Tayo Okusanya

Tayo Okusanya asked for thematic insights into the $6.25 million revenue headwinds from tenant wind-downs, inquiring if it was due to failed drug trials, cash depletion, or other factors. He also inquired if the strategic evaluation of four development assets primarily hinged on leasing prospects around those assets, or if other factors were equally determinant.

Answer

Joel Marcus, Executive Chairman and Founder, explained that wind-downs are a natural outgrowth of a five-year bear market, leading to fewer company formations and more wind-downs. Marc Binda, CFO, added that public and private biotech comprise the majority, driven by clinical milestone failures and shorter capital runways. Joel Marcus clarified that the evaluation of development assets is much more granular than just leasing, involving broad submarket prospects, asset nature, and competitive product, with leasing being important but not the sole determinant.

Tayo Okusanya inquired whether the strategic evaluation of the four development assets primarily boils down to leasing around these assets to determine whether to proceed or pursue strategic alternatives.

Answer

Joel Marcus, Executive Chairman and Founder, clarified that the evaluation is more granular than just leasing. It involves a comprehensive analysis of the submarket prospects, the nature of the asset, and any competitive product, with leasing being an important but not the sole determinant.

Tayo Okusanya of Deutsche Bank inquired about the common themes driving outperformance in certain markets and whether customer interaction data supports the narrative of demand stabilization.

Answer

CEO Joseph Russell explained that outperformance is driven by multiple factors, with lower new supply being a primary one, alongside inherent economic activity and housing dynamics. SVP & CFO Thomas Boyle added that a key piece of data supporting stabilization is the healthy and improving conversion rate across all channels year-to-date.

Sam, on behalf of Tayo Okusanya at M Science, asked for an update on retail categories facing headwinds, such as dollar stores and pharmacies, and inquired if there were any changes to the company's credit watchlist.

Answer

CEO Joey Agree stated that the company is not increasing its exposure to the dollar store or pharmacy sectors, noting that pharmacy exposure has already declined year-over-year. He reiterated the focus on best-in-class categories like off-price, auto service, and dominant grocers. He also confirmed no significant changes to the watchlist, with the main focus remaining on the Big Lots bankruptcy resolution.