Q4 2024 Phillips Edison & Co Inc Earnings Call
Please note that this call is being recorded I will now turn the call over to Kimberly Greene head of Investor Relations Kimberly you may begin.
Thank you operator I'm joined on this call by our Chairman and Chief Executive Officer, Jeff Edison, President, Bob Myers, and Chief Financial Officer, John Caulfield. Once we conclude our prepared remarks, we will open the call to Q&A. After today's call an archived version will be published on our Investor Relations website.
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As a reminder, today's discussion may contain forward looking statements about the company's view of future business and financial performance, including forward earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties as described in our SEC filings specifically in our most recent Form 10-K.
In 10-Q, and our discussion today, we will reference certain non-GAAP financial measures information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings press release, and supplemental information packet, which have been posted on our website. Please note that we have also posted a presentation with additional information.
Our caution on forward looking statements also applies to these materials.
Speaker Change: Now I'd like to turn the call over to Jeff Edison, Our Chief Executive Officer, Jeff.
Jeff Edison: Thank you Kim and thank you everyone for joining us today.
Jeff Edison: <unk> delivered market, leading operating results in 2024.
Jeff Edison: We believe we have the best team in the shopping center space.
Jeff Edison: I'd like to thank our <unk> associates for their dedication hard work and maintain our unique competitive advantage and drive value at the property level.
<unk> and 10-Q that our discussion today will reference certain non-GAAP financial measures information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings press release, and supplemental information packet, which have been posted on our website. Please note that we have also posted a presentation with additional information.
Jeff Edison: The <unk> team delivered solid core <unk> per share growth of nearly 4% in 2044, despite significant interest expense headwinds if.
Jeff Edison: If we added back per share impact of increased interest rates core <unk> per share growth would have been 6% in 2044.
Our caution on forward looking statements also applies to these materials.
Jeff Edison: Retailer demand across our portfolio remained strong.
Now I'd like to turn the call over to Jeff Anderson, Our Chief Executive Officer, Jeff.
Jeff Edison: Evident and our high occupancy strong rent spreads and our leasing pipeline.
Jeff Anderson: Thank you Kevin.
Jeff Anderson: Thank you everyone for joining us today.
Jeff Edison: Retailers want to be located in our centers with top grocers drive consistent and recurring foot traffic.
Jeff Anderson: Pico delivered market, leading operating results in 2024, we believe we have the best team in the shopping center space I'd like to thank our Pico itself.
Jeff Edison: Transaction market also improved for us in 2024, allowing us to exceed the high end of our original guidance for acquisitions.
Jeff Anderson: Their dedication and hard work and maintained our unique competitive advantage and drive value at the property level.
Jeff Edison: Our unique advantage is that we understand quality differently. We believe we are able to identify quality in our markets with better initial yields and higher growth opportunities in the top 10 markets.
Jeff Anderson: The <unk> team delivered solid core <unk> per share growth of nearly 4% in 2044 is quite significant.
Jeff Anderson: Headwind.
Jeff Anderson: If we added back per share impact of increased interest rates core <unk> per share growth would have been 6% in 2044.
Jeff Edison: We have built a high quality portfolio acquisition by acquisition that is capable of delivering strong cash flow growth.
Jeff Anderson: Retailer demand across our portfolio remained strong.
Jeff Edison: The quality of <unk> cash flows is a product of Pico cycle tested performance over more than 30 years.
Jeff Anderson: Evident and our high occupancy strong rent spreads and our leasing pipeline.
Jeff Edison: When we look at our performance following both the 2008 global financial crisis, and the 2020 COVID-19 induced downturn with highlights the resiliency of our grocery anchored portfolio.
Retailers want to be located in our centers with top grocers drive consistent and recurring foot traffic.
Jeff Anderson: Transaction market also improved for us in 2044, allowing us to exceed the high end of our original guidance for acquisition.
Jeff Edison: The quality of our cash flows is also reflected in <unk> focus and differentiated strategy of owning neighborhood shopping centers anchored by the number one or two growth for bike sales in the market.
Jeff Anderson: Our unique advantage is that we understand quality differently. We believe we are able to identify quality in a market with better initial yields and higher growth opportunities are in the top 10 markets.
Jeff Edison: We know the average American family business for grocery store, one six times per week.
Jeff Edison: Proceeds draw consistent daily foot traffic to our centers driving sales through our small store shop, and increasing the strength of our cash flow.
Jeff Anderson: We have built a high quality portfolio acquisition by acquisition that is capable of delivering strong cash flow growth.
Jeff Edison: Proximately, 70% of our ABR comes through necessity based goods and services.
Jeff Anderson: The quality of vehicles cash flows is a product of pre close cycle tested performance over more than 30 years.
Jeff Edison: 30% of our rents come from our grosses.
Jeff Edison: This is the highest in the shopping center space and further strengthens our cash flow.
Jeff Anderson: When we look at our performance following both the 2008 global financial crisis, and the 2020 COVID-19 induced downturn and highlights the resiliency of our growth portfolio.
Jeff Edison: The quality of <unk> cash flow is also reflected in our market, leading operating metrics, including strong lease spreads.
Jeff Anderson: The quality of our cash flows is also reflected in Pico focused and differentiated strategy of owning neighborhood shopping centers anchored by the number one or two growth sales in the market.
Jeff Edison: The occupancy.
Jeff Edison: Many advantages of suburban markets, where we operate our centers and high neighbor retention.
Jeff Edison: Our average center is about 113000 square feet.
Jeff Anderson: We know the average American family for grocery store, one six times per week are processed draw consistent daily foot traffic to our centers driving sales through our small store shop, and increasing the strength of our cash flow.
Jeff Edison: Which enhances our pricing power, we believe our smaller centers allow for better long term <unk> and <unk> per share growth because our centers are neighborhoods, where retailers want to be.
Jeff Edison: Have a diversified neighbor mix and have limited exposure to big box bankruptcies, we believe that our unique format drive high quality cash flows.
Jeff Anderson: 70% of our ABR comes through necessity based goods and services.
Jeff Anderson: 30% of our rents come from our grocers.
Jeff Anderson: This is the highest in the shopping center space.
Jeff Edison: The end of 2024 and early 2025 was met with several retailers filing bankruptcy.
Jeff Anderson: Further strengthens our cash flow.
Jeff Anderson: The quality of vehicles passed laws is also reflected in our market, leading operating metrics, including strong lease spreads high occupancy the many advantages of suburban markets, where we operate our centers and high neighbor retention.
Jeff Edison: As a reminder.
Jeff Edison: Party City Big lots and Joanne represent just 60 basis points of <unk>.
Jeff Edison: Those ABR when combined.
Jeff Edison: CECO has low exposure to these retailers which is intentional.
Jeff Anderson: Our average center is about 113000 square feet.
Jeff Edison: The quality of <unk> cash flows are important to acknowledge as we continued to grow our portfolio accretively to stay true to our core strategy and create long term value for our shareholders.
Jeff Anderson: Which enhances our pricing power, we believe our smaller centers allow for better long term <unk> and <unk> per share growth because our centers are neighborhoods, where retailers want to be.
We have been strategic in our decision, making the best positioned Pico. So that we can take advantage of opportunities for growth both internal and external.
Jeff Anderson: The diversified neighbor mix and have limited exposure to big box bankruptcy, we believe that our unique format drive high quality cash flows.
Jeff Edison: On acquisitions, we continue to believe that <unk> offers the best opportunity for external growth within the shopping center space recently.
Jeff Anderson: At the end of 2024 and early 2045 was met with several retailers filing bankruptcy.
Jeff Edison: These investments continue to be core to Pico growth plan equally.
Jeff Edison: <unk> is creating value through accretive investments at a point in the cycle, where there is very little new development, taking place we are.
Jeff Anderson: As a reminder.
Jeff Anderson: Garden City, Big lots and Joanne represent just 60 basis points <unk> APR winter buys.
Jeff Edison: <unk> been able to acquire assets at meaningful discounts to replacement costs.
Jeff Anderson: Veeco has low exposure to these retailers which is intentional.
Jeff Edison: Given the strength of the market the pipeline, we are targeting and the team we have in Pico. We believe we can achieve $350 million to $450 million in gross acquisitions. This year.
Jeff Anderson: Quality of <unk> cash flows are important to acknowledge as we continue to grow our portfolio accretively to stay true to our core strategy and create long term value for our shareholders.
Jeff Edison: We have the capacity to acquire more of attractive opportunities materialize.
Jeff Anderson: We have been strategic in our decision, making to best position Pico. So that we can take advantage of opportunities for growth both internal and external.
Jeff Edison: We closed on nearly $100 million of acquisitions in the fourth quarter.
Jeff Edison: Our pipeline for the first quarter as strong recently, we closed on an additional asset in our joint venture with Cowen and Sears. We also acquired an asset in a separate joint venture with Lafayette square and northwestern mutual.
Jeff Anderson: On acquisitions, we continue to believe that <unk> offers the best opportunity for external growth within the shopping center space.
Jeff Anderson: <unk> continued record of Pico growth plan equal.
Jeff Edison: We continue to target an unlevered IRR of 9% for our acquisition.
Jeff Anderson: <unk> is creating value through accretive investments at a point in the cycle, where there is very little new development taking place.
Jeff Edison: If we look at everything we have acquired over the past few years. We are currently exceeding our estimated underwritten returns by 100 basis points on average.
Jeff Anderson: We have been able to acquire assets at meaningful discounts to replacement costs.
Jeff Anderson: Given the strength of the market.
Jeff Edison: For example in 2023 Pico acquired River Park shopping center.
Jeff Anderson: Pipeline, we're targeting and the team we have in FICO, we believe we can exceed $350 million to $450 million in gross acquisitions. This year we.
Jeff Edison: The HEB anchored center is located in a fast growing Houston, Texas suburb and was 79% leased at acquisition.
Jeff Anderson: We have the capacity to acquire more of attractive opportunities materialize.
Jeff Edison: The CECO team is so far improved our estimated underwritten return the asset by 123 basis points, largely driven by the team's ability to quickly drive the centers lease percentage to 99%, while keeping capital costs down.
Jeff Anderson: We closed on nearly $100 million of acquisitions in the fourth quarter.
Jeff Anderson: Our pipeline for the first quarter as strong recently, we closed on an additional asset in our joint venture with Cowen and sphere. We also acquired an asset in a separate joint venture with Lafayette square and northwestern mutual.
Jeff Edison: We're disciplined buyers and we will continue to be disciplined as we go forward.
Jeff Anderson: We continue to target an unlevered IRR of 9% for our acquisition.
Jeff Edison: In addition to external growth with Pico team continues to identify ground up development and repositioning opportunities with weighted average cash on cash yields between 9% and 12%.
Jeff Anderson: If we look at everything we have acquired over the past few years. We are currently exceeding our estimated underwritten returns by 100 basis points on average.
Jeff Edison: This activity has been a great use of free cash flow and is expected to produce attractive returns with less risk.
Speaker Change: For example in 2023 Pico acquired River Park shopping center the.
Speaker Change: The HEB anchored center is located in the fast growing Houston, Texas suburb and was 79% leased at acquisition.
Jeff Edison: We continue to grow this pipeline.
Jeff Edison: Returns have been accretive to our high quality portfolio.
Speaker Change: The CECO team is so far improved our estimated underwritten return the asset by 123 basis points, largely driven by the team's ability to quickly drive the centers lease percentage to 99%, while keeping capital costs down.
Jeff Edison: Our low leverage gives us the financial capacity to meet our growth targets.
Jeff Edison: We also have diverse sources of capital that we can use to grow and match fund our investment activities. These sources include additional debt issuance dispositions and equity.
Speaker Change: We are disciplined buyers and we will continue to be disciplined as we go forward.
Jeff Edison: In January we sold an asset and provided seller financing, which was the first broad. Additionally, Jon will talk about funds raised on our ATM in the fourth quarter.
In addition to external growth the Pico team continues to identify ground up development or repositioning opportunities with weighted average cash on cash yields between nine and 12%.
Jeff Edison: We believe match funding our capital sources with our investments is important to a proper investment strategy as long term owners and operators of real estate.
Speaker Change: This activity has been a great use of free cash flow and is expected to produce attractive returns with less risk.
Jeff Edison: The combination of our ability to drive cash flow growth from our existing portfolio and to invest accretively in new acquisition gives us the confidence that we can deliver mid to high single digit core <unk> and <unk> per share growth on a long term basis.
Speaker Change: We continue to grow this pipeline as returns have been accretive to our high quality portfolio.
Speaker Change: Our low leverage gives us the financial capacity to meet our growth targets.
Speaker Change: We also have diverse sources of capital that we can use to grow and match fund our investment activity <unk>.
We believe people as high quality portfolio allows for better long term core <unk> and <unk> growth than our shopping center peers.
Speaker Change: These sources include additional debt issuance.
Speaker Change: Physicians and equity.
Jeff Edison: In addition to this earnings growth, we believe <unk> offers a solid dividend yield with room to grow.
Speaker Change: January we sold an asset and provided seller financing, which was the FERC process.
Speaker Change: Actually Jon will talk about funds raised on our ATM in the fourth quarter.
Jeff Edison: Given our demonstrated track record through various cycles, we believe an investment in Pico will provide shareholders with a favorable balance of quality cash flows mitigation of downside risk and strong internal and external growth.
