Q1 2025 Acadia Realty Trust Earnings Call

Operator: Good day and thank you for standing by.

Good day and thank you for standing by welcome to the Cardio Realty Trust first quarter 2025 earnings Conference call.

Operator: Welcome to the Acadia Realty Trust's first quarter 2025 earnings conference call. At this time, all participants are on listen-only mode. After the speaker's presentation, there will be a question and answer session.

At this time, all participants are in listen only mode.

The speaker's presentation there'll be a question answer session.

Operator: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.

To ask a question during the session you will need to press star one on your telephone.

Speaker Change: Jordan you automated message about your hand this race to withdraw your question. Please press star one again.

Operator: Please be advised that today's conference is being recorded.

Please be advised that today's conference is being recorded.

Chantal Vlas: I would like to hand the conference over to our first speaker today, Chantal Vlas, Director of Leasing. Please go ahead.

Chuck: Like the hand conference over to your first speaker today, Chuck <unk> director of <unk>. Please go ahead.

Chantal Vlas: Good afternoon, and thank you for joining us for the first quarter 2025 Acadia Realty Trust earnings conference call. My name is Chantal Voss, and I am Director of Leasing in our Leasing Department.

Speaker Change: Good afternoon, and thank you for joining us for the first quarter of 2025, Acadia Realty Trust earnings Conference call. My name is Paul Vos and I'm director of leasing and our leasing department before we begin please be aware that statements made during the call that are not historical maybe deemed forward looking statements.

Chantal Vlas: Before we begin, please be aware that statements made during the call that are not historical may be deemed forward looking statements within the meeting of the Securities and Exchange Act of 1934. And actual results may differ materially from those indicated by such forward looking statements. due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic filings with the SEC. Forward-looking statements speak only as of the date of this call, April 30, 2025, and the company undertakes no duty to update.

Speaker Change: Within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward looking statements.

Speaker Change: Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K, and other periodic filings with the SEC forward looking statements speak only as of the date of this call April 30th 2025, and the company undertakes no duty to update them.

Chantal Vlas: During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

Speaker Change: During this call management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see the earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

Chantal Vlas: Once the call becomes open for questions, we ask that you limit your first round to two questions per caller to give everyone the opportunity to participate. You may ask further questions by reinserting yourself into the queue, and we will answer as time permits.

Speaker Change: Once the call becomes open for questions. We ask that you limit your first round to two questions per caller to give everyone the opportunity to participate you.

Speaker Change: You may ask further questions by Reinsert yourself into the queue and we will answer as time permits.

Kenneth Bernstein: Now it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks. Thank you, Shantel. Welcome, everyone. notwithstanding significant volatility in the capital market. increased uncertainty for the overall economy.

Speaker Change: Now it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer will begin today's management remarks.

Speaker Change: Welcome everyone.

Speaker Change: Notwithstanding significant volatility in the capital markets and increased uncertainty for the overall economy.

Kenneth Bernstein: look at the key drivers of our business. that they continued to deliver in the first quarter, and more importantly as we look forward. Please see the complete disclaimer at https://sites.google.com.au The first and most significant driver for our business is our internal growth, primarily from the street retail segment of our portfolio. We saw this outsized growth again in the first quarter. And as A.J. Levine will discuss, with a nice combination of long-term contractual growth. incremental lease up, we see no signs of slowness. Now retailers are certainly not ignoring the current challenges around tariffs and the economy.

Speaker Change: We look at the key drivers of our business.

Speaker Change: We see that they continued to deliver in the first quarter.

Speaker Change: More importantly, as we look forward, we see this momentum continuing.

Speaker Change: The first and most significant driver for our business is our internal growth primarily from the street retail segment of our portfolio.

Speaker Change: We saw this outsized growth again in the first quarter.

Speaker Change: And as Jay Levine will discuss with a nice combination of long term contractual growth and.

Speaker Change: An incremental lease up we see no signs of slowdown.

Speaker Change: Now retailers are certainly not ignoring the current challenges around tariffs and the economy, but in discussions with our retailers. They are moving ahead with their leasing needs, especially for mission critical locations like those in our portfolio.

Kenneth Bernstein: But in discussions with our retailers... They are moving ahead with their leasing needs, especially from mission-critical locations like those in our portfolio. This continued momentum in leasing is likely due to a combination of the lack of new high quality supply, then along with several longer term or secular demand tailwinds. that our industry is experiencing, especially for street retail.

Speaker Change: This continued momentum in leasing is likely due to a combination of the lack of new high quality suppliers.

Speaker Change: Along with several longer term or secular demand tailwind.

Speaker Change: Our industry is experiencing especially for street retail.

Kenneth Bernstein: We have discussed these tailwinds on previous calls, but in short. Strong tenant demand we have seen over the past couple of years was not just a COVID recovery. It was coming from retailers recognizing the increased importance. of having their own physical store in an omni-channel world, both for relevancy and Profitability. prior years. Retailers and leading brands could rely on selling just through departments. or just online or just in mall. Now, for most brands to be relevant, they must have stores in the key shopping corridors where they can connect directly with their customers. Our retailers are telling us that while online sales will remain important, they need to continue to build out their fleet of stores that meet this direct-to-consumer need.

Speaker Change: We have discussed these tailwind as on previous calls but in short.

Speaker Change: The strong tenant demand we have seen over the past couple of years.

Speaker Change: It was not just a COVID-19 recovery it was coming from retailers recognizing the increased importance.

Speaker Change: Of having their own physical store.

Speaker Change: In an Omnichannel world.

Speaker Change: Both for relevancy.

Speaker Change: And profitability.

Speaker Change: In prior years.

Speaker Change: Retailers and leading brands could rely on selling.

Speaker Change: Selling just through department stores, or just online or just in malls.

Speaker Change: Now the most brands to be relevant they must have stores in the key shopping Carter's where they can connect directly with their customer.

Speaker Change: Our retailers are telling us that while online sales will remain important they need to continue to build out their fleet of stores that meet this direct to consumer need.

Kenneth Bernstein: These tours are especially critical in the must-have high conviction corridors that dominate our street retail portfolio.

Speaker Change: These stores are especially critical in the must have high conviction carters that dominate our street retail portfolio.

Kenneth Bernstein: Now we appreciate that there are increased concerns around both inflationary pressures from tariffs and simultaneously an economic slowdown. creating so-called stagflation. In terms of the inflationary side of the equation, given that this is a policy-driven inflationary disruption, it is subject to very sudden changes and corrections. and to the extent that the ultimate impact from the final tariff policy changes are more moderate, which is what is generally anticipated, those inflationary pressures will likely be highly disruptive in the short term, but then more of a one-time increase in cost of goods once the uncertainty settles down. Now, the sooner that this is resolved, the better, since the risk of a policy-driven recession increases, the longer that this continues.

Speaker Change: Now we appreciate that there are increased concerns around both inflationary pressures from tariffs.

Speaker Change: And simultaneously and.

Speaker Change: Economic slowdown.

Speaker Change: Creating so called stagflation.

Speaker Change: Terms of the inflationary side of the equation given that this is a policy driven inflationary disruption. It is subject to a very sudden changes and corrections.

Speaker Change: And to the extent that the ultimate impact from the final tariff policy changes are more moderate which is what is generally anticipated those inflationary pressures will likely be highly disruptive in the short term.

Speaker Change: But then more of a one time increase in cost of goods once the uncertainty settles down.

Speaker Change: Now the sooner that this is resolved the better since the risk of our policy driven recession increases the longer that this continues but most of our retailers are telling us that they are prepared to navigate this volatility and keep in mind.

Kenneth Bernstein: But most of our retailers are telling us that they are prepared to navigate this volatility. And keep in mind... Cost increases, in and of themselves, are not necessarily a headwind. As we saw in 2022, when inflation and supply chain disruptions were met with strong demand... It was actually a tailwind for top-line tenant sales, and that also translated through into growth in market rent. All things equal will take inflation over deflation as long as demand remains stable. So while not ignoring the challenges to retailers, margins, or supply chain issues. It is a long-term decline in demand.

Speaker Change: Cost increases in and of themselves are not necessarily a headwind as we saw in 2022, when inflation and supply chain disruptions were met with strong demand.

Speaker Change: It was actually a tailwind for topline tenant sales and that also translated through into growth in market rents all things equal will take inflation over deflation as long as demand remains stable.

Speaker Change: So while not ignoring the challenges to retailers margins or supply chain issues.

Speaker Change: It is a long term decline in demand.

Kenneth Bernstein: that would be more of a concern. and we're watching this carefully.

Speaker Change: That would be more of a concern.

Kenneth Bernstein: Here's what we're seeing so far. Consumer spending has remained surprisingly resilient to date, especially for the more affluent communities. The declining consumer sentiment could predict a decline in spending and a recession. The Consumer Sentiment Surveys are more often misleading indicators as opposed to leading indicators. We also appreciate that discretionary retail in general might fare worse in a recession. But the consumers served by our tenants in our must-have markets tend to be some of the most affluent in our economy, and their spending habits tend not to correlate as closely with these broader economic indicators.

Speaker Change: And we're watching this carefully here's what we're seeing so far.

Speaker Change: Consumer spending has remained surprisingly resilient to date, especially for the more affluent consumer.

Speaker Change: The decline in consumer sentiment could predict the decline in spending in a recession.

Speaker Change: But consumer sentiment surveys or more often misleading indicators as opposed to leading indicators.

Speaker Change: We also appreciate that discretionary retail in general might fare worse in a recession.

Speaker Change: But the consumers served by our tenants in our must have markets tend to be some of the most wanted our economy and their spending habits tend not to correlate as closely with these broader economic indicators.

Kenneth Bernstein: Most importantly, Economic cycles and slowdowns are inevitable. and tenants prepare for them, and we do as well. When a tenant signs a 10-year lease, they know that they are subject to these inevitable cycles. Thus, the feedback from our tenants as to why they are continuing full speed ahead makes sense. and given the limited new supply, barring a significant worsening of economic forecasts. Tenants tell us that they expect to continue with their growth.

Speaker Change: Most importantly.

Speaker Change: Economic cycles and slowdown are inevitable.

Speaker Change: And tenants prepare for them.

Speaker Change: And we do as well.

Speaker Change: When a tenant signed a 10 year lease they know that they are subject to these inevitable cycles.

Speaker Change: The feedback from our tenants as to why they are continuing full speed ahead makes sense.

Speaker Change: And given the limited new supply barring a significant worsening of economic forecasts.

Speaker Change: Tenants tell us that they expect to continue with their growth plans.

Kenneth Bernstein: Second key driver of our business is external. In the first quarter, we were quite productive and looking forward, we see this momentum also remaining intact.

Speaker Change: Second key driver of our business is external growth.

Speaker Change: In the first quarter, we were quite productive and looking forward. We see this momentum also remaining intact.

Kenneth Bernstein: Reggie will discuss our most recent acquisitions and how they continue to meet our goals, but taking a step back. Our external growth goals and focus remain, as we have discussed on prior calls. First, for on-balance sheet acquisitions, our goal is to add street retail properties consistent with our focus of being a dominant owner-operator of street retail in key mission-critical corridors, corridors where our shareholders will benefit from the scale and operating leverage that we are already beginning to see in several of our markets, including Georgetown. Armitage Avenue, and now North 6th Street and Williams. We will make sure that these additions are accretive, both from an earnings and a portfolio enhancement perspective, and that they continue to drive our superior long-term NOI growth Then second, with respect to our investment management platform.

Speaker Change: <unk> will discuss our most recent acquisitions and how they continue to meet our goals, but taking a step back.

Speaker Change: Our external growth goals and focus remain.

Speaker Change: As we have discussed on prior calls first for on balance sheet acquisitions. Our goal is to add street retail properties consistent with our focus of being a dominant owner operator of street retail in key mission critical Carter's Carter's where our shareholders will benefit from the scale and operating leverage.

Speaker Change: That we are.

Speaker Change: We're already beginning to see in several of our markets, including Georgetown.

Speaker Change: Armitage Avenue and now North sixth Street in Williamsburg.

Speaker Change: We will make sure that these additions are accretive both from an earnings and a portfolio enhancement perspective and that they continue to drive our superior long term NOI growth goals.

