Brixmor (BRX) Q1 2026 Earnings Call Transcript

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DATE

Tuesday, April 28, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Brian T. Finnegan
• Chief Financial Officer — Steven T. Gallagher
• Executive Vice President, Chief Investment Officer — Mark T. Horgan
• Senior Vice President, Investor Relations — Stacy Slater

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TAKEAWAYS

• Same Property NOI Growth -- 6.4% year over year, with 410 basis points from base rent and 120 basis points from other income, including recurring contributions such as the Orlando garage restructure.
• Consumer Traffic -- Over 220 million visits, representing a 3.5% year-over-year increase in foot traffic at shopping centers.
• Leasing Activity -- 1.3 million square feet of new and renewal leases executed at a blended cash spread of 27%; new lease spreads at 42%, and renewal growth at a record 21%.
• Leased Occupancy -- Total leased occupancy stood at 95.1%, unchanged sequentially and up 100 basis points year over year; small shop occupancy at 92.1%, up 130 basis points year over year.
• Funds from Operations (FFO) -- NAREIT FFO was $0.58 per share in the quarter, supported by strong NOI performance.
• Signed-but-Not-Commenced (SNOC) Pipeline -- Reached $67 million, a 10% increase year over year, with a record $24 per square foot, 25% above in-place average base rent; 370 basis point spread between leased and billed occupancy, with $38 million expected to commence ratably throughout 2026.
• Reinvestment and Development Returns -- $78 million of projects stabilized at a 9% average incremental return; six new outparcel projects added at a 16% incremental return.
• Active Reinvestment Pipeline -- At period end, the pipeline stood at a 10% average incremental return and a further $700 million in the future pipeline.
• Dispositions and Acquisition Pipeline -- $108 million of asset dispositions completed; $160 million of assets under control in high-growth markets with a robust acquisition pipeline in underwriting.
• Equity Raise -- $116 million raised through the forward ATM equity program to support capital recycling and acquisitions.
• Balance Sheet and Liquidity -- $1.8 billion of available liquidity, including $425 million in cash, $115 million of unsettled forward ATM proceeds, and $1.25 billion in revolving credit capacity; debt to EBITDA at 5.3 times.
• Guidance Updates -- Same property NOI growth guidance raised to 4.75% to 5.5%, and FFO guidance lifted to $2.34 to $2.37 per share, with base rent contribution expected to accelerate.
• Interest Rate Management -- $100 million interest rate hedge entered at 3.99% ahead of a June bond maturity to manage Treasury market volatility.

SUMMARY

Brixmor Property Group (NYSE:BRX) management noted that consumer value-seeking and resilient tenant sales contributed to portfolio stability despite macroeconomic uncertainty. Institutional capital inflows and low new supply supported a highly competitive transaction market, with cap rate compression evident in high-demand assets. The team emphasized disciplined capital allocation, maintaining low leverage while targeting accretive reinvestment and acquisition opportunities aligned with a long-term value creation strategy.

• Brian T. Finnegan stated, "We are operating in a period of heightened uncertainty. Geopolitical tensions and capital markets volatility are real, and we are monitoring them. That said, the fundamentals for our property type remain exceptionally strong."
• Steven T. Gallagher reported, "We were at 54 basis points of total revenues within the quarter. If you look back over the last several years, there is a little bit of seasonality on when we report that, based on the collection mainly of real estate tax bills for large cash-basis tenants," pointing to ongoing positive rent collection trends.
• Mark T. Horgan described new capital inflows as "compressing cap rates across all asset types," and observed private equity and high net worth buyers actively pursuing open-air retail assets due to attractive cash flow dynamics.
• The company highlighted multi-phase redevelopments and transformational anchor additions, with future phases still to come, particularly at projects like Wynnewood Village and Block 59.
• Backfilling vacated anchor boxes was discussed as an opportunity for significantly higher re-lease spreads, especially with grocer tenants, in one of the "tightest box supply environment across the country."
• Management noted that payback and maintenance CapEx remain at decade lows, enabled by efficient leasing processes and higher-quality tenant demand.
• Renewal rates reached record highs, with anchor rents signed last year at over $17 per square foot and new leases in the mid-$20s, indicating broad-based ABR improvement.