Speaker Change: We believe match funding our capital sources with our investments is important to a proper investment strategy as long term owners and operators of real estate.
Jeff Edison: In summary, the quality of our past produces our beta and the strength of our growth increases our alpha.
Speaker Change: The combination of our ability to drive cash flow growth from our existing portfolio and to invest accretively in new acquisitions.
Jeff Edison: That's data more alpha.
Speaker Change: Our confidence that we can deliver mid to high single digit core <unk> and <unk> per share growth on a long term basis.
Jeff Edison: I will now turn the call over to Bob to provide additional color on the operating environment Bob.
Speaker Change: We believe <unk> high quality portfolio allows for better long term core assets, <unk> and <unk> growth than our shopping center peers.
Bob Myers: Thank you Jeff Good afternoon, everyone and thank you for joining us.
Bob Myers: We had another quarter of strong operating results and leasing momentum we continue to see high retailer demand with no current signs of slowing down.
Speaker Change: In addition to this earnings growth, we believe <unk> offers a solid dividend yield with room to grow given our demonstrated track record through various cycles. We believe an investment in <unk> provides shareholders with a favorable balance of quality cash flows mitigation of downside risks and strong internal and external growth.
Bob Myers: It goes leasing team continues to convert retailer demand into significantly higher rents at our centers.
Bob Myers: As Jeff mentioned, the quality of pick those cash flows as reflected in our market leading operating metrics.
Bob Myers: You've heard us say it before we believe sore provides important measures of quality spreads occupancy advantages of the market and retention.
Speaker Change: In summary, the quality of our cash flow reduces our paid us and the strength of our growth increases our outflow.
Bob Myers: In terms of new lease activity, we continue to have success in driving higher rents.
Speaker Change: Less data more alpha.
Bob Myers: Comparable new rent spreads for the fourth quarter were 32% are in line new rent spreads remained strong at 26, 5% in the quarter.
I will now turn the call over to Bob to provide additional color on the operating environment Bob.
Bob: Thank you Jeff Good afternoon, everyone and thank you for joining us.
Bob Myers: We continue to capitalize on strong renewal demands.
Bob: We had another quarter of strong operating results and leasing momentum we continue to see high retailer demand with no current signs of slowing down.
Bob Myers: <unk> team remains focused on maximizing opportunities to improve lease language at renewal and drive rents higher in the fourth quarter, we achieved comparable renewal rent spreads of 28%.
Bob: He goes leasing team continues to convert retailer demand into significantly higher rents at our centers.
Bob: As Jeff mentioned, the quality of <unk> cash flows as reflected in our market, leading operating metrics you've heard us say it before we believe saw provides important measures of quality spreads occupancy advantages of the market and retention.
Bob Myers: Our in line renewal rent spreads remain high at 19, 8% in the quarter.
Bob Myers: We also remain successful at driving higher contractual rent increases are new and renewal in line leases executed in the fourth quarter had an average annual contractual rent bumps of two and 3% respectively. Another important contributor to our long term growth.
Bob: In terms of new lease activity, we continue to have success in driving higher rents.
Bob: Comparable new rent spreads for the fourth quarter were 32% are in line new rent spreads remained strong at 26, 5% in the quarter.
Bob Myers: These increases in spreads reflect the continued strength of the leasing and retention environment.
Bob Myers: We expect new and renewal spreads to continue to be strong throughout the balance of this year and into the foreseeable future.
Bob: We continue to capitalize on strong renewal demand.
Bob: <unk> team remains focused on maximizing opportunities to improve lease language at renewal and drive rents higher in the fourth quarter, we achieved comparable renewal rent spreads of 28%.
Bob Myers: Portfolio occupancy remained high and ended the quarter at 98% leased.
Bob Myers: Occupancy remains strong at 99% and in line occupancy ended the quarter at 95%.
Bob: Our in line renewal rent spreads remain high at 19, 8% in the quarter.
Bob Myers: New neighbors added in the fourth quarter included quick service restaurants, such as Jimmy John's Chipotle and Wingstop.
Bob: We also remain successful at driving higher contractual rent increases are new and renewal in line leases executed in the fourth quarter had an average annual contractual rent bumps of two and 3% respectively. Another important contributor to our long term growth.
Bob Myers: We also added new med tail users and other necessity based retailers and services.
Bob Myers: As it relates to bad debt in the fourth quarter, we actively monitor the health of our neighbors.
Bob Myers: Not concerned about bad debt in the near term.
Bob: These increases in spreads reflect the continued strength of the leasing and retention environment.
Bob Myers: Given the strong retailer demand and as Jeff mentioned, we don't have any meaningful concentrations.
Bob: We expect new and renewal spreads to continue to be strong throughout the balance of this year and into the foreseeable future.
Bob Myers: A key advantage of Pico suburban locations is that our centers are situated in markets, where our top grocers are profitable.
Bob: Portfolio occupancy remained high and ended the quarter at 98% leased.
Speaker Change: He goes three mile trade area demographics include an average population of 67000 people and an average median household income of 88000, which is 12% higher than the U S medians.
Bob: Occupancy remains strong at 99% and in line occupancy ended the quarter at 95%.
Bob: New neighbors added in the fourth quarter include a quick service restaurants, such as Jimmy John's Chipotle and Wingstop we.
Speaker Change: These demographics are in line with the store demographics, a program and Publix, which are <unk> top two neighbors.
Bob: We also added new med tail uses and other necessity based retailers and services.
Speaker Change: Our markets also benefit from low unemployment rates, which are below the shopping center peer average.
Bob: As it relates to bad debt in the fourth quarter, we actively monitor the health of our neighbors.
Speaker Change: The necessity based focus of our properties is important with demographics are considered.
Bob: Not concerned about bad debt in the near term.
Speaker Change: You are comparing our publics to an apple store or a high end fashion store the demographics that each retailer needs to be successful are very different.
Speaker Change: <unk> given the strong retailer demand and as Jeff mentioned, we don't have any meaningful concentrations.
Speaker Change: A key advantage of <unk> suburban locations is that our centers are situated in markets, where our top grocers are profitable.
Speaker Change: Peak those demographics are very strong and supporting our neighbors.
Speaker Change: We also enjoy a well diversified neighbor base.
Speaker Change: He goes three mile trade area demographics include an average population of 67000 people and an average median household income of 88000, which is 12% higher than the U S median these.
Speaker Change: Neighbor list is comprised of the best grocers in the country, our largest non brochure neighbor makes up only one 4% of our rents and that Nabors T. J Maxx all other non grocery neighbors are below 1% of ABR.
Speaker Change: These demographics are in line with the store demographics of Kroger, and Publix, which are <unk> top two neighbors.
Speaker Change: When looking at our very limited exposure to distressed retailers. The top 10 Nabors currently on our watch list represent less than 2% of ABR. This is not by accident. It is a product that many years of being locally smart.
Speaker Change: Our markets also benefit from low unemployment rates, which are below the shopping center peer average.
Speaker Change: The necessity based focus of our properties is important with demographics are considered.
Speaker Change: You are comparing our publics to an apple store or a high end fashion store the demographics that each retailer needs to be successful are very different.
Speaker Change: And intentionally cultivating our portfolio of grocery anchored neighborhood centers located in strong suburban markets.
Speaker Change: Our neighbour retention remained high at 88% in the fourth quarter, while growing Brent at attractive rates retention rates result, in better economics, with less downtime and dramatically lower tenant improvement costs lower capital spend resulted in better returns the IRR on a renewal lease had been meaningfully higher.
Speaker Change: Peak goes demographics are very strong and supporting our neighbors.
Speaker Change: We also enjoy a well diversified neighbor base our top neighbor list is comprised of the best grocers in the country, our largest non grocery neighbor makes up only one 4% of our rents and that Nabors T. J Maxx all other non grocery neighbors are below 1% of ABR.
Speaker Change: Then the return on a new lease in the fourth quarter. We spent only 87 per square foot on tenant improvements for renewals.
Speaker Change: When looking at our very limited exposure to distressed retailers. The top 10 Nabors currently on our watch list represent less than 2% of ABR. This is not by accident. It is a product that many years of being locally smart and intentionally cultivating our portfolio of grocery anchored neighborhood.
Speaker Change: The <unk> team thinks like owners and we believe it shows in our portfolio.
Speaker Change: When we think like owners, we understand the importance of every one of our neighbors and creating the right merchandising mix and shopping experience at every center when.
Speaker Change: When we think like owners everyone benefits.
Speaker Change: Centers located in strong suburban markets.
Speaker Change: Our approach makes us a preferred landlord validated by our 96% satisfaction score from our most recent neighbors survey.
Speaker Change: Our neighbour retention remained high at 88% in the fourth quarter, while growing Brent at attractive rates retention rates result, in better economics, with less downtime and dramatically lower tenant improvement costs lower capital spend resulted in better returns the IRR on a renewal lease had been meaningfully higher.
Speaker Change: We have looked at quality differently for over 30 years, and we continue to believe that sword is the best metric for quality.
Speaker Change: The leasing spreads that we're achieving and the strength of our leasing pipeline reflect continued demand for space in our high quality neighborhood shopping centers.
Speaker Change: And the return on a new lease in the fourth quarter. We spent only 87 per square foot tenant improvements for renewals.
Speaker Change: In addition to our strong rental growth trends, we continue to expand our pipeline of ground up out parcel development and repositioning projects in 2024, we stabilized 15 projects and delivered over 300000 square feet of space to our neighbors. These projects add incremental NOI of approximately five.
Speaker Change: The <unk> team, thanks, like owners and we believe it shows in our portfolio.
Speaker Change: We think like owners, we understand the importance of every one of our neighbors and creating the right merchandising mix and shopping experience at every center.
Speaker Change: When we think like owners everyone benefits.
Speaker Change: $3 million annually.
Speaker Change: Our approach makes us a preferred landlord validated by our 96% satisfaction score from our most recent neighbors survey.
Speaker Change: Are expected to provide superior risk adjusted returns and have a meaningful impact on our long term NOI growth.
Speaker Change: We have looked at quality differently for over 30 years, and we continue to believe that <unk> is the best metric for quality.
Speaker Change: We expect to invest $40 million to $50 million annually and these types of investments long term.
Speaker Change: The overall demand environment.
Speaker Change: The leasing spreads that we're achieving and the strength of our leasing pipeline reflect continued demand for space in our high quality neighborhood shopping centers.
Speaker Change: The stability of our centers the strength of our grocers the health of our inline neighbors and the capabilities of our team give us confidence in our ability to deliver strong growth in 2025, this will be driven by both internal and external growth.
Speaker Change: In addition to our strong rental growth trends, we continue to expand our pipeline of grounds up out parcel development and repositioning projects in 2024, we stabilized 15 projects and delivered over 300000 square feet of space to our neighbors. These projects add incremental NOI of approximately five.
John Caulfield: I will now turn the call over to John John.
John: Thank you Bob and good morning, and good afternoon, everyone I'll start by addressing.
John: Addressing fourth quarter results, then provide an update on the balance sheet and finally speaks for official 2025 guidance.
Speaker Change: $3 million annually.
Speaker Change: They are expected to provide superior risk adjusted returns and have a meaningful impact on our long term NOI growth.
John: Fourth quarter 2020 for NAREIT <unk> increased to $83 8 million or <unk> 61 per diluted share.
Speaker Change: We expect to invest $40 million to $50 million annually and these types of investments long term.
John: Each reflects year over year per share growth of eight 9%.
John: Fourth quarter core <unk> increased to $85 8 million or <unk> 62 per diluted share, which reflects year over year per share growth of six 9% and our same center NOI growth in the quarter was six 5%.
Speaker Change: The overall demand environment.
Speaker Change: The stability of our centers the strength of our grocers the health of our inline neighbors and the capabilities of our team give us confidence in our ability to deliver strong growth in 2025.
John: Turning to the balance sheet, we have approximately $948 million of liquidity to support our acquisition plans and no meaningful maturities until 2027.
Speaker Change: This will be driven by both internal and external growth.
Speaker Change: I will now turn the call over to John John.
John John: Thank you Bob and good morning, and good afternoon, everyone I will start by addressing fourth quarter results, then provide an update on the balance sheet and finally speak to our official 2025 guidance.
John: This is pro forma as of December 31, 2024, and reflects our amended revolver.
John: Our net debt to adjusted EBITDAR was it five times, our debt had a weighted average interest rate of four 3% and a weighted average maturity of five eight years, when including all extension options.
John John: Fourth quarter 2020 for NAREIT <unk> increased to $83 8 million or <unk> 61 per diluted share, which reflects year over year per share growth of eight 9%.
John: In January we amended our revolving credit facility to extend its maturity to January 2029, and increased its size to $1 billion.
John John: Fourth quarter core <unk> increased to $85 8 million or <unk> 62 per diluted share, which reflects a year over year per share growth of six 9% and our same center NOI growth in the quarter was six 5%.
John: It gives us additional liquidity and flexibility as we continue to access the capital markets. We are grateful for the support of our strong Bank group.
John John: Turning to the balance sheet, we have approximately $948 million of liquidity to support our acquisition plans and no meaningful maturities until 2027. This.
John: As of December 31, 2024, 93% of peak of this total debt was fixed rate, which is in line with our target range of 90%.
John John: This is pro forma as of December 31, 2024, and reflects our amended revolver.
<unk> continues to have one of the best balance sheets in the sector, which has us well positioned for continued external growth.
