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01/11 03:33
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company's strategic initiatives, such as the successful leasing targets, Crabtree Mall acquisition, and debt reduction plans, indicate positive momentum. The Q&A section showed a constructive debt market and positive leasing demand, despite some management opacity. The company's strong leasing performance, optimistic holiday sales outlook, and positive impact from the Crabtree acquisition support a positive sentiment. The market cap suggests moderate sensitivity to these factors, leading to a prediction of a 2% to 8% stock price increase over the next two weeks.
Leasing Volume 1.5 million square feet of new and renewal leases signed in Q3 2025, an 87% increase from Q3 2024. Year-to-date signed leases in 2025 reached 5.4 million square feet, an 86% increase compared to the same period in 2024. The increase is attributed to strong leasing momentum and execution of the Path Forward plan.
SNO Pipeline Grew from $87 million in August to $99 million as of Q3 2025, with a target of $100 million by year-end. The inclusion of Crabtree Mall is expected to add $140 million of incremental SNO. Growth is driven by leasing initiatives and focus on high-rated spaces.
Portfolio Sales $867 per square foot at the end of Q3 2025, up almost 4% compared to Q3 2024. The go-forward portfolio sales were $905 per square foot. The increase is due to improved leasing and merchandising strategies.
Occupancy 93.4% at the end of Q3 2025, up 140 basis points from the previous quarter. The go-forward portfolio occupancy was 94.3%, up 150 basis points. The improvement is attributed to commitments on vacant spaces and better brands replacing previous tenants.
Leasing Spreads Trailing 12-month leasing spreads as of September 30, 2025, were positive at 5.9%, marking 16 consecutive quarters of positive leasing spreads. This reflects strong tenant demand and effective leasing strategies.
FFO (Funds From Operations) Approximately $93 million or $0.35 per share in Q3 2025. Includes $7.5 million of noncash interest expense related to debt mark-to-market amortization. The performance is supported by leasing and operational improvements.
Net Operating Income (NOI) Go-forward portfolio centers NOI, excluding lease termination income, increased 1.7% in Q3 2025 compared to Q3 2024. Year-to-date, NOI increased almost 2% compared to the same period in 2024. Growth is driven by improved leasing and operational performance.
Net Debt to EBITDA 7.76x at the end of Q3 2025, a full turn lower than at the outset of the Path Forward plan. The reduction is due to debt repayments and asset sales.
Dispositions Almost $1.2 billion in mall dispositions completed to date, including sales of Lakewood, Atlas Park, and Valley Mall. The disposition program aims to improve the balance sheet and refine the portfolio.
New leases signed: 1.5 million square feet of new and renewal leases signed in Q3 2025, an 87% increase from Q3 2024. Year-to-date signed leases in 2025 total 5.4 million square feet, an 86% increase compared to 2024.
Anchor leasing initiatives: 30 anchors targeted to open between 2025 and 2028, with 25 committed to categories like sporting goods, fashion, entertainment, and grocery. Dick's House of Sport has 9 committed locations, with significant traffic increases reported.
New store openings: Opened 355,000 square feet of new stores in Q3 2025, totaling 852,000 square feet year-to-date. Notable openings include Hermès in Scottsdale Fashion Square and Level 99 at Tysons Corner.
Portfolio sales: Portfolio sales at the end of Q3 2025 were $867 per square foot, up 4% from 2024. The go-forward portfolio sales were $905 per square foot.
Occupancy: Portfolio occupancy at the end of Q3 2025 was 93.4%, up 140 basis points from last quarter. Go-forward portfolio occupancy was 94.3%, up 150 basis points.
Leasing spreads: Trailing 12-month leasing spreads as of September 30, 2025, were positive at 5.9%, marking 16 consecutive quarters of positive spreads.
Lease expirations: Commitments on 94% of 2025 expiring square footage and 55% of 2026 expiring square footage, with an additional 30% in the letter of intent stage for 2026.
Dispositions: Completed almost $1.2 billion in mall dispositions to date, with a clear path to achieving the $2 billion target by 2026. Recent sales include Atlas Park, Lakewood, and Valley Mall.
Debt reduction: Paid down almost $1 billion of debt with 2026 maturity dates, reducing net debt to EBITDA to 7.76x, a full turn lower than at the start of the Path Forward plan.
