comparing assets above 90% occupancy versus those below 80%, and the potential for reacceleration.

Answer

CEO Shankh Mitra confirmed a persistent performance gradient, where properties below 80% occupancy have minimal pricing power (RevPOR growth ~1%), while those above 90% have significant power (RevPOR growth >6%). He expressed optimism that as more of the portfolio and the industry reach 90%+ occupancy, overall pricing power should strengthen, potentially within the next 18-24 months.

Ronald Kamdem asked about the strong Q1 occupancy jump, seeking color on long-term expectations and whether the current pace of growth is sustainable or could even accelerate.

Answer

CEO Shankh Mitra noted that while the key summer leasing season is still ahead, the strong start prompted the company to raise its full-year occupancy guidance. He reiterated a long-term belief that optimizing the portfolio with dense regional operators will lead to significantly higher occupancy levels over time.

Ronald Kamdem from Morgan Stanley requested an update on the labor market, asking about current expense trends and any concerns regarding labor shortages.

Answer

CEO Shankh Mitra acknowledged that labor is a persistent concern in the business. However, he noted that wage growth is stabilizing and that Welltower's operational and capital initiatives are tangibly reducing employee turnover, though it remains a challenging environment.

Ronald Kamdem inquired about the drivers of the strong top-line growth and whether there is a reason to expect deceleration heading into 2025.

Answer

Shankh Mitra (CEO & CIO) declined to provide a 2025 forecast but pointed to positive commentary on pricing and reiterated his previous statement that occupancy growth could potentially improve next year. He highlighted the record sequential occupancy gain in Q3 as evidence of strong momentum.

Ronald Kamdem inquired about Urban Edge Properties' future expectations for shop occupancy upside and details regarding the acquisition pipeline, cap rates, and potential dispositions.

Answer

Jeffrey Mooallem, Chief Operating Officer, and Mark Langer, Chief Financial Officer, indicated a target shop occupancy in the 94%-96% range, noting strategic considerations for pushing beyond that. Jeffrey Olson, Chairman and Chief Executive Officer, described a competitive acquisition market, highlighting a New Jersey property acquired at over a 7.5% cap rate and plans for a 1031 exchange involving a Kohl's-anchored center to reduce exposure.

Ronald Kamdem inquired about Urban Edge Properties' expectations for future small shop occupancy growth, given the strong 170 basis point year-over-year increase, and sought details on the acquisition pipeline, cap rates, and disposition strategy within their capital recycling efforts.

Answer

Jeff Mooallem, Chief Operating Officer, indicated a target steady state for shop occupancy in the 94% range, emphasizing strategic tenant management. Jeff Olson, Chairman and Chief Executive Officer, described a highly competitive acquisition market with narrowing cap rates, highlighting a recent acquisition in Bridgewater at over a 7.5% cap rate and plans for a 1031 exchange to reduce Kohl's exposure.

Ronald Kamdem from Morgan Stanley inquired about the remaining upside for shop occupancy, the translation of high occupancy into pricing power, the current environment for capital recycling, and an update on the company's exposure to Kohl's.

Answer

EVP & COO Jeffrey Mooallem stated that shop occupancy could reach 93-94% and that pricing power is manifesting in better lease terms, including rent increases, radius restrictions, and lower landlord contributions. He also noted that while Kohl's is on their radar, they don't see an imminent issue and are proactively discussing getting some locations back. Chairman & CEO Jeffrey Olson added that the acquisition market is strong, with cap rates for quality assets in the 5.5% to 6% range, and that the company's stock appears inexpensive relative to these private market values.

Ronald Kamdem of Morgan Stanley inquired if the post-tariff environment is creating more acquisition opportunities and asked for an early read on cap rates. He also requested a reminder of the bad debt assumption and commentary on the company's Kohl's exposure.

Answer

Chairman and CEO Jeffrey Olson stated that the bid-ask spread for acquisitions remains wide, and the company will be patient. He also noted that Kohl's is not seen as a near-term bankruptcy risk. CFO Mark Langer reiterated the bad debt guidance of 75 to 100 basis points of gross rents for the year.

Ronald Kamdem of Morgan Stanley inquired about the visibility into the 75-100 basis points of bad debt included in the same-store NOI guidance and sought commentary on the current acquisition pipeline, noting that cap rates have become more competitive.

Answer

Chief Financial Officer Mark Langer detailed the bad debt provision, stating that approximately 70 basis points relate to tenants already in bankruptcy, with a 40 basis point general reserve, partially offset by expected collections. Chairman and CEO Jeffrey Olson addressed the acquisition environment, emphasizing that accretive capital recycling is the company's preferred strategy. He highlighted their track record over the last 16 months, acquiring $550 million in assets at a 7.2% cap rate funded by $427 million in dispositions at a 5.2% cap rate, and expressed hope of finding similar value-creating deals in 2025.

Ronald Kamdem from Morgan Stanley asked about the extent of the opportunity to continue selling low-cap-rate assets and the underlying same-store NOI growth assumption for the reiterated 2025 FFO target.

Answer

CEO Jeffrey Olson estimated that Urban Edge could consistently sell $100 million to $200 million in assets annually over the next several years. He identified a specific pool of 21 single-tenant properties (Home Depot, Lowe's, etc.) as the primary source for these low-cap-rate dispositions. Chief Financial Officer Mark Langer addressed the 2025 target, stating that while specific guidance would be provided later, healthy NOI growth numbers around 5% are certainly achievable, supported by the signed-not-opened pipeline.

Ronald Kamdem inquired about the acquisition pipeline, specifically the assumed cap rate for the $700 million guidance and its recent trends. He also asked about the deceleration in same-store NOI and leasing spreads in the quarter, seeking details on the 3% same-store NOI guidance, including bad debt assumptions.

Answer

David Lukes (CEO) stated that cap rates for acquisitions have averaged just north of 6%, with a range from mid-5s to high 6s. Conor Fennerty (CFO) added that Curbline has visibility on about half of the $700 million acquisition pipeline for 2026. Regarding same-store NOI, Conor Fennerty (CFO) advised looking at trailing twelve months for leasing spreads due to the small denominator, expecting new lease spreads to return to the low 20s in Q1 and Q2. He noted the same-property pool's small size can cause volatility but anticipates acceleration in the second half of 2026 as the leased-occupied gap compresses. For bad debt, a 60 basis point bogey is assumed for 2026, compared to 30 basis points in 2025.

Ronald Kamden asked about the acquisition pipeline, including the assumed cap rate for the $700 million guidance and how cap rates have been trending. He also inquired about the deceleration in same-store NOI and leasing spreads in the quarter, seeking details on the 3% same-store NOI guidance, including bad debt expectations.

Answer

CEO David Lukes stated that cap rates have averaged just north of 6%, with a wide range from mid-5s to high 6s. CFO Conor Fennerty added that visibility for about half of the $700 million acquisition pipeline for 2026 is already established. Regarding same-property NOI and leasing spreads, Conor Fennerty advised looking at trailing twelve months for leasing spreads, expecting new lease spreads to return to the low 20s in Q1 and Q2 2026. He noted the small same-property pool can create volatility but expects acceleration in the back half of 2026 due to a compressing leased-occupied gap. For bad debt, a 60 basis point bogey is assumed for 2026, compared to 30 basis points in 2025.

Ronald Kamdem asked for more detail on cap rates, including their ranges, differences between larger and portfolio deals, and the potential for cap rate compression over the next 12-36 months. He also inquired about the structural cap on the portfolio's lease rate, considering the building occupancy.

Answer

CEO David Lukes explained that cap rates can range widely from low 5%s to high 6%s, averaging to the low 6%s for top-quartile assets, depending on vacancy and growth opportunities. CFO Conor Fennerty added that Q3 was just over 6% and Q4 blended to 6.25%, noting that future cap rate compression is more dependent on macro interest rates. Regarding occupancy, Conor Fennerty stated that with the total portfolio at 96.7% and the same property pool at 97.1%, low 97%s is likely the peak, with growth primarily coming from renewals rather than significant occupancy increases.

Ronald Kamdem asked for more detail on Curbline Properties Corp.'s acquisition cap rates, including their range and differences between deal types, and the potential for cap rate compression over the next 12-36 months. He also questioned the structural cap for the portfolio's lease rate given building occupancy.

