Todd Thomas

Todd Thomas asked if 2026 revenue growth is expected to follow a 'tale of two halves' pattern, similar to 2025, or if a continued recovery is anticipated in the latter half of the year as comps normalize. He also inquired whether the guidance includes any deleveraging initiatives beyond organic EBITDA growth and what the leverage target is for year-end 2026.

Answer

Brandon Togashi, CFO, indicated that 2026 will benefit from easier comps in the first half and part of Q3, with year-over-year same-store revenue growth steadily increasing before potentially plateauing in late Q3/Q4 due to tougher comparisons. Regarding leverage, Mr. Togashi stated that the 5.5x-6.5x range remains the long-term target. He noted that based on the midpoint of flat same-store NOI and relatively flat FFO guidance, leverage is expected to remain fairly neutral by year-end 2026, similar to year-end 2025, with capital deployment at the midpoint also being neutral.

Todd Thomas asked if National Storage Affiliates' (NSA) 2026 revenue growth is expected to follow a 'tale of two halves' pattern, similar to 2025, or if a continued recovery is anticipated in the latter half of the year as comps normalize. He also inquired whether the company's guidance includes any deleveraging initiatives beyond organic EBITDA growth and what the leverage target is for year-end 2026.

Answer

CFO Brandon Togashi indicated that NSA expects easier comps in the first half of 2026 and part of Q3, with year-over-year same-store revenue growth steadily increasing before potentially plateauing in late Q3/Q4 due to tougher comps. President and CEO David Cramer stated that the long-term leverage target remains 5.5x-6.5x. Based on flat same-store NOI and FFO guidance, leverage is expected to remain fairly neutral by year-end 2026, similar to the end of 2025, with acquisition and disposition midpoints also being neutral.

Todd Thomas of KeyBanc Capital Markets questioned the current status of web search rankings and conversion rates compared to pre-PRO transition levels and asked about the recent strategy and scope of using concessions.

Answer

President & CEO David Cramer reported significant improvements in web visibility scores in rebranded markets, leading to a 13-14% increase in top-of-funnel traffic and a 6-7% lift in opportunities on a year-over-year basis. He added that concessions were used strategically in softer markets and were targeted at specific unit sizes to manage inventory, a tactic that proved successful.

Todd Thomas of KeyBanc Capital Markets asked what gave management the confidence to raise rates despite soft occupancy and whether vacate activity had changed.

Answer

CEO Dave Cramer explained that their models indicated that lowering rates would not have stimulated enough demand to produce a better net revenue result. He added that rates were likely a bit low post-transition, allowing for a reset. Regarding vacates, he stated they remain muted compared to last year, with the ratio of move-ins to move-outs remaining consistent, and no significant changes in customer behavior.

Todd Thomas of KeyBanc Capital Markets asked what gave management the confidence to raise rates despite softer occupancy and whether their systems indicated that lower rates would not have stimulated sufficient demand. He also inquired about vacate activity trends during Q1 and into April.

Answer

CEO Dave Cramer confirmed that their analysis suggested the benefit of a lower rate would not drive enough volume to achieve the desired net revenue result. He also noted they were likely under-priced post-transition, allowing for a reset. Regarding vacates, Cramer stated that move-out activity remains muted compared to last year, with the ratio of move-ins to vacates remaining consistent, and there has been no significant change in this trend.

Todd Thomas asked for clarification on whether the Q4 run-rate fully captures internalization synergies. He also sought to clarify if the 300 bps PRO occupancy gap has been partially closed or if the closure is an assumption for 2025, and when the revenue synergies would be most impactful.

Answer

CFO Brandon Togashi confirmed that the Q4 run-rate is a good baseline for G&A and tenant insurance synergies. He clarified that closing the occupancy gap is an assumption for 2025, not something that has already occurred. CEO Dave Cramer added that while work will happen in H1, the momentum from these synergies will be most felt in the second half of 2025, leading into 2026.

Todd Thomas inquired about the financial impacts of the PRO internalization on G&A and other income lines for Q4 and early 2025, and asked for an update on the transaction environment, including dispositions.

Answer

CFO Brandon Togashi explained that G&A savings and tenant insurance benefits are being realized, with supervisory fees paid to PROs decreasing from $5M to $3.4M in Q3 and expected to taper further. He cautioned that the loss of SP unit sharing is a near-term headwind. CEO Dave Cramer noted that acquisition deal flow is increasing and that NSA has identified 15-20 PRO stores for potential disposition, with listings expected in Q4 and sales over the next 6-9 months.

Todd Thomas inquired about the expected cadence of SmartStop Self Storage REIT's revenue growth throughout 2026, specifically regarding performance in the first half versus the second half, considering recent market shifts and comparative periods. He also asked for the outlook on the Miami and Greater Toronto Area (GTA) markets, given their recent performance trends.

Answer

James Barry, CFO and Treasurer, explained that the year-over-year growth will be somewhat 'lumpy' due to varying comparative periods, with a strong start to the year but tougher comparisons in the third quarter, though he expects less lumpiness than the previous year. Michael Schwartz, Founder, Chairman, and CEO, detailed that Canadian same-store revenue was up 60 basis points in Q4 on a constant currency basis, with the GTA re-accelerating and move-in rates up 1%. He anticipates the GTA portfolio will perform slightly better than the U.S. portfolio in 2026. James Barry added that Miami's strong performance is attributed to its density and clustering, projecting it to perform at or slightly above the portfolio average. He also noted that the L.A. MSA, despite ECRI restrictions in some counties, has performed well, with those counties expected to be above-average producers in 2026, impacting overall same-store revenue growth by 15-20 basis points. Michael Schwartz confirmed L.A. County's extended price restrictions.

Todd Thomas inquired about the expected cadence of revenue growth throughout 2026, considering market shifts and comparative periods. He also asked for the outlook and anticipated performance for SmartStop Self Storage REIT's two largest markets, Miami and the GTA, in 2026.

Answer

James Barry, CFO and Treasurer, stated that 2026 revenue growth would be lumpy due to varying comps but less so than the prior year, with a strong start but tougher Q3 comparisons. Michael Schwartz, Founder, Chairman, and CEO, detailed that Canadian operating metrics showed GTA re-acceleration in Q4 2025, expecting it to slightly outperform the U.S. portfolio in 2026. James Barry added that Miami's strong performance is due to density and clustering, projecting it to perform at or above the portfolio average, while the L.A. MSA is strong despite ECRI restrictions impacting guidance by 15-20 basis points.

Todd Thomas of KeyBanc Capital Markets asked for specific operating trends for July, including occupancy and rent, and sought insight into the cause of the demand slowdown observed in June and the subsequent recovery.

Answer

SVP David Corak reported that July occupancy was 92.8%, up 80 basis points year-over-year, with concessions down 25% and revenue growth approaching 2%, indicating a reacceleration. CFO James Barry attributed the June weakness to competitive pricing pressure but noted underlying demand remained strong. CEO H. Michael Schwartz added that the company is now able to hold rates with lower discounts, a positive shift from the prior two years, despite an anemic housing market.

Todd Thomas asked about the specific drivers behind Tanger's Q4 beat versus guidance, which led to full-year results exceeding the high end of the range. He also inquired about the process of bankruptcy-related lease auctions, Tanger's potential activity or aggressiveness in these auctions, and any unique restrictions in an outlet center portfolio.

Answer

Stephen Yalof (President, CEO, and Director, Tanger) and Michael Bilerman (EVP, CFO, and Chief Investment Officer, Tanger) explained that the Q4 beat was driven by strong revenue performance from sales (percentage rents) and leasing activity (base rents, recoveries), along with better-than-expected performance from non-Same Center acquisitions (Kansas City, Pinecrest, Little Rock). Regarding lease auctions, Stephen Yalof stated Tanger's desire to control its real estate and merchandising decisions, noting that acquiring retailers must adhere to existing lease terms, including use clauses. Michael Bilerman added that Tanger's small average tenant size (5,000 sq ft) and short lease terms for most bankruptcies allow for effective management and re-leasing, mitigating impact.

Todd Thomas asked what specifically drove Tanger's beat in the quarter versus guidance, leading to full-year results above the high end of the range. He also inquired about bankruptcy-related lease auctions, how the process works in Tanger's portfolio, and if Tanger would be active in retaining control, as well as any restrictions around the auction process in an outlet/value-oriented center.

Answer

Stephen Yalof, President, CEO, and Director, Tanger, clarified that the beat was driven by Same-Center NOI reaching the high end (4.3%) due to strong Q4 revenue from percentage rents and leasing activity, plus better performance from non-Same Center acquisitions (Kansas City, Pinecrest, Little Rock). Yalof confirmed Tanger's desire to control its real estate and be active in auctions. Michael Bilerman, EVP, CFO, and Chief Investment Officer, Tanger, added that most bankruptcies are manageable due to small tenant size and short lease terms, creating headlines more than actual impact. Yalof explained that acquiring retailers in auctions must adhere to existing lease terms, rent, and use clauses, with inconsistencies creating conflict.

Todd Thomas of KeyBanc Capital Markets questioned the modest same-store base rent growth despite higher occupancy, the significant increase in straight-line rent, and the classification of centers as 'primary' versus potentially non-core.

Answer

CFO Michael Bilerman explained that investors should focus on total rent growth, which includes fixed CAM, not just base rent. He attributed the higher straight-line rent to the normal cadence of leasing, where it's recognized upon tenant possession before cash rent commences. CEO Stephen Yalof clarified that all centers in the portfolio are considered core, but are marketed differently based on whether they serve local populations or are tourist destinations, noting that many former tourist centers are rapidly becoming primary markets.

Todd Thomas inquired about the occupancy outlook for the remainder of the year, the status of recapturing Forever 21 spaces, and whether retailers might pass on higher prices for 'made-for-outlet' goods.

Answer

President and CEO Stephen Yalof attributed the Q1 occupancy dip to strategic remerchandising, which yields strong rent spreads of over 30% on re-tenanted spaces. He confirmed the 9 Forever 21 closures were anticipated and are being backfilled with temporary tenants without a material rent decline. He also suggested outlet retailers have the flexibility to adjust pricing quickly to move inventory, reinforcing the channel's value proposition.

Todd Thomas asked about acquisition pricing, specifically if 8% initial yields are still achievable, and followed up on the temporary tenant strategy, inquiring about rent levels and whether the 10% exposure is expected to decrease over time.

Answer

President & CEO Stephen Yalof responded that while 8% yields have been achieved, the primary focus is on value-add potential, and they would consider lower initial yields for assets with significant upside. He also explained that temporary rents are variable, with pop-ups from national brands paying near-market rates. CFO & CIO Michael Bilerman added that underwritten yields are on a forward one-year basis, accounting for some initial remerchandising.

Todd Thomas asked for an end-of-January or year-to-date occupancy update, clarification on the stability of the 600 basis point spread between physical and economic occupancy, and the status of volume-based guarantees and resets.

