Q1 2025 Federal Realty Investment Trust Earnings Call

[music].

Unknown Executive: Good afternoon and welcome to the Federal Realty Investment Trust first quarter 2025 earnings All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by a tablet. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star 1 on your telephone.

Good afternoon, and welcome to the Federal Realty Investment Trust first quarter 2025 earnings Conference call all participants will be in listen only mode.

Should you need assistance.

Conference specialist.

Speaker Change: If I can just start keep all thank you all.

Speaker Change: After todays presentation, there will be an opportunity to ask questions.

Speaker Change: Ask a question you May press Star then mother nature.

Unknown Executive: If you have any questions, please press star- Please note, this is not just being recorded.

Speaker Change: It's really a question for Scott.

Speaker Change: Please note this event is being recorded.

Jill Sawyer: I would now like to turn the conference over to Jill Sawyer, Senior Vice President, Investor Relations. Please go ahead. Thank you, Amy. Good evening.

Speaker Change: I would now like to turn the conference over California.

Speaker Change: Oh, Vice President Investor Relations. Please go ahead.

Unknown Executive: Thank you for joining us today for Federal Realty's First Quarter 2025 Earnings Conference.

first quarter 2025 earnings conference call.

Jill Sawyer: Joining me on the call are Dawn Wood, Federal's Chief Executive Officer. Dan Guglielmone, Chief Financial Officer, Wendy Seher, Eastern Region President and Chief Operating Officer, and Jan Sweetnam, Chief Investment Officer, as well as other members of our executive team that are available to take your questions at the conclusion of our prepared remarks.

Speaker Change: Joining me on the call are Dawn Wood, Federal Chief Executive Officer. Thank you very much.

Speaker Change: Dan Guglielmone, Chief Financial Officer, Wendy Seher, Eastern Region President, and Chief Operating Officer, and Jan Sweetnam, Chief Investment Officer, as well as other members of our executive team that are available to take your questions at the conclusion of our prepared remarks.

Unknown Executive: A reminder that certain matters discussed on this call may be deemed to be forward-looking statements. Forward-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated events or results, including guidance. Although Federal Realty believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty's future operations and its actual performance may differ materially from the information in our forward-looking statements, and we can give no assurance that these expectations can be attained.

Speaker Change: The reminder that certain matters discussed on this call may be deemed to be for-looking statements. For-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated event or results, including guidance.

Speaker Change: Although Federal Realty believes the expectations reflected in such polar looking statements are based on reasonable assumptions, Federal Realty's future operations and its actual performance may differ materially from the information in our polar looking statements, and we can give no assurance that these expectations can be obtained.

Unknown Executive: The earnings release and supplemental reporting package that we issued tonight, our annual report filed on Form 10-K, and our other financial disclosure documents provide a more in-depth discussion of risk factors that may affect our financial condition and operational results.

Speaker Change: Earnings released in supplemental reporting package that we issue tonight are annual report filed on 410K and are other financial disclosure documents provide a more in-depth discussion of risk factors that may affect their financial condition and operation results.

Unknown Executive: Given the number of participants on the call, we kindly ask that you limit yourself to one question during the Q&A portion of our call. If you have additional questions, please recue.

Speaker Change: Given the number of participants on the call, we kindly ask you to limit yourself to one question during the Q&A portion of our call. If you have additional questions, super cute. And with that, I will turn the call over to Dawn Wood.

Donald Wood: And with that, I will turn the call over to Don Wood. Thank you, Jill, and welcome to your first Federal Realty Conference call. We are excited that you're here. At $1.70 per share, the first quarter was another strong one for the trust. It was ahead of our consensus, our internal expectations, and the prior year. This is probably a good time to remind everybody of the historical correlation between uncertain economic times and the performance of real estate surrounded by an affluent customer base and lots of density. The more uncertain the economy, the better we tend to do.

Don wood: Thank you, Jill, and welcome to your first Federal Realty Conference call. We are excited that you're here.

Speaker Change: Had a downward 70 per share, the first quarter was another strong one for the trust. It was ahead of our consensus, our internal expectations, and the prior year.

Speaker Change: This is probably a good time to remind everybody of the historical correlation between uncertain economic times and the performance of real-estates around it by an affluent customer base and authenticity. More uncertain the economy that are we tend to do.

Donald Wood: Wendy Seher, our president of the East Coast, along with Dan Gee, are going to go through the detail of those results this evening. It'll be her first foray into prepared remarks on the earnings call, so be confident. Health Center on Operations, so mine will focus on the broader economic and capital allocation landscape that we're operating in since the new administration took over in January. The headlines and the stock market performance seem to settle down a bit over the past week or so, at least until today, up until an hour ago, in sharp contrast to the first few weeks of April, but we're clearly in a really unpredictable position.

Speaker Change: Wendy Seher, our President of the East Coast, along with Angie, are going to go through the detailed

Speaker Change: It'll be her first foray into prepared remarks on the earnings call, so be kind.

Speaker Change: Field Center on Operations, some minor focus on the broader economic and capital allocation landscape that we're operating in since a new administration took over in January .

Speaker Change: The headlines in the stock market performance seem to settle down a bit over the past week or so, at least until today, up until an hour ago, in sharp contrast to the first few weeks of April , but we're clearly in a really unpredictable time. [inaudible]

Donald Wood: The bottom line, though, is that we have not seen any negative impact to our property leasing or consumer behavior as a result of the administration's actions and policies as we sit here on May 8. In fact, April saw year-over-year foot traffic at Federalist Properties in the Washington, D.C. MSA up 6% year-over-year, up 3% at Santana Row, up 11% at Federalist Properties in Boston. Consumer in our markets, including Washington, D.C., have been remarkably resilient. Obviously, ongoing government layoff announcements combined with a whipsaw tariff policy can possibly be a good thing for business investment and consumer confidence and will likely lead to broader inflationary pressure later this year and next, but we haven't seen or felt it yet.

Speaker Change: The bottom line though is that we have not seen any negative impact to our property leasing or consumer behavior as a result of the administration's actions and policies as we sit here on May 8th.

Speaker Change: In fact, April saw a year-over-year foot traffic at Federalist Properties in the Washington, DC, MSA, up 6% year-over-year, up 3% at Santana Ro, up 11% at Federalist Properties and Boston

Speaker Change: Consumer and our markets, including Washington DC, have been remarkably resilient.

Speaker Change: Obviously, ongoing government layoff announcements combined with a whipsaw of terror policy can possibly be a good thing for business investment, consumer confidence, and will likely lead the broader inflationary pressure later this year and next. But we haven't seen her filthy yet.

Donald Wood: It's also why the high household incomes are so important to the future.

Speaker Change: It's also why the high household incomes are so important to the future. [inaudible]

Donald Wood: First of all, it has always been our job to insulate our company as best we can against changing economic conditions and other disruptive forces. After all, this is and always has been a cyclical business. The way we've done this is by having an extremely diverse tenant base. Our largest tenant by ADR is TJX, which makes up 2.6% of our base rent, and it's considered a likely net beneficiary amid the economic uncertainty triggered by the tariffs. Our number two is Grosser Ahold, who makes up another 1.9%. Don't underestimate how important tenant diversity In addition, we've set ourselves up well by being very selective in choosing the best operator in each category with strong credit, whether that be restaurants, fashion, services or others.

Speaker Change: First of all, it has always been our job to insulate our company as best we can against changing economic conditions and other disruptive forces. After all this is and always has been a cyclical business. [inaudible]

Speaker Change: The way we've done this is by having an extremely diverse tenant base. Our largest tenant by ADR is TDAX, which makes up 2.6% of our base rent, and it's considered a likely net beneficiary amid the economic uncertainty triggered by the tariffs. [inaudible]

Speaker Change: Our number two is Grocera Hold, who makes up another 1.9%

Don't underestimate how important tenant diversity is.

Speaker Change: In addition, we set ourselves up well by being very selective in choosing the best operator in each category with strong credit, whether that be restaurants, fashion, services or others.

Donald Wood: We get sales reporting from about 50% of our tenants, strong representative sample, and our overall cost of occupancy is about 9% of sales, only 10% when excluding groceries. making rent obligations affordable and with room to spare. Tenants can, by and large, still pay the rent, continue to pursue further growth for the best real estate. We're here to partner with our retailers to help them grow and as the landlord, strength of our leases and tenant credit quality protect us on the downside. And yes, perhaps most importantly, we work to insulate our company by owning real estate that leans in heavily towards strong household income.

Speaker Change: We get sales reporting from about 50% of our tenants, strong representative sample and their overall cost of occupancy is about 9% of sales, only 10% with excluding grocers, making rent obligations affordable and with room to spare. [inaudible]

Speaker Change: Ted Sken, Buckton, By and large, still pay the rent, continue to pursue further growth for the best real estate. We're here to partner with our retailers to help them grow and add to the landlord, strength of our leases, content and quality, and credit quality protect us on the downside.