Answer

David Lukes, CEO, explained that cap rates can range from low fives to high sixes for top-quartile assets, averaging to the low 6%s, depending on vacancy and growth opportunities. Conor Fennerty, CFO, noted Q3 cap rates were just over 6% and Q4 blended to 6.25%, adding that future cap rate compression is more dependent on macro interest rates than sector-specific factors. Conor also stated that the lease rate structural cap is likely in the low 97%s, with a couple hundred basis points of structural vacancy due to tenant churn. David Lukes clarified that future growth will primarily come from renewals, not occupancy.

Ronald Kamdem of Morgan Stanley inquired about Curbline's acquisition pace, pipeline, and cap rate trends, noting the recent large portfolio deal. He also asked about any tenant impact from tariffs and the reason for a slight dip in new lease spreads.

Answer

CEO David Lukes stated that cap rates are stable around a 6% forward NOI yield, with variations depending on vacancy. He highlighted that the acquisition pipeline is now roughly 50% off-market deals due to building direct relationships. CFO Conor Fennerty added that full-year 2025 leasing spreads are expected to be consistent with 2024, attributing quarterly fluctuations to the portfolio's growing but still small size, and confirmed no observable impact from tariffs.

Ronald Kamdem of Morgan Stanley inquired about the composition of the acquisition pipeline, asking if it was granular or contained larger deals, and sought details on expected cap rates. He also asked how potential tariffs might impact underwriting and sector exposure.

Answer

CEO David Lukes responded that the acquisition pipeline is highly granular, consisting mostly of single-asset deals, with cap rates blending around 6.25%. He explained that the direct impact of tariffs is limited as most tenants are service-based with low inventory. However, he confirmed that the rising cost of capital does influence their investment underwriting, requiring higher returns to be factored into their analysis.

Ronald Kamdem from Morgan Stanley asked for more detail on the acquisition pipeline, questioning if it was composed of granular, single-asset deals or larger portfolios, and what cap rates the company is targeting. He also inquired if potential tariffs have altered the company's underwriting approach or its desired tenant sector exposure.

Answer

CEO David Lukes clarified that the pipeline is predominantly made up of single-asset purchases from regional owners, reflecting the granular nature of the asset class. He stated that while individual deal cap rates can range from the mid-5s to over 7%, they are blending to an average of around 6.25%. Regarding tariffs, Lukes noted a lesser impact as most tenants are service-oriented and don't carry significant inventory. However, he acknowledged that the higher cost of capital is influencing underwriting, reinforcing the need for investments to generate strong returns.

Ronald Kamdem asked for details on the 2025 same-store NOI guidance, including bad debt and occupancy assumptions, and inquired about the competitive landscape and cap rate trends for acquisitions.

Answer

CFO Conor Fennerty stated the 2025 same-store NOI guidance midpoint assumes 55 basis points of bad debt and stable occupancy around 95.1%. CEO David Lukes addressed competition, noting it is 'fierce' and primarily from local and regional private capital. He said unlevered IRR targets remain in the high single-digits (7.5%-9%), as rising market rents have offset cap rate compression seen over the past few years.

Ronald Kamdem asked about acquisition cap rates, potential pressure on them, their relation to development yields, and the reason for removing the commenced occupancy slide from the presentation.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, noted that cap rates for core grocery-anchored assets are being pushed down, but Regency targets a 150 basis point-plus spread for development yields (7%+) compared to core acquisitions. Mike Mas, Chief Financial Officer, explained that the commenced occupancy slide was removed because the portfolio has largely returned to historical highs, and the narrative has shifted to forward growth rather than recovery.

Ronald Kamdem asked about the relationship between acquisition cap rates and development yields, potential pressure on cap rates, and the reason for removing the commenced occupancy slide from the presentation.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, stated that development yields are consistently targeted at 150 basis points or more above core acquisition cap rates, which are currently being pushed down. Alan Roth, East Region President and Chief Operating Officer, explained that the commenced occupancy slide was removed because the portfolio has largely achieved its historical occupancy highs, shifting the narrative to future growth rather than recovery.

Ronald Kamdem inquired about current cap rates and IRRs in the acquisition market, their recent trends, and whether Regency has an increased willingness to buy out or sell interests in its over 100 JV assets.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, confirmed an ongoing willingness to buy out JV partners' interests when opportunities align, viewing it as a continuous pipeline. Regarding cap rates, he noted increased capital flow into the sector, pushing core asset cap rates from 5.5%-6% to now 'minus side on 5.5%,' making acquisitions more challenging. Lisa Palmer, President and CEO, emphasized valuing long-term partners and often being the preferred buyer when partners seek to exit.

Ronald Kamdem inquired about current cap rates and IRRs in the acquisition market and asked if there's an increased willingness to buy out or sell interests in the remaining 100+ JV assets.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, confirmed ongoing conversations to buy out JV partner interests when opportunities align. He noted that core asset cap rates, previously 5.5% to 6%, are now trending towards the lower end of that range due to increased capital flow. Lisa Palmer, President and CEO, emphasized valuing long-term partners and often being the best buyer when partners seek to exit.

Ronald Kamdem from Morgan Stanley asked whether the recent pickup in large acquisition activity is a one-off event or signals a more notable shift in the market environment.

Answer

West Region President and CIO Nick Wibbenmeyer suggested that strong investor demand for core shopping centers is encouraging more sellers, leading to a 'marginal pickup in velocity.' He anticipates more assets will come to market after Labor Day. CEO Lisa Palmer added that Regency likes to acquire compelling assets and has a proven ability to execute successfully due to its platform and cost of capital advantages, and will continue to do so.

Ronald Kamdem from Morgan Stanley asked whether the recent pickup in acquisition activity represents a notable market shift or is merely a one-off event.

Answer

CIO Nick Wibenmeyer suggested it's a 'marginal pickup in velocity,' driven by strong investor demand for core assets, which is encouraging more sellers to test the market. He anticipates more assets will become available after Labor Day. CEO Lisa Palmer emphasized that regardless of market volume, Regency's platform and cost of capital advantage position it to execute successfully on attractive opportunities.

Ronald Kamdem inquired about early indications of construction cost trends and how Regency is adjusting its target development yields in light of the proposed tariff environment.

Answer

Nicholas Wibbenmeyer, West Region President and CIO, acknowledged they are closely monitoring costs. He noted that while tariffs could have an impact, these are partially offset by year-over-year decreases in steel and crude prices. He confirmed Regency still feels confident in delivering projects on budget and continues to target a 150 basis point spread over stabilized asset values.

Ronald Kamdem asked about the occupancy delta between Independent Living (IL) and Assisted Living (AL) products, inquiring if it's acuity-driven and if Ventas has a strategic preference for an optimal mix in new acquisitions. He also requested broad-based trends on labor costs and CapEx per unit.

Answer

J. Justin Hutchens, EVP of Senior Housing and Chief Investment Officer, noted outperformance in the independent living portfolio for occupancy growth, expecting it to continue. He stated Ventas is about half IL and half AL by units and prefers a mix in acquisitions, favoring continuum of care offerings. Robert F. Probst, EVP and CFO, indicated that labor costs assume normal inflation on a per-hour basis, with the 5% OpEx guide reflecting volume growth. He explained that the increase in FAD CapEx from $300 million to $400 million is driven by more units and some inflation.

Ronald Kamdem inquired about the occupancy delta between Independent Living (IL) and Assisted Living (AL) products, Ventas's strategic preference for mix, and broad-based trends in labor costs and CapEx per unit.

Answer

J. Justin Hutchens, EVP of Senior Housing and Chief Investment Officer, noted outperformance in Independent Living occupancy and stated that Ventas is about half and half IL/AL by units, preferring a mix and continuum of care in acquisitions. Robert F. Probst, EVP and CFO, indicated that labor costs per hour are assumed to have normal inflation, with the 5% OpEx guide largely driven by volume. He added that CapEx is up from $300 million to $400 million due to more units and some inflation.

Ronald Kamdem requested an update on acquisition cap rate and IRR trends amid a more competitive market. He also asked what steps Ventas is taking to unlock more value through operator transitions.

Answer

J. Justin Hutchens, EVP - CIO of Senior Housing, confirmed that target unlevered IRRs remain consistent in the low-to-mid teens. While year-one yields have drifted slightly lower, this is offset by acquiring higher-quality, newer assets. On transitions, he described it as a continuous part of their active asset management playbook to ensure the optimal operator is in place to maximize performance for each community.