Speaker Change: Then second with respect to our investment management platform.

Kenneth Bernstein: Our focus will remain to opportunistically add assets utilizing our core competencies in open-air retail. and Leveraging Our Institutional Capital Relations. over the last 12 months. We have closed over $800 million of acquisitions. About half being street retail properties for our core portfolio, and then the other half were transactions for our investment management. That transaction volume is a significant needle mover for a company of our size. We recognize that in connection with the current volatility in the market. Cost of capital is increasing. It is true for private buyers, who are generally seeing their cost of secure debt increase, and public companies like ours, who have seen an impact on our cost of equity.

Speaker Change: Our focus will remain to Opportunistically add.

Speaker Change: I'd assets utilizing our core competencies in open air retail.

Speaker Change: And leveraging our institutional capital relationships over the last 12 months.

Speaker Change: We have closed over $800 million of acquisitions about half being street retail properties for our core portfolio and then the other half were transactions for our investment management business.

Speaker Change: That transaction volume is a significant needle mover for a company of our size.

Speaker Change: We recognize that in connection with the current volatility in the market.

Speaker Change: Cost of capital has increased.

Speaker Change: It is true for private buyers, who were generally seeing their cost of secured debt increase and pump public companies like ours, who have seen an impact on our cost of equity, but we don't see this materially sidelining or external growth for a few reasons first with respect to core acquisitions, given the strength of our balance sheet enhanced by having raised.

Kenneth Bernstein: But we don't see this materially sidelining our external growth for a few reasons. First, with Spectacore acquisitions, given the strength of our balance sheet, enhanced by having raised approximately $800 million last year and to date, we can weather the volatility, and then opportunistically invest during this period. and given that there is substantially less bidding competition for street retail. than other formats of open-air retail, we will stay focused on motivated sellers. who are prepared to transact. As Reggie will walk through, the majority of our transactions were negotiated either off-market or in conjunction with our buying-out existing partners.

Speaker Change: <unk> $800 million last year and to date, we can weather the volatility and then opportunistically invest during this period.

Speaker Change: And given that there is substantially less bidding competition for street retail.

Speaker Change: Then other formats of open air retail, we will stay focused on motivated sellers.

Speaker Change: Who are prepared to transact.

Speaker Change: As Rajiv will walk through the majority of our transactions were negotiated either off market or in conjunction with our buying out existing partners and we have found sellers, who are ready to transact today and have been reasonable and take into account the current market volatility.

Kenneth Bernstein: And we have found sellers who are ready to transact today and have been reasonable in taking into account the current market volatility. And then for our investment management platform, where we utilize capital from our private institutional partners, the volatility and headwinds in the public market. probably our net profit.

Speaker Change: And then for our investment management platform, where we utilized capital from our private institutional partners, the volatility and headwinds in the public markets.

Speaker Change: Probably are a net positive.

Kenneth Bernstein: So in short, we don't wish for this current volatility, but it is very likely to create some additional buying opportunities both for our street retail investments and our investment management platform.

So in short we don't wish for this current volatility, but it is very likely to create some additional buying opportunities both for our street retail investments and our investment management platform.

Kenneth Bernstein: Then finally, with respect to our balance sheet, our leverage and other metrics are right where we want them.

Speaker Change: Then finally with respect to our balance sheet, our leverage and other metrics are right, where we want them and as John Gottfried will discuss.

Kenneth Bernstein: And as John Gottfried will discuss. dry powder to continue to execute our growth.

Speaker Change: We have dry powder to continue to execute our growth plan and with that I'd like to thank the team for their hard work last quarter and turn the call over to a J let me.

A.J. Lee: And with that, I'd like to thank the team for their hard work last quarter, and turn the call over to A.J. Lee. Thanks Ken. Good afternoon, everyone. So Ken touched on many of the secular trends that continue to drive our internal growth. And I want to build on that by sharing what we're seeing firsthand, both within our portfolio and on the ground on our scale that we continue to build across some of the most mission-critical corridors for our tenants, including Williamsburg and Brooklyn, M Street and Georgetown, Henderson Avenue in Dallas, SoHo in New York, and most recently in the Flatiron Union Square neighborhood in Manhattan.

A J: Thanks, Ken good afternoon, everyone. So.

A J: So Ken touched on many of the secular trends that continue to drive our internal growth and I want to build on that by sharing what we are seeing firsthand both within our portfolio and on the ground on our streets.

A J: With the scale that we continue to build across some of the most mission critical corridor for our tenants, including Williamsburg, Brooklyn M Street in Georgetown Henderson Avenue in Dallas as Soho in New York and most recently in the Flatiron Union Square neighborhood in Manhattan, we benefit from unique visibility into a wide spectrum of tenant performance and fundamentals.

A.J. Lee: We benefit from unique visibility into a wide spectrum of tenant performance and fundamentals. And what the data is telling us, and just as importantly, what our tenants are telling us, is that our core consumer continues to spend. And there has been no meaningful change in plans around long-term growth. In fact, our leasing velocity and sign-not-open pipeline are both accelerating, and none of our top retailers are signaling any signs of a slowdown. To that end, so far this year, we've signed new core leases totaling over $5 million in ABR with 95% of that income coming from our streets, which will continue to provide the highest contractual growth moving forward.

A J: <unk>.

A J: And what the data is telling us and just as importantly, what our tenants are telling us is that our core consumer continues to spend.

A J: And there has been no meaningful change in plans around long term growth.

A J: In fact, our leasing velocity and signed not open pipeline are both accelerating and none of our top retailers are signaling any signs of a slowdown.

A J: To that end so far this year, we've signed new core leases totaling over $5 million in ABR with 95% of that income coming from our streets, which will continue to provide the highest contractual growth moving forward.

A.J. Lee: That includes over a million dollars in new leases for the month of April, which puts us well ahead of our pace from last year. And with a robust leasing pipeline of over $6 million of additional leases in advanced stages of negotiation, it is reasonable to conclude that barring the unforeseen, we will exceed last year's record leasing volume of $12.5 million. In fact, we've already done all of the leasing we need to hit our stated goals for 2025, but of course it's only April and we still have plenty of time to build on that momentum. Now similar to our tenants, the relatively affluent consumer that chops our streets also shows no signs of slowing down.

A J: That includes over $1 million in new leases for the month of April which puts US well ahead of our pace from last year.

A J: And with a robust leasing pipeline of over $6 million of additional leases in advanced stages of negotiation. It is reasonable to conclude that barring the unforeseen we will exceed last year's record leasing volume of $12 $5 million.

A J: In fact, we've already done all of the leasing we need to hit our stated goals for 2025, but of course, it's only April and we still have plenty of time to build on that momentum.

A J: Now similar to our tenants the relatively affluent consumer that shops. Our streets also shows no signs of slowing down.

A.J. Lee: Looking at Q125 versus Q124, we've seen double digit sales growth on average across key street markets like Soho, the Gold Coast, Armitage Avenue, and MGM. When we look at our brands, like a well-known athleisure tenant that operates multiple stores in our portfolio, we see sales that continue to significantly outpace the broader market. It's important to remember who our core customers are. Whether it's the Fiori or Givenchy shopper in Soho, the Saint Laurent and Veronica Beard customer on the Gold Coast. Chloe, an Oscar De Laurentiis shopper on Melrose Place, or The Aritzia, an Aloe Yoga faithful on MGM.

A J: Looking at Q1, 'twenty five versus Q1, 'twenty four we've seen double digit sales growth on average across key street markets like Soho, The gold Coast Armitage Avenue and M Street.

A J: When we look at our brands like a well known athleisure tenant that operates multiple stores in our portfolio. We see sales that continued to significantly outpace the broader market.

A J: It is important to remember who our core customers.

A J: Whether it's the purity of the <unk> shopper in Soho, the Saint Laurent and Veronica beard customer on the gold coast, the Chloe and Oscar de La Renta shopper on Melrose place or the Auryxia and Allo yoga faithful on M Street, our core consumer is a high earning gainfully employed homeowner that has consistently proven to be the most resilient and best equipped.

A.J. Lee: Our core consumer is a high-earning, gainfully-employed homeowner that has consistently proven to be the most resilient and best-equipped demographic to absorb price increases, whether those increases are driven by inflation or tariffs or otherwise. And so far, the data shows that our shopper continues. But you don't have to take my word for it. I would strongly encourage you to walk all of our streets and see it for yourselves. Go see firsthand the crowds at Skims on M Street. The lines outside our Brandy Melville or Jenny Kane in Chicago were the traffic at our Sephoras in both Williamsburg and at City Park.

A J: Demographic to absorb price increases whether those increases are driven by inflation or tariffs or otherwise.

A J: And so far the data shows that our shopper continues to spend.

A J: But you don't have to take my word for it I would strongly encourage you to work all of our streets and see it for yourselves go see firsthand the crowds at schemes on M Street.

A J: The lines outside our brandy Melville or Jenni Kayne in Chicago, where the traffic at our Sephora and built Williamsburg and at city point is absolutely remarkable.

A.J. Lee: It's absolutely remarkable. Now that said, at the end of the day, we always look at everything through the lens of tenant health and occupancy costs. And top line sales and health ratios are still the number one metric our tenants look to as they plan for long-term growth. That's not to downplay the importance of short-term margin fluctuations, but our tenants are thinking long-term, signing 10-year leases. And top-line sales growth is still the best indicator of long-term success. Regardless, it is helpful that our tenants tend to operate at relatively high margins. But more important... Occupancy costs on our streets remain healthy and top line sales continue to grow.

A J: Now that said at the end of the day, we always look at everything through the lens of tenant health and occupancy costs and topline sales and health ratios are still the number one metric our tenants look to as they plan for long term growth.

A J: That's not to downplay the importance of short term margin fluctuations, but our tenants are thinking long term signing 10 year leases and topline sales growth is still the best indicator of long term success.

A J: Regardless it is helpful that our tenants tend to operate at relatively high margins, but more importantly occupancy cost on our streets remain healthy and top line sales continued to grow.

A.J. Lee: So our focus remains on leveraging our scale and using that scale to curate our key corridors, like M Street in Georgetown, where we are the largest landlord on the street. First quarter apparel sales in our Georgetown portfolio were up 15% year over year. And to reinforce the power of scale, since increasing our ownership on the street in Q1, we've signed two new leases with average cash spreads of over 50%. In Williamsburg, with our most recent acquisitions on North 6th Street, we are quickly becoming the largest landlord in that high demand market as well. Our portfolio in Williamsburg already includes top performers like Lululemon, Abercrombie, Sephora, and Alloyoga.

A J: So our focus remains on leveraging our scale and using that scale to curate our key corridors like M Street in Georgetown, where we are the largest landlord on the street.

A J: First quarter apparel sales in our Georgetown portfolio were up 15% year over year and to reinforce the power of scale since increasing our ownership on the street in Q1, we signed two new leases with average cash spreads of over 50%.

In Williamsburg, with our most recent acquisitions on North sixth Street, we are quickly, becoming the largest landlord in that high demand market as well.

A J: Our portfolio of millions Berg already includes top performers like Lulu Lemon Abercrombie Sephora Anello yoga and with our recent acquisitions. We now have the scale to curate and influenced the performance of not just our building, but the overall market.

A.J. Lee: And with our recent acquisitions, we now have the scale to curate and influence the performance of not just our building, but the overall market. On Armitage Avenue in Chicago, Q1 sales in our portfolio were up 12% year-over-year. You've heard from our newest tenant, Rails, that the Armitage opening was the strongest they've ever had. And so far, the store is exceeding even their wildest expectations. And just this week, we executed another lease on the street as part of our Pry Luce strategy, and we can share those details next week. In SoHo, despite the incredible growth we've seen over the last several years, rents are still not back to their prior peak.

A J: On Armitage Avenue in Chicago, Q1 sales in our portfolio were up 12% year over year.

Speaker Change: We've heard from our newest tenant rails that the Armitage opening was the strongest they've ever had and so far the stores exceeding even their wildest expectations.

Speaker Change: And just this week, we executed another lease on the street as part of our <unk> strategy and we can share those details next quarter.