INDUSTRY GLOSSARY

• SNOC (Signed-but-Not-Commenced): Leases that have been executed but for which rent commencement has not yet begun, representing contracted future cash flow.
• ABR (Average Base Rent): The average rent per square foot contracted with tenants, a key measure of real estate pricing power.
• Outparcel: A freestanding building or development pad within a shopping center, typically leased to a single tenant, often a retailer or restaurant, and developed to increase site utilization.

Full Conference Call Transcript

Brian T. Finnegan: Thank you, Stacy, good morning, everyone. I am pleased to report on another quarter of outstanding results by the Brixmor Property Group Inc. team as we continued to execute across all facets of our business plan to start the year. We grew same property NOI 6.4% over last year and delivered $0.58 per share in FFO, results that demonstrate the momentum that is accelerating across the platform which is also reflected in our improved outlook for the year. These results continue to differentiate Brixmor Property Group Inc. in what remains a positive backdrop for open-air, grocery-anchored retail.

Before providing additional detail on Brixmor Property Group Inc.'s strong start to the year, I want to share a few thoughts on the broader environment and how Brixmor Property Group Inc. is positioned within it. We are operating in a period of heightened uncertainty. Geopolitical tensions and capital markets volatility are real, and we are monitoring them. That said, the fundamentals for our property type remain exceptionally strong. Consumer traffic at our centers continues to grow, with over 220 million visits in the first quarter, up over 3.5% year over year.

New supply remains at historic lows, and demand from high-quality retailers for well-located space is as strong as we have seen, as physical stores remain the most cost-effective way to deliver goods to the consumer. These secular tailwinds are attracting institutional capital into our sector at the highest pace in decades. Within this environment, Brixmor Property Group Inc. stands apart. We have meaningful embedded upside across our portfolio, enabling us to continue to deliver on industry-leading mark-to-market opportunities. Our reinvestment and signed-but-not-commenced pipelines provide exceptional visibility into future cash flow growth. The underlying credit quality of our tenant base is the strongest in our company's history, and we have the talent and experience to continue to deliver for our stakeholders.

Now let us turn to our results for the quarter, which highlight the operating strength in our business. Leasing demand from best-in-class tenants remains elevated. We executed 1.3 million square feet of new and renewal leases at a blended cash spread of 27%, with new lease spreads at 42% and record renewal growth of 21%. Our team is capitalizing on strong tenant demand, as well as the investments we have made across the portfolio to elevate the quality of our tenant mix. During the quarter, we added first-to-portfolio locations with Pottery Barn, Williams-Sonoma, L.L.Bean, Rowan, and Teso Life, while continuing to grow with leading operators across the off-price, health and wellness, and quick service restaurant segments.

From an occupancy perspective, total leased occupancy ended the quarter at 95.1%, flat sequentially and up 100 basis points year over year, while small shop occupancy was 92.1%, up 130 basis points year over year, underscoring sustained demand for space. We are still well below peak occupancy expectations for the portfolio, which represents meaningful future upside. And while we do expect overall occupancy headwinds in the second quarter due to a handful of anticipated box recaptures, we expect to return to a growth trajectory in the second half of the year. Our leasing activity during the quarter also increased our signed-but-not-commenced pipeline to $67 million, up 10% year over year.

Accretive reinvestment remains central to our strategy, and we were active in the first quarter. We stabilized $78 million of projects at a 9% average incremental return. This included two transformational projects: the opening of our first large-format Target at Wynnewood Village in South Dallas, Texas, and phase one of Block 59 in suburban Chicago. Both have been exceptionally well received in their respective markets and demonstrate our team's ability to execute large-scale projects that generate meaningful value creation and growth, with future phases still to come at both locations. We also commenced phase three of our Roosevelt Mall redevelopment in Philadelphia, further densifying the site with exceptional operators like Ulta, Shake Shack, and Victoria's Secret.

