Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more detail on the $250 million development and redevelopment spend planned for 2025, and the types of projects that will add the most value? Also, do you expect the blended yield to remain at 9% or increase? A: Nicholas Wibbenmeyer, West Region President and Chief Investment Officer, explained that the $250 million spend is based on projects already started, with expectations to find another $250 million in opportunities for 2025. The yields have been steady, with ground-up development yields at 7% plus and redevelopment yields in the low double digits, resulting in a high single-digit blended yield.
Q: What are the drivers of the earnings guidance for 2025, which is now above previous expectations? A: Michael Mas, Chief Financial Officer, highlighted that the primary driver is same-property NOI growth, expected to be between 3.2% and 4%. Additional contributions come from accretive capital allocation, including net acquisition activity and share repurchases. Interest expense is a headwind, but G&A expenses will see a positive contribution due to increased capitalization of overhead from the growing development business.
Q: Can you discuss the credit loss reserve of 75 to 100 basis points and any pressures from tenants in the fourth quarter? A: Michael Mas noted that the credit loss reserve is based on historical averages and current tenant risk assessments. Alan Roth, East Region President and COO, added that tenant health remains strong, with low accounts receivable and increasing sales and traffic, which supports the limited exposure to credit risk.
Q: With the same-store NOI range for the year being better than expected, what is driving the wider spread in guidance? A: Michael Mas explained that the range is consistent with historical guidance, with the biggest factors being move-outs and credit loss. The midpoint of the guidance is slightly positive due to strong leasing activity in the fourth quarter.
Q: How do you view the transaction market and cap rates, and what is the expected value creation from ground-up developments? A: Nicholas Wibbenmeyer stated that the transaction market is healthy, with a focus on grocery-anchored centers. Ground-up developments are expected to yield a 150 basis point spread over acquisitions, with developments solving for a mid 5.5% to 6% cap rate, indicating strong value creation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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