AKR

• Core Strategic Thesis Validation

  • The company's long-term focus on U.S. street retail has been validated by recent operating results, driven by three core tailwinds: limited new supply, strong performance from tenants targeting affluent consumers, and sustained multi-year growth in direct-to-consumer (DTC) brand demand for standalone street retail space as brands move away from wholesale/department stores.
  • Street retail leases have structural advantages over other formats: 3% annual contractual rent escalators, lower retenanting capital expenditures, and regular fair market value (FMV) resets that allow faster capture of market rent growth and provide inflation protection. Street retail is expected to deliver 200-400 basis points of incremental same-store growth annually compared to the suburban portfolio.
  • Achieving 20-25% ownership of retail space on a core corridor generates scale benefits: improved tenant curation, better market intelligence, higher operating efficiencies, and a resulting ~10% incremental NOI increase for corridor properties.

• Leasing Operational Highlights

  • Q2 2026 set a company record for leasing volume, with $8.9 million in new leases signed; overall rent spreads hit 91% in the quarter. Average payback period for new street retail leases is just over 9 months (including commissions and capex), far faster than the 5-7 year payback for suburban box retail.
  • Vacancy rates on core streets are at historic lows, and tenant demand meaningfully outpaces supply. Tenant sales growth for key brands on core streets averages over 25% year-over-year, with blended health ratios below 9.5%, meaning tenants remain profitable even after recent rent growth, leaving further room for rent upside.
  • The signed not-yet-open (S&O) pipeline reached an all-time high of $16.5 million (~7% of pro rata ABR), up nearly 60% quarter-over-quarter, with half of this pipeline expected to commence in 2026 (heavily weighted to Q4) and the balance starting in 2027.

• Transaction Activity Highlights

  • Since Q3 2024, the company has invested ~$700 million in street retail acquisitions for its REIT portfolio, targeting $1 billion in total acquisitions by the end of 2026, which would nearly double the size of the street retail portfolio. Year-to-date 2026, $228 million in acquisitions have closed, including $149 million in Q2. All acquisitions are accretive to FFO and net asset value (NAV) from day one, hitting the target of 1 penny of FFO accretion per $200 million deployed.
  • Acquisitions focus on adding scale in existing high-potential corridors and unlocking value from below-market leases via FMV resets and retenanting. Recent examples include 4&28 Newberry Street (Boston), 8800 Melrose Avenue (West Hollywood), and an additional storefront in the Flat Iron Union Square market, bringing the company's total there to five.
  • The company has disposed/recapitalized over $500 million of mature I&P platform assets year-to-date 2026 at a nearly 2x equity multiple, with an additional $200 million+ in dispositions targeted by year-end, generating dry powder for new street retail investments.

• Balance Sheet Highlights

  • The company match-funded its acquisition pipeline with $200 million in new equity in Q2 2026, and now has all required equity to complete its full-year 2026 acquisition target and the Henderson Avenue (Dallas) development project.
  • There are virtually no near-term debt maturities, the company holds nearly $1 billion in total liquidity, providing ample dry powder for growth. Street retail capex as a percentage of NOI runs 7-10%, far lower than suburban power center retail (15%) which supports higher incremental bottom line growth from top line gains.

• Full-year 2026 FFO guidance was raised to target approximately 10% year-over-year FFO growth at the midpoint, the second upward revision this year, reflecting stronger than expected operating performance and acquisition accretion that more than offset ~1 penny of short-term dilution from profitable investment management asset sales.
• Same property NOI growth for full-year 2026 is currently projected to trend above the midpoint of the existing 5% to 9% guidance range, with 7.3% growth achieved through the first half of 2026; the company does not plan to update same property guidance quarterly.
• The $16.5 million S&O pipeline is expected to deliver $0.08 of incremental FFO on a full run-rate basis, with ~$0.01 hitting earnings in H2 2026, $0.03 to $0.05 in 2027, and the balance in 2028.
• Management expects to continue delivering 5%+ annual same property growth and strong earnings growth over the next several years, driven by remaining street retail lease-up, 3% embedded contractual growth, the S&O pipeline, and mark-to-market gains on the large portfolio of below-market street retail leases.
• Annual street retail acquisition targets remain $400 million to $500 million, which is expected to deliver over 2 cents of annual FFO accretion.

The firm's portfolio is split between street/urban retail and suburban retail. For Q2 2026, the street retail segment drove all excess results, delivering 16% same-property net operating income (NOI) growth, contributing nearly two cents of incremental FFO year-over-year. Approximately 80% of new average base rent (ABR) signed in the quarter came from the street/urban segment, which represents the firm's high-growth focus. Scaled street corridors (e.g., M Street Georgetown, Armitage Avenue Chicago) delivered even stronger same-property growth exceeding 20% in Q2. The suburban retail segment is largely stabilized, with occupancy already near full levels and lower embedded growth than street retail. The investment management (I&P) segment saw year-to-date dispositions/recapitalizations of over $500 million of assets, delivering a nearly 2x equity multiple and mid-teens IRR for completed deals in 2026.

• Geopolitical events and broader global economic uncertainty create potential volatility for consumer spending, which could impact tenant demand and sales growth.
• Sustained economic weakness could reduce tenant ability to pay higher market rents, slowing mark-to-market gains for the street retail portfolio.
• Increased competition for retail assets from institutional investors has crowded the suburban retail space, which could compress acquisition yields for non-strategic assets.
• Strong demand for street retail space can at times lead to pricing that pushes the company to the sidelines on acquisitions in overheated markets, potentially slowing near-term deployment.
• Quarter-to-quarter rent spreads are expected to be volatile given uneven timing of FMV resets and large individual lease transactions.

Q: Given the strong street retail performance, are current rent levels sustainable, and are you seeing shifts in consumer behavior that could impact this trend? / A: Management notes that a structural industry shift is underway: as department stores and wholesale channels contract, more brands are shifting to DTC standalone stores, and brick-and-mortar stores remain retailers' most profitable channel even in an omnichannel world. Sales growth for core tenants is outpacing market rent growth, leading to declining health ratios, which confirms current rent levels are sustainable. Scale in key corridors allows management to curate tenants and improve overall corridor performance, supporting ongoing rent gains, making this a sustained long-term trend. / Q: You've already raised $200 million in equity this quarter to fund your acquisition pipeline; do you plan to pursue additional equity offerings for 2026? / A: Management confirms the company already has all the equity required to hit its full-year $400-$500 million 2026 acquisition target and complete the Henderson Avenue development project. No additional equity offerings are currently planned, the company only raises equity when it has high conviction that it can deploy the capital immediately into accretive opportunities, and will continue to match-fund future deals as they close. / Q: How do you evaluate going-in cap rates for new street retail acquisitions, and when can investors expect yield expansion on these assets? / A: Management notes that going-in cap rates are far less relevant for street retail than they are for suburban retail, because most street retail acquisitions carry embedded upside from below-market leases that can be unlocked via FMV resets, retenanting, and corridor curation. The company targets stabilization to 6%+ yields in the near term, which is typically 100-200 basis points above the current market trading cap rate for the same assets, with upside realized over a relatively short timeframe as value creation levers are pulled. / Q: What is the structural capex advantage of street retail, and how does it compare to other retail formats? / A: Management quantifies capex as a percentage of stabilized NOI: suburban power centers have a target full capex load of ~15%, grocery-anchored retail runs 10-12%, while street retail capex runs just 7-10% of NOI. While near-term capex is currently elevated due to record leasing activity, the long run rate for street is meaningfully lower than other formats, even with higher per-square-foot rents, which means more top line growth drops to the bottom line.