Financial Data and Key Metrics Changes - Normalized FFO for Q3 2025 was $33,900,000 or $0.20 per share, down from $0.32 per share in the prior year quarter [19] - Adjusted EBITDAre decreased by $10,000,000 year over year to $145,000,000, primarily impacted by a $13,100,000 decline in adjusted hotel EBITDA and an $8,700,000 increase in interest expense [19][20] - Overall financial results were affected by a decline in gross operating profit margin percentage to 24.4%, down 330 basis points from the prior year [19] Business Line Data and Key Metrics Changes - Hotel portfolio generated adjusted hotel EBITDA of $44,300,000, an 18.9% decline from the prior year due to softer demand and expense pressures [20] - RevPAR for the retained hotel portfolio increased by 60 basis points year over year to $114, while the overall hotel portfolio's RevPAR increased by 20 basis points year over year [10][20] - The triple net lease segment reported rent growth over 2%, stable rent coverage, and occupancy over 97% [13] Market Data and Key Metrics Changes - Domestic leisure travel has declined to its lowest point in several years, reflecting heightened price sensitivity and a shift towards shorter booking windows [9] - The U.S. travel market continues to face headwinds with uneven demand trends amid persistent economic uncertainty [9] Company Strategy and Development Direction - The company is focused on capital recycling initiatives, including the sale of 121 hotels for gross proceeds of $959,000,000, with 69 hotel sales expected to close in November and December [7][8] - The strategic shift towards a net lease company is intended to improve portfolio fundamentals and provide optionality with financing sources [8][15] - Significant capital investments have been made to elevate the quality and performance of hotels, with renovations completed at approximately 45% of the retained hotel portfolio [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the current operating environment is characterized by economic uncertainty and a cautious consumer mindset [9] - The company expects the disposition pipeline to normalize, supporting stability and margin improvement as it moves into 2026 [11] - Future guidance for Q4 includes projected RevPAR of $86 to $89 and adjusted hotel EBITDA in the range of $20,000,000 to $25,000,000, considering seasonality and recent headwinds [21] Other Important Information - The company raised over $850,000,000 in proceeds, including $295,000,000 from asset sales during the quarter and approximately $490,000,000 from the issuance of new zero coupon bonds [7][8] - The company has a current debt outstanding of $5,500,000,000 with a weighted average interest rate of 5.9% [22] Q&A Session Summary Question: How realistic is it that all remaining hotel sales will close by year-end? - Management indicated that they are tracking to close 40% to 50% of the remaining balance in November, with the rest in December [27][28] Question: Can you discuss the $27,000,000 impairment taken in the quarter? - Management explained that it was related to shifting purchase price allocations among portfolios and does not indicate further impairments [30] Question: What is the outlook for price coverage in the travel center portfolio? - Management noted that while there has been a decline in coverage, it is stabilizing and not a major concern due to backing from BP [32][34] Question: How did hotel EBITDA perform versus expectations? - Management stated that timing of asset sales was the biggest driver of performance, with several one-time impacts affecting results [38][40] Question: What is the rationale behind issuing zero coupon bonds? - The primary goal was to provide headroom with covenants and improve liquidity, allowing for better management of debt maturities [49][51] Question: Will there be further hotel dispositions in 2026? - Management confirmed plans for continued dispositions in 2026, focusing on hotels with negative EBITDA [58]

Financial Data and Key Metrics Changes - Normalized FFO for Q3 2025 was $33.9 million or $0.20 per share, down from $0.32 per share in the prior year quarter [15] - Adjusted EBITDA RE decreased by $10 million year over year to $145 million, primarily impacted by a $13.1 million decline in adjusted hotel EBITDA and an $8.7 million increase in interest expense [15][16] - Gross operating profit margin percentage declined by 330 basis points to 24.4% [15] Business Line Data and Key Metrics Changes - Hotel portfolio generated adjusted hotel EBITDA of $44.3 million, an 18.9% decline from the prior year due to softer demand and expense pressures [16] - REVPAR for the retained portfolio increased by 60 basis points year over year to $114, while the 76 domestic exit hotels not yet sold generated REVPAR of $72, a decline of 1% [16][17] - The triple net