Ronald Kamdem of Morgan Stanley asked about the potential for more triple-net to SHOP conversions and sought more color on the drivers of acquisition cap rate compression.

Answer

EVP & Chief Investment Officer J. Hutchens highlighted a recent triple-net to SHOP conversion in the U.K. as an example of ongoing efforts and expressed excitement about establishing a SHOP presence there. He acknowledged cap rate compression, with yields moving from 7.7% to 7.2% on recent deals, but noted they remain in the target range. He attributed Ventas's competitive success to its platform, relationships, and certainty of close.

Ronald Kamdem asked for an update on the labor market's impact on expenses and inquired about the remaining opportunity for converting triple-net lease properties to the SHOP structure within the portfolio.

Answer

Executive J. Hutchens reported that the labor market is the best it has been 'in some time,' with strong hiring and retention, and the 5% expense growth forecast accounts for inflation and volume. He also suggested that most of the prime triple-net conversion opportunities have been identified, with the focus now shifting to execution.

Ronald Kamdem from Morgan Stanley inquired about the potential timing for private capital to re-enter the senior housing market and questioned the sustainability of the portfolio's strong top-line growth.

Answer

J. Hutchens suggested that unfavorable debt market conditions have kept private capital on the sidelines, creating an advantage for Ventas. He noted that while a favorable year-over-year comparison on agency labor costs provided a tailwind, the core fundamentals of strong demand and pricing power are expected to continue.

Ronald Kamdem asked about the current spread between cap rates and IRRs for acquisitions versus new development starts, and if EastGroup plans to pare back capital in any other markets beyond Fresno for recycling purposes.

Answer

CEO Marshall Loeb stated that EastGroup is exiting Santa Barbara and Fresno (a 1990s project) to modernize its portfolio, and is also reducing its presence in Jackson (down to one building) and potentially New Orleans, while considering new markets like Salt Lake. He noted that development yields are currently in the 7.1-7.3% range, while strategic acquisitions are in the low- to mid-5s, representing a 180-200 basis point better return on development. COO Brent Wood emphasized the need for consistency in development leasing and a quieter macro environment to fully capitalize on opportunities.

Ronald Kamdem asked about the spread between cap rates and IRRs on acquisitions versus development starts, and if any other markets are being pared back for capital recycling besides Fresno.

Answer

CEO Marshall Loeb stated that ground-up development yields are in the low 7s (7.1-7.3%), while strategic acquisitions are in the low-to-mid 5s, creating a 180-200 basis point spread. He confirmed exits from Santa Barbara and Fresno, with plans to pare back in Jackson and potentially New Orleans. EVP and COO Brent Wood emphasized the need for consistency in development leasing.

Ronald Kamdem first asked which markets had planned development starts at the beginning of the year that were subsequently pulled back. He then inquired if, with potential occupancy gains and rent escalators next year, releasing spreads would be the primary driver for EastGroup Properties' same-store performance.

Answer

Marshall Loeb, CEO, explained that no single market was solely responsible for pulled-back development starts, citing an example in a Texas market where a signed lease was terminated, leading to a $20-25 million swing in planned starts. He noted that a few starts are still programmed for the current quarter, contingent on leases out for signature. Brent Wood, CFO, added that strong cash releasing spreads (around 20%) are expected to remain sticky, contributing 4-5% growth from rolling leases. He highlighted that same-store occupancy is projected to finish the year near 97% (up from 96% at the start), providing solid momentum. Wood also emphasized that a stronger firing of the development leasing cylinder, which has been slower, could provide additional lift to growth next year.

Ronald Kamdem asked which markets had development starts planned at the beginning of the year but were subsequently pulled back. He also inquired if rent spreads would be the primary driver for same-store NOI growth next year, given potential occupancy gains and rent escalators.

Answer

CEO Marshall Loeb explained that no single market was solely responsible for pulled-back starts, but cited a Texas market where a signed lease was pulled back, leading to a $20-25 million swing in planned starts. He noted a few Q4 starts are programmed based on pending leases. CFO Brent Wood stated that strong rent spreads (cash 20% range) are expected to remain sticky, contributing 4-5% growth from the 20% of the portfolio rolling annually. He also highlighted the projected increase in same-store occupancy from 96% at the start of 2025 to 97% by year-end, which should favorably stack up for early next year, providing solid same-store run rate ingredients.

Ronald Kamdem from Morgan Stanley asked for an on-the-ground update on Southern California and inquired about the specific catalyst needed to unlock slower development leasing.

Answer

President and CEO Marshall Loeb described Southern California as a challenging market with 10 consecutive quarters of negative absorption, making rent predictions difficult. Regarding a catalyst for leasing, he believes it will be driven by tenants becoming accustomed to tariff news or by the announcement of new trade agreements, which would restore certainty. He is confident that when demand returns, EastGroup is well-positioned due to low vacancy and a head start on development.

Ronald Kamdem of Morgan Stanley asked a two-part question about conditions in Southern California, including activity levels and re-leasing spread outlook, and what specific catalyst is needed to unlock development leasing demand.

Answer

President and CEO Marshall Loeb described the Southern California market as uniquely challenged by negative absorption for ten consecutive quarters, making it difficult to predict rent trends. For the broader market, he believes the catalyst for a leasing recovery will be tenants becoming numb to tariff news or reaching certainty on trade agreements, particularly with China. He is optimistic that once corporate confidence returns, demand will rebound quickly into a supply-constrained market.

Ronald Kamdem inquired about the extent of construction cost increases and which materials were most affected, as well as any observed trends in space utilization, particularly among 3PL tenants.

Answer

Executive Marshall Loeb reported that overall construction costs have actually declined 10-12% in the past year. While minor tariff-related increases are possible for rebar and storefronts, he believes this will be offset by increased competition among contractors for limited projects. Regarding utilization, he noted a general pent-up demand for expansion has led tenants to use their space more intensely, but did not single out 3PLs specifically.

Ronald Kamdem of Morgan Stanley asked about the expected cadence of the 96% average occupancy guidance for 2025. He also requested an update on near-shoring and onshoring markets like El Paso, Phoenix, and San Diego.

Answer

Executive Brent Wood explained that the occupancy guidance assumes a slight dip early in the year due to known vacates, followed by stabilization in the first half and a build-up in the second half. Marshall Loeb added that Phoenix remains a strong market, El Paso is doing well but with rent growth leveling off, and San Diego has been slower but is showing signs of picking up.

Ronald Kamdem asked for a comparison of the domestic property NOI assumptions for 2026 versus 2025, specifically regarding occupancy, re-leasing spreads, and bad debt.

Answer

CFO Brian McDade reiterated the 'at least 3%' domestic NOI growth guidance, consistent for the past four years. He stated that outperformance would be driven by factors discussed, including upside from occupancy, leasing, and other business segments, mirroring past years' contributions.

Ronald Kamdem asked for a comparison of the domestic property NOI assumptions for 2026 versus 2025, specifically detailing expectations for occupancy, re-leasing spreads, and bad debt.

Answer

Brian McDade, Chief Financial Officer, noted that Simon Property Group has consistently guided for at least 3% domestic NOI growth for about four years and has outperformed this target. He reiterated that future outperformance will be driven by upside from occupancy, leasing, and various other parts of the business, consistent with past years.

Ronald Kamdem of Morgan Stanley asked about the outlook for domestic property NOI growth for the remainder of the year, given the strong 3.8% year-to-date performance and potential headwinds.

Answer

Chairman, CEO & President David Simon expressed confidence that the company will beat its full-year guidance of "at least 3%" NOI growth. He noted that tenant demand remains unabated and the back-to-school season has been strong, contributing to their outperformance year-to-date.

Ronald Kamdem from Morgan Stanley asked for the outlook on domestic property NOI growth for the rest of the year, considering the strong 3.8% year-to-date performance amid potential headwinds.

Answer

Chairman, CEO & President David Simon expressed confidence that the company will beat its full-year guidance of "at least 3%" for domestic property NOI. He cited that tenant demand continues unabated and noted a strong start to the back-to-school season, suggesting continued momentum despite external volatility.

Ronald Kamdem asked for an update on the key assumptions underlying the full-year guidance, such as domestic NOI, bad debt, and interest costs.

Answer

CEO David Simon and CFO Brian McDade both confirmed there has been 'no change' to the material elements of the full-year guidance issued at the beginning of the year. McDade noted that interest income and expense trends are proceeding as anticipated, but the core operational assumptions remain intact.

