Samir Khanal

Samir Khanal inquired about Regency Centers' acquisition and disposition strategy, current market pricing for grocery-anchored assets, and opportunities for the upcoming year, following an active acquisition year in 2025.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, noted strong demand for grocery-anchored real estate, with cap rates in the 5%-6% range. He emphasized that acquisitions are incremental to the development program and must be accretive to earnings, growth, and quality. Alan Roth, East Region President and Chief Operating Officer, reinforced that development is the priority, with acquisitions pursued opportunistically.

Samir Khanal inquired about the acquisition market, current pricing for grocery-anchored properties, and potential opportunities for Regency Centers in the upcoming year, given their active acquisition year in 2025.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, noted strong demand for grocery-anchored real estate, with cap rates in the 5%-6% range. He emphasized the company's focus on accretive acquisitions and prioritizing development with yields north of 7%. Alan Roth, East Region President and Chief Operating Officer, clarified that acquisitions are incremental to their development strategy, not an alternative.

Samir Khanal observed a recent shift towards more anchor leasing compared to shop space in new leases, a departure from prior quarters, and asked for clarification on whether this was due to returned boxes or development-related activity.

Answer

Alan Roth, East Region President and COO, clarified that the higher proportion of anchor transactions in Q3 was an anomaly and not development-driven. He advised focusing on the strong cash and gap rent spreads achieved during the quarter, indicating that the mix was coincidental.

Samir Khanal observed a shift towards more anchor leasing compared to shop space in recent quarters and asked for clarification on the reasons behind this change.

Answer

Alan Roth, East Region President and Chief Operating Officer, explained that the higher volume of anchor transactions in Q3 was an anomaly for the quarter, not driven by development or specific boxes being returned, and advised focusing on cash and gap rent spreads.

Samir Khanal from Bank of America inquired about the expected cadence of same-store NOI components for the second half of 2025, following a very strong second quarter.

Answer

EVP & CFO Mike Mas explained that while base rent remains the primary driver, the growth rate is expected to decelerate in the second half. This is due to the known timing of bankruptcy-related move-outs from tenants like Party City and Rite Aid, and an anticipated normalization of uncollectible lease income, which was exceptionally low in the first half. He also noted that Q2 benefited from some one-time items like shifted percentage rent and strong expense recoveries.

Samir Khanal of Bank of America inquired about the expected cadence and contributing components of same-store NOI growth for the second half of 2025.

Answer

CFO Mike Moss explained that while a deceleration from Q2's exceptional results is expected, base rent will remain the primary driver. He noted that the second half will be impacted by known bankruptcy-related move-outs and a normalization of uncollectible lease income, which was unusually low in the first half. Moss also highlighted that Q2 benefited from some one-time items like shifted percentage rent and higher-than-expected expense recoveries.

Samir Khanal inquired how the encouraging demand and leasing activity are translating into pricing and market rent growth, seeking EastGroup's national outlook for rent growth and identifying any outperforming or lagging markets.

Answer

CEO Marshall Loeb stated that while demand has picked up, it has not yet translated into significant rent growth, though he remains optimistic due to the 7-8 year low in the construction pipeline. He noted that rents are generally inflation plus a little bit, absent California, and that construction pricing has come down, helping maintain development yields around 7%. He anticipates an inflection point for rent growth as demand stabilizes.

Samir Khanal inquired how the encouraging development leasing translates into pricing and market rent growth, seeking insights on the national market rent growth outlook and identifying outperforming or lagging markets.

Answer

CEO Marshall Loeb stated that while demand has picked up, it has not yet translated into significant market rent growth, though he anticipates it due to historically low construction pipelines. He noted rents are generally inflation-plus, with construction pricing decreases helping maintain development yields above 7%.

Samir Khanal asked for expanded commentary on leasing, particularly concerning the development pipeline in areas like rural Houston and other Texas projects. He inquired about the conversion of larger spaces to signed leases and what factors prospects need to see to finalize deals.

Answer

CEO Marshall Loeb noted an improvement in the tenor of conversations since May, with a high retention rate of almost 80% benefiting the portfolio. He mentioned slowing development starts due to cautious larger prospects, but an increase in overall prospects. Loeb expressed hope for external factors like interest rate cuts or a ceasefire to boost business sentiment, acknowledging that leases sent out have not always returned as quickly as in prior years. He also highlighted the availability of spec suites for tenants needing quick occupancy.

Samir Khanal asked for an expansion on EastGroup Properties' leasing commentary, particularly regarding the development pipeline, including projects in Rural Houston and other Texas markets. He inquired about what factors prospects need to see to finalize leases for larger spaces.