John John: Our net debt to adjusted <unk> was it five times, our debt had a weighted average interest rate of four 3% and a weighted average maturity of five eight years, when including all extension options.
John: During the fourth quarter Pico generated net proceeds of $72 million after commissions through the issuance of $1 9 million common shares at a gross weighted average price of $39 23.
In January we amended our revolving credit facility to extend its maturity to January 2029, and increase its size to $1 billion.
John: Per share through our ATM.
John: Our official 2025 guidance is unchanged from the preliminary guidance provided at our December business update our.
John: Our guidance range for 2025 net income is <unk> 54 to <unk> 59 per share.
John John: This gives us additional liquidity and flexibility as we continue to access the capital markets. We are grateful for the support of our strong Bank group.
John: This represents an increase of 10, 8% over 2024 at the midpoint.
John John: As of December 31, 2024, 93% of peak of this total debt was fixed rate, which is in line with our target range of 90%.
Our guidance range for 2025, NAREIT <unk> is $2 47 to $2 54 per share. This reflects a five 7% increase over 2024 at the midpoint.
John John: CECO continues to have one of the best balance sheets in the sector, which has us well positioned for continued external growth.
John: Our guidance range for 2025 core <unk> is $2 52 to $2 59 per share. This represents a five 1% increase over 2024 at the midpoint.
John John: During the fourth quarter Pico generated net proceeds of $72 million after commissions through the issuance of $1 9 million common shares at a gross weighted average price of $39 23.
John: Our guidance range for 2025 same center NOI growth is 3% to three 5%.
John John: Per share through our ATM.
John John: Our official 2025 guidance is unchanged from the preliminary guidance provided at our December business update.
John: As we continue to enhance our neighbor mix our actions in 2024 to improve merchandising and capture mark to market rent growth with new neighbors will be a slight headwind to 2025 growth.
John John: Our guidance range for 2025 net income is 54 to <unk> 59 per share. This represents an increase of 10, 8% over 2024 at the midpoint.
John: As we've said previously the Pico team is focused on the long term and these actions to replace neighbors are intentionally.
John John: Our guidance range for 2025, NAREIT <unk> is $2 47 to $2 54 per share. This reflects a five 7% increase over 2024 at the midpoint.
John: Our gross acquisition guidance range for 2025 is $350 million to $450 million.
John: Currently have several acquisitions in our pipeline either under contract or in contract negotiation totaling over $150 million that we expect to close in the first quarter and early second quarter.
John John: Our guidance range for 2025 core <unk> is $2 52 to $2 59 per share. This represents a five 1% increase over 2024 at the midpoint.
John: Based on the equity raised in the fourth quarter and the disposition in the first quarter our guidance does not assume additional equity issuance in 2025 as we believe we will be in our target leverage range of low to mid five times on a net debt to adjusted EBITDAR basis.
John John: Our guidance range for 2025 same center NOI growth is 3% to three 5%.
John John: As we continue to enhance our neighbor mix our actions in 2024 to improve merchandising and capture mark to market rent growth with new neighbors will be a slight headwind to 2025 growth as we've said previously the Pico team is focused on the long term and these actions to replace neighbors are intentional.
John: We have provided ranges for the other guidance items used in your models in our earnings materials.
John: We believe this portfolio and this team are well positioned to deliver mid to high single digit core <unk> per share growth on an annual basis. This assumes stabilized interest rates, which are expected to remain a near term headwind. However, we're hopeful that we're near stabilization as we are projecting to deliver earnings growth.
John John: Our gross acquisition guidance range for 2025 is $350 million to $450 million. We currently have several acquisitions in our pipeline either under contract or in contract negotiation totaling over $150 million that we expect to close in the first quarter and early second quarter.
John: Over 5% in 2025.
John: We also believe that our long term <unk> growth can be higher as more of our leasing mix is weighted towards renewal activity.
John John: Based on the equity raised in the fourth quarter and the disposition in the first quarter our guidance does not assume additional equity issuance in 2025 as we believe we will be in our target leverage range of low to mid five times on a net debt to adjusted EBITDAR basis.
John: We believe our targets for growth in core <unk> and <unk> will allow <unk> to outperform the growth of our shopping center peers on a long term basis.
John: We are excited about the opportunities before us and we believe that we have the ability and capacity to execute our accelerated growth plans.
John John: We have provided ranges for the other guidance items used in your models in our earnings materials.
John: With that we will open the line for questions.
John John: We believe this portfolio and this team are well positioned to deliver mid to high single digit core <unk> per share growth on an annual basis.
John: Operator.
John: Thank you.
Speaker Change: I ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue and if you'd like to withdraw that question again press Star. One. We also ask that you limit yourself to one question and one follow up for any additional questions. Please re queue.
John John: This assumes stabilized interest rates, which are expected to remain a near term headwind.
John John: However were hopeful that were near stabilization as we are projecting to deliver earnings growth over 5% in 2025.
John John: We also believe that our long term <unk> growth can be higher as more of our leasing mix is weighted towards renewal activity.
Speaker Change: First question comes from the line of Jeffrey Spector with Bank of America. Please go ahead.
John John: We believe our targets for growth in core <unk> and <unk> will allow <unk> to outperform the growth of our shopping center peers on a long term basis.
Jeffrey Spector: Great. Thank you.
Speaker Change: First question I wanted to ask Jeff I guess, how you feel today versus one year ago, let's say in terms of.
John John: We are excited about the opportunities before us and we believe that we have the ability and capacity to execute our accelerated growth plans.
Jeffrey Spector: Whether its tenant demand for space.
Speaker Change: And then the external opportunity to thank John set of $150 million pipeline I'm, not sure where that.
John John: With that we will open the line for questions.
Jeffrey Spector: That compares to let's say one year ago.
John John: Operator.
Speaker Change: Could discuss that thank you great.
John John: Thank you.
Speaker Change: Ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue and if you'd like to withdraw that question again press Star. One. We also ask that you limit yourself to one question and one follow up for any additional questions. Please re queue.
Speaker Change: Great. Thanks, Joe.
Jeffrey Spector: Yeah I think.
Jeffrey Spector: We.
Jeffrey Spector: We feel a lot better coming into this year than we did last year in terms of backlog.
Jeffrey Spector: Projects, we have under contract and controlled.
Jeffrey Spector: So we have a much bigger pipeline coming into this year than we did last year and I think that's reflective.
Speaker Change: Last question comes from the line of Jeffrey Spector with Bank of America. Please go ahead.
Jeffrey Spector: Great. Thank you.
Speaker Change: Had a really strong fourth quarter as we've talked about so we had almost 100 billion in acquisitions in the fourth quarter. So combined.
Speaker Change: First question I wanted to ask Jeff I guess, how you feel today versus one year ago, let's say in terms of weather.
Speaker Change: Whether its tenant demand for space and then the external opportunities I think John said, it $150 million pipeline I'm, not sure where that how that compares to let's say one year ago.
Speaker Change: That gives us some I think we're in a better position today than we were then but we've got bigger goals too I mean, we've got higher goals and targets for what we what we wanted to do on the acquisition side. So that part is always the uncertainty.
Speaker Change: Could discuss that thank you great.
Speaker Change: Great. Thanks, Jeff.
Speaker Change: Uncertain, Jeff you know that was like we're we're we're going to buy based upon very disciplined approach that we've taken for a long time and has worked really well for us. So.
Speaker Change: Yes, I think.
Speaker Change: We.
Speaker Change: We feel a lot better coming into this year than we did last year in terms of backlog.
Speaker Change: But that does make there's you know there's always uncertainty in terms of how much is going to come to the market. What we're seeing right now as you know.
Speaker Change: Projects, we have under contract and controlled.
So we have a much bigger pipeline coming into this year than we did last year.
Speaker Change: There continues to be a pretty strong.
Speaker Change: Our pipeline of product coming to the market and there are more buyers.
Speaker Change: And I think thats reflective.
Speaker Change: We had a really strong fourth quarter as we've talked about so we had almost 100 billion in acquisitions in the fourth quarter. So combined.
Speaker Change: Which is putting a little bit of pressure on pricing.
Speaker Change: But we still are optimistic of meeting are meeting our goals.
Speaker Change: That gives us some.
Speaker Change: We're in a better position today than we were then but we've got bigger goals too I mean, we've got higher goals and targets for what we what we wanted to do on the acquisition side. So that part is always uncertain.
Speaker Change: Thank you and then my follow up question I guess, just looking thinking about the high occupancy level. How are you balancing that with your retention.
Speaker Change: Uncertain, Jeff you know that.
Speaker Change: Is there any shift or thoughts on reducing that retention or youre happy to keep that retention of course, if there is a quality tenant they are delivering but how are you balancing that as you as you head into 25.
Speaker Change: It was like.
Speaker Change: Sure.
Speaker Change: We're going to buy based upon a very disciplined approach that we've taken for a long time and has worked really well for us. So.
Speaker Change: But that does make there's there's always uncertainty in terms of how much is going to come to the market. What we're seeing right now is the.
Speaker Change: Yes, I think the point then I think we made this over the last couple of.
Speaker Change: There continues to be a pretty strong.
Speaker Change: Times have gotten together.
Speaker Change: Our pipeline of product coming to the market and there are more buyers.
Speaker Change: Is that.
Speaker Change: We are taking.
Speaker Change: Taking a more aggressive approach to <unk>.
Speaker Change: Which is putting a little bit of pressure on pricing.
Speaker Change: But we still are optimistic of meeting are meeting our goals.
Speaker Change: Merchandising and taking back.
Weaker stores when their leases that will put some downward.
Speaker Change: Thank you and then my follow up question I guess, just looking thinking about the high occupancy level. How are you balancing that with your retention.
Speaker Change: <unk> pleasure on temporarily on occupancy a little bit and on.
Speaker Change: The retention.
Speaker Change: But.
Speaker Change: Is there any shift or thoughts on on reducing that retention or youre happy to keep that retention of course, if there is a quality tenant they are delivering but how are you balancing that as you as you head into 25.
Speaker Change: It will improve those on a longer term basis so that.
Speaker Change: And that will.
Speaker Change: The hard part about the hardest part about our business is that.
Speaker Change: Its center by center and so when we talk when we put everything together and talk about our portfolio.
Speaker Change: Yes, I think the point then I think we made this over the last couple of.
Speaker Change: It looks like it happens very.
Speaker Change: It's a really very intentional process, but it's done center by center space by space and that's how you get the right result, and we're really confident in that that will.
Speaker Change: Got it together.
Speaker Change: Is that.
We are.
Speaker Change: Taking a more aggressive approach to <unk>.
Speaker Change: Merchandising and taking back.
Speaker Change: Create the long term growth that we that we want.
Speaker Change: Weaker stores when their leases that will put some.
Speaker Change: But it will.
Speaker Change: Will be quarters, where it will go up in quarters really go down but overall, what we're doing is improving the merchandising mix getting good.
Speaker Change: Downward pressure on temporarily on occupancy a little bit and on the.
Speaker Change: The retention.
Speaker Change: New leasing spreads, but also improving the value of the property and that's what we do and.
Speaker Change: But.
Speaker Change: It will improve those on a longer term basis.
Speaker Change: Hopefully do really well so.
Speaker Change: And that will.
Speaker Change: But that's how we're looking at.
Speaker Change: The hard part about the hardest part about our businesses.
Yeah, Jim. Thank you I'm sorry. This is Bob the only other thing I would add on that is.
Speaker Change: It Center by center and so when we talk when we put everything together and talk about our portfolio.
Speaker Change: No.
Speaker Change: It really depends on the type of spreads we're driving but when you see that we're renewing tenants.
Speaker Change: It looks like it happens very.
Speaker Change: It's a really very intentional process, but it's done center by center space by space and that's how you get the right result, and we're really confident in that that will.
At 48% in the fourth quarter and for 2024, I think the whole year, we were at like 19, 4% and you're only spending 57, a foot for tenant improvements.
Speaker Change: Great for long term growth that we that we want.
Speaker Change: That's a really good return on the investment and when you look at new leasing spreads at 32% for the fourth quarter and 35, 7% for the entire year.
Speaker Change: But it will.
Speaker Change: Be quarters, where it will go up in quarters really go down but overall, what we're doing is improving the merchandising mix getting good new leasing spreads, but also improving the value of the property.
Speaker Change: As Jeff mentioned it is a.
Jeff Edison: Space by Space Center by Center decision as we improved merchandising, but as long as we're able to generate those types of spreads will be very selective in terms of whether or not we want our retention rates to be 90, 92 or 88% at the end of the day, what we're trying to do is create value at the asset level.
Speaker Change: What we do in <unk>.
Hopefully do really well.
Speaker Change: So.
That's how we're looking at yes.
Bob: Yes, Jeff. Thank you I'm sure. This is Bob the only other thing I would add on that is.
Bob: It really depends on the type of spreads we're driving but when you see that we're renewing tenants at 48% in the fourth quarter and for 2024 I think the whole year, we were at 19, 4% and you're only spending 57, a foot for tenant improvements.
Your next question comes from the line of Handel St. Jude with Mizuho. Please go ahead.
Speaker Change: Hey, guys good.
Speaker Change: I think it's good morning out there.
Bob: That's a really good return on the investment and when you look at new leasing spreads at 32% for the fourth quarter and 35, 7% for the entire year.
Speaker Change: So I.
Speaker Change: I wanted to talk a bit more about your plans to ramp acquisitions.
