Q1 2025 Regency Centers Corp Earnings Call

Operator: Greetings and welcome to Regency Centers Corporation first quarter 2025 earnings conference. At this time all participants are on a list.

Greetings and welcome to Regency Centers Corporation first quarter 2025 earnings Conference call.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Operator: Question and Answer Session will follow the If anyone should require operator assistance during the conference call, please call 1-866-433-4332.

Mind you This conference is being recorded.

Christy McElroy: I would now like to turn the call over to your host, Christy McElroy. Thank you.

I would now like to turn the call over to your host Christine Mcelroy. Thank you you may begin.

Lisa Palmer: Good morning, and welcome to Regency Center's first quarter 2025 earnings conference call. Joining me today are Lisa Palmer, President and Chief Executive Officer, Mike Mas, Chief Financial Officer, Alan Roth, East Region President and Chief Operating Officer, and Nick Wibbenmeyer, West Region President and Chief Investment Officer. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance, include forward earnings guidance, and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties. It's possible that actual results may differ materially from those suggested by these forward-looking statements we may make.

Christine Mcelroy: Good morning, and welcome to Regency Centers' first quarter 2025 earnings conference call joining me today or at least the Palmer President and Chief Executive Officer, Mike Mas, Chief Financial Officer, Alan Ross East region, President and Chief operating Officer, and Nick with admire West region, President and Chief Investor.

Christine Mcelroy: Officer as a reminder, today's discussion may contain forward looking statements about the company's views of future business and financial performance include forward earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties. It is possible that actual results may differ materially from those suggested.

Christine Mcelroy: By these forward looking statements, we may make factored it factors and risks that could cause actual results to differ materially from these statements may be included in our presentation. Today and are described in more detail in our filings with the SEC specifically in our most recent Form 10-K, and 10-Q filing and our discussion today, we will also reference certain non-GAAP financial measures.

Lisa Palmer: Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation today and are described in more detail in our filings with the SEC, specifically in our most recent Form 10-K and 10-Q filings. In our discussion today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance. Our caution on forward-looking statements also applies to these presentation materials.

Christine Mcelroy: The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance. Our caution on forward looking statements also apply to these presentation materials as a reminder.

Unknown Executive: As a reminder, given the number of participants we have on the call today, we respectfully ask that you limit your questions to one and then rejoin the queue with any additional follow-up questions.

Lisa: The number of participants we have on the call today, we respectfully ask that you limit your questions to one and then rejoin the queue with any additional follow up questions Lisa.

Lisa Palmer: Lisa? Thank you, Christine. Good morning, everyone. We are pleased with another quarter of outstanding results highlighted by strong same property NOI growth and earnings growth. Our results are reflective of continued robust operating fundamentals within our trade areas and at our shopping centers. amplified by the commencement of leases within our S&O pipeline and accretion from investments including our ground-up development, redevelopment, and acquisitions. Positive trends and activity continued into April, and the conversations that we've had with our tenants over the last few weeks have indicated no impact on sales or shifts in consumer behavior. Within our portfolio, we've seen growth in foot traffic accelerate in April from Q1 levels.

Speaker Change: Thank you Christy and good morning, everyone. We're pleased with another quarter of outstanding results highlighted by strong same property NOI growth and earnings growth.

Speaker Change: Our results are reflective of continued robust operating fundamentals within our trade areas and at our shopping centers ample.

Speaker Change: Amplified by the commencement of leases within our S N O pipeline and accretion from investments, including our ground up development redo.

Speaker Change: Redevelopment and acquisitions.

Speaker Change: Positive trends in activity continued into April and the conversations that we've had with our tenants over the last few weeks have indicated no impact on sales or shifts in consumer behavior.

Speaker Change: Within our portfolio, we've seen growth in foot traffic accelerate in April from Q1 levels.

Lisa Palmer: And for the remainder of the year, our lease commencement plans are largely committed, supported by a strong pipeline of leases already executed and awaiting rent commencement, and our lease negotiation pipeline remains full. Our tenants are healthy and continue to look long-term. Planning for space needs years ahead of time amid a scarcity of high-quality available space. In addition, external growth remains visible, largely driven by in-process development and redevelopment projects coming online. Additional acquisitions in 2025 would be opportunistic and additive to our plan.

Speaker Change: For the remainder of the year our lease commencement plans are largely committed supported by a strong pipeline of leases already executed and awaiting rent commencement and our lease negotiation pipeline remains full.

Speaker Change: Our tenants are healthy and continue to look long term planning for space needs years ahead of time amid a scarcity of high quality available space.

Speaker Change: In addition, external growth remains visible largely driven by in process development and redevelopment projects coming online.

Speaker Change: Additional acquisitions in 2025 would be opportunistic and additive to our plan.

Lisa Palmer: As we look longer term, I'll highlight, as I often do, the competitive advantages that make Regency unique across the REIT sector peers. and why we believe we are positioned to outperform across cycles. Our grocery-anchored neighborhood and community centers serve the essential, non-discretionary needs of our shoppers within a format that caters to service, convenience, and value. The trade areas in which we operate are supported by strong demographics with above average income and employment, while the retailers within our centers are predominantly in the top tiers of performance across their chains. As a result, our tenant base is, on the whole, more insulated from the impacts of potential inflation and volatility in the macro backdrop.

Speaker Change: As we look longer term I'll highlight as I, often do the competitive advantages that make regency unique across the REIT sector peers.

Speaker Change: And why we believe we are positioned to outperform across cycles.

Speaker Change: Our grocery anchored neighborhood and community centers serve the essential non discretionary needs of our shoppers with in a format that caters to service convenience and value.

Speaker Change: The trade areas in which we operate are supported by strong demographics with above average income unemployment.

Speaker Change: The retailers within our centers are predominantly in the top tiers of performance across their change.

Speaker Change: As a result, our tenant base is on the whole more insulated from the impacts of potential inflation and volatility in the macro backdrop.

Lisa Palmer: We are also in a great position to continue growing opportunistically, supported by our substantial liquidity and access to low-cost capital.

Speaker Change: We are also in a great position to continue growing opportunistically supported by our substantial liquidity and access to low cost capital.

Lisa Palmer: In closing, we acknowledge the elevated volatility and macro uncertainty in the economy today. But importantly, we continue to feel really good about how Regency is positioned as we are built to thrive across changing economic cycles. We hold our long-term playbook and strategic objectives firm, maintaining our focus on driving growth, and we remain confident in our competitive edge with the unique combination of our strategic advantages.

In closing, we acknowledged the elevated volatility and macro uncertainty in the economy today.

Speaker Change: But importantly, we continue to feel really good about how regency is positioned as we are built to thrive across changing economic cycles, we hold our long term playbook and strategic objectives firm, maintaining our focus on driving growth and we remain confident in our competitive edge with a unique combination of our strategic.

Speaker Change: [noise] advantages Alan.

Unknown Executive: Thank you, Lisa.

Alan Ross: Thank you Lisa and good morning, everyone. Our first quarter results were again marked by solid leasing activity and continued success growing NOI and particularly base rent.

Alan Roth: And good morning, everyone. Our first quarter results were again marked by solid leasing activity and continued success growing NOI and particularly base rent. We made significant progress delivering on as well as further building our leasing pipelines with strong demand from various tenant categories, including grocers, restaurants, health and wellness, and off-price retailers. Activity in the quarter was led by continued strength in shop leasing, where we were able to drive another 10 basis points of growth in lease occupancy on top of our 60 basis point increase last year. Notably, our same property metrics now include the former ERSTAT Biddle properties, which entered the pool this year.

Alan Ross: We made significant progress delivering on as well as further building our leasing pipelines with strong demand from various tenant categories, including grocers restaurants, health and wellness and off price retailers.

Alan Ross: Activity in the quarter was led by continued strength in shop leasing, where we were able to drive another 10 basis points of growth in leased occupancy on top of our 60 basis point increase last year.

Alan Ross: Notably our same property metrics now include the former Earth capital properties, which entered the pool this year.

Alan Roth: We also made meaningful progress commencing new leases representing approximately $10 million of ABR while driving the same property percent commenced rate up another 20 basis points in the quarter. While we've been actively rent commencing pre-lease space, the value of our SNO pipeline is up to $46 million of incremental base rent, as we continue to replenish the pipeline with newly signed leases, providing further support for future commenced occupancy. Cash rent spreads were 8% in Q1, while gap rent spreads were nearly 19%, positively impacted by achieving higher average embedded rent steps in our executed leases, given a greater mix of shop space in the quarter.

Alan Ross: We also made meaningful progress commencing new leases, representing approximately $10 million of ABR, while driving the same property percent commenced rate up another 20 basis points in the quarter.

Alan Ross: While we've been actively rent commencing pre leased space the value of our S. N O pipeline is up to $46 million of incremental base rent as we continued to replenish the pipeline with newly signed leases providing further support for future commenced occupancy.

Alan Ross: Cash rent spreads were 8% in Q1, while GAAP rent spreads were nearly 19%.

Alan Ross: Positively impacted by achieving higher average embedded rent steps in our executed leases given a greater mix of shop space in the quarter.