Speaker Change: And Soho despite the incredible growth we've seen over the last several years rents are still not back to their prior peak.

A.J. Lee: So while the remainder of our portfolio is well below current market rent, as we've discussed, we recently shed our last above-market lease, which will be reflected in our Q2 results. We don't usually celebrate when rents move backwards, but in this case, we're able to significantly upgrade merchandising and credit by signing an exciting new brand owned by Richemont. And finally, in markets that have been slower to recover, we are now seeing an acceleration in positive activity. Last quarter we talked about the clear momentum on North Michigan Avenue with brands like Mango, Alo Yoga, Uniqlo, and Arixia all committing long term to the street.

Speaker Change: So while the remainder of our portfolio is well below current market rent as we've discussed we recently shed our last above market lease which will be reflected in our Q2 results. We don't usually celebrates rents move usually celebrate when went through with backwards, but in this case, we're able to significantly upgrade merchandising and credit by signing an exciting new brand owners.

Speaker Change: My response.

Speaker Change: And finally in markets that have been slower to recover we are now seeing an acceleration in positive activity.

Speaker Change: Last quarter, we talked about the clear momentum on North, Michigan Avenue with brands like Mango Allo Yoga Uniqlo in Auryxia, all committing long term to the street and this quarter I'm happy to report that we are also seeing meaningful traction in San Francisco.

A.J. Lee: And this quarter I'm happy to report that we are also seeing meaningful traction in San Francisco. As we discussed on the last call, in Q1 we signed a 50,000 square foot lease at City Center with T&T Supermarkets. TNT is Canada's largest Asian grocer and a subsidiary of Loblaws, which is Canada's largest retailer. By now the news has gone viral in San Francisco, with both Mayor Laurie and Councilman Sherrill sharing their excitement on Instagram. and of course we greatly appreciate their support. As we expected, the community's response to the announcement has been overwhelmingly positive. If you've been to any of TNT's other locations, you would immediately feel the energy they bring to the center and the quality of the co-tenancy they attract.

Speaker Change: As we discussed on the last call in Q1, we signed a 50000 square foot lease at Citycenter with TNT supermarkets.

Speaker Change: PMT is Canada's largest Asian grocer, and a subsidiary of <unk>, which is Canada's largest retailer.

Speaker Change: By now the news has gone viral on San Francisco with both mayor Lori and councilman Sheryl sharing their excitement on Instagram and of course, we greatly appreciate their support.

Speaker Change: As we expected the community's response to the announcement has been overwhelmingly positive.

Speaker Change: If you've been to any of Tnt's. Other locations you would immediately feel the energy they bring to the center and the quality of the co tenancy they attract.

A.J. Lee: Even before permits are finalized, we've already received interest from several top-tier brands looking to cluster around us. I've been doing this for a long time and I can't think of any other grocer that can elicit that level of excitement from both shoppers and other tenants. and the momentum in San Francisco doesn't stop there.

Speaker Change: Even before permits are finalized we have already received interest from several top tier brands looking to cluster around them.

Speaker Change: I've been doing this for a long time and I can't think of any other grocer that can elicit that level of excitement from both shoppers and other tenants.

And the momentum in San Francisco doesn't stop there.

A.J. Lee: Next quarter, we should be able to share another equally exciting... So those are just a few examples of the momentum we've carried into 2025, and while we'll continue to keep a close eye on the potential impact of tariffs, in the meantime, we remain very encouraged by the high levels of performance and demand on our key strategies.

Speaker Change: This quarter, we should be able to share another equally exciting update.

Speaker Change: So those are just a few examples of the momentum we carried into 2025 and while we will continue to keep a close eye on the potential impact of tariffs in the meantime, we remained very encouraged by the high levels of performance and demand on our key streets.

A.J. Lee: So congratulations and thank you to the team for their hard work and another strong quarter.

Speaker Change: So congratulations and thank you to the team for their hard work and another strong quarter and with that I will hand, it over to Rajiv.

Reginald Livingston: And with that, I will hand it over to Reg. Thanks, A.J.

Reginald Livingston: Good afternoon, everyone. I'm excited to share specifics around our Q125 and year-to-date acquisition activity and provide insight on how we're positioning the company for continued. As noted in our earnings release, we completed over $370 million of acquisitions year-to-date, including approximately $175 million not paid. Assisting with our strategy, the total included targeted street retail acquisitions on balance sheet and value-add opportunities for our investment management. And while the market has been volatile over the last few weeks, our focus remains. hallmarks of our external growth business on balance sheet are FFO accretion, NAV accretion, strong CAGR, and increasing our concentration in key supply constraint markets that are must-have locations for our research.

Speaker Change: Thanks, a J.

Rajiv: Afternoon, everyone I'm excited to share specifics around our Q1, 'twenty five and year to date acquisition activity and provide insight on how we're positioning the company for continued growth.

Rajiv: As noted in our earnings release, we completed over $370 million of acquisitions year to date included approximately $175 million not previously announced.

Rajiv: Consistent with our strategy. The total included targeted street retail acquisitions on our balance sheet and value add opportunities for our investment management business and while the market has been volatile over the last few weeks our focus remains consistent.

Rajiv: <unk> of our external growth business on balance sheet, or <unk> accretion NAV accretion strong CAGR and increasing our concentration in key supply constrained markets that are must have locations for our retailers in Q1 was another quarter of delivering on that potent mix.

Reginald Livingston: Q1 was another quarter of delivering on that hope. Year-to-date, we've constructed a portfolio delivering accretion consistent with our one penny per 200 target, with an attractive going-in gap yield in the low sixes, and five-year CAGR in excess of 5%.

Rajiv: Year to date, we've constructed our portfolio delivering accretion consistent with or one penny per 200 target with an attractive going in and GAAP yield in the low sixes and five year CAGR in excess of 5%. So let's take a closer look at the transactions not previously announced.

Reginald Livingston: So, let's take a closer look at the transactions not. First, for $61 million, we acquired three new storefronts in Williamsburg, Brooklyn, located at 95, 97, and 107 North Street. These tenants include great contemporary brands such as Lululemon, Abercrombie & Mejuri, consisting of a strong combination of lease-term and mark-to-market opportunities. This is our third acquisition on this street in the last three quarters where we now own seven total storefronts. This nine-month run is our latest example of our ability to scale quickly and must have corridors for our resources. We are on our way to being the dominant landlord on the prime three-block stretch of North 6th Street, with more to come, so stay tuned.

Rajiv: First for $61 million, we acquired three new store fronts in Williamsburg, Brooklyn, located at 90, 597, and $1 seven North six Street.

Rajiv: These tenants include great contemporary brands, such as Lulu Lemon Abercrombie in Missouri.

Rajiv: <unk> have a strong combination of lease term and mark to market opportunity in the future. This is our third acquisition of history in the last three quarters, where we now own seven total store fronts. This nine month run is our latest example of our ability to scale quickly. It must have core doors for our retailers, we are on our way to being the dominant landlord or the.

Rajiv: Prime three blocks dress up North sixth street with more to come so stay tuned.

Reginald Livingston: Second, in the vibrant Flatiron Union Square Submarket in Manhattan, we acquired 85 Fifth Avenue for $47 million. This asset is on a key corner in the market and leased to a global Fortune 100 company to be invested in. This marks our fourth storefront in this sub-market, where we see a favorable supply-demand dynamic that should continue to drive growth. On the investment management side of our business, we acquired Pinewood Square in Lakewood, Florida for $68 million. This asset has a first-class lineup of high-performing tenants, including TJ Maxx and HomeGoods, in a trade area with a dense and growing population.

Rajiv: And the vibrant part of our Union square Submarket in Manhattan, We acquired 85 fifth Avenue for $47 million.

Rajiv: That is a key corner in the market and leased to a global Fortune 100 company to be announced this marks our fourth storefront in this submarket, where we see a favorable supply demand dynamic that should continue to drive rent growth.

Rajiv: On the investment management side of our business, we acquired with square and Lake with Florida for $68 million.

Rajiv: This asset has a first class lineup of high performing tenants, including T. J Maxx home goods in a trade area with a desk and a growing population.

Reginald Livingston: Our business plan is to achieve high-teen returns through a combination of marking shop-based rents-to-market and executing multiple past spend-offs with credit. This transaction is part of our strategy to use our balance sheet to acquire an asset and match it with an institutional investor in due time. a wash, rinse, and repeat formula that enables us to deliver certainty of execution to sellers and allows us to continue to move the needle at our Now, while our execution continues, we certainly have taken note of the volatility that began a few weeks ago. If this turns into a prolonged period of disruption, we feel uniquely positioned to continue to grow in that environment for two main reasons.

Rajiv: Our business plan to achieve high teens returns through a combination of market shock base rents to market and executing multiple pads spinoffs with credit tenants.

Rajiv: This transaction is part of our strategy to use our balance sheet to acquire an asset and match it with an institutional investor in due course, a wash rinse and repeat formula that enables us to deliver certainty of execution to sellers and allows us to continue to move the needle at our size.

Now while our execution continues we certainly have taken note of the volatility that began a few weeks ago.

Rajiv: If this turns into a prolonged period of disruption, we feel uniquely positioned to continue to grow in that environment for two main reasons.

Reginald Livingston: One, while it's possible sellers would ask that price to perfection and looking for a deep bidder pool withdraw from the market, that has never been a significant part of our pipeline. For example, all 300 million Core Street acquisitions closed year-to-date across five different transactions were either off-market or buying out existing partners, containing a trend of profit. Our sourcing capabilities, rooted in our reputation and relationships, will ensure we get our fair share of consummated deals in any event. And second, our investment management platform has a multi-decade history of profitably taking advantage of disruptions and dislocations.

Rajiv: While its possible sellers with asset price to perfection and looking for a deep bitter pool withdraw from the market that has never been a significant part of our pipeline.

Rajiv: For example, all $300 million of core Street acquisitions closed year to date across five different transactions, where either off market or buying out existing partners containment a trend of previous years.

Rajiv: Our sourcing capabilities rooted in our reputation and relationships will ensure we get our fair share of consummated deals in any environment.

Rajiv: And second our investment management platform is a multi decade history of profitably taken advantage of disruptions and dislocations in the market. We expect opportunities on this side of our business to increase.

Reginald Livingston: We expect opportunities on this side of our business to And while it's too early to articulate where exactly these opportunities... Most market disruptions create a scenario where owners and investors are looking for either outright liquidity, capital infusions, better operating partners, or some combination of such, all of which speak to the strength of this platform. And while the cause of disruptions vary from cycle to cycle, the winning formula remains being a well-capitalized, trusted counterparty with deep relationships and in-house expertise. should once again allow us to declare victory on the other side of the current.

Rajiv: While it's too early to articulate where exactly these opportunities arise most market disruptions create a scenario where owners and investors are looking for either outright liquidity capital infusions, better operating partners or some combination of search all of which speak to the strength of this platform.

Rajiv: And while the cause of disruptions varied from cycle to cycle, the winning formula remains the same.

Rajiv: Being a well capitalized trusted counterparty with deep relationships in house expertise should once again allow us to declare a victory on the other side of the current headwinds.

Reginald Livingston: So to summarize, our activity this year continues to be a period of strategic growth and disciplined. On the Balance Sheet platform, our acquisitions continue to connect the dots. Corridors with long-term rent growth potential. And on the investment management platform, we continue to find interesting value-add opportunities that leverage our talent and institutional capital.

Rajiv: To summarize our activity. This year continues to be a period of strategic growth and disciplined execution.

Rajiv: From a balance sheet platform, our acquisitions continued to connect the dots and key core doors with long term rent growth potential.

Rajiv: Management platform, we continue to find interesting value add opportunities that leverage our talent and institutional capital relationships I want to thank the team for their hard work and dedication of this quarter and with that I'll turn it over to John.

John Gottfried: I want to thank the team for their hard work and dedication this quarter, and with that, I'll turn it over. Thanks, Reggie, and good afternoon. Before diving into the quarter, I want to start with a quick update on the three key drivers of our... starting with internal. Our expectation of multi-year core internal growth remains. both in terms of the rents we are achieving, along with the timing and velocity of leasing activity that's necessary to meet, if not exceed, our goal. and our confidence in this growth was reaffirmed this quarter. 6.8% same-store growth from our street retail portfolio.