We continue to make meaningful progress on our outparcel development program, adding a record six new projects at an attractive 16% incremental return. This has been and will continue to be a compelling area of focus, as demand is deep, returns are strong, and the program is highly complementary to our merchandising strategy. In addition, the communities that we serve are increasingly supportive of these projects as they share our desire to convert large, underutilized parking fields into thriving retail and restaurant destinations. At quarter end, our active reinvestment pipeline stood at $[inaudible] with a 10% average incremental return, with another $700 million in our future pipeline, including opportunities at assets we acquired over the last two years.

The depth of this pipeline continues to differentiate Brixmor Property Group Inc., providing many years of runway for accretive reinvestment. On the transaction front, the market has been competitive and dynamic. Increasing demand for open-air retail allowed Mark and team to dispose of $108 million of assets where value had been maximized. And while we did not acquire any assets during the quarter, we continue to identify compelling opportunities to put our platform to work, with over $160 million of assets under control in high-growth markets where we have a strong presence and a deep pipeline of additional opportunities we are currently underwriting.

To support our capital recycling strategy, we raised $116 million through our forward ATM, which provides flexibility as we execute. We will remain disciplined in our approach to capital allocation, focused on acquiring assets where our platform can create value and that are accretive to our long-term growth profile. Before I turn it over to Steve, I want to take a moment to thank the entire Brixmor Property Group Inc. team. The results we delivered this quarter and the acceleration of our business plan are a direct reflection of your focus, discipline, and commitment to this company. I am incredibly proud of this team and grateful for the energy and thoughtfulness you bring every single day.

With that, I will turn the call over to Steve for a deeper review of our financial results and improved 2026 outlook.

Steven T. Gallagher: Thanks, Brian. I am pleased to report solid first quarter results and an improved forward outlook as we continue to capitalize on the strength of the current retail environment and the embedded opportunity within the Brixmor Property Group Inc. portfolio. First quarter same property NOI increased 6.4%, supported by a 410 basis point contribution from base rent growth due to the stacking of rent commencements. [inaudible] and other income contributed an additional 120 basis points, driven in part by the [inaudible] Orlando garage restructure discussed last year. While these dollars are recurring, the year-over-year benefit to same property NOI growth is limited to the first quarter, as the garage contribution began in the second quarter of last year.

Revenues deemed uncollectible contributed 30 basis points to growth as we continue to benefit from the improving underlying credit quality of the portfolio. NAREIT FFO was $0.58 per share in the first quarter, benefiting from the strong same property NOI performance. Our signed-but-not-yet-commenced pipeline ended the quarter at $67 million at a record $24 per square foot, 25% above in-place ABR per square foot, and ended the period with a 370 basis point spread between leased and billed occupancy. We anticipate approximately $38 million of that signed-but-not-commenced ABR to commence ratably throughout 2026. Turning to our forward outlook, we increased our same property NOI growth guidance to 4.75% to 5.5% and our FFO guidance to $2.34 to $2.37 per share.

We expect base rent contribution to growth will accelerate as the year progresses, and we continue to expect revenues deemed uncollectible of 75 to 100 basis points of total revenues, supported by ongoing positive trends in rent collections. The increase in our FFO guidance reflects the strength and visibility of our same property NOI trajectory. From a balance sheet perspective, we took advantage of our improved cost of capital and proactively raised $115 million of equity under our at-the-market equity program on a forward basis to partially fund our growing acquisition pipeline.

As we look to our upcoming bond maturity in June, we proactively entered into a $100 million interest rate hedge at 3.99%, providing us protection against recent volatility in the Treasury markets. We ended the period with $1.8 billion of available liquidity, including $425 million in cash, $115 million of unsettled forward ATM proceeds, and $1.25 billion in capacity under our revolving credit facility, leaving us well positioned with flexibility to execute under our business plan. Debt to EBITDA is 5.3 times, as the continued growth in free cash flow of the underlying portfolio has allowed us to naturally deleverage while funding accretive redevelopment and acquisition pipelines.

