BPG(BRX) - 2024 Q3 - Quarterly Results

Glossary of Terms This section defines key financial and operational terms, including non-GAAP measures essential for evaluating a Real Estate Investment Trust (REIT) - This section defines key financial and operational terms used throughout the report, particularly non-GAAP measures critical for evaluating a Real Estate Investment Trust (REIT)[3][4][6] - Key non-GAAP performance measures are defined, including: - Nareit Funds From Operations (FFO): Net income excluding depreciation, amortization, and gains/losses from property sales, providing a measure of operating performance for REITs[3][4][6] - Net Operating Income (NOI): Property revenues less direct property operating expenses, used to measure the operating performance of the property portfolio[3][4][6] - Same Property NOI: A subset of NOI that only includes properties owned for the entirety of both periods being compared, offering a more consistent metric for performance comparison[3][4][6] - EBITDAre: Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate, a Nareit-defined measure of operational performance[3][4][6] Results Overview & Guidance The company reported strong Q3 2024 financial results with increased revenues and net income, alongside an upward revision of its full-year 2024 guidance for Nareit FFO and Same Property NOI performance Q3 2024 Financial Highlights (vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $320.7 Million | $307.3 Million | +4.4% | | Net Income | $96.8 Million | $63.7 Million | +52.0% | | Net Income per Diluted Share | $0.32 | $0.21 | +52.4% | | Nareit FFO | $159.2 Million | $152.2 Million | +4.6% | | Nareit FFO per Diluted Share | $0.52 | $0.50 | +4.0% | | Same Property NOI Performance | 4.1% | 4.8% | -0.7 p.p. | Key Portfolio Statistics (as of 9/30/24) | Metric | 9/30/24 | 9/30/23 | | :--- | :--- | :--- | | Number of Properties | 360 | 364 | | Percent Leased | 95.6% | 93.9% | | Percent Billed | 91.9% | 90.0% | | ABR PSF | $17.44 | $16.77 | Updated 2024 Full Year Guidance | Metric | Current Guidance | Previous Guidance (at 7/29/24) | | :--- | :--- | :--- | | Nareit FFO per Diluted Share | $2.13 - $2.15 | $2.11 - $2.14 | | Same Property NOI Performance | 4.75% - 5.25% | 4.25% - 5.00% | Financial Summary The company's financial position as of Q3 2024 shows increased assets and liabilities, strong revenue growth, improved leverage, and higher FFO, reflecting robust operational performance Consolidated Balance Sheets As of September 30, 2024, the company's total assets stood at $8.75 billion, a slight increase from $8.33 billion at year-end 2023, with total liabilities rising to $5.87 billion primarily due to debt obligations Consolidated Balance Sheet Summary (in thousands) | Account | As of 9/30/24 (in thousands) | As of 12/31/23 (in thousands) | | :--- | :--- | :--- | | Real estate, net | $7,792,610 | $7,796,907 | | Cash and cash equivalents | $451,326 | $866 | | Total Assets | $8,749,817 | $8,332,716 | | Debt obligations, net | $5,338,681 | $4,933,525 | | Total Liabilities | $5,869,241 | $5,482,415 | | Total Equity | $2,880,576 | $2,850,301 | Consolidated Statements of Operations For the third quarter of 2024, total revenues grew 4.4% year-over-year to $320.7 million, driven by higher rental income, while net income significantly increased by 52.0% to $96.8 million Statement of Operations Summary (in thousands, except per share) | Metric | Three Months Ended 9/30/24 (in thousands) | Three Months Ended 9/30/23 (in thousands) | Nine Months Ended 9/30/24 (in thousands) | Nine Months Ended 9/30/23 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $320,682 | $307,314 | $956,612 | $928,551 | | Net Income | $96,840 | $63,736 | $255,870 | $232,390 | | Net Income per Diluted Share | $0.32 | $0.21 | $0.84 | $0.77 | EBITDA & Debt Reconciliation Adjusted EBITDA for Q3 2024 increased to $216.3 million, improving the company's leverage ratio to 5.7x from 6.1x year-over-year, indicating a stronger credit profile EBITDA Reconciliation (in thousands) | Metric | Three Months Ended 9/30/24 (in thousands) | Three Months Ended 9/30/23 (in thousands) | | :--- | :--- | :--- | | Net Income | $96,840 | $63,736 | | EBITDA | $247,695 | $207,951 | | EBITDAre | $216,540 | $201,239 | | Adjusted EBITDA | $216,340 | $201,336 | | Cash Adjusted EBITDA | $206,498 | $194,062 | Leverage Ratios | Metric | As of 9/30/24 | | :--- | :--- | | Net Principal Debt | $4,898,318,000 | | Net Principal Debt to Adjusted EBITDA (TTM) | 5.7x | Funds From Operations (FFO) Nareit FFO for Q3 2024 increased to $159.2 million, or $0.52 per diluted share, with the dividend payout ratio remaining stable at 51.7% Nareit FFO Summary (in thousands, except per share) | Metric | Three Months Ended 9/30/24 (in thousands) | Three Months Ended 9/30/23 (in thousands) | | :--- | :--- | :--- | | Nareit FFO | $159,180 | $152,184 | | Nareit FFO per Diluted Share | $0.52 | $0.50 | | Dividends Declared per Share | $0.2725 | $0.2600 | | Dividend Payout Ratio (% of Nareit FFO) | 51.7% | 51.4% | Supplemental Balance Sheet Detail This section provides a granular breakdown of certain balance sheet items, including accounts payable, dividends payable, and below market leases, as of September 30, 2024 Accounts Payable, Accrued Expenses and Other Liabilities (in thousands) | Component | As of 9/30/24 (in thousands) | As of 12/31/23 (in thousands) | | :--- | :--- | :--- | | Accounts payable and other accrued expenses | $273,645 | $289,215 | | Below market leases, net | $80,652 | $82,583 | | Dividends payable | $86,016 | $85,692 | | Total | $530,560 | $548,890 | NOI & Supplemental Operations Detail Net Operating Income (NOI) for Q3 2024 increased by 3.8% to $230.3 million, maintaining a strong NOI margin of 74.4% and an improved expense recovery ratio of 92.7% NOI and Operating Ratios | Metric | Three Months Ended 9/30/24 (in Millions) | Three Months Ended 9/30/23 (in Millions) | | :--- | :--- | :--- | | Net Operating Income (NOI) | $230.3 | $221.9 | | NOI Margin | 74.4% | 74.2% | | Expense Recovery Ratio | 92.7% | 89.3% | Same Property NOI Analysis Same Property NOI grew by 4.1% in Q3 2024, primarily driven by a 5.2% increase in base rent, with billed occupancy rising by 170 basis points to 91.9% Same Property NOI Performance (352 properties) | Metric | Three Months Ended 9/30/24 (in Millions) | Three Months Ended 9/30/23 (in Millions) | Change | | :--- | :--- | :--- | :--- | | Same Property NOI | $225.9 | $217.1 | +4.1% | | Percent Billed | 91.9% | 90.2% | +1.7 p.p. | | Percent Leased | 95.6% | 94.1% | +1.5 p.p. | - The 4.1% Same Property NOI growth in Q3 was primarily driven by a 5.2% contribution from base rent growth, partially offset by a -2.0% impact from revenues deemed uncollectible[19] Capital Expenditures Total capital expenditures in Q3 2024 amounted to $93.1 million, with a significant portion allocated to value-enhancing projects like redevelopments and anchor space repositioning Capital Expenditures Breakdown (in thousands) | Category | Three Months Ended 9/30/24 (in thousands) | Three Months Ended 9/30/23 (in thousands) | | :--- | :--- | :--- | | Leasing related and maintenance | $41,588 | $45,045 | | Value-enhancing | $51,468 | $51,865 | | Total Capital Expenditures | $93,056 | $96,910 | Capitalization, Liquidity & Debt The company maintains a strong financial position with $13.3 billion in market capitalization, $1.7 billion in liquidity, and investment-grade credit ratings, supported by a 100% fixed-rate debt structure Capitalization, Liquidity & Debt Ratios As of September 30, 2024, the company had a total market capitalization of $13.3 billion and total liquidity of $1.7 billion, maintaining investment-grade credit ratings with a stable outlook from Fitch and S&P, and a positive outlook from Moody's Capitalization and Liquidity (as of 9/30/24, in thousands) | Metric | Amount (in thousands) | | :--- | :--- | | Total Equity Capitalization | $8,415,475 | | Net Debt | $4,886,234 | | Total Market Capitalization | $13,301,709 | | Total Liquidity | $1,701,044 | - Credit Ratings: - Fitch: BBB (Stable)[22] - Moody's: Baa3 (Positive)[22] - S&P Global: BBB (Stable)[22] - The company's debt is 100% fixed-rate as of Q3 2024, with a weighted average maturity of 4.5 years[23] Debt Obligations Total debt obligations as of September 30, 2024, amounted to $5.35 billion, entirely fixed-rate with a weighted average stated interest rate of 4.10% and staggered maturities extending to 2035 Debt Maturity Schedule (Principal in thousands) | Maturity Year | Maturities (in thousands) | | :--- | :--- | | 2025 | $632,312 | | 2026 | $607,542 | | 2027 | $900,000 | | 2028 | $357,708 | | 2029+ | $2,853,203 | | Total Debt | $5,350,765 | Covenant