John Gottfried: Thanks, Roger and good afternoon before diving into the quarter I wanted to start with a quick update on the three key drivers of our business starting with internal growth.

John Gottfried: Our expectation of multiyear core internal growth remains intact.

John Gottfried: Both in terms of the rents we are achieving along with the timing and velocity of leasing activity that's necessary to meet if not exceed our goals.

John Gottfried: And our confidence in this growth was reaffirmed this quarter, we achieved six 8% same store growth from our street retail portfolio. Additionally, we further increased our core operating signed not yet open pipeline by over 15%.

John Gottfried: Additionally, we further increased our core operating signed-not-yet-open pipeline by over 15%. Signing new leases at cash spreads and ex- Secondly, our balance sheet is rock solid. Untapped Revolver and Ford Equity contracts remaining, we have both the liquidity and balance sheet flexibility to navigate through any potential headwinds. as well as dry powder on call to fund our external growth. Third is our external growth. Over the last six to nine months, as Ken highlighted, we have closed on over $800 million in core and investment. And these investments met our earnings accretion target of a penny of FFO for every $200 million of gross income.

John Gottfried: Signing new leases at cash spreads in excess of 50%.

John Gottfried: Secondly, our balance sheet is rock solid with an untapped revolver and forward equity contracts remaining we are both a liquidity and balance sheet flexibility to navigate through any potential headwinds as well as dry powder on call to fund our external growth strategy.

John Gottfried: Third is our external growth over the last six to nine months as Ken highlighted we have closed on over $800 million in core and investment management transactions.

John Gottfried: And these investments met our earnings accretion target of a penny of <unk> for every $200 million of gross asset value.

John Gottfried: In addition, as Reggie had mentioned, our team is actively engaged in several exciting investment management opportunities.

John Gottfried: In addition, as Rajeev mentioned, our team is actively engaged in several exciting investment management opportunities and while that's differentiated and highly profitable portion of our business lends itself to making our earnings somewhat variable year to year, our investment management business is built to capitalize through economic cycles.

John Gottfried: And while this differentiated and highly profitable portion of our business lends itself to making our earnings somewhat variable year to year, we're not going to be able to do that. Our investment management business is built to capitalize. So putting these key drivers together, our quarterly results were clean and came in ahead of our expectations with the street retail portion of our business.

John Gottfried: Putting these key drivers together our quarterly results were clean and came in ahead of our expectations with the street retail portion of our business driving our results.

John Gottfried: And it was this strength, coupled with a successful closing of nearly $400 million of accretive external acquisitions during the quarter, that gave us the confidence to raise our full And now let me fill in a few details. Our first quarter earnings came in at $0.34 a share, which includes a $0.06 from Whole Foods that was discussed on our last... As a reminder, the $0.06 is comprised of $0.04 relating to rents and recoveries. With a balance, attributable determination. And for those modeling, we have included the entire amount of these payments.

John Gottfried: And there was this strength coupled with the successful closing of nearly $400 million of accretive external acquisitions during the quarter.

John Gottfried: That gave us the confidence to raise our full year guidance.

John Gottfried: And now let me fill in a few details.

John Gottfried: Our first quarter earnings came in at 34, a share which includes a six cents from whole foods that was discussed on our last call.

John Gottfried: As a reminder, that <unk> is comprised of four relating to rents and recoveries.

John Gottfried: With the balance attributable to termination payments and for those modeling. We have included the entire amount of these payments within other income in our supplemental outside of net operating income.

John Gottfried: within other income and are supplemental outside of net operating AJ gave a great overview of our excitement for TNT's planned 2026 opening at City Center. So while I won't repeat any of his observations, I certainly share I now wanted to spend a moment outlining our 2025 FFO expectations. as well as the building blocks for core NOI growth for the balance of the year and going into 2020. starting with FFI. We remain on track, if not ahead, particularly in the street retail portion of our portfolio. The key assumptions that we laid out in our... Additionally, although we did say that you shouldn't expect us to raise our guidance after a few short We did caveat that our guidance did not factor in further external growth, but as Reggie highlighted, we added an incremental $175 million.

John Gottfried: Hey, Jay gave a great overview of our excitement for Tnt's plan 2026 opening at City center, So while I won't repeat any of his observations I certainly share enthusiasm.

John Gottfried: I don't want to spend a moment outlining our 2025 F O expectations as well as the building blocks for core NOI growth for the balance of the year and going into 2026.

John Gottfried: Starting with <unk>, we remain on track if not ahead, particularly in the street retail portion of our portfolio with the key assumptions that we laid out in our initial guidance. Additionally.

John Gottfried: Additionally, although we did say that you shouldn't expect us to raise our guidance. After a few short weeks, we did caveat that our guidance does not factor in further external growth.

Speaker Change: But as Roger highlighted we added an incremental $175 million of previously unannounced external investments during the quarter, which coupled with the continued strength, we're seeing in our portfolio gave us the confidence to raise our full year guidance.

John Gottfried: previously unannounced external investments during the quarter. and others, coupled with the continued strength we are seeing in our portfolio, gave us the confidence to raise our In terms of quarterly earnings cadence, we anticipate that our Q2 earnings should fall within the $0.32 to $0.34 per share range. and targeting $0.34 to $0.36. quarterly FFO for the second half of the year as our acquisition accretion continues to kick in and our signed, not yet open, pipeline comes online.

Speaker Change: And Tom in terms of quarterly earnings cadence, we anticipate that our Q2 earnings should fall within the 32 to 34 per share range.

Speaker Change: And targeting 34 to 36.

Speaker Change: Quarterly <unk> for the second half of the year as our acquisition accretion continues to kick in and our signed not yet open pipeline comes online.

John Gottfried: And now, moving on to core net operating. We are seeing two key drivers that are fueling our conviction on achieving, if not exceeding, our 2025 goals, as well as optimism heading into 2020. First is our sign, not yet open. Secondly, is the robust pipeline of leasing deals and advanced stages of negotiation that AJ mentioned. starting with our signed not edible. as of March 31, increased by over 15% to approximately $9 million of ABR at our in terms of timing and Substantially, all of this $9 million of ABR is expected to commence at various points during 2020.

Speaker Change: And now moving on to core net operating income.

Speaker Change: We are seeing two key drivers that are fueling our conviction on achieving if not exceeding our 2025 goals as well as optimism heading into 2026.

Ajay: First is our signed not yet open pipeline and secondly is a robust pipeline of leasing deals in advanced stages of negotiation that Ajay mentioned in his remarks.

Ajay: Starting with our signed not yet open pipeline, which as of March 31 increased by over 15% to approximately $9 million of ABR at our share.

Ajay: In terms of timing and impact.

Ajay: Substantially all of this $9 million of ABR is expected to commence at various points during 2025 and.

John Gottfried: based on projected opening date. We anticipate that approximately four of the $9 million will be recognized in 2025. 75% of it, or roughly $3 million out of the $4 million showing up in the second half. Thus, this leaves us with an incremental $5 million in 2020. Additionally, and it's worth reminding everyone, that the $9 million I just discussed relates solely to our core assets in the same store, NOI. meaning it excludes the signed not yet open pipeline for core assets and redevelopment. Which if included, adds an additional $6 million, and in terms of timing and impact, we expect a nominal amount of this to be recognized in 2025.

Ajay: And based on projected opening dates.

Ajay: We anticipate that approximately four of the $9 million will be recognized in 2025 with 75% of it or roughly $3 million of the $4 million showing up in the second half of the year. Thus this leaves us with an incremental $5 million in 2026.

Ajay: Additionally, and it's worth reminding everyone that the $9 million I've just discussed relates solely to our core assets in our same store NOI pool means.

Ajay: Meaning it excludes the signed not yet open pipeline for core assets and redevelopment, which if included adds an additional $6 million and in terms of timing and impact we expect a nominal amount of this to be recognized in 2025.

John Gottfried: $3 to $4 million dollars projected in 2020. So, again, a lot of numbers, but for those modeling... These two pieces of our same-store and redevelopment signed not-yet-open pipeline are projected to add a combined $8 to $9 million of incremental ABR heading into 2020. Secondly, in addition to our signed not yet The second driver of growth for 2026 is the robust pipeline of pending deals and active negotiation that a As he mentioned, we are in advanced stages of negotiation on over $6 million of new core leases. And just to be clear and to reiterate... We don't need to sign any of these leases to meet our $2,000 goal.

Ajay: And $3 million to $4 million projected in 2026.

Ajay: So again, a lot of numbers, but for those modeling.

Ajay: These two pieces of our same store and redevelopment signed not yet open pipeline are projected to add a combined $8 million to $9 million of incremental ABR heading into 2026.

Ajay: Secondly, in addition to our sign that Youre open leases. The second driver of growth for 2026 is the robust pipeline of pending deals and active negotiation that AJ discussed.

Speaker Change: As he mentioned we are in advanced stages of negotiation on over $6 million of Nucor leases and just to be clear and to radiate reiterate AJ his remarks.

Speaker Change: We don't need to sign any of these leases to meet our 2025 goals, but with a lot of days left in 2025 and active retailer interest.

John Gottfried: A lot of days left in 2025 in active retailer. This gives us plenty of runway to further drive our 2026 coronavirus.

Speaker Change: This gives us plenty of runway to further drive our 2026 core NOI growth.

John Gottfried: So while it's too early to give 2026 guidance... between the $8 to $9 million of ABR from executed leases within our signed, not yet open pipeline. As well as our expectation and optimism of continuing to execute new leases and with the approximately 2.5% contractual growth embedded in our existing leases. We are feeling pretty good about achieving 5 plus percent core internal NOI growth. And just to be crystal clear, our target is to achieve that 5 plus percent growth in 2026. even when including the payments received from Whole Foods in our 2025.

So while it's too early to give 2026 guidance, but between the $8 million to $9 million of ABR from executed leases within our signed not yet opened pipelines.

Speaker Change: As well as our expectation and optimism of continuing to execute new leases and with the approximately two 5% contractual growth embedded in embedded in our existing leases.

Speaker Change: We are feeling pretty good about achieving 5% core internal NOI growth in 2020.

Speaker Change: And just to be Crystal clear our target is to achieve that five plus percent growth in 2026, even when including the payments received from whole foods in our 2025 NOI.

John Gottfried: Now moving on to Aki. highlighted in our release. declined, as we had anticipated, by approximately 140 basis points. Again, and as a reminder, occupancy percentages for us are far less insightful given the wide range of rents between our street and suburban portfolios, but we also appreciate that the headline percentages As we highlighted in our release, the drop in our occupancy percentage this quarter primarily due to the anticipated termination of a local suburban tenant at Maryville This suburban tenant previously occupied over 50,000 square feet of space. at about $10 a foot in rent. This space has already been released at a positive spread and is expected to commence in the third quarter of next year.

Speaker Change: Now moving on to occupancy, which is highlighted in our release declined as we had anticipated approximately 140 basis points during the quarter.

Speaker Change: Again, and as a reminder, occupancy percentages for us are far less insightful given the wide range of rents between street and suburban portfolios, but we also appreciate that the headline percentages at that point.

Speaker Change: As we highlighted in our release the drop in our occupancy percentage. This quarter was primarily due to the anticipated termination of a local suburban tenants at Mirabel Plaza.

Speaker Change: Suburban tenants previously occupied over 50000 square feet of space.

Speaker Change: At about $10 a foot in rent.

Speaker Change: The space has already been released at a positive spread and is expected to commence in the third quarter of this year.

John Gottfried: So between this new suburban tenant, along with the leases commencing within our sign not yet open pipeline, we expect that our year-end core physical occupancy percentage to increase to the 94 to 95 percent range by December 31st. In terms of same-store NOI, in line with our expectations, we reported 4.1% of same-store NOI growth. The street retail portion of our portfolio growing 6.8%. Our street outperformed our suburban assets by over 400 basis points, driven by mark-to-market and occupancy gains in SoHo and Chicago. In terms of our quarterly same-store rental I-Cadence We are seeing increased strength in the second half of the year, driven by the $3 million from the signed, not yet open, pipeline that I mentioned.

