Q1 2025 Brixmor Property Group Inc Earnings Call
Greetings and welcome to the bricks more property group's first quarter 2025 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Speaker Change: Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Stacy Slater Senior Vice President Investor Relations and capital markets. Please go ahead.
Stacy Slater: Thank you operator, and thank you all for joining breaks Morris first quarter conference call with me on the call today are Jim Taylor, Chief Executive Officer, Brian Finnegan, President and Chief operating Officer, and Steve Gallagher Executive Vice President and Chief Financial Officer, Mark Horgan Executive.
Speaker Change: Ice President and Chief investment Officer will there'll be available for Q&A.
Speaker Change: Before we begin let me remind everyone that some of our comments today may contain forward looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties as described in our SEC filings and actual future results may differ materially we assume no obligation to update any forward looking statements.
Speaker Change: Also we will refer today to certain non-GAAP financial measures further information regarding our use of these measures and reconciliations of these measures dry GAAP results are available in the earnings release and supplemental disclosure on the Investor relations portion of our website.
Speaker Change: Given the number of participants on the call. We kindly ask that you limit your questions to one per person. If you have additional questions. Please re queue at this time, it's my pleasure to introduce Jim Taylor. Thanks.
Jim Taylor: Thanks, Stacy and good morning, everyone. The unique strength and durability of our all weather value added plan truly came through again this quarter positioning us for continued outperformance, particularly in the face of looming tariff uncertainty and the increased potential for an economic slowdown.
Jim Taylor: <unk> for a moment, how we continued to generate robust new and renewal activity and leasing spreads, which Brian will cover in more detail demonstrating not only the tenant demand to be in our well located centers, but also the importance of our low rent basis, we capitalize on recent tenant disruption to bring in better tenants at better rents.
Jim Taylor: Driving growth in our in legal leasing pipeline. In fact, we are now at lease or LOI and over two thirds of the recently recaptured bankruptcy space at phenomenal spread.
Jim Taylor: We continue to capture outsize share of new store openings in our core categories of grocery specialty grocery quick serve restaurants and value apparel retailers with vibrant tenants that are growing and outperforming even in this environment.
Jim Taylor: On a real time basis, our centers continued to drive compelling year over year traffic growth, reflecting the transformative impact of our reinvestment and importantly, the strength of our underlying tenant performance and we continue to deliver our reinvestment projects on time and on budget at very compelling returns.
Jim Taylor: Well also back filling our active pre lease pipeline with exciting grocery projects that will completely transform the centers impacted.
Jim Taylor: Importantly, as we look ahead into 25 and 26, we remain very confident in our ability to continue to outperform consider that forward visibility on growth provided by our pipeline, which remained at $60 million or 6% of total in place ABR. Despite commencing 14 million of new age.
Jim Taylor: We are in the quarter. This stacking of commence drags, which Steve will address in more detail combined with the level of our snow pipeline provides significant growth momentum through 'twenty five and ended at 26 and as I mentioned before are robust and legal leasing pipeline provides even further visibility on growth.
Jim Taylor: In the 26 and beyond.
Jim Taylor: Consider the virtual lack of new supply of open air retail on our market, which continues to help us drive growth and improvement in insurance like terms with our tenants.
Jim Taylor: And finally consider the strength resiliency diversification and credit profile of our key tenants.
Jim Taylor: We also expect that this volatility in the capital markets May present, some interesting growth opportunities for a well capitalized market leading platforms such as for X more as Steve will cover in a minute we've kept our powder dry reduce leverage in the quarter to five five times debt to EBITDA and have over one.
Jim Taylor: One 3 billion and revolver capacity and cash on hand with no maturities until June of 'twenty six.
Jim Taylor: In sum I truly like how well we are positioned to deliver despite an increasingly volatile landscape, one, which we think will bring some compelling and exciting opportunities with that I'll turn the call over to Brian and then Steve for a more detailed discussion of our results Brian.
Brian: Thanks, Jim and good morning, everyone. Our team is off to a great start in 2025 quickly addressing recently recaptured space and adding to our pipeline with tenants that continue to thrive in this environment, while capitalizing on the embedded mark to market opportunity that remains a trademark of the bricks more portfolio.
Brian: During the quarter, our team executed on 1.3 million square feet of new and renewal leases at a blended cash spread of 21% with spreads on new leases at 48% and renewals staying strong at 14%.
Brian: The activity during the quarter included back fills of recently recaptured big lots boxes with the likes of Ross dress for less and Burlington stores, putting our resolve big lots locations at 75% of our total exposure at the time of the filing at spreads of more than 50%.