Answer

Greg Lehmkuhl, President and CEO, reported that January occupancy was in line with forecasts, expecting a seasonal step-down from Q4 to Q1, with import/export volume down 9% year-over-year in Q4 and continuing into Q1. He confirmed the 400-600 basis point volume guarantee spread is normal and expected to hold, with 65% of the revenue base already through contract negotiations. Robb LeMasters, Chief Financial Officer, added that the team proactively addressed this disparity.

Todd Thomas asked for an update on Lineage's occupancy levels at the end of January or year-to-date, the expected stability of the 600 basis points spread between physical and economic occupancy, and the current status of volume-based guarantees and resets, particularly regarding any volatility from Q4 to Q1.

Answer

Greg Lehmkuhl, President and CEO, stated that January occupancy was in line with forecasts, anticipating a seasonal step-down from Q4 to Q1, consistent with historical patterns. He noted that ongoing reductions in import/export container volume, which was down 9% year-over-year in Q4 and continued into Q1, would be a headwind. Lehmkuhl expects the 400-600 basis points spread between physical and economic occupancy to remain stable throughout the year, as the majority of Lineage's business is marked to market annually, with 65% of the revenue base already negotiated, providing confidence in achieving 1-2% net new pricing increases. Robb LeMasters, Chief Financial Officer, added that the current 6% spread is among the lowest observed, indicating successful early management of this disparity.

Todd Thomas from KeyBanc Capital Markets asked for specific details on July occupancy trends and an explanation for the divergence between softness in the warehouse business and strong 8% growth in Global Integrated Solutions (GIS).

Answer

CFO Rob Crisci confirmed that July occupancy had recovered to levels above April and May, indicating the seasonal uplift has begun, albeit later than usual. CEO Greg Lehmkuhl attributed the strong GIS performance to an excellent team, enhanced technology, and better cross-selling with the core warehousing business, a positive trend he expects will continue.

Todd Thomas followed up on minimum volume guarantees, asking if the Q1 reset was a one-off event or if the percentage could decline further. He also asked about the operational transition of the acquired Tyson facilities into public warehouses.

Answer

CFO Robert Crisci confirmed the volume guarantee reset was largely a Q1 phenomenon and noted new business is being signed with strong guarantees. Regarding the Tyson assets, both he and CEO W. Lehmkuhl acknowledged there will be an occupancy decline when Tyson vacates to move into the new builds, but this transition was fully structured and contemplated in the deal economics.

Todd Thomas asked about the expected mix of debt and equity for future investments and the cadence for recognizing the $101 million of incremental NOI from development projects.

Answer

CFO Robert Crisci stated that the $1.5 billion deployment capacity assumes funding with only cash and debt, with no equity issuance. Regarding the incremental NOI from the development pipeline, he projected that approximately one-quarter would be realized in 2025, with the remainder flowing through in subsequent years, highlighting it as a key component of their compounding growth.

Todd Thomas asked about underlying trends in customer inventory rationalization and whether the Global Integrated Solutions (GIS) segment can stabilize without a broad demand recovery.

Answer

CEO W. Lehmkuhl explained that while the GIS segment is cyclical due to its transportation focus, its primary strategic value is driving business to the core warehousing segment. CFO Robert Crisci declined to provide a specific Q4 maintenance CapEx figure, reiterating that the company manages to a total AFFO per share number and has many levers to achieve it.

Todd Thomas asked if Extra Space Storage's revenue growth forecast at the midpoint assumes a stronger first half and moderating growth in the second half due to tougher comps. He also inquired about expectations for market performance in 2026, specifically if Sun Belt markets will take the lead or if it will be a gradual recovery for other markets, given that some higher-performing markets in 2025 were not Sun Belt.

Answer

CFO Jeff Norman stated that the growth is expected to be gradual, slow, and steady, with seasonality potentially impacting growth by 10-20 basis points, but not significantly driven by previous year's comps. CEO Joe Margolis explained that 2025 market performance was largely correlated with supply, and market performance is cyclical. He emphasized Extra Space Storage's strategy of a broadly diversified portfolio to smooth out returns, noting that markets like Atlanta cycle between overperformance and underperformance.

Todd Thomas asked if the base case for Extra Space Storage's revenue growth guidance at the midpoint assumes a stronger first half and moderating growth in the second half due to tougher comps. He also inquired about whether certain markets (New York, Southern California, Miami, San Francisco) would continue to outperform in 2026, or if other Sun Belt markets would take the lead.

Answer

Jeff Norman, CFO, clarified that the growth at the midpoint is generally flat, with seasonality potentially impacting it by 10-20 basis points, suggesting a gradual, slow, and steady growth rather than a strong first half followed by moderation. Joe Margolis, CEO, explained that 2025 market performance was largely correlated with supply, not just job growth. He emphasized that market performance is cyclical, and Extra Space Storage's strategy of broad diversification helps smooth returns, citing Atlanta as an example of a market cycling between over and underperformance.

Todd Thomas from KeyBanc Capital Markets asked about the catalyst for the strategic discounting strategy and whether both net and gross customer rate growth were expected to continue increasing. He also sought to understand the percentage of the portfolio involved in the discounting test and its magnitude.

Answer

CEO Joseph Margolis explained that discounting is part of continuous long-term revenue optimization, particularly in response to state of emergency restrictions. CFO Jeff Norman, while not detailing specific test percentages, noted the gross vs. net customer rate growth delta narrowed significantly in October (over 6% gross, over 5% net), indicating a more temporary drag. Joseph Margolis added that slower churn was also a factor in revenue guidance adjustments.

Todd Thomas from KeyBanc Capital Markets asked about the catalyst for the strategic discounting strategy, whether both net and gross customer rate growth were expected to continue increasing, and the percentage of the portfolio where this strategy was tested to gauge its magnitude.

Answer

CEO Joseph Margolis stated the catalyst was continuous testing to optimize long-term revenue, especially in response to state of emergency restrictions. CFO Jeff Norman indicated they are focused on overall revenue growth but noted an accelerating trend in pricing power since May. He declined to share specific test details due to competitive advantage but quantified the gross-to-net delta narrowing from 300 bps in Q3 to 100 bps in October, suggesting a more temporary drag. Joe Margolis clarified that discounting was a factor, but slower-than-expected translation of new rates to rent roll was also a reason for revenue guidance adjustment.

Todd Thomas sought to reconcile positive rent trends and high occupancy with comments about slower-than-expected conditions. He also asked about the acquisition strategy and what pricing adjustments are needed for the company to become more active.

Answer

EVP & CFO Jeff Norman noted that positive net rental income was offset by lower ancillary fee income. CEO Joseph Margolis clarified they are not on the sidelines for acquisitions but remain disciplined, avoiding deals with sub-5% cap rates while using other tools like bridge loans and JV buyouts for growth.

Todd Thomas of KeyBanc Capital Markets followed up to clarify if tenants downsizing from flex space is a notable trend, whether the LSI portfolio's growth tailwind is expected to increase, and if there are any constraints to growing the third-party management (3PM) platform.

Answer

CEO Joseph Margolis clarified the downsizing example was illustrative of diverse demand drivers, not a major tracked trend. CFO P. Scott Stubbs expects the LSI contribution to be flat to slightly moderating, not increasing. CEO Margolis sees no major constraints to the scalable 3PM platform, noting its integral role across the business makes a strategic sale unlikely.

Todd Thomas followed up on property tax increases, asking if the trend was becoming more widespread, and requested more detail on the revenue growth forecast, particularly the expected contribution from occupancy changes.

Answer

Executive P. Stubbs noted that aggressive tax reassessments are a lagging indicator of the strong property value and revenue growth seen over the past five years. Regarding the forecast, he explained that while they don't guide to specific rate and occupancy components, the year begins with a significant positive year-over-year occupancy delta that is expected to diminish as the year progresses.

Todd Thomas inquired about the implied fourth-quarter deceleration in the same-store guidance for both EXR and LSI pools and sought details on the operational impacts of Hurricane Milton.

Answer

Executive P. Stubbs stated that Q4 same-store performance is expected to be relatively flat rather than showing significant deceleration. Regarding the hurricane, he noted a tangible uptick in rental activity, with occupancy at some affected LSI stores jumping to 96%, and clarified that pauses on existing customer rate increases (ECRIs) are being implemented on a targeted, store-by-store basis.

Todd Thomas asked if the competitive pressure cited for the Lincoln acquisition was specific to that asset or other Bally's master lease assets, and whether these pressures are expected to abate. He also inquired about the mechanisms and plans for permanently financing the revolver balance used for the Lincoln acquisition, including potential interest rate hedges.

Answer

Brandon Moore, President, COO and Secretary, clarified that the competitive pressure was unique to Lincoln, stemming from the Mashpee tribe's expanded facility, which is now stabilized. He noted that Genting's focus on a large New York project reduces concerns about future expansion of that competitor. Desiree Burke, Chief Financial Officer and Treasurer, confirmed the use of the $2 billion bridge revolver for Lincoln and other Bally's transactions, leaving over $1 billion available. Brandon Moore added that GLPI is actively looking at managing its balance sheet, is cognizant of the variable rate debt, and is evaluating options for permanent financing and hedging.

Todd Thomas asked if the competitive pressure cited for the Lincoln acquisition was specific to that asset or other Bally's assets, and if those pressures are abating. He also inquired about the revolver's bridge component for Lincoln funding, plans for interest rate hedges, and permanent financing timeline.

Answer

Brandon Moore, President and Chief Operating Officer, clarified that the competitive pressure was unique to Lincoln due to Mashpee Tribe expansion, which is now stabilized, and prudent underwriting led to more rent coverage. Desiree Burke, Chief Financial Officer and Treasurer, confirmed the bridge revolver was planned for Lincoln and other transactions, with $1 billion capacity remaining. Mr. Moore stated GLPI is actively managing its balance sheet and is cognizant of the variable rate debt but could not provide further details on hedging or permanent financing at this time.

Todd Thomas of KeyBanc Capital Markets followed up on the company's hedging strategy, asking when the forward interest rate swaps commence, and questioned the broader implications of recent management changes, specifically the elimination of the Chief Investment Officer role.

Answer

CFO & Treasurer Desiree Burke clarified the swaps are forward-starting to hedge a future bond issuance, not typical interest rate swaps. Chairman & CEO Peter Carlino addressed the management change, stating it involves 'no change at all' to the team's strategy. He explained the CIO role was created to explore non-gaming opportunities that never materialized because the gaming space proved more attractive.

Todd Thomas of KeyBanc Capital Markets asked about the company's equity capital strategy, given its unsettled forward equity and lack of ATM activity in the quarter. He also requested an update on the expected cadence of the $375 million in 2025 fundings and any outlook for 2026.

Answer

SVP & CIO Matthew Demchyk explained that GLPI is in a cash-positive position for the year before new deals, combining the forward settlement and free cash flow. He stated the company will continue to use its ATM program in a measured way and that the single quarter was not indicative of a strategy shift. CFO & Treasurer Desiree Burke confirmed the $375 million in funding remains back-end loaded and that the timeline is consistent with previous statements, with funding lagging project completion.

Todd Thomas of KeyBanc Capital Markets questioned the strategy behind maintaining floating-rate debt exposure, particularly in a potentially "higher for longer" interest rate environment, and asked about the company's willingness to use swaps.

