Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the decline in leasing volumes from 3.2 million square feet in Q1 to 1 million in Q4, and what are your expectations for 2025? A: The 1 million square feet of leasing in Q4 was expected due to minimal lease expirations and a slower demand environment. However, in January, we saw an increase in market activity, executing 1 million square feet of leasing year-to-date, including lease-ups of repositioning projects. We are focused on converting this activity into executed leases. - Laura Clark, COO
Q: Can you discuss the components of cash same-store NOI growth, including rent spreads, rent bumps, and bad debt? A: The major drivers include 270 basis points from cash releasing spreads at about 20% for the year, and 320 basis points from rent steps. These are offset by 130 basis points of concessions, 100 basis points of occupancy decline, and 80 basis points from higher bad debt. - Michael Fitzmaurice, CFO
Q: What are your thoughts on market rent growth, given the recent decline in rents for comparable portfolios? A: It's challenging to predict a bottom for market rents due to various demand and supply drivers. However, our small to medium-sized tenant base shows more resilience compared to larger box tenants. Our portfolio's market rents are down about 8% year-over-year, compared to a 25% decline for larger box tenants. - Michael Frankel, Co-CEO
Q: How do you view lease expirations in 2025, and are there any significant move-outs expected? A: We anticipate a 100 basis point decline in average portfolio occupancy for 2025, mainly due to longer projected downtime between tenant move-outs and new rent commencements. About 70% of this decline is impacted by four tenants, with two spaces vacated in Q4 and two expected in 2025. - Laura Clark, COO
Q: Can you clarify why GAAP same-store NOI growth is expected to be lower than cash same-store guidance? A: The difference is due to straight-line rent as we burn off below-market leases, which are generally in the back half of their terms. This creates a drag on GAAP same-store NOI growth. - Unidentified Company Representative
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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