Speaker Change: And yes, perhaps most importantly, we've worked in slid our company by owning real estate that leans in heavily towards strong household income quality metric that is fundamental to our core, a cycle after cycle favors affluence when considering the ability to power through

Donald Wood: Quality metric that is fundamental to our core as cycle after cycle favors affluence when considering the ability to power through. Bottom line, we are well set up to continue to grow, even if the landscape continues to evolve unpredictably. We closely monitor the political and economic policy environment throughout the week and sometimes daily changes, as well as to continually dialogue with our retail partners. In the meantime, we continue to run our business aggressively and with purpose.

Speaker Change: Bottom line, we are well set up to continue to grow even if the landscape continues to evolve unpredictably.

Speaker Change: We closely monitor the political and economic policy environment through the weekly throughout the week and sometimes daily changes as well as to continually dialogue with our retail partners. In the meantime, continue to run our business aggressively and with purpose.

Donald Wood: Before turning it over to Wendy, I also wanted to make a few comments about capital allocation choices and how we're considering them in this environment. In terms of the transaction market, it should come as no surprise that the April 2nd tariff announcements, including the changes made every week since, along with the related capital markets uncertainties, have had a profound effect on buyers' ability to underwrite and evaluate opportunities with the level of confidence that they've become accustomed to. In our view, while the volatility of the last five weeks shouldn't in and of themselves kill deals that make sense for the organization in the medium and long term, they do require underwriting and capital allocation decisions that take into account the different risk profile that reduce predictability branch.

Speaker Change: Before turning it over to Wendy, I also wanted to make a few comments about capital allocation choices and how we're considering them in this environment.

Speaker Change: In terms of transaction market, it should come as no surprise that the April 2nd tariff announcements.

Speaker Change: Including the changes made every week since, along with the related capital markets uncertainties, have had a profound effect on buyers' ability to underwrite and evaluate opportunities with the level of confidence that they've become accustomed to.

Speaker Change: In our view, while the volatility of the last five weeks shouldn't in and of themselves kill deals that make sense for the organization in the medium and long term, they do require underwriting and capital allocation decisions that take into account the different risk profile that reduced predictability brings.

Donald Wood: 10-year IRRs are disproportionately hit by disruptions in the first couple of years. As the year progresses, we'll continue to look for and aggressively pursue opportunities that fit that risk-adjusted criteria. I think we'll be successful in finding... And while our clear bias is to grow our company through the acquisition and development of great retail real estate, buying back our own stock wins out when the spread between that investment and other alternatives gets too wide. It's important for our investors to know that we consider prudent capital allocation decisions to be at the very top of our list of responses.

Speaker Change: Ten-year IRRs are disproportionately hit by disruptions in the first couple of years.

Speaker Change: As the year progresses, we'll continue to look for and aggressively pursue opportunities that fit that risk-adjusted criteria. I think we'll be successful in finding them.

Speaker Change: And while our clear bias is to grow our company through the acquisition, development of great retail real estate, buying back our own stock wins out when the spread between that investment and other alternatives gets to want.

Speaker Change: It's important for our investors to know that we consider fruiting capital allocation decisions to be at the very top of our list of responsibilities

Wendy Seher: That's all I wanted to cover in prepared remarks this afternoon, so I'll turn it over to Wendy Seher for her prepared remarks on the quarter and expectations for the rest of the year. Wendy? Thank you, Don. As many of you know, I spend most of my time interacting with our retail partners, driving revenue for the company, focused on our day-to-day operating metrics, including asset management, leasing, tenant coordination, and redevelopment.

Speaker Change: That's all I wanted to cover and prepare to march this afternoon, so I'll turn it over to Wendy Seher for her prepared to march on the quarter and expectations for the rest of the year. Wendy.

Wendy Seher: You've typically only heard prepared remarks from Dawn and Dan, but I wanted to take the opportunity to provide my observations on current market dynamics and how I think our centers are positioned to perform for the year. First, let's talk about Q1. We're off to a strong start this year, providing results that outperformed what we had expected for the quarter. Our comparable portfolio ended the quarter at 95.9% leased, 160 basis points higher than last year's first quarter results. In all, our comparable lease rate dropped only 20 basis points quarter over quarter, signaling higher retention and less move-outs than we expected.

Wendy Sear: You've typically only heard prepared remarks from Dawn and Dan, but I wanted to take the opportunity to provide my observations on current market dynamics and how I think our centers are positioned to perform for the year. First, let's talk about Q1.

Speaker Change: We're off to a strong start this year providing results that outperformed what we had expected for the quarter.

Speaker Change: Our comparable portfolio ended the quarter at 95.9% least, 160 basis points higher than last year's first quarter results.

Speaker Change: In all, our comparable least rate dropped only 20 basis points, quarter over quarter, signaling higher retention and less move outs than we expected.

Wendy Seher: With minimal or no exposure to some of the retail bankruptcy headlines of today, such as Joanne's, Big Lots, Rite Aid or Party City, our strong lease rate speaks to the strength of the real estate and the best-in-class retailers that occupy our center. From what I'm seeing at the property level today, we're well positioned with both in-place contracts and a strong pipeline to deliver higher occupancy in the second half of 2025. We executed 91 retail leases representing 430,000 square feet for the quarter, including the company's first lifetime fitness deal at Santana Row. As expected, our leasing volume has normalized due to our high leased occupancy rates, while rent rollover was a modest 6% for the quarter.

Speaker Change: With minimal or no exposure to some of the retail bankruptcy headlines of today, such as Joanne's, Big Lodz, Rydade of Party's City, our strong least rate speaks to the strength of the real estate and the best-in-class retailers that occupy our centers.

Speaker Change: From what I'm seeing at the property level today, we're well positioned with both in-place contracts and a strong pipeline to deliver higher occupancy in the second half of 2025.

Speaker Change: We executed 91 retail leases, representing 430,000 square feet for the quarter, including the company's first lifetime fitness deal at Santana Roe.

Speaker Change: As expected, our leasing volume has normalized due to our high-least occupancy rates, while Rant Rollover was a modest 6% for the quarter. This Rollover rate does not represent a trend but is more driven by the mix of deals executed this quarter.

Wendy Seher: This rollover rate does not represent a trend, but is more driven by the mix of deals executed this quarter. As I look both at our executed deals this second quarter, plus our in-process pipeline, I would expect our rollover will be somewhere in the mid-teens for the next couple of quarters. I remain encouraged with respect to the level of tenant demand as we've seen no meaningful impact on the uncertain economic environment. In fact, our executed leases since quarter end are well above our normal historic pace and we continue to see opportunities to push both small shop and anchor rents, including annual increases, as well as produce non-financial terms that can deliver meaningful value for the mid-term and long-term horizon.

Speaker Change: And I look both at our executed deals this second quarter, plus our in-process pipeline, I would expect our roll-over will be somewhere in the mid-teens for the next couple of quarters.

Speaker Change: I remain encouraged with respect to the level of tenet demand as we have seen no meaningful impact from the uncertain economic environment.

In fact,

Speaker Change: Our executed leases since quarter-end are well above our normal, historic pace, and we continue to see opportunities to push both small shop and anchor rents

Speaker Change: including annual increases as well as produce non-financial terms that can deliver meaningful values for the mid-term and long-term horizon.

Wendy Seher: Contractual bumps this quarter were 2.4%, blended both anchor and small shop, which is quite strong. Some of the momentum is certainly being driven by the limited inventory, but mostly the demand is being driven by our signature amenitized locations surrounded by high household income. A great example of this is the new Bloomy's small format concept that just opened at The Grove in affluent Shrewsbury, New Jersey. Bloomy's is outperforming even their own expectations, and this traffic and sales production has enabled us to push small shop rents well beyond what we underwrote. No Sign of a Weakening Consumer in Shrewsbury, Strong Household Income Really Does Matter.

Speaker Change: Contractural bumps this quarter were 2.4 percent, blended both anchor and small shaft, which is quite strong.

Speaker Change: Some of the momentum is certainly being driven by the limited inventory, but mostly the demand is being driven by our signature and monetized locations surrounded by high household incomes.

Speaker Change: A great example of this is the new Bloomy's small format concept that just opened at the grove in a Fluent Shoesbury, New Jersey. Bloomy's is outperforming even their own expectations and this traffic and sales production has enabled us to push small shop rents well beyond what we underrode.

Speaker Change: Those sign of a weakening tenant, a weakening consumer, excuse me, intrudes very strong household income, really does matter.