Answer

Marshall Loeb, CEO, stated that the company is more encouraged by the improving tenor of conversations since May. He noted that a high retention rate of almost 80% is benefiting the portfolio's same-store numbers, but the development pipeline has slowed. While there are more prospects, converting activity into signed leases is taking longer, with hopes for interest rate cuts and improved business sentiment. He mentioned not assuming spec leasing for the remainder of the year but sees potential upside, acknowledging that leases sent out have not always returned, which is atypical.

Samir Khanal of Bank of America inquired about the leasing cadence during the second quarter and into July for both the core and development portfolios.

Answer

President and CEO Marshall Loeb explained that after a strong start to the year, leasing for larger spaces slowed due to tariff uncertainty, though the prospect pipeline remains full. He noted a recent pickup in June and July, particularly for spaces 50,000 square feet and below. Loeb mentioned that some development leases have stalled at the corporate level but expressed optimism that activity can turn around quickly, similar to late last year.

Samir Khanal from Bank of America inquired about the leasing cadence during the second quarter and into early July 2025, seeking details on activity in both the core portfolio and the development pipeline.

Answer

President and CEO Marshall Loeb responded that leasing for spaces 50,000 sq. ft. and below remained steady, but decisions for larger spaces have elongated due to tariff-related uncertainty. He noted that while the total number of leases signed was strong, the total square footage was down from prior record quarters. Loeb added that activity picked up slightly in June and July, but some deals near the finish line have been frustratingly put on hold by tenants' corporate offices.

Samir Khanal questioned the company's stated urgency to complete leases quickly, asking if management was being more flexible on terms or lowering rents to secure occupancy in the current macro environment.

Answer

Executive Marshall Loeb clarified that the focus is on the speed of execution—turning around lease documents promptly—rather than conceding on economic terms like rent or tenant improvements. The goal is to finalize deals before macroeconomic news can cause prospects to hesitate. He noted that while they might 'stretch a little more' in a challenged market like Los Angeles, they are not compromising on credit standards or making bad deals.

Samir Khanal requested an updated view on market rent growth, referencing previous guidance of mid-single digits.

Answer

President and CEO Marshall Loeb reaffirmed that 4-5% market rent growth is still an accurate forecast for the year for their product type. He anticipates a future 'rent squeeze' that will push rents higher as the construction pipeline shrinks, noting that excluding Southern California, the portfolio is currently seeing growth around the 4% range.

Samir Khanal asked for early observations regarding the Simon Plus loyalty program, particularly its impact on traffic and retailer sales since its launch in November.

Answer

Chairman, CEO, and President David Simon expressed satisfaction with early customer adoption and brand excitement, noting a successful holiday activation that generated organic buzz and increased traffic. He mentioned plans to continue focusing on new rewards, retailers, and partnerships with external loyalty programs in 2026.

Samir Khanal inquired about the early observations and impact of the Simon Plus loyalty program, which launched in November, on key metrics such as traffic and retailer sales.

Answer

David Simon, Chairman, Chief Executive Officer, and President, expressed satisfaction with the early adoption from both customers and brands. He noted a successful holiday activation that generated organic buzz and helped increase traffic, with plans to continue focusing on new rewards, retailers, and external loyalty partnerships in 2026.

Samir Khanal asked if Simon's approach to lease negotiations, including pricing and tenant improvements, has changed given the current uncertainty for tenants.

Answer

CEO David Simon stated that it remains 'business as usual' for lease negotiations, as tenant demand is still strong and supply is constrained. He mentioned that while he has some concern for smaller 'mom-and-pop' retailers if uncertainty persists, they have not seen any broad-based issues or changes in their leasing strategy.

Samir Khanal asked for more color on the significant pickup in occupancy in Europe and Asia in Q4, specifically in Japan, and what factors were driving this trend.

Answer

CFO Tim Arndt explained that strong occupancy in Europe and Japan is not a new trend, having been highlighted in recent quarters, with Prologis' portfolio consistently performing well in these markets. Managing Director of Global Strategy and Analytics Chris Caton added that momentum is building globally, with ex-U.S. markets showing healthy demand and lower vacancies.

Samir Khanal (Bank of America) asked for more details on the significant occupancy pickup observed in Prologis' European and Asian portfolios during Q4, specifically inquiring about the drivers behind the strong performance in Japan.

Answer

CFO Tim Arndt noted that the strong performance in Europe and Japan, including high occupancies, has been a consistent trend highlighted in recent quarters. Chris Caton, Managing Director of Global Strategy and Analytics, added that momentum is building globally, with ex-U.S. markets showing increased vigor, healthy demand, and lower vacancies.

Samir Kanal asked for more color on strengthening customer sentiment, specifically if customers are now desensitized to short-term noise like tariffs and more comfortable making long-term decisions, leading to an inflection in occupancy.