Brian: The recapture of the remaining big lots and party city boxes during the quarter resulted in a decline in occupancy to 94, 1% and while we do expect additional occupancy pressure in the second quarter as we recapture additional space from Joanne as Jim noted, we're well on our way to addressing these box.
Brian: It is as well with better tenants at higher rents.
Brian: We also continue to add best in class grocers to the portfolio during the quarter kicking off Redevelopments in Broward County, Florida, and Westchester County, New York, with Publix, and sprouts, respectively, bringing our in process reinvestment pipeline to $391 million at a weighted average 10% return.
Brian: With several years of compelling opportunities still in front of US. In addition, our team stabilized $28 million of reinvestment projects during the quarter, including the opening of the company's first new Bj's wholesale club location and suburban Tampa.
Brian: We remain encouraged by the depth of demand of categories led by grocery and off price apparel within our new leasing pipeline, which at the end of the quarter was up 30% in G. L. A over the same period last year and currently sits at the highest level in nearly two years at rents that are 43% above our in place.
Brian: Rent of 17 94 per square foot.
Brian: The traffic generating well capitalized retailers that continue to grow with us are joining a defensive portfolio with the strongest underlying credit profile, we have ever had.
Brian: As Jim noted, we're well positioned to navigate whatever potential disruption that may be a result of the recent volatility timing.
Brian: Time, and again, our team has proven that disruption creates opportunity, which can be seen in nearly every observable metric.
Brian: We're grateful to the bricks more team for their continued focus and for their work in continuing the transformation of our portfolio.
Brian: With that I'll hand, the call over to Steve for a more detailed review of our financial results as well as guidance Steve.
Brian: Thanks, Brian I'm pleased to report a strong start to 2025 as we have discussed on prior calls the size of our signed but not commenced pool over the last few years and the resulting stacking of rent commencement provides visibility into growth as we navigate through recent bankruptcies and changes in economic policy.
Brian: And when combined with our pre leased reinvestment pipeline, which is self funded on a leverage neutral basis with free cash flow, we are well positioned to continue executing on our value added business plan.
Brian: NAREIT <unk> was 56 cents per share in the first quarter driven by same property NOI growth of 2.8%. Despite a 160 basis point drag from tenant disruption base rent growth contributed 410 basis points to same property NOI growth as the impact of the $63 million of ABR recommenced in 2024 far exceeded the 175.
Brian: Basis point drop in billed occupancy year over year related to recent bankruptcies.
Brian: As previewed on last quarter's call revenues deemed uncollectible detracted from same property NOI growth due to a difficult comparison as a result of the timing of annual real estate tax reconciliation collected from cash basis tenants in the prior year.
Brian: Brian noted we continue to see strong demand from retailers to look at in our centers and have made substantial progress in leasing space recaptured in bankruptcy.
Brian: We ended the first quarter with a 410 basis point spread between leased and build occupancy and are signed but not yet commenced pool totaled $60 million, which includes $52 million of net new road.
Brian: We expect to commence $48 million or 79% of this ABR ratably through the remainder of 2025.
Brian: From a balance sheet perspective, we utilize the existing cash on hand, and proceeds from 400 million in bonds issued in March of five 2% to repay the remaining $630 million of our February bond maturity.
Brian: 31, we had $1 4 billion of available liquidity no remaining debt maturities until June 2026, and our debt to EBITDA was five five times, providing us flexibility as we execute on our business plan.
Brian: Subsequent to quarter end with the strong support of our Bank group, we amended our $1 75 billion unsecured credit facilities, improving pricing and extending the maturities.
Brian: In terms of our forward outlook, we have affirmed our same property NOI growth guidance of three 5% to four 5% and our <unk> guidance of $2.19 to $2 24.
Brian: We still expect revenues deemed uncollectible and 2025 within our historical run rate of 75 to 110 basis points of total revenues, we expect base rents to accelerated into the second half of the year as we commence rent from this new pipeline. The vast majority of our 2025 forecasted ABR is executed and leasing efforts during the remainder of the year well as normal.
Brian: Mainly contribute to 2026 and 2027 commencement.
Brian: To reiterate Jim and Brian's remarks, our portfolio today is well positioned to grow through the disruption that has significantly decreased our exposure to watch list tenancy.
Brian: While improving our centers with better tenants at better rents and with that I turn the call over to the operator for Q&A.
Brian: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: From Imation total indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: We ask that in the interest of time you limit yourself to one question. You May then rejoin the question queue for participants.
Speaker Change: Equipment and may be necessary to pick up you'd have thought before pressing the star keys.
Speaker Change: Your first question comes from Todd Thomas with Keybanc capital markets. Please go ahead.
Todd Thomas: Hi, Thanks, good morning.
