Brixmor Property Group Inc. Q2 FY2025 earnings call

• Strong leasing activity: Drove robust volumes and spreads, with record quarterly annual base rent. Backfilled spaces from bankruptcies with better tenants at higher rents.
• Reinvestment pipeline: On track to meet upper end of $150M-$200M annual goal, with projects like The Davis Collection and Wynwood Village.
• Acquisition of LaCenterra: Iconic grocery-anchored asset in Houston with high-profile vacancies, rent mark-to-market opportunities, and low 6s cap rate with growth potential.
• Small shop leasing: Reached record high of 91.2%, with opportunities for further growth from reinvestments.
• CAM provisions: Disciplined approach improving recovery rate.

Brixmor's leasing activity was robust, with 1.7 million square feet of new and renewal leases executed in the quarter at a blended cash spread of 24%, including over 900,000 square feet of new leases at a 44% spread. This generated the highest quarterly annual base rent in the company's history. Small shop leasing reached a portfolio high of 91.2%. The reinvestment pipeline is expected to be at the upper end of the annual goal of $150 million to $200 million. The acquisition of LaCenterra, a grocery-anchored lifestyle asset in Houston, adds significant upside with below-market rents expiring soon.

Updated same-property NOI growth guidance to 3.9% to 4.3% and increased FFO guidance to $2.22 to $2.25. Expect tenant disruption to drag same-property NOI by 230 basis points, with base rent growth accelerating in the second half as rent commences from the SNO pipeline.

• Ongoing tenant disruption and bankruptcies could impact NOI.
• Potential move-outs and normal course tenant changes that may affect growth.

Q: Todd Thomas with KeyBanc Capital Markets asked about leasing and tenant disruption.

A: Jim Taylor mentioned prayers for 345 Park victims. Brian Finnegan discussed strong leasing activity and improved credit profile with smaller watch list.

Q: Michael Goldsmith with UBS asked about LaCenterra opportunity.

A: Mark Horgan discussed value-added investing, high-profile vacancies, rent mark-to-market, and low 6s cap rate with growth potential.

Q: Samir Khanal with Bank of America asked about other revenue.

A: Steven Gallagher discussed parking agreement renegotiation at Point Orlando and ancillary revenue initiatives.

Q: Greg McGinniss with Scotiabank asked about bad debt and leasing demand.

A: Steven Gallagher noted strong credit quality, and Brian Finnegan discussed positive leasing trends and elevated brands in grocery-anchored centers.

Q: Craig Mailman with Citi asked about earnings cadence and LaCenterra financing.

A: Steven Gallagher discussed first half performance and LaCenterra financing via capital recycling.

Q: Michael Griffin with Evercore asked about retailer margins and tariffs.

A: James Taylor and Brian Finnegan discussed retailers' commitment to stores and positive traffic trends despite tariff noise.

Q: Cooper Clark with Wells Fargo asked about acquisition pipeline.

A: Mark Horgan discussed competitive acquisition market and focus on high-growth opportunities.

Q: Alexander Goldfarb with Piper Sandler asked about next year's growth.

A: James Taylor discussed portfolio positioning for growth despite potential tenant disruption.

Q: Juan Sanabria with BMO Capital Markets asked about CAM impact on margins.

A: Brian Finnegan discussed focus on CAM provisions improving recovery rate.

Q: Haendel St. Juste with Mizuho Securities asked about multiple vs peers.

A: James Taylor discussed growth strategy and ability to close multiple gap.

Q: Caitlin Burrows with Goldman Sachs asked about guidance setting.

A: Steven Gallagher discussed portfolio performance and upward revision of guidance.

Q: Floris Van Dijkum with Ladenburg Thalmann asked about shop occupancy.

A: James Taylor and Brian Finnegan discussed shop occupancy visibility and reinvestment pipeline impact.

Q: Ki Bin Kim with Truist Securities asked about Big Lots and JOANN re-leasing.

A: Brian Finnegan discussed 80% resolved and progress in backfilling spaces.

Q: Mike Mueller with JPMorgan asked about LaCenterra without Trader Joe's.

A: Mark Horgan discussed grocery exposure and value creation.

Q: Linda Tsai with Jefferies Group asked about LaCenterra demographics and master planned community.

A: Mark Horgan and James Taylor discussed demographics and value-added strategy.

Q: Paulina Rojas with Green Street Advisors asked about LaCenterra cap rates and rents.

A: Mark Horgan discussed NOI growth, rent ranges, and upside.

Q: Alexander Goldfarb with Piper Sandler asked about SNO commencement and negatives.

A: James Taylor and Brian Finnegan discussed growth visibility despite potential factors