Answer

President Dan Letter confirmed that customers have become more desensitized to short-term noise and are comfortable making long-term decisions. He noted that well-capitalized large companies are leading the way, with smaller and medium businesses expected to follow, as they can no longer delay long-term decisions.

Samir Khanal of Bank of America asked about the increased acquisition guidance, seeking details on transaction opportunities, pricing, and current underwriting assumptions.

Answer

President Dan Letter noted the transaction market has been resilient, with capital chasing high-quality assets and driving core returns into the low 7% range. He said Prologis is focusing on value-add opportunities with 150-200 bps better returns, such as broken developments or vacant properties. CEO Hamid Moghadam added that returns in Europe are even lower, in the low 6% range.

Samir Khanal noted the relatively lower occupancy of 92% for smaller spaces (under 100,000 sq. ft.) and asked for color on this trend and any specific markets facing challenges.

Answer

Dan Letter, President, explained that this smaller-space segment typically has the lowest occupancy due to shorter lease terms and higher churn. Christopher Caton, Managing Director, added that market strength is broad, not isolated. Hamid Moghadam, CEO, also pointed out that while these tenants may have lower credit, the high replacement cost for smaller buildings provides a barrier to new supply.

Samir Khanal of Evercore ISI asked for a reconciliation between the positive commentary on leasing and the recent dip in the company's space utilization chart.

Answer

Managing Director Christopher Caton addressed the question, explaining that unexpectedly healthy holiday consumption pulled goods from the supply chain, causing a temporary dip in utilization that is not representative of the underlying trend. He added that customers are reporting that their utilization is actually rising and inventory building is expected in 2025.

Samir Khanal asked for clarification on the one-time benefits recorded in the quarter, specifically the Rite Aid impact, and the total amount of such benefits for the full year when considering the 2026 outlook.

Answer

Glenn Cohen, CFO, confirmed a $3.2 million (half a penny per share) one-time benefit from Rite Aid in Q3, bringing the total one-time items for the year to about $0.03 per share. He noted these are lumpy and not included in initial guidance. Conor Flynn, CEO, also advised considering the $240 million structured finance prepayment.

Samir Khanal asked for clarification on the one-time benefits recorded in the quarter, specifically the Rite Aid impact, and the total amount of such benefits for the full year when considering the 2026 outlook.

Answer

Glenn Cohen, CFO, confirmed a $3.2 million (half a penny per share) one-time benefit from Rite Aid in Q3, bringing the total one-time items for the year to about $0.03 per share. He noted these are lumpy and not included in initial guidance. Conor Flynn, CEO, also advised considering the $240 million structured finance prepayment.

Samir Khanal of Bank of America inquired about the drivers behind the increase in lease termination fees and sought an update on the tenant watch list for 2026.

Answer

EVP & COO David Jamieson explained the higher termination fee was primarily from a single large redevelopment project, not a broader trend. He and CEO Conor Flynn noted the tenant watch list is the smallest it's ever been, with strong operators actively taking market share from weaker ones.

Samir Khanal from Bank of America asked about the drivers for higher expense reimbursements in the quarter and the expected trajectory for the remainder of the year.

Answer

Glenn Cohen, CFO, attributed the strong recoveries to good collections, the structure of fixed CAM agreements, and favorable timing. He also highlighted that insurance costs came in lower than anticipated. Conor Flynn, CEO, added that the lower insurance costs demonstrate a key benefit of the portfolio's scale and diversity.

Samir Khanal asked for the key building blocks for growth in 2025 and whether another year of 3%+ same-site NOI growth, or even an acceleration, is possible.

Answer

CEO Conor Flynn did not provide specific 2025 guidance but outlined a positive outlook based on muted supply and strong tenant demand. He identified key growth levers as compressing the signed-but-not-open pipeline and accretively recycling capital from asset monetizations (like entitled units) into higher-growth centers, which could enhance the company's growth profile.

Samir Khanal of Evercore ISI asked for the key building blocks for growth in 2025 and whether another year of over 3% same-site NOI growth is achievable.

Answer

CEO Conor Flynn declined to give specific 2025 guidance but highlighted positive fundamentals like muted bankruptcies and strong tenant demand. He pointed to differentiators like monetizing entitled units and recycling assets into higher-growth centers as levers to enhance the growth profile.

Samir Khanal from BofA Securities asked Brian Finnegan about the record-high small shop occupancy and the comment that there's "more room to run," seeking expansion on the outlook for occupancy into the next year.