Todd Thomas: I wanted to ask about the sequential decrease in the portfolios lease trade in the bankrupt tenants appreciate some of the commentary.
Todd Thomas: In your remarks, but I'm curious was was there any exposure to big lots or party city at quarter end and then in terms of Joanne.
Todd Thomas: Are you expecting that space to fully vacate during the quarter end and maybe you can tie all of that year to date activity into the 100 basis points you assumed in guidance for for lease rejections that you had visibility into and also the 100 basis points that you assumed for potential outcomes related to other bankrupt tenants.
Todd Thomas: Todd that is the compound class yeah, Brian Yeah, Todd why don't I take the first part relative to the occupancy decline, we had 140 basis points of bankruptcy impact in the quarter. So said differently without the bankruptcy as we would have grown occupancy quarter sequentially.
Speaker Change: That was primarily the big lots and party city spaces coming off a we're expecting to get the Joanne boxes back here in May and as Jim mentioned, and we talked about on our opening remarks, we're really pleased with the level of the backfill is that we've had thus far we've addressed roughly 75% of that big lots space at.
Speaker Change: Spreads of over 50% of users in the specialty grocery off price apparel fitness wellness segments, we're seeing great traction on the party city and the Joanne spaces as well, but the occupancy decline was expected and with the leasing activity that we had during the quarter, we were really able to offset a big chunk.
Speaker Change: Steve you want to take the guidance piece, yeah on the guidance you know Todd I think generally the bankruptcy activity has played out as we expected when we released guidance a couple of months ago.
Speaker Change: We feel like we have additional capacity within our guidance range to absorb additional tenant disruption and Brian and team as he mentioned continues to backfill space have tried to get it opened as soon as possible later in the year. So again I think we're well positioned within our existing guys right and I'd just add given the supply demand backdrop, we're getting this space back at a very opportune.
Speaker Change: Time, our tenants continue to demand to be in our centers and we're driving great outcomes in terms of that existing run basis versus wherever signing of the Daytona.
Speaker Change: Next question Samir Khanal with Bank of America. Please go ahead.
Samir Khanal: Thank you good morning, everybody I'm, So I guess, Jim when I when I when I hear you talk kind of in the opening remarks, there's a lot of good visibility.
Have towards growth here, even for the balance of the year I look at same store.
Samir Khanal: To aid in one queue, but you know there's a lot of good growth baked into the second half or even into next quarter.
Samir Khanal: Kind of walk us through where that growth and help us think through any risk you know, they're maybe not to hit kind of your midpoint I mean youre looking at achieving maybe you know about 45% I think for the next three quarters to get to.
Samir Khanal: Out of your mid point. So is there any risk maybe rent commencements are pushed into next year to help us walk through kind of the balance of the year in terms of growth. Thanks.
Samir Khanal: Yeah, I mean, you know again, while we highlight Sameer is the great visibility, we have with that signed but not commenced pipeline, which really its contractual it'll be coming in as Steve I'll outline in terms of the balance of the year and on top of that we've got a great and legal and leasing pipeline, where we may be able to get some of those rents commenced in 'twenty five.
Samir Khanal: As well, but really we're talking about growth and 26 and beyond.
Samir Khanal: So you know it it is part of that all weather all weather business plan, we've often talked about that you know capitalizing on the low rent basis, bringing in better tenants at better rents getting those leases signed getting them in occupancy is really giving us tremendous visibility on growth through what may be.
Samir Khanal: A more volatile period.
Speaker Change: Next question, Craig Melman with Citi. Please go ahead.
Samir Khanal: Good morning.
Craig Melman: You know, Jim and team it sounds like things are actually humming along pretty well I think you guys are one of the few to no. Other there were terrorists in your prepared remarks in the first couple of questions here. So I'll just kind of curious.
Samir Khanal: Maybe how the leasing.
Craig Melman: Discussions and activity has trended post April checking in and maybe yeah.
Craig Melman: From a tenant conversation are there concerns just about supply chain supply chain disruptions and inventory levels and things of that nature that could put more pressure on you know tenants as the years progress.
Craig Melman: I think tariffs are a concern for everybody as as regulatory uncertainty I think our tenants in particular, given their focus on the grocery and value segment are very well position their balance sheets are in good shape and Bryan can comment on our discussions, but we remain encouraged by their growth plans, yeah, Craig we're really encouraged by the tenor.
Craig Melman: The leasing discussions that we're having with our tenants and you look it will be signed thus far in April. It's ahead of where we were in April last year, our new DS New lease deal flow into committee is ahead of where it was in April last year, you look at our lineup in our meetings at ICSC. If you were to come to our booth you'd see tenants, who we continue.