Our first quarter results demonstrate strong fundamentals, sustained leasing momentum, and solid visibility into future earnings. With same property NOI and FFO growth expected to be approximately 5% at the midpoint of our revised guidance, supported by meaningful embedded growth and a flexible balance sheet, we are well positioned to execute and drive long-term value. I will now turn the call over to the operator for Q&A.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press 2 if you would like to remove your question from the queue. As a reminder, we ask analysts to limit themselves to one question and to re-queue for a follow-up so that other analysts have an opportunity to do so as well. One moment, please, while we poll for questions. Our first question comes from Michael Anderson Griffin with Evercore ISI. Please proceed with your question.

Michael Anderson Griffin: Great. Thanks. Brian, appreciate your commentary there on the prepared remarks. Curious if you could quantify the expected headwind to occupancy in the second quarter that you detailed? And then maybe as it relates to the SNOC commencement, Steve, I know you mentioned about $38 million coming on ratably throughout the balance of the year. If that delta between signed and occupied was 370 basis points in the first quarter, how do you expect that to progress throughout the balance of the year?

Brian T. Finnegan: Mike, thanks for the question. Just on the first part related to occupancy, we are highlighting it because it may impact the growth trajectory throughout the year. It is not always linear. Those boxes are within our improved guidance range and outlook. There is opportunity there for mark-to-market. We knew we were getting them back. We do expect to get back on a path to growth. Overall, we are very pleased with the portfolio. We are well below peak occupancy, so it is a handful of boxes. We expect it to be modest, but ultimately expect to be able to put better tenants in at much higher rents.

Steven T. Gallagher: And on the commencement side of the SNOC pipeline, we do expect it to commence ratably. Importantly, the entire team is really focused on backfilling that pipeline. As we continue to backfill and commence rent out of that pipeline, you might see a wider delta for the remainder of the year, as there are some really impactful leases within that SNOC pipeline that are coming on in 2027. One of our largest pipelines we have had with Publix is in that longer-term portion within the SNOC pipeline.

Operator: Thank you. Our next question comes from Michael Goldsmith with UBS. Please proceed with your question.

Michael Goldsmith: Good morning. Thanks for taking my question. Can you talk a little bit about the acquisition environment? What are the opportunities you are seeing, if you are seeing any, and if that is influencing pricing? Clearly, you disposed of some stuff in the quarter and you tapped the ATM, so you have the liquidity to participate, but just a sense of the opportunities that you could use this capital on. Thanks.

Brian T. Finnegan: Michael, I would just say, as I mentioned, it has been competitive, but we also like what we are seeing out there. Mark, why do you not give more detail on that?

Mark T. Horgan: As Brian highlighted in his remarks, we are certainly seeing new capital come into the space, which I think is a real reflection of the healthy fundamentals that everyone is seeing, and a good signal for future growth in the overall business in open-air retail. From a competitive market perspective, that new capital is certainly compressing cap rates across all asset types. You are seeing compression on smaller grocery-anchored deals and smaller unanchored deals. We are also seeing the return of some really low-priced capital chasing high-profile deals, which has pushed some deals into the high 4s in certain cases. From a Brixmor Property Group Inc. perspective, we have been at this acquisition game for a long time.

We have developed lots of relationships. As we think about sourcing acquisitions, part of it is through brokers, like it has been for many years, and the other half really has been direct deals. That is how we compete. We really try to have a good and intentional way of thinking about assets that work for Brixmor Property Group Inc. You should expect us on the transaction front to always remain disciplined. If you look at last year, we did not close any acquisitions in the first couple of quarters. We closed $420 million in the second half of the year. We really try to drive this business for long-term cash flow and value growth.

We are excited about what we see in this $160 million we have under control, and importantly, we see a really healthy pipeline of assets behind that. We are going to continue to find those assets where we can really put our platform to work and drive strong rent mark-to-market, redevelopment opportunities, and drive those unlevered IRRs in the 9% to 10% range. We are really bullish about what we are seeing in the acquisition market today, but expect us to remain disciplined once we put capital out.

Brian T. Finnegan: And, Michael, I would just add, we have been thrilled with how the team is executing on what we bought. We are ahead of our underwriting on the $400 million that we bought last year. That gives us a lot of conviction as we are out there in the market in terms of being able to drive a growth profile that is accretive to the growth profile of the company and in line with what we have been doing. We are excited about that.

