The Goldman Sachs Conviction List is a curated list of stocks that the firm's research team believes have a high likelihood of outperforming the market. ...

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Core Viewpoint - Shopping center REITs are positioned to exploit a partial arbitrage opportunity between private and public real estate markets, which can enhance earnings and shareholder value [1][5]. Group 1: Arbitrage Mechanics - Arbitrage occurs when the same asset trades at different prices across markets, leading to profit opportunities [2]. - Current real estate markets exhibit a partial arbitrage, with private real estate values being 10%-40% higher than public market prices [3]. - The valuation gap between private and public markets has persisted for about two years, allowing REITs to capitalize on this discrepancy [5]. Group 2: REIT Strategies - REITs can buy back their stock and sell properties at higher private market prices, effectively closing the valuation gap [6][11]. - The implied cap rate of a REIT can be calculated by dividing its forward net operating income (NOI) by its enterprise value, which can then be compared to market cap rates for similar properties [7]. - For example, if a shopping center REIT has an implied cap rate of 8% while similar properties sell at 6%, the REIT can sell assets and use the proceeds to buy back stock, resulting in increased NOI per share [8][10]. Group 3: Case Studies - Kite Realty (KRG) plans to sell $500 million in assets to repurchase shares, highlighting the strategy of redeploying capital for shareholder value [11]. - Brixmor (BRX) is also considering buybacks as its share price remains below NAV, with a recent 7% increase in its annual dividend [23]. - CTO Realty Growth (CTO) has already begun executing buybacks, having repurchased $9.3 million in common stock in 3Q25 [24]. Group 4: Market Conditions - The shopping center sector is experiencing a significant disconnect between positive fundamentals and negative stock pricing, leading to mispricing opportunities [30][31]. - Many shopping center REITs are trading at implied cap rates of 7.5%-9%, while high-quality assets could be valued closer to 6% cap rates [32].

Core Insights - Brixmor Property Group Inc. (BRX) has underperformed over the past year, with a loss of approximately 5% in share value [1] - Despite reporting solid results, the company's shares have been negatively impacted by prolonged high interest rates, real estate concerns, and valuation issues [1] Financial Performance - The company reported its Q3 results this week, indicating ongoing operational performance [1]

Core Insights - Brixmor Property Group Inc. (BRX) has underperformed over the past year, with a loss of approximately 5% in share value [1] - Despite reporting solid results, the company's shares have been negatively impacted by prolonged high interest rates, real estate concerns, and valuation issues [1] Financial Performance - The company reported its Q3 results this week, indicating ongoing operational performance [1] Market Context - The broader market environment, characterized by higher interest rates and real estate market challenges, has contributed to the stock's disappointing performance [1]

Financial Data and Key Metrics Changes - NAREIT FFO was reported at $0.56 per share for the third quarter, driven by same-property NOI growth of 4% [12] - Base rent growth decreased to a 270 basis point contribution due to a 150 basis point drop in billed occupancy compared to the previous year [12] - The company expects base rent growth to accelerate into 2026 as billed occupancy rebounds [12][15] Business Line Data and Key Metrics Changes - The company executed 1.5 million square feet of new and renewal leases at a blended cash spread of 18% [6] - New leases were signed at a record rate of $2,585 per square foot, with small shop occupancy hitting a record of 91.4% [6][7] - The signed but not yet commenced rent pipeline remains above $60 million, with $22 million of ABR commenced during the quarter [7][13] Market Data and Key Metrics Changes - The percentage of ABR from grocery anchor tenants is now at 82%, with a 35% increase in year-over-year traffic when adding a grocer [9] - The company closed on the $223 million acquisition of LaCenterra at Cinco Ranch, with seven new leases signed or in process [10] Company Strategy and Development Direction - The company continues to focus on executing its business plan, attracting high-quality tenants in a supply-constrained environment [11] - The redevelopment platform is delivering low-risk, compelling returns with several years of runway for future growth [11] - The company is positioned to recycle capital from low-growth assets into those with higher growth potential [11][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the leasing environment, noting that the pipeline is higher than a year ago despite signing 10% more in GLA this year [38] - The company anticipates significant tailwinds from 2025 rent commencements and a strong signed but not yet commenced rent pipeline [16] - Management expects lease settlement income to be a headwind to 2026 FFO growth but remains confident in the overall outlook [15][44] Other Important Information - The company announced a 7% increase in its annual dividend to a rate of $1.23, allowing for maximum flexibility in capital allocation [15] - The SEC shelf registration statement is due to expire next month, and a replacement will be filed [14] Q&A Session Summary Question: Factors contributing to same-store NOI growth acceleration in Q4 - Management highlighted the commencement of $22 million of rent in the quarter and an additional $19 million expected to commence between Q3 and Q4 [18][19] Question: Future occupancy levels and reinvestment pipeline - Management noted that there is room for improvement in shop occupancy, with several hundred basis points of potential growth [25][26] Question: Acquisition pipeline and cap rates - Management indicated that the market remains competitive, focusing on value-add opportunities and recycling capital into higher growth assets [30][32] Question: Leasing pipeline and retailer expansion - Management remains optimistic about the leasing environment, with retailers looking to expand despite macro uncertainties [37][38] Question: Tenant health and bad debt expense - Management expressed confidence in tenant credit quality and noted a significant reduction in exposure to at-risk tenants [47][48] Question: Yield expectations for redevelopment projects - Management stated that the average yield for redevelopment projects remains in the high single-digit to low double-digit range, with no changes to their thresholds [71][73] Question: Capital recycling and disposition pipeline - Management emphasized the importance of recycling capital from low-growth assets into those with higher growth potential [83][86]