lease segment reported annualized base rent growth of 2.3% and NOI increased by 50 basis points year over year [12] Market Data and Key Metrics Changes - The U.S. travel market is facing headwinds, with domestic leisure travel declining to its lowest point in several years, reflecting heightened price sensitivity and shorter booking windows [7] - The triple net lease market continues to show resilience and growth, driven by consumer preferences for convenience and affordability [10] Company Strategy and Development Direction - The company is focused on capital recycling initiatives, strengthening its balance sheet, and transitioning towards a net lease company [5][6] - Significant capital investments have been made to elevate hotel quality, with renovations completed at nearly 45% of the retained hotel portfolio [9] - The company plans to continue with hotel dispositions in 2026, focusing on negative EBITDA hotels [48] Management's Comments on Operating Environment and Future Outlook - Management noted that the travel industry is experiencing softness, with cost pressures and a cautious consumer mindset impacting performance [7][36] - The company expects to see stability and margin improvement as the disposition pipeline normalizes and renovated hotels capture additional market share [9][20] - Fourth-quarter guidance projects REVPAR of $86-$89 and adjusted hotel EBITDA in the $20-$25 million range, considering seasonality and recent headwinds [17] Other Important Information - The company raised over $850 million in proceeds, including $295 million from asset sales during the quarter [5] - The company has $5.5 billion of debt outstanding with a weighted average interest rate of 5.9% [18] - Full-year CapEx guidance has been lowered from $250 million to approximately $200 million due to a shift in the pace of deployment [20] Q&A Session Summary Question: How realistic is it that all remaining hotel sales will close by year-end? - Management indicated that they are tracking to close 40-50% of the remaining balance in November, with the rest in December [23] Question: Can you discuss the $27 million impairment taken in the quarter? - Management clarified that it was related to shifting purchase price allocations and does not indicate further impairments [25] Question: What is the expectation for the declining rent coverage in the travel center portfolio? - Management noted that while there has been a decline, they are not particularly concerned due to the investment-grade backing from BP [27] Question: Can you elaborate on the hotel portfolio's Q3 performance? - Management explained that the timing of asset sales and some insurable events contributed to the performance being below expectations [32] Question: What is the rationale behind issuing zero-coupon bonds? - The primary goal was to provide headroom with covenants and improve liquidity, allowing for better management of debt maturities [40] Question: What is the outlook for potential further dispositions in 2026? - Management confirmed plans to continue with hotel dispositions in 2026, focusing on negative EBITDA hotels [48]

Core Insights - Brookfield Business Partners reported a net loss of $59 million for Q3 2025, a significant decline from a net income of $301 million in Q3 2024, primarily due to lower tax recoveries and gains on dispositions [2][3][43] - The company achieved an Adjusted EBITDA of $575 million for Q3 2025, down from $844 million in the same period last year, reflecting the impact of lower ownership in three businesses following partial sales [3][4][30] - The CEO highlighted successful acquisitions and capital recycling initiatives, including the acquisition of a Canadian mortgage lender for $2.6 billion, which is expected to enhance growth [2][11] Financial Performance - For the three months ended September 30, 2025, net income attributable to unitholders was a loss of $59 million, translating to a loss of $0.28 per unit, compared to a profit of $301 million or $1.39 per unit in the prior year [2][3] - Adjusted EBITDA by segment for Q3 2025 was as follows: Industrials $316 million, Business Services $188 million, Infrastructure Services $104 million, and Corporate $(33) million [3][4] - The total revenue for Q3 2025 was $6.919 billion, down from $9.232 billion in Q3 2024, with direct operating costs also decreasing to $5.663 billion from $7.069 billion [30] Operational Highlights - The Industrials segment saw a 17% increase in Adjusted EBITDA to $316 million, excluding tax recoveries, driven by contributions from recent acquisitions [4][5] - The Business Services segment's Adjusted EBITDA was $188 million, impacted by the sale of a partial interest in dealer software operations [6] - The Infrastructure Services segment reported Adjusted EBITDA of $104 million, affected by the sale