Strategic Performance Drivers – Achieved record-setting leasing volume with 819,000 square feet signed, driven by 15% cash rent spreads and a trailing 12-month rollover of 17%, the highest in over a decade. – Performance beat was driven by $0.05 from capital recycling activity,…
ong with $0.05 from higher rental income, recoveries, and incremental income initiatives such as parking and percentage rent. – Strategic remerchandising at Grossmont Shopping Center is underway, replacing an underperforming Macy’s with a 161,000 square foot Bass Pro Shops to create a national draw. – Small shop occupancy reached 92.3%, a level not seen since 2007, allowing management to drive double-digit rent increases on average. – The residential pipeline is focused exclusively on excess land at existing centers to eliminate incremental land costs and leverage existing shopping center amenities for higher rents. – Management attributes the robust demand to a total lack of new retail supply over the last 15 to 20 years, making high-quality existing space increasingly valuable. – The business development platform is on track for 20% year-over-year growth in incremental income, specifically through parking revenues and site activations. Outlook and Strategic Assumptions – Guidance assumes a spike in overall occupancy to the mid-to-upper 94% range by year-end 2026, powered by already signed leases. – Management expects to convert straight-line rent to cash-paying rent over the next few years, forecasting free cash flow to grow from $100 million in 2026 to $150 million by 2028. – The residential development pipeline is projected to add $27 million of new operating income once the current 800-unit pipeline is stabilized. – Acquisition strategy targets 3 to 5 new markets while continuing to fill in existing markets, focusing on assets where management can drive 8% or better unlevered IRRs. – Future growth is expected to be bolstered by a digital innovation program aimed at improving operating