Answer

CFO Desiree Burke explained that the current $932 million in variable-rate debt is expected to remain outstanding due to its connection to a Bally's guarantee. She noted that while they regularly evaluate swaps, the cost-benefit analysis doesn't currently favor entering them. She acknowledged that as variable-rate exposure potentially increases with the Lincoln property acquisition, they will reconsider using swaps to fix rates depending on market conditions.

Todd Thomas of KeyBanc Capital Markets questioned the implied sequential decline in Q4 AFFO from the updated guidance and asked about the company's long-term appetite for allocating capital to tribal gaming.

Answer

CFO Desiree Burke attributed the modest Q4 AFFO dip to dilution from recent equity issuance and the costs of two bond financings. On the tribal gaming strategy, CEO Peter Carlino, President and COO Brandon Moore, and SVP Steven Ladany collectively emphasized that it is too early to define a long-term capital allocation strategy. They described the opportunity as exciting but unproven, stating they need to better assess the market acceptance and risk profile before committing significant capital.

Todd Thomas followed up on the potential transaction or joint venture, asking about the expected earnings dilution and whether a non-dilutive transaction is anticipated.

Answer

EVP, CIO, and Interim CFO Scott Henderson stated that management is not yet prepared to provide details on potential dilution but expects more information mid-year. CEO Rob Chambers added that while any transaction would impact short-term expectations, it is considered the right long-term path, and early conversations on interest and valuations are encouraging.

Todd Thomas from KeyBanc Capital Markets followed up on the potential transaction or joint venture, asking about the expected earnings dilution Americold might tolerate and the likelihood of a non-dilutive transaction.

Answer

Scott Henderson, EVP, CIO, and Interim CFO, stated that the company is not prepared to provide details on potential earnings dilution but expects more information mid-year. Rob Chambers, CEO, added that while any transaction would impact current year expectations, it is considered the right long-term path, encouraged by early conversations regarding interest and valuations.

Todd Thomas of KeyBanc Capital Markets requested elaboration on customers using their own cold storage infrastructure instead of third-party providers and asked about the buyer profile for the company's non-core asset dispositions.

Answer

CEO George Chappelle clarified that customers prioritizing their own assets is normal but that some are now using space more aggressively due to financial pressures, viewing it as a contextual indicator of the tough environment rather than a major headwind. CFO Jay Wells explained that most dispositions were lease exits, with inventory moved to nearby owned facilities, and the few asset sales were to non-cold storage buyers.

Todd Thomas from KeyBanc Capital Markets followed up on the business pipeline by asking about lease expirations in 2025 and 2026. He also requested more information on the five facilities being consolidated, including the transition process and the expected financial impact.

Answer

President of Americas Rob Chambers stated that upcoming lease expirations are not outsized and renewal rates remain high. CEO George Chappelle and other executives explained that the consolidation involves exiting underperforming leased facilities and moving business to nearby owned assets. This strategic portfolio management is expected to reduce costs, avoid rent increases, and contribute positively to NOI.

Todd Thomas asked how services margins, which are already in the low double digits, will trend when volumes eventually recover. He also questioned if margins would be volatile during the initial stages of a recovery.

Answer

CEO George Chappelle pointed to the Q3 results, where a small sequential volume gain drove significant margin expansion, as evidence of high operating leverage. He stated that a volume return could help the company reach its 15% margin target sooner than expected and suggested the aspirational goal may now be higher. CFO Jay Wells added that incremental volume flows through at a highly accretive 50% contribution margin, which would immediately benefit the overall services margin, with minimal lag or volatility.

Todd Thomas sought clarification on the South Plains refinancing, specifically the interest rate decrease, and asked if market pricing for outparcel and land sales has changed from the 7%-8% cap rate target.

Answer

Dan Swanstrom, Senior EVP and CFO, clarified that the higher rate was an effective interest rate due to a debt mark-to-market, while the coupon remained 4.2%. He confirmed Macerich is still tracking towards the 7%-8% cap rate for outparcel sales, with some deals even below 7%, indicating no change in market pricing.

Todd Thomas asked for clarification on the South Plains refinancing, specifically if there was any consideration related to the decrease in the coupon from 7.97% to 4.22% and its impact on the P&L. He also inquired if the market for outparcel and land sales had changed, affecting the 7%-8% cap rate target.

Answer

Dan Swanstrom, Senior EVP and CFO, clarified that the 7.97% was an effective interest rate due to a debt mark-to-market when Macerich bought out its JV interest, while the coupon remained 4.2%. The extension means the debt mark-to-market amortization is no longer an additional cost. He confirmed that the 7%-8% cap rate target for outparcel sales remains on track, with some smaller deals even below 7%, and no change in market pricing or appetite.

Todd Thomas asked for an update on the disposition of City Center, which is part of the $115 million of dispositions assumed in guidance, and how the balance of cash and restricted cash on the balance sheet would be deployed. He also inquired about the broader acquisition environment and Kite Realty Group's strategy for new investments in 2026 and 2027.

Answer

EVP and CFO Heath Fear confirmed that City Center is actively in process, with the weighted average transactional date for the group of assets in August. He detailed cash deployment for a special dividend, stock buybacks, line of credit paydown, 1031 acquisitions, and a balance for debt reduction and further share repurchases. Chairman and CEO John Kite described an active acquisition market with strong bids across retail, emphasizing the company's focus on value-add opportunities with better embedded rent growth profiles and de-risking exposure to certain large anchor tenants, while being agile in their approach.

Todd Thomas asked for an update on the disposition of City Center and how Kite Realty Group plans to deploy the balance of its cash and restricted cash. He also sought insights into the broader acquisition environment, the types of products the company is seeing, and its appetite for new investments in 2026 and 2027.

Answer

EVP and CFO Heath Fear confirmed City Center is in process, with a weighted average transactional date for that group of assets in August. He detailed cash deployment plans, including a special dividend, stock buybacks, line of credit paydown, 1031 acquisitions, debt reduction, and further share repurchases. Chairman and CEO John Kite described an active market with strong retail bids, making it challenging to find suitable matches. He reiterated the focus on underwriting $110 million in acquisitions, targeting assets that add value, offer better embedded rent growth, and de-risk exposure to large anchor tenants.

Todd Thomas from KeyBanc Capital Markets asked about the forward leasing pipeline, July activity, and visibility on signing more anchor leases. He also inquired about re-tenanting spreads and strategies to shorten the rent commencement timeframe for new anchor tenants.

Answer

CEO John Kite confirmed that leasing momentum is accelerating and that KRG often has multiple opportunities per available space, allowing them to prioritize the best long-term outcomes. President & COO Tom McGowan highlighted strong Q2 results, with 36.6% cash spreads on new anchor boxes, and noted that KRG is working with tenants to start drawings and permitting early to shorten delivery times.

Todd Thomas from KeyBanc Capital Markets asked for an update on the forward leasing pipeline, particularly for recaptured anchor inventory, and inquired about strategies to shorten the time between lease signing and rent commencement.

Answer

CEO John Kite described the leasing pipeline as accelerating, with multiple tenants competing for available spaces. President & COO Tom McGowan provided specifics, noting Q2 anchor cash spreads of 36.6% and that they are proactively working with tenants on drawings and permits to shorten delivery timelines, using tenant demand as leverage to expedite the process.

Todd Thomas from KeyBanc Capital Markets asked about the forward leasing pipeline, recent activity in July, and the company's ability to sign additional anchor leases for recaptured inventory. He also inquired about strategies to shorten the time between lease signing and rent commencement.

Answer

CEO John Kite expressed strong confidence, noting the leasing pipeline is accelerating with multiple opportunities for each available space. COO Thomas McGowan highlighted the 36.6% cash spreads on 11 new anchor leases in Q2 and expects that volume to increase. To shorten timelines, Mr. McGowan explained they are starting drawings and permitting earlier and using tenant demand as leverage to push for quicker store openings.

Todd Thomas asked about the near-term NOI growth expectations for the newly acquired Legacy West property, its current occupancy rates, and the potential to expand the joint venture relationship with GIC.

Answer

CEO John Kite highlighted that Legacy West's embedded rent bumps are 2.6%, well above the portfolio average, and noted a significant mark-to-market opportunity. CFO Heath Fear provided specific occupancy figures: 98.7% for office and 95% for retail. COO Tom McGowan emphasized the strength of the Plano submarket. John Kite also confirmed a strong interest in expanding the GIC partnership, noting a second joint venture is already in the works.

Todd Thomas asked about Kite Realty's current appetite for new investments and capital deployment, given its balance sheet capacity and market volatility. He also inquired about the strategy for capital recycling and the status of the City Center White Plains sale.

Answer

John Kite, Chairman and CEO, explained that KRG prioritizes high-quality real estate with strong growth profiles, citing the recent West Palm Beach acquisition as an example. He confirmed that due to their strong balance sheet, they are prepared to acquire assets before securing disposition funding. Kite also stated that the sale of City Center is anticipated to close in 2025 and its impact is factored into their planning.

Todd Thomas inquired about the drivers of Kite Realty's Q3 outperformance, the potential for growth to have been pulled forward from Q4, and the forward-looking trajectory for NOI growth into 2025. He also asked for commentary on the current acquisition environment, particularly for large, high-quality assets, and the company's appetite to be a buyer.

Answer

CFO Heath Fear attributed the Q3 outperformance primarily to better-than-expected bad debt results and confirmed no growth was pulled forward from future quarters. While declining to give specific 2025 guidance, he noted optimism based on the signed-not-open pipeline. CEO John Kite described the acquisition market as strong and competitive, with significant capital inflows compressing yields. He affirmed that KRG's strong balance sheet, with net debt to EBITDA at 4.9x, provides the 'firepower' and optionality to pursue compelling large-scale acquisitions if they offer appropriate returns.

Todd Thomas asked about the evolving oversight role of Public Storage's board under PS 4.0, particularly concerning capital deployment and allocation. He also inquired if any changes to the company's capital structure or leverage policy should be expected, given the current 4.2x net debt to EBITDA and upcoming refinancing headwinds. He followed up on acquisition constraints and return hurdles.

Answer

Joe Russell, President and CEO, stated that the board's commitment to succession planning and leadership talent remains high, with active involvement and counsel. Tom Boyle, CFO and CIO, highlighted the formation of a new investment committee of the board, chaired by Ron Spogli, to provide strong capital allocation perspectives. Joe Fisher, President and CFO, affirmed the intention to maintain the 4x-5x debt to EBITDA range, leveraging the strong balance sheet with $600 million annual free cash flow and $1.5 billion debt capacity for offensive opportunities, and exploring various funding sources like joint ventures and dispositions. Boyle added that the biggest acquisition constraint has been buyer/seller expectations, and PS 4.0 focuses on improving execution and relationships rather than lowering return hurdles.

Todd Thomas asked about the evolution of Public Storage's board oversight role under PS 4.0, particularly concerning capital deployment and allocation, and whether any changes to the company's capital structure or leverage policy should be expected. He also inquired about the biggest constraints for acquisitions in recent years and if Public Storage plans to increase its risk appetite or change return hurdles.