of offshore oil services operations [8] Strategic Initiatives - The company is simplifying its corporate structure by converting into a single listed corporation, which has been positively received by investors [2][12] - A special meeting for security holders is scheduled for January 13, 2026, to vote on the proposed corporate reorganization [14][15] - The company ended Q3 2025 with approximately $2.3 billion in liquidity, which is expected to increase to $2.9 billion post-announced transactions [18] Distribution and Shareholder Information - The Board declared a quarterly distribution of $0.0625 per unit, payable on December 31, 2025, to unitholders of record as of November 28, 2025 [19][44] - The company aims to align dividends on exchangeable shares with distributions on partnership units to provide equivalent economic returns [45][47]

Financial Data and Key Metrics Changes - The company reported third quarter 2025 adjusted EPS of $1.11, an increase from $0.89 in the prior period [5][17] - Full year 2025 adjusted EPS guidance remains at $4.30-$4.70, with 2026 EPS guidance set at $4.80-$5.30 [6][21] - Third quarter 2025 GAAP earnings were $77 million, or $0.12 per share, compared to $638 million, or $1 per share in the same period last year [17] Business Line Data and Key Metrics Changes - Sempra California saw a $76 million increase in earnings primarily from higher income tax benefits, offset by higher net interest expense [18] - Sempra Texas reported $45 million of higher equity earnings due to increased invested capital and Oncor's system resiliency plan [19] - Sempra Infrastructure experienced a $26 million increase from higher asset optimization, despite lower transportation results [19] Market Data and Key Metrics Changes - Oncor's active load connections increased over 10% from the prior quarter, with a premise count increase of 16,000 [15] - The Texas 765 transmission expansion is projected to require $32 billion-$35 billion for full buildout, with Oncor expected to surpass 50% of this investment [16] Company Strategy and Development Direction - The company is focusing on lower risk and higher value transmission and distribution investments, particularly in Texas [4] - A significant transaction involved selling a 45% stake in Sempra Infrastructure Partners for $10 billion, aimed at improving business growth and capital efficiency [7][8] - The company is prioritizing capital allocation to Texas, anticipating substantial increases in its capital plan [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing growth of utilities, particularly in Texas, and the importance of maintaining a strong balance sheet [30] - The company is optimistic about achieving strong year-over-year growth and is tracking several regulatory decisions that will impact financial results [18][62] Other Important Information - The enactment of California SB 254 is viewed as a significant de-risking event for California Electric Utilities [10] - The company is actively engaged in settlement discussions regarding Oncor's base rate review, with a hearing scheduled for November 17 [35] Q&A Session Summary Question: Balance sheet capacity for increased CapEx at Oncor - Management indicated that proceeds from the Sempra Infrastructure transaction are expected to eliminate the need for common equity in the 2025-2029 financing plan [26][27] Question: Update on Texas transmission expansion - Management confirmed ongoing settlement discussions and expressed confidence in the strength of their case regarding Oncor's base rate review [34][35] Question: Status of the SIP transaction and tax implications - Management confirmed that a 20% tax leakage estimate remains valid, with ongoing evaluations of the transaction's tax efficiency [42] Question: Load growth potential in Texas - Oncor is confident in doubling its load by 2030, driven by the state's desire to accelerate the transmission plan [53][54] Question: Confidence in achieving ROEs with increased capital spending - Management noted that Oncor's authorized ROE of 9.7% has been under-earning due to regulatory lag, but improvements are expected with the resolution of ongoing matters [95]