Speaker Change: Over the near term I think you mentioned $350 million to $400 million.
Speaker Change: I'm curious how much of a role that dispositions, perhaps some of your more mature maybe slower growth lower IRR assets could play.
Jeff Anderson: As Jeff mentioned it is a.
Jeff Anderson: Space by Space Center by Center decision as we improved merchandising, but as long as we're able to generate those types of spreads will be very selective in terms of whether or not we want our retention rates to be 90, 92 or 88% at the end of the day, what we're trying to do is create value at the asset level.
Speaker Change: A source of funding here I'm sure. The IRR is on some of what Youre looking to buy.
Speaker Change: <unk>, probably exceed some of the returns on these assets. So how do you balance the merits of that.
Speaker Change: Capital recycling strategy to improve the long term growth profile of the portfolio versus say, perhaps forcing it with new equity or disbursed.
Speaker Change: Your next question comes from the line of Handel St. Jude with Mizuho. Please go ahead.
Speaker Change: Yeah.
Speaker Change: And thanks for the question, it's a great question and it is a.
Speaker Change: Hey, guys good to see.
Speaker Change: The market drives part of that obviously in terms of which source of capital whether it's the debt issuing additional equity or the dispositions.
Speaker Change: I think it's good morning out there.
So.
Speaker Change: Wanted to talk a bit more about your plans to ramp acquisitions.
Speaker Change: And.
Speaker Change: The near term I think you mentioned $350 million to $400 million I guess I'm curious how much of a role that dispositions, perhaps some of your more mature maybe slower growth lower IRR assets could play as a source of funding here I'm sure. The IRR is on some of what you are looking at.
Speaker Change: At this stage the question for us is going to be at.
Speaker Change: What level can we.
Speaker Change: Cute, our dispositions and if that's the best.
Speaker Change: Sure it's a capital.
Speaker Change: To foster our growth we'll do it.
Speaker Change: But we're also have the other areas, where we can use our capital to meet our acquisition targets.
Speaker Change: Probably exceed some of the turns on these slower growth assets. So how do you balance the merits of that capital recycling strategy to improve the long term growth profile the portfolio versus say, perhaps sourcing it with new equity or dismissed.
Speaker Change: <unk> targets and.
Speaker Change: We did we did do.
Speaker Change: And have announced the one disposition so far this year.
Speaker Change: Yes.
Don: And Don Thanks for the question, it's a great question and it is a.
Speaker Change: <unk>.
Speaker Change: We'll continue to look at those and use those selectively where we can get a better return on what we're buying than what we're selling and if we can do that we're gonna be we'll be active in that market.
Speaker Change: The market drives part of that obviously in terms of which.
Speaker Change: Source of capital, whether it's the debt issuing additional equity or the dispositions.
Speaker Change: And.
Speaker Change: At this stage the question for us is going to be at what level can we execute.
Speaker Change: And you use that as a source, but it it is yeah.
Speaker Change: It's hard to say, where that's going to be because we don't know where the pricing is going to be on our dispositions and and what that cost of capital is relative.
Speaker Change: Execute our dispositions and if that's the best.
Speaker Change: Sure it's a capital.
Speaker Change: To foster our growth we'll do it.
Speaker Change: Using equity or using our debt capital.
Speaker Change: But we're also have the other areas, where we can use our capital to meet our acquisition.
Speaker Change: Certainly appreciate the color there is a follow up but maybe something thats come back with more color on the reserve here 75, 100 basis points seems a little conservative maybe in relation to the known tenant credit concerns on your watch list. So I guess I'm curious.
Speaker Change: <unk> and <unk>.
Speaker Change: We did we did do.
Speaker Change: And have announced the one disposition so far this year.
Speaker Change: We will continue to look at those and use those selectively where we can get a better return on what we're buying than what we're selling and if we can do that we're going to be we'll be active in that market.
Speaker Change: On that as well as what the credit loss was in 2024, and perhaps what you might be hearing on the ground from some of your more local tenants and neighbors on the potential impact of.
Speaker Change: Tariffs and higher labor costs.
Speaker Change: And you use that as the source, but it.
Speaker Change: Yeah.
Speaker Change: John you want to take the.
Speaker Change: It is yes.
John: Sure I'll take the first part yes. So in 2024, our bad debt experience was around 75 basis points as we look to guidance next year. That's around 60 to 120, we intentionally set this is a wider range because we acknowledged that in 2024 and this was a kind of a bigger topic relative to the absolute size.
Speaker Change: It's hard it's hard to say, where that's going to be because we don't know where the pricing is going to be on our dispositions and and what that cost of capital is relative.
Speaker Change: Using equity or using our debt capital.
Speaker Change: Certainly appreciate the color there is a follow up but maybe I was hoping to ask about some more color on the.
John: The number in itself. So when we set the guidance range, we intentionally set a wider to plan for that and Thats accounted for in our same center guidance. So ultimately we feel very comfortable I mean fourth quarter came in a 40% was around 45 basis points. So I mean.
Speaker Change: The reserve here 75 to 100 basis points seems a little conservative maybe in relation to the known tenant credit concerns on your watch list. So I guess I'm curious.
Speaker Change: On that as well as what the credit loss was in 2024, and perhaps what you might be hearing on the ground from some of your more local tenants are neighbors on the potential impact of tariffs.
Speaker Change: We're seeing good strength from our neighbors, but as Jeff was referencing we are trying to be very proactive in making the best kind of cash flow merchandising decisions at the property level and so I would say there is that with regards to our watch list, we actually feel very good.
Speaker Change: Tariffs and higher labor costs.
Speaker Change: Yes.
Speaker Change: John you want to take the.
Speaker Change: That question.
Speaker Change: I'll take the first part yes. So in 2024, our bad debt experience was around 75 basis points as we look to guidance next year. That's around 60 to 120, we intentionally set this is a wider range because we acknowledged that in 2024. This was kind of a bigger topic relative to the absolute size of the number in itself.
Speaker Change: We mentioned that to the known bankruptcies. So far that are occupying headlines at party city big lots and.
Speaker Change: Joann fabrics 60 basis points of rent for US and then that's in there some because we have some remaining collections and things, but ultimately we believe that our neighbors are very strong and doing well Jeff.
Speaker Change: So when we set the guidance range, we intentionally set a wider.
Speaker Change: Thanks for that and Thats accounted for in our same center guidance. So ultimately we feel very comfortable I mean fourth quarter came in in the <unk> is around 45 basis points. So we're seeing good strength from our neighbors, but as Jeff was referencing.
Speaker Change: Jeff Bob I don't know, if you want to stick to the tariffs.
Speaker Change: The.
Speaker Change: Good morning.
Speaker Change: Sorry go ahead.
Caitlin Burrows: Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Please go ahead.
Speaker Change: We are trying to be very proactive in making the best kind of cash flow merchandising decisions at the property level and so I would say there is that with regards to our watch list, we actually feel very good.
Speaker Change: For somebody else I don't know if you want to finish up on that last topic.
Caitlin Burrows: Yes.
Caitlin Burrows: Sure.
Caitlin Burrows: Is it weather.
Caitlin Burrows: I wanted to give like I'm not sure what the second part was.
Speaker Change: We mentioned that.
Speaker Change: The known bankruptcies, so far that are occupying headlines at party city big lots and.
Caitlin Burrows: I'm not sure.
Speaker Change: Jumping here. The question is what are we hearing from our neighbors with regards to tariffs and passive businesses.
Speaker Change: Joann fabrics 60 basis points of rent for us and that's that's in there some because we have some remaining collections and things, but ultimately we believe that our neighbors are very strong and doing well Jeff.
Caitlin Burrows: Businesses, yes.
Caitlin Burrows: What we're hearing from the grocers is that.
Caitlin Burrows: They're watching it theyre concerned about it.
Caitlin Burrows: Feel pretty comfortable theyre going to be able to pass it onto the consumer.
Jeff Anderson: Yes, Bob I don't know if you want to stick to the tariffs.
Caitlin Burrows: But but it is.
Speaker Change: The.
Caitlin Burrows: It's a top of thought issue for them right now.
Speaker Change: Good morning.
Speaker Change: Sorry go ahead.
Speaker Change: Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Please go ahead.
Caitlin Burrows: And we did get the there was a month, obviously a month long in terms of implementation with Mexico and Canada.
Speaker Change: Yes, first somebody else I don't know if you want to finish up on that last topic.
Caitlin Burrows: But they have impact and they will have they will put pressure on the retailers across the board. Our grocers are generally feel pretty comfortable with it so far but we will see how how well they can pass that onto the consumer and what the pushback from.
Speaker Change: Yes.
Speaker Change: I wasn't sure.
Speaker Change: But whether it no one wanted to give like I am not sure what the second part was.
Speaker Change: Sure.
Speaker Change: I'll jump in here. The question is what are we hearing from our neighbors with regards to tariffs and so.
Speaker Change: Yes.
Speaker Change: Sure.
Caitlin Burrows: From the consumer is unfortunately.
Speaker Change: What we're hearing from the grocers is that.
Caitlin Burrows: Tumors going in in a fairly strong position with employment.
Speaker Change: They're watching it theyre concerned about it.
Speaker Change: Feel pretty comfortable theyre going to be able to pass it onto the consumer.
Caitlin Burrows: Our unemployment low and people.
Caitlin Burrows: People feeling fairly confident in the economy, So I think generally I.
Speaker Change: But but it is.
Speaker Change: It's a top of thought issue for them right now.
Caitlin Burrows: I think it's not going to be a major issue but.
Speaker Change: And we did get there was a month.
Speaker Change: We see a month prolonged in terms of implementation with Mexico and Canada.
Caitlin Burrows: Who would ask me tomorrow, we'll see things quicker.
Caitlin Burrows: Quickly right now.
Speaker Change: But they have impacts and.
Caitlin Burrows: I will say thank you on behalf of I think it was sent out but whoever just one.
Speaker Change: They will have they will put pressure on the retailers across the board. Our grocers are generally feel pretty comfortable with it so far but we will see how how well they can pass that onto the consumer and what the pushback from the consumer is unfortunately.
Caitlin Burrows: But this is Caitlin then.
Caitlin Burrows: Maybe just looking at the signed but not occupied spread it was 100 basis points at the end of the year, which is high for Pico. So wondering if you could just give a little discussion on that what we should take away from it was what is driving it.
Caitlin Burrows: I mean, I feel like it would suggest higher occupancy, but you mentioned that economic occupancy could actually be a headwind. This year. So how does items that together.
Speaker Change: <unk> going in in a fairly strong.
Speaker Change: Physician with employment.
Speaker Change: Our unemployment low in.
Caitlin Burrows: John if you want to take.
Speaker Change: People feeling fairly confident in the economy, So I think generally.
John: Take that.
John: And we can talk a little bit about some of the the big box stuff that Bob as well on that.
Speaker Change: I think it's not going to be a major issue but.
John: Sure I'll take the impact on the financials and then Bob you can give some context of what we're seeing in occupancy and so it came in where we really when we look to last year and some of the anchor activity that we had we had it was marginally higher than it is for US as you know our anchors of the grocers and those are incredibly stable, but we did on the edges have more.
Speaker Change: Ask me Tomorrow, we will see things pretty quickly.
Speaker Change: Quickly right now.
Speaker Change: I will say thank you on behalf of I think it sent out but whoever is just one.
Caitlin Burrows: But this is Caitlin then.
Caitlin Burrows: Maybe just looking at the signed but not occupied spread it was 100 basis points at the end of the year, which is high for Pico. So wondering if you could just give a little discussion on that what we should take away from it was what is driving it.
John: Moving it but it was a really great opportunity to deliver some some great leasing spreads, but as we've talked about for years inline spaces are quick to leasing quick move in and click to pay but anchors take a little bit more time, and so part of the economic gap for us is putting in.
Caitlin Burrows: I mean, I feel like it would suggest higher occupancy, but you mentioned that economic occupancy could actually be a headwind. This year. So how does items that together.
Caitlin Burrows: John If you wanted to.
John: Higher paying nabors into those dark spaces, which do have a longer lead time from an economic basis.
Caitlin Burrows: Take that.
Caitlin Burrows: <unk>.
Caitlin Burrows: And we can talk a little bit about some of the the big box stuff that.
John: On that standpoint throughout 'twenty, five and there is a little bit in there as well from the in line that we're talking about but again on a same store basis, we feel good about our three to three 5% Bob I don't know if theres anything else you want to add about that the overall market with regards to kind of our boxes.
Caitlin Burrows: Bob.
Bob: Well on that so.
Caitlin Burrows: Sure I'll take the impact on the financials and then Bob you can give some context of what we're seeing in occupancy and so Caitlin what we really when we look to last year and some of the anchor activity that we had we had it was marginally higher than it is for US as you know our anchors of the grocers and those are incredibly stable, but we did on the edges have.
John: Yes, we've had really good demand and activity on the box space and as you recall I believe it was the third quarter last year I highlighted probably eight anchor spaces, where we're able to drive considerable leasing spreads I believe it was over 100% at the time, so the spread and snow that youre seeing.
Caitlin Burrows: More movement, but it was a really great opportunity to deliver some some great leasing spreads, but as we've talked about for years in line spaces are quick to leasing quick move in and click to pay but anchors take a little bit more time, and so part of the economic App for us is putting in.