Michael Goldsmith: Excellent color here, guys. Thanks. Good luck in the second quarter.

Operator: Our next question comes from Alexander David Goldfarb with Piper Sandler. Please proceed with your question.

Alexander David Goldfarb: Hey, good morning. Big picture: we have had massive inflation since COVID the past few years, which fortunately seems to be subsiding, but now we have spiking energy prices. Yet you do not seem to talk about any slowdown in tenant leasing. You talked about consumer traffic being up, I think, 3% year over year. Is it just that the consumer and the retailers are basically impenetrable from price shock? How do we sort of manifest this, especially as your portfolio is sort of middle market? It is not like you are super high end. You are middle market.

Trying to get a better sense for how the consumer and the retailers seem to be stomaching it when the headlines would suggest otherwise?

Brian T. Finnegan: Alex, it is a great question. I would say consumers are adapting versus collapsing. Across the income spectrum, you are seeing consumers look for value. That helps our grocers and our off-price retailers. There is a higher percentage of share going to health and wellness; that helps our fitness operators and our higher-quality restaurant options. You are still seeing some positive trends in the economy: there is still decent wage growth and a strong job market. We have been pleased with traffic trends. Interestingly, from a leasing perspective, two-thirds of our leasing during the quarter happened after the conflict started. Retailers today have been nimble and have been catering to what the consumers want.

Another point is retailers have more data today than they ever have on their consumer—understanding what is selling within the stores, what is getting delivered from the stores, and how that fits within an omnichannel strategy. They are better positioned to adapt to different consumer trends. We are encouraged. It is something that we are watching very closely. We do not see any delinquencies picking up in our small shop tenancies. You can see that coming through in the bad debt numbers for the quarter. We will continue to watch, but have been encouraged by the trends so far.

Operator: Our next question comes from Todd Michael Thomas with KeyBanc Capital Markets. Please proceed with your question.

Todd Michael Thomas: Yes. Hi. Thanks. Good morning. I just wanted to ask about the equity issuance in the quarter and that decision. Can you speak about your interest level to issue additional equity at these prices, how you are thinking about funding obligations in general, and whether you might look to over-equitize acquisitions here a bit to perhaps drive down leverage more meaningfully than you had previously?

Brian T. Finnegan: Todd, I will take the first part and maybe Steve can chime in. We saw a window during the first quarter, with the acquisition pipeline growing, to utilize the ATM on a forward basis. It is very similar to what we did in 2024 to help fund acquisitions. We are going to remain very disciplined with our equity. We recognize that it is precious. We saw an opportunity, so we took it during the first quarter, and we are pleased with what we are seeing in the acquisition market.

Steven T. Gallagher: These are long-term assets, and we think about our balance sheet over the long term. While the match funding might not always occur in the quarter, we are really thinking about long-term funding of our business. Importantly, what you have seen in our leverage level is that we have been able to naturally delever through the growth that is coming through in the portfolio without having to issue equity. At 5.3 times levered, we feel really comfortable where we are today.

Operator: Our next question comes from Haendel St. Juste with Mizuho Securities. Please proceed with your question.

Haendel St. Juste: Hey there. Thanks for taking my question. My question is on the leasing CapEx. A bit of a jump in the quarter—I think it is up 30% year over year. I am assuming that is tied to the recent backfillings and why the anchor and release spreads are up 90%. Can you add some color on what is driving this, and should we expect the leasing CapEx figure to stay elevated near term given the size of the SNOC pipeline? Thanks.

Brian T. Finnegan: Haendel, we remain pleased with the overall CapEx trends in the portfolio. I think that was the nature of the pool this quarter. If you looked at overall CapEx, it was down versus the fourth quarter of last year. We expect CapEx as a percentage of NOI to be in line with where we were a year ago, which were decade lows for this portfolio. All the things that we have been talking about relative to demand for space and tenants taking on more existing conditions have allowed us to be more efficient with that leasing capital spend.

We did lease a lot of space last year, so there are some costs associated with that, but we are filling those boxes much more efficiently. Our payback trends remain at decade lows for the portfolio as well. Maintenance CapEx will continue to be at a level we were at a year ago, which again was the lowest for the portfolio. We feel very well positioned in terms of what we are seeing from those CapEx trends, and what you saw during the quarter was just the nature of how some of the deals came through.