Financial Data and Key Metrics Changes - NAREIT FFO was reported at $0.56 per share for the third quarter, driven by same-property NOI growth of 4% [12] - Base rent growth decreased to a 270 basis point contribution due to a 150 basis point drop in billed occupancy compared to the same quarter last year [12][15] - The company expects base rent growth to accelerate into 2026 as billed occupancy rebounds [12] Business Line Data and Key Metrics Changes - The company executed 1.5 million square feet of new and renewal leases at a blended cash spread of 18% [6] - New leases were signed at a record rate of $2,585 per square foot, with small shop occupancy hitting a record of 91.4% [6][7] - The signed but not yet commenced rent pipeline remains above $60 million, with $22 million of ABR commenced during the quarter [7][13] Market Data and Key Metrics Changes - The percentage of ABR from grocery anchor tenants is now at 82%, with a 35% increase in year-over-year traffic when a grocer is added [9] - The company closed on the $223 million acquisition of LaCenterra at Cinco Ranch, with seven new leases signed or in process [10] Company Strategy and Development Direction - The company continues to focus on executing its business plan, with a strong emphasis on leasing and redevelopment [5][11] - The redevelopment platform is delivering low-risk, compelling returns with several years of runway for future growth [11] - The company is positioned to recycle capital from low-growth assets into those with higher growth potential [11][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the leasing environment, noting that the pipeline is higher than a year ago despite signing 10% more in GLA this year [38] - The company anticipates significant tailwinds from 2025 rent commencements and a strong signed but not yet commenced rent pipeline [16] - Management expects lease settlement income to be a headwind to 2026 FFO growth but remains confident in the overall outlook [15][44] Other Important Information - The company announced a 7% increase in its annual dividend to a rate of $1.23, allowing for maximum flexibility in capital markets [15] - The SEC shelf registration statement is due to expire next month, and a replacement will be filed [14] Q&A Session Summary Question: Factors contributing to same-store NOI growth acceleration in Q4 - Management highlighted the commencement of $22 million of rent in the quarter and an additional $19 million expected to commence between Q3 and Q4 [19][20] Question: Future occupancy levels and reinvestment pipeline - Management noted that there is room for improvement in shop occupancy, with several hundred basis points more to run [26] Question: Acquisition pipeline and cap rates - Management indicated that the market remains competitive, focusing on value-add opportunities and strong growth potential in acquisitions [32][33] Question: Leasing pipeline and retailer expansion - Management remains optimistic about retailer expansion, with a strong pipeline and positive conversations with tenants [38] Question: Tenant health and bad debt expense - Management expressed confidence in tenant credit quality and noted a significant reduction in exposure to at-risk tenancy [48] Question: Yield expectations for redevelopment projects - Management stated that the average yield for redevelopment projects remains in the high single-digit to low double-digit range, with no changes to their thresholds [72][73] Question: Capital recycling and disposition pipeline - Management emphasized the importance of recycling capital from low-growth assets into higher-growth opportunities [84][86]