John: Well hopefully come online in 2025 later this year, which is why youre, referring to the 100 basis points. So.
Caitlin Burrows: Higher paying nabors into those box spaces, which do have a longer lead time from an economic basis.
John: We're excited about the box activity, we've seen in the replacement.
Speaker Change: On that standpoint throughout 2005, and there is a little bit in there as well from the in line that we're talking about but again on a same store basis, we feel good about our three to three 5% Bob I don't know if theres anything else you want to add about that the overall market with regards to kind of our boxes.
John: Of those opportunities so that that should come online later this year.
John: Got it okay.
John: Just to add in there we're.
John: We've always had substantially less snow.
John: The others in our space.
Speaker Change: Yes, we've had really good demand in activity on the box space and as you recall I believe it was the third quarter last year I highlighted probably eight anchor spaces, where we're able to drive considerable leasing spreads I believe it was over 100% at the time, so the spread and snow that youre seeing.
John: I mean, we.
John: We're not big proponents, we don't love, having a lot of snow around it.
John: And it's driven by our big box activity and as we had.
John: We'll have low snow I think on a relative basis.
John: But.
John: Part of our hesitation of getting into bigger box retail is that you end up with this longer term ability to turn your space into cash flow and that is what we.
Speaker Change: Well hopefully come online in 2025 later this year, which is why youre, referring to the 100 basis points. So we're excited about the box activity we've seen in the replacement of.
Speaker Change: Those opportunities so that should come online later this year.
John: What we really like about our businesses.
John: We don't have that buildup in snow.
Speaker Change: Okay.
John: I mean again, its 1% its not were not 3% 4%.
Speaker Change: Just to add in there.
Speaker Change: Sure.
Speaker Change: We've always had substantially less snow.
John: And that and that's very intentional in terms of our strategy because our small stores move just much more quickly from leads to open and rent paying.
Speaker Change: The others in our space.
Speaker Change: I mean, we.
Speaker Change: We're not big proponents, we don't love, having a lot of snow around.
John: Got it makes sense and then maybe back to acquisitions, you mentioned before higher discipline buyer, maybe on the volume front I'm wondering like how big is your universe of potential acquisitions and if you look at the volume from 22 to 20 from 23% to 24% to 25, it's gone up each year.
Speaker Change: And it's driven by our big box activity and as we had.
Speaker Change: Still have low snow I think on a relative basis, but.
Speaker Change: As part of our hesitation in getting into bigger box retail is that you end up with this longer term ability to turn your space into cash flowing and that is what we.
John: So wondering if you think you could long term like continue at this level or how sustainable is it or do you think.
John: Looking for like 2020 guidance, but.
John: How sustainable is this pace or like an increased pace over time.
Speaker Change: What we really like about our business is that we don't have that buildup in snow.
John:
John: I would say, we believe there's more upside to our target than downside as we move forward I mean, we've been in a pretty difficult environment for a number of years.
Speaker Change: I mean again, its 1% its not were not 3% to 4%.
Speaker Change: And that and that's very intentional in terms of our strategy because our small stores move just much more quickly from leads to open and rent paying.
And.
John: The grocery anchored shopping center business is a big business and it does tend to revert to the mean over time and we think that that is a volume at which we can be.
Speaker Change: Got it makes sense and then maybe back to acquisitions, you mentioned before higher discipline buyer, maybe on the volume front I'm wondering like how big is your universe of potential acquisitions and if you look at the volume from 22% to 20 from 23 to $24 25, it's gone up each year.
John: We are buying.
John: Buying at a much larger than we have a large base stronger base than we have.
John: Over the last three years so.
Speaker Change: So wondering if you think you could long term like continue at this level or how sustainable is it or do you think.
John: We're optimistic about it we obviously.
Speaker Change: Looking for like 2020 guidance, but.
John: I think a J.
John: John said in his prepared remarks, we have.
Speaker Change: How sustainable is this pace or like an increased pace over time.
John: Under contract.
Speaker Change:
John: To close in the first quarter early second quarter over $150 million.
Speaker Change: I would say, we believe there's more upside to our target than downside as we move forward I mean, we've been in a pretty difficult environment for a number of years.
John: Of acquisitions.
And we closed 100 in the fourth quarter so.
We feel like there is a oh.
Speaker Change: And.
John: A really good chance to be able to continue at that pace.
Speaker Change: The grocery anchored shopping center business is a big business and it does tend to revert to the mean over time and we think that that is the volume at which we can be.
John: But as you know it's going to be.
John: Bumpy, it's not it's not just a consistent easy like we're going to we're going to do this and this and this is going to depend on where the market is and what we can buy but but we have.
Speaker Change: Be buying.
Speaker Change: Buying at a much larger than we have a large base stronger base than we have over the last three years. So.
Done this for a long time, we have a we've got a really good team that.
Speaker Change: We're optimistic about it.
John: Nos.
Speaker Change: We obviously.
John: Everything thats coming in on the market and that is transacting and so we'll look if it can be done will be the ones to do it and but again, we don't want to be buying for buying sake. We wanted behind it to make money and that's the discipline that we put into every acquisition we buy in.
Speaker Change: I think.
Speaker Change: John said in his prepared remarks, we have.
Speaker Change: Under contract to close in the first quarter early second quarter over $150 million.
Speaker Change: Acquisitions, and we closed 100 in the fourth quarter. So we feel like there is a.
John: That's what makes it lumpy.
Speaker Change: Sure.
John: Got it thanks.
Speaker Change: Really good chance to be able to continue at that pace.
Speaker Change: Your next question comes from the line of Ana My town Cusano with Deutsche Bank. Please go ahead.
Speaker Change: But as you know it's going to be.
Speaker Change: Bumpy, it's not it's not just a consistent easy like we're going to we're going to do this and this and that it's going to depend on where the market is and what we can buy but but we have.
Speaker Change: Your line is open.
Speaker Change: Done this for a long time, we have.
Speaker Change: Got a really good team that knows.
Speaker Change: Everything thats coming in on the market and that is transacting and so we'll look at it.
Speaker Change: Your next question comes from the line of Dori Kesten with Wells Fargo. Please go ahead.
Speaker Change: If it can be done will be the ones to do it.
Speaker Change: And but again, we don't want to be buying for buying sake, we wanted to behind it to make money and thats what.
Dori Kesten: Hi, Thanks, good morning.
Speaker Change: Ladies and you provided some seller financing.
Definition I might have missed this.
Speaker Change: The discipline that we put into every acquisition we buy.
Speaker Change: Can we be thinking of that as a one off or potentially part of clients.
Speaker Change: And that's what makes it lumpy.
Speaker Change: Alliance program.
Speaker Change: Got it thanks.
Speaker Change: Right now Jerry I would think of it as a one off it was a specific program that worked really well for a specific asset.
Speaker Change: Your next question comes from the line of Anna My town Cusano with Deutsche Bank. Please go ahead.
Speaker Change: And we think got us.
Speaker Change: Significantly better proceeds than we would have without it. So we we felt like it was it was a worthwhile deal, but I wouldn't count on that as a as an area that will grow significantly it will be always be a one off.
Speaker Change: Your line is open.
Part of that.
Speaker Change: Your next question comes from the line of Dori Kesten with Wells Fargo. Please go ahead.
Speaker Change: The disposition strategy in specific very specific cases.
Speaker Change: Okay I appreciate it thank you.
Dori Kesten: Hi, Thanks, good morning.
Thanks, Brian.
Dori Kesten: I believe you said you provided some seller financing on our recent disposition I made it in.
Speaker Change: Your next question comes from the line of Ronald Camden with Morgan Stanley. Please go ahead.
Speaker Change: Mr Sweeney.
Speaker Change: Should we be thinking of that as a one off for potentially part of.
Speaker Change: Just two quick ones just starting on the sort of the acquisition obviously some activity on the consolidated as well as some of the Jv's, maybe if you could just provide a little bit more color on some of those the joint venture partnerships, how that's been going on.
Speaker Change: The larger program.
Speaker Change: Right now Jerry I would think of it as a one off it was a specific program that worked really well for a specific asset.
Speaker Change: And we think got us.
Speaker Change: And do you see yourselves sort of doing more of that in the future.
Speaker Change: Significantly better proceeds than we would have without it. So we felt like it was it was a worthwhile deal, but I wouldn't count on that as a as an area that will grow significantly it will be always be a one off.
Speaker Change: Yeah.
Bob Myers: Bob will then you can jump in as well.
Speaker Change:
Speaker Change: On the other.
Speaker Change: The JV.
Speaker Change: I think it represents just about.
Part of the.
The disposition strategy and specific very specific cases.
Speaker Change: 10% of what we anticipate buying this year.
Speaker Change: And it's a.
Speaker Change: Okay I appreciate it thank you.
Brian: Thanks, Brian.
Speaker Change: We're really excited about it because we think it will expand the net and will allow us more buying opportunities to continue to grow.
Speaker Change: Your next question comes from the line of Ronald Camden with Morgan Stanley. Please go ahead.
Speaker Change: Portfolio. So this is we're excited about it.
Ronald Camden: Just two quick ones just starting on the sort of the acquisition obviously some activity on the consolidated as well as some of the Jv's, maybe if you could just provide a little bit more color on some of those the joint venture partnerships, how that's been going.
Speaker Change: As we've said I mean this is our 10th JV that we've done in Pico. So this is something that we know really well and we know how it can be additive to our growth and we are.
Ronald Camden: And do you see yourself sort of doing more of that in the future.
Speaker Change: So we're excited about that part of it.
Ronald Camden: Yes.
Speaker Change: And.
Speaker Change: We bought three properties, so far into that into the two different jbs that we've got set up and.
Ronald Camden: And you can jump in as well.
Ronald Camden:
Ronald Camden: On the on the JV.
Ronald Camden: I think it represents just about.
Speaker Change: I think that.
Ronald Camden: 10% of what we anticipate buying this year.
Speaker Change: <unk> is a good pace at which we can continue to grow those on with select opportunities.
Ronald Camden: And.
Ronald Camden: A.
Ronald Camden: We're really excited about it because we think it will expand the net and will allow us more buying opportunities to continue to grow.
Speaker Change: And about the new additions to that.
Speaker Change: Yes, the only other thing I would add is you know when you think about our target of $3 50 to $4 50 in acquisitions.
Ronald Camden: Portfolio. So this is I mean, we're excited about it.
Speaker Change: I would assume about 10% of that being our share of the debentures.
Ronald Camden: We've said I mean this is our 10th JV that we've done in Pico. So this is something that we know really well and we know how it can be additive to our growth and.
Speaker Change: We have investment committee meetings with.
Speaker Change: Both sides weekly we continue to present sites, we're seeing more activity.
Speaker Change: So, yes, I mean, we're committed to it and we.
Ronald Camden: So we're excited about that part of it.
Speaker Change: We're very active in this space. So I think that's what I would project for this year.
Ronald Camden: And we bought three properties so far into that into the two different JV is that we've got set up and.
Speaker Change: Yeah.
Speaker Change: Great.
Speaker Change: And then my second one is you know just staying into something that was brought up before on the call, which as you know.
Ronald Camden: I think that.
Ronald Camden: <unk> is a good pace at which we can continue to grow those on with select opportunities.
Speaker Change: The portfolio is full.
Speaker Change: And you're trying to find opportunities for sort of more pricing power to plus the organic growth I'd just love an update on what the focus is going to be sort of this year or is it on the rent bumps are at all the options is it on.
Ronald Camden: I don't know about the new additions to that.
Yes, the only other thing I would add is when you think about our target of $3 50 to $4 50 and acquisitions.
Speaker Change: Maybe targeting a little bit more a little bit lower retention I should say to push rents just is there sort of thematically.
Ronald Camden: Assume about 10% of that being our share of the debentures and we have investment committee meetings with <unk>.
Ronald Camden: Both sides weekly we continue to present sites, we're seeing more activity.
Speaker Change: Things, we should be thinking about at this full portfolio, how you're going to be pushing rents.
Speaker Change: Yeah, I would say the answer is yes.
Ronald Camden: So yes, I mean, we're committed to it and we're very active in this space. So I think that's.
Speaker Change: All of those and it will not be just one piece of it it's going to be all of those and it's.
Ronald Camden: What I would project for this year.
Ronald Camden: Yeah.
Ronald Camden: Great.
Speaker Change: It is.
Speaker Change: And then my second one is you know just taking it to something that was brought up before on the call which is.
Speaker Change: It's a hand to hand combat property by property lease by lease.
Speaker Change: We we.
Ronald Camden: The portfolio is full.
Speaker Change: We have a different strategy for every center that we've got.
Ronald Camden: And you're trying to find opportunities for sort of more pricing power to plus the organic growth I'd just love an update on what the focus is going to be sort of this year is it on the rent bumps are at all the options.
Speaker Change: And they're you know they're nuanced in terms of of each of the pieces that we have to take care of whether it's a renewal or whether its a new lease whether it's.
Ronald Camden: It on.
Speaker Change: No.
Speaker Change: A change where we're trying to re merchandize on specific center to market changes that are going on those are those are happening at the 300 different centers that we've got in a different way.
Ronald Camden: Maybe tolerating a little bit more a little bit lower retention I should say to push rents just is there sort of thematically some things we should be thinking about at this full portfolio, how you're going to be pushing rents.
Ronald Camden: Yeah, I would say the answer is yes to all of those and it will not be just one piece of it it's going to be all of those and it's.