Operator: Our next question comes from Greg Michael McGinniss with Scotiabank. Please proceed with your question.

Greg Michael McGinniss: I appreciate the color so far on the acquisition market, but I am curious what type of buyer you are running into on the competition side and also who tends to be acquiring your assets and at what cap rates. And then was the comment on high-4% cap rates related to types of assets that you would be interested in acquiring, or is that just a high watermark that you have seen in the market?

Mark T. Horgan: The high-4% comment is really just a high watermark you are seeing from some of the lower-priced capital coming in for high-profile deals. Our strategy is going to remain finding assets where we can drive long-term IRR growth in that 9% to 10% range. With respect to buyers, you have seen a full range of buyers. You have seen private equity funds come in, the rise of high net worth buyers purchasing assets, and smaller private equity funds coming to the forefront. The broad trend is that a lot of private capital is saying the cash flow generation out of open-air retail is very attractive relative to other asset types today.

They are coming into the space, seeing very strong fundamentals that Brian has been talking about, and they like access to this cash flow level. We are competing with this full set of folks when we are trying to buy assets, and we are selling assets to that same group. Where it comes back to for Brixmor Property Group Inc. is our operating platform. We try to find those assets where we can put the platform to work to drive value.

Greg Michael McGinniss: Mhmm. Okay. Thank you.

Operator: Our next question comes from Caitlin Burrows with Goldman Sachs. Please proceed with your question.

Caitlin Burrows: Hi. Good morning, everyone. Maybe just on the same-store NOI growth side, I know you gave some comments about a unique factor that drove especially strong results in the first quarter. You mentioned a potential expected occupancy dip in the second quarter. Could you go through what it would take to get you to the low versus high end of the same-store NOI guidance range now?

Steven T. Gallagher: Importantly, when you look at the trajectory of same property NOI growth, focusing on that top-line base rent, that has been accelerating since the middle of last year, and we expect that to continue throughout the remainder of this year. When you think about the highs and lows and the puts and takes, it is similar to most quarters. The team works every day to get rent commencing sooner—pulling those rent commencement dates forward—continuing to lease additional space and getting them open within the year. Then ultimately, what will happen on the bad debt side: we have seen some positive trends. We still think 75 to 100 basis points is appropriate where we sit at this point in the year.

Those are really the puts and takes to the high and the low within that range.

Brian T. Finnegan: And, Caitlin, just because you mentioned occupancy again, to reiterate, we expect that impact to be fairly modest. We get the question on trajectory a lot. We are expecting to be back on a path to growth towards the end of the year. What we leased in the first quarter was ahead of where we were last year. Our deal flow into committee is ahead of where we were, both in rent and square footage. We remain very excited by what we are seeing in the leasing environment. It is just not always linear in terms of the growth trajectory as it relates to occupancy.

Caitlin Burrows: Thanks.

Operator: Our next question comes from Cooper R. Clark with Wells Fargo. Please proceed with your question.

Cooper R. Clark: Great. Thanks for taking the question, and I appreciate the earlier comments on the acquisition pipeline. I just wanted to touch on the transaction market and was curious if you could provide any incremental color in terms of liquidity today. It seems like higher demand for the sector is being met with an ample amount of product coming to the market. Also, any color on some of the product where you might be seeing better opportunities, whether on the large format side or value-add?

Brian T. Finnegan: Let me start, and I will give it to Mark for more detail. What you are seeing from institutions and the demand for the space is because of all the great things that are happening. We are in a very low supply environment. Traffic continues to grow at our shopping centers. The consumer remains resilient. Our retailers are performing, and there continues to be upside in the asset class. That is why you are seeing so much demand from a wide range of capital sources.

Mark T. Horgan: I will just reiterate what Brian said. It has been a big change over the last several years with the amount of capital flowing in. There is plenty of liquidity for us today. As far as where we are seeing opportunities, it is the same type we have been trying to take advantage of for a long time: assets that are under-rented, where there is large rent mark-to-market and redevelopment opportunities. That will not change as we look to place capital. We want to find ways to put our platform to work and drive long-term value and cash flow.

