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01/11 11:27
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate positive sentiment. Strong leasing momentum, a pipeline of acquisitions, and improved debt management suggest growth potential. The reaffirmation of FFO guidance and increased NOI are positive signs. The Q&A reveals no significant risks, and the management's focus on buybacks and dividend yield adds confidence. Despite some vagueness on asset recycling timing, the overall outlook remains optimistic.
Leasing Activity Year-to-date through September 30, 2025, completed 482,000 square feet of overall leasing activity, including 424,000 square feet of comparable leasing at a weighted average base rent spread of 21.7%. In Q3, executed 143,000 square feet of new retail leases, renewals, and extensions at an average base rent of $23 per square foot, including 125,000 square feet of comparable leases with a 10.3% base rent spread.
Signed-Not-Open (SNO) Pipeline As of Q3 2025, the SNO pipeline stands at $5.5 million, representing approximately 5.3% of annual cash base rents in place as of quarter-end. Approximately 76% of the SNO pipeline's ABR is anticipated to be recognized in 2026 and 100% in 2027.
Term Loan Financing Closed $150 million in term loan financings before Q3 2025 end, including a new 5-year $125 million term loan maturing in September 2030 and a $25 million upsizing of an existing term loan maturing in September 2029. Initial fixed interest rate is approximately 4.2%, adjusting to 4.7% in March 2026.
Liquidity Ended Q3 2025 with approximately $170 million of liquidity, consisting of $161 million available under the revolving credit facility and $9 million in cash.
Stock Repurchase Repurchased $9.3 million of common stock at a weighted average purchase price of $16.27 per share during Q3 2025. This included $4.3 million towards the end of Q3 and $5 million in October under a new $10 million repurchase program.
Net Debt to EBITDA Ended Q3 2025 with net debt to EBITDA of 6.7x, a slight improvement from 6.9x at the end of Q2 2025. Anticipates further deleveraging as re-leasing progresses and SNO pipeline tenants commence paying rent.
Core FFO Core FFO was $15.6 million for Q3 2025, a $3 million increase compared to $12.6 million in Q3 2024. On a per-share basis, core FFO was $0.48 compared to $0.50 in Q3 2024, reflecting a reduction in leverage.
Same-Property NOI Same-property NOI increased 2.3% during Q3 2025, driven by leasing activity, particularly at Beaver Creek with Onelife Fitness replacing the former theater, and strong small shop leasing at West Broad Village, Plaza at Rockwall, and Ashford Lane.
Leasing Activity: Completed 482,000 square feet of overall leasing activity year-to-date, including 424,000 square feet of comparable leasing at a weighted average base rent spread of 21.7%. Executed 143,000 square feet of new retail leases, renewals, and extensions in Q3 at an average base rent of $23 per square foot.
Shops at Legacy: Signed a 30,000 square foot lease with a co-working operator expected to open by year-end 2026. Signed a 20,000 square foot private members-only social club lease in Q3 2024. Aggregate of nearly 60,000 square feet of smaller shop leases signed over the last 2 years for restaurants, fitness, and retail concepts. Lease percentage now stands at approximately 85%.
South Florida Shopping Center Acquisition: Signed an agreement to acquire a shopping center in South Florida with value-add potential. Expected to close before year-end, with plans to use the line of credit initially and fund the acquisition by recycling an asset around year-end.
Debt Financing: Closed $150 million in term loan financings, including a new 5-year $125 million term loan and a $25 million upsizing of an existing term loan. Reduced revolving credit facility balance and retired a $65 million term loan. Ended the quarter with $170 million of liquidity.
Stock Repurchase: Repurchased $9.3 million of common stock at a weighted average price of $16.27 per share.
Signed-Not-Open (SNO) Pipeline: SNO pipeline stands at $5.5 million, representing 5.3% of annual cash base rents. Approximately 76% of ABR from the SNO pipeline is anticipated to be recognized in 2026 and 100% in 2027.
Guidance Update: Raised core FFO outlook to $1.84-$1.87 per diluted share and AFFO outlook to $1.96-$1.99 per diluted share for full year 2025.
Vacant Anchor Spaces: The company has 10 vacant anchor spaces, of which only 6 have been leased. The remaining 4 spaces are still under negotiation, posing a risk to achieving full occupancy and maximizing rental income.