Speaker Change: But the key point there is that we're looking at these investments on a long term basis, creating long term cash flow and long term value and that's how we think about these each of those pieces and.
Ronald Camden: It's a hand to hand combat property by property lease by lease.
Speaker Change: It's not really I mean, it's not a broad brush business in terms of being able to say well, we're going to we're just going to re merchandize the portfolio.
And we.
Ronald Camden: We have a different strategy for every center that we've got.
Ronald Camden: And.
Ronald Camden: Nuanced in terms of each of the pieces that we have to take care of whether it's a renewal or whether its a new lease whether it's.
Speaker Change: Literally going center by center, and making sure that some need to be re merchandize. So we can just cash flow and grow.
Ronald Camden: Yes.
Speaker Change: Wrenches as much as we can and it's but it's.
Ronald Camden: A change where we're trying to re merchandize on specific center to market changes that are going on those are those are happening.
Speaker Change: It's all driven by the specific location specific property.
Speaker Change: I know that probably wasn't.
Ronald Camden: At the 300 different centers that we've got in a different way.
Speaker Change: In terms of your your question, but but that's how we're thinking about it so it's hard to say.
Ronald Camden: But the key point there is that we're looking at these investments on a long term basis, creating long term cash flow and long term value and that's how we think about these each of those pieces and.
Speaker Change: What what.
Speaker Change: What part of our strategy.
Speaker Change: There's going to be strong this year, because they all have a place in how we manage our properties.
It's not really I mean, it's not a broad brush business in terms of being able to say well we're going to.
Speaker Change: And Jeff the only other thing I would add to that is look I mean there.
Speaker Change: We're very focused on continuing to grow occupancy and if you look at our acquisition strategy in 2023, our average occupancy on what we acquired was 87% and a year later with leases signed executed we were at 98% on those 14 assets.
We're just going to re merchandize the portfolio.
It's literally going center by center, and making sure that some need to be re merchandize. Some we can just cash flow and grow.
Ronald Camden: Wrenches as much as we can and it's but it is.
Speaker Change: And again, if you look at what we acquired in 2024 I believe our average occupancy on those assets were 93, 1% and even in just a few months, we have already increased that to 94, 4% with leases out. So we're seeing activity and to Jeff's point. There there are a lot of things.
Ronald Camden: It's all driven by the specific location that specific property.
Ronald Camden: I know that probably wasn't.
Ronald Camden: In terms of your your question, but that's how we're thinking about it so it's hard to say exactly what.
Ronald Camden: What part of our strategy.
Ronald Camden: It's going to be strong this year, because they all have a place in how we manage our properties.
Speaker Change: Internally to drive growth with spreads retention et cetera, but we do want to run a parallel path by acquiring good solid assets that give us occupancy growth. So I do believe it will be a combination of that and that's that's what we're seeing and that's what we've been successful.
Ronald Camden: And Jeff the only other thing I would add to that is look I mean, we're very focused on continuing to grow occupancy and if you look at our acquisition strategy in 2023, our average occupancy on what we acquired was 87% a year later with leases signed executed we were at 98.
Speaker Change: That's really helpful color that's it for me. Thank you.
Speaker Change: Okay.
Your next question comes from the line of Arnaud Martel Cusano with Deutsche Bank. Please go ahead.
Ronald Camden: <unk> on those 14 assets and.
Ronald Camden: And again, if you look at what we acquired in 2024 I believe our average occupancy on those assets were 93, 1% and even in just a few months, we have already increased that to 94, 4% with leases out. So we're seeing activity and to Jeff's point. There there are a lot of things.
Speaker Change: Matteo please on mute.
Speaker Change: Hi can you hear me.
Speaker Change: We can now yes.
Speaker Change: Sorry about that.
Speaker Change: Most of my questions have been answered, but I had a question about the pavilion transaction, if you could talk a little bit about.
Ronald Camden: Internally to drive growth with spreads retention et cetera, but we do want to run a parallel path by acquiring good solid assets that give us occupancy growth. So I do believe it will be a combination of that and that's that's what we're seeing and that's what we've been successful.
Speaker Change: Why the need to provide seller financing you guys haven't really been not much in the past on also what Murray.
Speaker Change: On those notes receivable.
Speaker Change: The second part I, Didnt get but I'll just I'll I'll.
Speaker Change: That's really helpful color that's it for me. Thank you.
Thanks, Greg.
Speaker Change: Your next question comes from the line of Arnaud Martel, All Cusano with Deutsche Bank. Please go ahead.
Speaker Change: Chime in on the on why we provide seller financing.
Speaker Change: And the answer is pretty simple.
Speaker Change: We felt we were de risking the portfolio, we were selling an asset that was not growing as quickly as the rest of what we could buy in in and we.
Speaker Change: Matteo please on mute.
Speaker Change: Hi can you hear me.
Speaker Change: We can now yes.
Speaker Change: We got a premium in value by providing the financing and we're providing financing at a level that we felt like we were going to be repaid and if we didnt we.
Speaker Change: Okay, sorry about that.
Speaker Change: Most of my questions have been answered, but I just had a question about the civilian transaction. If you could talk a little bit about.
Speaker Change: We were going to be we'd be very happy to own the center at that base.
Speaker Change: Why the need to provide seller financing you guys haven't really been not much in the past on also what Murray.
Speaker Change: That was the that was the reason for it.
Speaker Change: On those notes receivable.
Speaker Change: It was something that facilitated.
Speaker Change:
Speaker Change: Our.
Speaker Change: The second part I Didnt get but I'll just I'll sure.
Speaker Change: Plan on disposition and debt.
Speaker Change: Worked really well for us.
Speaker Change: Chime in on that on why we provide seller financing and the answer is pretty simple we are.
Jeff Edison: And Tayo I'll take the second part so we didn't disclose what the rate was because it's actually not going to be overly meaningful but it's it's a it's a meaningful spread to our our ongoing borrowing costs and as Jeff said, it's not a tool we expect to use frequently but.
Speaker Change: We felt we were derisking the portfolio, we were selling an asset that was not growing as quickly as the rest of what we could buy in and.
Jeff Edison: It really again, but it's a structural tool, where we can get better pricing for the asset while mitigating risk and deploying that into a better return so.
Speaker Change: We got a premium in value by providing the financing and we're providing financing at a level that we felt like we were going to be repaid and if we didnt we.
Jeff Edison: It's accretive.
Jeff Edison: Not a lot of money and you get paid.
Speaker Change: We were going to be weak.
Jeff Edison: Do you get paid back.
We'd be very happy to own the center at that basis. So.
Jeff Edison: That on the.
Speaker Change: That was the that was the reason for it.
Jeff Edison: I believe that the fully pre payable, but it's 12 to 24 months.
And.
Speaker Change: It was something that facilitated.
Jeff Edison: Include the option.
Speaker Change: Part of our.
Jeff Edison: Thank you.
Speaker Change: Planned disposition and debt.
Jeff Edison: Sure thing.
Speaker Change: Your next question comes from the line of Todd Thomas with Keybanc Capital markets. Please go ahead.
Speaker Change: Worked really well for us.
Speaker Change: I'll take the second part so we didn't disclose what the rate was because it's actually not going to be overly meaningful, but it's a it's a meaningful spread to our our ongoing borrowing costs and as Jeff said, it's not a tool we expect to use frequently but.
Speaker Change: Alright, thank you.
Speaker Change: Wanted to go back and ask about the joint venture with northwestern mutual specifically you have an existing relationship there.
Speaker Change: It really again, but it's a structural tool, where we can get better pricing for the assets well.
Speaker Change: Is this expected to be a new growth vehicle and are there any differentiating factors in the investments being sourced now between.
Speaker Change: While mitigating risk and deploying that into and have better returns. So.
Speaker Change: This venture the deals that you are looking at Cowen and Steers and also what you are looking at it on balance sheet.
Speaker Change: It's accretive.
Speaker Change: Not a lot of time do you get paid how soon do you get paid back.
Speaker Change: Yes.
Speaker Change: That on the note.
Speaker Change: Todd Thanks for the question and yes. This is.
Speaker Change: I believe.
Speaker Change: Leave that it's fully pre payable, but it's 12 months to 24 months.
Speaker Change: Our JV with northwestern mutual we've been partners with them on.
Speaker Change: To include the option.
Speaker Change: On our first one for seven years. They were one of the original investors and a couple of other funds that we had so it's a really long term relationship with them, we had trouble getting them into another JV and we were really happy to have them as a partner in this in this new this newest.
Speaker Change: Thank you.
Speaker Change: Sure thing.
Speaker Change: Your next question comes from the line of Todd Thomas with Keybanc Capital markets. Please go ahead.
Todd Thomas: Alright, thank you.
Todd Thomas: Wanted to go back and ask about the joint venture with northwestern mutual.
Speaker Change: Fund.
Todd Thomas: Correctly, you have an existing relationship there.
Speaker Change: And it's.
Speaker Change: So we're this fund is focused on really unique opportunities, where we can step into situations that wouldn't meet our balance sheet.
Todd Thomas: Is this expected to be a new growth vehicle and are there any differentiating factors in the investments being sourced now between.
The center or the deals that you are looking at Cohen <unk> Steers and also what you are looking at it on balance sheet.
Speaker Change: But that are opportunities for us and.
Speaker Change: An example is.
Todd Thomas: Yes.
Speaker Change: Moving into a.
Todd Thomas: Todd Thanks for the question.
Speaker Change: Senator that's anchored by a Hispanic grocer that is not number one or two in the market, but it's a really strong player and being able to have capital that fits into that bucket, which doesn't fit clearly onto our balance sheet and and so that's how we're.
Yes. This is.
Todd Thomas: A JV with northwestern mutual we've been partners with them on.
Todd Thomas: On our first one for seven years. They were one of the original investors and a couple of other funds that we had so it's a really long term relationship with them we.
Todd Thomas: We had trouble getting them into another JV and we were really happy to have them as a partner in this in this new this newest.
Speaker Change: About that opportunity.
Speaker Change: Opportunity.
Speaker Change: So we're really excited about it we think it's it is not going to be a major growth vehicle for us, but it is certainly one that we are.
Todd Thomas: Fund.
Todd Thomas: And.
Todd Thomas: So we're this fund is focused on really unique opportunities, where we can step into situations that wouldn't meet our balance sheet.
Speaker Change: We are looking forward to kind of getting fully invested and then we'll see where that takes us from there really based upon the performance of that fund.
Todd Thomas: But that are opportunities for us and.
Speaker Change: And we want we think that there are unique opportunities in our space that don't.
Todd Thomas: An example is.
Todd Thomas: Moving into a.
Senator that's anchored by a Hispanic grocer that is not number one or two in the market, but it's a really strong player and being able to have capital that fits into that bucket, which doesn't fit clearly onto our balance sheet and and so that's how we're thinking.
Speaker Change: Don.
Speaker Change: Fit squarely on the balance sheet that this fund will be will be a great add to and so we're really excited about it.
Speaker Change: <unk>.
Speaker Change: I don't know John.
Speaker Change: Thought about any add on separate.
Speaker Change: It's something we're really excited about.
Speaker Change: Well.
Todd Thomas: <unk> about that.
Speaker Change: We'll all deals going forward with with northwestern mutual in this in this fund b.
Todd Thomas: Opportunity.
Todd Thomas: So we're really excited about it we think it's it is not going to be a major growth vehicle for us, but it is certainly one that we.
Speaker Change: At similar economics, or 31% stake for a P <unk> <unk> interest or as every deal.
Todd Thomas: <unk>.
Speaker Change: Separately.
Todd Thomas: Looking forward kind of getting fully invested and then see where that takes us from there.
Speaker Change: The 31% is the right number for us.
Speaker Change: Until we until this this.
Todd Thomas: Based upon the performance of that fund.
Speaker Change: Gets fully fully allocated.
Todd Thomas: We want we think that there are unique opportunities in our space.
Speaker Change: Okay got it and then just.
Speaker Change: Just wanted to go back to the discussion on tenant retention and some of the proactive.
Todd Thomas: Don't fit.
Todd Thomas: Fit squarely on the balance sheet that this fund will be will be a great add to and so we're really excited about.
Speaker Change: Remerchandised initiatives.
Speaker Change: That you discussed in 2024, I guess, what's the drag that that activity creates has created on 2025 growth.
Todd Thomas: I don't know.
Todd Thomas: I'm talking about if you have any add ons that but we're it's something we're really excited about.
Speaker Change: And are you targeting more of that in 'twenty five and then.
Todd Thomas: Well all deals going forward with with northwestern mutual in this in this fund b.
John: John I'm just curious.
John: Again retention has been very elevated at 88% I think it was closer to 90% for the full year whats embedded in the model and guidance with regard to tenant retention.
Todd Thomas: At similar economics of 31% stake for <unk> interest or as every deal.
Todd Thomas: Separately.
Todd Thomas: The 31% is the right number four.
John: Okay.
Todd Thomas: Until this does.
John: John you want to take that.
Todd Thomas: It gets fully fully allocated.
John: Sure.
John: So we have we talked about this a little bit of being intentional in doing this and it is it is a bare I mean I would say that if you were to normalize the actions from 24 and what we're anticipating for 2005, you would see growth in the lines of what we experienced last year and so we feel really good.
Todd Thomas: Okay got it and then just.
Todd Thomas: Just wanted to go back to the discussion on.