Wendy Seher: There is so much conflicting information out there on consumer confidence and tenant performance. I really focus on three key metrics, well-located real estate, high-income areas, and strong retail sales. This combination creates a solid foundation in any market climate. I looked at a few of our tenants that report sales publicly, TJX, Kava, Onevi, Chipotle, and Anthropologie, and I compared their national sales on average with our average portfolio sales. Across the board, federal realty properties exceeded national averages anywhere from 15 to 40%. This doesn't even take into account the e-commerce halo effect of brick-and-mortar locations. Remember, higher sales disproportionately enhance store profitability.

Speaker Change: There is so much conflicting information out there on consumer confidence and tenant performance.

Speaker Change: I really focus on three key metrics, well-located real estate, high income areas and strong retail sales. This combination creates a solid foundation in any market climate.

Speaker Change: I looked at a few of our tenants that report sales publicly, TJX, Cava, O'Nady, Chipotle, and Anthropology, and I compared their national sales on average with our average portfolio sales.

Speaker Change: Across the board, Federal Realty Properties exceeded national averages anywhere from 15 to 40 percent. This doesn't even take into account the e-commerce halo effect on brick and mortar locations.

Speaker Change: Remember, higher sales disproportionately enhance store profitability. This measurement is not perfect, but it does signal the strength of the real estate and our ability to drive rents, which really is just a function of sales.

Wendy Seher: This measurement is not perfect, but it does signal the strength of the real estate and our ability to drive rents, which really is just a function of sales.

Wendy Seher: A diversified retail race is how I feel comfortable that we are prepared for the near term as well as the long term.

Speaker Change: A diversified retailer base is how I feel comfortable that we will prepare for the near term as well as the long term.

Wendy Seher: Lastly, I did want to talk about our current discussions with retailers and navigating the changing tariff landscape. As our retail partners have reminded me, sophisticated retailers have been diversifying their supply channels for over five years now and have been navigating tariffs for years beyond that. I don't want to suggest it will be business as usual, of course not, but until there is some clarity on where tariffs land, the retailers that we have spoken to have not made any material changes to either their open to buy requirements or their capital expenditures. We will continue to monitor this and get feedback as we head into our Vegas convention in a couple of weeks.

Speaker Change: Lastly, I did want to talk about our current discussions with retailers and navigating the changing tariff landscape As our retail partners have reminded me, sophisticated retailers have been diversifying their supplied channels for over five years now and have been navigating tariffs for years beyond that

Speaker Change: I don't want to suggest it will be business as usual, of course not, but until there is some clarity on where tariffs land the retailers that we have spoken to have not made any material changes to either their open to buy requirements or their capital expenditures.

Speaker Change: We will continue to monitor this and get feedback as we head into our biggest convention in a couple of weeks. Stay tuned. Dan?

Wendy Seher: Stay tuned.

Daniel Guglielmone: Dan? Thank you, Wendy. and the law everyone. A reported NARED FFO per share for the first quarter of $1.70 came in at the top end of our guidance range and represented almost 4% growth on a per share basis. Revenues were up 6% and POI was up almost 5% for the quarter on a year-over-year basis. Primary drivers for the solid 1Q performance were one, lower than expected credit reserve utilizations, which highlights our lack of any material exposure to bankruptcy. to higher rental revenue than we had forecast and lower GNA due to ongoing focus on cost controls.

Thank you, Wendy [inaudible]

and the law of everyone.

Speaker Change: We're reported and they read FAFSA for the first quarter of $1.70 came in at the top end of our guidance range and represented almost 4% growth on a first-year basis. Revenues were up 6% and POI was up almost 5% for the quarter on a year-over-year basis.

Speaker Change: Two, higher rental revenue than we had forecast, and lower DNA due to ongoing focus on cost controls.

Daniel Guglielmone: This was somewhat offset by higher than expected property Primarily Driven by Snow Comparable POI growth excluding prior period rents and term fees came in at 2.8% for the first quarter, which is better than the mid 2% range we had forecasted in the February quarter. Comparable base rents were up 3% and comparable total revenues up 4% of the quarter on a year-over-year basis.

This was somewhat offset by higher than expected property expenses.

Permele, Driven by Snow

Speaker Change: Cooperable P.O.I. Growth, excluding prior period rents and term fees, came in at 8.8% for the per-score, which is better than the mid-2% range we had forecasted on the February call.

Speaker Change: Comparable base rents were of 3% and comparable total revenues of 4% for the quarter on a year-over-year basis.

Daniel Guglielmone: Quick update on office leasing for the quarter. where we continue to see very, very positive momentum, 118,000 square feet of total leasing. with signed new deals at Santana West. for over 60,000 square feet during the quarter with starting base rents north of $50 per square foot.

Speaker Change: Quick update on office leasing for the quarter, where we continue to see very, very positive momentum.

with signed new deals at Santana West.

Speaker Change: Over 60,000 square feet during the quarter was starting base rents north of $50 per square foot.

Daniel Guglielmone: We remain optimistic that Santana West will be nearly fully leased by the end of the year. We also added an additional 27,000 square feet of leases at 915 Meeting Street at Pike and Rose, also north of $50, where we expect to be stabilized at 96% leased by the end of this quarter.

Speaker Change: We remain optimistic that Santana West will be nearly fully released by the end of the year.

Speaker Change: We also added an additional 27,000 square feet of leases at 9.13 meters free at Pike & Rose, also north of $50.00, where we expect to be stabilized at 96% by the end of this quarter.

Daniel Guglielmone: With respect to our in-place mixed-use office portfolio, occupancy, leased occupancy now stands at 98%, with a weighted average lease term in excess of 8%.

Speaker Change: With respect to our in place mixed use office portfolio, occupancy, lease occupancy now stands at 98% with a weighted average lease term in excess of eight years.

Daniel Guglielmone: Now to the balance sheet and an update on our liquidity. and more. We refinanced our $600 million term loan. Effectively extending the final maturity out to March of 2030. while expanding the size of the loan to $750 million. We increase the loan by $150 million by adding a delayed draw feature, which we expect to take down by year-end, while also improving pricing on the loan by reducing the effective spread by $10.

Speaker Change: Now to the balance sheet and an update on our liquidity position.

Speaker Change: In March, we refinanced our $600 million term loan, effectively extending the final maturity out to March of 2030.

while expanding the size of the loan to 750 million.

Speaker Change: We increase alone by 150 million by adding a delayed draw feature which we expect to take down by year end. While also improving pricing on the loan are reduced in the effective spread by tendoms.

Daniel Guglielmone: As a result, this has allowed us to improve our liquidity at quarter end for roughly $1.5 billion with over $1.2 billion available on our unsecured credit facility, over $100 million of cash, and $150 million available under the new term limits. During the quarter, we took down our remaining forward common equity totaling $55 million of gross proceeds previously raised at a share price north of $115 per share. This was effectively utilized to fund a portion of the $123.5 million purchase of Del Monte Shopping Center in Monterey, California.

Speaker Change: As a result, this has allowed us to improve our liquidity at quarter end for roughly $1.5 billion, with over $1.2 billion available on an unsecured credit facility, over $100 million of cash, and $150 million available under the new terminal.

Speaker Change: During the quarter, we took down our remaining forward common equity.

Speaker Change: Totaling 55 million of gross proceeds, previously raised a share price north of $115 per share.

Speaker Change: This was effectively utilized upon the portion of $123.5 million purchase of Del Monte Shopping Center in Monterey, California.

Daniel Guglielmone: During the quarter, as a result, our leverage metrics remained in line with our forecast. First quarter annualized net debt to EBITDA stands at 5.7 times, down from six times as reported on this call last year. We are targeting improving that metric over 2025 to be inside of our targeted five and a half times level. Fixed charge coverage now stands at 3.8 times, up from 3.5 times at this time last year. We expect this metric to continue to improve toward our four times target over the course of 2025.

Speaker Change: During the quarter, as a result, our leverage metrics remain in line with our forecast.

Speaker Change: First quarter annualized net debt to EBITDA stands at 5.7 times, down from six times as reported on this call last year. We are targeting improving that metric over 2025 to be inside of our targeted five and a half times level.

Speaker Change: 6 charge coverage now stands at 3.8 times, up from 3.5 times at this time last year. We expect this metric to continue to improve toward our 4 times target over the course of 2025.

Daniel Guglielmone: We have made significant progress on our asset disposition efforts over the first quarter as well. We are actively in the market with over $250 million of assets at various stages in the sale process. Currently we have approximately $150 million under a firm contract with a blended yield in the upper 5% cap rate range.

Speaker Change: We have made significant progress on our asset disposition efforts over the first quarter as well.

Speaker Change: We are actively in the market with over $250 million of assets at various stages in the sale process.