Craig Melman: To grow with their focus on their new store plans for 'twenty six 'twenty seven and really be on in a lot of new tenants that are coming to join the portfolio because of all the reinvestments that we've made so we remain very encouraged to the extent that the tariffs are implemented the way. They were announced there are certainly some retailers that could be more negatively impacted that.
Craig Melman: Others, but to Jim's point, we really like how we're positioned do you think is a strong grocery anchor exposure that we have the heavy concentration in off price the high quality service and fitness users that we have in the portfolio and as Steve mentioned, the best underlying credit profiles that we've ever had so it's something we're watching very closely we are encouraged by the.
Craig Melman: <unk> that we're having with our tenants, but again feel like we're really well positioned.
Craig Melman: Alexander Goldfarb Piper Sandler. Please go ahead.
Alexander Goldfarb: Hey, good morning down there.
Alexander Goldfarb: Just going back to this year just wrapping it together the occupancy in the same store if we just look at SFO.
Alexander Goldfarb: What we should expect it sounds like to queue, maybe a little bit weaker than or flat to first quarter, but the back half of this year should show a pretty strong ramp because nothing in your commentary has suggested there is incremental or outside or unknown bankruptcies that you didn't originally forecast.
Alexander Goldfarb: Sounds like leasing is going away there are no delays in the <unk> openings. So again sounds like <unk> may be sort of flat or so with first quarter maybe.
Alexander Goldfarb: Maybe down a touch but then back half of the year is up is that a fair way to think about the cadence of <unk> for this year.
Alexander Goldfarb: I think so Alex you know, we don't provide as you know quarterly guidance, but I think you're on the key drivers in terms of the timing of that signed but not commenced and we think we've got appropriate.
Alexander Goldfarb: Conservatism baked in our outlook and our guidance.
Alexander Goldfarb: But most of that growth is going to be coming in in the second half yeah, and I think we've talked about on previous calls just remember there is sort of a seasonality to things like percent read and the timing of cash basis collection that more heavily weighted or episode of the first half of the year than the second half of the year, but outside of that I think you're dead on with the trajectory of the stope height.
Alexander Goldfarb: Well I didn't.
Alexander Goldfarb: Same property NOI.
Alexander Goldfarb: Thank you.
Alexander Goldfarb: Alright, thank you.
Alexander Goldfarb: <unk> Bank. Please go ahead.
Speaker Change: Hey, good morning, more hoping we could talk about some of those are potentially interesting growth opportunities.
Speaker Change: Year end, one periods, where the transaction market looks like today, how that's changed in April and then what you expect to be driving those compelling opportunities to come to market later this year.
Speaker Change: Yeah, I think I think it's a couple of things I mean first I'd point to tenant disruption creates opportunity, particularly for integrated platforms like ours to capture outsize share of tenants who are growing in this environment. It allows us to look through occupancy in vacancy as opportunities as we think about it.
Speaker Change: As I've mentioned on the last couple of calls we remain encouraged by the breadth.
Speaker Change: Product, that's coming to market and Mark maybe you can give some additional commentary in terms of what we're seeing real time, yes.
Mark: Yes sure.
Mark: You know post the April 2nd announcements, we certainly have seen the market slow a bit as buyers and sellers.
Mark: The current volatility that's very similar to any other time, we've seen volatility ahead of market.
Mark: That said over the last week or so we've certainly seen some deals pricing price generally pretty well.
Mark: Would that would that also said there are certainly deals that are waiting you know through this whole journey of volatility to see where the market kind of lays out so as Jim mentioned, we do think of it that pipeline will build and not a platform like virtual which has significant liquidity should be able to take advantage of some opportunities here as we get into the latter half of the year.
Mark: The other thing I would say real time in the market. We continue to see very small deals priced very well as we had in the press release, we had a couple of deals closed post quarter and if you take all the liquidity. We have raised year to date, it's been about $41 million that cap rate is about a five but we're certainly continuing to fill well priced capital out of the port.
Mark: And then we're going to reinvest into some higher yielding opportunities with other growth. We're excited about where we're gonna see but certainly there is some slowness in the market real time.
Mark: Thank you.
Michael Griffin: Next question, Michael Griffin with Evercore ISI. Please go ahead.
Michael Griffin: Great. Thanks, Brian I think you mentioned in your prepared remarks, you know kind of the reason to leave the bad debt assumption unchanged.
Michael Griffin: The additional capacity to absorb potential disruption should we read into this that you know you're just keeping it on the conservative got a conservative side given the uncertainty out there or has there been an incremental change and tenants that might be coming onto the watch list.
Michael Griffin: I'll, let Steve take the guidance piece, Yeah, I think on the guidance you know it was generally an inline quarter I think when you think about like I'd mentioned earlier on the bankruptcy, but also on the bad debt.