Speaker Change: So between this new suburban tenants along with the leases commencing with our sign within our signed not yet open pipeline, we expect that our year end core physical occupancy percentage to increase to the 94% 95% range by December 31.

Speaker Change: In terms of same store NOI in line with our expectations, we reported $4, 1% of same store NOI growth.

Speaker Change: With the street retail portion of our portfolio growing six 8% for the quarter.

Speaker Change: Our street outperformed our suburban assets by over 400 basis points, driven by Mark to market and occupancy gains in Soho in Chicago.

Speaker Change: In terms of our quarterly same store NOI cadence we.

Speaker Change: We are seeing increased strength in the second half of the year driven by the $3 million from the signed not yet open pipeline that I mentioned, a few minutes ago driving our confidence that we remain on track to achieve our targeted 5% to 6% of full year same store NOI growth.

John Gottfried: driving our confidence that we remain on track to achieve our targeted 5% to 6% a full year, same store and all.

John Gottfried: So while we are all facing various degrees of uncertainty in the current environment, we remain optimistic that our portfolio is well poised to deliver strong NOI growth for the balance of the year and into 2020. Additionally, and as I will discuss now, our balance sheet is rock solid, with both a liquidity and dry powder on call to not only manage any unforeseen economic events, but also to fund accretive core and investment opportunities that we anticipate will continue to arise. We reported debt to EBITDA, inclusive of our shared debt from the investment management business. 5.7 times.

Speaker Change: So while we are all facing various degrees of uncertainty in the current environment. We remain optimistic that our portfolio is well poised to deliver strong NOI growth for the balance of the year and into 2020.

Speaker Change: Additionally, and as I will discuss now our balance sheet is rock solid with both a liquidity and dry powder on call to not only manage any unforeseen economic events, but also to fund accretive core and investment opportunities that we anticipate will continue to rise.

Speaker Change: We reported debt to EBITDA inclusive of our share that from the investment management business of five seven times for the quarter now keep in mind that given the timing and funding of the significant acquisitions, we completed during the quarter, our reported quarterly debt to EBITDA metrics are going to vary a bit but when annualized the full impact of our acquisitions along with.

John Gottfried: Now keep in mind that given the timing and funding of the significant acquisitions we completed during the quarter, our reported quarterly debt to EBITDA metrics are going to vary. But when annualizing the full impact of our acquisitions, along with the forward equity contracts we have on call, we remain well within the 5.5 to 6 times targeted debt to EBITDA range with dry powder available to us. We will not take our balance sheet advantage for granted and will remain disciplined in our external growth strategy, which means when we put capital work... It will be funded, there will be earnings in Navicreative, and will complement our existing internal...

Speaker Change: Forward equity contracts, we have on call.

Speaker Change: We remain well within the five five to six times targeted debt to EBITDA range with dry powder available to invest.

Speaker Change: We will not take our balance sheet advantage for granted and will remain disciplined in our external growth strategy, which means when we put capital work. It will be pre funded there'll be earnings and NAV accretive and will complement our existing internal growth at.

John Gottfried: And additionally, our goal is to not only retain our balance sheet strength, but to further improve it. And as we think about our funding source... We have numerous avenues of capital available. and the Equity Markets, Institutional Capital, Asset Sales from our core and investment management Payments from our Structured Finance Book can retain cash.

Speaker Change: And Additionally, our goal is to not only retain our balance sheet strength, but to further improvement and as we think about our funding sources.

Speaker Change: We have numerous avenues of capital available to us, including the equity markets institutional capital asset sales from our core investment management business repayments from our structured finance book and retained cash flow.

Operator: And with that, I will now turn the call over to the Thank you.

Speaker Change: And with that I will now turn the call over to the operator for questions.

Operator: At this time, we'll conduct the question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to two questions. Please stand by while we compile the Q&A roster.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: Please limit yourself to two questions. Please.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Yes.

Linda Tsai: And our first question comes from the line of Linda Tsai of Jeffrey's. Your line is now open. Yes, hi.

Speaker Change: And our first question comes from the line of Linda Tsai of Jefferies. Your line is now open.

John Gottfried: John, do you think the SNO continues to accelerate and will be higher by year-end 25? Could it grow to be more than 6% of ABR? Yeah, it's a great, great question, Linda. So I think we have, you know, a bunch of, as I mentioned, In my remarks, three million of that is going to start rolling. But I think if A.J. is... successful as we think we are in converting. We think we replenished that, so fingers crossed we remain on track.

Linda Tsai: Yes, Hi, John do you think the SNL continues to accelerate and we will be higher by year end 'twenty five.

Speaker Change: Grow to be more than 6% of ABR.

Speaker Change: Yeah, It's a great great question, Linda So I think we have a bunch of as I mentioned on in my remarks $3 million of that is going to start rolling into the second half of the year, but I think if a J is success successful as we think we are in converting these polices, we think we've replenished that so fingers crossed we remain attractive.

Speaker Change: <unk> continue to grow on that.

Kenneth Bernstein: And then a question for Ken or Reggie.

Speaker Change: And then a question for Ken or Rajiv can you just talk about opportunistic investing during downturns, who are the sellers typically.

Kenneth Bernstein: Can you just talk about opportunistic investing during downturns? You know, who are the sellers typically? And, you know, who's the seller pool today, maybe versus the GFC?

Speaker Change: And who is the seller pool today, maybe versus the TFC.

Kenneth Bernstein: I think it's a little early, Linda, as far as how this one will play out. I think big picture, as I said in my prepare remarks, a lot of these, you know, whether it's, you know, institutional guys that are saying, hey, we want to get out of retail, we need liquidity, we need different operating partners. I think it could come from anywhere, frankly, and the actual sellers really does depend on the specifics. So it's a little early to tell exactly how it plays out. What we've seen, though, just from us and what we've been able to...

Grant: Grant you want to sure I think it's I think it's a little early Linda as far as how this one will play out I think big picture as I said in my prepared remarks, a lot of these whether it's <unk>.

Grant: Institutional guys that are saying, hey, we want to get out of retail we need liquidity, we need a different operating partners I think it could come from anywhere frankly, and the actual sellers really does depend on the specifics. So it's a little early to tell exactly how it plays out what we've seen though just from us and what we've been able to X.

Kenneth Bernstein: When those opportunities arise, we have the relationships to be able to take advantage of them from a sourcing standpoint and from a capital standpoint, and just from our execution and being vertically integrated, which I think a lot of these institutional investors are looking for. And so we feel confident that when it materializes, we'll be there. But it's very difficult to say exactly how it's going to play itself out.

Grant: Cute is windows opportunities arise, we have the relationships to be able to take advantage of them on the sourcing standpoint, and from a capital standpoint, and just from our execution and being vertically integrated which I think a lot of these institutional investors are looking for and so we feel confident that when it when it materializes, we will be there, but it's very difficult to say exact.

Kenneth Bernstein: And the only thing I'd add, Linda, it is premature. say the least to equate.

Grant: How it was going to play itself out.

Linda Tsai: The only thing I'd add Linda it is premature.

Grant: To say the least to equate.

Kenneth Bernstein: the current policy-driven volatility that we've seen over the last 30, 60 days to the global financial crisis where, frankly, the plumbing in our financial system broke down. There's nothing that we're seeing that would indicate that, and my guess is the opportunistic plays we'll see now. are going to be driven by value-add, releasing opportunities, our team willing to step up, roll up our sleeves and deal with re-tenanting and other issues like that, as opposed to bank failures or anything along those lines. That's a fair point.

Linda Tsai: The current policy driven vol.

Linda Tsai: Volatility that we've seen over the last 30 60 days to the global financial crisis, where frankly, the plumbing in our financial system broke down because there is nothing that we're seeing that would indicate that and my guess is the opportunistic place we'll see now.

Linda Tsai: Are going to be driven by value add re leasing opportunities our team willing to step up rolled at roll up our sleeves.

Linda Tsai: And then deal with re tenant ing and other issues like that as opposed to bank failures or anything along those lines.

Kenneth Bernstein: In light of your Flatiron acquisition, would you expect more office streets to be selling their street retail? I'll let them respond to where their focus is, but what we are is that Acadia has now established itself as a dominant acquirer of street retail at a time when there's just less competition. There's less people focused on this. There's fewer groups with the expertise we have. So we like our highly differentiated focus. And almost irrespective of where the sellers come from, we are on that short list. We will continue to see the kind of deals that Reggie and his team have found so far over the last 12 months.

That's a fair point in light of your Flatiron acquisition would you expect more office Reits to be selling their street retail.

Linda Tsai: I'll, let them respond to where their focus is but what we are seeing is that Acadia has now established itself as a dominant acquirer of street retail at a time when there's just less competition. There is less people focused on this there's fewer groups with the expertise we have.

Linda Tsai: So we like our highly differentiated focus.

Linda Tsai: And almost irrespective of where the sellers come from we are on that short list to continue to see the kind of deals that Reggie.

Linda Tsai: <unk> and his team have found so far over the last 12 months.

A.J. Lee: And then I think your street portfolio post-COVID turned over quite a bit.

Linda Tsai: And then I think your street.

Linda Tsai: Portfolio post COVID-19 turned over quite a bit could you just discuss probably what tenant types went away what came in how you think about the resilience either from a consumer demand perspective, where tenant credit perspective.

A.J. Lee: Could you just discuss broadly what tenant types went away, what came in, how you think about the resilience either from a consumer demand perspective or tenant credit perspective? Yeah, AJ, maybe you want to touch that and Linda.

Speaker Change: Yeah, Hey, Jay maybe you want to touch that and Linda. This is the last question, we can respond to because there is other people yes.

A.J. Lee: The last question. response. other people yeah I mean I don't think there was Most of the deals that we've signed are with... Exciting brands that were very relevant to today's consumer.

Speaker Change: I don't think there was a huge amount of turnover coming into Covid I think most of the deals that we've signed are with it.

Speaker Change: Citing brands that we're very relevant to today's consumer.

Speaker Change: You know that runs that runs a spectrum, yes. So let me just add a little color heading into the retail arm again.

A.J. Lee: Yes, so let me just add a little color heading into the retail Armageddon. There were a bunch of what we referred to as digitally native retailers, online only, that began to emerge and replace some of the legacy retailers who had lost their way. Fast forward to the last year or two. And what we're seeing is the confluence of high-quality retailers, whether they started digitally native, think Warby Parker, but then also other ones who regained their stature. And all of them are recognizing that they have to have their own stores. They can't rely just on online or just apartment stores.

Speaker Change: There were a bunch of what we referred to a digitally native retailers online only that began to emerge and replace some of the legacy retailers, who had lost their way.

Speaker Change: Fast forward to the last year or two.

Speaker Change: And what we're seeing is a confluence of high quality retailers, whether they started digitally native think war be Parker, but then also other ones who regained their stature and all of them are recognizing that they have to have their own stores. They can't rely just on online.

Speaker Change: Or just department stores that confluence.

A.J. Lee: That confluence of healthier retailers with strong demand, controlling their own brands is really what has driven this multi-year growth in demand, growth in rents, and thus our status.

Speaker Change: Healthier retailers with strong demand controlling their own brands is really what has driven this multi year growth and demand growth in rents and thus our success and I wish we had 30 seconds just on the credit side window, which is what I would look at I would say the credit today is very.

A.J. Lee: I would say the credit today is very different than it was heading into then. Two things. One is the occupancy cost ratios, the health of the tenants that are here today. in the 2000s. as well as the strength of the retailer's balance sheets behind that. So I think it is a different credit portfolio and tenant health than it was at that point in time.

Speaker Change: Different than it was heading into that into two things. One is the occupancy cost ratios. The health of the turn of the tenants that are here today versus in.

Speaker Change: And the two day 2019, as well as the strength of the retailers balance sheets behind that so I think it is a different different credit portfolio and tenant health than it was at that point in a cycle in 2019.

Operator: Thanks. Thank you.

Speaker Change: Great. Okay. Thank you.

Operator: One moment for our next question.

Speaker Change: Thank you one moment for our next question.