Speaker Change: Currently we have approximately 150 million under a firm contract with a blended yield in the upper 5% cap rate range.

Daniel Guglielmone: We will report details on these transactions when completed. From a capital flexibility perspective with roughly $1.5 billion of capacity, plus the aforementioned asset sales and process, we are very well positioned and ready to take advantage of any market dislocation, whether it be in the acquisition market or with respect to repurchasing our stock, which currently trades north of the 7% implied capital.

We will report details on these transactions when completed.

Speaker Change: From a capital flexibility perspective with roughly $1.5 billion of capacity, plus the aforementioned asset sales and process, we are very well positioned and ready to take advantage of any market-deus dislocation.

Speaker Change: Whether it be in the acquisition market, or with respect to repurchasing our stock, which currently trades north of the 7% implied capric.

Daniel Guglielmone: Do that end on April 10th. Our board authorized a $300 million common share repurchase program given the significant volatility which has impacted the capital markets earlier in the quarter.

To that end on April 10th.

Speaker Change: Our Board authorized a $300 million common share research program given the significant volatility which has impacted the capital markets earlier in the Board.

Daniel Guglielmone: Now onto guidance. Given a solid first quarter. Landing at the top end of our $1.67 to $1.70 range, we are raising our forecast for FFO per share to $7.11 to $7.23. This represents about 6% growth at the increased midpoint of $7.17, and roughly 5% and 7% at the low and high end of the range respectively.

Now, on to guidance.

Given a solid first quarter

Speaker Change: Landing at the top end of our $1.67 to $1.70 range, we are raising our forecast for FFO per share to $7.11 to $7.23.

Speaker Change: This represents about 6% growth at the increased midpoint of $7.17 and roughly 5% and 7% at the low and high end of the range respectively [inaudible]

Daniel Guglielmone: We are affirming our forecast for 2025 comparable POI growth of three to four percent to three and a half percent of the... We expect occupancy levels to be flat and 2Q, but then grow from this current level in the second half of the year into the mid-94s by year-end 2025 on a comparable basis. given the deal signed to date and the robust pipeline of leasing activity in process. given limited exposure to bankrupt tenants in a better-than-forecasted first quarter for our utilization of our credit reserve. Inside of 60 basis points, this positive start to the year sets us up to land in the bottom half of our 75 to 100 basis points range.

Speaker Change: We are affirming our forecast for 2025 comparable POI growth of 3 to 4% to 3.5% of the midpoint.

Speaker Change: We expect occupancy levels to be flat and too cute but then grow from this current level in the second half of the year into the mid-94s by year end 2025 on a comparable basis.

Speaker Change: Given the deal signed to date and the robust pipeline of leasing activity and process [inaudible]

Speaker Change: Given the limited exposure to bankrupt tenants, any better than forecasted first quarter for our utilization of our credit reserve?

Speaker Change: Inside of 60 basis points, this positive start to the year sets us up to land in the bottom half of our 75 to 100 basis points range.

Daniel Guglielmone: We are also adjusting our forecast for GNA down slightly. $45 to $47 million from the previously disclosed level of $45 to $48 million. All other assumptions toward 2025 guidance remain unchanged. Please see the updated summary of these guidance assumptions in our 8K on page 27. With respect to quarterly FFO cadence for the balance of 2025, we are leaving our original quarterly estimates essentially as is, with the second quarter at $170 to $174. The third quarter at $189 to $193. Fourth Quarter at $182,000 to $186,000 Please note that we continue to expect the revenues from our new market tax credits to be recognized in the third quarter, but it is possible we may recognize those earlier.

We are also adjusting our forecast for GNA down slightly.

Speaker Change: 45-47 million from the previously disclosed level of 45-48 million [inaudible]

All other assumptions toward 2025 guidance remain unchanged.

Speaker Change: Please see the updated summary of these guidance assumptions in our 8K on page 27.

Speaker Change: With respect to quarterly FFO cadence for the balance of 2025, we are leaving our original quarterly estimates essentially as is with the second quarter at 170 to 174.

The third quarter at 189 to 193. The third quarter at 189.

The fourth quarter at 182 to 186.

Speaker Change: Please note that we continue to expect the revenues from our new market tax credits to be recognized in the third quarter, but it is possible we may recognize those earlier.

as well as the second floor.

Daniel Guglielmone: Cadence for comparable growth will build on the modestly stronger than expected first quarter results of 2.8% and move higher throughout the balance of the year.

Speaker Change: Fathons for Comparable Growth will build on the modestly strongly unexpected first quarter results of 2.8% and move higher throughout the balance of the youth.

Unknown Executive: With that, Operator, please open the line for questions. Thank you.

With that operator, please open the line for questions.

Thank you [inaudible]

Unknown Executive: To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key.

Speaker Change: To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. To try your question, please press dragon too.

Unknown Executive: To try a question, please press star then 2.

Unknown Executive: Please limit yourself to one question at a time. If you have further questions, you may re-enter the question.

Speaker Change: Please form yourself to one question at a time. If you have further questions you may read to the question to you.

Jeff Spector: The first question comes from Jeff Spector at Bank of America. Great, thank you.

Speaker Change: The first question comes from Jeff Spector at Bank of America.

Unknown Speaker 0

Great. Thank you.

Speaker Change: Great, thank you. I wanted to see if Wendy could just clarify...

Wendy Seher: I wanted to see if Wendy could just clarify her comment around the mix of deals executed in the quarter, the 2% rate on the new lease rate. Wendy, I think you had some comments on, you know, your expectations of role in the coming quarters. And was there anything particular around and what expired, let's say, in one cue? Any more color you could add to that? Thank you. Yeah, it's mostly timing. We had some deals that hit right after the first quarter versus in the first quarter and It's not always perfect, it does cause a little noise, which I know probably makes Dan crazy, but it's really just noise.

Speaker Change: for comment around the mix of deals executed in the quarter.

Speaker Change: And what expired, let's say, in one queue, any more color you can add to that. Thank you.

Speaker Change: Yeah, it's mostly timing. We had some deals that hit right after the first quarter versus in the first quarter. And, you know,

Speaker Change: It's not always perfect. It does cause a little noise, which I know probably makes Dan crazy, but...

Speaker Change: It's really just noise. The first quarter was a good solid quarter, more normalized than levels than we had last year, which was totally expected.

Wendy Seher: The first quarter was a good, solid quarter, more normalized levels than we had last year, which was totally expected. Good categories between food and sweet greens and honey grow, and beauty is still very... in favor, grocery, furniture, apparel, both full price apparel and value. So it was really a widespread of deals that got Yeah, Jeff, the only thing I would add to that is if the cutoff was April 10, instead of March 31, it would have seemed like a record quarter. So it really is, for a company of our size and what we do, it's a matter of timing.

Speaker Change: Good categories between foods, and sweet greens, and honey grown, and beauty is still very...

Speaker Change: in favor, grocery furniture, apparel, both well-priced apparel and value. So it was really a widespread of deals that got signed.

Speaker Change: Yes, the only thing I would add to that is that the cutoff was April 10th instead of March 31st to seem like a record quarter. So it really is for a company of our size and what we do just a, it's a matter of timing, all good for the year.

Donald Wood: All good for the year.

Michael Goldsmith: The next question is from Michael Goldsmith at UBS. Good afternoon. Thanks a lot for taking my question. Two and a half, 2.8% Same-Store NLI growth in the quarter, the guidance for the year is 3 to 4%.

The next question is from Michael Goldsmith at UBS.

Michael Goldsmith: Good afternoon, thanks a lot for taking my question. 2.8% seems to have been in a lot of growth in the quarter, the guidance for the years, 3 to 4%. So can you get a walk through some of the factors that's going to drive the acceleration that seems to analyze through the balance of the year to hit the guidance range?

Wendy Seher: So can you kind of walk through some of the factors that's going to drive the acceleration of Same-Store NLI through the balance of the year to hit the guidance range? Yeah, I think the biggest driver is going to be, you know, continued gains in occupancy over the course of the year. That would be, you know, our primary driver of getting us up into that three to four percent range. And, you know, we had fully expected, actually expected a weaker first quarter. But occupancy is going to be the big driver there. And obviously, Michael, that is on leases that have already been done and will simply get open.

Michael Goldsmith: Yeah, I think the biggest driver is going to be continued gains in occupancy over the course of the year.

Michael Goldsmith: That would be the primary driver of getting us up into that 3-4% range and we had fully expected, actually expected a week or first quarter, but occupancy is going to be the...

Michael Goldsmith: Big driver there. And obviously Michael, that is on leases that have already been done. And we'll simply get open, so that's not speculative.

Wendy Seher: So that's not speculation.