Alan Roth: I am proud of our team delivering these exceptional operating results reflected in the same property NOI growth of 4.3%, primarily driven by growth in base rent. As Lisa mentioned, we acknowledge the macro uncertainty, but as we've moved through April, our leasing activity, foot traffic, and rent collection trends within our portfolio remain highly favorable. We are well positioned due to the quality and location of our assets, durability of occupancy within our neighborhood and community center format, manageable exposure to watch list retailers, and a strong tenant health profile, including top performing grocers.

Alan Ross: I am proud of our team delivering these exceptional operating results reflected in the same property NOI growth of four 3%, primarily driven by growth in base rent.

Alan Ross: As Lisa mentioned, we acknowledge the macro uncertainty, but as we've moved through April our leasing activity foot traffic and rent collection trends within our portfolio remained highly favorable.

Alan Ross: We are well positioned due to the quality and location of our assets durability of occupancy within our neighborhood and community Center format manageable exposure to watch list retailers and a strong tenant health profile, including top performing grocers.

Nick Wibbenmeyer: Nick? Thank you, Alan.

Alan Ross: Okay.

Speaker Change: Thank you Alan and good morning, everyone. We had another active quarter accretive investment activity, including closing on a large high quality acquisition continued successful execution of our in process development projects on time and on budget and further progress sourcing new projects to drive growth and our future pipeline.

Nick Wibbenmeyer: And good morning, everyone. We had another active quarter of a creative investment activity, including closing on a large, high-quality acquisition, continued successful execution of our in-process development projects on time and on budget, and further progress sourcing new projects to drive growth in our future pipeline. During the quarter, we acquired Brentwood Place in Brentwood, Tennessee, one of the most desirable submarkets in Nashville. Brentwood Place is a 320,000-square-foot community center with best-in-class retailers, including national anchors that perform well above their chain averages. Furthermore, the future mark-to-market leasing opportunities give us clear visibility to significant growth in coming years at this prominent center.

Speaker Change: During the quarter, we acquired Brooklyn place in Brentwood, Tennessee, one of the most desirable submarkets in Nashville.

Speaker Change: Well it would places of 320000 square foot community Center with best in class retailers, including National anchors that performed well above their chain averages.

Speaker Change: Are there more future mark to market leasing opportunities give us clear visibility to significant growth in coming years at this prominent center.

Nick Wibbenmeyer: Additionally, we have a high-quality grocery-anchored shopping center under contract within our joint-venture platform located in the Northeast.

Speaker Change: Additionally, we have a high quality grocery anchored shopping center under contract within our joint venture platform located in the northeast we expect to close in the second quarter and look forward to sharing more details at a later time.

Nick Wibbenmeyer: We expect to close in the second quarter and look forward to sharing more details at a later time.

Nick Wibbenmeyer: Pivoting to development, I'm really proud of our team's execution on our $500 million of in-process development and redevelopment projects. Leasing activity remains strong, and we are managing cost in line with our underwriting. Roundup development remains a key component of our strategy and a unique differentiator for Regency, especially in an environment with limited new retail supply and capital constraints for other developers. We believe our development platform, combined with the creative redevelopments within our existing portfolio, continues to be the best use of our levered free cash flow, with blended returns exceeding 9%. The vast majority of our projects involve partnering with leading grocers, where we continue to see significant demand for space as they further expand their footprints and reach.

Speaker Change: Dividends your development I'm really proud of our team's execution on our $500 million of in process development and redevelopment projects.

Speaker Change: Leasing activity remains strong and we are managing costs in line with underwriting.

Speaker Change: Roundup development remains a key component of our strategy and a unique differentiator for regency, especially in an environment with limited new retail supply and capital constraints for other developers, we believe our development platform combined with accretive redevelopments within our existing portfolio continues to be the best use of our levered free cash flow with blended returns.

Speaker Change: <unk>, 9%.

Speaker Change: The vast majority of our projects involve partnering with leading grocers, where we continue to see significant demand for space as they further expand their footprints and reach.

Nick Wibbenmeyer: Our team remains highly engaged sourcing and underwriting investment opportunities, and we continue to have confidence in maintaining an annual plan pace of $250 million of project starts.

Speaker Change: Our team remains highly engaged sourcing and underwriting investment opportunities. We continue to have confidence in maintaining an annual plan pace of $250 million of project starts Mike.

Michael Mas: Good morning, everyone. Piling on the comments from Lisa, Alan and Nick, we are certainly gratified with our strong first quarter results, evidence to cross our same property NOI for operating earnings and NAERI FFO metric. This is a testament of our team's ability to drive both occupancy and rent growth within our portfolio, amplified by astute capital allocation, including execution within our value-add development and redevelopment platform, in addition to sourcing accretive acquisitions.

Speaker Change: Good morning, everyone pilot.

Speaker Change: Pilot on the comments from Lisa Allen and Nick We're certainly gratified with our strong first quarter results evidenced across our same property NOI or operating earnings and NAREIT <unk> metrics.

This is a testament of our teams ability to drive both occupancy and rent growth within our portfolio.

Speaker Change: Amplified by astute capital allocation, including execution within our value add development and redevelopment platform. In addition to sourcing accretive acquisitions.

Michael Mas: We are reaffirming our 2025 earnings outlook, which implies growth in NARED FFO of nearly 6% and growth in same property NOI of 3.6%, each at the midpoint of our guidance ranges. This includes maintaining our credit loss guidance of 75 to 100 basis points, which combines the expected impact of both uncollectible lease income and lost revenues from bankruptcy-related move-outs. One item to point out within same property NOI growth, we do expect a modestly elevated growth rate in the second quarter, driven primarily by the timing of percentage rent and other income. These items will not affect base rent growth, which we expect to remain fairly consistent quarter to quarter.

Speaker Change: We are reaffirming our 2025 earnings outlook, which implies growth in NAREIT <unk>, nearly 6% and growth in same property NOI of three 6% each at the midpoint of our guidance ranges.

Speaker Change: This includes maintaining our credit loss guidance of 75 to 100 basis points, which combines the expected impact of uncollectible lease income and loss revenues from bankruptcy related move outs.

Speaker Change: One item to point out within the same property NOI growth.

Speaker Change: We do expect a modestly elevated growth rate in the second quarter.

Speaker Change: Driven primarily by the timing of percentage rent and other income.

Speaker Change: Items will not affect base rent growth, which we expect to remain fairly consistent quarter to quarter.

Michael Mas: As a reminder, core operating earnings accretion from our Q1 acquisition of Brentwood Place was previously included within guidance. This quarter, and with the closing behind us, you'll see within the guidance slides of our earnings presentation that we made a few adjustments for non-cash items related to the below market leases and below market debt associated with that acquisition. which were a wash for NARED SSL. These small tweaks comprise the only changes to our earnings outlook for 2025.

Speaker Change: As a reminder, core operating earnings accretion from our Q1 acquisition of Brentwood place.

Speaker Change: Was previously included within guidance.

Speaker Change: This quarter and with the closing behind us you'll see within the guidance slides of our earnings presentation that we made a few adjustments for noncash items related to the below market leases and below market debt associated with that acquisition.

Speaker Change: Which were a wash for NAREIT <unk>.

Speaker Change: These small tweaks comprised the only changes to our earnings outlook for 2025.

Michael Mas: Moving to the balance sheet, in February, S&P upgraded Regency's credit rating to A-. This follows our upgrade to an A3 rating by Moody's approximately one year ago. We now hold the only A credit ratings from either Moody's or from S&P in the shopping center REIT sector.

Speaker Change: Moving to the balance sheet in February S&P upgraded regency's credit rating to a minus.

Speaker Change: This follows our upgrade to an 83 rating by Moody's approximately one year ago, we now hold the only a credit ratings from either Moody's or from S&P and a shopping center REIT sector.

Michael Mas: We are extremely proud of this accomplishment and the validation from the agencies, reflecting the strength of our business and appreciation for our balance sheet strategy. Our balance sheet strength and liquidity remain key advantages, with leverage well within our target range of five to five and a half times. Strong annual free cash flow generation and plentiful availability on our credit facility.

Speaker Change: We are extremely proud of this accomplishment and the validation from the agencies, reflecting the strength of our business and appreciation for our balance sheet strategy.

Speaker Change: Our balance sheet strength and liquidity remain key advantages with leverage well within our target range of five to five and a half times.

Speaker Change: <unk> annual free cash flow generation and plentiful availability on our credit facility.

Michael Mas: From this position of strength, we will remain opportunistic, investing accretively, and driving earnings growth and shareholder value over the long term and through economic cycles.

Speaker Change: From this position of strength, we will remain opportunistic investing accretively and driving earnings growth and shareholder shareholder value over the long term and through economic cycles.

Unknown Executive: With that, we look forward to your questions. Thank you. At this time, we'll be conducting a question and answer session.

Speaker Change: With that we look forward to your questions.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Operator: If you'd like to ask a question, please press star 1 on your television. Any confirmation, tell them to indicate your line is in the question... You may press star 2 if you'd like to remove your questions.

Speaker Change: A confirmation tone will indicate your line is in the question queue you.

Speaker Change: You May press Star two if you like to remove your question from the queue. As a reminder, we ask that you. Please limit to one question and then re queue.