Floris van Dijkum: Our next question comes from Line of Floris Van Dijkum of Compass Point. Your line is now open. Hey, guys. My first question is in regards to your street portfolio. Maybe if you could comment, John, a little bit on the, you've in the past said that you expect this portfolio to average something like 10% underlying growth for the foreseeable future. How confident are you in that forecast today? And will you be able to achieve that in 25? Yeah, Floris, when we look at the signed, not yet open, portion of our pipeline... The vast majority of that is coming from the street.

Speaker Change: Our next question comes from the line of Floris Van <unk> of Compass point. Your line is now open.

Speaker Change: Hey, guys.

Speaker Change: My first question is in regards to your screen.

Speaker Change: Our street portfolio.

Speaker Change: Maybe if you could comment John a little bit on the <unk> in the past said that you expect this portfolio to average something like 10.

Speaker Change: 10% underlying growth for the foreseeable future. How confident are you in that forecast today and will you be able to achieve that.

Speaker Change: Ah.

Speaker Change: 25.

Speaker Change: Yeah. So when we look at the signed not yet opened portfolio portion of of our pipeline the.

Speaker Change: The vast majority of that coming from the street. So I think between and that number is the mark to markets that we've been generating so.

John Gottfried: So I think between, in that number, is the mark-to-markets that we've been generating. So we feel confident that the street is going to continue.

Speaker Change: So we feel we feel confident that the street is going to continue to be the key driver of our growth.

A.J. Lee: key drivers.

A.J. Lee: And maybe as a follow up, and this might be more for AJ, but talk a little bit about the mark to market opportunity in Williamsburg. I believe your average ABR in place there is now 123-ish or thereabouts. Where is the market and where are you signing new leases at in that quarter? Yeah, I mean, the market's up fairly substantially from that number. I mean, right now, leases are trading at, you know, multiples of that number. So there's definitely embedded market to market opportunity in what Reggie is buying. We're going to unlock good portion of that over the coming years.

A J: And maybe as a follow up and this might be more for a J.

J: Talk a little bit about the mark to market opportunity in Williamsburg, I believe your your average ABR in place there is now a 123 ish or thereabouts.

Speaker Change: Where is the markets and where are you signing new leases that in that in that quarter.

Speaker Change: Yes, I mean, the market's up fairly substantially from that number I mean, right now leases are trading at multiples of that number.

Speaker Change: So theres definitely embedded mark to market opportunity in what Reggie is buying.

We're going to unlock.

Speaker Change: A good portion of that over the coming years.

Andrew Reale: and we should be fairly successful. And and if I were to, just so people don't think we're intentionally not giving out numbers, the rents per foot vary so much on street retail, depending on depth, depending on a whole variety of issues, that it's not just an easy double or triple those numbers, but you could probably double or triple those numbers. Great. Thanks, guys. Thank you. One moment for our next question.

Speaker Change: And we should be fairly successful.

Speaker Change: And if I were to.

Speaker Change: Just to add.

Speaker Change: So people yet.

Speaker Change: We're intentionally not giving out numbers.

Speaker Change: The rents per foot very so much on street retail depending on depth, depending on a whole variety of issues is that it's not just an easy double or triple those numbers, but you could probably double or triple those numbers yet.

Speaker Change: Great. Thanks, guys.

Speaker Change: Thank you one moment for our next question.

Kenneth Bernstein: Our next question comes from the line of Andrew Reale of Bank of America. Your line is now open. Hey, good afternoon. Thanks for taking my questions. I guess just to go back to the latest on street retail transaction markets. Just to clarify, I mean, have there really been any meaningful recent changes in behavior from either sellers or buyers versus, I don't know, say a quarter ago? And then do you see this broader macro uncertainty as a situation where competition starts pulling back and you find yourselves with a greater opportunity set? Or is that more negligible if most of your deals are off market anyway?

Speaker Change: Our next question comes from the line of Andrew <unk> of Bank of America. Your line is now open.

Andrew: Hey, good afternoon. Thanks for taking my questions I guess just to go back to the latest on street retail transaction markets.

To clarify I mean have there really been any meaningful recent changes in behavior from either sellers or buyers versus I don't know say a quarter ago.

Andrew: And then do you see this broader macro uncertainty as a situation where competition starts pulling back and you find yourselves with a greater opportunity set or is that more negligible. If most of your deals are off market anyway.

Kenneth Bernstein: Thank you for your time.

Kenneth Bernstein: So let me touch on a few pieces of that. First, as I said before, it's still very early days. But I do think that we were heading into a period, let's say the fourth quarter of last year, where we did see some buyers showing up. with very aggressive growth goals for given streets. Whether we have always said, look, the rental growth over the last year or two has been fantastic, but we would never wanna underwrite that level of growth going forward. It's just not sustainable. And some buyers were. hearing to say that they expected 10% market rent growth for several, several years to And that would be extraordinary.

Andrew: So let me touch on a few pieces of that.

Andrew: First as I said before it's still very early days.

But I do think that we were heading into a period, let's say the fourth quarter of last year, where we did see some buyers showing up.

Andrew: With very aggressive growth goals for given streets, whether we have always said look the rental growth over the last year or two has been fantastic, but we would never want to underwrite that level of growth going forward, it's just not sustainable and some buyers were.

Andrew: Appearing to say that they expected 10% market rent growth for several several years to come.

Andrew: And that would be extraordinary.

Kenneth Bernstein: To the extent that this volatility has tempered some of that expectation, some of that competition may go to the sidelines, and that's fine by us. Sellers in general have been I have found relatively realistic. They're going to go with the most aggressive bidders out there, and there has been a nice recovery. But my guess is, where we stand right now, is there will be fewer tourists. And I don't mean shopping tourists, I mean people who say, oh, maybe it's a good time to go buy street retail. It's a tough business. We have spent decades working on it.

Andrew: To the extent that this volatility had tempered some of that expectation some of that competition may go to the sidelines and that's fine by us.

Andrew: Sellers in general have been I have found relatively realistic theyre going to go with the most aggressive bidders out there and there has been a nice recovery.

Andrew: But my guess is where we stand right now is there will be fewer tourists and I don't mean shopping tourist I mean people, who say Oh, maybe it's a good time to go buy street retail it's tough business.

Andrew: We have spent decades working on it so I think there'll be a little less competition there.

Kenneth Bernstein: So I think there'll be a little less competition there, but we're prepared to deal with the competition as it comes forward and get our fair share of deals. Either way, but I'll end with where I started. The last 30 days... It's just too soon to know exactly how this all shakes out.

Andrew: But we're prepared to deal with the competition as it comes forward and get our fair share of deals.

Andrew: Either way.

Andrew: But I'll end with where I started.

Andrew: The last 30 days.

Andrew: It's just too soon to know exactly how this all shakes out.

Kenneth Bernstein: We are in a position where we can take our time, we can be patient, we will be disciplined, and let's see where the economy settles over the next 30, 60, 90 years. Okay, that's helpful color. Thank you.

Andrew: We are in a position where we can take our time, we can be patient, we will be disciplined and let's see where the economy settles over the next 30 60 90 days.

Speaker Change: Okay. That's helpful color. Thank you.

John Gottfried: And just a quick follow up question. There's been some leasing spread volatility from period to period in recent quarters. Just any color on how you're thinking about spreads trending through the balance of the year. John, you want to? Yeah, Andrew. So they are, just given the nature of our portfolio, they are inevitably going to vary, right? And it's generally a smaller sample set, which as we've talked about in the past, we create value by combining... So, I think it's a little bit more difficult given we don't have a homogeneous pool of multiples of leases to really project quarter by quarter trajectory there, but as AJ mentioned, we feel that our leases are in a very good spot in terms of where they are in relation to market.

Speaker Change: Just a quick follow up question Theres been some leasing spread volatility from period to period in recent quarters, just any color on how youre thinking about spreads trending through the balance of the year.

Speaker Change: John you want to yeah, Andrew So they are just given the nature of our portfolio. They are inevitably going to vary right and that's a generally a smaller sample set which as we've talked about in the past we create value by combining cutting up spaces.

So I think it's a little bit more difficult given we don't have a homogeneous pool of multiples of leases to really project quarter by quarter trajectory.

Speaker Change: Trajectory, there, but as J J mentioned, we feel that our leases are very good spot.

Speaker Change: In terms of where they are in relation to market, but is it straight percentage I don't think that that's real.

John Gottfried: But Straight percentage, I don't know. Okay, thank you.

Speaker Change: Practical.

Speaker Change: Okay. Thank you.

Operator: Thank you one moment for our next question.

Speaker Change: Thank you one moment for our next question.

Craig Mailman: Our next question comes from the line of Craig Mailman of Citi. Your line is now open. Hey, guys, I just want to follow up on the $6 million of leases and advanced negotiations. Just kind of curious.

Craig Mailman: Our next question comes from the line of Craig Mailman of Citi. Your line is now open.

Speaker Change: Hey, guys.

Speaker Change: Just wanted to follow up on the $6 million of leases in advance negotiations just kind of curious.

A.J. Lee: Has there been any kind of change in the frequency of kind of touch points with these tenants as you know, post April 2, or any kind of elongation of gestation periods? Or is, you know, it's similar to what you guys are talking about that your tenants are continuing to make decisions, and it's just business as usual, despite some of the background certainty? Yeah, I mean, we haven't seen any noticeable change in the velocity of leasing or the responsiveness of our tenants, you know, post. April 1st. Look, sales are up. Our tenants have a good amount of cushion in their margins.

Speaker Change: Has there been any kind of change in the frequency of.

Kevin: Kind of touch points with these Kevin says post April 2nd.

Speaker Change: Or any kind of elongation of gestation periods or is.

Kevin: It's similar to what you guys are talking about that.

Speaker Change: Your tenants are continuing to make decisions.

Speaker Change: Business as usual despite some of the background certainty.

Speaker Change: Yes, I mean, we haven't seen any noticeable change in the velocity of leasing.

Speaker Change: Or the responsiveness of our tenants post <unk>.

Speaker Change: April one.

Speaker Change: Look sales were up our tenants have a good amount of cushion in there margins are consumer again like we said wealthy resilient continues to spend and I think that that's translating through to tenant demand and we haven't seen any sign of a slowdown yet.

A.J. Lee: Our consumer, again, like we said, wealthy, resilient, continues to spend. And I think that that's translating through to tenant demand, and we haven't seen any sign of a slowdown. The only increase in velocity I think that A.J.

A J: The only increase in velocity I think that a J I would add to that is the number of times per day I walk down the hall to his office, saying anything new because obviously the headlines.

A.J. Lee: would add to that is the number of times per day I walk down the hall to his office saying anything new because obviously the headlines are grabbing everyone's attention. And the good news is so far, and we would know, but so far our retailers are saying these are mission-critical locations. Okay, that's helpful.

A J: Grabbing everyone's attention and the good news is so far and we would know, but so far our retailers are saying. These are mission critical locations they must have.

Reginald Livingston: Um, and then just on the investment side, I know you guys talked a little about sort of the investment management aspect of the business. Can you just talk about kind of the the appetite of some of your newer partners that you've kind of created some JVs with to put capital out the door today versus maybe a month or two ago? Is it still pretty high? And, you know, from that perspective, how could you How much capacity could you have kind of on a gross deal volume? you know, knowing that your share of the acquisition would be a little bit less.

A J: Okay. That's helpful.

A J: And then just on the investment side I know you guys talk a little about sort of the investment management aspect of the business.

A J: Can you just talk about kind of the the appetite of some of your newer partners that you've.

A J: Kind of create some JV with to put capital out the door today versus maybe a month or two ago is it still pretty high in.

A J: From that perspective, how could you.

A J: How much capacity could you have.

A J: On a gross deal volume.

A J: <unk>.

A J: Knowing that your share of the acquisition would be a little bit less.

Reginald Livingston: Right, let me let me first set the table, Reg, and then maybe you can give some specifics. The way we think about our investment management platform is matching the right kind of deals and risk adjusted returns with the right capital and think about it as core although that's really not what we do. It's more core plus than value add and Opportunistic dollars have had a hard time. finding retail assets and there's a very good chance that the high teens IRR investor is going to be aggressively ready to step up and swoop in when we see those opportunities and we have great relationships there and I would expect some increase on that side.