Speaker Change: Obviously with the uncertainty around tariffs that Brian talked about and how that's going to impact some of our tenancy.
Michael Griffin: Think it's appropriate to hold that guidance level, where it is.
Michael Griffin: And I think Brian can hit otherwise yeah from a watch list perspective, the one benefit of this disruption at the beginning of the year is that watchlist is down considerably. So there are still tenants that were watching in the drugstore space. We've got a very low exposure there I'm very low exposure to theaters. So from that perspective, we feel really good about where we sit.
Speaker Change: From an underlying tenancy, there's always a pocket of tenants that we are cautious with and that we're keeping a close eye on but as Steve talked about we feel like we're in a really good position really the best position that we've ever been in from a credit profile perspective.
Michael Griffin: Okay.
Michael Griffin: Thank you.
Speaker Change: Next question Florent Van <unk> with Compass point. Please go ahead.
Speaker Change: Hey, good morning, guys.
Speaker Change: I had a question on your.
Speaker Change: Redevelopment pipeline 391, I think you still have around 40% of your portfolio that still hasn't been touched yet so theres more to come as well there are three bigger projects in that pipeline and maybe if you can touch on on each of those the returns maybe are a little bit a touch below.
Speaker Change: The average for the whole redevelopment, but maybe.
Speaker Change: Maybe talk about the importance of Davis block 59, and Preston if if you could.
Speaker Change: Yeah, I mean, they're all great projects importantly, there are pre leased and their assets. It would trade at very compelling cap rate. So we believe we are creating substantial value. We're very pleased with the progress that we've made in terms of getting those assets in a position to open on time and on budget and with very.
Speaker Change: Selling tenants and it's really part of.
Speaker Change: The opportunities that we create as we move forward capitalizing on that low rent basis, and finding opportunities, where we know there's substantial tenant demand to be at a particular location and we can execute our leasing strategy around it.
Jim Taylor: Yeah, I would just add we're thrilled with the progress that our teams are making on those projects for US. We just opened shake shack in Naperville as Jim pointed out we're on time and on budget to open some great operators. There later this summer.
Jim Taylor: Davis will be opening up our Nordstrom rack and may opening up our old to around the same time, we've got great to us our operators to join a fantastic trader Joe's in that market across the street from UC Davis, It's just a fantastic piece of real estate and the team's done a great job at Plano as well, we opened our first kohler showroom location.
Jim Taylor: Last year, we were thrilled about another new tenants to the portfolio. So while those projects are larger in scope to your point, they're very consistent in terms of what we've done in the sense of being pre leased bought out good visibility on the construction cost and our team's execution has been fantastic. So we're really excited about them and everything else we have in the pipeline as well.
Jim Taylor: To state the obvious a lot of this tenant disruption is creating some of that future pipeline in terms of being able to bring in more compelling retailers that really serve that.
Jim Taylor: Community and drive us towards our purpose of creating and owning centers that are the center of the community they serve.
Jim Taylor: Great. Thanks.
Jim Taylor: Thank you.
Jim Taylor: Caitlin Burrows with Goldman Sachs. Please proceed.
Speaker Change: Hi, Good morning, maybe just following up on the redevelopment topic, so considering possible tariffs in the materials you use and how you source. How do you think <unk> could be impacted as it relates to tenant improvements and redevelopment costs and how sustainable that yeah sorry.
Speaker Change: Well I mean, it is an important issue as you look forward and again, we dealt commit substantial capital until we have a pre lease and we have the capital or the construction costs nailed down through a <unk> contract as we look forward and you think about the things like the impact tariffs will have on costs.
Speaker Change: Will drive us to continue to push right now is to make sure that we're getting two accretive returns otherwise we wont proceed.
Speaker Change: But with that said I'm very encouraged by the breadth of opportunity that we have and the types of rents tenants are willing to pay to be in these projects.
Speaker Change: Thanks.
Speaker Change: That.
Speaker Change: Next question <unk> St Juste with Mizuho Securities. Please go ahead.
Hey, guys good morning.
Speaker Change: All the color on the expected.
Speaker Change: Spreads on the backfill of the former party city big lot enjoying boxes, but I'm curious if you could shed any light perhaps on the expected the capital spend there.
Speaker Change: To re tenant the space and are there any plans to subdivide any of the boxes.
Speaker Change: Yeah, and they will similar to what we saw in bed Bath <unk> primary users for these boxes have been single tenant users we've been able to keep cost in line there theyre in line with where we've been back filling those spaces I'd say on average around that $50 square foot range. One of the things we've been tracking is our payback periods.