Operator: As a reminder, we ask that you please limit to one question and then... for Participants Using Speaker Equipment and May Be Necessary to Pick Up. before pressing the star keys. One moment, please, while we poll.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Michael Goldsmith: Our first question comes from Michael Goldsmith with UBS, please proceed. Good morning. Thanks a lot for taking my question. The question is on the watch list and bad debt. You know, clearly, the market is concerned about the impact of tariffs and the potential pressured consumers that may follow up from that. So, you know, as you're looking at your tenant base, have you made any changes to the watch list? Or has there been anything noticeable from your perspective in terms of accounts receivable or in the small shop? Are you remind us of your rate aid exposure?

Speaker Change: Our first question comes from Michael Goldsmith with UBS. Please proceed with your question.

Michael Goldsmith: Good morning, Thanks, a lot for taking my question. My question is on the watch list and bad debt clearly the market is concerned about the impact of tariffs and potential pressured consumer says that that may.

Speaker Change: That may follow up from that so.

Speaker Change: As you're looking at your tenant base have you made any changes to the watch list or has there been anything noticeable from your perspective in terms of accounts receivable or is it small shop.

Speaker Change: Factoring anything with that can.

Speaker Change: Can you remind us of your rate exposure.

Alan Roth: Michael, good morning. This is Alan. That was a loaded lot of questions in there, so let me see if I can unpack these one at a time. So, from the watch list perspective, we are constantly evaluating and updating that watch list, but from an exposure perspective, it stays consistent with where it's been in the past, and so we feel really good about how we are proactively approaching our watch list tenant. From a Rite Aid exposure, we have 30 basis points of ABR that is out there, and again, the team's not just from a Rite Aid perspective, but the totality of the watch list standpoint, we are aggressively out in front of proactively what we call leasing occupied space where appropriate, and from an AR perspective, I would just tell you it remains below historic levels, and I think that addressed your questions, Michael.

Alan Ross: Michael Good morning, this is Alan.

Alan Ross: That was a loaded a lot of questions in there. So let me see if I can I can unpack. These one at a time.

Alan Ross: So from the watch list perspective, we are constantly evaluating and updating that watch list, but from an exposure perspective, it stays consistent with where it's been in the past and so we feel really good about how we are proactively approaching our watch list tenant from our Rite aid.

Alan Ross: Suppose her we have 30 basis points of ABR that is out there and again the teams not just from a rite aid perspective, but the totality of the watch list standpoint, we are aggressively out in front of proactively what we call leasing occupied space, where appropriate and from an AUR perspective, I would just tell you it remains.

Alan Ross: Below historic levels, and I think that I think that addressed your questions Michael.

Michael Goldsmith: I only asked because I knew you could handle it. Thank you very much. I appreciate it.

Michael Goldsmith: I only ask because I know you can handle it thank you very much.

Alan Ross: I appreciate it.

Samir Khanal: Our next question comes from Samir Khanal with Bank of America. Please proceed with your question. Thank you and good morning everybody.

Speaker Change: Our next question comes from Samir, how now with Bank of America. Please proceed with your question.

Speaker Change: Thank you and good morning, everybody I guess, Lisa just maybe expanding on your opening remarks there.

Lisa Palmer: I guess, Lisa, just maybe expanding on your opening remarks there, maybe post sort of April to talk about kind of how, you know, leasing discussions have been going, how activity sort of has been trending. I mean even for your existing tenants, right? I mean they're certainly going to, I mean if this tariff situation doesn't get resolved to a certain degree, the more this lingers, how are you sort of approaching these conversations given the, you know, the higher cost that they'll have to incur? Thanks. Appreciate the questions here.

Speaker Change: Post sort of April to talk about kind of how.

Speaker Change: Leasing discussions had been going how activity is sort of has been trending.

Speaker Change: I mean, even for your existing tenants right I mean, there, there's certainly going to I mean, if this tariff situation doesn't get.

Speaker Change: All to a certain degree the more of this lingers how are you sort of approaching these conversations given the you know the <unk>.

Speaker Change: Higher costs that they'll have to incur.

Speaker Change: I appreciate the questions here I will I'll start but.

Lisa Palmer: I will, I'll start but I think it might be best to have Alan address the specific conversations with tenants. I will, again, just reiterate that And you've said this in your question, the kind of reality, the scale, the impact from tariffs is so unknown right now and uncertain. And we acknowledge that. I'm speaking, many of you know HAP, I was speaking with HAP earlier this week. And it's like, you know, our eyes are wide open and do not want anyone to think that they're not. But I want to remind you and just reiterate what I did say in my prepared remarks.

Alan Ross: It might be best to have Alan address the specific conversations with with tenants.

Speaker Change: Again, just reiterate that.

Speaker Change: Got it.

Speaker Change: And you've said this in your question the kind of reality to scale the impact from tariffs is so unknown right now and uncertain and we acknowledge that.

Speaker Change: I'm speaking many of you know half, let's say goes half earlier this week and it's like you know our eyes are wide open and do not want anyone to think that they're not but I want to remind you and just to reiterate what we what I did say in my prepared remarks and that is all.

Lisa Palmer: And that is our sector, our product type, we really do cater to essential, non-discretionary service, convenience, value. That's the product that our centers offer to our shoppers. And. We are not immune. We know we're not immune, but we are much more resistant as a result of that and able to kind of absorb. Economic Uncertainty and Cycles recession is what would impact us. It's when people lose their jobs. And when there's a lack of you know, when they don't have income coming in when they really cut back on spending, but again, remind you of the trade areas in which we operate much, much more well positioned to absorb those pressures.

Speaker Change: Our sector, our product tight we really do cater to essential non discretionary service convenience value. That's the product that ours are centers offered to our shoppers.

Speaker Change: And.

Speaker Change: We are not immune we know we're not immune but we are much more resistant as a result of that and able to kind of absorb that.

Speaker Change: Economic uncertainty in cycles.

Speaker Change: Recession is what would impact us it's when people lose their jobs and when there's a lack of you know and they don't have income coming in when they really cut back on spending, but again remind you of the trade areas in which we operate much much more well positioned to absorb those pressures.

Lisa Palmer: So if you think historically, because I've been at the company for quite some time now, have lived through different cycles, there were really two major economic downturns that impacted us. And I'll say they only impacted us by 200 to 250 basis points of occupancy, and they were severe. And that was the GFC and COVID. I don't have a crystal ball. I have no idea where we're going. I'd be surprised if we have something that severe. So I feel really good about the strength and quality of our tenant base. As you just heard Alan say about ARs, they're healthy.

Speaker Change: So if you think historically because I've been at the company for quite some time now have lived through different cycles. There were really two major economic downturns that impacted us and I'll say, they only impacted us by 200 to 250 basis points of occupancy and they were severe and that was the <unk>.

Speaker Change: S C and Covid.

Speaker Change: I don't have a crystal ball I have no idea, where we're going I'd be surprised if we have something that severe ah. So I feel really good about the strength.

Alan Ross: And quality of our tenant base as you just heard Alan say about a ours they're healthy.

Lisa Palmer: The quality of our tenants, they're able to navigate and get through challenges. And also, again, emphasizing service, convenience, value, essential goods. So no, we're not immune, but I feel really good about how well-positioned we are to perform through and even outperform. And thrive in economic downturns.

Alan Ross: Are the quality of our tenants, they're able to navigate and get through challenges and also again emphasizing service convenience value essential goods.

Alan Ross: So no we're not immune but.

But I feel really good about how well positioned we are to to perform through and even outperform and thrive in economic downturns.

Alan Roth: Samir, I thought that was such a well-articulated answer, I'm not going to add anything to that. No, thank you. Thank you so much for that. Thanks Samir.

Speaker Change: I thought that was such a well articulated answer I'm not going to add anything.

Alan Ross: [laughter].

Alan Ross: No. Thank you. Thank you so much for that.

Amir: Thanks Amir.

Craig Mailman: Our next question comes from Craig Mailman with Citi. Please proceed with your question. Hey, good morning. We appreciate the comments that you just made and kind of in that vein with You know, pretty decent conviction here that you guys are a little bit more immune, at least in the near term.

Speaker Change: And our next question comes from Craig Mailman with Citi. Please proceed with your question.

Craig Mailman: Hey, good morning.

Speaker Change: I appreciate the comments that you just made and kind of in that vein width.

Speaker Change: Pretty decent conviction here that you guys are a little bit more immune at least in the near term.

Michael Mas: You guys talked also about the balance sheet capacity, and you've been opportunistic, you bought the national asset, just kind of how are you thinking about keeping powder dry? Until things maybe we get better visibility of what ultimately plays out from a tariff perspective versus, you know, looking at opportunity today and how much you would want to kind of put to work, if you think that maybe this is less of an issue, and there's some dislocation in the market, and you can find some opportunities. I appreciate the question and I also appreciate the recognition of the strength of the balance sheet and strategically, you know, it is not by accident that we're the only A-rated company in the sector.

Speaker Change: You guys talked also about the balance sheet capacity and you've been opportunistic he bought the Nashville asset just kind of how are you thinking about keeping powder dry.

Speaker Change: Until things, maybe we get better visibility on what ultimately plays out from a tariff perspective versus <unk>.