Answer

Joe Russell, President and CEO, affirmed the board's ongoing commitment to succession planning and talented leadership, noting active discussions and counsel. Tom Boyle, CFO and CIO, highlighted the formation of a new board investment committee, chaired by Ron Spogli and including Shankh Mitra, to provide strong capital allocation perspectives. Joe Fisher, President and CFO, stated that Public Storage aims to maintain its 4-5x debt to EBITDA target (currently 4.2x), leveraging $600 million in annual free cash flow and $1.5 billion in debt capacity for offensive opportunities, while also exploring joint ventures and dispositions. Boyle added that buyer/seller expectations have been the biggest acquisition impediment, and PS 4.0 focuses on improving execution (relationships, speed, off-market deals) rather than lowering return hurdles.

Todd Thomas from KeyBanc Capital Markets inquired about the performance of recent development projects against underwriting and whether there are signs of stabilization in challenged Sunbelt markets.

Answer

SVP & CFO Thomas Boyle confirmed that recently delivered projects are leasing up ahead of schedule and tracking toward their 8% yield-on-cost targets. CEO Joseph Russell noted that while markets like Atlanta remain challenged by supply, others like Florida are showing good stabilization and favorable revenue trends. He identified Atlanta, Dallas, Phoenix, and Charlotte as markets being watched closely.

Todd Thomas asked for the rationale behind the 8% drop in move-in rates in April despite occupancy gains. He also inquired about how the development landscape might change due to rising costs from tariffs and policy uncertainty.

Answer

H. Boyle explained that move-in rates fluctuate monthly as they optimize for total revenue, and the lower April rate drove strong volume ahead of the busy season. Ryan Burke stated that the multi-year deceleration in new supply continues, creating a favorable window for PSA to develop in less competitive markets despite rising costs, which they are monitoring closely.

Todd Thomas inquired about the specific impact of the Los Angeles rent restrictions on 2025 guidance, including the underlying assumptions for occupancy and rate, and asked for a comparison of recovery trends between Sunbelt and coastal markets.

Answer

Executive H. Boyle explained the 100 basis point negative impact on same-store revenue from Los Angeles is primarily driven by rent restrictions, not occupancy, and will accumulate throughout 2025. Executive Joseph Russell noted that while some Sunbelt markets like Phoenix and Las Vegas still face supply pressures, others like Miami and Orlando are inflecting positively, following a trend previously seen in coastal markets like Seattle and D.C.

Todd Thomas asked about the use of promotions in October and whether they are attracting higher lifetime value customers. He also requested a clarification on the October occupancy figures provided earlier.

Answer

Executive H. Boyle clarified that October's promotion use was consistent with the prior year and that different promotions attract different customer profiles. He then clarified the occupancy metric, stating it was down 90 basis points year-over-year, not sequentially, and that the full-year average decline is now expected to be closer to 70 basis points.

Todd Thomas asked about the full-year same-store NOI growth coming in slightly below forecast, the drivers behind this miss, the impact of expense leakage and concessions on 2026 guidance, and the company's capital allocation strategy regarding acquisitions, dispositions of non-target assets, and stock buybacks.

Answer

CFO Nathan Brunner attributed the same-store NOI miss to marginally higher property expense leakage across a few properties, including vacant ones and those with expense caps. EVP and Director of Asset Management James Dudley noted that concessions were higher in the first half of the previous year but are expected to recede. Chairman and CEO Will Eglin stated that future acquisitions would primarily be 1031 exchanges, with $200 million in non-target assets under negotiation, and that new development offers more shareholder value than buybacks currently, though some buyback activity has occurred.

Todd Thomas asked about the variance in LXP's full-year same-store NOI growth compared to prior forecasts, the impact of expense leakage and concessions, and the company's capital allocation strategy regarding dispositions, acquisitions, and share buybacks.

Answer

Nathan Brunner, CFO, attributed the same-store NOI miss to marginally higher property expense leakage. James Dudley, EVP and Director of Asset Management, discussed the evolving concessions environment, expecting them to recede. Will Eglin, Chairman and CEO, outlined the methodical approach to non-target market dispositions, potential capital redeployment, and prioritizing new development over buybacks, while still considering opportunistic repurchases.

Todd Thomas asked for an update on remaining 2025 lease expirations in relation to the year-end occupancy target, the outlook for tenant retention in 2026, and the current level of activity in the build-to-suit market.

Answer

EVP James Dudley confirmed a 380,000 sq. ft. lease in Indianapolis is a known move-out but has strong backfill interest. For 2026, he anticipates strong retention despite a few potential moves, with an attractive 19% mark-to-market. CIO Brendan Mullinix noted continued build-to-suit interest, particularly at the Columbus site, though tenant decision-making remains protracted.

Todd Thomas inquired about the leasing environment for LXP's large development boxes, asking about user interest, changes in stabilized yield expectations, and clarification on comments regarding lower tenant retention for 2025.

Answer

Executive James Dudley noted a positive shift in leasing activity in January, with interest from a broad range of tenants including e-commerce and 3PLs. CIO Brendan Mullinix clarified that the remaining large buildings are expected to stabilize around a 6% yield. James Dudley also confirmed a new known move-out in Houston and stated that the commentary on lower retention was otherwise a conservative stance due to uncertainty in the latter half of the year.

On behalf of Todd Thomas, an analyst asked for more details on the full-building user at the Ocala development, interest levels at the Greenville/Spartanburg and Indianapolis properties, the cap rate on the Phoenix land purchase option, and the cap rates for the dispositions that occurred after the quarter ended.

Answer

Brendan Mullinix, CIO, confirmed that progress is being made with the tenant in Ocala and that they are closer to leasing the Greenville building, with activity also increasing in Indianapolis. He stated the Phoenix land sale was at approximately a 6% cash cap rate on the in-place rent. Mullinix also confirmed the four assets sold subsequent to quarter end were at a combined 6% cap rate.

Todd Thomas inquired about the company's focus on New York for acquisitions, asking if it represents the most favorable market, and discussed future investment activity. He also asked for insights into Chicago, both for new capital deployment and potential capital recycling.

Answer

CEO Kenneth F. Bernstein and SVP Reginald Livingston noted that New York is a competitive market, often leading to off-market deals, but they plan to expand into other established markets where building scale is possible. Kenneth F. Bernstein acknowledged strong fundamentals in Chicago (e.g., Gold Coast, Armitage Avenue) but indicated an over-ownership relative to the portfolio. He stated plans to prune non-strategic assets in Chicago over the next 1-2 years, aiming to subtract rather than add to their holdings there.

Todd Thomas asked about Acadia Realty Trust's acquisition pipeline, specifically comparing opportunities in New York to other markets and the company's focus for future investment activity. He also questioned the company's strategy for the Chicago market, including capital deployment for new deals and potential capital recycling.

Answer

CEO Kenneth F. Bernstein and SVP Reginald Livingston explained that New York is competitive, often requiring off-market deals, but Acadia will continue to add to its portfolio there. They also plan to enter other established markets where retailers are present and scale can be built. Regarding Chicago, Ken noted strong fundamentals and rental growth, but Acadia has too much ownership. The goal is to rebalance the portfolio by pruning assets not part of the scale strategy over the next 2-3 years, despite good acquisition opportunities and strong rental growth.

Todd Thomas sought to clarify the year-end 92% street portfolio occupancy target and asked about the outlook for tenant retention and mark-to-market spreads on leases expiring through 2026.

Answer

EVP & CFO John Gottfried clarified the total core operating occupancy target is 94-95%, with street and urban in the low 90s. SVP Alexander Levine stated that demand is strong and any vacancies would likely be from proactive recaptures. He reiterated that blended mark-to-market spreads for the street portfolio are in the double digits.

Todd Thomas asked if Acadia is altering its leasing strategy around tenant categories and questioned the risk of delays or cancellations in the signed-not-yet-open (SNO) pipeline due to macro uncertainty.

Answer

Executive Vice President A.J. Levine and CEO Kenneth Bernstein responded that the core strategy of curating a strong tenant mix remains, but they are now increasingly screening tenants for supply chain diversification. Regarding the SNO pipeline, Bernstein noted that retailers have a 'fear of missing out' on critical locations and are proceeding. The primary concern heard from tenants relates to build-out costs, not a desire to delay or cancel leases.

Todd Thomas asked if the acquisition accretion metric of ~$0.01 of FFO per $200 million of investment has improved, whether there is a path to 100% ownership in the Georgetown portfolio, and for more details on occupancy cost ratios across the street portfolio.

Answer

CIO Reginald Livingston confirmed the FFO accretion target is holding up well. President and CEO Kenneth Bernstein stated that 100% ownership in Georgetown is not a current focus, as the partners are additive and Acadia already controls the assets with its majority stake. Executive A.J. Levine noted that the 12% occupancy cost ratio on M Street has significant room to run, potentially to the upper teens, which is well below prior cycle peaks. Bernstein emphasized the focus is on growing tenant sales, which drives rental growth.

Todd Thomas of KeyBanc Capital Markets asked about the strategy for the investment management platform, questioning whether to expect growth or capital recycling. He also probed why the acquisition accretion target of 1% per $200 million hasn't improved despite a more favorable cost of capital.

Answer

CEO Kenneth Bernstein advised that for modeling purposes, it is prudent to assume stability and capital recycling within the investment management platform, although growth is possible. CFO John Gottfried added this model allows for faster realization of promotes. Regarding accretion, Bernstein noted that while the 1% per $200M is the target, they are allowed to exceed it, and the high growth rate of the acquired assets is a critical component of the value creation.

Todd Thomas inquired about the acquisition environment, investment, and capital recycling activity, specifically asking about the pipeline heading into 2026 in terms of volume and pricing, and the $0.01 growth related to transactions in the guidance reconciliation.

Answer

CEO Brian Finnegan noted strong transaction activity, with EVP and CIO Mark Horgan detailing a growing pipeline, direct marketing efforts, and an opportunistic approach prioritizing redevelopment. Mark Horgan also observed cap rate compression for smaller deals but smaller bid lists for larger, operating-intensive assets. CFO Steve Gallagher clarified the $0.01 growth is a component breakdown, expecting transactions to be initially neutral but with higher growth profiles for acquired assets.

Todd Thomas asked about Brixmor's acquisition environment, including the pipeline's volume and pricing expectations for 2026. He also questioned the $0.01 growth related to transactions in the guidance reconciliation, asking if it's based on 2025 activity or future forecasts.

Answer

CEO Brian Finnegan noted strong transaction activity, with 40% of recent volume occurring in the last five quarters. EVP and CIO Mark Horgan explained the growing pipeline, driven by direct marketing to private owners, and observed cap rate compression due to increased private and pension fund capital. CFO Steve Gallagher clarified the $0.01 growth is a component of the growth-up approach, with acquired assets expected to have a higher growth profile than disposed ones.

Todd Thomas asked about the building blocks for 2026 same-store growth, specifically addressing the headwinds from bankruptcies and tenant disruptions (previously 230 basis points) and whether this drag is expected to alleviate or remain similar.