Answer

Brian Finnegan, Interim CEO and COO, stated that the future reinvestment pipeline is several hundred basis points below current occupancy, and historically, bringing these projects online lifts shop occupancy. He cited specific projects with Publix in Plano, Florida, suburban Atlanta, and metro New York as examples providing visibility for continued growth.

Samir Khanal inquired about Brixmor's shop occupancy hitting another record and the statement that there's 'more room to run,' asking for expansion on these comments regarding occupancy into next year.

Answer

Brian Finnegan, Interim CEO and COO, stated that the future reinvestment pipeline is several hundred basis points below current occupancy, and historically, bringing these projects online has lifted shop occupancy. He cited specific projects with Publix in Plano, Florida, suburban Atlanta, and metro New York as examples providing visibility for continued growth.

Samir Khanal from Bank of America requested details on the drivers behind the year-over-year increase in the 'other revenue' line, which contributed to strong same-store NOI growth.

Answer

EVP & CFO Steven Gallagher explained that about half of the increase came from a renegotiated parking agreement at Pointe Orlando, which now allows Brixmor to capture more revenue upside. The remainder was driven by the ancillary revenue team capitalizing on temporarily vacant spaces. President & COO Brian Finnegan added that this is part of a broader, recurring strategy to generate fees from sources like EV charging and solar.

Samir Khanal questioned the growth trajectory for the remainder of the year, noting that achieving the guidance midpoint implies significant acceleration in same-store NOI growth. He asked for a walkthrough of this expected growth and any potential risks, such as rent commencement delays.

Answer

CEO Jim Taylor emphasized that the company has excellent visibility into future growth due to its large, contractual signed-but-not-commenced (SNO) pipeline. He stated this pipeline provides significant growth momentum through 2025 and into 2026, forming a key part of the company's 'all-weather' business plan that allows it to perform well even in volatile periods.

Samir Khanal inquired about Brixmor's use of its at-the-market (ATM) equity program in Q4, the outlook for acquisition opportunities, and the preferred funding sources between the ATM and capital recycling.

Answer

CEO James Taylor explained that at the current share price, the company's focus for funding external growth is on capital recycling. He noted an encouraging increase in the availability of target assets that fit Brixmor's value-add framework and emphasized that the company will remain disciplined, viewing its equity as precious.

Samir Khanal of Evercore ISI asked about Brixmor's use of its at-the-market (ATM) equity program in Q4, the current acquisition pipeline, and the preferred funding strategy between capital recycling and equity issuance.

Answer

CEO James Taylor responded that at the current share price, the company's focus for funding external growth is on capital recycling rather than issuing equity. He noted an encouraging increase in the availability of target assets that fit Brixmor's value-add framework and emphasized that the company will remain disciplined, viewing its equity as precious.

Samir Khanal asked for more detail on the preliminary outlook for over 4% NOI growth in 2025, specifically requesting how to model the flow-through of the $59 million of rent commencements.

Answer

COO Brian Finnegan detailed that the growth is driven by three main factors: embedded rent growth in existing leases, the compounding impact of the SNO pipeline (as 2024 commencements contribute for a full year plus new 2025 commencements), and contributions from the stabilizing redevelopment pipeline.

Samir Khanal asked for more detail on the preliminary outlook for over 4% NOI growth next year, specifically regarding the flow-through timing of the $59 million in rent commencements.

Answer

President & COO Brian Finnegan explained that growth will be driven by the compounding impact of the SNO pipeline. Leases commenced in 2024 will contribute for a full year in 2025, layered on top of new leases that will commence during 2025. This 'layering impact,' combined with embedded rent bumps and redevelopment deliveries, provides high confidence in exceeding 4% growth.

Samir Khanal asked about the sustainability and run rate of the 3.3 million square feet of leasing executed in the third quarter, inquiring about any carryover from the previous quarter.

Answer

Laura Clark, Chief Operating Officer, highlighted that Q3 marked the highest leasing quarter and strongest net absorption in the company's history, driven by improved tenant decision-making and strong retention. She noted activity on approximately 80% of vacant spaces, similar to Q2, but acknowledged ongoing macroeconomic and tariff uncertainties make future demand predictions challenging.

Samir Khanal from Bank of America asked for the outlook on the 3% cash mark-to-market, how it is expected to trend, and its potential impact on future cash same-store growth.

Answer

COO Laura Clark explained that while the mark-to-market trend depends on market rent growth, Rexford's growth is not reliant on it due to the small portion of the portfolio rolling annually (15%). She highlighted more significant growth drivers, including $70 million of incremental NOI from redevelopments and strong contractual rent steps averaging 3.7%.

Samir Khanal of Bank of America asked for the outlook on the 3% cash mark-to-market, how it is expected to trend, and its potential impact on cash same-store growth.