Disclosure The company was in full compliance with all unsecured notes and credit facility covenants as of September 30, 2024, with key ratios well within required limits, demonstrating strong financial health Covenant Compliance (as of 9/30/24) | Covenant Test | Requirement | Actual | | :--- | :--- | :--- | | Aggregate Debt Test (Notes) | < 65% | 45.1% | | Unencumbered Asset Ratio (Notes) | > 150% | 221.6% | | Leverage Ratio (Credit Facility) | < 60% | 34.1% | | Fixed Charge Coverage Ratio (Credit Facility) | > 1.5x | 4.2x | Investment Summary The company actively manages its portfolio through strategic acquisitions, dispositions, and value-enhancing redevelopment projects, including anchor space repositioning and outparcel development, to drive future NOI growth Acquisitions During Q3 2024, the company acquired two properties and a land parcel for $63.9 million, contributing to year-to-date acquisitions totaling $81.2 million and adding over 266,000 square feet of GLA Q3 2024 Acquisitions (dollars in thousands) | Property Name | Purchase Price (in thousands) | GLA / Area | | :--- | :--- | :--- | | The Fresh Market Shoppes | $23,625 | 86,398 sq. ft. | | Land at Kings Market | $2,300 | 1.0 acres | | Acton Plaza | $38,000 | 137,572 sq. ft. | Dispositions The company sold six properties or parcels in Q3 2024 for an aggregate price of $73.8 million, contributing to year-to-date dispositions totaling $143.1 million and over 1.1 million square feet of GLA Q3 2024 Dispositions (dollars in thousands) | Property Name | Sale Price (in thousands) | GLA (in sq. ft.) | | :--- | :--- | :--- | | Arbor Faire - outparcel | $5,000 | 15,000 | | Festival Centre | $21,750 | 325,347 | | Presidential Plaza West | $11,900 | 88,441 | | Commons of Chicago Ridge - The Home Depot | $29,680 | 113,918 | | Springdale - Piccadilly | $4,750 | 11,700 | Anchor Space Repositioning Summary The company is actively managing 18 anchor repositioning projects with an estimated cost of $88.6 million and an expected NOI yield of 7-14%, having stabilized nine projects year-to-date at a 12% NOI yield - In-process anchor repositioning pipeline includes 18 projects with total net estimated costs of $88.6 million and an expected NOI yield range of 7% to 14%[32] - A total of 9 anchor repositioning projects have been stabilized in 2024, costing $29.5 million and generating an actual NOI yield of 12%[32] Outparcel Development Summary The outparcel development program includes seven active projects, with two stabilized in Q3 and four year-to-date, costing $5.9 million and generating a strong 10% NOI yield - Two outparcel projects were stabilized in Q3 2024: a Chipotle and a multi-tenant building including First Watch and Mission BBQ[34] - Total stabilized outparcel projects for the nine months ended September 30, 2024, cost $5.85 million and achieved a 10% NOI yield[34] Redevelopment Summary The company has a substantial redevelopment pipeline of 18 projects with an estimated investment of $403.5 million and a weighted average expected NOI yield of 9%, having stabilized three projects year-to-date at a 9% NOI yield - The in-process redevelopment pipeline consists of 18 projects with total net estimated costs of $403.45 million and a weighted average expected NOI yield of 9%[37] - Major in-process redevelopments include Westridge Court / Block 59 in Chicago ($53.2 million cost, 9% yield) and Wynnewood Village - Phase IV in Dallas ($52.4 million cost, 9% yield)[36] Future Redevelopment Opportunities The company has identified a deep pipeline of future redevelopment opportunities, focusing on repositioning, densification, and remerchandising, with several major projects considering multi-family residential or medical office components - The future pipeline includes 9 major redevelopment opportunities, many of which involve densification and potential addition of multi-family or medical office components[39] - Examples of major future projects include Village at Mira Mesa (potential residential), Kings Park Plaza (potential multi-family), and Market Plaza (potential multi-family and/or medical office)[39] Portfolio Summary Brixmor's portfolio demonstrates strong occupancy and diversified composition across essential and national tenants, supported by robust leasing activity and a well-staggered lease expiration schedule, primarily concentrated