Answer

Brian Finnegan, Interim CEO and COO, and Steve Gallagher, Chief Financial Officer, highlighted Brixmor's reduced exposure to at-risk tenancy compared to historical levels and peers. They noted that rent recognized for bankruptcy space in 2025 will not recur in 2026, creating a headwind, but expressed comfort with tailwinds from the SNOC pipeline commencing in 2025 and 2026, with no significant tenant disruption anticipated.

Todd Thomas of KeyBanc Capital Markets inquired about the building blocks for 2026 same-store growth, specifically asking about the drag from bankruptcies and tenant disruptions, which was 230 basis points last quarter, and whether this drag is expected to alleviate or remain similar in 2026.

Answer

Steve Gallagher, CFO, highlighted Brixmor's reduced exposure to at-risk tenancy compared to historical levels, noting a shift towards stronger credit tenants like Whole Foods and Publix. He acknowledged that rent recognized for bankruptcy space in 2025 would not recur in 2026, creating a headwind, but expressed comfort with the tailwind from the SNOC pipeline commencing in 2025 and 2026, with no significant tenant disruption currently foreseen.

Todd Thomas from KeyBanc Capital Markets inquired about the potential timeline for reaching a 95% portfolio lease rate and the forward outlook for tenant disruption in late 2025 and early 2026, following recent bankruptcies.

Answer

President & COO Brian Finnegan highlighted strong, broad-based leasing activity and an improved tenant credit profile, noting that while some categories like drug stores are being watched, the overall outlook is confident. EVP & CFO Steven Gallagher added that accelerating rent commencements from the SNO pipeline in the second half of the year are expected to drive base rent growth, offsetting any minor drag from recent bankruptcies. CEO James M. Taylor emphasized that the company is achieving over 4% growth despite these headwinds.

Todd Thomas asked about the drivers behind the sequential decrease in the portfolio's leased rate, specifically inquiring about remaining exposure to Big Lots and Party City, the expected timing for JOANN vacancies, and how this activity aligns with the bankruptcy assumptions in the company's full-year guidance.

Answer

Brian Finnegan, President and COO, clarified that a 140 basis point impact from Big Lots and Party City bankruptcies drove the occupancy decline and that JOANN boxes are expected back in May, with strong re-leasing progress already underway. CFO Steve Gallagher added that bankruptcy activity has been in line with expectations and that current guidance has capacity to absorb further disruption. CEO Jim Taylor noted the opportune timing for recapturing space given the strong supply/demand backdrop.

Todd Thomas asked for more detail on the $0.02 positive FFO contribution from G&A and other items, specifically how much was attributable to the recent G&A realignment.

Answer

CEO James Taylor confirmed that the 'lion's share' of the positive contribution is the benefit from the regional G&A realignment announced in the third quarter. He added that the company is excited about the opportunity to reinvest some of those savings closer to the properties to drive performance.

Todd Thomas from KeyBanc Capital Markets asked for more detail on the $0.02 positive contribution to FFO guidance from the G&A line and how much was attributable to the recent corporate realignment.

Answer

CEO James Taylor confirmed that the 'lion's share' of the positive G&A impact on FFO guidance is a direct benefit from the regional realignment announced in the third quarter of 2024. He added that the company is excited about the opportunity to reinvest some of those savings closer to the properties to drive performance.

Todd Thomas followed up on the investment environment, asking if Brixmor will continue using its ATM program and whether to expect an increase in net acquisition activity or if dispositions will match acquisitions.

Answer

CEO Jim Taylor clarified that capital recycling will remain the primary funding source for external growth. He explained that the ATM program would be used selectively to match-fund accretive acquisitions. While the company has been a net seller year-to-date, he anticipates a ramp-up in acquisition activity that will be funded by a mix of dispositions and ATM issuance, aiming for a relative balance over time.

Todd Thomas followed up on the investment environment, asking if Brixmor will continue using its ATM program and whether to expect an increase in net acquisition activity or if dispositions will match acquisitions.

Answer

CEO James Taylor clarified that capital recycling remains the primary funding source for external growth. He indicated that while they expect a ramp-up in acquisition activity, it will be funded by a mix of dispositions and, when appropriate, ATM issuance, with the goal of being relatively balanced over several quarters.

Todd Thomas asked about the cadence of acquisitions, specifically if the pipeline consists of single-off deals or portfolios, and if there are any limits on the annual acquisition volume. He also inquired about a small disposition in the quarter and the company's expectations for future dispositions or asset management activities in 2026.

Answer

David Lukes (CEO) confirmed that the current acquisition pipeline is exclusively single-asset deals, expressing high confidence in achieving budget through one-off transactions. He noted that portfolios are episodic, and Curbline is less aggressive on them due to ample high-quality one-off inventory. David Lukes (CEO) stated that no dispositions are planned in the 2026 budget, as the business plan is focused on long-term ownership. The small Q4 disposition (sub $2 million vacant land) was an opportunistic sale to SITE Centers for an adjacent parcel and is not expected to be a recurring event. Conor Fennerty (CFO) confirmed no 2026 budget for further dispositions.

Todd Thomas asked about the composition of the acquisition pipeline, specifically if it includes single-off deals or portfolios, and if there are any limits or constraints on the amount of acquisition volume Curbline Properties can achieve annually. He also inquired about a small disposition in the quarter and expectations for any further dispositions or asset management activities in 2026.

Answer

CEO David Lukes stated that the current pipeline is almost exclusively single-asset acquisitions, indicating high confidence in meeting budget targets through one-off deals. He noted that portfolio deals have been episodic, and Curbline is less aggressive in stretching for portfolios that might contain undesirable assets. Regarding dispositions, David Lukes clarified that no dispositions are planned in the 2026 budget, as the business plan is not about recycling assets. The small Q4 disposition (sub $2 million vacant land) was a unique, strategic sale to SITE Centers for an adjacent property and is not expected to be a recurring event, as confirmed by CFO Conor Fennerty.

Todd Thomas asked about Curbline Properties' acquisition activity and pipeline heading into 2026, including the pace of acquisitions and whether more product is coming to market. He also inquired about the 2026 growth algorithm for same-store NOI, the portfolio's blended annual escalator, and any other relevant considerations.

Answer

CEO David Lukes indicated that the amount of inventory underwritten is increasing, with 2025 acquisitions expected to be around $750 million with potential for upside, driven by increased visibility and deal flow. CFO Conor Fennerty added that they have visibility for the next 5-6 months and will provide a 2026 framework later. Regarding same-store NOI, Conor Fennerty noted a significant pool change for 2026 but no material differentiators in structural growth, expecting steady growth comparable to 2025's 3.25% midpoint, with no major headwinds.

Todd Thomas inquired about Curbline Properties Corp.'s acquisition pipeline beyond Q4 2025, the projected pace of acquisitions into 2026, and whether increased product is coming to market. He also asked about the portfolio's blended annual escalator and other considerations for 2026 same-store growth.

Answer

David Lukes, CEO, confirmed increasing inventory underwriting and deal flow, with 2025 investment activity expected around $750 million, potentially higher. Conor Fennerty, CFO, added that the company has built a 'machine' with better visibility into early 2026. Conor also explained that the same-property pool changes significantly for 2026 but expects steady growth comparable to 2025, averaging north of 3% over 2024-2026, with no material headwinds.

Todd Thomas of KeyBanc Capital Markets followed up on acquisitions, asking if the year-to-date cap rate of 6% (down from 6.25%) indicates embedded mark-to-market opportunities. He also inquired about the CapEx requirements and occupancy rates of these new assets.

Answer

CEO David Lukes explained that the lower cap rate reflects a strategic choice to acquire properties with more vacancy, which presents a mark-to-market opportunity, rather than market-driven cap rate compression. CFO Conor Fennerty reaffirmed the long-term target for CapEx to remain below 10% of NOI, noting no change in the capital needs of the business. He added that Q2 acquisitions were ~96% leased, while Q3-to-date acquisitions are in the low 90s, aligning with this strategy.

Todd Thomas of KeyBanc Capital Markets requested a breakdown of the $500 million pipeline between assets under contract versus those under LOI. He also asked how the deal environment, particularly seller willingness and pricing, has changed since early April amid market volatility. Additionally, he sought clarification on the sequential decline in same-store occupancy despite commentary about outperformance.

Answer

CEO David Lukes declined to break out the pipeline, explaining that even assets under contract have diligence outs, making the distinction less meaningful. He stated that seller willingness remains firm, as transactions are typically driven by life events rather than market timing. While competition from institutional capital is present, it hasn't been long enough to cause significant pricing changes. CFO Conor Fennerty clarified the occupancy metric, explaining that same-store NOI growth was better than budgeted due to renewing tenants they had expected to lose, even though the overall same-store occupancy figure saw a slight decline quarter-over-quarter due to a few non-renewals.

Todd Thomas from KeyBanc Capital Markets Inc. requested a breakdown of the $500 million acquisition pipeline between assets under contract versus LOI. He also asked about changes in the deal environment, such as seller willingness and pricing, since early April, and sought clarification on same-store NOI drivers.

Answer

CEO David Lukes declined to break down the pipeline, citing diligence contingencies, and stated that seller motivation remains steady as it is often driven by non-market 'life events'. CFO Conor Fennerty clarified that same-property NOI growth was driven by better-than-budgeted occupancy, as they retained tenants they had expected to lose, even though the overall same-property occupancy metric saw a slight sequential dip.

Todd Thomas asked how a 'higher-for-longer' interest rate environment affects capital strategy, inquired about the potential for equity issuance, and questioned the company's stance on using joint ventures.

Answer

CEO David Lukes stated that a higher-for-longer environment reinforces their strategy, as their assets' rent growth keeps pace with inflation. CFO Conor Fennerty noted their balance sheet remains strong and they constantly evaluate all capital sources. CEO David Lukes firmly stated they have an 'extremely low' desire to add complexity with joint ventures, preferring to maintain a simple strategy and capital structure despite receiving inbound interest.

Todd Thomas inquired about a potential ramp-up in Phillips Edison & Company's joint venture (JV) activity in 2026, including discussions with new JV partners, and asked for details on the underwriting framework for their 9%+ core and 10%+ everyday retail acquisition IRRs, also clarifying if dispositions are factored into guidance.

Answer

Chairman and CEO Jeff Edison confirmed ongoing discussions with potential JV partners, especially when the stock is undervalued. President Bob Myers noted increased JV opportunities, with weekly investment committee meetings and capital readiness from existing JVs. Myers detailed the underwriting for everyday retail, highlighting upside from occupancy and mark-to-market, achieving 45% new leasing spreads and 27% renewal spreads, with NOI CAGRs of 4.3-6%. CFO John Caulfield confirmed that disposition activity is factored into the 2026 guidance.

Todd Thomas asked if Phillips Edison & Company expects JV activity to ramp up meaningfully in 2026 and if there are discussions with other potential JV partners for new vehicles. He also inquired about the basic framework and underwriting assumptions for the 9% (core) and 10% (everyday retail) IRR hurdles, and whether the $100 million-$200 million disposition activity is embedded in the 2026 guidance.