Ronald Kamdem of Morgan Stanley asked for a performance comparison between the outlet and mall businesses and inquired about any impact from the strong U.S. dollar on tourist-heavy centers.

Answer

CFO Brian McDade responded that all platforms performed well without significant bifurcation, though value-oriented Outlets and Mills saw slight outperformance in Q4. He noted no material impact from the strong dollar on tourist centers yet, but it could affect foreign earnings translation going forward. CEO David Simon added that the focus on asset improvement is portfolio-wide.

Ronald Kamdem noted the strong domestic NOI growth of nearly 5% and asked for updated commentary on achieving a 3% growth target for the next year, as well as any performance differentiation between traditional malls and outlets.

Answer

David Simon, Chairman, CEO, and President, acknowledged the strong performance and stated that momentum is expected to continue. However, he declined to provide specific 2025 NOI growth guidance, indicating that the company is currently in its budgeting process and will share its formal outlook during the year-end earnings call in February. He confirmed that all platforms are generally moving in a positive direction.

Ronald Kamdem asked for a breakdown of the 4% same-store NOI guidance, specifically quantifying the benefit derived from Summit versus occupancy increases and other contributing factors. He also inquired how the board considers recurring cash flow payments from joint ventures (JVs) when determining the dividend, given the historical delta between operating cash flow and dividend payments.

Answer

Matt J. DiLiberto, CFO, stated that while Summit has an impact, the main driver of the 3.5%-4.5% same-store NOI growth is occupancy increases (up 400 basis points in seven quarters), translating into significant NOI growth for the current year and over 10% in 2027. Marc Holliday, Chairman and CEO, SL Green Realty Corp, explained that the board views cash flow holistically, including operating cash flow and gains from active real estate sales, as the metric for setting the dividend, reflecting the company's long-standing strategy of buying, improving, developing, stabilizing, and monetizing assets.

Ronald Kamdem inquired about the dividend payout ratio, specifically how the recurring cash flow payments from joint ventures are considered by the board when determining the dividend, as opposed to solely focusing on FAD.

Answer

Marc Holliday, Chairman and CEO, SL Green Realty Corp, explained that the board considers total cash flow, which includes both operating cash flow and gains from active real estate sales, as SL Green is not a buy-and-hold company. He emphasized that the company's strategy involves buying, improving, developing, stabilizing, and monetizing assets, and all generated revenue, including taxable gains, serves as the barometer for setting the dividend. He highlighted the company's consistent history of active dispositions, which are integral to its business model and cash flow generation.

Ronald Kamden asked about the headwinds to Same-Store NOI, specifically the impact of Ascent and year-to-date performance against investor day goals, and the capital needs and funding strategy for the 346 Madison development.

Answer

Matt DiLiberto, CFO, clarified that Same-Store cash NOI was only slightly below the guidance range, primarily due to Ascent being offline (impacting percentage rent) and a tenant converting TI to free rent. He noted that goals are set to outperform guidance. For 346 Madison, Matt DiLiberto stated that a deeper dive would be provided at the investor conference, but the likely capitalization strategy would involve construction financing and a joint venture partner, similar to One Vanderbilt and One Madison.

Ronald Kamdem of Morgan Stanley inquired about transaction market trends, cap rates, and foreign buyer participation. He also asked if same-store NOI is expected to follow the same upward trajectory as occupancy.

Answer

CIO Harrison Sitomer described the transaction market as healthy, citing recent trophy asset sales like 590 Madison at a mid-5% cap rate as evidence of strong capital demand. CFO Matthew Diliberto confirmed the logic that rising economic occupancy, driven by recent leasing, sets the foundation for future same-store NOI growth into 2026.

Ronald Kamdem asked for an update on the company's $1 billion disposition target and for more detail on the composition of the 1.1 million square foot leasing pipeline.

Answer

Executive Harrison Sitomer confirmed the $1 billion disposition plan is on track, citing a strong sales track record. Regarding the pipeline, Steven Durels highlighted that 250,000 square feet consists of TAMI tenants, a notable increase. He confirmed most of the pipeline activity is concentrated in the Grand Central submarket, where the majority of SL Green's portfolio is located.

Ronald Kamdem of Morgan Stanley inquired about leasing activity in the company's West Side portfolio and the expected trend for capital expenditures in future years as occupancy rises.

Answer

Steven Durels, an executive, reported continued leasing momentum at the company's major West Side assets, building on a substantial amount of activity from the previous year. Matthew Diliberto, an executive, clarified that current CapEx is primarily success-based investment for new leases and will decrease as occupancy stabilizes, while base building maintenance CapEx remains nominal.

Ronald Kamdem of Morgan Stanley asked for the drivers behind the 2.9% acceleration in same-store cash NOI and expectations for the remainder of the year. He also requested qualitative insights on the Alternative Strategy Portfolio (ASP) and how the improving market is impacting negotiations.

Answer

Executive Matthew Diliberto noted that the portfolio has been performing better than expected, leading to a guidance raise in July, and continues to trend ahead, though he deferred 2025 guidance to the upcoming investor day. CEO Marc Holliday explained that the ASP strategy has already yielded positive results with assets like 717 Fifth and 2 Herald. He added that the market's recovery aids in reevaluating these non-recourse assets, allowing the company to work creatively with lenders to maximize value.

Ronald Kamdem requested an update on BXP's smaller markets, specifically Los Angeles and Seattle, regarding occupancy trends and the company's strategy for its assets in those regions.

Answer

Rodney Diehl, Company Representative, stated that Seattle is seeing good demand from in-place tenants and is starting to mirror San Francisco's demand. In Los Angeles (West LA/Santa Monica), the market is still recovering, but BXP has seen some recent activity. Douglas Linde, President, added that BXP is taking two Santa Monica Business Park buildings (260,000 sq ft) out of service to redevelop into residential multifamily projects, believing this offers more value than waiting for office market recovery.

Ronald Kamdem requested an update on the LA and Seattle markets, including occupancy trends and BXP's strategy for its assets in those smaller markets.

Answer

Rodney Diehl, Company Representative, reported good demand from in-place tenants in Seattle CBD, with the market starting to mirror San Francisco's demand, and optimism for increased activity this year. He noted that West LA/Santa Monica is recovering slower due to COVID and entertainment industry contraction, but has seen some recent activity. President Douglas Linde added that BXP is taking two Santa Monica Business Park buildings (260,000 sq ft) out of service for high-value residential multifamily projects, seeing more value in that asset class than in a short-term office market recovery.

Ronald Kamdem asked about BXP's expectations for same-property NOI in 2026 and 2027, inquiring if it would see a similar acceleration (100-200 basis points) as the projected occupancy inflection.

Answer

Michael LaBelle (CFO, BXP Inc) stated that BXP is not providing specific guidance for 2026 or 2027 same-property NOI today. However, he indicated that most of the growth is expected to come from occupancy, and with improving mark-to-market rents, BXP anticipates positive same-property NOI growth that will follow the climbing occupancy.

Ronald Kamdem asked how the anticipated occupancy inflection point ties into expectations for same-property NOI, specifically if a similar 100-200 basis point acceleration in NOI growth should be expected.

Answer

CFO Michael LaBelle stated that BXP is not providing 2026/2027 guidance but expects most growth to come from occupancy. He noted improving mark-to-market rents and anticipates positive same-property NOI growth as occupancy climbs, following the occupancy trend.

Ronald Kamdem of Morgan Stanley asked if the smaller floor plates at 343 Madison attract a different tenant base and inquired about the pushed-out stabilization date for 651 Gateway and life science leasing.

Answer

Hilary Spann, EVP of the New York Region, explained that while the floor plates at 343 Madison are well-suited for 200-250k sq. ft. tenants, they are seeing demand from larger clients due to a lack of premier space in the submarket. Douglas Linde, President & Director, commented that pure lab leasing in the Bay Area remains quiet, impacting 651 Gateway's stabilization timeline.

Ronald Kamdem of Morgan Stanley asked for an update on life science market trends, what might trigger a turnaround, and commentary on the broader Boston market where job growth has been slowing.

Answer

President Douglas Linde noted weak demand for new raw lab space but significant interest from life science firms for traditional office space as they shift focus from discovery to de-risked products. Executive Bryan Koop addressed the Boston market, stating that BXP's access to capital and flexibility are key differentiators, allowing them to win deals from capital-constrained landlords and pivot projects to meet tenant needs.