in major U.S. metropolitan areas Portfolio Overview As of September 30, 2024, Brixmor's portfolio consisted of 360 properties totaling 63.4 million square feet (GLA), demonstrating strong occupancy with a 95.6% leased rate and an increased ABR per square foot of $17.44 Portfolio Metrics | Metric | As of 9/30/24 | As of 9/30/23 | | :--- | :--- | :--- | | Number of properties | 360 | 364 | | GLA (in sq. ft.) | 63,445,487 | 64,827,439 | | Percent Billed | 91.9% | 90.0% | | Percent Leased | 95.6% | 93.9% | | ABR PSF | $17.44 | $16.77 | Portfolio Composition The portfolio is well-diversified with essential tenants accounting for 33% of ABR and national/regional tenants comprising 89%, ensuring a stable income base evenly split between anchor and small shop tenants - The portfolio's Annualized Base Rent (ABR) is composed of: - Essential Tenants: 33%[43][44][45] - National / Regional Tenants: 89%[43][44][45] - Anchor Tenants (≥10k SF): 50.2%[43][44][45] - Small Shop Tenants (<10k SF): 49.8%[43][44][45] Top 40 Retailers by ABR The company's tenant base is highly diversified, with the top 40 retailers accounting for only 33.1% of total ABR, and the top five tenants collectively representing 10.8% of total ABR Top 5 Retailers by ABR | Rank | Retailer | % of ABR | | :--- | :--- | :--- | | 1 | The TJX Companies, Inc. | 3.3% | | 2 | The Kroger Co. | 2.3% | | 3 | Burlington Stores, Inc. | 2.0% | | 4 | Dollar Tree Stores, Inc. | 1.7% | | 5 | Publix Super Markets, Inc. | 1.5% | New & Renewal Lease Summary Leasing activity remained robust in Q3 2024, with 316 new, renewal, and option leases signed for 2.1 million square feet, achieving a strong total blended rent spread of 15.9% Q3 2024 Leasing Spreads (Comparable Leases) | Lease Type | Rent Spread | | :--- | :--- | | New Leases | 31.8% | | Renewal Leases | 18.1% | | Option Leases | 6.9% | | Total (New, Renewal & Option) | 15.9% | New Lease Economics & SNO Pipeline New leases signed in Q3 2024 achieved a net effective rent of $21.32 per square foot, and a substantial pipeline of 362 signed but not yet commenced (SNO) leases is expected to contribute an additional $59.4 million in annualized base rent - The pipeline of leases signed but not yet commenced (SNO) includes 362 leases totaling 2,684,554 GLA, which will generate $59.4 million in ABR[48] - The majority of the SNO pipeline's ABR ($36.5 million) is expected to commence in 2025, with $17.9 million commencing in the remainder of 2024[48] Lease Expiration Schedule The company maintains a well-staggered lease expiration schedule, with 10.6% of leased GLA (9.3% of ABR) set to expire in 2025, and a high lease retention rate of 85.8% by GLA for the trailing twelve months Upcoming Lease Expirations (Assumes No Renewals) | Year | % of Leased GLA | % of In-Place ABR | | :--- | :--- | :--- | | 2025 | 10.6% | 9.3% | | 2026 | 11.5% | 11.4% | | 2027 | 14.0% | 13.4% | - The lease retention rate at natural expiration for the twelve months ended September 30, 2024 was 85.8% by GLA[50] Major CBSA Detail The portfolio is concentrated in the top 50 largest U.S. Core-Based Statistical Areas (CBSAs), accounting for 71.3% of ABR, with the top 10 CBSAs representing 48.0% of total ABR, indicating a focus on major metropolitan markets Top 5 CBSAs by ABR | Rank | CBSA | % of ABR | | :--- | :--- | :--- | | 1 | Philadelphia-Camden-Wilmington, PA-NJ-DE-MD | 7.5% | | 2 | New York-Newark-Jersey City, NY-NJ | 7.1% | | 3 | Houston-Pasadena-The Woodlands, TX | 5.7% | | 4 | Chicago-Naperville-Elgin, IL-IN | 5.5% | | 5 | Dallas-Fort Worth-Arlington, TX | 5.3% | Properties by State Geographically, the portfolio has significant exposure to high-growth Sun Belt states, with Florida and Texas being the largest contributors to ABR, and the top five states collectively accounting for 55.6% of total ABR Top 5 States by ABR | Rank | State | % of ABR | | :--- | :--- | :--- | | 1 | Florida | 13.8% | | 2 | Texas | 12.0% | | 3 | California | 11.6% | | 4 | New York | 7.1% | | 5 | Pennsylvania | 7.1% | Property List This section provides a comprehensive, detailed list of all 360 properties in the portfolio as of September 30, 2024, including city, state, CBSA, GLA, leased percentage, ABR, and major tenants - The report concludes with a detailed property-by-property list of the entire 360-property portfolio, offering granular data on each asset[55][60][65]