Answer

COO Laura Clark explained that while the mark-to-market trend depends on market rent growth, Rexford's growth is not reliant on it. She highlighted that only 15% of the portfolio rolls annually and pointed to more significant growth drivers, including $70 million of incremental NOI from redevelopments and contractual rent steps averaging 3.7%.

Samir Khanal of Bank of America asked for the company's outlook on the 3% cash mark-to-market, how it is expected to trend in coming quarters, and its potential impact on future cash same-store growth.

Answer

COO Laura Clark explained that while the mark-to-market trend depends on market rent growth, Rexford's growth is not reliant on it. She emphasized that only 15% of the portfolio rolls annually and pointed to significant embedded growth from other sources, including $70 million in incremental NOI from redevelopments and 3.7% average contractual rent steps.

Samir Khanal from Bank of America asked for the company's outlook on the 3% cash mark-to-market, how it is expected to trend, and its potential impact on cash same-store growth.

Answer

COO Laura Clark responded that while the future mark-to-market depends on market rent growth, only about 15% of the portfolio rolls annually. She emphasized that Rexford's growth is not dependent on mark-to-market, highlighting $70 million of incremental NOI from redevelopments and strong contractual rent steps averaging 3.7%.

Samir Khanal from Bank of America asked for the outlook on the 3% cash mark-to-market, how it is expected to trend in the coming quarters, and its potential impact on cash same-store growth.

Answer

COO Laura Clark responded that while the mark-to-market trend depends on market rent growth, Rexford's growth is not solely dependent on it. She emphasized that only about 15% of the portfolio rolls annually and pointed to other significant growth drivers, including $70 million of incremental NOI from redevelopments and strong contractual rent steps averaging 3.7%.

Samir Khanal from Bank of America asked for details on the low end of the guidance, seeking to understand the cushion for potential declines in rent and occupancy, similar to a stress test.

Answer

CFO Michael Fitzmaurice explained that the guidance was sensitized against historical downturns like the GFC and the pandemic. He confirmed the low end of the range already incorporates conservative assumptions, including a longer lease-up time for redevelopments (9 months vs. 6 months historical) and a bad debt assumption of 75 basis points, which is double the portfolio's recent average.

Samir Khanal asked for an update on the Inland Empire West market, questioning if conditions were bottoming out, and inquired about any 'green shoots' signaling stabilization in the broader Southern California market.

Answer

Co-CEO Howard Schwimmer noted that Rexford's smaller-sized product in the Inland Empire is outperforming the broader market, with rent declines slowing. Co-CEO Michael Frankel identified a 'green shoot' in tenant behavior, pointing to their willingness to sign leases with high annual rent escalators (3.9-4%) as a sign of long-term confidence and the essential nature of their spaces.

Samir Khanal from Bank of America inquired about the current competitive pricing environment and the structural details of Americold's fixed commitment contracts, including whether customers can renegotiate terms amid market challenges.

Answer

CEO George Chappelle acknowledged that the storage pricing market is very competitive and will remain under pressure, but noted that value-added services create stickiness. He and President Robert Chambers explained that fixed commitment contracts are typically multi-year (3-7 years) with fixed monthly fees and no annual volume resets, providing stability for both Americold and its customers.

Samir Khanal of Evercore ISI asked about the impact of tariffs on customer demand, seeking clarity on the timeline of the slowdown and management's confidence in its pricing power amid macroeconomic headwinds.

Answer

CEO George Chappelle explained that while direct tariff impacts are modest, the indirect effects on consumer confidence have significantly worsened the environment in the last 30-45 days, prompting the guidance revision. He and President of Americas Rob Chambers affirmed their pricing strategy, citing the company's value proposition, contractual rate increases, and disciplined commercial approach as key differentiators.

Samir Khanal sought commentary on whether occupancy is nearing a trough and if there are any 'green shoots' for revenue. He also asked about the sustainability of strong services pricing over the next 12 to 24 months, given the inflationary environment.

Answer

CEO George Chappelle identified partnership-driven developments with entities like DP World and CPKC as green shoots, as they are not tied to consumer demand. He anticipates a broader recovery in the second half of next year. President of the Americas, Rob Chambers, added that the new business pipeline for same-store occupancy is very healthy, representing over $200 million in probability-weighted revenue. Regarding pricing, management reiterated that comps will normalize in Q4 but expressed confidence in their ability to price ahead of inflation long-term due to value-added services and contractual GRIs.

Samir Khanal from Bank of America asked about the tenant mix driving the strong leasing volume and the 1.5 million square foot pipeline, and whether tenants are expressing concerns about tariffs or other costs.