Michael Griffin: The next question comes from Michael Griffin at Evercore ISI. Great, thanks. Maybe just some more color on sort of the concessions that you saw in the quarter. You know, if I look at the kind of comparable leases of about $370,000, you know, the TIs, we'll call it, you know, $19, $20, something like that, versus the total pool of $430,000 leases signed where TIs were, you know, in the high 20s. So I guess on that non-comparable segment, can you give us a sense of maybe why those TIs are elevated? It sounds like some leases were signed and some of the office projects, maybe that contributed to it.

The next question comes from Michael Griffin at Evercore ISI.

Michael Goldsmith: The total pool of 430,000 leases signed where TI's were, you know, in the high 20's. So, I guess on that non-comparable segment can you give us a sense of maybe why those TI's are elevated? It sounds like some leases were signed and some of the office projects, maybe that contributed to it, but just what's the concessionary environment look like and any color you can provide there would be helpful. Thank you very much.

Wendy Seher: But just what's the concessionary environment look like? And any color you can provide there would be helpful. Yeah, that's just driven by one deal, you know, with a tenant that we are giving a reasonable concession to. That happens in the business. Good, strong deal with Lifetime Fitness. And feel really excited about having them join the ranks of Santana Row and bringing that category to really further enhance the offering there.

Michael Goldsmith: That's just driven by one deal with the tenant.

Michael Goldsmith: that we are giving a reasonable concession to. That happens in the business, good strong deal with lifetime fitness.

Speaker Change: And I feel really excited about having them join the ranks of Santana Ro and bringing that category to really further enhance the offering there.

Donald Wood: I don't know if, Don, you have anything you want to add? No, I just want to add that there's a deal there that we can't talk about completely. We could talk about the Lifetime deal, but not effectively the other side of that deal and where it's going. I'm very excited to tell you about that when I can, which will be a month or two, probably by the time Nareed comes along. One of the best deals we've ever done, certainly there's a concession, if you will, in that particular deal, but it's for an entire building. And this makes all the economic sense in the world.

Um...

Speaker Change: I don't know if Dawn, do you have anything you want to know? I just wanted to add, there's that deal there that we can't talk about completely. We could go about the lifetime deal but not affect the way the other side of that deal and...

Speaker Change: where it's going. I'm very excited to tell you about that when I can, which will be a month or two probably by the time they

Speaker Change: There's a concession, if you will, in that particular deal, but it's for an entire building.

Speaker Change: and this makes all the economic sense in the world. So, don't look at concessions as being a, you know...

Wendy Seher: So don't look at concessions as being a, you know, TIs going up as being anything more than that particular deal. In fact, we're really proud of how we've been able to lever the supply-demand dynamic out there to be able to get TIs as low as they are. And I think when you see that, see where we are, you'll see those numbers are lower than they've been in quite some time. Yeah, being on the comparable pool, inside of $20 and overall at $15, including kind of everything, it's probably one of the best results we've had in a while.

Speaker Change: T.I. is going up as being anything more than that particular deal. In fact, we're really proud of how we've been able to deliver.

Speaker Change: The supply demand dynamic out there to be able to get TI's as low as they are and I think when you see that, see where we are, you'll see those numbers are lower than they've been in quite some time.

Daniel Guglielmone: Incident of $20 and overall at $15, including kind of everything, it's probably one of the best results we've had in a while.

Craig Mailman: The next question comes from Craig Mailman at... Hey, can I just clarify the distance you have in the market? Was it 250 overall with 150 under contract? And also just use of proceeds there? Is that could that be earmarked for buybacks? Or you guys kind of have that earmarked for for the development pipeline? Yeah, we currently have 250 in the market. 150 is under contract. You heard that correctly. Proceeds there and we'll see what gets done. We're optimistic on them, but we'll see. We also have a big I think stable of properties we consider bringing to market further along in the year as well.

Daniel Guglielmone, Unknown Executive, Leah Brady

The next question comes from Craig Mailman at City

Unknown Speaker Hey, um,

Can I just clarify the-

Speaker Change: The distance you have in the market was at 250 overall with 150 under contract

Daniel Guglielmone: and also just the use of proceeds there. Could that be earmarked for a buyback for you guys?

kind of have that earmarked for the development pipeline.

Daniel Guglielmone: Yeah, we currently have 250 in the market. 150 is under contract. You heard that correctly. Proceeds there and we'll see. Yeah, what gets done. We're optimistic on them, but we'll see. We also have a big...

Daniel Guglielmone: I think stable of properties we consider bringing a market. [inaudible]

Daniel Guglielmone: Further along in the year as well. And I think we'll be opportunistic. I think we've demonstrated in our history a discipline in terms of deploying capital in a risk-adjusted way that is...

Donald Wood: And I think we'll be opportunistic. I think we've demonstrated in our history a discipline in terms of deploying capital in a risk-adjusted way that is very beneficial to shareholders, beneficial to FFO per share in the first year and on a long-term basis. And I would not be surprised if the opportunity arose. We could look. I don't think we'd do it today. But at the right stock price, we would absolutely buy back shares through our buyback alternative.

Daniel Guglielmone: is very beneficial to shareholders, beneficial to FUP over share in the first year and on a long-term basis.

Daniel Guglielmone: And I would not be surprised if the opportunity arose. We could look. I don't think we'd do it today. But at the right stock price, we would absolutely buy back shares through our buy back authorization.

Donald Wood: Yeah, and just of course, I have to add something to it, if you don't mind. And that is, look, we've gotten now our debt to EBITDA to a place I'm very comfortable with. Frankly, mid-five is very proud of where that is and how we've gotten to that point. That means that proceeds from things like asset sales are available for capital allocation to the extent whatever capital allocation scenario makes the most sense. That certainly can be acquisitions. It certainly can be the right kind of development, although that's obviously the hardest to get to right now. Or it could be shares.

Speaker Change: Yeah, and just of course I have to add something to it if you don't mind. And that is look at...

Speaker Change: We've gotten our debt to EBITDA to a place I'm very comfortable with, frankly, midfives, very proud.

Speaker Change: of where that is and how we've gotten to that point, that means. [inaudible]

Speaker Change: that proceeds from things like assets sales are available for capital allocation to the extent whatever capital allocation scenario makes the most sense.

That certainly can be acquisitions, it certainly can be.

Speaker Change: The right kind of development, although that's obviously the hardest to get to right now, or it could be shares.

And look, there has to be a...

Donald Wood: And look, there has to be a spread, if you will, that's decent between the share price and what an acquisition opportunity is. That's not a one-for-one thing. Our business is to grow this company, and we need to do that aggressively. But when that gets too wide, then that's our best investment. So I hope that's helpful in terms of framing.

Speaker Change: Yeah, spread, if you will. That's decent between the chair price and what an acquisition opportunity is. That's not a one-for-one thing. Our business is to grow this company and we need to do that aggressively.

Speaker Change: But when that gets too wide, then that's our best investment. So I hope that's helpful in terms of framing this.

Juan Sanabria: The next question comes from Juan Sanabria at BMO Capital Markets. Hi, good afternoon, and thanks for the time.

Speaker Change: The next question comes from Juan Sanabria at BMO Capital Markets.

Juan Sanabria: Hi, good afternoon and thanks for the time. I'm just hoping you could talk a little bit more about the performance in DC, I recognize.

Donald Wood: I'm just hoping you could talk a little bit more about the performance in D.C. I recognize that foot traffic is up, but I believe there was some mention of sales and company performance in the federal stores versus company-wise statistics. But are sales in the D.C. area holding firm, or have you seen basket sizes come down? And if you have any thoughts or data you could share around restaurant performance in particular, that'd be super helpful. Thank you.

Performance in the Federal Store's Roses

Juan Sanabria: company-wise statistics. But are sales in the DC area holding firm or have you seen basket sizes come down? And if you have any thoughts or data you can share around restaurant performance in particular, that would be super helpful. Thank you.

Donald Wood: Yeah, Juan, let me let me give you a couple of couple of things about this. And Wendy, obviously, feel free to jump in here. Look, we don't get sales reporting all that, you know, on time. So I can't tell you what sales were last week or last, you know, two weeks from that, two weeks ago, or whatever. I can tell you that that the wintertime was soft with bad weather, it was soft everywhere, and did not see a discernible difference between DC, springtime came, boom. And we see it in the form of traffic, I expect to see it in in the form of sales once once sales are reported.

Speaker Change: Yeah, Juan, let me give you a couple of things about this and when they obviously feel free to jump in here. Look, we don't get sales reporting all that.

Speaker Change: You know, on on time, so I can't tell you what's the last week or last week

Speaker Change: You know, two weeks from that, two weeks ago, or whatever, I can tell you that that...