Ronald Kamdem asked about the New York market's health, specifically if the quarterly occupancy decline was expected and if a Q4 rebound is anticipated.

Answer

President Douglas Linde confirmed the Q3 occupancy decline in Manhattan was entirely expected and attributable to the single known move-out of O'Melveny & Meyers at Times Square Tower. He stated that overall leasing activity in the market is actually above expectations, with active dialogues across the portfolio, suggesting a positive outlook for the coming year.

Ronald Kamdem inquired about the leasing pipeline's rebuild after the quarter, asking if any notable groups are currently in or out of the pipeline.

Answer

Peter Moglia, CEO and CIO, noted that smaller spaces under 50,000 sq ft remain active, with most tours in that range. He highlighted a 'dearth' of public biotech companies (50,000-150,000 sq ft) but some good activity in the 100,000 sq ft+ range in certain markets. Hallie Kuhn, SVP of Life Science and Capital Markets, added that Greater Boston saw an 11% increase in tenants in the market, the first such increase in several quarters.

Ronald Kamdem asked for commentary on cap rate trends and price discovery for Alexandria Real Estate Equities' planned $2.9 billion dispositions, particularly for land and non-core assets, relative to expectations. He also inquired about the rebuilding of the leasing pipeline after the quarter, seeking details on notable groups or segments within the pipeline.

Answer

Peter Moglia, CEO and CIO, stated that cap rates for non-core assets ranged from mid-sixes to mid-nines, depending on market, leasing, and WALT, anticipating some core asset executions in 2026 with a 'five-handle' for top-end properties, likely through JVs. Regarding the leasing pipeline, Peter Moglia noted strong demand for smaller spaces (under 50,000 sq ft) and some good activity in 100,000 sq ft+ range in certain markets, but observed a dearth of public biotech companies.

Ronald Kamdem (Morgan Stanley) posed a broader question regarding Prologis' capital deployment strategy for both data centers and traditional industrial assets, seeking insights into the potential pipeline ramp and the conditions required to increase the industrial run rate.

Answer

CEO Dan Letter highlighted significant deployment opportunities, noting continued strength in the real estate cycle in Q4 with improved activity across all size ranges, allowing for flexible ramping based on market conditions. CFO Tim Arndt added that deployment decisions are made week-by-week at the investment committee level, rather than through a top-down approach.

Ronald Kamdem posed a broader question on capital deployment, asking about the potential pipeline ramp for both Data Center and traditional industrial projects, and what conditions would be needed to increase the industrial run rate.

Answer

CEO Dan Letter stated that Prologis has significant opportunities, noting improved activity across all size ranges in Q4, not just big box. He emphasized the ability to monitor markets weekly/monthly and ramp decisions accordingly. CFO Tim Arndt added that deployment decisions are made week-by-week at the investment committee level, based on market conditions, rather than being governed top-down.

Ronald Kamdem from Morgan Stanley inquired about the record-high leasing pipeline, asking for details on its composition and how it influenced the decision to increase guidance for development starts and acquisitions.

Answer

Chris Caton, MD of Global Strategy & Analytics, described the pipeline as diverse and up 19% year-over-year, with notable growth in larger deals and renewed interest from 3PLs. President Dan Letter added that the $1 billion increase in development starts is driven by a record build-to-suit pipeline, particularly outside the U.S. in markets like Japan, India, and Mexico.

Ronald Kamdem asked about the assumptions within the company's stress test, specifically concerning the impact on 3PL tenants, particularly Asian 3PLs in the Inland Empire West.

Answer

Christopher Caton, Managing Director, clarified that Asian 3PLs represent a small portion of their rent roll, just over 1.5%. He noted these tenants are mitigating risk by pulling inventory forward and diversifying. Hamid Moghadam, CEO, added that while inventory flow is a challenge, the underlying consumer demand for the products these 3PLs handle remains strong.

Ronald Kamdem of Morgan Stanley inquired about the conditions necessary for development starts to ramp back up to the $4-5 billion range and whether that could occur in 2025.

Answer

President Dan Letter explained that the company is waiting for market conditions and rents to improve to boost returns before accelerating its spec program. He highlighted that Prologis has a large land portfolio with significant infrastructure investments already made, allowing them to 'flip the switch' and narrow vertical build times when conditions are right.

Ronald Kamdem asked when portfolio availability is now expected to peak, noting the previous forecast was for Q4 2024, and inquired about any one-time items in the same-store cash NOI guidance that could affect 2025 comparisons.

Answer

Chris Caton, Managing Director, stated that while market vacancies are still expected to peak late this year, they anticipate an 'elongation of the peak' through the first half of 2025. Timothy Arndt, CFO, confirmed there are no one-time items in the cash same-store NOI metric. He then provided a framework for 2025 same-store growth, expecting a 5.5-6% contribution from rent change, offset by a ~100 bps drag from Duke portfolio accounting and a potential headwind from lower average occupancy.

Ronald Kamden asked about the occupancy upside beyond 90% spot occupancy, the operating leverage at this point, and the pricing strategy to maximize growth. He also inquired about the competitive environment for external growth, referencing a Wall Street Journal article about a large private equity player selling senior housing, and why competition hasn't increased given the unlevered returns.

Answer

CEO Danny Prosky stated that the maximum occupancy upside is 10% (from 90% to 100%), expecting continued positive trends due to supply-demand fundamentals. He anticipates pricing increases around 200 basis points above inflation, aiming for 5% or better. CIO Stefan Oh noted that more assets are coming to market as performance improves, with some private equity groups selling. He added that entering the REIT DEA business is challenging, and about half of their pipeline consists of off-market deals.

Ronald Kamdem asked about the occupancy upside and pricing strategy for American Healthcare REIT's portfolio, particularly after reaching 90% spot occupancy, and the competitive environment for senior housing acquisitions given recent private equity sales.

Answer

CFO Brian Peay stated that while maximum occupancy upside is 10%, the company expects continued positive trends in occupancy, revPOR, and margins due to supply-demand fundamentals. He anticipates pricing increases around 200 basis points above inflation. Regarding competition, CFO Brian Peay noted an increase in both buyers and available assets as industry results improve. CIO Stefan Oh added that many private equity groups are now selling assets after waiting for performance to improve, and the REIT Daya business remains challenging for new entrants.

Ronald Kamdem from Morgan Stanley inquired about the long-term demand outlook, asking for projections on peak occupancy and pricing power for the Trilogy and SHOP portfolios. He also requested details on the occupancy levels and potential upside of recently acquired assets and those in the pipeline.

Answer

President and CEO Danny Prosky stated that favorable demographics and low new supply suggest a multi-year growth trend, with peak occupancy potentially reaching the mid-90s. He and Chief Investment Officer Stefan Oh added that the acquisition pipeline, valued at over $300 million, consists of high-quality, newer RIDEA assets with yields expected to stabilize in the high-7% to 8% range.

Ronald Kamdem from Morgan Stanley inquired about the 'early innings' of the demand tailwind, asking for projections on peak occupancy and pricing power for the Trilogy and SHOP portfolios. He also requested details on the occupancy levels and potential upside of recent acquisitions and the current pipeline.

Answer

President, CEO & Director Danny Prosky explained that strong demographic trends and low new construction create a multiyear favorable environment, targeting mid-90s occupancy with disciplined rate growth. Chief Investment Officer Stefan Oh detailed the acquisition strategy, which focuses on high-quality, newer RIDEA assets. He noted that stabilized acquisitions have year-one yields in the low-6% range, with all assets expected to stabilize at high-7% to 8% yields.

Ronald Kamdem from Morgan Stanley inquired about the long-term demand drivers supporting the 'early innings' thesis, asking for projections on peak occupancy and pricing power in the Trilogy and SHOP portfolios. He also asked for details on the occupancy levels and potential upside of recently acquired assets.

Answer

President and CEO Danny Prosky cited favorable demographics and a multi-year lag in new construction as key secular tailwinds, projecting peak occupancy could reach the mid-90s while maintaining pricing discipline. Chief Investment Officer Stefan Oh added that recent acquisitions and the current pipeline are focused on high-quality, newer RIDEA assets, with a mix of stabilized and pre-stabilized properties expected to yield in the high-sevens to eights percent range upon stabilization.

