BPG(BRX) - 2024 Q4 - Annual Report

Part I Business Brixmor is a REIT that owns and operates 363 grocery-anchored open-air retail centers, aiming to maximize stockholder returns through strategic portfolio management and corporate responsibility Portfolio Summary as of December 31, 2024 | Metric | Value | | :--- | :--- | | Number of Shopping Centers | 363 | | GLA (square feet) | 64.0 million | | Percent Billed | 91% | | Percent Leased | 95% | | ABR Per Square Foot (PSF) | $17.66 | | New Rent Spread (2024) | 38.8% | | Blended Rent Spread (2024) | 22.5% | | % of ABR from Grocery-Anchored Centers | 81% | | % of ABR in Top 50 U.S. CBSAs | 71% | - Driving Internal Growth: Leveraging contractual rent escalations, below-market rents, occupancy growth, and expense management, with 1,416 leases executed representing 9.6 million square feet in 2024[31] - Value-Enhancing Reinvestment: Investing in repositioning and redevelopment projects, stabilizing 28 projects at a 9% incremental NOI yield in 2024[32] - Prudent Acquisitions and Dispositions: Actively managing the portfolio, acquiring $293.8 million in assets and generating $210.1 million in net proceeds from dispositions in 2024[36] - Maintaining a Flexible Capital Structure: Utilizing multiple capital sources and maintaining investment-grade credit ratings[36] - Operating in a Socially Responsible Manner: Integrating a Corporate Responsibility strategy focused on environmental, social, and human capital goals, including a commitment to achieve net zero carbon emissions by 2045[36] - As of December 31, 2024, the company had 454 employees, with a human capital strategy built on engagement, growth, health, and an inclusive culture[47][53] - Brixmor intends to maintain its REIT status, which generally exempts it from U.S. federal income tax on distributed net taxable income[53] Risk Factors This section details significant risks to Brixmor's business, financial condition, and operations, categorized by portfolio, organizational structure, and REIT status - Portfolio and Business Risks: - Economic Conditions: Adverse economic conditions, inflation, and rising interest rates may negatively impact financial results and tenant stability[60] - Tenant Distress: Tenant failures or bankruptcies could lead to reduced rental income and re-leasing difficulties[67] - Competition and E-commerce: Competition and e-commerce growth may necessitate rent concessions or significant capital expenditures to attract and retain tenants[87] - Debt and Capital Access: Significant indebtedness requires substantial cash flow for debt service, and favorable capital access is not guaranteed[87] - Cybersecurity and Climate Change: Risks include cybersecurity attacks and the physical and transitional impacts of climate change[87] - Organizational and Structural Risks: - The Board of Directors can change significant corporate policies, including investment and financing strategies, without stockholder approval[90] - The company's charter limits director and officer liability and contains provisions that could discourage third-party acquisitions[92] - REIT Status and Tax Risks: - Failure to maintain REIT qualification would result in taxation as a regular corporation, leading to substantial tax liability[95] - REIT compliance requirements may force the company to forgo attractive investment opportunities or liquidate certain assets[99] - The charter's 9.8% stock ownership limit, designed to protect REIT status, may also deter a change in control[101] Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - None[104] Cybersecurity Brixmor maintains a comprehensive cybersecurity program, overseen by the CIO and Audit Committee, to manage risks through preparation, prevention, detection, and response, with no material incidents reported as of December 31, 2024 - The cybersecurity program is led by the Chief Information Officer, with oversight from the Audit Committee, which receives quarterly updates[106][108] - The company has a formal Cybersecurity Incident Response Plan outlining procedures for analyzing, containing, and recovering from incidents, with a dedicated Incident Response Team[107] - Preventative measures include regular internal and external security audits, penetration testing, multi-factor authentication, and mandatory annual cybersecurity training for all employees[110][111] - As of December 31, 2024, the company has not experienced any known material cybersecurity incidents[118] Properties Brixmor's portfolio comprises 363 shopping centers totaling 64 million square feet of GLA, with detailed tables on top tenants, geographic diversification, unit size, and lease expirations Top 5 Tenants by ABR (as of Dec 31, 2024) | Retailer | Leased GLA (sq ft) | % of GLA | ABR ($ thousands) | % of ABR | | :--- | :--- | :--- | :--- | :--- | | The TJX Companies, Inc. | 2,604,394 | 4.1% | $33,176 | 3.3% | | The Kroger Co. | 3,037,909 | 4.7% | $23,207 | 2.3% | | Burlington Stores, Inc. | 1,829,056 | 2.9% | $20,987 | 2.1% | | Dollar Tree Stores, Inc. | 1,357,291 | 2.1% | $16,509 | 1.6% | | Publix Super Markets, Inc. | 1,490,442 | 2.3% | $14,898 | 1.5% | Top 5 States by ABR (as of Dec 31, 2024) | State | Number of Properties | GLA (sq ft) | ABR ($ thousands) | % of ABR | | :--- | :--- | :--- | :--- | :--- | | Florida | 48 | 8,473,446 | $141,138 | 14.0% | | Texas | 48 | 7,409,851 | $120,470 | 11.9% | | California | 28 | 5,187,376 | $116,966 | 11.7% | | Pennsylvania | 24 | 4,336,727 | $71,843 | 7.2% | | New York | 27 | 3,435,843 | $71,391 | 7.1% | - Lease expirations are staggered, with 8.9% of leased GLA scheduled to expire in 2025 and 11.7% in 2026, assuming no renewal options are exercised[123] Legal Proceedings The company is involved in routine litigation, none of which is expected to materially impact its financial condition or results - The company is not presently involved in any material litigation arising outside the ordinary course of business[128][433] Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[129] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section covers Brixmor's common stock trading on the NYSE under "BRX", its REIT dividend requirements, the taxability of 2024 distributions, and the $400.0 million share repurchase program with no repurchases in 2024 - BPG's common stock trades on the New York Stock Exchange under the ticker symbol "BRX"[132] - To maintain its REIT qualification, BPG must distribute at least 90% of its REIT taxable income to stockholders annually[133] - For the taxable year ended December 31, 2024, 100.0% of the company's distributions to stockholders constituted taxable ordinary income[136] - The company has a $400.0 million share repurchase program, with full capacity available as of December 31, 2024, as no shares were repurchased during the year[140] Management's Discussion and Analysis of Financial Condition and Results of Operations The MD&A provides an executive overview of Brixmor's 2024 business, financial performance, and strategic initiatives, detailing results of operations, liquidity, capital resources, cash flow, non-GAAP measures, and critical accounting estimates Results of Operations In 2024, total revenues increased to $1.285 billion from $1.245 billion in 2023, driven by higher rental income, while total operating expenses rose slightly, leading to net income attributable to Brixmor Property Group Inc. of $339.3 million Comparison of Revenues (in thousands) | Revenue Type | 2024 | 2023 | $ Change | | :--- | :--- | :--- | :--- | | Rental income | $1,283,421 | $1,243,844 | $39,577 | | Other revenues | $1,633 | $1,192 | $441 | | Total revenues | $1,285,054 | $1,245,036 | $40,018 | Comparison of Operating Expenses (in thousands) | Expense Type | 2024 | 2023 | $ Change | | :--- | :--- | :--- | :--- | | Operating costs | $152,825 | $146,473 | $6,352 | | Real estate taxes | $164,291 | $173,517 | ($9,226) | | Depreciation and amortization | $381,396 | $362,277 | $19,119 | | Impairment of real estate assets | $11,143 | $17,836 | ($6,693) | | General and administrative | $116,363 | $117,128 | ($765) | | Total operating expenses | $826,018 | $817,231 | $8,787 | - The increase in rental income was primarily driven by a $47.6 million increase for assets owned for the full period, reflecting higher base rent, straight-line rent, and expense reimbursements[156] - Interest expense increased by $25.3 million in 2024 compared to 2023, mainly due to higher overall debt obligations and a higher weighted average interest rate[169] Liquidity and Capital Resources Brixmor maintains a flexible capital structure with $1.63 billion in available liquidity as of December 31, 2024, utilizing operating cash flow, borrowings, dispositions, and equity issuances to meet debt service, capital expenditures, and dividend requirements - As of December 31, 2024, the company had $1.63 billion of available liquidity, comprising $1.25 billion under its Revolving Facility and $378.7 million of cash and cash equivalents[177] Contractually Obligated Expenditures (as of Dec 31, 2024, in millions) | Obligation | Twelve Months Ended Dec 31, 2025 | Thereafter | | :--- | :--- | :--- | | Debt maturities | $632.3 | $4,718.5 | | Interest payments | $207.2 | $847.7 | | Operating leases | $6.2 | $112.9 | | Total | $845.7 | $5,679.1 | Cash Flow Summary - Brixmor Property Group Inc. (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $624,687 | $588,794 | | Net cash used in investing activities | ($437,021) | ($163,080) | | Net cash provided by (used in) financing activities | $172,122 | ($428,069) | Non-GAAP Performance Measures This section presents and reconciles Nareit FFO and Same Property NOI, key non-GAAP measures, with Nareit FFO increasing to $647.9 million ($2.13 per diluted share) and Same Property NOI to $896.4 million in 2024 Nareit FFO Reconciliation (in thousands, except per share) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net income attributable to BPG Inc. | $339,274 | $305,087 | | Depreciation and amortization related to real estate | $375,511 | $358,088 | | Gain on sale of real estate assets | ($78,064) | ($65,439) | | Impairment of real estate assets | $11,143 | $17,836 | | Nareit FFO | $647,864 | $615,572 | | Nareit FFO per diluted share | $2.13 | $2.04 | Same Property NOI (in thousands) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Same