Financial Data and Key Metrics Changes - The company reported third quarter 2025 adjusted EPS of $1.11, an increase from $0.89 in the prior period [5][17] - Full year 2025 adjusted EPS guidance remains at $4.30-$4.70, with 2026 EPS guidance set at $4.80-$5.30 [6][21] - Third quarter 2025 GAAP earnings were $77 million, or $0.12 per share, compared to $638 million, or $1 per share in the same period last year [17] Business Line Data and Key Metrics Changes - Sempra California saw a $76 million increase in earnings primarily from higher income tax benefits, offset by higher net interest expense [18] - Sempra Texas reported $45 million of higher equity earnings due to increased invested capital and Oncor's system resiliency plan [19] - Sempra Infrastructure experienced a $26 million increase from higher asset optimization, despite lower transportation results [19] Market Data and Key Metrics Changes - Oncor's active LC&I queue increased over 10% from the prior quarter, with a premise count increase of 16,000 [15] - The Texas 765 transmission expansion is projected to require $32 billion-$35 billion for full buildout, with Oncor's portion expected to exceed 50% [16] Company Strategy and Development Direction - The company is focusing on lower risk and higher value transmission and distribution investments, particularly in Texas [4] - A significant transaction involved selling a 45% stake in Sempra Infrastructure Partners for $10 billion, aimed at improving business growth and capital efficiency [7][8] - The company is prioritizing capital allocation to Texas, anticipating a substantial increase in Oncor's capital plan by over 30% [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing growth in Texas and the importance of maintaining a strong balance sheet to support future growth [30] - The company is optimistic about achieving strong year-over-year growth and is tracking several regulatory decisions that will impact financial results [18][21] Other Important Information - The company is actively engaged in regulatory matters in California, including the GRC and cost of capital proceedings [11] - The Port Arthur LNG Phase I project is on schedule, with Train One expected to reach COD in 2027 [12] Q&A Session Summary Question: Balance sheet capacity for increased CapEx at Oncor - Management indicated that proceeds from the Sempra Infrastructure transaction are expected to eliminate the need for common equity in the 2025-2029 financing plan [26][27] Question: Status of the SIP transaction and tax implications - The company is still assuming around a 20% tax leakage from the SIP transaction, with ongoing evaluations [42] Question: Load growth potential in Texas - Oncor is confident in doubling its load by 2030, driven by the state's desire to support the oil and gas industry [52][53] Question: ROE expectations with increased capital spending - Management expects a material improvement in ROE as regulatory lag issues are resolved and a new test year is established [96] Question: Equipment and supply chain readiness for capital plans - The company has made significant investments in its supply chain and logistics to ensure readiness for its growth plans [70][71] Question: Strategic options for California utilities - Management emphasized that California remains an important part of the company, complementing growth in Texas while minimizing customer bill impacts [84][86]

Financial Data and Key Metrics Changes - The company reported third quarter 2025 adjusted EPS of $1.11, an increase from $0.89 in the prior period [5][17] - Full year 2025 adjusted EPS guidance range is affirmed at $4.30-$4.70, with 2026 EPS guidance at $4.80-$5.30 [5][17] - Third quarter 2025 GAAP earnings were $77 million, or $0.12 per share, compared to $638 million, or $1 per share in the same quarter of 2024 [17] Business Line Data and Key Metrics Changes - Sempra California saw a $76 million increase in earnings primarily from higher income tax benefits, offset by higher net interest expense [18] - Sempra Texas reported $45 million of higher equity earnings due to increased invested capital and Oncor's system resiliency plan [19] - Sempra Infrastructure experienced a $26 million increase from higher asset optimization, partially offset by lower transportation results [19] Market Data and Key Metrics Changes - Oncor's active load connections increased by over 10% from the prior quarter, with a premise count increase of 16,000 [15] - The Texas 765 transmission expansion is projected to require $32 billion-$35 billion for full buildout, with Oncor's portion expected to exceed 50% [16] Company Strategy and Development Direction - The company is focusing on lower risk and higher value transmission and distribution investments, particularly in Texas [4] - A significant transaction to sell a 45% stake in Sempra Infrastructure Partners for $10 billion is expected to improve the business growth profile and unlock reinvestment capital [6][7] - The company aims to fortify its balance sheet and improve credit metrics through strategic capital allocation [6][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing growth in Texas and the potential for substantial capital investment opportunities [20] - The company is tracking several regulatory matters in California that are expected to influence financial results [18] - Management remains optimistic about achieving the 2025 guidance and anticipates strong year-over-year growth [62] Other