Speaker Change: Alright, let me let me first set the table rich and then maybe you can give some specifics.

Speaker Change: The way, we think about our investment management platform is matching the right kind of deals and risk adjusted returns with the right capital and think about it as core although that's really not what we do it's more core plus and value add and opportunistic.

Speaker Change: Opportunistic dollars have had a hard time.

Speaker Change: Finding retail assets.

Speaker Change: And there is a very good chance that the high teens IRR.

Speaker Change: Investor is going to be aggressively ready to step up and swoop in when we see those opportunities and we have great relationships, there and I would expect some increase on that side again early days to predict a major shift and there is nothing.

Reginald Livingston: Again, early days to predict a major shift and there is nothing that we are seeing to indicate that this is anything like the global financial crisis but we do see increased opportunities there. We are also seeing an increased desire in the core plus area for retail or open-air retail and we may see increased participation there. and opportunities, especially given that a lot of the shopping center REITs seem to be pausing right now.

Speaker Change: We are seeing to indicate that this is anything like the global financial crisis, but we do see increased opportunities. There. We are also seeing an increased desire in the core plus area for retail for open air retail and we may see increased participation there.

Speaker Change: And opportunities, especially given that a lot of the shopping center Reits seem to be pausing right now so private capital may jump in there, but rich why don't you add some color to that just I guess, the only thing I would add to that is what these institutional investors that I speak with them every week.

Reginald Livingston: So private capital may jump in there, but Reg, why don't you add some color to that? Yeah. Just, I guess, the only thing I would add to that is what these institutional investors, and I speak with them every week, what they really have realized is that in order to go after these value-add opportunistic deals, they need a qualified operator, right? Retail is very specific, it's very idiosyncratic, it depends on the relationships with the tenants, it depends on understanding rent to market and the like. And so a lot of these, frankly, you've gotten inbounds from groups that are saying, hey, we want to put more institutional dollars to work, but we need to do it with a group that we can trust, that has their own capital, that has a multi-decade, multi-cycle track record.

Speaker Change: What they really have realized is that in order to go after these value add opportunistic deals they need a qualified operator right retailed as very specific very idiosyncratic depends on the relationships with the tenants as it depends on understanding rent to market and the like and so a lot of these women.

Speaker Change: Frankly, we've gotten inbounds from groups that are saying, hey, we want to put more institutional dollars to work, but we need to do it with a group that we can trust that has their own capital. There has a multi decade multi cycle track record and so we feel really good about being able to place capital with these opportunities.

Reginald Livingston: And so we feel really good about being able to place capital with them.

Operator: Great, thank you.

Speaker Change: Great. Thank you.

Operator: Thank you.

Todd Thomas: One moment for our next question.

Speaker Change: Thank you one moment for our next question.

Todd Thomas: Our next question comes from the line of Todd Thomas of Keating Capital Markets. Your line is now open. Hi, thanks. Good afternoon.

Speaker Change: Our next question comes from the line of Todd Thomas of Keybanc Capital markets. Your line is now open.

Speaker Change: Yes.

Todd Thomas: Hi, Thanks, good afternoon.

Todd Thomas: In terms of leasing, or merchandising, either street or suburban centers, looking out, are you having conversations at all internally about strategy around targeting certain categories or retailers any differently today than you were, you know, before before April 2? Not necessarily. I mean, look, we're curating our streets, so we want to make sure that there's a good mix between, say, apparel and beauty, for instance. But really, it all comes down to making sure we're picking the right tenants that can operate at healthy occupancy costs, that can do the volume that we need for them to do to pay these rents.

Speaker Change: In terms of leasing or merchandising either street or suburban centers looking out are you having conversations at all internally about strategy.

Speaker Change: Around targeting certain categories of retailers any differently today than you are.

Speaker Change: Before for April 2nd.

Speaker Change: Not necessarily I mean look we're curating our streets. So we want to make sure that there's a good mix between say apparel and.

Speaker Change: Beauty for instance, but really it all comes down to making sure. We're picking the right tenants that could operate at healthy occupancy costs that can do the volume that we need for them to do to pay these rents.

Kenneth Bernstein: So we're always looking in any environment at balance sheets, but also sales history and sales comps from comparable markets where they're operating. The only thing I'd add to that, Todd, is virtually every lease deal that then comes to my desk, we have a conversation about supply chain and is that retailer overly dependent on one country, China, for instance, have they managed to diversify their supply chain? And for the most part, the leases we are signing are with retailers who have diversified their supply chain already. So we are certainly screening for that and thankfully encouraged by what we're seeing.

Speaker Change: So we're always looking at any environment at balance sheets, but also sales history and sales comps from comparable markets, where they where they.

Speaker Change: Where they're operating today.

Todd Thomas: The only thing I'd add to that Todd is.

Todd Thomas: Virtually every lease deal that then comes to my desk, we have the conversation about supply chain.

Todd Thomas: And.

Todd Thomas: Is that retailer overly dependent on one country, China for instance has a.

Todd Thomas: Managed to diversify their supply chain and for the most part the leases. We are signing are with retailers who have diversified their supply chain already. So we are certainly screening for that and thankfully incur.

Todd Thomas: Encouraged by what we're seeing.

Kenneth Bernstein: Okay, and then, you know, appreciate the comments around the consumer, you know, and leasing activity through April and some discussion around the S&O pipeline. You know, curious with regards to that, that pipeline today, 8.9 million of ABR, you know, how would you characterize the risk around changes to the extent that some of this policy uncertainty persists? You know, do you see risk today around either delays or even cancellations? Or is there any concern around anything in the pipeline where there might be a little bit more exposure or a little bit more economic sensitivity that could lead to, you know, I guess some potential changes or fallout?

Todd Thomas: Okay and then.

Todd Thomas: I appreciate the comments around the consumer.

Todd Thomas: And leasing activity through April and some discussion around the <unk> pipeline.

Todd Thomas: Curious with regards to that.

Todd Thomas: That pipeline.

Todd Thomas: Pipeline today $8 $9 million of ABR.

Todd Thomas: How would you characterize the risk.

Todd Thomas: Round changes to the extent that some of this policy uncertainty persist.

Todd Thomas: Do you see risk today around either delays or even cancellations or is there any concern around anything in the pipeline, where there might be a little bit more exposure.

Todd Thomas: Or a little bit more economic sensitivity that could lead to.

Todd Thomas: I guess, some some some potential changes or fallout.

Kenneth Bernstein: Let me, let me start AJ and then chime in. First thing I would point out and This is probably an important underlying factor in why retailers are continuing to step up. 2020-2021 there was a lot of availability and what we saw was a decade's worth of so-called availability on these key streets especially got absorbed in a year or two. And those retailers that missed out in 2022 and 2023 or 2024, they are still licking their wounds for not having delivered the stores that their customers demand. And so while institutional memory tends to be short, it's not that short, and retailers are recognizing that if these are locations that they need.

A J: Let me, let me start a J and then chime in.

Todd Thomas: First thing I would point out.

A J: <unk>.

A J: This is probably an important underlying factor in why retailers are continuing to step up.

A J: 2020, 2021, because there was a lot of availability and what we saw was a decade's worth of so called availability on these key streets, especially got absorbed in a year or two and.

A J: And those retailers that missed out in 2022, and 2023 or 'twenty four.

A J: They are still licking their wounds for not having delivered the stores that their customers demand.

A J: So while institutional memory is.

A J: Tends to be short, it's not that short and retailers are recognizing that if these are locations that they need.

Kenneth Bernstein: And if they're wrong, and they think that waiting somehow is going to create an opportunity, they're going to miss out, and that is going to... So call it fear of missing out or FOMO. I still see retailers saying these are locations we have to have and we're gonna take them. In terms of pipeline, there's always that risk tie. If we go and are heading into a hard landing, I would expect a lot of difficult conversations, not withstanding all of the positive tailwinds we've discussed. So far, the only real concerns we're hearing is tenant build-out costs and supply chain issues or inflationary costs on the build-out side.

A J: And if they're wrong.

A J: And they think that waiting somehow is going to create an opportunity.

A J: They're going to miss out and that is going to be painful.

A J: Call.

A J: Fear of missing out or a fomo ice still see retailers, saying. These are locations, we have to have and we're going to take them in terms of pipeline, there's always that risk time.

A J: If we go and are heading into a hard landing I would expect a lot of difficult conversations notwithstanding all of the positive tailwind as we've discussed.

A J: So far.

A J: The only real.

A J: Real concerns we're hearing is tenant build out costs and supply chain issues or inflationary cost on the build outside and it's not that tenants are looking to change the economics. They just want to see some level of protection if costs were to store on that side, but others.

A.J. Lee: And it's not that tenants are looking to change the economics. They just want to see some level of protection if costs were to soar on that side.

A.J. Lee: But otherwise, A.J., I don't know if there's anything you want to add. Just to expand upon your final comment, you know, I think we're at somewhat of an advantage in that. You know, the average cost of build on a street market relative to rent is much lower than I also think we have a competitive advantage in that sense in that we are well capitalized, right? And we have the ability to absorb some of that shift in TI dollars from the tenants to the landlords. We haven't seen it yet. We haven't seen really any of our tenants that are in the existing pipeline indicate any troublesourcing materials or a desire to slow down.

A J: Wise, a J I don't know.

Speaker Change: Just to expand upon your.

Speaker Change: Your final comment I think we're at somewhat of an advantage in that you know.

Speaker Change: The average cost to build on our street market relative to rent is much lower than in the suburban markets.

Speaker Change: So I think we have a competitive advantage in that sense and that we are well capitalized and we have the ability to absorb some of that shift in ti dollars from the tenants to the landlords, we haven't seen it yet.

Speaker Change: We haven't seen really any of our tenants that are in the existing pipeline sort of indicate any trouble sourcing materials or a desire to slow down.

A.J. Lee: And then I'll just end with, again, it's important to point out that the markets, we're in our mission-critical markets, right? When the slowdown, or if a slowdown were to happen...

Speaker Change: And then I'll just end with again, it's important to point out that the market's worried our mission critical markets.

Speaker Change: When the slowdown where if a slowdown were to happen.

Michael Mueller: We don't expect it to happen in markets like a Soho that is mission critical to a lot of Okay, thank you. Sure. Thank you. One moment for our next question.

We don't expect it to happen in markets like Soho that is mission critical to a lot of these retailers.

Speaker Change: Okay. Thank you.

Speaker Change: Sure.

Speaker Change: Thank you for our next question.

Michael Mueller: Our next question comes from the line of Michael Mueller of J.P. Morgan. Your line is now open. Yeah, hi. Just curious, what portion of your core portfolio, Kenneth Rosker, do you get monthly sales from? And then, you know, what would you do differently if you're getting those monthly sales and you see spending starts to stall? Yeah, Mike, so officially, meaning the lease mandates it, it's about called 15 to 20%. but unofficially giving our leasing team property. call it a hundred percent, but pretty close to a hundred percent as to what you know how the So we have a very good.

Speaker Change: Our next question comes from the line of Michael Mueller of Jpmorgan. Your line is now open.

Michael Mueller: Yeah, Hi, just curious what portion of your core portfolio tenant roster can you give monthly sales from and then.

Michael Mueller: What would you do differently, if youre getting those monthly sales, we see spending starts to stall.

Michael Mueller: Yeah, Mike So officially meeting the lease mandated mandated it's about call it 15% to 20%, we get but unofficial eight giving our leasing team property management teams et cetera.

Michael Mueller: I'm not going to call it, 100%, but pretty close to a 100% as to what how the tenants performing there. So we have a very good good good view on it and I would say that the way we use that data is.

John Gottfried: view on it and I would say that you know the way we use that data is Most importantly is given, as AJ pointed out, where our rents are related to market, where we start to see the sales slip, that's where Candade would be, is how do we get that space back? How do we bring that, accelerate? that's how That's how we're, I would say, using it. A.J., I don't know if you want to add anything. Yeah, look, I would say just generally we have much more visibility into the performance of our street tenants. on the suburban side, it's just much more common that they're reporting sales.

Michael Mueller: <unk>.