Answer

Chairman and CEO Jeff Edison confirmed ongoing discussions with potential JV partners, noting that JV opportunities become more attractive when the stock is not trading at desired levels. President Bob Myers added that increased JV opportunities are expected, with weekly investment committee meetings, one fund nearing close, and the Cohen & Steers JV well-capitalized. Regarding underwriting, Jeff Edison and Bob Myers described a refined, 30-year standard process that has historically outperformed by 1%. For everyday retail, they leverage current occupancy/vacancy, mark-to-market opportunities, achieving 45% new leasing spreads, 27% renewal spreads, and 4.3%-6% NOI CAGRs, with occupancy increasing from 91.6% to 94.7% in the last year. CFO John Caulfield confirmed that the disposition activity is embedded in the 2026 guidance.

Todd Thomas followed up on the same-store growth calculation methodology, asked if the current stock price limits acquisition potential, and inquired about the cap rate spread between assets being acquired and those targeted for disposition.

Answer

CFO John Caulfield confirmed the same-store pool methodology is consistent and stated the stock price is not a limiting factor for acquisitions, as the company has ample liquidity and no plans to issue equity. He added that dispositions could occur in the 7-7.5% cap rate range, allowing the company to monetize gains.

Todd Thomas asked for more color on the sequential decline in occupancy, an update on bankruptcy-related vacancies, and the outlook for occupancy for the rest of the year. He also inquired about the nature of the large Q1 lease termination fee and whether more such buyouts from non-distressed tenants are expected.

Answer

CEO Jeffrey Edison and President Bob Myers explained that PECO maintains the highest occupancy in its sector and that recent bankruptcies present strong mark-to-market opportunities, with active LOIs on 80% of the spaces. Myers confirmed he expects occupancy to stabilize and improve through 2025. CFO John Caulfield added the lease termination fee was an opportunistic, value-add transaction with a single national tenant to bring in a better replacement. Myers stated he does not see a broader trend of non-distressed tenants seeking buyouts.

Todd Thomas asked about the Northwestern Mutual joint venture's strategy, the impact of remerchandising on 2025 growth, and the tenant retention rate assumed in guidance.

Answer

CEO Jeffrey Edison described the Northwestern Mutual JV as a vehicle for unique opportunities that don't fit the balance sheet's strict criteria, such as centers with strong but not #1 or #2 grocers. CFO John Caulfield stated that guidance assumes retention levels similar to 2024. He noted that while proactive remerchandising creates a near-term drag, the underlying growth remains strong, and the economics of high renewal spreads with low capital spend are very compelling.

Todd Thomas asked if 2025 could be a more active acquisition year, whether pipeline deals are for the balance sheet or the new fund, and sought details on the drivers of the high 55% new lease spreads.

Answer

CEO Jeffrey Edison expressed optimism for a stronger acquisition market in 2025 due to more available product, confirming the vast majority of activity is for the balance sheet. President Robert Myers explained that the quarter's high 55% new lease spread was heavily influenced by eight anchor leases with spreads over 100%. He anticipates future spreads will normalize to the historical 25-35% range, though renewal spreads will remain elevated.

Todd Thomas asked if development activity in the open-air retail space is poised to increase, given the favorable backdrop and strong demand, and if the competitive landscape for new development sites is changing.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, confirmed that development activity is expected to grow, but from a very low base, meaning it will remain a limited amount compared to overall supply. He acknowledged seeing more competition for new opportunities but expressed excitement about Regency's pipeline and ability to execute.

Todd Thomas asked if development activity is poised to increase, whether the competitive landscape for new development sites is changing, and if open-air development activity might accelerate over the next few years.

Answer

Nick Wibbenmeyer, West Region President and Chief Investment Officer, confirmed continued growth in development opportunities but noted it's from a very low base, keeping overall supply limited. He acknowledged increasing competition for development opportunities but expressed confidence in Regency's projects and underlying demand.

Todd Thomas sought further detail on the mid-3% same-property NOI growth for 2026, specifically regarding contributions from the SNO pipeline and redevelopment projects, and whether redevelopment impact would be neutral or additive year-over-year.

Answer

Mike Mas, EVP and CFO, explained that the mid-3% growth would involve continued occupancy climb, driven by closing the 200 basis point gap in commenced occupancy, which includes delivering on redevelopments. He anticipated redevelopment contributions to growth in 2026 to be similar to 2025 (north of 100 basis points), with the balance coming from rent growth. He noted that more detailed guidance would be provided in February.

Todd Thomas sought further details on the mid-3% same-property NOI growth outlook for 2026, specifically regarding contributions from the S&O pipeline and redevelopment projects.

Answer

Mike Mas, Chief Financial Officer, explained that the mid-3% growth will involve continued occupancy climb and compression of the S&O pipeline. He anticipates redevelopment contributions to growth in 2026 to be similar to 2025, which was north of 100 basis points, driven by absorbing space and increasing commenced occupancy.

Asked about rights to future deals with the SoCal acquisition seller and the specific growth drivers for the highly-occupied acquired portfolio.

Answer

The company has no rights to future acquisitions as they bought all the seller's existing retail assets, but they are in positive discussions for future development partnerships. Growth in the acquired portfolio will come from marking rents to market and small redevelopments of a vacant Rite Aid and a soon-to-be-vacant CVS, targeting a growth rate above 3%.

Todd Thomas of KeyBanc Capital Markets Inc. asked about any rights to future opportunities with the SoCal seller and the specific growth drivers within the newly acquired, 97% leased portfolio.

Answer

West Region President and CIO Nick Wibbenmeyer explained that while they acquired all of the seller's existing retail assets, they have had positive discussions about partnering on future developments. He noted the portfolio's growth will come from marking rents to market and small redevelopment opportunities, including a vacant Rite Aid and a soon-to-be-vacant CVS, projecting a forward growth rate of over 3%.

Todd Thomas of KeyBanc Capital Markets asked about the Southern California acquisition, specifically regarding rights to future opportunities and the sources of growth within the 97% leased portfolio.

Answer

CIO Nick Wibenmeyer clarified that they acquired all existing retail assets in the master plan, so there are no further acquisition rights, but they have had positive dialogue on future development partnerships. He identified growth drivers within the acquired portfolio, including mark-to-market opportunities on near-term rent expirations and small redevelopment projects involving a vacant Rite Aid and a soon-to-be-vacant CVS, projecting a forward growth rate north of 3%.

Todd Thomas asked if there has been any change in the timeline for lease execution, any slowdown in tenant decision-making, or increased pushback on rent escalators given the uncertain economic outlook.

Answer

Alan Roth, East Region President and COO, reported no signs of a slowdown. He highlighted that new leasing activity in April 2025 surpassed April 2024 levels, foot traffic was up 7% year-over-year in early April, and the leasing pipeline remains strong with quality operators.

Asked if there have been any changes in the leasing process, such as longer timelines for deals, slowdowns in tenant decision-making, or pushback on lease terms like rent escalators, given the uncertain economic outlook.

Answer

The company has not seen any negative translation of market volatility into its April results. Leasing activity in April 2025 exceeded April 2024, foot traffic was up 7% year-over-year, and accounts receivable remain below historical averages. The leasing pipeline remains strong with no signs of a slowdown.

Todd Thomas of KeyBanc Capital Markets inquired about the outlook for leasing spreads in 2025, given the portfolio's high occupancy, and asked about expectations for tenant retention.

Answer

Alan Roth, East Region President and COO, expressed confidence in continued positive momentum for spreads, emphasizing strong GAAP rent spreads (over 30% for new deals in Q4) as the best indicator of total rent growth. On retention, he stated the historical rate of 70-75% is comfortable, as it allows Regency to retain successful tenants while also strategically recapturing space to enhance the merchandising mix.

Todd Thomas requested more details on the pipeline for prospects, current demand, and tenant activity trends, seeking insight into the visibility for the 1.7 million sq ft development leasing and the Central Pennsylvania asset, which are skewed towards the second half of 2026. He also asked about the broad trends in concessions and the capital plan for 2026, including thoughts on dispositions and land sales.

Answer

Peter Schultz, Executive Vice President, reported a continued pickup in activity from late 2025 into early 2026, with increased inquiries, tours, and RFPs, and improved tenant engagement. Jojo Yap, Chief Investment Officer, noted that two Inland Empire development projects are part of the 1.7 million sq ft, with strong prospect activity in that market, supported by record low construction and declining sublease availability. Peter Schultz indicated that concessions are flat to slightly increasing, with free rent typically between half a month and one month per year of term, and tenant improvement allowances driven by specific tenant needs. Jojo Yap added that renewal concessions are tight, with renewals occurring earlier. Peter Baccile, Chief Executive Officer, stated that the company remains opportunistic regarding dispositions, exploring higher and better use conversions, but does not have a large number of planned sales.

Todd Thomas requested more detail on the pipeline of prospects and demand trends for the second-half 2026 development leasing and Central PA asset. He also inquired about broad concession trends (free rent, TIs) and the company's capital plan for 2026, specifically regarding dispositions and land sales.

Answer

Peter Schultz (EVP) noted a continuation of pickup activity from late 2025 into early 2026, with more inquiries, tours, and RFPs, and better tenant engagement. Jojo Yap (CIO) added that two IE development projects are included in the 1.7 million sq ft, with more prospects/RFPs in IE, where construction starts/deliveries are at record lows and sublease availability is slightly down, indicating a market bottoming out. Peter Schultz (EVP) said concessions are flat to drifting up, with free rent between half to one month per year of term, and TIs driven by tenant requirements. Jojo Yap (CIO) added that renewals have tight concessions and tenants are renewing earlier. Peter Baccile (CEO) stated they remain opportunistic regarding dispositions and land sales, evaluating everything for higher and better use, with planned sales not a large number.

Todd Thomas of KeyBanc Capital Markets Inc. asked if the company's confidence in the timing of leasing its 1.6 million sq. ft. development bucket has changed, given the assumption was pushed to year-end. He also asked for clarification on the impact to the 95-96% year-end occupancy guidance.

Answer

President and CEO Peter Baccile acknowledged there is risk in leasing these assets, which have been available for a while, making a year-end assumption more reflective of the probability. CFO Scott Musil confirmed the 95-96% average quarter-end occupancy guidance range remains unchanged, as the year-end lease-up assumption positively impacts the Q4 average.

Todd Thomas of KeyBanc Capital Markets sought to understand if management's confidence in leasing its development pipeline has changed and how pushing out leasing assumptions affects the full-year occupancy guidance.

Answer

CEO Peter Baccile acknowledged that the risk of leasing the remaining assets is 'not zero' and that pushing assumptions to year-end reflects that probability. CFO Scott Musil clarified that the 95-96% average occupancy guidance remains intact, as a lease signed on December 31st still positively contributes to the fourth-quarter average.

An analyst on behalf of Todd Thomas from KeyBanc Capital Markets asked about a nonrecurring G&A expense this quarter and inquired about any short-term leasing activity related to inventory stocking, particularly for large spaces in the Inland Empire.