Speaker Change: You know looking at opportunities today, and how much you would want to.

Speaker Change: Put to work if you think that maybe this is less of an issue and there's some dislocation in the market and you can find some opportunities.

Speaker Change: I appreciate the question and I also appreciate the recognition of the strength of the balance sheet.

And strategically.

Speaker Change: No. It is not by accident that we're the only a rated company in the sector.

Michael Mas: We intentionally keep balance sheet capacity so that we can play offense again through all cycles and so that we can take advantage of and capitalize on opportunities. Our best use of our free cash flow, and we've said this often, is our development program today and that's because it gives us the best return on our invested capital and that will continue to be the case. So we will always evaluate opportunities as they're presented to us and if it's compelling enough, which gets to your question about, you know, using it now versus saving it, we'll know if it's compelling and if it's compelling, we'll act and we have the capacity to act.

Speaker Change: We intentionally keep balance sheet capacity. So that we can play offense again through all cycles and so that we can take advantage of and capitalize on opportunities and are our best use of our free cash flow and we said this often.

Speaker Change: <unk> is our is our development program today and that's because it gives us the best return on our on our invested capital and that will continue to be the case. So we will always evaluate opportunities as they're presented to us and if it's compelling enough which gets to your question about using it now versus say.

Speaker Change: Got it.

We'll know if it's compelling and if its compelling will act and we have the capacity to act and it and so that again in my prepared remarks, I made the comment about the playbook.

Michael Mas: And so that, again, in my prepared remarks, I made the comment about the playbook and our objectives, you know, remain firm and that's the case and we will continue to operate that way.

Speaker Change: And our objectives.

Speaker Change: Remain firm and that that's the case and we will continue to operate that way.

Speaker Change: Thanks, Greg.

Todd Thomas: Our next question comes from Todd Thomas with KeyBank Capital Marks.

Speaker Change: Our next question comes from Todd Thomas with Keybanc Capital markets. Please proceed with your question.

Speaker Change: Yeah.

Todd Thomas: Hi, good morning. I just wanted to dig in a little bit and follow up on Samir's question. I'm just curious, you know, has there been any change at all in the timeline to get lease deals done, whether you're seeing any slowdown at all in the decision making process? Whether there's any pushback at all on new lease deal conversations regarding rent escalators or move-in rates. What might be a little bit more of an uncertain outlook for tenants trying to budget sales?

Speaker Change: Hi, Good morning, I, just wanted to dig in a little bit and follow up on <unk> question. I'm. Just curious has there been any change at all in the timeline to get lease deals done whether youre seeing any slowdown at all in the decision making process or whether there was any pushback.

Speaker Change: On new lease deal conversations regarding rent escalators or move in rents given what might be a little bit more of an uncertain outlook for tenants trying to budget our sales at a new location.

Alan Roth: Todd, good morning. Thank you for the question. So we always closely monitor lease activity, foot traffic, collections, pipeline, and quality of the pipeline. And simply put, as we look at April post-quarter close, we're simply just not seeing any translation from this volatility in our April results. Activity was really solid in April. In fact, 2025 new activity exceeded the April 24 new activity. Foot traffic for the first three weeks was up 7% year over year. As I mentioned in Michael's question, AR remained well below our historical averages, and our pipelines still remain strong with quality operators.

Todd Thomas: Todd Good morning. Thank you for the question. So we always closely monitor lease activity foot traffic collections pipeline and quality of the pipeline and simply put as we look at April post quarter close we're simply just not seeing any translation from.

Speaker Change: This volatility and our April results activity was really solid in April in fact, 2025 new activity exceeded.

Speaker Change: The April 24, new activity foot traffic for the first three weeks was up 7% year over year as I mentioned in Michael's question AAR remain well below our historical averages and our pipeline still remains strong with quality operators. You know, we're going to continue to stand tall as Lisa said with our.

Alan Roth: We're going to continue to stand tall, as Lisa said, with our eyes wide open and our antenna up. But April was another really good month for us, and nothing has transitioned.

Speaker Change: Is wide open and our antenna up but.

Speaker Change: April was another really good month for us and nothing has has transitioned.

Ronald Kamden: Our next question comes from Ronald Kamden with Morgan Stanley. Hey, just on the construction side development side, if you will, just any sort of quick early indications of how much construction costs are up? And how are you guys thinking about sort of the evolution of the of the yield that you're targeting? You know, sort of in this post tariff environment?

Speaker Change: Our next question comes from Ronald Camden with Morgan Stanley. Please proceed with your question.

Ronald Camden: Hey, just on the construction side development side. If you will just any sort of quick early indications of how much construction costs are up and hi, how are you guys thinking about sort of the evolution of the of the yields that you're targeting.

Speaker Change: You know sort of in this post tariff environment. Thanks, so much.

Nick Wibbenmeyer: Ronald, appreciate the question.

Speaker Change: Ronald I appreciate the question this is Nick and good morning.

Nick Wibbenmeyer: This is Nick. And good morning. So yes, we're obviously very closely monitoring construction costs. And as you all can appreciate, the last four or five years have been a challenging time to do that for a host of reasons. And so with the new volatility, our team's digging in, as they always do, to really make sure we understand every line item. And as you can see, in our in-process, the team continued to do an amazing job. We really do de-risk these projects significantly before we even start construction. So our in-process continue to perform. Really, really well.

Speaker Change: So yes, we're obviously very closely monitoring construction cost and as you. All can appreciate the last four or five years had been a challenging time to do that for a host of reasons and so with the new volatility our teams digging in as they always do to really make sure. We understand that every line item and as you can see in our in process. The team continued to do the amazing.

Speaker Change: Job, we really do de risk these projects significantly before we even start construction. So our in process continue to perform really really well and then as we look forward to our projects that are not have not yet started construction same thing. The team is digging in line item by line item and yes. These proposed tariffs could impact some of those line items without a doubt.

Nick Wibbenmeyer: And then as we look forward to our projects that have not yet started construction, same thing. The team is digging in line item by line item. And yes, these proposed tariffs could impact some of those line items, without a doubt. The good news is, though, other line items, we have seen some pullback in cost. Steel prices are down year over year. Crew prices are down year over year. And so net net, we still feel really good that we can deliver the projects that are in our pipeline at a budget and a return on investment. And that we think is appropriate.

Speaker Change: Good news is though other line items, we have seen some pullback in cost steel prices are down year over year crude prices are down year over year and so net net we still feel really good that we can deliver the projects that are in our pipeline at a budget and a return that we think is appropriate and to your question on return you can see where we have our eyesight.

Nick Wibbenmeyer: And to your question on return, you can see where we have our eyesight, as we've always articulated our development program. We want a spread above what we think those assets are worth post being built. And so we're looking at 150 basis point spread, and we continue to achieve that and then some. And so feel really good about in-process and feel really comfortable with what we have planned to start as we move forward this year and next.

Speaker Change: We've always articulated our development program, we want a spread above what we think those assets are worth a post being built and so we're looking at 150 basis point spread.

Speaker Change: We continue to achieve that and then some and so feel really good about and process and feel really comfortable with what we have planned to start.

Speaker Change: As we move forward this year or next.

Nick Wibbenmeyer: Thanks so much.

Speaker Change: Thanks, so much.

Juan Sanabria: Our next question comes from Juan Sanabria with BMO Capital Markets. Please proceed with Hi, good morning. Just hoping you could talk a little bit about the transactions market, how Fire tents have changed. So they're more or less players looking to acquire in the space and kind of where you see cap rates trending. Have you seen any diminution of foreign investors looking at the US?

Santa Maria: Our next question comes from one Santa Maria with BMO Capital markets. Please proceed with your question.

Santa Maria: Hi, Good morning, just hoping you could talk a little bit about the transactions market how are you.

Speaker Change: Fire Tensive changed or are there more or less players looking to acquire in this space and kind of where you see cap rates trending and have you seen any diminishing of foreign investors looking at the U S.

Speaker Change: Thank you.

Unknown Executive: Thank you for the question, Juan. The reality is, you know, we're in the early innings from the volatility. So let me say that. And sometimes the transaction market's a little backwards looking. But every data point we're looking at, we continue to see cap rates in the 5 to 6% range for high quality gross reincurred assets, the type of assets we're pursuing. And in recent conversation, anecdotally, it does seem like there's been a little pullback in the public and international markets compared to the private market. And so it does appear deals that are on the market right now continue to have a lot of interest from private capital and are still pricing aggressively.

Speaker Change: Thank you for the question one on the reality is we're in the early innings from the volatility. So let me say that in sometimes it trends back transactions market's a little backwards looking.

Speaker Change: But every data point, we're looking at we continue to see cap rates in the 5% to 6% range for high quality grocery anchored assets. The type of assets. We're pursuing and then recent conversations anecdotally. It does seem like there's been a little pullback in the public and our international markets compared to the private market and so it does appear deals that are on.

Speaker Change: The market right now continue to have a lot of interest from private capital and are still pricing aggressively.

Michael Griffin: Our next question comes from Michael Griffin with Evercore ISI. Great, thanks.

Speaker Change: Our next question comes from Michael Griffin with Evercore ISI. Please proceed with your question.