Important Information - The company is actively engaged in improving community safety and operational excellence, including efforts to enhance the regulatory environment [7] - The ongoing sales process for EcoGas is generating significant interest, with final bids expected before year-end [7] Q&A Session Summary Question: How is the company viewing balance sheet capacity for increased CapEx at Oncor? - Management indicated that proceeds from the Sempra Infrastructure transaction are expected to eliminate 100% of the common equity previously in the financing plan, fortifying the balance sheet for growth [28][30] Question: What is the status of the base rate review in Texas? - Management confirmed that settlement discussions are ongoing, with a hearing set for November 17th, and expressed confidence in the strength of their case [36][38] Question: What is the expected leakage from the SIP transaction? - Management stated that a 20% leakage is still a good estimate, considering the complexity of the assets involved [44] Question: How does the company view the load growth pipeline in Texas? - Management noted that Oncor's system is expected to double its load by 2030, driven by the state's desire to support the oil and gas industry [54][56] Question: What is the company's approach to equity needs moving forward? - Management indicated that while equity issuance is not off the table, they are focused on maintaining a strong balance sheet and will consider all funding options as needed [96]

Financial Data and Key Metrics Changes - Centerspace reported a 4.5% year-over-year growth in NOI within the same-store portfolio for Q3 2025, driven by solid revenue increases and effective expense control [4][12] - Core FFO for Q3 was $1.19 per diluted share, with a reduction in the midpoint of core FFO guidance by $0.02 to $4.92 due to timing adjustments related to strategic transactions and G&A costs [5][12] - Same-store revenues increased by 2.4%, with a 20 basis point increase in occupancy and a 2.2% increase in average monthly revenue per occupied home [12][13] Business Line Data and Key Metrics Changes - The Denver portfolio faced challenges with Q3 blended lease rates down 3.5%, while North Dakota showed strong performance with blended increases of 5.2% [6][10] - Retention rates exceeded expectations at 60% during peak leasing quarters, with Minneapolis benefiting from improved occupancy and increasing rental rates [6][10] Market Data and Key Metrics Changes - The Minneapolis market is expected to outperform historical trends, with strong demand and absorption projected for 2026 [18][41] - Fort Collins showed significant outperformance compared to Denver, with retention rates 800 basis points ahead and strong year-over-year occupancy increases [10][41] Company Strategy and Development Direction - Centerspace is focused on enhancing market position and shareholder value through strategic acquisitions and dispositions, including the sale of lower-growth communities in Minnesota [5][10] - The company aims to maintain operational excellence and financial discipline while navigating the current cost of capital environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in Minneapolis and expects it to be among the top U.S. markets for rent growth in 2026 [18][41] - The company anticipates that demand in Denver will start to outpace supply in late 2026, leading to improved market conditions [41][42] Other Important Information - The company has recycled approximately $212 million of capital through strategic transactions, enhancing the quality and efficiency of its portfolio [5][10] - Recent acquisitions included properties in Salt Lake City and Fort Collins, with a focus on scaling in these markets [9][10] Q&A Session Summary Question: How does the company balance share repurchases with reducing leverage? - Management indicated that share repurchases were a small use of proceeds and emphasized the importance of capital allocation based on market conditions [16][17] Question: What are the expectations for the Minneapolis market going forward? - Management expects a return to normalcy in Minneapolis, with potential for above-average performance due to strong demand and absorption [18][19] Question: Can you elaborate on concession levels in Denver? - Concessions in Denver range from no concessions to six weeks free, with the market experiencing varying levels of concessions [22][23] Question: What are the expectations for blended lease growth in Q4? - Renewals are expected to remain strong, but new lease tradeouts are negative, indicating a stable occupancy trend [30][31] Question: What are the drivers of higher G&A expenses? - Higher G&A expenses were attributed to additional fees and legal expenses, but these are not expected to be run-rate items [32][33] Question: How does the company view the performance of smaller markets? - North Dakota is expected to continue outperforming, with Minneapolis also showing strong potential for growth in 2026 [80][81]