Answer

CFO Scott Musil confirmed the G&A increase was due to forecasted accelerated stock-based compensation. Chief Investment Officer Jojo Yap stated that the company generally avoids short-term leasing despite requests. He noted that demand for large requirements (750k sq ft and up) in the Inland Empire is currently quite active, citing two recent leases over 1 million square feet.

Todd Thomas of KeyBanc Capital Markets requested an update on leasing interest for four projects transitioning to the in-service portfolio in H1 2025 and asked for a forecast on 2025 market rent growth.

Answer

Chief Investment Officer Jojo Yap and Executive Vice President Peter Schultz confirmed active tours, RFPs, and interest for the properties in the Inland Empire and Miami, with leasing assumed for the second half of 2025. President and CEO Peter Baccile projected modest overall market rent growth for 2025, around 'inflation plus a point,' with Southern California expected to be flat to slightly down.

Todd Thomas inquired about the assumptions within EastGroup's guidance regarding development lease-up for assets already converted, such as Horizon West, and for projects scheduled for conversion in Q1 and Q2.

Answer

CEO Marshall Loeb clarified that the 2026 budget includes approximately $0.07 of speculative development leasing, heavily weighted towards the back half of the year (Q3 and Q4). This figure represents new incremental speculative leasing, distinct from leases signed in Q4 2025 that are now in the build-out phase.

Todd Thomas inquired about the development lease-up assumptions included in EastGroup's 2026 guidance, specifically for assets already converted to the operating portfolio (like Horizon West) and those scheduled for conversion in Q1 and Q2.

Answer

CEO Marshall Loeb clarified that the 2026 budget assumes approximately $0.07 per share from speculative development leasing, which is heavily weighted towards the back half of the year (Q3 and Q4). He noted that while some Q4 2025 leases are signed and in build-out, the impact of landing new tenants for speculative space will primarily be felt later in the year, presenting an opportunity to exceed the budget.

Todd Thomas inquired whether EastGroup Properties' development delays would push into 2026, potentially leading to a ramp-up in starts, or if the slower pace might persist, putting further pressure on 2026 starts, despite constructive comments on the broader environment.

Answer

Marshall Loeb, CEO, acknowledged the difficulty in predicting the recovery timeline, noting that it feels like delays persist. He expressed hope for over $200 million in starts next year, but emphasized that the pace depends on market pickup. Loeb highlighted EastGroup's ability to build quickly (8-10 months) once demand is clear, with permits often in hand. He stated that the company will break ground when confident about leasing up current projects or when tenants need expansion, preferring to be slightly late rather than too early. The current focus is on converting prospect activity into signed leases to pull the next round of starts.

Todd Thomas asked if the current delays in development leasing and starts would push into 2026, leading to a ramp-up, or if the slower pace might persist, putting further pressure on 2026 starts.

Answer

CEO Marshall Loeb expressed hope for next year, anticipating development starts north of $200 million, but acknowledged that he has 'missed' recovery calls in the past. He noted that the current development pipeline doesn't require a huge quantity of leases to turn around. Loeb emphasized that the company will go as fast or as slow as the market dictates, preferring to be slightly late than too early. He highlighted that the team has permits in hand, allowing for quick construction (8-10 months) once demand solidifies and signed leases materialize.

Todd Thomas asked for an update on return thresholds for new acquisitions and whether there has been any change in sellers' willingness to transact given the recent market uncertainty.

Answer

Executive Marshall Loeb confirmed they have raised their return thresholds due to a higher cost of capital. He cited an instance where they resubmitted an offer at a 50-75 basis point higher yield. He noted they have backed away from 'good but not compelling' deals to preserve capital flexibility. He has observed some sellers shelving listings, while others have only modestly increased cap rate expectations, which EastGroup felt was insufficient.

Todd Thomas asked about the slowdown in development leasing activity and whether the company's ability to pre-lease projects ahead of conversion might change with the 2025 schedule. He also requested more detail on the outlook for 2025 development starts.

Answer

President and CEO Marshall Loeb acknowledged that leasing timelines have extended from around 6 months to 15 months post-construction start, which may slightly delay stabilization. However, he remains confident in the value creation, with development yields in the 7% range. He noted that while the overall pace of starts has slowed, they will continue to pursue opportunities in strong submarkets.

Todd Thomas asked for clarification on the guidance assumptions for the office segment, specifically the 86%-88% year-end lease rate target. He sought to understand the current pro forma lease rate, including year-to-date leases and known move-outs, to gauge how much of the target is speculative. Mr. Thomas also inquired about the expected FFO contribution from non-same store assets like La Jolla Phase III in 2026 versus beyond, and details on the revolver renewal, including pricing and capacity.

Answer

Steve Center, EVP, detailed the significant leasing pipeline, including 68,000 sq ft signed year-to-date and 214,000 sq ft in lease documentation, indicating a strong path towards the target, with positive surprises from tenants. Adam Wyll, CEO, noted that first-generation space rents at La Jolla Commons III would commence later in the year or next, impacting 2026 FFO. Robert Barton, CFO, reiterated the $0.30 FFO contribution from La Jolla, One Beach, and Bellevue redevelopments, emphasizing it's a timing question. Mr. Barton also stated the banking syndicate is supportive of maintaining or increasing the revolver capacity to $500 million, with pricing expected to remain the same.

Todd Thomas from KeyBanc Capital Markets Inc asked for clarification on American Assets Trust's office segment guidance, specifically the 86%-88% year-end lease rate target, inquiring about the current pro forma lease rate including recent activity and known move-outs, and the proportion of speculative leasing. Thomas also sought an update on the FFO contribution from non-same store assets like La Jolla Phase III and the overall $0.30 FFO target from key developments, as well as details on the upcoming revolver renewal, including pricing and capacity expectations.

Answer

Steve Center, EVP, detailed significant office leasing momentum, with 68,000 sq ft signed year-to-date, 214,000 sq ft in lease documentation, and 235,000 sq ft in proposals, confirming speculative leasing is part of the target. He highlighted positive surprises and the success of spec suite development. Adam Wyll, CEO, and Robert Barton, CFO, explained that the $0.03 FFO contribution from non-same store assets (La Jolla Commons 3 and Genesee Park) reflects initial stages, with first-generation rents commencing later in the year. Mr. Barton reiterated the $0.30 FFO target from developments, noting it's a matter of timing. For the revolver, Mr. Barton confirmed strong bank syndicate support for $400M or $500M capacity, with Steve Center expecting the pricing grid to remain unchanged.

Todd Thomas inquired about the timing and contribution of the projected $0.30 FFO upside from the La Jolla, One Beach, and Bellevue development assets. He also asked about the potential for FFO to bottom out in late 2025 and sought more detail on the Del Monte Center disposition, including its valuation and the use of proceeds beyond the planned multifamily acquisition.

Answer

Robert Barton, an executive, and Steve Center, an executive, detailed the leasing pipeline for the development assets, noting that rent commencements are expected in late 2025 and into 2026. They confirmed that FFO could inflect in mid-to-late 2025, accelerated by a spec suite program. Regarding the asset transactions, executive Adam Wyll stated that details could not be shared as the deals are in escrow, but confirmed the multifamily acquisition would use just over half the proceeds from the Del Monte sale, with the remainder held as cash.

Todd Thomas from KeyBanc Capital Markets requested a breakdown of the projected $0.30 FFO upside from development projects, the stabilization timeline for Bellevue assets, the current leased percentage at La Jolla Commons III, and whether 2025 FFO could grow from the adjusted 2024 base.

Answer

CFO Robert Barton attributed approximately $0.18 of the FFO upside to La Jolla Commons, $0.02-$0.03 to One Beach, and the remainder to the suburban Bellevue projects, but deferred a specific stabilization timeline. SVP Steve Center confirmed that leasing activity accelerates as renovations complete, noting strong prospect interest. He stated La Jolla Commons III is 21% leased, with rent commencements staggered into next year. Barton concluded it was too early to provide 2025 FFO guidance relative to the adjusted 2024 base.

Todd Thomas (KeyBanc Capital Markets) inquired about the expected deployment drag in 2026, stemming from lighter starts in 2024 and 2025. He asked about the cadence of stabilizations throughout the year, whether it would accelerate, the magnitude of the drag within 2026 guidance, and if it's expected to alleviate by 2027.

Answer

CFO Tim Arndt directed to the supplemental for pipeline and stabilization year disclosures, noting that quarterly breakdowns are not provided. He explained that the speculative business typically leases up within 7-9 months, with expectations for this to tighten as market conditions improve, while build-to-suit projects come online immediately upon completion.

Todd Thomas asked about the capital deployment drag in 2026 resulting from lighter starts in 2024 and 2025, inquiring about the cadence of stabilizations, whether it will accelerate, and the magnitude of its impact on 2026 guidance and potential alleviation towards 2027.

Answer

CFO Tim Arndt directed to the supplemental for pipeline stabilization years, noting that speculative business typically leases up between seven and nine months (recently longer, expected to tighten). Build-to-suits come online immediately upon completion. He did not provide quarterly breakdowns but indicated that the supplemental offers the best detail on the overall pipeline.

Todd Thomas asked about the moving pieces behind the implied sequential decrease in core FFO for Q4 and Prologis's thoughts on 2026.

Answer

Managing Director Chris Caton explained that the implied Q4 FFO decrease is due to timing, specifically large sales of investment tax credits in Q3 (from solar/energy business) and lighter G&A in Q3, which will be heavier in Q4. He advised using the second half of the year for a 2026 run rate, reiterating long-term high single-digit earnings growth. He highlighted two 2026 headwinds: moderate impact from rising interest rates and a 'deployment drag' due to 2024 being the lightest development starts year since the merger, meaning lower contributions from stabilization in 2026.

Todd Thomas from KeyBanc Capital Markets requested an updated full-year outlook for net absorption and more detail on 3PL leasing activity and near-term trends.

Answer

Chris Caton, MD of Global Strategy & Analytics, confirmed year-to-date net absorption was 49 million sq. ft. and projected the full year to land between 75 and 100 million sq. ft. President Dan Letter noted that 3PLs accounted for about a third of Q2 leasing, slightly down from record levels in the prior two quarters, but the pipeline from larger 3PLs is growing as they work through gray space.

Todd Thomas of KeyBanc Capital Markets asked if the 2025 guidance assumes the recent post-election leasing momentum will continue, and requested the 2024 net absorption figure and the 2025 forecast.

Answer

CEO Hamid Moghadam explained that the 2025 business plan was prepared around the time of the election, before the full extent of the recent positive activity was clear, suggesting they are more encouraged now than when the plan was set. Managing Director Christopher Caton provided the net absorption figures, stating it was just under 150 million square feet in 2024 and is forecasted to be 185-190 million square feet in 2025, building over the course of the year.

Todd Thomas asked about leasing demand trends throughout the third quarter and whether near-term volatility in space utilization should be expected due to factors like pre-election inventory builds or potential port strikes.

Answer

Chris Caton, Managing Director, reported that demand was steady throughout the quarter without significant acceleration or deceleration. Regarding utilization, he noted a continued upward trend this year. He suggested that while companies are trying to restock, a resilient consumer is pulling goods through the supply chain, which is keeping utilization from rising more quickly.