Michael Mas: Maybe sticking in the acquisition vein, just wanted to get some more color and context on the Brentwood deal, you know, looks like a going in cap rate of call it the mid fives, but it seems like there is some opportunity to realize mark to market as those leases roll. I'm curious, number one, you know, how quickly do you think you can realize that mark to market within the center? And then what are you looking at on sort of a, you know, stabilized cap rate basis from that? Yeah.

Speaker Change: Great. Thanks, maybe sticking in the acquisition vein just wanted to get some more color and context on the Brentwood deal you know it looks like a going in cap rate of call. It the mid fives, but it seems like there is some opportunity to realize mark to market as those leases roll I'm curious number one how quickly do you think you can realize that mark to mark.

Speaker Change: But then the center and then what are you looking at on sort of a stabilized cap rate basis from that acquisition.

Michael Mas: Appreciate the question, Michael. So a couple of things. One is, we do feel really good about those mark to market opportunities. And so as you articulated, we're comfortable with the going in yield and how that project was financed, especially with the low market debt, but we're even more excited about the future growth potential of that asset. And so, in that initial 10 year hold, our eyesight is really at a high single digit IRR. And so we feel good about the ability to achieve that IRR. But then what's even more exciting about that asset is we have visibility beyond even that initial 10 year hold of future material mark to market opportunities.

Michael Goldsmith: I appreciate the question Michael.

Speaker Change: So a couple of things one is.

Speaker Change: We do feel really good about those mark to market opportunities and so as you articulated we're comfortable with the going in yield and how how that project was financed especially with the low market debt, but we're even more excited about the future growth potential of that asset and so and that initial 10 year hold our eyesight is really at a high single digit IRR.

Speaker Change: And so we feel good about the ability to.

Speaker Change: Achieve that IRR, but then what's even more exciting about that asset as we have visibility beyond even that initial 10 year hold a future material mark to market opportunities and so that asset based on the quality of that market the quality of the asset within that market and the quality of the income stream on a go forward basis, where extreme.

Michael Mas: And so that asset based on the quality of that market, the quality of the asset within that market, and the quality of the income stream on a go forward basis, we're extremely excited to bring that one into the mix. Great. Thanks so much.

Speaker Change: Really excited to bring that went into the mix.

Speaker Change: Great. Thanks, so much.

Greg Mcginniss: Thank you. Our next question comes from Greg McGinniss with Scotiabank. Please proceed.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Greg Mcginniss with Scotiabank. Please proceed with your question.

Unknown Executive: Hello, this is Viktor Fediv on with Greg McGinniss.

Speaker Change: Oh, the sneaker fatty one who's Greg Mcginniss.

Unknown Executive: And let's stick with acquisitions. I'd like to kind of understand your forward looking thinking. So essentially, you've doubled your tenancy exposure with this acquisition and obviously great asset. But what are your future plans?

Speaker Change: And Oh, let's stick with acquisitions.

Speaker Change: I'd like to kind of understand your forward looking thinking.

Speaker Change: So essentially you've doubled your tenancy exposure with this acquisition and are obviously, great asset, but what are your future plans that we're planning to kind of expand in this market that your footprint or which markets are your areas of interest.

Michael Mas: Are you planning to kind of expand in this market, your footprint or which markets are your areas of interest? Appreciate the question. As we've talked about before, and as Lisa has alluded to a couple times on just this call, the good news in our business plan is we don't have to acquire to meet our business objectives. And so let me state that first and foremost, but that being said, we are very, very focused on growing our exposure and high quality markets across the country. And so every one of our 22 plus offices is waking up every day trying to figure out what are the opportunities within that market to own a best in class retail that we feel like has appropriate growth profile.

Speaker Change: No.

Speaker Change: Yeah.

Speaker Change: Sure.

Speaker Change: I appreciate the question.

Speaker Change: As we've talked about before and as Lisa has alluded to a couple of times on this call. The good news in our business plan as we don't have to acquire to meet our business objectives.

Speaker Change: So let me state that first and foremost, but that being said we are very very focused on growing our exposure in high quality markets across the country and so every one of our 22 plus offices is waking up every day trying to figure out what are the opportunities within that market to own a best in class retail that we feel like.

Speaker Change: As appropriate growth profile and so Nashville has been on that list for quite some time, it's a very tight market and so there's no doubt not a lot of trades in that market.

Michael Mas: And so Nashville has been on that list for quite some time. It's a very tight market. And so there's no doubt, not a lot of trades in that market. We continue to be focused on Nashville, but I'll tell you, we are also focused on the other great markets we operate around the country. And so feel good that we'll win more than our fair share of these opportunities as they present themselves.

Speaker Change: Continue to be focused on Nashville, Nashville, but I'll tell you. We are also focused on the other great markets, we operate around the country and so feel good that we'll win more than our fair share of these opportunities as they present themselves.

Unknown Executive: Thank you.

Speaker Change: Thank you.

Jamie Feldman: Our next question comes from Jamie Feldman with Wells Fargo. Please proceed with your question. Great, thank you for taking the question. I guess sticking with tariffs a little bit, I mean, have you, are you able to provide any color from conversations with tenants or even your own math in terms of just, you know, tariffs as proposed what they would do to cost a good sold for your tenants? I'll start and... Again, I'll have Alan add if he so desires. I really, I'm just going to go ahead and reiterate. holding our playbook firm, our strategy firm, and we really like it, right?

Speaker Change: Our next question comes from Jamie Feldman with Wells Fargo. Please proceed with your question.

Jamie Feldman: Great. Thank you for taking the question.

Speaker Change: I guess sticking with tariffs a little bit I mean have you are you.

Speaker Change: Are you able to provide any color from conversations with tenants or even your own math in terms of just you know.

Speaker Change: As proposed what they would do to cost of goods sold for your tenants.

Speaker Change: What it could mean for credit coverage just anything you can kind of quantify from either work you've done or conversations you're having with tenants and then along those lines.

Speaker Change: President's going to an office for four more years maybe.

Speaker Change: Maybe more but we'll see.

Speaker Change: Does it change at all your view on the types of tenants you want types of categories, you want in the portfolio or even where you want to own assets longer term.

Speaker Change: I'll start in.

Speaker Change: Again, I'll I'll have Alan add if he if he so desires.

Speaker Change: I really I'm, just going to go ahead and reiterate them.

Speaker Change: Well holding our playbook for our strategy firm and we.

Speaker Change: We really like it right where it is why that we are in this business.

Lisa Palmer: It's why that we're in this business. The format that we own, neighborhood, community shopping centers, mostly grocery anchored, catering to essential needs, catering to service, convenience, and value. I do not expect that to change. We feel really good about it. We feel really good about the sustainability of cash flows and the ability to sustain growth in those cash flows as a result of the offering that we have to both our customers, which are people we're leasing space to, and the customers of those merchants, the shoppers. Reiterate once again, foot traffic is up year over year.

Speaker Change: The format that are that we own neighborhood community shopping centers, mostly grocery anchored catering to essential needs catering to service convenience and value.

Speaker Change: Not expect that to change and we feel really good about it we feel really good about the sustainability.

Speaker Change: <unk> of cash flows and the ability to sustain growth and those cash flows as a result of the offering that we have two both are our customers, which are people, we're leasing space too and the customers of those.

Speaker Change: Merchants the shoppers.

Speaker Change: Ill reiterate once again foot traffic is up year over year. It was up in April over Q1, we feel really good about the positioning and the ability to perform through cycles, because there will always be cycles, and we have proven that we can and will perform and Jamie I would just add as we.

Alan Roth: It was up in April over Q1. We feel really good about the positioning and the ability to perform through cycles because there will always be cycles, and we have proven that we can and will perform. And Jamie, I would just add, as we think about categories, and again, we don't know, but apparel, luxury, hobby, home improvement, variety stores, largely discretionary type retailers, and that's a very small part of our portfolio. And those that could be impacted, we certainly have the very well-capitalized operators that are top in their sector and are time-tested, really knowing how to operate through uncertain times.

Speaker Change: About categories and again, we don't know, but apparel luxury hobby home improvement a variety store as you know largely discretionary type.

Speaker Change: Retailers and that's a very small part of our portfolio and those that could be impacted.

Speaker Change: We certainly have the very well capitalized operators that are top in their sector and our time tested really knowing how to operate through uncertain times and so as we think about our approach to leasing I would say, it's not going to change it has been and it will always be very intentional very deliberate.

Lisa Palmer: And so, as we think about our approach to leasing, I would say it's not going to change. It has been, and it will always be very intentional, very deliberate as we think about how to qualify operators based on their experience, based on their balance sheet, and we're just not filling space to fill space. And I will remind you that the retail world is always changing, and you will always have – you're going to have operators that cannot navigate challenges, changes in their kind of environment, and they'll fail. Really interesting.

Speaker Change: As we think about how to qualify operators.

Speaker Change: Based on their experience based on their balance sheet, and we're just not filling space to fill space and I'll remind you that the retail world is always changing.

Speaker Change: And you will always have youre going to have the operators that cannot navigate challenges changes in there.

Speaker Change: They're kind of environment and they'll fail.