Speaker Change: In terms of in terms of how we're ultimately getting paid back for those construction costs. They were at a seven year low last year and our team continues to do a fantastic job not only keeping cost in line, but as Jim alluded to as we were he was just mentioning relative to redevelopment when costs do pick up getting more rent for those spaces. So we've been encouraged by what we're seeing.
Speaker Change: When we do have opportunities to split the space, we're getting paid for those as well and higher rents, but overall they've learned primarily single tenant backfill and I'm pleased with how our teams overall keeping cost in line as well as the tenants that we've been able to bring them for those boxes and you know those boxes are right in the bull's eye of demand from a size perspective, so it's an <unk>.
Speaker Change: Capitalizing on that and one thing I would just add to handle and you can really see it at the auctions as retailers have gotten really really good at being able to utilize existing conditions and open quickly. So that's another benefit too of what's happened over the past few years is that the utilization of existing conditions, where the loading dock is where the facade.
Speaker Change: Is keeping the bathrooms, where they are and not only kept costs down, but it's enabled us to get tenants in and get them open faster.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Next question, Tim what truly Securities. Please go ahead.
Speaker Change: Good morning, Thank you.
Speaker Change: Jim.
Speaker Change: Just wanted to go back to the prior topic about a tenant.
Speaker Change: Tenant behavior pre and post tariff news.
Speaker Change: And you mentioned that the leasing volume in April was ahead of last year, but if you isolate it for just new leasing volume would that still be the case and then second question you had a higher lease termination fee than we thought.
Speaker Change: Can you provide any color on that thank you.
Speaker Change: Yes, I can take that keeping it was new leases that I was referring to relative to what's been executed and what's been coming into committee. Thus far in April. So we remain very encouraged we're encouraged with the overall tenor of the discussions as well as those conversations heading into New York ICSC look term fees are apart.
Of our business, we're going to be opportunistic with those when we have the ability to backfill. The space. One is the reinvestment opportunity. We had a few of those during the corner. It had a negligible impact to occupancy as the majority of those spaces already had leases on them I think it was less than five bips. So we're gonna be continue to be opportune.
Speaker Change: Mystic when we see those opportunities and we expect to maybe have a few of them here and in the normal course, but it's something that comes up in our business.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Linda Tsai with Jefferies. Please proceed.
Speaker Change: Hi, so your.
Speaker Change: Your FY 'twenty five same store screens towards the high end of the peer set and given notably lower basis rents is your expectation that your same store growth, maybe a year out can stay above the peer set.
Disruption.
Speaker Change: Without giving guidance one of the great things about our business plan and our execution is the forward visibility. It provides you look at that side, but not commence pipeline. The fact that we commenced $13 million to $14 million of ABR in the quarter and it stayed at $60 million that stacking of rents as we deliver 14.
Speaker Change: $15 million to $16 million of ABR of quarter get the full benefit of it in the following year, while at the same time, maintaining that forward signed but not commenced pipeline. In addition to what we see in the legal pipeline. It gives us tremendous visibility on on our continued outperformance.
Speaker Change: I think you mentioned it.
Speaker Change: Low rent basis, certainly helps.
Speaker Change: But it's that activity that we've basically gotten contractually committed to come into our portfolio that gives us confidence in our ability to continue to grow.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Paulina Rojas with Green Street.
Speaker Change: Good morning, and even the ongoing developments not only around Paris, but also long immigration restrictions, which tenant category do you see as most vulnerable to long term margin question.
Speaker Change: Hey, it's Bryan it's something that we've been watching closely we haven't seen an impact in terms of leasing decisions relative to our tenants from an immigration standpoint.
Speaker Change: We've been tracking the traffic on our specialty grocers versus our traditional grocers, we haven't seen any real shift there or any trends to be concerned about.
Speaker Change: Our restaurant tenants that we have we had of the restaurant leases that we signed during the quarter, we had a 55% uptick in rent so over for comparable leases. So we're really pleased with what we're seeing in that space, but that's something that we're watching there to just overall from a restaurant standpoint, I would say, though that that restaurant exposure at two thirds of them are <unk>.
Speaker Change: National and regional tenants we've got.
Speaker Change: Strong credit profiles and what the underwriting standards that Steve and team have put in place here. We have really good visibility on those offers I'd say, that's one category, we're watching as it relates to it but really haven't seen any shifts in terms of the tenor of the discussions or any impact of real estate decisions.
Speaker Change: Which is encouraging and certainly as we look forward, we're well aware and mindful of the policy uncertainty and what that might do to the consumer what it might do from an economic slowdown perspective, and as we all know that can be pretty broad based but what we particularly like is how well we're positioned as Steve talked about from a credit profile.