Cooper R. Clark: Great. Thank you.

Operator: Our next question comes from Craig Allen Mailman with Citi. Please proceed with your question.

Craig Allen Mailman: Just to the acquisition side of things, as we think about the equity being put to work, how should we view the going-in yields versus that longer-term 9% to 10% IRR? And then also, on the other side of Todd’s earlier question about over-equitizing, how do you think about competing with the private guys that are using more debt, given the stability of the asset class, while you and your public peers are driving leverage down at the same time? It kind of puts you at a competitive disadvantage on the margin. How do you think about the use of equity here versus even expanding leverage a bit on the margin?

Brian T. Finnegan: Craig, let me start. We are spending a bunch of time on acquisitions and we are pleased with what we are seeing in the market, but let us not forget, our core business strategy is to accretively reinvest in the portfolio. We had a fantastic quarter on the redevelopment front. The pipeline continues to be very large. Our team is demonstrating the ability to deliver larger projects at scale. You are seeing those come through. We have been pleased with what we are seeing in the acquisition market and will continue to be opportunistic there, but it is secondary to what we do. We can remain disciplined. We do not have to buy to drive growth.

Mark T. Horgan: On how we are competing with private capital, they are seeking simpler, more stabilized deals. We are trying to find assets where we can put our platform to work for future redevelopment, like the Brittni Plaza platform from a couple of years ago. The private folks are not really seeking that type of opportunity today. On going-in yields versus IRR, we underwrite to drive that 9% to 10% unlevered IRR over time through mark-to-market and redevelopment, so the going-in yield can be lower with clear, actionable value-creation levers.

Steven T. Gallagher: On the balance sheet side, with the equity issuance, we look at all sources of capital available to us. We were a net acquirer last year and did not issue any equity. It is about the long-term financing of the business and providing us with the flexibility to execute under the business plan. The redevelopment pipeline is still funded with free cash flow on a leverage-neutral basis, so where we are issuing equity is generally going to be additive to what we can do in the transaction market.

Operator: Our next question comes from Samir Upadhyay Khanal with Bank of America. Please proceed with your question.

Samir Upadhyay Khanal: Good morning, everybody. Brian, maybe talk about bad debt and how that is tracking year to date and how that compares to your guidance of, I think you said, 75 to 100 basis points. It sounds like you are tracking better from your comments, but you left the guide unchanged from that perspective. Any categories driving that conservatism? Thanks.

Brian T. Finnegan: Steve can touch on the guide, but this is the best underlying credit profile this portfolio has ever seen. Move-outs were at historic lows for the portfolio last year and are down 10% from a GLA perspective thus far year to date. If you include the bankruptcies, that is just normal course move-outs; include the bankruptcies last year and they are cut in half. From a payment trend perspective, all the things that we have been doing to attract higher-quality tenants and the stringent underwriting standards that Steve’s team has in place, working with our leasing team, have positioned us very well.

Looking out over the balance of the year, we feel adequately provisioned, and we feel very confident in the quality of the cash flows in the portfolio today. From a category perspective, drugstores are going to continue to close stores. It is a very low percentage of what we do—it is about 80 basis points. We cut our office supply exposure in half; they are going to close stores, and we leased a number of those boxes to off-price uses over the last few quarters at significant spreads. Even within categories that may be on a “watch list,” we have very low exposure. In restaurants, two-thirds of our exposure is from national and regional tenants.

Our top restaurants are Starbucks, Chipotle, and Darden. We feel really good about the nature of that tenancy as well. Taken as a whole, this is the best position we have ever been in from a credit quality perspective.

Steven T. Gallagher: We were at 54 basis points of total revenues within the quarter. If you look back over the last several years, there is a little bit of seasonality on when we report that, based on the collection mainly of real estate tax bills for large cash-basis tenants. So when you are looking at the quarter, it is not always a straight trajectory. We have commented on that in previous years. Saying all of that, we agree with everything Brian said. We are still seeing a lot of positive trends in collection, and that is where the 54 will sort of balance out at some point, all things considered.