Financial Data and Key Metrics Changes - FFO and core FFO per share for Q3 2025 were both $0.35, down from $0.38 in Q3 2024 [12] - Total operating revenues for Q3 2025 were $40.8 million, compared to $39.2 million in Q3 2024, while operating expenses decreased from $28.5 million to $26 million [13][14] - Net assets increased from $1.21 billion to $1.265 billion due to portfolio acquisition [14] Business Line Data and Key Metrics Changes - The company acquired a six-facility industrial manufacturing portfolio for $54.5 million, increasing industrial concentration to 69% of annualized straight-line rents from 63% at the start of the year [6][19] - The portfolio achieved a 99.1% occupancy rate, the highest since Q1 2019, with a weighted average lease term of 7.5 years [8] Market Data and Key Metrics Changes - The Federal Reserve reduced the funds rate by 50 basis points, contributing to a downward trend in long-term rates [5] - Asking cap rates showed a gradual downward trend, aligning with long-term Treasury yields [5] Company Strategy and Development Direction - The company focuses on growing its industrial concentration, managing existing portfolio assets, and strategically disposing of non-core assets [6][10] - Plans to continue acquiring high-quality industrial assets and support tenant growth through lease extensions and capital improvements [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the capital markets and the company's ability to execute its strategy effectively [5][11] - The company remains aware of challenges in the office environment and will strategically evaluate its portfolio for potential disposals [10] Other Important Information - The company increased its credit facility to $600 million, extending and laddering debt maturities [9][19] - The common stock dividend remains at $0.30 per share per quarter [18] Q&A Session Summary Question: Future of Industrial Allocation - Management anticipates increasing industrial allocation beyond 70% in the foreseeable future [24] Question: Increase in Operating Expenses - Operating expenses have risen due to inflation and insurance costs, which are being passed on to tenants where possible [28][31] Question: Capital Expenditure Insights - Higher capital expenditures were driven by renewals, which are expected to be accretive to the company [32] Question: Dividend Confidence Amid CapEx - Management believes that the capital expenditures are accretive and do not negatively impact the dividend [36] Question: Acquisitions Pipeline for 2026 - Management is optimistic about matching 2025 acquisition levels, with two transactions currently in the pipeline [37] Question: Lease Termination Details - A lease termination occurred with a small tenant, but a new tenant has already taken over the space [44][50] Question: Automotive Exposure and Bankruptcy Concerns - Management maintains confidence in their automotive exposure, emphasizing robust underwriting practices [51][53] Question: Leverage and Asset Sales - The company plans to manage leverage through capital recycling and may issue more equity to reduce leverage [55] Question: Cap Rate Trends - Management sees cap rates compressing and anticipates taking advantage of favorable conditions in the market [61] Question: Impact of Government Shutdown - No significant impact from the government shutdown has been reported by tenants [62]

Core Insights - The company reported its best leasing quarter ever, achieving 727,000 square feet of comparable space leased at an average cash rent of $35.71, which is 28% higher than the previous tenant's rent [1] - Two-thirds of the leased space was for renewals, indicating strong tenant retention, while over half of the new leases were for currently occupied spaces, showcasing the attractiveness of the shopping centers [1][12] - The company experienced a strong comparable operating income growth of 4.4% for the quarter, leading to a Funds From Operations (FFO) per share of $1.77, despite some negative impacts from capitalized interest and operating costs [5][19] Leasing Performance - The company recorded a record 123 comparable deals with impressive rent spreads of 28% over prior rents, reflecting strong demand for its properties [12] - The occupancy rate in the comparable pool increased by 40 basis points quarter-over-quarter and 20 basis points year-over-year, reaching 94% [12] - The overall occupancy rate across all shopping centers stands at 93.8%, with a healthy leased rate of 95.7% expected to grow further due to a strong pipeline of new leases [13][14] Development and Acquisitions - The company is progressing well with residential