Debt Maturity and Interest Rates: The company has $17.8 million of debt maturing in 2026. Additionally, interest rates for term loans will increase from 4.2% to 4.7% in March 2026, which could impact financial performance.
Leverage Ratio: The company's net debt to EBITDA ratio is 6.7x, which, while slightly improved, remains high and could limit financial flexibility.
Dependence on SNO Pipeline: The company’s signed-not-open (SNO) pipeline represents 5.3% of annual cash base rents, with 76% of ABR expected in 2026 and 100% in 2027. Delays or issues in realizing this pipeline could impact earnings growth.
Acquisition Financing: The planned acquisition of a South Florida shopping center will initially be financed through a line of credit, with plans to recycle an asset by year-end. This reliance on asset recycling and credit lines could pose financial risks if market conditions change.
Signed-not-open (SNO) pipeline: The SNO pipeline stands at $5.5 million, representing approximately 5.3% of annual cash base rents in place as of quarter end. Approximately 76% of the annual base rent (ABR) from the SNO pipeline is anticipated to be recognized in 2026 and 100% in 2027.
Shops at Legacy leasing updates: A 30,000 square foot lease with a co-working operator is expected to open by year-end 2026. Additionally, a 20,000 square foot private members-only social club signed in Q3 2024 and smaller shop leases aggregating nearly 60,000 square feet are expected to increase the vibrancy of the center. The lease percentage of Shops at Legacy currently stands at approximately 85%.
South Florida shopping center acquisition: The company plans to acquire a shopping center in South Florida with value-add potential before year-end 2025. The acquisition will initially be funded using the line of credit, with plans to recycle an asset around year-end to fund the purchase.
Debt and liquidity management: The company closed $150 million in term loan financings, including a new 5-year $125 million term loan maturing in September 2030 and a $25 million upsizing of an existing term loan maturing in September 2029. The interest rate for these loans will adjust to approximately 4.7% in March 2026. The company ended the quarter with $170 million in liquidity and plans additional deleveraging as re-leasing efforts progress.
Core FFO and AFFO guidance for 2025: The company raised its core FFO guidance to $1.84 to $1.87 per diluted share (from $1.80 to $1.86) and its AFFO guidance to $1.96 to $1.99 per diluted share (from $1.93 to $1.98).
Stock Repurchase Program: The company has recently repurchased $9.3 million of common stock at a weighted average purchase price of $16.27 per share. This includes $4.3 million towards the end of the third quarter to close out the previous $5 million repurchase program and $5 million in October under the recently announced $10 million common stock repurchase program.
The earnings call summary and Q&A indicate positive sentiment. Strong leasing momentum, a pipeline of acquisitions, and improved debt management suggest growth potential. The reaffirmation of FFO guidance and increased NOI are positive signs. The Q&A reveals no significant risks, and the management's focus on buybacks and dividend yield adds confidence. Despite some vagueness on asset recycling timing, the overall outlook remains optimistic.
The earnings call presents a mixed picture. Positive elements include reaffirmed guidance, acquisition progress, and debt management improvements. However, the Q&A reveals potential risks, such as increased leverage for acquisitions and temporary rent losses due to tenant transitions. The lack of specific guidance details and vague management responses add uncertainty. These factors, combined with consistent financial metrics, suggest a neutral short-term stock price movement.
The earnings call presents a mixed outlook. While there are positive aspects such as strong leasing activity and potential mark-to-market upside for acquisitions, there are concerns about the impact of the convertible notes settlement and the associated debt charge. Additionally, the competitive market pressures and the lack of clear guidance on tenant payments and CapEx spending add uncertainty. The Q&A session did not alleviate these concerns, with management providing vague responses. Given these factors, a neutral sentiment is appropriate as the positives and negatives balance each other out.
The earnings call indicates strong financial performance, with increased FFO, raised guidance, and a robust liquidity position. The Q&A revealed no significant concerns, and management plans to settle convertible notes in cash, avoiding dilution. However, there were some vague responses about bad debt, which slightly tempers the outlook. Overall, the positive elements, like raised guidance and strong NOI growth, suggest a positive stock price movement over the next two weeks.
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