Answer

EVP Wendy Seher noted that retailers are focused on securing the best long-term real estate despite headwinds like tariffs, and listed a broad mix of tenants. CEO Donald Wood added that much of the activity is proactive 'blend and extend' renewals to lock in long-term cash flow.

Samir Khanal of Bank of America asked for insight into the timing of an occupancy inflection and what key indicators investors should monitor.

Answer

President & CEO Greg Lehmkuhl responded that the primary indicator they track is direct customer feedback and their own occupancy data, which already shows a bounce off the bottom. While their guidance doesn't assume a broad market rebound, he noted that factors like interest rate relief or finalized tariff deals could act as positive catalysts for inventory growth.

Samir Khanal asked about the expected cadence of occupancy for the remainder of the year and questioned what provides management with confidence in a second-half recovery, given customer delays in decision-making.

Answer

CEO W. Lehmkuhl reiterated that the multiyear inventory stocking cycle concluded in Q3 2024, and warehouse activity has since returned to normal seasonal patterns. He expressed confidence in a second-half recovery due to easier year-over-year comparisons and analysis from their data science team, which shows current trends align with nearly a decade of historical data for core inventory holdings.

Samir Khanal asked how the current occupancy pressure and muted seasonal trends translate to the company's previously discussed mid-single-digit NOI growth target for next year.

Answer

CFO Robert Crisci explained that while near-term growth is against tough comps, the two-year stacked growth rate aligns with their mid-single-digit 'flywheel' target. He expressed confidence in achieving this long-term goal through cost controls and operating leverage, with a formal update coming in February.

Samir Khanal of Bank of America questioned NSA's strategy for existing customer rate increases (ECRI) in competitive markets and sought clarity on the company's dividend policy given the current AFFO payout ratio.

Answer

President & CEO David Cramer confirmed the ECRI program remains stable and effective, with recent data helping to refine the strategy. Regarding the dividend, he explained the Board maintains a long-term view, confident in the business's ability to improve its payout ratio due to the sector's dynamics.

Samir Khanal of Bank of America asked for quantification of the expected revenue growth pickup in the second half of 2025 and questioned whether recent monthly improvements were due to normal seasonality or genuine demand recovery.

Answer

CFO Brandon Togashi confirmed that Q2 revenue and NOI are expected to remain negative year-over-year, with an inflection to positive growth anticipated in the back half of the year, though the exact timing is uncertain. CEO Dave Cramer added that while seasonality is a factor, atypical street rate improvements from late last year through Q1, combined with a productive ECRI program, indicate fundamental strength beyond just seasonal trends.

Samir Khanal of Bank of America asked for a quantification of the expected revenue growth ramp-up in the second half of the year and sought to understand how much of the recent monthly improvement is due to seasonality versus fundamental demand.

Answer

CFO Brandon Togashi confirmed that the guidance implies continued sequential improvement, with revenue and NOI expected to turn positive in the back half of the year, though the exact timing is uncertain. CEO Dave Cramer added that while seasonality is a factor, the company has also seen atypical street rate improvements since late last year, driven by a successful rate program and ECRI, suggesting a component of fundamental strength beyond just seasonality.

Samir Khanal inquired about the drivers for the significant improvement in 2025 revenue guidance, from negative 3% in 2024 to flat, asking for specifics on occupancy and rate growth. He also asked about the impact of California fire restrictions and plans for capital recycling.

Answer

CEO Dave Cramer and CFO Brandon Togashi explained the guidance reflects post-internalization efficiencies, a return to normal seasonality, and improved operational tools. Cramer noted minimal impact from California fire restrictions, affecting only eight stores. Regarding capital recycling, he confirmed more non-core dispositions are planned in 2025 to improve the portfolio, with deal flow remaining strong and cap rates stable.

Samir Khanal asked for clarification on the updated revenue guidance, specifically why the top end was lowered while the midpoint was raised, and also inquired about the performance drivers in the New York market, noting a slight deceleration.

Answer

CFO Timothy Martin explained the top end of guidance was lowered because a stronger demand recovery, which was previously considered possible, has not materialized. CEO Christopher Marr addressed the New York market, stating that while net rental income accelerated, total revenue faced a difficult comparison due to fee structure changes made in the prior year. He confirmed strong performance in the boroughs and Long Island, with Northern New Jersey gradually improving.

Samir Khanal of Bank of America inquired about the rationale for lowering the top end of revenue guidance despite a midpoint raise, and requested details on performance trends in the New York MSA, specifically comparing the boroughs to Northern New Jersey.

Answer

CFO Timothy Martin explained that the high end of guidance was trimmed because an anticipated strong demand recovery did not fully materialize. President & CEO Christopher Marr added that the New York MSA is performing well, with net rental income accelerating, led by the boroughs and Long Island, while Northern New Jersey's recovery is more gradual.