Financial Data and Key Metrics Changes - NAREIT FFO was reported at $0.56 per share for Q3 2025, driven by same-property NOI growth of 4% [11] - Base rent growth decreased to a 270 basis point contribution due to a 150 basis point drop in billed occupancy compared to the previous year [11] - The company expects base rent growth to accelerate into 2026 as billed occupancy rebounds [11] Business Line Data and Key Metrics Changes - The company executed 1.5 million square feet of new and renewal leases at a blended cash spread of 18% [4] - New leases were signed at a record rate of $2,585 per square foot, with small shop occupancy hitting a record of 91.4% [5][6] - The signed but not yet commenced rent pipeline remains above $60 million, with $53 million of net new rent included [12] Market Data and Key Metrics Changes - The percentage of ABR from grocery anchor tenants is now at 82%, with a 35% increase in year-over-year traffic when a grocer is added [8] - The company closed on the $223 million acquisition of LaCenterra at Cinco Ranch, with seven new leases signed or in process [9] Company Strategy and Development Direction - The company is focused on executing its business plan, which includes attracting high-quality tenants and enhancing its redevelopment platform [4][10] - The company plans to continue recycling capital from low-growth assets into those with higher growth potential [10][74] - The partnership with Publix is expanding, with several new projects announced and more in the pipeline [8][59] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the leasing environment, noting that retailers are looking to expand despite macro uncertainties [38] - The company updated its FFO guidance to $2.23 to $2.25 and affirmed its same-property NOI range of 3.9% to 4.3% [14][15] - Management highlighted a strong demand from tenants to locate in their centers, with significant tailwinds expected from 2025 rent commencements [16] Other Important Information - The company announced a 7% increase in its annual dividend to a rate of $1.23, allowing for the retention of free cash flow while meeting REIT dividend requirements [14] - The company has $1.6 billion of available liquidity as of September 30, including $400 million from a recent issuance [13] Q&A Session Summary Question: Factors contributing to same-store NOI growth acceleration in Q4 - Management noted that $22 million of rent commenced in the quarter and an additional $19 million is expected to commence between Q3 and Q4, contributing to growth [18][19] Question: Future occupancy levels and reinvestment pipeline - Management indicated that there is room for improvement in shop occupancy, with several hundred basis points of potential growth remaining [26][27] Question: Acquisition opportunities and cap rate trends - Management highlighted a competitive market for acquisitions, focusing on value-add opportunities that align with their growth strategy [30][32] Question: Leasing pipeline and retailer expansion - Management remains optimistic about the leasing pipeline, noting that retailers are still looking to expand despite macroeconomic uncertainties [36][38] Question: Tenant health and bad debt expense - Management expressed confidence in tenant credit quality and noted a reduction in exposure to at-risk tenants compared to previous years [45][46] Question: Capital recycling and disposition pipeline - Management discussed the strategy of selling low-growth assets to reinvest in higher-growth opportunities, maintaining a focus on long-term IRR [70][74]

Core Insights - Brixmor Property (BRX) reported a revenue of $340.84 million for the quarter ended September 2025, reflecting a year-over-year increase of 6.3% [1] - The earnings per share (EPS) for the quarter was $0.56, up from $0.32 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $338.83 million by 0.59%, while the EPS met the consensus estimate [1] Revenue Breakdown - Rental income was reported at $340.62 million, surpassing the average estimate of $337.48 million, marking a year-over-year increase of 6.5% [4] - Other revenues were reported at $0.23 million, significantly below the average estimate of $0.55 million, indicating a year-over-year decline of 67.5% [4] Stock Performance - Brixmor's shares have returned +2.4% over the past month, slightly underperforming the Zacks S&P 500 composite's +2.5% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

分组1 - Brixmor Property (BRX) reported quarterly funds from operations (FFO) of $0.56 per share, matching the Zacks Consensus Estimate and increasing from $0.52 per share a year ago, with a surprise of +1.82% compared to the expected $0.55 per share [1][2] - The company achieved revenues of $340.84 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.59% and up from $320.68 million year-over-year, having topped consensus revenue estimates four times over the last four quarters [2] - The current consensus FFO estimate for the upcoming quarter is $0.57 on revenues of $347.04 million, and for the current fiscal year, it is $2.24 on revenues of $1.36 billion [7] 分组2 - Brixmor shares have increased about 1% since the beginning of the year, underperforming the S&P 500, which gained 15.5% [3] - The Zacks Industry Rank for REIT and Equity Trust - Retail is in the top 37% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8] - The estimate revisions trend for Brixmor was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, suggesting expected outperformance in the near future [6]