Speaker Change: The winter time was soft with bad weather. It was soft everywhere. And did not see a discernible difference between DC. Spring time came, boom.

Speaker Change: And we see it in the form of traffic. I expect to see it in the form of sales once sales are reported also. I think that's good stuff. There's a broader comment that a conversation I want to have with you here, though. And that is...

Donald Wood: Also, I think that's good stuff.

Donald Wood: There's a broader comment that I conversation I want to have with you here, though. And that is, you know, headlines are one thing. Don't short DC. And don't short DC. And when I say that, I'm obviously referring to our particular portfolio. But I think, frankly, it's even broader than that. When you think about about, you know, the the long term places to live, where there are great schools, where there is great infrastructure. This place beats most places in the country by a lot. And it's not although federal government is an important part of what's happening.

You know headlines are one thing. Don't short DC

Speaker Change: And don't you see, and when I say that, I'm obviously referring to heart particular portfolio, but I think frankly it's even broader than that. When you think about, you know, DZ...

Speaker Change: Long-term places to live where there are great schools where there is great infrastructure

Speaker Change: This place beats most places in the country by a lot, and it's not, although Federal Government is an important part of what's happened and this is not a one industry town, anyway you look at it, banking, finance, real estate, lawyers, I mean lots of them, and they're all busy.

Donald Wood: This is not a one industry town. Anyway, you look at it, banking, finance, real estate, lawyers, I mean, lots of them, and they're all busy. There's a lot of commerce in this place that will fill any type of hit that we ultimately see. And I'm pretty darn confident that I've now lived here 27 years. And it's a very dynamic marketplace. I hope that's helpful.

Speaker Change: There's a lot of commerce in this place that will fill any type of hit that we ultimately see. And I'm pretty darn confident of that. I've now lived here 27 years, and it's a very dynamic marketplace.

Hope this helps you

Connor Mitchell: The next question is from Connor Mitchell of Piper Sandlin. Hey, thanks for taking my question.

Next question is from Connor Mitchell of Piper Sandlin.

Connor Mitchell: Hey, thanks for taking my question. I guess turning to acquisition and maybe just a big picture question. You guys bought Demata in the quarters, pretty good size, and we've kind of seen some other larger acquisition in of Ruteland throughout the first quarter and earnings, et cetera. Just curious, was there anything that kind of spurred this trend towards the larger centers, and then how long do you see this cycle maybe continuing as well?

Donald Wood: I guess turning to acquisitions and maybe just a big picture question. You guys bought Del Monte in the in the quarters, pretty good size. And we've kind of seen some other larger acquisitions in REIT land throughout the first quarter and earnings, etc. Just curious, was there anything that kind of spurred this trend towards the larger centers?

Donald Wood: And then how long do you see this cycle maybe continuing as well? God, it's a great question in terms of how long do you see this cycle. I don't know, but I do know a bunch of things. First of all, we have always looked at larger centers. It's frankly core to what it is that we try to do. Because we view ourselves very much as real estate people with the ability to add density to centers, more of that can happen in a bigger center. There's more opportunities. And so we always are biased, if you will, to the larger size.

Connor Mitchell: God, it's a great question, in terms of how long do you see this cycle? I don't know, but I do know a bunch of things. First of all, we have always looked at larger samples.

Connor Mitchell: Partners, it's frankly core to what it is that we try to do because we view ourselves very much.

as real estate people with the ability to add density.

Connor Mitchell: There's more opportunities, and so we always are biased, if you will, to the larger size. In terms of deals that are getting done and all that...

Donald Wood: In terms of deals that are getting done and all that, just remember the lag in timing. And so stuff that's getting done now is stuff that's been in the works for six months or eight months or whatever it's been. And I tried to say this in my remarks, I think this is really important to figure out. Obviously, I'm saying the sky is blue here. When there is a lack of predictability, how do you underwrite? And so there's only one way to underwrite. When you do that, and that's it, you put more cushion for a different situation.

Just remember the lag in timing.

Connor Mitchell: It's just, I tried to say this in my remarks, I think this is really important to figure out. [inaudible]

Connor Mitchell: Obviously, I'm saying the sky is blue here. When there is a lack of predictability, how do you want to write?

Connor Mitchell: And so there are only one way on the right when you do that and that's it to put more cushion for a different situation. That is where we are today.

Donald Wood: That is where we are today, trying to figure out what kind of IRRs you're actually going to receive if you close on a deal today.

Connor Mitchell: Trying to figure out what kind of IRRs you're actually going to receive if you close on a deal today. If I had my way, I try to get another 30, 60, 90 days of visibility.

Donald Wood: If I had my way, I'd try to get another 30, 60, 90 days of visibility with respect to that marketplace. Because it's all about time, trying to see where this all shakes out. And if it shakes out great, then maybe there's an opportunity or two that got missed. But the downside of that is very, very small, as opposed to if obviously this doesn't shake out as well as it should, the downside is bigger. So I'm looking for time right now.

Connor Mitchell: with respect to that marketplace. So that's all about time, trying to see where this all shakes out. And if it shakes out great, then maybe there's an opportunity or two that got missed.

Connor Mitchell: The downside of that is very small. As opposed to if obviously this doesn't shake out as well.

Connor Mitchell: As it should, the downside is bigger. So I'm looking for time right now and I can't tell you how long but I will tell you that I expect to see something different and have a different point of view or a more informed point of view on the second quarter call.

Donald Wood: And I can't tell you how long, but I will tell you that I expect to see something different and have a different point of view or a more informed point of view on the second quarter call.

Haendel St. Juste: The next question comes from Haendel St. Just at Mizzou Hall. Hi there.

The next question comes from Handle Pages at Mizzou Hall.

Ravi Vaid: Hi there, this is Ravi Vaidya on the line for Haendel. Hope you guys are doing well.

Ravi Vaidya: This is Ravi Vaidya on the line for Haendel. Hope you guys are doing well.

Ravi Vaidya: Can you talk about your acquisition pipeline and any other changes in the transaction markets or any deals falling through or getting retraded? I think there was an accident in Kansas that was mentioned and discussed. And are you seeing any changes in cap rates or risk premiums? Thank you. Yeah, that's a fair question. I'm obviously not going to comment on any deals that we're in the middle of and, you know, that have not been resolved one way or the other that way. And I can tell you that, and Jan is here to add to this, we're looking at a bunch of stuff.

Speaker Change: Can you talk about your acquisition pipeline and any other changes in the transaction markets or any deals falling through or getting retreated? I think there was an accident in Kansas that was mentioned and discussed. And are you seeing any changes in cap rates or risk premiums? Thank you.

Speaker Change: Yeah, that's a fair question. I'm obviously not going to comment on any deals that we're in the middle of and that have not been resolved one way or the other that way. And I can tell you that, and Yannis here to add to this, we're looking at a bunch of stuff.

How best to underwrite it is a question. [inaudible]

Donald Wood: How best to underwrite it is a question. And I think you're going to want us and other people, whoever's buying, to be careful with respect to the underwriting assumptions they're making. So I have not seen deals, the deal flow, in terms of what's available, stop. Whether those deals actually happen or don't happen, time will tell. And I suspect that's different for public buyers than it is for private buyers, to some extent, for some pretty obvious reasons.

Speaker Change: And I think you're going to want us and other people, whoever's buying to be careful with respect to the underwriting assumptions they're making.

Speaker Change: So, I have not seen deals that deal flow in terms of what's available. Stop.

Speaker Change: Whether those deals actually happen or don't happen, time will tell. And I suspect that's different for public buyers than an insurprivate buyers, to some extent for some pretty obvious reasons.

Donald Wood: So, you know, I don't have a lot more to say to that, Jan, in terms of the pipeline. flattened out a little bit. And some sellers have reached down to buyer's expectations. And so right now it's a healthy market, but we'll see what happens. But there's still plenty of opportunities out there. There's a great pipeline that we think is going to be coming, and we're going to have a lot of dry powder, and we're well-positioned to take advantage of it for sure.

Speaker Change: You know, I don't have a lot more to say to that, Jan, in terms of the pipeline, I would say that the transaction market is still pretty strong, there are still deals that are happening and I think the flow of new deals coming out here since April's second has slowed down a little bit I mean

Speaker Change: Don mentioned that, you know, he's looking for time, 30, 60, 90 days. I think that's probably the same thing for some sellers out there for sure.

Speaker Change: and that's, you know, putting a little bit of a new specter on the market itself. So, cap rates feel like they're pretty solid. They perhaps have stopped going down and kind of flattened out a little bit, and some sellers have reached down to buyers' expectations. And so, right now it's a healthy market, but we'll see what happens.

Speaker Change: But there's still plenty of opportunities out there. There's a great pipeline that we think is going to be coming and we're going to have a lot of drive powder and we're well-positioned to take advantage of it for sure. Sure, so.