Debt Maturities: The company has one remaining maturing loan in 2025 for $200 million on the South Plains property, which is expected to be in technical default at maturity. Additionally, there are significant 2026 debt maturities that need to be addressed through asset sales, refinancings, loan modifications, or property givebacks.
Leverage: Net debt to EBITDA is currently at 7.76x, which is high, though it has improved from earlier levels. The company aims to reduce leverage to the low to mid-6x range over the next few years.
Dispositions: The company has a $2 billion disposition target as part of its Path Forward plan. While progress has been made, there are still significant assets to sell or give back, including additional mall dispositions and land/outparcel sales.
Occupancy and Leasing Risks: Occupancy at the end of Q3 2025 was 93.4%, with some progress in re-leasing vacant spaces. However, challenges remain in achieving permanent occupancy and improving merchandising mix to drive traffic and rents.
Economic and Market Uncertainty: The company acknowledges macroeconomic uncertainties, political noise, and pending tariffs as potential risks to tenant demand and overall performance.
Anchor Leasing Initiatives: While progress has been made in re-leasing vacant anchor spaces, the success of these initiatives is critical to improving traffic and dwell time in malls, which remains a challenge.
Retailer Environment: Despite strong tenant demand, the company is exposed to risks from legacy retailers reinventing themselves and emerging brands, which may not sustain long-term success.
Leasing Momentum and Targets: The company has achieved 70% of its new lease deals target for the 5-year plan ahead of schedule and aims to reach 85% by mid-2026. The SNO pipeline is expected to meet or exceed $100 million by year-end 2025, with a total incremental SNO target of $140 million including Crabtree Mall.
Anchor Leasing Initiatives: 30 anchors are targeted to open between 2025 and 2028, with 25 already committed. These include categories such as sporting goods, fashion, entertainment, and grocery, which are expected to improve traffic and customer dwell time.
Crabtree Mall Acquisition: The acquisition is expected to be a compelling investment, with early progress in leasing and plans to deploy operating, leasing, and marketing platforms to drive occupancy and NOI growth.
Retailer Demand and Expansion: Strong retailer demand across categories is expected to continue, with legacy retailers reinventing themselves and emerging brands rapidly opening stores. Examples include Dick's House of Sport, Gap, American Eagle, and others.
Debt and Leverage Reduction: The company aims to reduce net debt to EBITDA to the low to mid-6x range over the next few years. Progress includes paying down $1 billion of debt over the past year and achieving a full turn lower in leverage since the Path Forward plan's inception.
Disposition Program: The company plans to complete its $2 billion disposition program by the end of 2026, with $1.2 billion already completed. Remaining dispositions include outparcels, freestanding retail, non-enclosed mall assets, and land.
The selected topic was not discussed during the call.
The company's strategic initiatives, such as the successful leasing targets, Crabtree Mall acquisition, and debt reduction plans, indicate positive momentum. The Q&A section showed a constructive debt market and positive leasing demand, despite some management opacity. The company's strong leasing performance, optimistic holiday sales outlook, and positive impact from the Crabtree acquisition support a positive sentiment. The market cap suggests moderate sensitivity to these factors, leading to a prediction of a 2% to 8% stock price increase over the next two weeks.
The earnings call summary reveals strong financial performance with record leasing progress and a growing SNO pipeline, despite some uncertainties. The Q&A section highlights confidence in re-leasing and strategic acquisitions, with no major risks identified. The company's strategic plan to reduce leverage and increase asset sales is on track, and the focus on permanent tenants and high-quality assets is promising. The market cap indicates moderate sensitivity to these developments, suggesting a positive stock price movement within 2% to 8% over the next two weeks.
The earnings call presents a mixed picture: EPS missed expectations, but FFO showed improvement. The leasing strategy appears strong, with increased leasing spreads and a growing SNO pipeline. However, occupancy rates declined, and net debt to EBITDA remains high. The Q&A session revealed some management evasiveness and uncertainties, particularly around core versus non-core NOI and asset pricing. The market cap suggests moderate volatility, but without strong positive catalysts or partnerships, the stock is likely to remain neutral in the short term.
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