Speaker Change: But also from the nature of our key tenants whether its in groceries specialty grocery off price apparel. These are retailers that are well capitalized, but importantly, do well through cycles and I'm really proud of how our all weather business plan has continued to hold up it outperformed coming into and coming up.
Speaker Change: Out of the pandemic and we think it will be well positioned to outperform whatever may come from an economic standpoint.
Speaker Change: Next question Huh.
Speaker Change: J P. Morgan. Please go ahead.
Speaker Change: Yeah, I guess, just circling back to lease term income I guess out of curiosity do you. How do you expect a more normalized level of lease term income through the rest of the year.
Speaker Change: Yeah, I think just as you think about the one we had in the quarter, obviously being signed in the quarter releasing guidance seven or eight weeks ago that was fully known to us at that time, and then I think as Brian said as we move throughout the year. These are things that come up in the normal course and visibility out upon them will come based on not only the demand to backfill that.
Speaker Change: But also the tenant credit and that leaves us well.
Speaker Change: Got it and I guess on G&A I think you talked about the talk last quarter about a couple of pennies of G&A savings throughout this year I'm just curious.
Speaker Change: Still expected.
Speaker Change: We do continue to expect to see the benefits of that regional realignment.
Speaker Change: Yeah.
Speaker Change: The next question once an RV with BMO capital markets. Please go ahead.
Speaker Change: Alright, good morning.
Speaker Change: Excuse me if I missed it I joined late but could you provide a little bit more color on Joanne and what we should expect on the impact.
Speaker Change: Occupancy or anything else into the second quarter I think the first.
Speaker Change: Comments are out.
Speaker Change: So just any color on what at least what we know today or how we should be thinking about the range of outcomes from an occupancy perspective, right that would be helpful.
Speaker Change: Hey, this is Brian our Joanne exposure was down to stores from last quarter that was basically two natural expirations that are already leased one to one to Ross and another to the pay per store, we're expecting to have the remaining 17 boxes back to us in May we're really pleased with the activity out of.
Speaker Change: The gate, where roughly resolved on two thirds at lease or LOI at compelling rent spreads in the 30% to 40% range I think.
Speaker Change: What we've seen here is kind of what our team has been able to demonstrate over time is it. This disruption creates a great opportunity for us to capitalize on those tenants that are expanding like the off price operators like specialty grocers like strong fitness operator so.
Speaker Change: We will be taking that space back the impact we do expect some pressure as it relates to occupancy is the level of which is going to depend on how quickly those actual leases get signed but out of the gate. We were really pleased with progress.
Speaker Change: Okay.
Speaker Change: If there are any additional questions. Please press star one telephone keypad next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Speaker Change: Hey.
Alexander Goldfarb: And thank you for taking the follow up.
Jim just a question on tariffs overall from your tenants is there any sense of what they think the ultimate price impact in there on the goods that they that they sell will be I know the policy keeps shifting almost daily but is there a sense of what of what the retailers are expecting.
Alexander Goldfarb: That impact and how they've.
Alexander Goldfarb: Adjusted their sourcing to perhaps mitigate this.
Alexander Goldfarb: Well I think that that's retailers have been in tariff environments before have shown resiliency in terms of sourcing and are working.
Alexander Goldfarb: Quite assiduously to get the product into the stores at the right kind of price in terms of specific impacts based on retailers. So I don't think that's truly known yet so I think what you're finding as retailers are accelerating some purchases ahead of the holidays and ahead of tariffs they're doing other strategies.
Alexander Goldfarb: Position themselves.
Alexander Goldfarb: Thrive and compete in this environment.
Alexander Goldfarb: You know the off price retailers, particularly like this type of inventory disruption because it's their bread and butter its how they really drive values a capture.
Alexander Goldfarb: Inventory and product from full price retailers. So each each retailer is looking at it a little bit differently.
Alexander Goldfarb: But I don't think it's known yet how much is going to be absorbed by the supplier how much is going to be absorbed by the retailer and then ultimately whats going to be passed onto the consumer what I find most encouraging in this environment is despite all of that uncertainty we continue to see retailers, who are growing committing to future located.
Alexander Goldfarb: <unk>, where they know they can be profitable, where they know their customer is and where they can serve that customer through a model. That's the most efficient you know we were talking years ago about e-commerce and not being displacing our core retailers I think theres retailers have proven the stores work there are healthy in Prague.
Hospital channel and if we do see some inflation I think the efficiency of the store is going to be all that much much more important.
Alexander Goldfarb: Thank you.
Jamie Feldman: Next question, Jamie Feldman with Wells Fargo. Please go ahead.
Speaker Change: Great. Thank you for taking the question I guess, a follow up to Alex's question. As you guys think about your guidance or just speak internally.