Todd Thomas from KeyBanc Capital Markets inquired about the status of major upcoming lease expirations in Memphis and St. Louis, early visibility into 2026 tenant retention, and the company's strategy for acquisitions versus share repurchases.

Answer

James Connolly, EVP & Asset Management, confirmed a two-year extension is in progress for the Memphis lease and the 625,000 sq. ft. St. Louis renewal is in the final DocuSign stage with 'no chance it's not happening.' He also noted that two large international leases for 2026 are in the signature cycle. Anthony Saladino, President & CFO, added that the acquisition pipeline is robust at $750 million, with about $91 million left to deploy from the Sixth Street capital, which will be allocated between acquisitions and share buybacks.

Todd Thomas asked for an update on the confidence level for securing a renewal in St. Louis and backfilling a space in Columbus, the key drivers for the projected second-half acceleration in same-store growth, and the funding sources for the $205 million of acquisitions currently under agreement.

Answer

Executive James Connolly confirmed the St. Louis renewal is being signed and that an agreement is in place for a partial leaseback in Columbus. Executive Anthony Saladino clarified that the St. Louis asset is in the same-store pool and is a key growth contributor, detailing the occupancy ramp from 92.2% to a projected 97.3% by year-end. Saladino also stated that acquisitions will be funded via the line of credit and a $79 million preferred equity draw in May.

Todd Thomas asked for specifics on the timing of the 740,000 square feet of recently signed leases and whether any speculative leasing for vacant space is included in the 2025 guidance. He also requested more detail on the remaining 2025 expirations, particularly the St. Louis renewal and the Columbus downsize.

Answer

EVP of Asset Management James Connolly confirmed that all 740,000 square feet of leases have already commenced. President and CFO Anthony Saladino specified that of the 1 million square feet of lease-up assumed in guidance, about 300,000 square feet is speculative. Connolly added that the St. Louis tenant has expressed interest in expanding, and for the Columbus vacancy, there are two prospects to fill the entire building with minimal downtime after the current tenant leaves.

Todd Thomas of KeyBanc Capital Markets sought to confirm the fourth-quarter FFO run rate as the correct baseline for 2025 projections, based on the NOI bridge provided. He also asked about the current leasing environment and whether the election's conclusion might improve tenant decision-making velocity.

Answer

Executive Anthony Saladino confirmed the interpretation of the FFO bridge was accurate and that the Q4 run rate is the correct baseline, noting a one-time $500,000 cleanup fee was the most significant non-recurring item in Q3. Executive Jeffrey Witherell acknowledged a recent slowdown in leasing velocity, which he speculated could be tied to the election and interest rate uncertainty. James Connolly, Head of Asset Management, added that specific prospects for the St. Louis property had indicated they would wait until after the election to make a decision.

Todd Thomas inquired about operating trends in weaker Sunbelt markets and whether their recovery would lag the broader portfolio. He also asked if the company is considering proactive changes to its existing customer rate increase (ECRI) program given the macroeconomic outlook.

Answer

CEO Christopher Marr stated that positive trends are broad-based, but markets with heavy new supply like those in Florida, Arizona, and Texas will likely have a longer recovery period. Regarding the ECRI program, CFO Timothy Martin responded that the system continues to manage based on observed demand and the existing customer base remains healthy, so no fundamental changes are being made.

Todd Thomas of KeyBanc Capital Markets questioned if the recovery in weaker Sunbelt markets like Texas and Florida would lag the portfolio average and asked if the strategy for existing customer rate increases (ECRI) is adjusted for a potentially weaker macroeconomic outlook.

Answer

President & CEO Christopher Marr confirmed that while positive trends are broad-based, recovery in high-supply Sunbelt markets will likely take longer. CFO Timothy Martin added that the ECRI program is systematically managed based on demand trends and that the existing customer base has remained healthy and resilient.

Todd Thomas from KeyBanc Capital Markets Inc. asked for the rationale behind the flat sequential FFO guidance for Q2, a historically rare occurrence, and questioned if demand from small business customers was increasing.

Answer

CFO Timothy Martin explained the flat FFO guidance was due to several factors, including the timing of operating expenses like marketing and a reduced contribution from the 'other income' line item starting in Q2. CEO Christopher Marr noted a slight pickup in small business demand in urban markets like New York and Chicago, driven by businesses seeking flexible space solutions rather than distress.

Todd Thomas requested a current occupancy update and sought to confirm if year-to-date performance is running slightly ahead of guidance. He also questioned the drivers of the large sequential FFO decline from Q4 2024 to the Q1 2025 guidance midpoint and asked about assumptions for the upcoming bond refinancing.

Answer

President and CEO Christopher Marr confirmed the year-over-year occupancy gap narrowed to -50 basis points, with absolute occupancy at 89.5%, and agreed that year-to-date trends are encouraging but the company is not extrapolating them. CFO Tim Martin stated the sequential FFO decline is due to typical seasonality and that the guidance for the 2025 bond refinancing assumes a rate in the mid-5% range with timing between Q2 and late Q3.

Todd Thomas of KeyBanc Capital Markets Inc. questioned why the fourth-quarter FFO guidance range was wider than typical and asked for the latest occupancy figure for October.

Answer

CFO Timothy Martin explained that the wider $0.03 FFO range for Q4 is intended to capture the week-to-week volatility and potential outcomes in the current environment, and no other specific factor is driving it. President and CEO Christopher Marr reported that same-store occupancy at the end of October was 89.9%, which is 130 basis points lower than the prior year.

Asked about the potential for raising equity given the improved stock price, the strategy around hedging upcoming debt maturities, and the reason for the implied increase in Q4 bad debt guidance.

Answer

The company is focused on its balance sheet and debt refinancing, not raising equity. They chose not to enter new swaps to avoid complicating the upcoming bond issuance. The higher bad debt guidance is simply a matter of being conservative, as the tenant base is considered healthy.

Inquired about the reasons for lower investment activity, the quantitative impact on guidance, the health of the tenant base amidst recent bankruptcies, and the status of the Kohl's backfill at Fallbrook.

Answer

The investment slowdown is due to interest rate uncertainty causing seller reluctance, impacting FFO guidance by about $0.01 per $100M of activity. The tenant base remains healthy with minimal exposure to recent bankruptcies. The Kohl's backfill has a signed LOI for the main space, with active discussions for the remainder.

Inquired about funding for the net investment guidance, the CapEx and timing for the new anchor leases, and the drivers behind the strong Q1 same-store NOI growth.

Answer

The company will not issue equity at the current stock price and will fund acquisitions through dispositions. The CapEx for anchor leases is around $75-$100 per square foot, and the rent increase is double on a net basis, with rent commencement expected in early 2025. The strong Q1 same-store NOI was due to a combination of factors including lower bad debt, lower operating expenses, and higher base rent, not a single specific item.

Asked about the occupancy impact of an additional anchor vacancy, potential for further Rite Aid impacts in guidance, the company's sensitivity to its stock price for funding acquisitions, and the expected accretion from this activity.

Answer

The additional anchor vacancy will not have a significant impact on overall occupancy, which is expected to remain in the 97-98% range, and the space has significant mark-to-market potential. No further Rite Aid impact is assumed in guidance. The company is sensitive to its stock price but sees accretive opportunities, expecting $0.01 to $0.03 of FFO accretion depending on the volume of acquisitions. The interest expense guidance is tied to this acquisition activity.

Todd Thomas asked about the potential for higher near-term tenant turnover in the Curbline portfolio to improve merchandising and capture rent growth, and how the portfolio might perform in a traditional economic cycle given its exposure to food and restaurant tenants.

Answer

CEO David Lukes indicated that significant tenant recycling is unlikely, as the strategy focuses on the low-CapEx, high-retention nature of the business. CFO Conor Fennerty added that historical data, including through the GFC, shows the convenience asset class performs well, supported by a high concentration of national credit tenants and a diversified tenant base, which mitigates risk during downturns.

Todd Thomas of KeyBanc Capital Markets Inc. asked for commentary on new capital formation in the open-air shopping center space and whether Curbline could potentially be in a net cash position at the time of the spin-off.

Answer

CEO David Lukes noted he has been surprised by the depth of demand, highlighting increased interest from institutions, value-add funds, and a significant amount of private wealth from unlevered family offices. CFO Conor Fennerty confirmed that Curbline being in a net cash position is the base case, stating there's a 'very good chance' it will be capitalized entirely with cash and no preferred investment in SITE, depending on the final disposition volume.

Asked about the investment pipeline for Curb Properties, the reasons for its elevated same-store NOI growth in 2024, and whether dispositions are better executed individually or if there is appetite for portfolio sales.

Answer

The Curb investment pipeline is strong, but acquisitions are currently slower as the team prioritizes the high volume of SITE dispositions. The elevated 2024 same-store NOI growth for Curb is driven by the SNO pipeline lease-up, shorter backfill times, and significant mark-to-market opportunities. The company is open to portfolio sales but is also price-sensitive and sees value in one-off transactions with specific buyers.

Asked for details on the shared services agreement, Curbline's future capital structure, the perception of convenience assets in the debt markets, the rate on the new mortgage commitment, and the growth outlook for the remaining SITE Centers portfolio.

Answer

The shared services agreement will last up to two years to ensure an orderly transition, allowing both companies to become self-sufficient. Curbline's capital structure is expected to be predominantly unsecured, similar to SITE Centers. Debt markets have shown strong interest in convenience assets. The rate on the $1.1B mortgage is TBD but will be comparable to a market-rate CMBS loan. SITE Centers' path is to maximize NAV, which may involve continued asset sales if private market values remain attractive, and its balance sheet is structured to support this flexibility.

Todd Thomas from KeyBanc Capital Markets asked for an update on plans for the 2020 secured nonrecourse mortgage maturities, specifically for the Burnsville, Parkway, and Valley View properties. He also inquired about the early outlook for the 2020 leasing environment and the potential size of the unbudgeted bankruptcy reserve.

Answer

EVP & CFO Farzana Mitchell stated that CBL is in discussions with both current and new lenders well ahead of the 2020 maturities. CEO Stephen Lebovitz commented that 2020 will be a challenging year for leasing due to the full-year impact of 2019 bankruptcies. He noted it was too early to estimate the 2020 bankruptcy reserve, as waiting for more current information provides a more accurate forecast.

Todd Thomas from KeyBanc Capital Markets asked for an update on the plans for the 2020 secured nonrecourse mortgage maturities, specifically for the Burnsville, Parkway, and Valley View properties. He also inquired about the early outlook for the 2020 leasing environment and the potential size of the unbudgeted bankruptcy reserve for next year.

Answer

EVP & CFO Farzana Mitchell responded that CBL is in discussions with both current and new lenders for the 2020 maturities and will provide updates as progress is made. CEO Stephen Lebovitz added that 2020 is expected to be a 'tough year' for leasing due to the full-year impact of 2019 bankruptcies. He stated it was too early to estimate the 2020 bankruptcy reserve, as waiting for more current information closer to year-end provides a more accurate forecast.