Ronald Kamdem from Morgan Stanley inquired about the 'early innings' of the demand tailwind, asking for projections on peak occupancy and pricing power for the Trilogy and SHOP portfolios. He also sought details on the occupancy levels and potential upside of recently acquired assets and those in the pipeline.

Answer

President and CEO Danny Prosky cited strong demographic trends and low new construction as drivers for a multi-year favorable operating environment, targeting mid-90s occupancy with disciplined rate growth. Chief Investment Officer Stefan Oh added that the acquisition pipeline, valued at over $300 million and primarily focused on SHOP assets, consists of newer, high-quality properties with stabilizing yields projected in the high-sevens to eights.

Ronald Kamdem from Morgan Stanley asked about pricing strategies to capture strong move-in demand during the peak season and the potential ripple effects of tariffs on the business, including development and operating costs.

Answer

President and CEO Danny Prosky highlighted a focus on reducing concessions and leveraging dynamic pricing, a system where Trilogy is a leader. Regarding tariffs, Prosky stated AHR is well-positioned and does not expect a major impact, though construction costs could be affected. COO Gabe Willhite added that inflationary pressures could further constrain new supply, benefiting AHR's existing portfolio.

Ronald Kamdem asked about operational trends in early 2025 and the reasoning for the deceleration in same-store NOI guidance compared to 2024's outperformance. He also inquired about the current size and activity level of the acquisition pipeline.

Answer

President and CEO Danny Prosky explained that Q1 NOI is expected to be flat versus Q4 due to seasonal factors like FICA resets, higher utility costs, and fewer days, though it will be significantly up year-over-year. CFO Brian Peay added that 2024's 600 basis point SHOP occupancy growth is not repeatable. Regarding the pipeline, Danny Prosky described it as "very robust" and more significant than the prior year.

Ronald Kamdem requested updated thoughts on where occupancy can ultimately trend for the Trilogy and SHOP portfolios and the associated operating leverage. He also asked about the role of non-core asset sales in funding external growth and the types of deals and operator relationships the company is pursuing.

Answer

President and CEO Danny Prosky stated he expects occupancy to continue trending up into the 90s, with incremental margins on new tenants ranging from 40% to 80% depending on the business line. COO Gabe Willhite added that NOI growth is also driven by rate optimization, not just occupancy gains. Prosky clarified that non-core dispositions, primarily of Outpatient Medical buildings, are now focused on portfolio enhancement rather than being a necessary funding source for growth, and that external growth will likely outpace sales. Management emphasized a focus on sourcing off-market deals through trusted regional operator relationships.

Ronald Kamdem asked about the trajectory of same-store cash NOI for 2026 and 2027, considering the burn-off of free rent. He also inquired about Vornado's interest in monetizing the Hotel Penn land site (Penn 15) and exploring further retail monetization opportunities.

Answer

Michael Franco, President and CFO, Vornado Realty Trust, expects same-store cash NOI to turn positive towards the end of 2026 and significantly so in 2027. He stated that the Hotel Penn site (Penn 15) is a long-term core holding with incoming tenant interest, not for disposal. On retail, he noted strong interest from retailers to purchase assets, particularly in Times Square and the Penn District, and Vornado is open to participation for the right value. Steven Roth, Chairman and CEO, Vornado Realty Trust, elaborated on the 34th Street retail redevelopment, aiming to rejuvenate the area and enhance Penn District values.

Ronald Kamdem of Morgan Stanley asked for high-level thoughts on the trajectory of same-store NOI for 2026 and 2027, and for an update on the monetization or development plans for the Hotel Penn (PENN15) site.

Answer

President and CFO Michael Franco projected that same-store NOI would turn positive starting next year. Chairman and CEO Steven Roth described the PENN15 site as the best in West New York but noted that development is not imminent due to high construction costs and the need to secure the right anchor tenant.

Ronald Kamdem of Morgan Stanley asked if the same-store NOI trajectory is expected to accelerate through 2027, in line with the occupancy forecast. He also requested an update on the capital allocation waterfall and the status of the Hotel PENN site sale.

Answer

President and CFO Michael Franco confirmed that same-store NOI should follow the occupancy trajectory and accelerate into 2027. On capital allocation, he said the current focus is on investing in the existing business, new development, and debt reduction, with stock buybacks not being a priority at this time. The Hotel PENN site was not specifically addressed in the response.

Ronald Kamdem of Morgan Stanley asked for the outlook on same-store NOI for Vornado's New York office portfolio over the next few years and for guidance on CapEx spending for 2025 and 2026.

Answer

Michael Franco, President and CFO, declined to provide a specific forward-looking same-store NOI number. On CapEx, he stated that the current forecast of $250-$275 million is a good directional number for the current year, reflecting a strong leasing environment, but expects the figure will start to come down in future years as the portfolio's occupancy stabilizes.

Ronald Kamdem from Morgan Stanley asked for the outlook on New York office same-store NOI growth over the next few years and inquired about the expected trajectory of capital expenditures in 2025 and 2026.

Answer

President and CFO Michael Franco declined to provide a specific same-store NOI forecast but said management would look into providing more visibility. On CapEx, he stated that the current projection reflects a strong leasing environment and that the number should start coming down in future years as the portfolio's occupancy stabilizes.

Ronald Kamdem of Morgan Stanley asked for the outlook on same-store NOI for the New York office portfolio over the next few years and for guidance on the trajectory of capital expenditures.

Answer

President and CFO Michael Franco declined to provide a specific same-store NOI forecast but indicated that CapEx for the upcoming year would likely be in the $250 million to $275 million range, reflecting a strong leasing environment. He expects this number to decrease in future years as the portfolio's occupancy stabilizes.

Ronald Kamdem requested an outlook for New York office same-store NOI growth over the next few years and asked for guidance on the capital expenditure trend for 2025 and 2026.

Answer

President and CFO Michael Franco declined to provide a specific same-store NOI forecast. Regarding capital expenditures, he stated that the current $250-$275 million range is a good directional estimate for the current year, reflecting strong leasing activity, and he expects that figure to decline in the future as the portfolio's occupancy stabilizes.

Ronald Kamdem of Morgan Stanley asked about the potential impact on same-store NOI from the expected occupancy fluctuations in 2025. He also inquired about the company's strategy for maximizing free cash flow and managing CapEx as the business recovers.

Answer

President and CFO Michael Franco stated it was difficult to predict the precise same-store NOI impact for 2025 due to timing variables but reiterated the end goal of stabilizing occupancy. He emphasized that Vornado remains rigorous with capital deployment, investing only where it sees appropriate returns, and hopes to see tenant concessions trend down as the market strengthens.

Ronald Kamdem of Morgan Stanley requested a breakdown of how much of the leasing pipeline relates to PENN2 and asked for an update on plans for the former Hotel Pennsylvania site.

Answer

Executive Glen Weiss stated that a 'good amount' of the pipeline is for PENN2 but declined to give a specific breakdown. President and CFO Michael Franco commented that the Hotel Pennsylvania site's development is not imminent, citing the high cost of construction and lack of financing, but noted it remains a prime site for the future.

Ronald Kamdem of Morgan Stanley requested a breakdown of the leasing pipeline related to PENN2 and asked for an update on plans for the former Hotel Pennsylvania site.

Answer

Glen Weiss, an executive, confirmed a 'good amount' of the 2.6 million sq. ft. pipeline is for PENN2 but declined to provide a specific breakout. Michael Franco, President & CFO, stated that development of the Hotel Penn site is not imminent due to high construction costs and the challenging financing environment, saying its 'day has not come yet.'

Ronald Kamdem inquired about the lab leasing pipeline, specifically its doubling since the beginning of the year, seeking details on the changes, tenant mix, and qualitative trends. He also asked for more information on the $1 billion capital recycling from outpatient medical, potential buy-side opportunities, and financial metrics for reinvestment.

Answer

Scott Brinker, President and CEO, explained that the lab pipeline has doubled in quantum and shows a more favorable mix of new and renewal leasing, driven by improved sector sentiment, capital raising, positive data, and FDA approvals. He noted the positive momentum needs to continue. Regarding capital recycling, Mr. Brinker highlighted outpatient medical's consistent NOI growth and the strategic decision to sell non-core assets due to strong demand from institutional buyers and attractive pricing. He mentioned $130 million is under contract at strong cap rates, with proceeds intended for higher-return lab opportunities and outpatient development.

