Financial Data and Key Metrics Changes - The company reported same property NOI growth exceeding 7%, with base rent contributing 4.5% [9] - Full year guidance for same property NOI growth was raised to 4.5% to 5%, an increase of 115 basis points at the midpoint [17] - NAREIT FFO range was raised by $0.06 per share at the midpoint, representing full year growth of more than 7% [17] - Core operating earnings per share were raised by $0.05 at the midpoint, indicating growth north of 6% [17] Business Line Data and Key Metrics Changes - The company achieved cash rent spreads of 10% and GAAP rent spreads of nearly 20% for new and renewal leasing [10] - The lease to commenced occupancy spread was 260 basis points at quarter end, representing an S and O pipeline of $38 million of incremental base rent [10] - The company maintained a same property leased rate and continued to grow shop occupancy, driven by strong tenant demand across various categories [9] Market Data and Key Metrics Changes - The company successfully deployed over $600 million of capital year to date, with a recent acquisition of five shopping centers for $357 million [6][12] - The acquisition portfolio is 97% leased and includes over 600,000 square feet of high-quality retail GLA in a sought-after market [12] - The company continues to see strong demand from leading grocers and retailers for expansion in its markets [15] Company Strategy and Development Direction - The company is focused on enhancing its presence in supply-constrained markets, particularly in Southern California [6] - The ongoing commitment to corporate responsibility is a foundational strategy for the company, reflecting its dedication to sustainable growth [7] - The company aims to capitalize on persistent demand for high-quality shopping centers while driving NOI higher through effective merchandising [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of operating fundamentals and the ability to sustain growth opportunities into 2026 [8] - The company is optimistic about the future, citing strong tenant health and positive consumer trends [80] - Management noted that the current operating environment is favorable, with limited supply and high demand for quality retail spaces [11] Other Important Information - The company has a strong balance sheet with low leverage and dependable access to low-cost capital, enabling it to pursue strategic growth opportunities [8] - The company has successfully executed a $400 million bond offering, demonstrating a clear cost of capital advantage [19] - The company is committed to maintaining a leverage ratio comfortably within its target range of 5 to 5.5 times [20] Q&A Session Summary Question: Contribution to same store NOI growth in the second half - Management indicated that base rent will continue to be the largest contributor, but there may be a slight increase in uncollectible lease income in the second half [23][25] Question: State property NOI growth algorithm and future components - Management noted that while peak leased occupancy has been reached, there is still room for growth in commenced occupancy, which will positively impact NOI [31][34] Question: Insights on the SoCal acquisition and competitive edge - The acquisition was described as off-market, with the seller valuing the quality of the company's operations and future development opportunities [42][45] Question: Development opportunities and retailer discussions - Management confirmed ongoing discussions with national retailers about new developments, with expectations for continued high yields [50][52] Question: Sustainability of improved expense recovery rates - Management anticipates a slight deceleration in recovery rates but expects continued improvement due to higher average in-place occupancy [55][56] Question: Tenant health and turnover rates - Management reported strong tenant health, with a retention rate of about 77%, attributed to supply constraints and productive stores [77][80] Question: Credit loss assumptions and potential troubled tenants - Management narrowed credit loss guidance, citing improved clarity on bankruptcy outcomes and strong tenant health [84][86] Question: Future occupancy levels and potential for growth - Management expressed confidence in the ability to push occupancy levels higher, with no ceiling identified for future growth [108][111]