Greg Mcginniss: The next question comes from Greg McGinnis of Scotiabank. Hey, good evening. Wendy, I'm just trying to reconcile two comments from your opening remarks, one of which was that you're seeing more normalized leasing volume in Q1 given higher occupancy, but also that Q2 is seeing executed leases above the historical pace.

The next question comes from Greg McKinniss' discussion.

Hey, Greening

Wendy Sear: And when the I'm just trying to reconcile two comments from your opening remarks, one of which was

Speaker Change: You're seeing more normalized leasing volume in Q1, given higher occupancy, but also that Q2 is seeing executed leases above the historical pace, so I guess what's kind of the expectation for the year then?

Wendy Seher: So I guess what's kind of the expectation for the year? I think with a lease rate of 95.9%, we're going to continue to see normalized leasing. I think, you know, leasing can be chunky, so you can have, you know, highs and lows and it all kind of measures out, but I think it'll be normalized and healthy. I just don't think you're going to see the, you know, we were doing 30% more lease volume than we historically have ever done, but at almost 96% occupied, I think it's going to be very normal and healthy. Yeah.

Speaker Change: I think with a least rate of 95.9 percent, we're going to continue to see normalized.

Listen, I think, you know, listen can be chunky. [inaudible]

Speaker Change: So, you can have highs and lows and it all kind of measures out but…

Speaker Change: I think it'll be normalized and healthy. I just don't think you're going to see the, you know, we were doing 30% more at least volume than we historically have ever done but at almost 96% occupied.

Speaker Change: I think it's going to be very normal and healthy. Yeah, I mean, what you should expect from us is, and what that means is, I'm 450,000 square feet.

Donald Wood: I mean, what you should expect from us is, and what that means is, I'm 400, 450,000 square feet a quarter on the comparable basis, more when you add in the office and the other stuff to that. What we've been doing is, Wendy said, a bunch more than that. And when you look at the 370, that 370, again, if you made an April 10th deadline, you'd see that back, you know, up at over 450,000 square feet.

Speaker Change: A quarter on the comparable basis, more when you add in the office and the other stuff.

Speaker Change: So that's what we've been doing is when he said a bunch more than that, and when you looked at 370, step 370 again if you made an April 10th.

Speaker Change: Deadline, you'd see that back, you know, up and over four in a 50,000 square feet. So, that's the reconciliation if you wouldn't mind it, very good if you get it in terms of, you know, what normalized is versus what happened in the quarter. [inaudible]

Donald Wood: So that's the reconciliation, if you wouldn't mind, if you get it in terms of, you know, what normalized is versus what happened in the quarter.

Stephen Kammett-Truitt: The next question comes from Stephen Kammett-Truitt. Hey, good afternoon.

The next question comes from Stephen Kermitry. Thank you.

Keegan Canmett-Truitt: Hey, good afternoon. A little bit of a random question for you, Dawn, but do you think...

Donald Wood: A little bit of a random question for you, Dawn, but do you think perhaps managing a mall, owning and managing a mall requires a different skill set or difference in corporate infrastructure than what you have today? Oh man, is that a loaded question? Holy smoke. Look, it's a different business. There is no doubt about that. Certainly more fashion-focused. It's certainly physically very different. It deals with certain different tenants than open-air does. So, yeah, it's a different business. But whether it's better or worse or, you know, I leave that to you guys to assess.

Keegan Canmett-Truitt: Perhaps managing a mall, owning and managing a mall requires a different skill set or difference in corporate infrastructure than what you have today.

Keegan Canmett-Truitt: Oh, man, is that a loaded question? Holy smoke. Look, it's a different business. There is no doubt about that. [inaudible]

Unknown Executive, Leah Brady

And that's really all I have to say about that.

Donald Wood: And that's really all I have to say about that.

Floris Dijkum: The next question comes from Floris and Dijkum. Hey guys, thanks for taking my question. Getting back on the capital allocation topic, Dawn, maybe if you could talk about, I know you've got the buyback authority, you've got asset sales under contract, you got more in the market, your stock is, you know, your implied cap rate is 7%. As you deploy capital towards, as you're choosing between acquisitions and share buybacks, What is your hurdle? I mean, shouldn't shouldn't Any acquisition yield more than 7% and isn't it isn't buying back your stock your lowest risk investment that you could possibly make today or how should people think about that?

The next question, Cultural War, Stand Beacom, Compostate [inaudible]

Hey guys, thanks for taking my question [inaudible]

Getting back on the capital allocation topic [inaudible]

What is your hurdle rate? I mean, shouldn't, shouldn't...

Any acquisition? [inaudible]

Keegan Canmett-Truitt: Healed more than 7% and isn't buying back your stock, your lowest risk investment that you could possibly make today? Or how should people think about that? How do you think about that today? And also maybe talk about the delts of between where you issued stock at in the first quarter and where your stock is trading today? [inaudible]

Donald Wood: How do you think about that today? And and also maybe talk about the delta between where you issued stock at in the first quarter and where your stock is trading today.

Donald Wood: Floris asked a very good question, and I don't think it's as simple as straight math. So the way I look at it, there's a reason that we exist. We are here to put high-quality retail-based products to work to create growth for our owners over the long term. That's what our business plan is. That's what we're darn good at doing. To the extent you can buy something at a 7% yield, but the stock is trading at a 7.1, does that in and of itself say it should buy back stock? No, I don't believe it does, because it's not just about that initial yield.

Keegan Canmett-Truitt: Floris, I ask a very good question, and I don't think it's as simple as straight math.

Keegan Canmett-Truitt: So, the way I look at it, there's a reason that we exist.

We are here to put side-quality retail...

Keegan Canmett-Truitt: of base products to work to create growth for our owners over the long term. That's what our business plan is. That's what we're going good at doing.

Keegan Canmett-Truitt: To the extent you can buy something at a 7% yield, but the stock is trading at a 7-1.

Keegan Canmett-Truitt: Does that in and of itself say you should buy back stock? No, I don't believe it does because it's not just about that initial yield. It's about a long-term business plan, the IRR that you're going to create, etc. It's all matched together. Now, there is a point when that gets too wide. You're going to be able to do it. You're going to be able to do it. You're going to be able to do it.

Donald Wood: It's about the long-term business plan, the IRR that you're going to create, etc. It's all matched together. Now, there is a point when that gets too wide. I can't quantify that exactly for you today, but I can tell you what, when we were trading in the mid $80 range and any acquisition had to be in the mid $60s, that's too wide. I'm hopeful that that is helpful for you. Beyond that, I don't want to do the math for you, because it's more, as I say, than the math there, but that should give you some parameters.

Keegan Canmett-Truitt: I can't quantify that exactly for you today, but I can tell you what, when we were speaking in the $80 range and any acquisition have to be in the mid-sixes

Keegan Canmett-Truitt: That's too white. Okay, so I'm hopeful that that is helpful for you. Beyond that, I don't want to do the math for you because it's more, as they say, than the math there, but that should give you some parameters.

Donald Wood: Gosh, what was the last part of Florida? I think you covered it. You think I covered it? I think you did. All right, Floris. Dan says I covered it.

Keegan Canmett-Truitt: I think you covered it. Do you think I covered it? I think you did. All right, Floris, Dan said I covered it. Thanks from time.

Paulina Rojas: Thanks for the time. The next question comes from Paulina Rojas at CUNY. Good afternoon.

The next question comes from Paulina Rojas at Queen Street.

Paulina Rojas: Good afternoon. What pricing insights in terms of cap rates do you think are fair to draw from the transaction of Legacy West when evaluating your flagship mixed-use assets?

Donald Wood: What pricing insights in terms of cap rates do you think are fair to draw from the transaction of Legacy West when when evaluating your flagship mixed use tax? All right, Dan's pointing at me, Paulina. Look that is a that's a great asset and I think particularly the structure with which they were able to complete that with the combination of private money and public money I think that was I think that's a great deal And I wish them all the best luck. I love the structure with respect to that. I think it does tell you that there are buyers out there that do appreciate how important the integration of uses are to the value of the entire piece of real estate.

All right, Dan's pointing at Big Bullina

Speaker Change: Look, that is a great asset and I think particularly the structure with which they were able to complete that with the combination of private money and public money I think that was a great deal for those guys.

Thanks so much.

Speaker Change: and I wish them all the best luck. I love this structure.

With respect to that, I think it does tell you.

that.

Speaker Change: that there are buyers out there that do appreciate how important the integration of uses are to the value of the entire piece of real estate.

Donald Wood: And that really helps.