Ronald Kamdem asked about the significant doubling of the lab leasing pipeline since the beginning of the year, seeking details on what has changed, the current mix of tenants, and any notable qualitative trends driving this positive shift.

Answer

President and CEO Scott Brinker explained that the pipeline now features a broad mix of early, clinical, and commercial stage tenants, with a more favorable balance of new versus renewal leasing. This improvement is attributed to enhanced sector sentiment, increased capital raising, positive data readouts, and favorable FDA actions. He noted the positive momentum, emphasizing the need for continued activity to sustain the pipeline.

Ronald Kamdem of Morgan Stanley asked which life science submarkets are expected to recover first and which offer the biggest upside. He also requested any early information on the 413,000 square feet of leases set to expire next year.

Answer

Chief Development Officer Scott Bohn noted that while it's hard to predict which market will recover fastest, the core submarkets like Cambridge, Lexington, and South San Francisco will see demand return sooner than tertiary areas. He observed a recent uptick in tour activity in San Diego. Regarding next year's expirations, he stated that since the bulk of them are in the second half of the year, it is a bit too early to provide specific guidance.

Ronald Kamdem from Morgan Stanley asked which life science submarkets are expected to recover first and have the most upside, and requested color on the lease expirations scheduled for the following year.

Answer

Chief Development Officer Scott Bohn indicated that top-tier submarkets like Cambridge and Lexington show the greatest demand, San Diego has seen an uptick in tour activity, and the Bay Area is stable. He believes their core submarkets will recover fastest. Regarding next year's expirations, he noted it was too early for detailed guidance as most fall in the second half of the year.

Ronald Kamdem followed up on tenant health, specifically the 25 basis points credit loss in guidance (lower than last quarter), and sought general color on tenant health. Kamdem also asked for any color on cap rates for larger deals or portfolios.

Answer

Joey Agree, President and CEO, clarified that the At Home disposition was an opportunistic real estate play. Peter Coughenour, CFO, explained that the credit loss assumption was tightened from 50 bps to 25 bps as performance has been strong. Agree mentioned passing on larger sale-leaseback portfolios that were not appropriately priced, believing they could create more value through alternative means like development.

Ronald Kamdem asked about the rationale for the lower 25 basis points credit loss guidance and the overall health of Agree Realty's tenants. He also inquired about cap rates for larger deals or portfolios.

Answer

President and CEO Joey Agree clarified that the At Home sale was an opportunistic real estate play. CFO Peter Coughenour explained the credit loss guidance was tightened from 50 basis points to 25 basis points due to strong portfolio performance. President and CEO Joey Agree mentioned passing on larger, notably sale-leaseback, deals due to inappropriate pricing, believing they can create more value through alternative means.

Ronald Kamdem asked if lease structures for development projects differ from acquisitions and inquired about the potential for further growth with top tenant Genuine Parts Company (Napa).

Answer

President and CEO Joey Agree responded that development leases are typically new, long-term (10-20 years) but standard in structure, with yields 50-150 basis points wider than acquisitions. Regarding Genuine Parts (Napa), he stated that while they like the auto parts sector, there are no current plans to materially increase exposure to that specific tenant.

Ronald Kamdem from Morgan Stanley inquired about the potential impact of tariffs on construction costs for development projects, the company's yield requirements for that channel, and the outlook for property dispositions for the year.

Answer

CEO Joey Agree estimated that tariffs could increase hard construction costs by 2% to 5% on the high end, which he does not consider a material impact on their projects. Regarding dispositions, he stated that the annual guidance remains unchanged and that capital recycling is not a major priority this year, unlike in the previous year, though they will continue to evaluate opportunistic sales.

Ronald Kamdem of Morgan Stanley asked for an estimate of how much construction costs could increase due to tariffs and how that affects yield requirements for development projects. He also inquired about the company's disposition strategy for the year.

Answer

CEO Joey Agree estimated that tariffs could increase hard construction costs by 2% to 5% on the high end, which they do not consider a material move for their projects. Regarding dispositions, he stated that the annual guidance remains unchanged and he does not foresee dispositions being a major source of capital this year. While they will remain opportunistic, pruning the portfolio is not a priority as it was in the previous year.

Zhen Li, on behalf of Ronald Kamdem at Morgan Stanley, questioned the long-term target for investment-grade tenant exposure and the expected cadence of transaction volume for the year.

Answer

CEO Joey Agree explained that the high investment-grade percentage is an output of their strategy, not a specific target, as they also value strong unrated retailers. He confirmed a strong start to the year but declined to predict the full-year cadence due to market volatility, noting Q1 was 'locked and loaded'.

Zhen Li, on behalf of Ronald Kamdem at Morgan Stanley, asked about the long-term expectations for investment-grade tenant exposure and the potential risks to the 2025 transaction volume pipeline.

Answer

CEO Joey Agree explained that the high investment-grade exposure (68.2%) is an output of their strategy, not a rigid target, as they also value strong unrated tenants. He noted that Q1 transaction volume is already "locked and loaded" after a strong January, but forward visibility for the rest of the year remains limited due to market volatility.

Ronald Kamdem of Morgan Stanley asked for more details on the drivers of the strong move-in activity in July and for specifics on the acquisition strategy, including target occupancy and stabilized yields.

Answer

President & CEO Brandon Ribar attributed the July move-in success to significant investments in digital marketing, which increased leads through Sonita's own channels and reduced reliance on paid third-party referrals. Regarding acquisitions, Ribar explained they target communities with occupancy in the mid-70s to low-80s, where they can apply their operational and sales expertise to drive growth, while still targeting low double-digit stabilized cap rates.

The analyst asked for more details on the drivers behind the increased move-in activity in July and for more information on the characteristics of their recent acquisitions, including occupancy and stabilized yields.

Answer

The company attributed the strong July move-ins to enhanced digital marketing efforts that generated leads through their own channels, not paid third-party aggregators, driven by new sales and marketing personnel. Regarding acquisitions, they are targeting properties in the mid-70s to low-80s occupancy range, which are not broken but can benefit from their operational and sales expertise. They are confident in achieving low double-digit stabilized cap rates by improving both rate and expense management.

Ronald Kamdem of Morgan Stanley asked for more detail on the drivers of the strong move-in activity in July and inquired about the acquisition strategy, specifically regarding the occupancy and stabilized yields of target properties.

Answer

President & CEO Brandon Ribar attributed the July move-in success to enhanced digital marketing efforts generating leads through Sonida's own channels, reducing reliance on costly third-party aggregators. Regarding acquisitions, Ribar stated they target communities with occupancy in the mid-70s to low-80s, aiming for stabilized cap rates in the low double-digits by implementing their sales, marketing, and expense control processes.

Ronald Kamdem inquired about the new repositioning portfolio, including the rationale behind the five assets moved, the timeline for their overhaul, and whether other assets might follow. He also asked for more details on the two newly announced acquisitions.

Answer

President and CEO Brandon Ribar explained that the repositioning of five Indiana-based assets is a strategic response to a state Medicaid program change, allowing Sonida to reduce its government reimbursement exposure. The company will invest $4-5 million to upgrade these communities for a private-pay model, projecting returns exceeding 30%. Ribar stated that no other large-scale repositioning is immediately planned. Regarding the new acquisitions, he confirmed they are in Florida and Georgia, consistent with the strategy of acquiring high-quality, newer vintage assets with operational upside and targeting low double-digit yields upon stabilization.

Ronald Kamdem asked about the structural ceiling for portfolio occupancy, how the company is maximizing pricing power, and what on-the-ground effects from tariffs are being observed among tenants and consumers.

Answer

President Robert Myers stated there is room for another 100-150 bps of growth in in-line occupancy to the 96% range. Chairman & CEO Jeffrey Edison addressed tariffs, noting that with only 15% of ABR exposed, tenants have so far been able to pass on most costs to suppliers, and no negative leasing trends have emerged.

Ronald Kamdem requested more color on the joint venture partnerships and inquired about the primary focus for driving organic growth in a high-occupancy portfolio.

Answer

CEO Jeffrey Edison described the JVs as an additive growth driver, expected to account for about 10% of the annual acquisition target. Regarding organic growth, Mr. Edison stated the strategy involves all levers—rent bumps, options, and retention—applied on a nuanced, property-by-property basis to create long-term value. President Bob Myers added that acquiring assets with occupancy upside provides a parallel path for growth.

Ronald Kamdem inquired about the progress in securing more favorable lease terms, such as higher rent escalators, and asked for clarification on whether acquisition cap rates were compressing.