Jamie Feldman: What do you view as the worst case and how is that baked into your numbers in terms of tariffs specifically.
Jamie Feldman: The impact on retail sales or leasing spreads or does it actually just not even matter for 25 and it becomes a 26 event by the time everything kind of flows through the system.
Jamie Feldman: Just curious if you can provide more color just on your forecasting and how you think about it yeah.
Jamie Feldman: Yeah.
Jamie Feldman: Thank for US you know it would be a second order impact and ultimately you'd see it and we think we have appropriate provision for this and additional retailer disruption.
Jamie Feldman: But again you know our retailers are focused on those segments that are economically resilient. They can handle downturn and we like how the portfolio is positioned overall against a wide.
Jamie Feldman: Range of potential outcomes to your other part of the question 25, and 26 do provide us tremendous visibility given that signed but not commenced pipeline with great tenants with great balance sheets that are committed to getting those stores open.
Jamie Feldman: And again these tenants today is we're looking at that growing legal leasing pipeline are really making decisions for 26 and 27.
Jamie Feldman: Next question.
Jamie Feldman: Cool.
Jamie Feldman: Go ahead.
Jamie Feldman: Hi, again, just another follow up question.
Jamie Feldman: Question on the guidance piece wondering if you could give any details or specifics.
Jamie Feldman: At this point in the year, what do you think could pursue ending up at the high end of the range versus the low end of the range on SSL.
Jamie Feldman: Yes, I think it's similar to other years, where the high end of the range is really where we're focused is getting those tenants that we have in that signed but not commenced will open as soon as possible, obviously bad debt and the revenue came about collectable line to the extent we performed at the lower end of that range, while obviously pushed up to the higher end of the range and then ultimately I think it's.
Jamie Feldman: What Jim just said, it's going to be the impact of tenant disruption and the magnitude and timing of any additional disruption that we see.
Jamie Feldman: Thanks.
Jamie Feldman: Next question.
Jamie Feldman: Please go ahead.
Jamie Feldman: Oh, thanks for the follow up just a broad question. So three tenants that are perhaps more impacted by tariffs or bringing goods from overseas do you have a kind of a general view on how much.
Jamie Feldman: Pre tariff inventory they have and how many months of that last.
Jim Taylor: Keep in I mean, that's not really come up in the leasing discussions I think to Jim's point.
Jim Taylor: Several retailers, we're prepared for some type of tariff impact I think the announcement was more than a lot of folks who are expecting but they had identified alternative sourcing opportunities. They were they were prepared at some point from an inventory perspective, as well, but it's really.
Jim Taylor: Remains to be seen in terms of what the what the total impact is what what we're encouraged by is what we continue to see real time in terms of the traffic to our centers the performance of our existing tenants. The renewal conversations that we're having that are coming through in our spreads and the new tenants that we continue to add to the portfolio and continue to add.
Jim Taylor: To the new leasing pipeline. So there certainly could be some tenants that are more impacted than others, we feel as though our our best retailers have really done a great job of preparing for the impact, but really remains to be seen but overall, we like how we're positioned to be able to navigate it.
Jim Taylor: Thank you again.
Jim Taylor: Thank you.
Jim Taylor: Camden Feldman with Wells Fargo.
Speaker Change: Great. Thanks for taking a follow up I was hoping you can just talk more about the transaction market given higher uncertainty out there have you seen the number of buyers or sellers changed recently foreign versus domestic and then any changes to underwriting assumptions youre seeing out there in terms of.
Speaker Change: Leasing spreads occupancy and has it caused you to get more or less aggressive on your investment plans.
Speaker Change: Yeah. Thanks for the question what I would say is when at bricks more when we think about funding deals. We look for ones that have high conviction, where it can drive strong returns through our platform and that resonates with well below market rents vacancies and redevelopment opportunities. It's one of the reasons why you didn't see us put capital out in Q1, it's always going to be really lumpy as we tried to find the right deal.
Speaker Change: To put on our platform with respect to the impact that you're asking about it's been a couple of weeks as I mentioned earlier, Youre, certainly seeing a slowing market, but what I would say that there has been very very strong demand from a variety of capital sources to be an open air retail Q1 was particularly strong for on demand perspective, we haven't necessarily.
Speaker Change: Seen capital pull back and say there out of the market. We've seen people more say hey, this is going to take a couple of weeks longer to figure out as we work through the volatility.
Speaker Change: Thank you okay, great. Thank you.
Speaker Change: Turning to Florida.
Speaker Change: For closing remarks.
Speaker Change: Thanks, everyone for joining us today.
Speaker Change: Yeah.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time.
Speaker Change: Thank you for your participation.