Financial Data and Key Metrics Changes - The company reported FFO per share of $1.77, which is above consensus and at the top end of the guidance range of $1.72 to $1.77 [19][22] - Comparable property operating income (POI) growth for the quarter was 4.4% on a GAAP basis and 3.7% on a cash basis, outperforming expectations [19][22] - The company has significant liquidity of approximately $1.3 billion at quarter-end, consisting of availability on its $1.25 billion unsecured credit facility and over $100 million in cash [19][20] Business Line Data and Key Metrics Changes - The company achieved a record leasing quarter with 727,000 square feet of comparable space leased at an average rent of $35.71, representing a 28% increase in annual cash rent compared to previous tenants [5][13] - Occupancy in the comparable pool increased by 40 basis points quarter-over-quarter and 20 basis points year-over-year to 94% [13][14] - The comparable lease rate stands at a healthy 95.7%, with expectations for growth driven by a strong pipeline of over 175,000 square feet of new leases in process [14][15] Market Data and Key Metrics Changes - The company closed on the acquisition of Annapolis Town Center for $187 million at a 7% unlevered return, enhancing its portfolio in a prime market [11][17] - The company is actively pursuing additional acquisitions, with one under contract for approximately $150 million expected to close by year-end [23][68] Company Strategy and Development Direction - The company is committed to enhancing internal and external growth, focusing on high-quality acquisitions and maintaining a disciplined capital allocation strategy [12][19] - The strategy includes expanding geographical footprint without sacrificing quality, targeting affluent markets with proven demand [10][11] - The company plans to continue its capital recycling program, with $400 million of assets at various stages of sale, and a pool of over $1 billion of non-core assets under consideration for future sales [20][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in closing out 2025 strong based on current operational momentum and leasing activity [6][25] - The company expects a strong operational year in 2026, with continued growth driven by strategic investments and acquisitions [25][36] - Management noted that retail tenant demand remains robust, with no signs of abating [23][25] Other Important Information - The company is experiencing a trend where tenants are signing leases for currently occupied spaces, which has increased from 30-40% to 70% in recent quarters [66] - The company expects to recognize straight-line rent from a significant anchor tenant in the fourth quarter, contributing to incremental POI growth [40] Q&A Session Summary Question: Can you provide insights on the dispositions and cap rates for retail versus residential? - The company indicated that pricing for residential assets is expected to be around 5% and for retail in the low sixes, with a blended cap rate in the mid to upper fives [29] Question: Can you outline any one-time factors affecting 2026 guidance? - Management stated that the new market tax credit is a significant one-time factor for 2025, but they do not expect any material differences in guidance for 2026 [33][35] Question: How sustainable are the impressive cash spreads observed this quarter? - Management noted that while the 28% cash spread is strong, a more sustainable figure over a 12-month period is in the mid-teens, indicating ongoing ability to drive rents [39] Question: What is the plan for the $200 million Bethesda Row mortgage maturing in December? - The company plans to extend the mortgage for another year, exercising the first of two extension options [45] Question: How is the acquisition pipeline looking in terms of competition and cap rates? - Management indicated that while there is increased competition for large transactions, they believe they are well-positioned to compete effectively [56][58] Question: Can you discuss the embedded rent in the pipeline and its projected timeline? - The company expects about $38 million in total rent from the pipeline, with a significant portion coming online in 2026 [61] Question: How is the Annapolis acquisition funded and its impact on future earnings? - The acquisition is funded through a combination of cash on hand and asset sales, with expected accretion contributing to future earnings [51]