Todd Thomas: Tenant retention in some of the proactive.
Todd Thomas: <unk> initiatives.
Todd Thomas: That you discussed in 2024, I guess, what's the drag that that activity creates has created on 2025 growth.
Speaker Change: Our decisions I would say that in terms of 25, we are assuming sort of similar retention levels to what we experienced in 'twenty four and Thats also very similar to 'twenty three and as Bob mentioned the economics. When you are getting 21% renewal spreads for 50 cents in capital.
Todd Thomas: And are you targeting more of that in 'twenty five and then.
John John: John I'm just curious.
John John: Again retention has been very elevated at 88% I think it was closer to 90% for the full year whats embedded in the model and guidance with regard to tenant retention.
John: You need a very high.
Speaker Change: New leasing spread to kind of economically solve for that because we're very focused on cash flows, but thats also where we say you know I'm a numbers Guy and then we talk about there is a bigger benefit to the asset when you really focus on merchandising and so there are times, where we are putting in better operators because they can actually improve the entire center.
John John: Okay.
John John: John you want to take that.
John John: Sure.
John John: We have we talked about this a little bit of being intentional in doing this and it is it is it there I mean I would say that if you were to normalize kind of the actions from 24 and what we're anticipating for 2005, you would see growth in the lines of what we experienced last year and so we feel really good about.
Speaker Change: So we're going to we're going to continue the actions we've taken because we've been very successful in this operating environment and feel really good about the actions that we're taking but we're also happy that we're able to manage them.
Speaker Change: Our decisions I would say that in terms of 25, we are assuming sort of similar retention levels to what we experienced in 'twenty four but that's also very similar to 'twenty three and as Bob mentioned the economics. When you are getting 21% renewal spreads for <unk> capital.
Speaker Change: Three to three 5% range for same store with over 5% growth for our fulfill metrics and anticipate continuing that in $2000.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
John John: You need in a very high.
Speaker Change: Your next question comes from the line of Florida, Floris Van <unk> with Compass point research and trading. Please go ahead.
Speaker Change: New leasing spread to kind of economically solve for that because we're very focused on cash flows, but thats also where we say you know I'm a numbers Guy and then we talk about there is a bigger benefit to the asset when you really focus on merchandising and so there are times, where we are putting in better operators because they can actually improve the entire center.
Speaker Change: Okay.
Hey, thanks.
Speaker Change: Just a follow up here on the on the acquisition guidance the $400 million of mid points.
Speaker Change: Did you say that 10% of that was over $100 million is your share in the jv's or what how much of that capital is going to be as part of JV acquisitions versus on balance sheet acquisitions.
Speaker Change: So we're going to we're going to continue the actions we've taken because we've been very successful in this operating environment and feel really good about the actions that we're taking but we're also happy that we're able to manage.
Speaker Change: Three to three 5% range for same store with over 5% growth for our <unk> metrics and anticipate continuing that in 'twenty.
Speaker Change: Yes.
Speaker Change: 10% of the of the $409.
Speaker Change: $40 million is probably a good.
Speaker Change: Centerpoint.
Speaker Change: Got it got it Okay and then.
Speaker Change: Okay. Thank you.
Speaker Change: Is there a difference in return expectations and maybe walk us through how do you allocate deals that you see between being on balance sheet to go into the Conan steer through the northwest.
Speaker Change: Your next question comes from the line of Florida, Floris Van <unk> with Compass point research and trading. Please go ahead.
Speaker Change: Hey, thanks.
Speaker Change: Just a follow up here on the on the acquisition guidance the $400 million of mid points.
Speaker Change: Your other JV.
Speaker Change: Hum.
Speaker Change: How do you how do you manage that.
Speaker Change: Did you say that 10% of that was or $100 million is your share in the jv's or what.
Speaker Change: That conflict or potential conflicts.
Speaker Change: Yes, great Great question Floris.
Speaker Change: How much of that capital is going to be as part of JV acquisitions versus on balance sheet acquisitions.
Speaker Change: The simple answer is if it's a larger center than we would normally buy on balance sheet and we're gonna, it's most likely to be of Cohen <unk> steers.
Yes.
Speaker Change: 10% of the 400 night so.
Speaker Change: <unk>.
Speaker Change: As you know we've been very disciplined in terms of the size of the centers that we buy and the and the.
Speaker Change: $40 million is probably a good.
Speaker Change: Centerpoint.
Speaker Change: Impact with with with the number one or two grocer in the center of this 175 or 200000 square feet versus our traditional 150000 square feet.
Speaker Change: Got it got it Okay and then.
Speaker Change: Is there a difference in return expectations and maybe walk us through how do you allocate deals that you see between being on balance sheet to go into the Conan steer for the northwest.
Speaker Change: And so that that gives that's really widens our net on that.
Speaker Change: That side and we think.
Speaker Change: Our other JV.
Speaker Change: But it has.
Speaker Change: Similar returns to what we would do on balance sheet, but.
Speaker Change: How do you how do you manage that.
Speaker Change: <unk>.
Speaker Change: That conflict or potential conflicts.
Speaker Change: So that's where the second JV is really we're looking for unique opportunities that don't fit on the balance sheet, but could.
Speaker Change: Yes, great Great question Floris I mean, the simple answer is if it's a larger center than we would normally buy our balance sheet.
Speaker Change: It's most likely to be accounted steers JV.
Speaker Change: Because they're not the number one or two grocer in the market. They have some some slight change that but we still think that there's solid investments and that's what we're using.
Speaker Change: No we've been very disciplined in terms of the size of the centers that we buy in the <unk>.
Speaker Change: Impact with with the number one or two grocer in a center that has 175 or 200000 square feet versus our traditional 150000 square feet and so that gives that really widens our net on.
Speaker Change: For the for the second.
Speaker Change: JV and the thing I I hope we leave with you is like we own three shopping centers today.
Speaker Change: One anchored by Publix, one anchored by Kroger, one anchored by Schnook that we would known today, if we didn't have our JV and that to us is additive.
Speaker Change: On that side and we think.
Speaker Change: But it has similar returns to what we would do on balance sheet, but the.
Speaker Change: Because we did that while exceeding our R. R.
Speaker Change: The top end of our target for acquisitions last year, increasing our goals for this year by $150 million. So this is really additive product to us and we're excited about we think it's going to it's going to.
So that's where the second JV is really where we're looking for unique opportunities.
Speaker Change: Don't fit on the balance sheet, but could.
Speaker Change: Because they're not the number one or two grocer in the market. They have some some slight change that but we still think that there's solid investments and that's what we're using.
Speaker Change: Give us opportunities.
Speaker Change: To broaden the net and if we can do that.
Speaker Change: With partners like northwestern mutual.
Speaker Change: It's a great it's a great add to our to our growth profile and.
Speaker Change: For the for the second.
Speaker Change: JV and.
Speaker Change: The thing I hope, we leave with you is like we own three shopping centers today.
Speaker Change: This is as they say this isn't our first rodeo. This is our 10th JV that we've done.
Speaker Change: One anchored by Publix, one acre by Kroger, one anchored by Schnook that we would known today, if we didn't have our JV and that to us is additive.
Speaker Change: It would be go and.
Speaker Change: They.
Speaker Change: So we know how they can be additive both to the operating side, but also to the financial returns.
Speaker Change: Because we did that while exceeding our R. R.
Speaker Change: Your next question comes from the line of Michael Mueller with JP Morgan. Please go ahead.
Speaker Change: The top end of our target for acquisitions last year, increasing our goals for this year by $150 million. So this is really additive product to us and we're excited about it we think it's going to it's going to.
Michael Mueller: Yeah, Hi, just a quick one can you remind us where the average portfolio blended escalators increased two today and where you think that could go over say the next three years to five years.
Speaker Change: Give us opportunities.
Speaker Change: Could you just broaden that and if we can do that with partners like northwestern mutual.
Speaker Change: John you want to you want to take that.
Speaker Change: Certainly hey, Mike.
Speaker Change: It's a great it's a great add to our to our.
So today, our portfolio is around 100 basis points on annual rent bumps, we think that'll continue to March forward and 25 based on the success that Bob and his team is having on embedding those and I believe we can we said that we can do I think 120 to 130, I think that we're going to.
Speaker Change: Growth profile and.
Speaker Change: This is as they say this isn't our first rodeo. This is our 10th JV that we've done.
Speaker Change: At Pico and.
Speaker Change: They.
So we know how they can be additive both to the operating side, but also to the financial returns.
Continue to move this to ultimately I believe that you can get to somewhere between 121 50. So.
Speaker Change: Your next question comes from the line of Michael Mueller with Jpmorgan. Please go ahead.
But it takes time, because we need the leases to roll we have a better time with the 20% renewal rates also are putting in slightly higher bumps than on the new leases, but it is going to be a cruising speed that we can continue to rise. So as we look to 'twenty five I think you'll see that around 100 to 110, and then it's going to continue marching.
Yeah, Hi, just a quick one can you remind us where the average portfolio blended escalators increased two today and where you think that could go over say the next three years to five years.
Speaker Change: John do you want to you want to take that.
John John: Certainly hey, Mike.
Speaker Change: Because I wouldn't say is three or four years ago that number was closer to 60 basis points. So good traction good environment in our favor and we're going to continue to push them.
John John: So today, our portfolio is around 100 basis points on annual rent bumps, we think that'll continue to March forward and 25 based on the success that Bob and his team is having on embedding us and I believe we can we said that we can do I think.
Mike: Yeah, Hey, Mike I'm not sure.
Mike: If you.
Speaker Change: The leaf the new leases, we're signing our targets three three.
John John: 120 to 130, I think that we're going to continue to move this to ultimately I believe that you can get to somewhere between 121 50. So.
Speaker Change: 3% growth in the new leases that we sign and when we're doing renewals we.
Speaker Change: We get slightly higher than that and some lessons, but that gets to John John was talking about the overall impact.
John John: But it takes time, because we need the leases to roll we have a better time with the 20% renewal rates also are putting in slightly higher bumps than on the new leases, but it is going to be a cruising speed that we can continue to rise. So as we look to 'twenty five I think you'll see that around 100 to 110, and then it's going to.
Speaker Change: And the timing that it takes but the newly the new leasing spreads were getting and the CAGR is are you now in that 3% range.
Speaker Change: Got it okay. Thank you.
Speaker Change: Thanks, Mike.
John John: Continue marching because I wouldn't say is three or four years ago that number was closer to 60 basis points. So good traction good environment in our favor and we're going to continue to push it.
Speaker Change: Your next question comes from the line of Juan Sanabria with BMO. Please go ahead.
Speaker Change: Okay, alright, thanks for the time.
Speaker Change: Yeah, Hey, Mike I'm not sure.
Speaker Change: Just trying to square a couple of things.
John John: Yes.
Speaker Change: He showed.
John John: The leaf the new leases, we're signing our targets III.
Speaker Change: Earlier comment or question you had said that there was a similar retention plan and 25 versus <unk> 24.
John John: 3% growth in the new leases that we sign and when we're doing renewals we.
Speaker Change: Versus 'twenty period, so I just wanted to make sure that.
John John: We get slightly higher than that and some lessons, but that gets to John John was talking about the overall impact.
Speaker Change: Is there going to be a drag from retention on same store NOI growth this year.
Speaker Change: And as a part of that how should we think about the snow that's a bit elevated 100 basis points to end the year 2024 evolving over the course of 'twenty five.
John John: And the timing that it takes but the newly the new leasing spreads were getting and the CAGR is are in that 3% range.
Speaker Change: Okay.
John John: Got it okay. Thank you.
Speaker Change: John.
John John: Thanks, Mike.
Speaker Change: You want you want it.
Speaker Change: Your next question comes from the line of Juan Sanabria with BMO. Please go ahead.
Speaker Change: <unk> talked to the snow and and and then we'll come back on the talk a little bit about the retention because I think the answer to the retention is it will be at the margin, but we do not anticipate significant change from what we've had what we've had over the last couple of years.
Juan Sanabria: Okay, alright, thanks for the time.
Speaker Change: Just trying to square a couple of things.
Speaker Change: Sure. The earlier comment or question you had said that there was a similar retention plan and 25 versus 24.
Speaker Change: Sure So as I have with Canada, and my my notes say that in 'twenty, three and it was actually 94% and 22 was almost 91% and issue. We finished at 89% and so when I say, it's all about the same I'm guess I'm rounding there so.
Speaker Change: Versus 'twenty for you. So I just wanted to make sure that if they're going to be a drag from retention on same store NOI growth this year.
Speaker Change: And as a part of that how should we think about the snow that's a bit elevated 100 basis points to end the year 224 evolving over the course of 'twenty five.
Speaker Change: It came down a little bit and I would think that it is kind of in that but I wouldn't say that we're moving to 60% and so when I say, it's pretty consistent that that's really what I'm talking about and then when we looked at 25, you can I guess I would say you can see the impact there we were.
Speaker Change: Okay.
Speaker Change: John.
Speaker Change: You want you want it.
Speaker Change: Talk to the snow.
Speaker Change: And then we'll come back on the talk a little bit about the retention because I think the answer to the retention is it will be at the margin, but we do not anticipate significant change from what we've had what we've had over the last couple of years.
Speaker Change: Guiding to three to three and half and I think in 2004. The activity was really the change from the past is really more on the anchor side.
Bob Myers: A few boxes that turned over that we took back in and Bob said that got excellent spreads on relative to the capital we're putting in so that's something that we'll continue to do and.