Samir Khanal of RBC Capital Markets inquired about the specific drivers behind CubeSmart's 'solid demand' in Q1, April occupancy levels, and whether the company lowered rental rates to boost occupancy.

Answer

CEO Christopher Marr attributed the resilient demand to a diverse customer base with varied, need-based life events, rather than a single driver. He also confirmed that April-end occupancy was 89.9%. Marr noted that the year-over-year decline in move-in rates narrowed significantly, from down 10% in Q4 to down 8% in Q1, and further to down about 2% in April, indicating improving pricing power.

Samir Khanal requested more detail on why rate growth progress has been more gradual than anticipated and inquired about the performance of the legacy Life Storage (LSI) portfolio, particularly its impact on same-store results.

Answer

CEO Joseph Margolis attributed the gradual progress to the time it takes for rate improvements to compound given monthly customer turnover. He confirmed the LSI portfolio is performing as expected and should add 60 basis points to same-store performance this year. EVP & CFO Jeff Norman added that Sunbelt markets faced headwinds from new supply and tough comps.

Samir Khanal from BofA Securities questioned the decision to maintain guidance despite strong performance, asked about the leasing strategy for the spring season, sought more detail on the positive impacts from the Life Storage (LSI) integration, and inquired about the Q1 financial impact of a recent JV exchange.

Answer

CEO Joseph Margolis explained that leasing strategy is driven by dynamic pricing algorithms and has not changed. He detailed LSI integration progress, noting a 10.4% rental increase at former LSI stores and $1.3 million in paid search savings. CFO P. Scott Stubbs clarified the JV exchange had no Q1 impact as it closed on March 31 and will be reflected in non-same-store NOI going forward.

Samir Khanal asked about the level of customer pushback on ECRIs and sought an outlook for the bridge loan program's volume into next year.

Answer

CEO Joseph Margolis explained that customer move-outs due to ECRIs are tracked against a control group and remain within an acceptable range. Regarding the bridge loan program, he noted a strong 2024 but anticipates some downward pressure on the portfolio size next year due to significant maturities, though the company will remain active in new originations.

Samir Khanal inquired about the expected deceleration in same-store NOI growth in the second half of 2025 and sought details on the acquisition market dynamics between core, shadow-anchored, and unanchored properties.

Answer

CFO John Caulfield clarified that the perceived slowdown is due to a difficult comparison against a strong Q4 2024 (6.5% growth) and that sequential NOI dollar growth is expected in 2025. Chairman & CEO Jeffrey Edison stated the acquisition mix is opportunity-driven, highlighting that acquired shadow-anchored centers feature high-performing grocers.

Samir Khanal questioned if PECO has shifted its strategy when negotiating renewals with shop tenants, particularly those in soft goods, given potential margin pressures from tariffs. He followed up by asking if any retailers have pulled back on their expansion plans.

Answer

CEO Jeffrey Edison stated that their approach to renewals remains unchanged, as they continue to expect significant rent increases. He detailed that they estimate only about 10% of their tenants would be significantly impacted by tariffs, with the vast majority being insulated due to their necessity-based and service focus. Edison confirmed that while there are always shifts by category, overall retailer demand remains strong enough that they have not altered their leasing strategy.

Samir Khanal of Bank of America Corporation questioned how Macerich can continue to push rents higher if its portfolio sales per square foot have remained flat.

Answer

Jackson Hsieh, President and CEO, advised to trust the process, explaining that significant investments, the addition of 26 new anchors, and an influx of best-in-class brands are designed to drive traffic and sales productivity over time. He expressed confidence that these actions will lead to the desired results, even if not immediately visible in current sales metrics.

Samir Khanal of Evercore ISI asked about Macerich's ability to continue pushing rents given flat sales trends and inquired about which retail categories were driving this flatness. He also asked for the cap rate on The Oaks disposition.

Answer

Senior Executive Vice President of Leasing Doug Healey responded that there has been no correlation between flat sales and retailer demand, which remains robust and is up 40% in terms of square footage reviewed compared to last year. He explained that rising occupancy gives them more power to push rates, balanced with merchandising needs. President and CEO Jackson Hsieh added that the focus is on upgrading specific underperforming spaces to drive rent growth. Regarding sales, Home Furnishings was the weakest category, while most others were slightly negative. Hsieh also confirmed The Oaks sale was at a 13% cap rate.

Samir Khanal asked about the outlook for existing customer rent increases (ECRIs) in 2025, considering potential consumer headwinds, and sought the move-in rent assumption for the high end of the guidance range.