Answer

President Robert Myers confirmed they are achieving 3-4% annual rent escalators on renewals and 2-3% on new leases, in addition to removing restrictive clauses. CEO Jeffrey Edison clarified that they are not seeing significant, broad-based cap rate compression, but rather a more stable market with variability based on individual asset quality and upside potential.

On behalf of Ronald Kamdem from Morgan Stanley, an analyst asked about VICI's plans for the Caesars Forum Convention Center call option and for an update on the strategic relationship with King International.

Answer

CEO Edward Pitoniak confirmed the call option on Caesars Forum becomes active in late September 2025 and any decision will be guided by maximizing total shareholder return. Regarding King International, he mentioned they have had preliminary conversations about potentially helping finance the growth of King's St. James sports and wellness facility network.

Representing Ronald Kamdem from Morgan Stanley, an analyst asked for VICI's outlook on the youth and recreational sports sector and its potential for strategic investment over the next 3-5 years. They also inquired about VICI's diversification strategy and if there are specific sectors where it seeks to broaden its tenant base.

Answer

CEO Edward Pitoniak expressed a positive outlook on youth sports, citing its growing importance in family culture and the increasing need for high-quality facilities. CFO David Kieske, addressing diversification, pivoted to international opportunities, stating that VICI has mapped the globe for potential real estate investments. He specifically mentioned Canada as a market where VICI would like to pursue more gaming and non-gaming deals, citing favorable operators and economies.

Ronald Kamdem asked for commentary on a potential turnaround in the San Francisco market, the specific plans for backfilling major upcoming expirations there, and the company's strategy for its 2026 debt maturities.

Answer

Albert Behler, Chairman, CEO, and President, noted positive signs in San Francisco, including new political leadership and a stronger return-to-office push from tech firms. Peter Brindley, EVP, Head of Real Estate, added that tour activity is up and plans are underway to add significant amenities to One Market Plaza and One Front Street to attract tenants. Regarding debt, Wilbur Paes, COO, CFO, and Treasurer, stated it's too early for specifics on 2026 maturities but observed that the financing market, especially for CMBS, is improving, and they will address it in late 2025 or early 2026.

Asked for more detail on the drivers of U.S. agent attrition versus international agent growth, and questioned whether the recent U.S. and Canadian settlements resolve all major litigation.

Answer

Executives attributed international growth to a strong brand and entrepreneurial network, while U.S. attrition is seen as a 'top of the funnel' issue that will be addressed by improving the value proposition. Regarding litigation, they confirmed the settlements remove significant uncertainty and directed further questions to the 10-K filing.

Asked why October operating statistics were not provided, and requested more detail on agent count trends, specifically the drivers of softness in the U.S. versus the strength seen internationally.

Answer

The CFO explained the October data was omitted due to timing, as the earnings release occurred before month-end, but noted trends were consistent with Q3. Internationally and in Canada, agent count hit record highs, driven by large conversions and market share gains. In the U.S., while overall count is down, agent productivity increased, suggesting that departing agents are from lower-producing cohorts.

Ronald Kamdem asked why October operating statistics were not provided and requested an update on agent and franchise trends. He also sought more detail on the drivers behind the diverging agent count trends between the U.S./Canada and international markets.

Answer

CFO Karri Callahan explained the absence of October data was due to the timing of the release and that trends were consistent with Q3. She attributed the record-high Canadian and international agent counts to strong momentum and large conversions. For the U.S., she noted that while overall agent count is pressured, agent productivity increased, suggesting departing agents are from lower-producing cohorts.

Ronald Kamdem of Morgan Stanley inquired about RMR's new residential joint venture investments, asking for details on the opportunity, pipeline, and targeted IRRs, and also sought more commentary on the newly mentioned development growth initiative.

Answer

President and CEO Adam Portnoy explained that the residential JVs involve RMR as the General Partner in deals totaling around $200 million, with a fiscal 2025 target of $500 million to over $1 billion in similar investments. He noted expected returns are in the mid-teens with potential for promote income. Portnoy also elaborated on development opportunities, including redeveloping obsolete structures into industrial or multifamily properties, citing large-scale projects in Nashville and Boston as examples that could involve outside partners.

Ronald Kamdem asked for an update on the pipeline and expected closing timelines for the RMR Residential and private lending vehicles, and also inquired about the projected cash balance trajectory for the end of the year and into the next.

Answer

CEO Adam Portnoy indicated that bringing partners into the private credit vehicle is likely a 2025 event. CFO Matt Jordan added that the residential platform is also expected to gain traction in early 2025, with momentum accelerating. Jordan projected that RMR's cash balance would increase to approximately $150 million by year-end, as no major strategic investments are expected to close in the current quarter, but anticipates drawing down that cash in calendar 2025 to fund strategic initiatives.

Ronald Kamdem requested details on office leasing fundamentals, including tenant types, concessions, and whether management sees an inflection point. He also asked for the same-store NOI growth assumptions for office and retail in the 2025 guidance and how the net debt-to-EBITDA ratio is expected to trend.

Answer

Executive Adam Wyll described a broad spectrum of office tenants and highlighted that the main incentive is landlord-funded tenant improvements in exchange for longer lease terms. Executive Ernest Rady emphasized that the company's strong balance sheet is a competitive advantage. Executive Robert Barton provided guidance for a 1% decrease in same-store office cash NOI and an approximate 1.5% increase for retail. He stated that net debt-to-EBITDA is expected to remain in the '6 range'.

Ronald Kamdem asked for the strategic thinking behind the recent debt exchange, which involved issuing new secured notes due in 2029 and common equity to address upcoming maturities.

Answer

CFO and Treasurer Brian Donley stated that the company is using all available tools to reduce its debt maturities. He clarified that this specific exchange utilized remaining capacity from a larger exchange completed in June. Donley emphasized that while some exchanges are small, every transaction helps to incrementally decrease the outstanding $457 million maturity due in 2025.

Ronald Kamdem of Morgan Stanley asked for the strategic thinking behind the recent debt exchange, which involved issuing new secured notes due in 2029 as well as common equity to reduce upcoming maturities.

Answer

CFO and Treasurer Brian Donley stated that the company is using all available tools to address its debt maturities. He explained that OPI utilized remaining capacity from a June exchange to issue more secured notes and is also conducting smaller, one-off debt-for-equity swaps. These actions are part of a broader effort to incrementally reduce the 2025 maturity, which now stands at $457 million.

Ronald Kamdem inquired about the strategic thinking behind the recent debt exchange, which involved issuing new secured notes due in 2029 and common equity to address upcoming maturities.

Answer

CFO and Treasurer Brian Donley stated that the company is using all available tools to incrementally reduce its debt maturities. He explained that the recent exchange utilized remaining capacity from a larger exchange completed in June and that the company is also conducting smaller, one-off debt-for-equity swaps to chip away at the remaining $457 million maturity due in 2025.

Asked for a breakdown of the leasing pipeline related to PENN2, whether a PENN1 deal is on vacant space, and for any updated plans for the former Hotel Penn site.

Answer

Management confirmed a 'good amount' of the pipeline is for PENN2 but declined to give specifics. The PENN1 deal is on vacant space. The Hotel Penn site redevelopment is not imminent due to the high cost and lack of construction financing.

Ronald Kamdem sought confirmation on the Q3 acquisition and disposition pipeline, asked if transaction activity has exceeded initial expectations, and inquired about the potential annual acquisition run rate for Curbline post-spin.

Answer

CFO Conor Fennerty confirmed the Q3 acquisition figure is not speculative and is based on over $200 million of assets awarded or under contract. CEO David Lukes added that disposition activity has 'far exceeded' expectations, and while the sales pace has been a challenge for the team's bandwidth, he is confident Curbline can acquire about $500 million per year.

Ronald Kamdem of Morgan Stanley inquired about the cap rates and IRR expectations for Curbline acquisitions and how the CapEx profile of Curbline will compare to SITE Centers' historical figures.

Answer

CEO David Lukes stated that acquisition cap rates are in the low to mid-6% range, consistent with other high-quality retail, but the unlevered IRR is higher due to significantly lower CapEx needs. CFO Conor Fennerty quantified this, explaining that Curbline's CapEx is expected to be sub-10% of NOI, compared to an industry average of 20-30%, which is a 'fulcrum piece' of the investment thesis.