property NOI | $896,358 | $853,730 | $42,628 | Quantitative and Qualitative Disclosures About Market Risk Brixmor's primary market risk is interest rate changes on its long-term debt, managed through interest rate swaps that fully hedge $500.0 million in variable-rate debt as of December 31, 2024, preventing impact from interest rate fluctuations - As of December 31, 2024, the company had $500.0 million in outstanding variable-rate debt, fully hedged with interest rate swap agreements to effectively fix the interest rate[224] - A hypothetical 100 basis point increase in market interest rates would not result in an increase in annual interest expense on the company's variable-rate debt, given the existing interest rate swap agreements[224] Debt Summary as of December 31, 2024 (in thousands) | Debt Type | Total Principal | Fair Value | | :--- | :--- | :--- | | Fixed rate | $4,850,765 | $4,653,205 | | Variable rate | $500,000 | $500,000 | Financial Statements and Supplementary Data This section formally incorporates the company's consolidated financial statements and supplementary data into the Form 10-K, commencing on page F-1 - This item refers to the Index to Consolidated Financial Statements and the financial statements commencing on page F-1[227] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles, practices, or financial statement disclosure - None[228] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting for both Brixmor entities were effective as of December 31, 2024, with no material changes reported in Q4 2024 - Management, including the CEO and CFO, concluded that the disclosure controls and procedures for both Brixmor Property Group Inc. and the Operating Partnership were effective as of December 31, 2024[230][236] - Management concluded that the internal control over financial reporting for both entities was effective as of December 31, 2024, based on the COSO framework[233][239] - There were no material changes in internal control over financial reporting during the fourth quarter of 2024[235][241] Part III Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees Information for Items 10 through 14, covering directors, executive officers, corporate governance, compensation, security ownership, and accountant fees, is incorporated by reference from the 2025 Annual Meeting proxy statement - Information for Items 10, 11, 12, 13, and 14 will be included in the definitive proxy statement for the 2025 Annual Meeting of Stockholders, to be filed with the SEC no later than 120 days after December 31, 2024[246][247][248] Part IV Exhibit and Financial Statement Schedules This section lists all documents filed as part of the Form 10-K, including an index to consolidated financial statements, schedules, and a comprehensive list of exhibits - This item provides an index to the consolidated financial statements for both Brixmor Property Group Inc. and Brixmor Operating Partnership LP, along with financial statement schedules[253] - A detailed list of exhibits filed with the report is provided, including corporate governance documents, debt agreements, employment contracts, and required certifications[255] Form 10-K Summary The company indicates that no Form 10-K summary is provided - None[261] Financial Statements and Notes Consolidated Financial Statements The consolidated financial statements present the financial position, operations, and cash flows for Brixmor Property Group Inc. and Brixmor Operating Partnership LP, with 2024 reporting $8.91 billion in total assets, $5.92 billion in total liabilities, and $339.3 million in net income Brixmor Property Group Inc. - Key Balance Sheet Data (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Real estate, net | $7,998,878 | $7,796,907 | | Total assets | $8,908,914 | $8,332,716 | | Debt obligations, net | $5,339,751 | $4,933,525 | | Total liabilities | $5,924,992 | $5,482,415 | | Total stockholders' equity | $2,983,678 | $2,850,301 | Brixmor Property Group Inc. - Key Income Statement Data (in thousands) | Account | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total revenues | $1,285,054 | $1,245,036 | $1,218,074 | | Total operating expenses | $826,018 | $817,231 | $779,471 | | Net income attributable to BPG Inc. | $339,274 | $305,087 | $354,193 | Notes to Consolidated Financial Statements The notes provide detailed disclosures supplementing financial statements, covering business nature, accounting policies, real estate transactions, debt, derivatives, equity, compensation, and subsequent events, including $293.8 million in 2024 acquisitions and $632.3 million 2025 Notes repayment in February 2025 - In 2024, the company acquired seven shopping centers and two land parcels for an aggregate purchase price of $293.8 million[375] - In 2024, the company disposed of six shopping centers, six partial shopping centers, and two land parcels for aggregate net proceeds of $208.2 million[376] - During 2024, the company issued $400.0 million of 5.500% Senior Notes due 2034 and $400.0 million of 5.750% Senior Notes due 2035[398][399] - In February 2025, the company repaid the entire outstanding $632.3 million principal amount of its 2025 Notes[445]