Lisa Palmer: I was telling some of the people that I work with that I went back and did a quick reread of Good to Great, and one of the companies that they highlight is Circuit City as a great company, and we all know what happened with Circuit City. So, it's just an example of it doesn't mean that we're going to be perfect. It doesn't mean that we're going to have 100% batting average or 1,000% batting average, that there will always be failures in our business. We plan for those. We expect those. But we also manage it really proactively, and as a result of that, the impacts in our portfolio tend to be pretty small and pretty immaterial and insignificant, and we manage through it.

Really interesting I was telling us some of.

Speaker Change: The people that I work with that I went back and did a quick read of good degree and one of the one of the companies that they highlight a circuit city is a great company.

Speaker Change: And we all know what happened was with circuit city. So it's just an example of it doesn't mean that we're gonna be perfect. It doesn't mean that we're going to have 100% batting average.

Speaker Change: Percent batting average.

Speaker Change: That there will there will always be failures in our business. We plan for those we expect those but we also manage it really proactively and as a result of that.

Speaker Change: The impacts in our portfolio tend to be pretty small and pretty immaterial and insignificant and we manage through it.

Unknown Executive: Alright, thanks for your thoughts.

Speaker Change: Alright, thanks for your thoughts.

Haendel St. Juste: Our next question comes from Haendel St. Just with Mizzou Health.

Speaker Change: Our next question comes from Handel St Juste with Mizuho. Please proceed with your question.

Ravi Vaidya: Please proceed with your question. Hi, good morning.

Speaker Change: Hi, Good morning. This is Ravi that'd be on the line for Honeywell Hope you guys are doing well.

Ravi Vaidya: This is Ravi Vaidya on the line for Haendel. I hope you guys are doing well. Just trying to do the math here on page nine of the presentation. Looking at the timing of commencements and contributions to the snow pipeline, how should we think about rent recognition either being pulled forward or pushed back in the current environment? Thank you.

Speaker Change: Trying to the math here on page nine of the presentation I'm looking at the timing of commencement and contributions as snow pipeline.

Speaker Change: How should we think about rent recognition either being pulled forward or pushed back in the current environment. Thank you.

Alan Roth: Hey, Ravi. That's a good question. So the slide that just to position everybody, we get some details on our S&O pipeline and the delivery of the same. So, again, just to level set 80% of our S&O pipeline is set to commence in 2025. However, only about a 3rd of that will be recognized as income this year. And what that really says to us is that that positions us for continued positive momentum and tailwind going into 26 as we'll continue to deliver upon the really strong loosing efforts of the team. The variability on these line items from a commencement perspective is rather small.

Speaker Change: Hey, Robby Uh Huh, that's a good question. So the fly that just to position everybody. We give some details on our <unk> pipeline and the delivery of the same.

So again just to level set at 80% of our S. N O pipeline is set to commence in 2025. However, only third about a third of that will be recognized as income this year and what that really says to us is that that positions us for continued positive momentum in tailwind going into 'twenty six as we'll continue to deliver upon the real.

Speaker Change: Strong leasing efforts of the team.

Speaker Change: The various the variability on these line items from a commercial perspective is rather small I mean, we tend to we tend to on the vast majority of our leases embedded contractual rental rate increase states commencement.

Alan Roth: I mean, we tend to, on the vast majority of our leases, embed contractual rental rate increase dates, commencement dates. So the tenant is obligated to commence rent as the earlier when they open or a date. So we know we have tremendous amount of visibility into that certainty of that income stream, our our ability to pull that forward and accelerate that opening to commence rent is what this team is about and what this team has been doing a great job, you know, accelerating build outs to get that rent commencing sooner. So the risk would be in the difference between that that ability and the contractual increase, which I would characterize as relatively small.

Speaker Change: Commencement dates so the tenant is obligated to commence right as you know the earlier when they open or or a date certain so we know we have tremendous amount of visibility into that certainty of that income stream or our ability to pull that forward and accelerate that opening to commence rap is what this team is about and what this team has been doing.

Speaker Change: Great job, you know accelerating build outs to get that rent commencing sooner.

Speaker Change: So the risk would be in the difference between that that ability in the contractual increase which I would characterize as relatively small.

Unknown Executive: Got it. That's really helpful.

Speaker Change: Got it that's really helpful. Just one more here.

Unknown Executive: Just one more here.

Unknown Executive: In terms of your release and pipeline, how forward Hey Ravi, we're limited to one question.

Speaker Change: In terms of your leasing pipeline.

Speaker Change: Forward.

Speaker Change: Hi, there Hey, Ravi we limit it to one question if you could Ricky that'd be great.

Unknown Executive: If you could re-cue, that would be great. Okay, thank you. Thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Ki-Bin Kim: Our next question comes from Ki-Bin Kim with Truist Securities. Please proceed with your question.

Speaker Change: Our next question comes from Keybanc, Kim with <unk> Securities. Please proceed with your question.

Ki-Bin Kim: Thank you So just going back to your comments about April being better than last April, you know I'm guessing the dentist probably isn't too impacted by tariff So if you looked at some of the tenant categories that might be more impacted Is that the same case or are some of those tenants, you know, a lot more impacted? Thank you Keybin... I'm not sure I 100% follow that question. To be honest, I feel bad about that. But let me let me just say a few things. So QSR and medical were our top categories in, in the first quarter, in terms of who we transacted with.

Speaker Change: Thank you.

Speaker Change: So just going back to your comments about April being better than last April.

Speaker Change: I'm guessing the dentist pie isn't too impacted by tariffs. So if you looked at some of the tenant categories that might be more impacted is that is that the same case or are some of those kind of you know a lot more impacted thank you.

Speaker Change: Keybanc so.

Speaker Change: I'm not sure I, 100%, followed by a question to be honest I feel bad about that but let me. Let me just say a few things, so <unk> and medical where our top categories and are in the first quarter in terms of who we transacted with and then there were a lot of tenants that we did multiple deals with that are aggressively out there expanding shake shack a remarkable USR operator.

Alan Roth: And then there were a lot of tenants that we did multiple deals with that are aggressively out there expanding Shake Shack, a remarkable QSR operator, Paris Baguette, Warby Parker, Greycliffs. Those are just a few that come to mind that we did multiple transactions with and we're constantly doing portfolio reviews, and continued one off deals with a lot of nationals as well, who still remain committed. And I think importantly, as Lisa mentioned, looking long term, right. And it's certainly multiple grocers that are out there off price financial services, vet clinics, you know, to name a few.

Speaker Change: Paris forget Morby Parker great clips those are just a few that come to mind that we did multiple transactions with them and we're constantly doing.

Speaker Change: Portfolio reviews, and continued one off deals with a lot of national as well as still remain committed and I think importantly, as Lisa mentioned looking long term right and it's certainly multiple grocers that are out there off price financial services vet clinics.

Speaker Change: To name a few and so things are.

Alan Roth: And so things are Still really good and really active, and I hope that addressed your question. Sure. We haven't seen a shift in the character of our leasing activity in April versus Q1. Yeah. And it's the same to Alan's point, that we're working with a lot of same tenants who are looking to expand their businesses. Similarly, the impact of heavier tariff impact tenants is small. Therefore, it is not as materially represented in our leasing activity. So as of today, Ki Kim, we're just not seeing anything in the numbers. And anecdotally, reiterating what I said in my remarks, the conversations, I think getting a little bit more direct to your question, Ki Kim, the conversations we have had with our tenants have not indicated any shifts in consumer behavior.

Speaker Change: Still really good and really active in and I hope that addressed your question I'm not sure we haven't seen a shift in the character of our leasing activity in April versus Q1, Yeah. It's the same type of challenge that we're working with a lot of phone tenants are looking to expand their businesses. Similarly, the impact of more heavier tariff impact.

Speaker Change: And small therefore, it is not as material representing a recent activity. So as of today keep in we're just not seeing anything in the numbers and anecdotally reiterating what I said in my remarks, the conversations I think getting a little bit more direct to your question keep in the conversations we had we have had with our tenants have not indicate.

Speaker Change: Any shifts in consumer behavior.

Alan Roth: And the fact that we did see overall foot traffic accelerate from Q1, I think just reinforces that. Okay, thank you.

Speaker Change: And the fact that we did see overall.

Speaker Change: Foot traffic accelerate from Q1, I think just reinforces that.

Speaker Change: Okay. Thank you.

Michael Gorman: Our next question comes from Michael Gorman with BTIG. Please proceed with your. Yeah, thanks. Good morning.

Speaker Change: Our next question comes from Michael Gorman with <unk>. Please proceed with your question.

Speaker Change: Yeah. Thanks, Good morning, maybe just going back to the transactions market for a minute here or can you and I know theres more and more details to come but can you maybe give a little bit of background on the grocery anchored asset that's under contract for the JV platform kind of.

Michael Gorman: Maybe just going back to the transactions market for a minute here.

Michael Mas: Can you, and I know there's more more details to come, but can you maybe give a little bit of background on the grosser anchored asset that's under contract for the JV platform kind of What drove that into the JV platform versus wholly owned and kind of maybe the appetite that you see out there for institutional capital still coming into the space given some of the recent market volatility, thanks. Sure, appreciate the question, Michael. So let me let me start with a little more clarity on the assets. So again, once we close, we'll share all of the details.