Operator: Our next question comes from Analyst with BMO Capital Markets. Please proceed with your question.

Analyst: Hey. Thanks. Good morning, everyone. I appreciate the comments around the positive foot traffic seen to start the year, but I was just curious if you could update us on tenant OCRs, and are there any parts of the tenant base where OCRs are improving or deteriorating? Thank you.

Brian T. Finnegan: From an occupancy cost perspective, tenant sales remain very healthy. You saw that come through in the percentage rent line item this quarter. We have actually seen some wins on the audit front as well. For a lot of our tenants that pay percentage rent—whether that is grocers or restaurants—we continue to see those numbers stick, and they are elevated a bit this year. Across the board, as we look at occupancy costs and assess those from a renewal perspective, we have renewals at record rates for the portfolio at 21%. Retailers and operators are not paying that unless their stores are profitable. We are seeing positivity across the board.

This is still the most profitable way to deliver goods to the consumer, and retailers are getting smarter about how they are stocking their stores and managing inventory levels, which ultimately makes those stores more productive. From an occupancy cost and overall sales trend perspective, we are encouraged by what we see.

Operator: Our next question comes from Floris van Dijkum with Ladenburg Thalmann. Please proceed with your question.

Floris van Dijkum: Hey, thanks, guys. You had really strong ABR growth again this quarter. Could you maybe talk a little bit about the differential in ABR between renovated portfolios and non-renovated portfolios and where the future upside potentially could come from in terms of ABR growth?

Brian T. Finnegan: Floris, it is fairly broad-based in terms of what we have been seeing, both in assets where we have reinvested and across the portfolio. In projects where we have been able to bring grocers in or significantly change out what was there previously, you are going to see a higher upside. We are now three years running of renewal growth in the mid-teens. We just hit a high for the portfolio. We have taken rents from $12.50 to over $19. We are signing new leases today in the mid-$20s. Our anchor rents over the last year were a record at over $17, and we have leases expiring that we control over the next year at $10.

We have been doing that more efficiently with less capital. We can point to box opportunities where they have been straight backfills and we have doubled or tripled the rent, and we can also point to places where we have made reinvestments and continue to see the benefit. Look at a reinvestment project like Newtown in suburban Philadelphia, which we stabilized several years ago—we are still achieving the highest rents that we ever have in that center, and that was not part of our initial underwriting. It is tough to perfectly differentiate between the two, and we can get back to you with specific numbers, but the upside has been fairly broad-based.

Steven T. Gallagher: And to add to Brian’s point with Newtown, it is also about the amount of properties we have touched at this point. There is a wider range that we have touched, getting that growth flywheel effect across a larger percentage of the portfolio. It is about 25% higher in-place rents on the assets that we redeveloped versus the broader in-place portfolio.

Floris van Dijkum: Thanks, Steve. Appreciate that.

Brian T. Finnegan: Thanks, Floris.

Operator: As a reminder, if you would like to ask a question, please press 1 on your telephone keypad. Our next question comes from Hong Zhang with JPMorgan. Please proceed with your question.

Hong Zhang: As it relates to the expected box move-outs this quarter, can you provide any color on whether you have tenants lined up, what the expected downtime is, and anything on the expected rent spread on re-leasing?

Brian T. Finnegan: This is why I said it should be modest in terms of what we are seeing. We do have leases out on several of those spaces; a few of them we are putting grocers in at significantly higher spreads. I would point to the fact that overall, our in-place anchor rents are in the low double digits. We have been signing them at records for the portfolio. This is the tightest box supply environment across the country, among the tightest that we have ever had, with additional occupancy upside.

It is just the nature of when we get those leases signed, but we are very pleased with the activity, the tenants we are negotiating with, and the rents we are going to be able to achieve as well.

Hong Zhang: Got it. Thank you.

Brian T. Finnegan: You got it. Thanks.

Operator: We have reached the end of our question-and-answer session. There are no further questions at this time. I would now like to turn the floor back over to Stacy Slater for closing comments.

Stacy Slater: Thanks, everyone. We will catch up with you soon.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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