Acquisition Outlook for 2024
Q: What opportunities do you see for acquisitions in 2024?
A: We are optimistic about acquisitions in 2024, expecting a better year than 2023 as the market heals. Sellers previously on the sidelines are now considering bringing properties to market. We have a compelling cost of capital and are format agnostic, focusing on location and opportunity. We're leveraging our relationships and creativity to capitalize on these opportunities.

Office Leasing Demand
Q: What's driving office leasing demand at Santana West and Pike & Rose?
A: We're close to signing leases with large tenants at Santana West, which will get the building to 50% leased. Similarly, at Pike & Rose, we're nearing 80% leased. Tenants are relocating from downtowns to our mixed-use properties, seeking amenities, and are less price-sensitive on rents, though tenant improvement packages have increased.

Pricing Power and Rent Growth
Q: Can you push rents higher given strong demand?
A: We're focusing on contractual rent increases and making leases as landlord-friendly as possible. Over the last 18 months, we've made strong strides in securing leases with big bumps, and we believe our rents are under market, providing room for growth.

Earnings Guidance Amid Interest Rates
Q: How do higher interest rates impact your 2024 earnings guidance?
A: Despite lessening headwinds, higher interest rates still impact earnings. Without the increased money costs, 2024 earnings growth would be about 5% instead of 3%.

Tenant Quality Strategy
Q: Are you avoiding high-leverage tenants?
A: Yes, we consider tenant leverage and credit quality when improving our portfolio. We're more selective, especially when investing capital into the space, ensuring we're likely to get paid over the lease term.

Retail Leasing Trends
Q: Why did Q4 leasing volumes drop, and what's the outlook?
A: The 25% drop in Q4 retail leasing volumes is due to timing, not a change in trend. Our pipeline remains strong, particularly in small shop leasing, where we see potential for another 100 basis points of occupancy growth.

Construction Costs and Development Pipeline
Q: How are construction costs affecting your development plans?
A: Construction costs have stabilized and are slightly decreasing, mainly due to better labor rates, improving predictability. This allows us to proceed with projects like Bala Cynwyd, where supply and demand dynamics now make sense.

Mortgage on Bethesda Row
Q: Why did you mortgage Bethesda Row, and what are its terms?
A: We secured a $200 million mortgage on Bethesda Row to lock in an attractive credit spread amidst volatile debt markets. The leverage is lower than typical but provides flexibility for tax planning and potential future joint ventures.

Residential Occupancy and Rent Growth
Q: What's happening with residential occupancy and rent growth expectations?
A: The 190 basis point drop in residential occupancy is due to seasonality, particularly in California and New England. We expect occupancy to pull back in Q4 but remain confident in our rent growth projections for 2024.

Joint Venture Plans
Q: Are you considering joint ventures for assets like Bethesda Row?
A: While we've considered it, we don't believe it's the right time to enter into joint ventures for mixed-use assets. Our mixed-use properties are outperforming and growing rapidly, so we prefer to maintain full ownership for now.

Guidance Components and FFO Drivers
Q: What are the key drivers and risks in your guidance?
A: Our guidance factors in elements like occupancy levels, percentage rents, parking revenues, and expense control. Interest rates impact our $600 million in floating-rate debt, and we've been conservative in our assumptions. Tenant retention and accelerating openings also contribute to FFO growth.