Speaker Change: What drove that into the JV platform versus wholly owned and kind of maybe the appetite that you see out there for institutional capital still coming into the space given some of the recent market volatility.

Michael Goldsmith: Sure I appreciate the question Michael So let me, let me start with a little more clarity on the asset. So again once we close we will share all the details, but what I will share at this point is it.

Michael Mas: But what I will share at this point is a phenomenal grocery anchored shopping center and a great sub market. And I'll keep it as simple as that, as it relates to the specifics on the transaction, but it's definitely right in line with other great assets we own in the Northeast, and so very excited about the opportunity. And then in terms of the structure with the joint venture, it's a long term institutional JV partner we've had for years and years that is still very bullish on the sector for the same reasons we are. And so we do have a program rotation with them to offer them opportunities as we as we are have the ability to acquire them.

Michael Goldsmith: Phenomenal grocery anchored shopping center in a great sub market and I'll keep it as simple as that as it relates to the specifics on the transaction, but it's definitely right in line with our other great assets, we own in the northeast and so very excited about the opportunity and then in terms of the structure with the joint venture. It's a long term institutional JV partner, we've had for years and yeah.

Michael Goldsmith: Here's that is still very bullish on this sector for the same reasons, we are and so we do have a program a rotation with them to offer them opportunities as we are.

Michael Goldsmith: As we are.

Michael Goldsmith: The ability to acquire them and the hit rate is very high when we say we want to buy it now says they are usually hand in hand with us in this just the case in this scenario of Theyre, taking their opportunity within <unk>.

Michael Mas: And the hit rate is very high when we say we want to buy assets, they are usually hand in hand with us. And that's just the case in this scenario of they're taking their opportunity within the rotation to partner with us on this asset.

Michael Goldsmith: The rotation to partner with us on this asset.

Floris van Dijkum: Our next question comes from Floris Van Duyckum with Compass Point. Please proceed with your question. Hey, thanks for taking my question. So I believe that Brentwood had something like 4.3 million visits last year. Where would that rank in your portfolio? And how many assets do you have that actually do more than where Brentwood gets in terms of annual visitors? I'm sure you have that data somewhere.

Speaker Change: Our next question comes from Floris Van <unk> with Compass point. Please proceed with your question.

Speaker Change: Hey, Thanks for taking my question, so I believe that.

Speaker Change: Brent Wood had something like $4 3 million visits last year.

Speaker Change: Where would that rank in your portfolio and how many assets do you have that actually do do more than where the Brent what gets in terms of annual visitors I'm sure you have that data somewhere Nick I'd love to get your your.

Nick Wibbenmeyer: Nick, I'd love to get your, you know, perspective on that. For more information visit www.FEMA.gov Floris, I'm laughing because I love the question. Talk about a detailed question. To your point, it is a phenomenal asset and is heavily trafficked. I have to admit off the top of my head, I don't know where it ranks in our portfolio. We can circle back with you and give you that specific answer. But it's definitely on the top end. But again, as you can appreciate, Floris, the size matters. And so it's a larger asset. And so by default, traffic counts are going to be higher.

Speaker Change: Our perspective on that.

Laura.

Laura: I'm laughing because I love the question talking about the detail.

Speaker Change: To your point it is a phenomenal asset and it is heavily traffic I have to admit off the top of my head I don't know where it ranks in our portfolio. We can circle back with you and give you that specific answer but it is definitely on the top end, but again as you can appreciate for US the size matters and so it's a larger asset and so by default traffic counts are going to be higher and so not only do we.

Nick Wibbenmeyer: And so not only do we look at total volume, we also look at traffic based on GLA, as well, which also gives us a really accurate prediction on volumes and success for our retailers. And so we can circle back with you on the exact on that one. But I think your assumption is correct that it's at the higher end of our portfolio.

Speaker Change: Look at total volume will also look at traffic based on GLA as well, which also gives us a really accurate.

Speaker Change: Prediction on volumes and success for our retailers and so we can circle back with you on the exact on that one but I think your assumption is correct that it's at the higher end of our portfolio.

Speaker Change: Okay.

Paulina Rojas: Our next question comes from Paulina Rojas with Green Street. Please proceed with Good morning. Regarding developments, I have a follow-up to a prior question. You are looking for a spread over the value or the cap rates the property would sell for, but I imagine cap rates are likely becoming less of a certain thing in this environment. So I wonder how you are navigating that uncertainty.

Speaker Change: Our next question comes from Paulina Rojas with Green Street. Please proceed with your question.

Speaker Change: Yeah.

Paulina Rojas: Good morning, and regarding developments I have a follow up to a prior question you are looking for for spread over that value or the cap rate the property would sell for.

Paulina Rojas: But I imagine cap rates arent likely becoming less of a certain N thing in this environment. So I wonder, how you're navigating that uncertainty and.

Michael Mas: And then second, as you continue to evaluate new development projects, are you seeing any consistent patterns in the types of projects that are emerging? And who are other developers that you are seeing in the market today? Sure, Pauline, let me take your first question first, related to yields and spreads. And so you're right, as I articulated before, we definitely are looking to get a spread above what we think the value of that asset would be stabilized. But it's not because we anticipate selling that asset, it really is to make sure we're getting an appropriate risk adjusted return.

Paulina Rojas: And then second as you continue to evaluate new development projects are you seeing any consistent patterns in the types of projects that are emerging.

Paulina Rojas: Our other developers that you were seeing in the market today.

Speaker Change: Sure Ali let me take your first question first related to yields and spreads and so you're right as I articulated before we definitely are looking to get a spread above what we think the value of that asset would be stabilized, but it's not because we anticipate selling that asset. It really is to make sure we're getting an appropriate risk.

Michael Mas: And as you've heard Lisa mention, even several times on this call, that is our best use of capital. And so when you look at the yields we're getting on our development program, in comparison, to what acquisitions would be, there's no question it's a better source, a better use of our capital in terms of what that long term return is. And then I would just stress, yes, we want that spread because of the risk of that transaction. But we do a phenomenal job de-risking these development opportunities. The team is highly focused on getting entitlements in hand, significant pre-leasing, construction bids and drawings in hand before we close, which is why you've seen usually right after closing, we are starting construction.

Paulina Rojas: Adjusted return.

Paulina Rojas: As you've heard Lisa mentioned, even several times on this call that is our best use of capital and so when you look at the yields we're getting on our development program in comparison to what acquisitions would be Theres. No question. Its a better source a better use of our capital in terms of what that long term return is and then I would just stress, yes, we want.

Paulina Rojas: That spread because of the the risk of that transaction, but we do a phenomenal job derisking These development opportunities.

Paulina Rojas: The team is highly focused on getting entitlements in hand significant pre leasing construction bids and drawings in hand, before we close which is why you've seen.

Paulina Rojas: Usually right. After closing we are starting the construction and so when.

Michael Mas: And so when you combine that going in yield compared to what an acquisition would be and how well these assets are de-risked, and I think our track record shows we do a very good job of delivering these projects on time and on budget, that really is why our eyesight continues to be focused on development. But we are continuing to monitor those yields and we'll continue to push development yields to the best of our ability to be as high as we can get. Look, it's to our benefit to build to as high a yield as we can achieve.

Paulina Rojas: When you combine that going in yield compared to what an acquisition would be and how well. These assets are de risked and I think our track record shows we we do a very good job of delivering these projects on time and on budget that really is why our eyesight continues to be focused on development.

Paulina Rojas: But we are continuing to monitor those yields and we'll continue to push development yields to the best of our ability to be as high as we can get look its to our benefit to build to as high yields as we can achieve and so feel good about that.

Michael Mas: And so feel good about that business plan. And you're starting to see the impact of that come through.

Paulina Rojas: Our business plan and Youre, starting to see the impact of that come through.

Michael Mas: And then in relation to what we're seeing in terms of competition and the type of developments, it's really what we've talked about the last couple of years, which is the grocery side of the business. And so at our scale, we have phenomenal relationships with all of the key grocers in every major market in the country. And they continue to invest right now in their brick and mortar side of their business. They know stores are a critical component to driving their top line. And we're there to partner with them and help them execute on that side of the business.

Paulina Rojas: And then in relation to what we're seeing in terms of competition and the type of developments.

Paulina Rojas: It's really what we've talked about the last couple of years, which is the grocery side of the business and so at our scale, we have phenomenal relationships with all of the key groceries in every major market in the country.

Paulina Rojas: And they continue to invest right now in their brick and mortar side of their business. They know stores are a critical component to driving their top line and we're there to partner with them and help them execute on that side of the business and so the vast majority of the opportunities we're looking at our with our tremendous grocery partners.

Lisa Palmer: And so the vast majority of the opportunities we're looking at are with our tremendous grocery partners.

Lisa Palmer: I feel like it's a great opportunity for me to jump in and just remind. everyone, development is something that we have been committed to for as long as we have been a company, and certainly as long as we've been a public company for decades. And the combination of kind of factors are what really allow us to have such success. And it's why it is the best use of our capital because it does provide us the best returns on our invested capital. And that is so you can't, you can't turn it on and off. You've heard me say that.