Michael Mueller: Most importantly is given as JJ pointed out where our rents are related to market, where we start to see the sales slip that's where at Kennedy would be is how do we get that space back how do we bring that accelerate that space to market. So that's how.

Michael Mueller: That's how we're I would say using an H M. If you want to add anything yes look I would say just generally we have much more visibility into the performance of our 300 tenants than we do on the suburban side. That's just much more common that they are reporting sales, but it goes back to the private strategy, which we've had a lot of success with right. We look at these sales every day every month.

A.J. Lee: But it goes back to the Pry Luce strategy, which we've had a lot of success with, right? We look at these sales every day, every month. identify the underperformers, right, and we engage with them about even proactively taking back space with a positive mark-to-mark. And again, you know, operating in streets, we have the benefit of an FMV reset, for example, where we see a tenant that's underperforming that we don't think is sustainable long term. lean into the FMV reset, again, pry that space back and release it to a tenant. Nice, of course, to get a higher rent, but just as importantly, can operate at a higher sales volume and be more successful.

Michael Mueller: <unk>, the Underperformers right and we engage with them about even proactively taking back space with a positive mark to market.

Michael Mueller: And again operating in streets, we have the benefit of an F&B reset.

Michael Mueller: For example, where we see a tenant that's underperforming that we don't think is sustainable long term, we can lean into the F&B reset again pre let that space back and re lease it to a tenant.

Michael Mueller: Nice of course to get a higher rent, but just as importantly can operate at a higher sales volume and be more successful in the market.

A.J. Lee: Got it. Okay.

Speaker Change: Got it Okay, and then second question Street portfolio it looks like it's about 84% as of March.

John Gottfried: And then, second question, street portfolio looks like it's about 84% as of March. Sorry about that. Yeah, the street, let me start again here, street portfolio is about 84%. I think you previously said you expected that to be at about 90% by year end. I guess, how much of that's locked in versus how much is, there's still wood to chop, basically. I would say there's a good portion that's locked in, given that... Our SNO pipeline is predominant. Good portion of that's locked in, Mike, but I think there's also, you know, when we look at our goals going into 26, that hopefully we can accelerate some of that.

Speaker Change: Like do we lose you.

Speaker Change: So sorry about that.

Speaker Change: Yes. The street start again here Street portfolio is about 84% I think you previously said you expected that to be at about 90% by year end I guess, how much of thats locked in versus how much is there still wood to chop basically.

Speaker Change: I would say there's a good portion of that's locked in given that.

Speaker Change: Our <unk> pipeline is predominantly street retail so a good portion of that's locked in Mike, but I think Theres also.

Speaker Change: We look at our goals going into 'twenty six that hopefully we can accelerate some of that but feel pretty good about it.

John Gottfried: But I feel pretty good. Got it. Okay, thank you. Thank you.

Speaker Change: Got it okay. Thank you.

Ki Kim: One moment for our next question.

Speaker Change: Thank you Bob for next question.

Speaker Change: Yeah.

Speaker Change: Yes.

Ki Kim: Our next question comes from the line of Kim Ping Kim of Truth, your line is now open. Thank you. Good morning.

Speaker Change: Our next question comes from the line of Kingdom Kim of <unk>. Your line is now open.

Thank you good morning.

Kenneth Bernstein: Can you just provide the cap rate, going-in cap rate for the deals you've closed through April? And, you know, you mentioned perhaps her hurdle rate is changing, maybe provides more color on, you know, to what degree. Thank you.

Speaker Change: Can you just provide the cap rate going in cap rate for the deals you've closed through April.

Speaker Change: And you mentioned, perhaps or hurdle rates changing.

Speaker Change: Maybe price more color on to what degree thank you.

Speaker Change: Yes, we want to not answer there.

Kenneth Bernstein: We tend to stay away from the specifics around going in cap rate. Some of it, frankly, can be a misleading metric because a lot of it, particularly on the street side, is based on market-to-market lease term, etc. But as I said earlier, low sixes, gap yield, is how we think about the portfolio. and the hurdle asset part of it again. Yeah, and you mentioned how, I mean, your cost of capital has been changing. I was just curious how your internal hurdle rate for new acquisitions might be changing as well. Yeah, again, let's not overreact to the volatility over the last 30 days and We have multiple sources of capital, so we think we can be competitive in the market.

Speaker Change: We tend to stay away from the specifics around going in cap rate I mean, some of it frankly is a can be a misleading metric because a lot of it particularly on the street side, it's based on Mark to market lease term and et cetera, but as I said earlier low sixes GAAP yield.

Speaker Change: Certainly that is how we think about the portfolio, we were able to deliver on.

Speaker Change: And then the hurdle at that part of it again keeping.

Speaker Change: Yes, you mentioned, how your cost of capitals been changing Doug I'm, just curious how your internal hurdle rates for new acquisitions might be changing as well.

Speaker Change: Yeah, again, let's not overreact to the volatility.

Speaker Change: Over the last 30 days.

Speaker Change: And we.

Speaker Change: We have multiple sources of capital. So we think we can be competitive in the market, but to the extent that all of a sudden.

Kenneth Bernstein: But to the extent that all of a sudden the market was dealing with a recession, hard landing, that's going to impact pricing, and it would certainly also impact our hurdle rate of expectation. So I would define the situation as very fluid right now. Thankfully, between our investment management platform, a variety of other deals, and then on top of the fact that our internal growth, as John's been talking about, is very compelling. We think we have a bunch of different ways to navigate through the short term and then the longer term.

Speaker Change: Market was dealing with a recession hard landing that's going to impact pricing and it would certainly also impact our hurdle rate of expectations. So.

Speaker Change: I would define the situation is very fluid right now.

Speaker Change: Felipe between our investment management platform variety of other deals and then on top of the fact that our internal growth as John has been talking about.

Speaker Change: Is very compelling.

Speaker Change: We think we have a bunch of different ways to navigate through the short term and then the longer term issues.

Kenneth Bernstein: And have you guys noticed any traffic or tenant demand changes in your Washington, D.C. market, given what's happened with Doge and some of the cuts that might be happening? Yeah, I mean, not at all. You know, the last time you mentioned that we started keeping a much closer eye on it. You know, I mentioned sales were up on M Street. then, you know, typical employee that would be impacted by Doge. But, you know, it hasn't shown up in the results of our Detailers, or in our leasing velocity, again, where we signed two leases last quarter, that's pretty significant.

Speaker Change: And have you guys noticed any traffic or tenant demand changes in your Washington D. C market, given what's happened with Doe Gen. Some other costs that might be happening.

Speaker Change: Yes, I mean, not at all but the last time, you mentioned that we started keeping a much closer eye on it.

Speaker Change: Mentioned sales were up on M Street in the teens year over year for the first quarter. So.

Speaker Change: We've said it before our demographic our consumer I think is less impacted.

Speaker Change: Then.

Speaker Change: <unk>.

Speaker Change: Employees that would be impacted by goes but it hasnt shown up in the results of our.

Speaker Change: Retailers or in our leasing velocity again, where we signed two leases last quarter at some pretty significant spreads.

Kenneth Bernstein: M Street in Georgetown does not follow that rhythm, it's driven by domestic tourists, it's driven by the universities, it's driven by a great confluence of retailers, so we're just not seeing that correlation. Okay, great. Thank you. One moment for our next question. Our next question comes from Linda Paulina Rojas-Smith of Green Street. Your line is now open. Hello, thank you for taking my question. We have seen a decline in international tourism to the U.S. recently. Can you please remind us how significant international tourism is for your tenants, and yeah, particularly in your key retail, street retail corridors?

Speaker Change: I'm sorry.

Speaker Change: <unk> does not follow that rhythm is it's driven by domestic tourists, it's driven by the universities, it's driven by a great confluence of retailer. So we're just not seeing that correlation.

Speaker Change: Okay, great. Thank you.

Speaker Change: Sure.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of pulling the Ross Smith of Green Street. Your line is now open.

Ross Smith: Hello, Thank you for taking my question.

Ross Smith: We have seen a declining international tourism to the U S. Recently can you please remind us how significant international tourism needs for your attendance and.

Speaker Change: Yes, particularly in your key retail street retail corridors.

Kenneth Bernstein: Yeah, I'll take a crack at that. I forget, I think it was the Wall Street Journal, maybe yesterday or today. noted that actually international tourism is not down materially. Tourism from Canada crossing the border is down materially, but overall we have not seen an impact, primarily because the international tourist as shopper. in our street retail assets had yet to really return and become impactful. That was a future tailwind that we were looking forward to, are looking forward to, but it so far has not impacted our business. Retailer Sales, and in the conversations with retailers, again, we look forward to a vibrant economy, but so far, other than the...

Speaker Change: Yeah, I'll take a crack at that.

Speaker Change: I forget I think it was the Wall Street Journal, maybe yesterday or today.

Speaker Change: Noted that actually international tourism is not down materially.

Speaker Change: Right.

Speaker Change: Tourism from Canada crossing the border is down materially.

Speaker Change: But overall.

Speaker Change: We have not seen an impact primarily because the international tourists as shopper.

Speaker Change: In our street retail assets had yet to really return and become impactful.

Speaker Change: That was a future tailwind that we were looking forward to are looking forward to but its so far has not impacted our retailer sales.

Speaker Change: And in the conversations with retailer again, we look forward to a vibrant economy, but so far other than the.

Kenneth Bernstein: shift in Canadian tourism, there has not been an impact, and that shift has not impacted. Thank you.

Speaker Change: Shifting Canadian tourism.

Speaker Change: There has not been an impact and that shift has not impacted our retailers.

Speaker Change: Thank you.

Kenneth Bernstein: Then I see you have acquired recently several assets in New York, across several neighborhoods, Soho, Williamsburg, West Village, and other. How do you balance the idea of scale versus diversification? And understanding these are different neighborhoods, is there still any limit in your mind to the exposure you would like to have to New York? Yeah, there is a limit in terms of portfolio construction of New York overall. We're not there yet. And I think we have a ways to go before we get. So, that could be a conversation in a couple of years, but between now and then, where we can connect the dots.

Speaker Change: Then I think you have acquired several assets in New York across several end neighborhoods Soho Williams Berg with village.

Speaker Change: Another so.

Speaker Change: How do you balance jbl's scale versus diversification.

Understanding these are different neighborhoods Easter steel.

Speaker Change: In your mind to exposure you would like to have to New York.

Speaker Change: Yes, there is a limit in terms of portfolio construction of New York overall, we're not there yet.

Speaker Change: And I think we have a ways to go.

Speaker Change: Before we get there so that could be a conversation in a couple of years, but between now and then where we can connect the dots in these key card works.

Kenneth Bernstein: these key corridors. Corridors that are defined not by Reggie or Ken, but much more so by our retailers saying these are the markets where we need to be. Those corridors expect to see us continue to add. We could double and triple the number of stores we have in any of those existing corridors before I get uncomfortable.

Speaker Change: Carter's that are defined not by Reggie or Ken but much more so by our retailers are saying. This is these are the markets, where we need to be.

Speaker Change: Those Carter's expect to see US continue to add we could double and triple the number of stores, we have in any of those existing Carter before I get uncomfortable that being said.

Kenneth Bernstein: That being said... Do expect to see us add in other markets. As you have seen with M Street in Georgetown, as see what we are going to be doing on Henderson Avenue and various other markets so that the portfolio balance over the next several years should look very healthy and it will be defined based on what our retailers say are must-have markets. Thanks. Thank you. I'm showing no further questions at this time.

Speaker Change: Do you expect to see us add in other markets.

Speaker Change: As you've seen with M Street in Georgetown as you see what we are going to be doing on Henderson Avenue.

Speaker Change: And various other markets so that the portfolio balance over the next several years should look very healthy and it will be defined based on what our retailers say are must have markets.

Speaker Change: Thanks.

Speaker Change: Thank you.

Speaker Change: Thank you I'm showing no further questions at this time I'll now turn it back to Ken Bernstein for closing remarks.

Kenneth Bernstein: I'll now turn it back to Ken Bernstein for closing remarks. Great. Thank you all for joining us. Look forward to speaking with you next quarter. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Great. Thank you all for joining us look forward to speaking with you next quarter.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].