Speaker Change: Sure. So as I look at my notes say that in 'twenty three it was actually 94% in 2002 was almost 91% and issue. We finished at 89% and so when I say, it's all about the same I'm guess I'm rounding there so.
Bob Myers: Your question of where to expect it to go by the end of 'twenty. Five I think you will see us return back to that historical level of our economic gap between economic and leased back to around 50 basis points based on what I'm seeing but again, if we have the opportunity to drive rents and improved merchandising.
Speaker Change: It came down a little bit and I would think that it's kind of in that but I wouldn't say that we're moving to 60% and so when I say, it's pretty consistent and that's really what I'm talking about and then when we looked at 25, you can I guess I would say you can see the impact there we were.
Bob Myers: We will do that but I don't see an environment. We just don't have that many of these boxes I believed it outside the grow share our anchor boxes are maybe 13% of our rent so it's not the <unk>.
Speaker Change: We are guiding to three to three and a half and.
Speaker Change: In 2004, the activity was really the change from the past is really more on the anchor side with a few boxes that turned over that we took back in and Bob said that got excellent spreads on relative to the capital we're putting in so that's something that we'll continue to do and your question is way too.
Bob Myers: Non grocery anchors are a small part of our business, which is specifically designed.
Bob Myers: And what we do so it is it is there, but it's not going to be the headwind that you might see in others because thats. The design that we have which is kind of steady smooth consistent growth and were kind of talking about small adjustments here.
Speaker Change: Expect it to go by the end of 'twenty five I think you will see us return back to that historical level of our economic gap between economic and leased back to around 50 basis points based on what I'm seeing but again, if we have the opportunity to drive rents and improved merchandising, we will do that but.
Bob Myers: Thank you.
Speaker Change: Your next question comes from the line of Paulino Rojas with Green Street. Please go ahead.
Paulino Rojas: Good morning, and tuck in acquisitions entries.
Speaker Change: In fourth Q.
Speaker Change: I don't see an environment, we just don't have that many of these boxes.
Speaker Change: From <unk> I think over the first nine months.
Speaker Change: I'll leave it outside to grow share our anchor boxes are maybe 13% of our rent. So it is not.
Speaker Change: Two seven closest seven having four two if I'm doing the math right.
Speaker Change: The non grocery anchors are a small part of our business, which is specifically designed.
And can you elaborate on the drivers behind that change including.
Speaker Change: And what we do so it is it is there, but it's not going to be the headwind that you might see in others because thats. The design that we have which is kind of steady smooth consistent growth and we're kind of talking about small adjustments here.
Speaker Change: Market trends that youre, seeing and perhaps the asset mix and academics that you acquired.
Speaker Change: And.
Speaker Change: And also related to that and if you could provide a cap rate for that corporate can you sold subsequent to quarter end.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Paulino Rojas with Green Street. Please go ahead.
Speaker Change: Hi, Vivien.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: But probably the second question was cap rates on what we saw what we sold in the first quarter is that was that I didn't I didn't hear exactly.
Paulino Rojas: Good morning, and tuck in acquisitions increase in fourth Q.
Speaker Change: Yeah. The second part is I believe you sold something subsequent to quarter end paydowns of some of the town.
Speaker Change: From <unk> I think over the first nine months.
Speaker Change: So Kevin ecosystem, and then having four two if I'm doing the math right.
Speaker Change: And it was asking for the Capex for that one.
Speaker Change: Okay.
Speaker Change: And can you elaborate on the drivers behind that change including.
Speaker Change: Hmm.
Speaker Change: So.
Speaker Change: Hum.
Speaker Change: Cap rates quarter to quarter are really like.
Speaker Change: Both market trends that youre, seeing and perhaps the asset mix and asset mix that you acquired.
Speaker Change: Mike.
Speaker Change: There.
Speaker Change: They are very asset specific and I can tell you that the unlevered IRR that we have for the Oh.
And also related to that.
Speaker Change: And if you could provide a cap rate for that.
Speaker Change: Can you sold subsequent to quarter end.
Speaker Change: For our.
Speaker Change: <unk>.
Speaker Change: Core grocery anchored.
Speaker Change: Thank you.
Speaker Change: Shopping centers.
Speaker Change: The second question was cap rates on what we have so what we sold in the first quarter is that was that I didn't I didn't hear exactly.
Speaker Change: Have stayed at nine.
Speaker Change: When they are shadow anchored they've moved to nine and a half and win.
Speaker Change: Yeah. The second part is I believe you sold something subsequent to quarter end paydowns of some of the tail.
Speaker Change: <unk>.
Limited, but but on acreage stuff that we bought has been.
Speaker Change: And it was asking for the Capex for that one.
Speaker Change: Over 10.
Speaker Change: So the these cap rates are going to reflect both the mix of all of that that we bought.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: Hmm.
Speaker Change: Yes.
Speaker Change: Rates quarter to quarter are really like.
Speaker Change: But also.
Speaker Change: <unk>.
Speaker Change: There.
Speaker Change: The the ability to grow.
Speaker Change: They are very asset specific and.
Speaker Change: The IRR on that.
Speaker Change: They.
Speaker Change: I can tell you that the Unlevered IRR that we have.
Speaker Change: They have a different growth profile, so the cap rates.
Speaker Change: For the.
Speaker Change: They may average.
Speaker Change: For our.
Speaker Change: Core grocery anchored.
Speaker Change: Uh Huh have averaged seven five for that second part, but that I don't I don't think that's reflective of what is going on in the market because they have a very specific story.
Shopping centers.
Speaker Change: Have stayed at nine.
Speaker Change: When they are shadow anchored they've moved to nine and a half.
Speaker Change: And the.
Speaker Change: Each one of them and the market is.
Speaker Change: Limited, but but unanswered stuff that we bought.
Speaker Change: This would indicate the market is getting lighter and it's not I mean the competition is.
Speaker Change: <unk> has been.
Speaker Change: Over 10.
Speaker Change: So the.
Speaker Change: As strong or stronger than it's been over the last 12 months. So if anything cap rates are compressing not expanding the story behind each one of these.
Speaker Change: These cap rates are going to reflect both the mix of that that we bought.
Speaker Change: But also.
Speaker Change: The ability to grow.
Speaker Change: We need to sit down and talk about property by property to understand exactly why why they averaged out at seven and a half because.
Speaker Change: The IRR on the.
Speaker Change: So they they.
Speaker Change: They have.
Speaker Change: Different growth profiles.
Speaker Change: The cap rates.
Speaker Change: It's both the mix of our growth and lower growth in the other end of the I don't John are we are we giving out cap rates on individual dispositions I don't.
Speaker Change: They may average.
Speaker Change: Have averaged seven five for that second part, but that I don't I don't think that's reflective of what is going on in the market because they have a very specific story.
Speaker Change: I don't think we are but if we are.
Speaker Change: Can you.
Speaker Change: Each one of them and the market is.
Speaker Change: It was between it was between seven and a half any.
Speaker Change: This would indicate the market is getting lighter and it's not I mean, the competition is at.
Speaker Change: On San Mateo.
Speaker Change: And then it will come through when we did we disclose that in Q1 so.
Strong or stronger than it's been over the last 12 months.
Speaker Change: Based on what we have so that'll be there.
Speaker Change: So if anything cap rates are compressing not expanding the story behind each one of these.
Great. Thank you very much yeah. Thanks, Thanks, Brian.
Speaker Change: Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Please go ahead.
Speaker Change: Bill.
Speaker Change: We'd need to sit down and talk about property by property to understand exactly why why they averaged out at seven and a half because and it's it's both the mix of growth and lower growth and and the other in the genre. We are we giving out cap rates on individual dispositions I don't.
Caitlin Burrows: Hi, everyone I know, we're past the hour, but I was wondering if you could talk a little bit about the leasing pipeline and interest level I feel like the topic Hasnt really come up so maybe that's because everyone just assumes that strong but like when youre not renewing a tenant today, how deep is the interested pool of new retailers and how does that compare to a year ago and anything else we should know.
Speaker Change: I don't think we are but if we are.
Speaker Change: Right great. Thanks, Thanks, Carolyn Bob do you want to you want to jump in on that one yet.
Speaker Change: You did.
Speaker Change: It was between it was between seven five and eight.
Bob Myers: Yes, absolutely yes, thanks for the question.
On San Mateo.
Speaker Change: It will come through when we disclosed that in Q1 so.
Speaker Change: There's just been a lot of consistency with the leasing pipeline and I'm still not seeing any signs of closing.
Speaker Change: Based on what we have so that'll be there.
Bob Myers: Or slowing down.
Speaker Change: Great. Thank you very much yeah. Thanks, Thanks, Brian.
Bob Myers: Coming out of the New York ICSC show the demand again retailers are looking for store openings in 2026 27.
Speaker Change: Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Please go ahead.
Caitlin Burrows: Hi, everyone I know, we're past the hour, but I was wondering if you could talk a little bit about the leasing pipeline and interest level I feel like the topic Hasnt really come up so maybe that's because everyone just assumes that strong but like when youre not renewing attendant today, how deep is the interested pool of new retailers and how does that compare to a year ago and anything else we should know.
Bob Myers: The visibility that I have out not only on our renewals.
Bob Myers: And the new deal side is.
Bob Myers: It was very positive reinforcing the type of spreads that we've seen historically I don't see that slowing down and again.
Bob Myers: I'm encouraged that we'll continue to move occupancy in the right direction. This year so.
Speaker Change: Alright, great. Thanks, Carolyn Bob do you want to you want to jump in on that one.
The demand is very very solid still fast casual med tail health and beauty, it's the normal cast that.
Bob: Yes, absolutely yes, thanks for the question.
Speaker Change: Theres just been a lot of consistency with the leasing pipeline I'm still not seeing any signs of closing.
Bob Myers: We partner with and again, we continue to see a lot of demand where retailers want to be associated with the number one number two grocer in our markets. So it's very positive.
Bob: Or slowing down.
Bob: Coming out of the New York ICSC show the demand again retailers Youre looking for store openings in 2026 27.
Speaker Change: Great and then just quickly you mentioned that visibility to leasing spreads is good it sounds like 24 spreads were boosted by anchor boxes, which isn't so regular for you. So do you guys think it would be fair to think that 24, I'm, sorry, 2025 spreads will still be strong, but possibly below last year's reported levels.
Bob: The visibility that I have out not only on our renewals and the new deal side is.
Bob: It was very positive reinforcing the type of spreads that we've seen historically I don't see that slowing down and again.
Speaker Change: Yeah, I would tell you that I think our spreads will be on.
Bob: I'm encouraged that we will continue to move occupancy in the right direction. This year so.
Speaker Change: On the new side new deals side.
Bob: The demand is very very solid still fast casual med tail health and beauty, it's the normal cast.
Speaker Change: I like that.
Speaker Change: 25% to 33% range.
Speaker Change: That's a big Big range, but if you look at what we did in 2024, we were I think we finished the year at.
Bob: We partner with and again, we continue to see a lot of demand where retailers want to be associated with the number one number two grocer in our market. So it's very positive.
Speaker Change: 35% and Youre right, we did have a big push with anchor we won't have that same in 2025. So yes, you should you should assume it will be inside of that but on the renewals side, you know I'm I'm showing the visibility that we have that our spreads will be elevated.
Bob: Great and then just quickly you mentioned that the visibility to leasing spreads is good it sounds like 24 spreads were boosted by anchor boxes, which isn't so irregular for you. So do you guys think it would be fair to think that 20 force sorry, 2025 spreads will still be strong, but possibly below last year's reported levels.
Speaker Change: Great. Thank you.
Speaker Change: Yep.
Speaker Change: In that case.
That concludes our question and answer session and I will now turn the conference back over to Jeff Edison for closing comments great.
Bob: Yeah, I would tell you that I think our spreads will be.
Jeff Edison: Great well, thanks, everyone for being on the call I know, where you're overtime, but.
Bob: On the new side new deals side.
Bob: I like that 20.
Bob: 25.
Speaker Change:
Speaker Change: We're really happy with how things turned out at the end of the year and we're really optimistic going forward. We think there's a really good fundamentals on the operating side as well as on the acquisition side and we're looking forward to a really good.
Bob: 33% range.
Bob: That's a big Big range, but if you look at what we did in 2024, we were I think we finished the year at.
Bob: 35% and Youre right, we did have a big push with anchor we won't have that same in 2025. So yes, you should you should assume it will be inside of that but on the renewal side.
Speaker Change: 2025, so thanks again, we will look forward to keep it up and answer any questions. Obviously holler if you have them. Thanks.
Bob: I'm showing the visibility that we have that our spreads will be elevated.
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Bob: Great. Thank you.
Yep.
Bob: Thank you.
Speaker Change: Yeah.
Bob: That concludes our question and answer session and I will now turn the conference back over to Jeff Edison for closing comments great.
Speaker Change: Great well.
Speaker Change: Thanks, everyone for being on the call I know where you're.
Speaker Change: Overtime, but.
Speaker Change:
Speaker Change: We're really happy with how things turned out at the end of the year and we're really optimistic going forward. We think there's a really good fundamentals on the operating side as well as on the acquisition side and we're looking forward to a really good.
Speaker Change: 2025, so thanks, Ken we'll look forward to keep it up and answer any questions. Obviously holler if you have them. Thanks.
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: [music].