Paulina Rojas: I feel like it's a great opportunity for me to jump in and just remind.

Paulina Rojas: Everyone development is something that we have been committed to for as long as we have been a company and certainly as long as we've been a public company for decades, and the combination of kind of factors are what really allow us to have such success and it's why.

Paulina Rojas: It is the best use of our capital because it does provide us the best returns on our invested capital and that is so you can't you can't turn it on and off you've heard me say that in it and you can't build it.

Lisa Palmer: And it and you can't build it in a year. So it has been decades of this. So we have the experience of our team is second to none. And the talent with that goes along with that experience, the relationships with the with the grocers and the retailers and the master plan community developers, and then our cost of capital. And you know, you combine those things, and we will remain committed to it and we will develop through cycles and it will enhance our growth rate.

Paulina Rojas: In a year. So it has been decades of it so we have the experience of our team.

Paulina Rojas: And second to none and talent with that goes along with that experience the relationships with the with the grocers and the retailers and the Master plan community developers and then our cost of capital and you combine those things and we will remain committed to it and we will develop through cycles and it will enhance our our growth rate.

Paulina Rojas: [laughter].

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.

Mike Muller: One moment, please, while we pull. Our next question comes from Mike Muller with J.P. Morgan. Please proceed with your question.

Speaker Change: Our next question comes from Mike Mueller with Jpmorgan. Please proceed with your question.

Michael Mas: Yeah, hi, I guess for the full year bad deck guide, it looks like what you booked in the first quarter was was extremely low, but you maintained the full year guidance. I guess, is it just conservatism given the world? Or is there some known kind of chunky fallout coming down the pike soon?

Mike Mueller: Yeah, Hi, I guess for the full year guide.

Mike Mueller: Guide it looks like what you booked in the first quarter was was extremely low but you maintained full year guidance.

Mike Mueller: Is it just conservatism given the world or is there some kind of chunky fall are coming down the pike soon.

Michael Mas: Hey, Mike. Appreciate the question. We remember we get guidance. You know, not even three months ago, so two, two and a half months ago, we had a pretty good indication at the time that the first quarter would come in light. And we still provided an annual guidance range on credit loss of 75 to 100 basis points. And the reason for the first quarter being light is the health of the tenant base, as Alan articulated, we knew that our cash basis tenancy collection rate on some annual reconciliations would be high, that would be recognized in the first quarter.

Mike: Hey, Mike I appreciate the question.

Speaker Change: Remember we gave guidance.

Speaker Change: Not even three months ago, so two two and a half months ago, we had a pretty good indication at the time that the first quarter would come in light.

Speaker Change: And we still provided an annual guidance range on credit loss of 75 to 100 basis points and the reason for the first quarter being light is.

Speaker Change: The health of the tenant base as Alan articulated we had we knew that our cash basis fancy collection rate on some annual reconciliations will be high that would be recognized in the first quarter and what youre seeing as a result of that right. So.

Michael Mas: And what you're seeing as a result of that, right. So kind of a detailed way of articulating, we understood that this would be a first half to second half story, where the first half would be a little bit higher from a runway perspective than the second on the growth. But nothing was out of the ordinary, nothing was beyond our expectations. So I wouldn't go as far to call it added conservatism, but an inline quarter to our expectations and our outlook remaining the same, given that the current conditions that we're that we're seeing haven't changed. Okay, thanks.

Kind of a detailed way of articulating we understood that this would be a first half.

Speaker Change: It's a second half story, where the first half would be a little bit higher from a run rate perspective, and the second on the growth.

But nothing was out of out of the ordinary nothing was beyond our expectations.

Speaker Change: So I wouldn't go as far to call it added conservatism, but an inline quarter to our expectations and our outlook remaining the same given that the current conditions that were that were seeing haven't changed.

Speaker Change: Okay. Thanks.

Linda Tsai: Our next question comes from Linda Tsai with Jeffreys. Please proceed with your question. Hi, thanks for taking my question. On foot traffic being up 7% first three weeks in April, how much do you think that came from pull forward demand? And then just any color on, you know, variances in traffic by region?

Speaker Change: Our next question comes from Linda Tsai with Jefferies. Please proceed with your question.

Linda Tsai: Hi, Thanks for taking my question on foot traffic being up 7%. The first two weeks in April how much do you think that came from pull forward demand and then just any color.

Color on variances in traffic by region.

Linda Tsai: Yeah.

Lisa Palmer: I'll take the first part and I'll let Alan address the regions. But, you know, I've read the same things that you have and I've seen the data come through of some kind of forward, front loading and spending. But I'd have to think about when you think about, again, our tenant types, there just wouldn't be a lot of that. People are not going grocery shopping for months in advance. And when they go out to eat, they're going out to eat for that day. So I would doubt that there's much of that at our.

Linda Tsai: I'll take the first part.

Linda Tsai: I'll, let Alan address their agents, but.

Speaker Change: Red and the same things that you haven't seen the data come through that at some point.

Speaker Change: Frontloading in spending, but I'd have to think about when you think about again, our tenant types. There just there wouldn't be a lot of that people.

Speaker Change: People are not growing grocery shape shopping for months in advance and when they go out to eat they're going out to eat for that day. So I would doubt that there's there's much of that at our centers.

Alan Roth: Um, yeah, Linda, I would just add that there was marginal differences around the country on traffic count. But importantly, every single region was up. So I think that's really the way I would answer the question. And so there really was no read through from a foot traffic perspective as we tried to bifurcate the regions.

Speaker Change: Yeah, Linda I would just add that there was marginal differences are around the country on traffic count, but importantly every single region was up so I think that's really the way I would answer the question.

Speaker Change: And so there really was a.

Speaker Change: No read through from a foot traffic perspective, as we tried that to bifurcate the regions.

Floris van Dijkum: Thank Our next question comes from Floris Van Dijkum with Compass Point.

Speaker Change: Thanks.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Floris Van Dijk them with Compass point. Please proceed with your question.

Lisa Palmer: Please proceed with Hey, Lisa, a question for you. And I think you're in good position to comment on this. As retailers are going to have margin pressure because of, you know, tariffs and etc. What do you think the impact is on the store and owners like yourselves, in particular owners with, you know, high quality real Appreciate the question. And, you know, I think it's possible we've spoken about this. Retailers have been feeling margin pressures over the past five years.

Speaker Change: Hey, Lisa a question for you and I think you are in good position to comment on this as retailers.

Are gonna have margin pressure because of tariffs and et cetera.

Speaker Change: What do you think the impact is on the store and end and owners like yourselves in particular owners with.

Speaker Change: High quality real estate.

Speaker Change: I appreciate the question and yeah.

It's possible we've spoken about this retailers have been feeling margin pressures over the past five years.

And I am on the board of trustees with ICSC. So I do have the opportunity to sit with many of them. And I have said this often, we want, it's got to be a win-win. We want our tenants to be successful and be productive so that we can continue to raise and increase our cash flows, which comes from rent. And there's no question that there continues to be tailwinds, despite all of these headwinds that we've focused on on this call, there's also tailwinds in our industry due to the limited new supply that has come online over the last decade, really, plus.

Speaker Change: I I am on the board of trustees with ICSC. So I do have the opportunity to sit with many of them and I have said this often we want it it's got to be a win win.

Speaker Change: We want our tenants to be successful and be productive. So that we can continue to raise and increase our cash flows which comes from right.

Speaker Change: And there's no question that there continues to be tell wins. Despite all of these headwinds that we are focused on on this call. Theres also tell ends in our industry due to the limited new supply that has come online over the last decade, and really plus 15 years and as a result, and I said this in my prepared remark.

15 years. And as a result, and I said this in my prepared remarks, there's still a scarcity of quality space available. And retailers are going to want to continue to grow. And they're going to continue to grow in the best locations and where they're going to have the opportunity to produce the best sales, which will then help them with margin pressures that they're facing. So again, to say that we're immune to any impacts of inflation or recessions, I know we're not, but I feel really good about the quality of our trade areas, the quality of the locations within those trade areas and the quality of the retailers in which we do business.

Speaker Change: So there's still a scarcity of quality space available.

Speaker Change: And retailers are going to want to continue to grow and we're going to continue to grow in the best locations and where theyre going to have the opportunity to produce the best sales, which will then help them with margin pressures that they're facing so.

Speaker Change: Again to say that we're immune to any impacts of inflation or recession I know, we're not I feel really good about the quality of our trade areas the quality of the locations within those trade areas and the quality of the retailers in which we do business and.

And I think that we will manage through that and we will continue to grow same property NOI for the years ahead.

Speaker Change: I think that we will manage through that and we will continue to grow same property NOI.

Thanks, Liz.

Speaker Change: For the years ahead.

Speaker Change: Thanks Lisa.

We have reached the end of the question and answer session.

Speaker Change: We have reached the end of the question and answer session I would now like to turn the call back over to Lisa Palmer for closing comments.

I would now like to turn the call back over to Lisa Palmer for closing. Thank you all for your time. Appreciate the questions and have a great rest of your day. Thank you.

Speaker Change: Thank you all for your time I appreciate the questions and have a great rest of your day. Thank you.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your...

Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.