Answer

Executive H. Boyle stated that the existing customer base remains strong, with consistent price sensitivity and performance. The guidance midpoint assumes consistent ECRI contribution from markets outside of Los Angeles. For the high end of the guidance range, Boyle specified that the embedded assumption is for an average move-in rent decline of about 3% for the year.

Samir Khanal inquired about the future trajectory of move-in rates and whether a housing market recovery is necessary for them to turn positive. He also asked about the reasons for lower payroll expenses and the potential for further savings.

Answer

Executive H. Boyle projected that move-in rents would likely hit a seasonal trough at year-end and would require a seasonal demand lift in the spring to improve meaningfully. CEO Joseph Russell explained that lower payroll costs are a direct result of operational efficiencies from their digital e-rental platform, now used by 75% of new tenants, which enables better labor optimization and creates new specialized career paths for employees.

Samir Khanal of Evercore ISI asked for an expansion on the company's successful G&A reduction strategy and its outlook beyond 2025. He also inquired about the future plans for the Sunrise Mall property after Macy's lease termination, asking whether it would remain retail-focused or if alternative uses are being considered.

Answer

Chief Financial Officer Mark Langer explained their G&A reduction involved a three-pronged approach: managing headcount, conducting deep dives on third-party vendor costs, and streamlining processes with automation tools like AI and RPA, noting they will continue to seek further efficiencies. Chief Operating Officer Jeff Mooallem addressed the Sunrise Mall question, stating that given the large 78-acre site, they are exploring multiple use categories beyond just retail. He called the Macy's closure a significant step forward and hopes to announce more definitive plans during 2025.

Samir Khanal from Evercore ISI inquired about a recent lease termination, the factors contributing to the wide range in the same-store NOI guidance, and the outlook for G&A expenses into 2025.

Answer

Chief Operating Officer Jeffrey Mooallem clarified that the lease termination was with a national tenant that had not yet commenced paying rent, minimizing any revenue drag and presenting an accretive re-tenanting opportunity. Chief Financial Officer Mark Langer explained the same-property NOI guidance range reflects potential tenant fallout risk (e.g., Big Lots) at the low end and better-than-expected rent collections and commencements at the high end. Regarding G&A, Langer advised not to expect further declines in 2025 after significant reductions over the past two years, citing inflationary pressures.

Samir Khanal asked about the expected slowdown in 2025 base rental income growth for both the MH and annual RV/Marina businesses, questioning if it stemmed from tougher comps, changing demand, or reduced pricing power.

Answer

Executive Patrick Waite affirmed the strong long-term demand for MH. Executive Paul Seavey specified that the slowdown in MH rent growth is a technical matter: a portion of leases are tied to CPI, and the CPI from 2024 (which dictates 2025 rent increases) was lower than the CPI from 2023 (which dictated 2024's higher increases).

Samir Khanal requested more color on the 13% decline in seasonal revenue during the quarter and asked if the payroll expense savings were primarily a function of the RV business and if further efficiencies are achievable.

Answer

Patrick Waite, EVP and COO, explained the seasonal revenue decline was mainly driven by a reduction in transitional workers in Florida who were present after Hurricane Ian. Paul Seavey, EVP and CFO, added that while a majority of properties saw seasonal growth, the overall decline was driven by a minority of locations. On payroll, Patrick Waite confirmed savings were driven by the summer RV business through managing open positions and overtime, but hesitated to say if further significant efficiencies could be gained, though they will continue to seek improvements.

Samir Khanal inquired about the breakdown of the announced $15 million to $20 million in cost savings between operating expenses and G&A, and asked for details on the potential for further dispositions beyond the year-to-date total.

Answer

Gary Shiffman, Executive, clarified that the savings are a starting point combining both OpEx and G&A, with a primary focus on the MH and RV segments. Fernando Castro-Caratini, Executive, added that the company is evaluating an additional $100 million to $200 million in potential near-term dispositions from non-income-producing land and non-core assets.

Samir Khanal questioned whether recent changes in interest rates have impacted disposition conversations and asked for the acquisition cap rate for the Curbline Convenience properties.

Answer

CEO David Lukes noted that buyer interest has remained consistently high for the last nine months and has not notably changed with interest rates, as many buyers have been unlevered. CFO Conor Fennerty stated that the GAAP cap rate on Curbline acquisitions has been around 6.5%.

Samir Khanal of Evercore ISI asked for the reasoning behind the wide guidance range for Curbline's same-store NOI growth, which remains at 3.5% to 5.5% despite being well into the year.

Answer

CFO Conor Fennerty explained that the wide range is primarily due to the small denominator of the Curbline portfolio, where a small dollar variance can significantly move the percentage. He also noted his generally prudent forecasting approach and mentioned that while it is May, there is still much of the year left. He confirmed there have been no credit issues in either portfolio year-to-date.