That really helps [inaudible]

Donald Wood: And, you know, as you and I have talked many times, it's one of the reasons that I believe that our mixed-use assets, in particular, are not trading the way they should be relative to the private value of those assets. Now, I don't know exactly what the cap rate was. I don't know exactly what the IRR would be with respect to that asset. But I can tell you that, you know, while that's a full price, I think that makes a lot of sense for that particular buyer group.

Speaker Change: And as you and I have talked many times, it's one of the reasons that I believe that our mixed-use assets in particular [inaudible]

Speaker Change: are not trading the way they should be relative to the private value of those assets. Now, I don't know exactly what the cap rate was, I don't know exactly what the IRR...

Speaker Change: With respect to that asset, but I can tell you that, you know, while that's a full price, I think that makes a lot of sense for that particular buyer group.

Michael Malarkey: The next question comes from Mike Malarkey. Yeah, hi. If the consumer really hits a wall, what segments of the portfolio do you think you see the impact first, either in terms of pullback in tenant demand or just tenant stress? Would it be dining or something else? You know, that's that's a it's a fair question to look for the segment. The problem is, I don't think it works like that, Mike. And I can tell you that that our dining segment, our restaurant segment was the best performance segment in the company after the after the GFC. And everybody was worried about that particular segment.

The next question comes from Mike Muller-Jupymore. The next question comes from Mike Muller-Jupymore,

Mike Mullen: Yeah, hi, I guess if the consumer really hits a wall, what segments of the portfolio do you think you see the impact first, either in terms of pullback intended demand or just can't stress? Would it be dining or something else?

Speaker Change: You know, it's a fair question to look for the segment. The problem is, I don't think it works like that.

Speaker Change: Mike, and I can tell you that our dining segment, our restaurant segment, was the best performance segment in the company after the GFC.

And everybody was worried about that particular segment. Why? [inaudible]

Donald Wood: Why? Because in the markets that we're at with the operators, that's that we had with the occupancy ratios that they were able to not only, you know, the room that they had, those occupancy ratios. When you put all that together, that was not a segment that overall was at risk. And so it doesn't really come down, in my view, to the segments as it does to the health of the operator, the health of the occupancy ratio and their ability to withstand what is always a cyclical business. So I don't have a specific place for you, but that's why we spend so much time trying to put the right tenants together, not only in terms of use, but the operators within the type of use that they are.

Speaker Change: because in the markets that we're at, with the operators that said, we had with the occupancy ratios that they were able to not only, you know, the room that they had those occupancy ratios, when you put all that together, that was not a segment that overall was at risk.

Speaker Change: And so it doesn't really come down in my view to the segments as it does to the help of the operator, the help of the occupancy ratio and their ability to withstand what is always a cyclical business.

Speaker Change: So I don't have a specific place for you, but that's why we spend so much time trying to put the right tenants together, not only in terms of use, but the operators within the type of use that they are.

Donald Wood: and also the resilience of the consumers that we have in our markets. And that's why we make the statement and that's why we perform exceptionally well when the broader consumer has hit a wall. As you as you discussed, we perform better because we have stronger. Now higher degrees of affluence, discretionary income, discretionary net worth.

Speaker Change: And also the resilience of the consumers that we have in our markets and that's why we make the statement and that's why we perform exceptionally well when the broader consumer has hit a wall as you discussed.

Higher degrees of excellence, discretionary income, discretionary network.

Daniel Guglielmone: The next question comes from Linda Tsai. Thanks for taking my question. Just on the lower bad debt, was that a function of tenants you didn't expect to pay actually paying, or was that just from lower general bad debt reserves? It was a combination of things. I mean, I think that we, one, we have a lower... level of concern with, you know, bankrupt tenants and surprises, you know, because I think of the strength of our portfolio, the strength of the operators that Don just mentioned. I also think that just, you know, being able to keep tenants in longer and just performing better in terms of, you know, I think, you know, collecting rent and eking out better than we had under it.

Linda Saaija: The next question comes from Linda Tiel Berkes, I'm sorry, Linda Syagin

Linda Saaija: Thanks for taking my question. Just on the lower bad debt, was that a function of tenants you didn't expect to pay, actually paying, or was that just lower from lower general bad debt reserve? [inaudible]

Linda Saaija: It was a combination of things. I mean, I think that we, what we have a lower...

Linda Saaija: Level of concern with, you know, bankrupt tenants and surprises, you know because I think of the strength of our portfolio, the strength of the operators that Don just mentioned.

Linda Saaija: I also think that just, you know, being able to keep tenants in longer.

Linda Saaija: and just performing better in terms of, I think, your collecting rent and eating out better than we had under it.

Daniel Guglielmone: And that utilization of our credit reserve, yeah, was a reason for the outperformance in the quarter.

Linda Saaija: and that utilization of our credit reserve was a reason for the outperformance in the quarter.

Thank you for joining us. Thank you.

Unknown Executive: Operator. We done? Looks like, Manny. There's one more question. Operator, are you there? We lost our operator. Greg, are you there? Greg, we can give you a call after to follow up on your question. Oh, ask it. Oh, great. Hi. So yeah, for a follow up, thank you very much for taking it.

Manny: We don't. Looks like maybe there's one more question. Operator, are you there?

We lost our operator.

Speaker Change: Greg, we can give you a call after to follow up on your question.

Thank you. Hello. Oh, ask it. Oh, great. Hi Thank you.

Speaker Change: So, yeah, for a follow-up, thank you very much for taking it. You talked about the changes in underwriting that you're having to do on, you know, acquisitions and how the environment has changed. I'm curious how that has impacted your view on, you know...

Greg Mcginniss: You talked about the changes and underwriting that you're having to do on, you know, acquisitions and how the environment has changed. I'm curious how that has impacted your view on redevelopments or residential development that you talked about adding some projects to the pipeline over the Yeah, Greg, it's a great question. And there's a couple of things in there. The first is obviously, when you're talking about adding residential developments to our existing assets, the question is at what cost. And so the absence of understanding construction costs, given the tariffs right now, that's a problem. And certainly that creates, you know, a lack of predictability there.

Speaker Change: Redevelopments or residential development that you talk about adding some projects to the pipeline over this year and next.

Speaker Change: Yeah, Greg, it's a great question, and there's a couple of things in there. The first is obviously, when you're talking about adding residential developments to our existing assets, the question is that what cost?

Speaker Change: And so the absence of understanding construction costs given the tariffs right now, that's a problem.

Donald Wood: Now, we are, we have just started and moved forward with Hoboken, which is a residential over retail development that Frankly, we had gotten the cost locked in, or 90% of the cost locked in before April 2nd. And so, that was important for us to go. And that, by the way, is a concrete building, so there's less of the volatility associated with that. You're talking about a stick-built building right now? Yeah. That's harder to understand if you're getting your lumber from Canada and you're getting your appliances from China. So, until there is better clarity on that so that we can lock in costs before we go, that's a harder thing for us to deal with than for anybody else to deal with, obviously.

Frankly, we had gotten the cost locked in.

or 90% of the cost locked in before April 2nd.

Speaker Change: And so, that was important for us to go. And that, by the way, is a concrete building. So, there's less of the volatility associated with that. You're talking about a stick building right now? Yeah. That's harder to understand if you're getting your lumber from-

Speaker Change: Canada, and you're getting your appliances from China. So until there is better...

Speaker Change: Clarity on that so that we can lock in costs before we go, that's a harder thing for us to deal with anybody else to deal with obviously.

Donald Wood: In terms of acquisitions, the underwriting goes – you look at – you run a downward scenario. It's not just your particular scenario. You've got to look at an economy that, to the extent it gets weaker, what would that do to the rent roll? You know, you probably apply your purchase price to that. Also, because IRRs, and IRRs are important to us, would be impacted most in a downward scenario by the next couple of years, those first few years in a 10-year IRR are disproportionately impactful. And so that needs to be considered at a time when you have less...

Speaker Change: in terms of acquisitions. The underwriting goes, you look at it, you run a downward scenario. [inaudible]

Speaker Change: Because IRRs and IRRs are more important to us would be impacted most in a downward scenario by the next couple of years, those first few years in a 10-year IRR are disproportionately impactful.

Speaker Change: And so that needs to be considered at a time when you have less less

Donald Wood: You know, vision here.

You know, vision here.

Jill Sawyer: This concludes our question and answer session. I would like to turn the conference back over to Jill Fleer for any closing remarks. I look forward to seeing many of you at the next few weeks in the upcoming conferences. Thank you for joining us today.

Speaker Change: This concludes our question and answer session, and we'd like to turn the conference back over to Delphalia for any closing remarks.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect

Unknown Executive: You may now disconnect.

Speaker Change: Unknown Executive, Leah Brady Unknown Executive, Leah Brady Unknown Executive, Leah Brady

Speaker Change: [music].