construction projects in Hoboken, New Jersey, and Balakinwood, Pennsylvania, with a total capital commitment of approximately $280 million [6] - The acquisition of Annapolis Town Center for $187 million is expected to enhance surrounding merchandising and increase rental income, supported by strong existing anchors like Whole Foods and Target [10][17] - The company is actively pursuing additional acquisitions, with another large center expected to close in the fourth quarter, further expanding its portfolio in affluent markets [10][24] Financial Position - The company maintains significant liquidity of approximately $1.3 billion, with a strong balance sheet reflected in a net debt to EBITDA ratio of 5.6 times [20] - The company is executing a capital recycling program, with $400 million in assets at various stages of sale, and expects to close approximately $200 million by year-end [20][22] - Guidance for FFO per share for 2025 has been raised to a range of $7.20 to $7.26, representing a growth of 6.8% at the midpoint over 2024 [23] Market Outlook - The company anticipates continued strong demand for its retail portfolio, with expectations for comparable occupied levels to be in the low 94% range by year-end [24] - The leasing environment remains robust, with a significant portion of new leases being signed for currently occupied spaces, indicating a healthy market dynamic [14][70] - The company is focused on enhancing internal and external growth, leveraging its experienced team to drive leasing performance and operational efficiency [11][62]

Financial Data and Key Metrics Changes - Total revenue increased from $29.6 million in Q3 2024 to $31.1 million in Q3 2025, representing a 4.9% year-over-year growth [10] - Quarter-over-quarter, total revenue grew by 1.1% when normalizing for a $1.7 million reversal of interest receivables in Q2 2025 [10] - Funds from operations (FFO) rose to $13.5 million in Q3 2025, a 5.7% increase from $12.8 million in Q3 2024 [13] - Adjusted funds from operations (AFFO) increased to $15.1 million, a 3.1% year-over-year growth [13] - The AFFO dividend payout ratio remained strong at 85% [14] Business Line Data and Key Metrics Changes - Occupancy decreased from 90.7% to 90.1% during the quarter, but leasing activity is expected to increase occupancy by 50 to 100 basis points by year-end [5][6] - The weighted average lease term increased slightly from 6.6 to 6.7 years [6] - One inpatient rehabilitation facility was acquired for $26.5 million, with an anticipated annual return of approximately 9.4% [7] Market Data and Key Metrics Changes - The company is seeing attractive opportunities in the market with cap rates in the 9%-10% range [17] - The company is focused on capital recycling to fund acquisitions without increasing leverage [20] Company Strategy and Development Direction - The company is being highly selective in acquisitions and is focused on capital recycling to fund new investments [17][20] - The strategy includes disposing of non-core properties to focus on better buildings and markets [36] - The company aims to maintain modest leverage levels while pursuing growth opportunities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the leasing activity and expects a positive impact on occupancy and revenue in 2026 [31] - The company is actively pursuing multiple plans to ensure stable rent from the behavioral health tenant [27] - Management is cautious about the timing of the acquisition related to the behavioral health tenant, indicating it may close in Q1 2026 [26] Other Important Information - The company declared a dividend of $0.4750 per common share for Q3 2025, marking a continuous increase since the IPO [9] - The company expects to close on a property sale with an expected gain of approximately $11.5 million in Q4 2025 [8] Q&A Session Summary Question: Acquisition pipeline and funding - Management indicated that the acquisition pipeline remains attractive, but they are being selective due to current stock prices [17] Question: Impact of asset sales on leverage - Management clarified that they do not expect to increase leverage significantly and plan to match dispositions with acquisitions [20][21] Question: Behavioral health tenant rent payments - The tenant previously paid approximately $800,000 per quarter but only paid $200,000 in the current quarter [25] Question: Timing of acquisition closing - Management hopes to close the acquisition by year-end but realistically expects it to occur in Q1 2026 [26] Question: Plans if the acquisition falls through - Management is exploring multiple paths to ensure stable rent from the tenant [27] Question: Impact of redevelopment properties on earnings - Significant leases from redevelopment properties are expected to commence in 2026, contributing to earnings growth [29]