Financial Data and Key Metrics Changes - For the first half of 2025, same property NOI grew approximately 6% and NAREIT FFO per share rose nearly 5% year over year [4] - Same property NOI for the second quarter was $42.6 million, representing a 4.8% increase compared to the same period last year [8] - NAREIT FFO for the second quarter was $35.5 million or $0.45 per diluted share, reflecting a 2.3% increase year over year [9] - Year to date, same property NOI totaled $85.1 million, a 5.6% increase over 2024 [9] - The company declared an annualized dividend of $0.95 per share, representing a 5% increase over the prior year [11] Business Line Data and Key Metrics Changes - Leased occupancy stood at 97.3%, with small shop occupancy reaching a new high of 93.8% [4][14] - The company executed 73 leases for approximately 304,000 square feet in the second quarter, with new leases signed at a 44.1% spread and renewals at 9.2%, resulting in a blended leasing spread of 16.4% [13] - The retention rate remained robust at 91%, with over 90% of renewal leases embedding annual rent escalators of 3% or higher [13] Market Data and Key Metrics Changes - The company is actively targeting investment opportunities in markets such as Asheville, Charleston, Charlotte, Nashville, Phoenix, and Savannah, which exhibit healthy population and job growth [5] - The company has successfully closed on six properties totaling approximately $230 million and has secured or is under contract for another two properties valued at nearly $126 million [5] Company Strategy and Development Direction - The company is raising its same property NOI growth expectations for the year to 4% to 5% [5] - The sale of the California portfolio was described as a tactical reallocation of capital to enhance focus on core markets expected to deliver long-term value [5] - The company aims to leverage its well-capitalized balance sheet to support sustained expansion and is focused on growing sustainable cash flow and delivering superior total returns for shareholders [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of retailers within the portfolio despite a less confident consumer and inflationary pressures [4] - The company noted that the transaction market was slower than anticipated in the spring but is seeing a speed-up in activity, which provides optimism for the second half of the year [22] - Management indicated that the 4% to 5% same store growth expectation appears sustainable based on current occupancy levels and embedded rent escalations [26] Other Important Information - The company has a total liquidity of $787 million, including $500 million in borrowing capacity under its revolving line of credit [10] - The net leverage ratio stood at 17%, and net debt to adjusted EBITDA was 2.8 times on a trailing twelve-month basis [10] Q&A Session Summary Question: Given acquisition activity is more back end loaded than initially expected, would guidance have been raised if acquisition activity had occurred as planned? - Management indicated that similar movements in expectations would have been seen relative to internal operations, especially given the significant proceeds from the California portfolio [21] Question: What was the same store growth profile of the California assets sold? - Management noted that the growth profile for the California assets was not as favorable as that experienced in the Southeast, influenced by demographic trends and business-friendly environments [24][25] Question: Is there a decline in the number of accretive core grocery opportunities available? - Management acknowledged strong institutional interest in grocery-anchored centers, leading to increased competition, but emphasized their ability to redeploy proceeds effectively [30][31] Question: What is the current acquisition pipeline in terms of size and pricing? - Management stated that the acquisition pipeline typically has about $1 billion in opportunities and expressed confidence in reaching the $100 million net acquisition guidance [37][38]

Financial Data and Key Metrics Changes - Same property NOI grew by 6.1% in Q1 2025, reaching $47.3 million, driven by strong demand and effective lease management [6][13] - NAREIT FFO for the quarter totaled $37.2 million or $0.48 per diluted share, representing a 6.7% increase year-over-year [13] - Core FFO rose 4.5% year-over-year to $0.46 per share, supported by internal growth and acquisitions [14] - The company declared an annualized dividend payment of $0.95 per share, a 5% increase over the previous year [15] Business Line Data and Key Metrics Changes - The portfolio remains highly leased, with small shop lease occupancy achieving a record high of 93.4%, up 130 basis points from last year [17] - The total portfolio ABR ended Q1 at $20.21 per square foot, reflecting a 3.1% increase compared to Q1 2024 [18] - The company executed 256,000 square feet of new leases and renewals during the quarter, achieving a retention rate of 90% [17] Market Data and Key Metrics Changes - 90.7% of net operating income is generated from the Sunbelt region, which continues to be a top-performing retail market [6] - The company is actively pursuing acquisitions in high-growth markets such as Asheville, Charlotte, Charleston, San Antonio, and Orlando [11] Company Strategy and Development Direction - The company is focused on necessity-based open retail centers in Sunbelt markets, which have shown resilience despite economic challenges [5][6] - Plans to exit California are underway, with expectations to significantly reduce investments in the state in 2025 [9][10] - The capital allocation plan includes evaluating asset sales and capital recycling to enhance the portfolio with high-quality necessity-based tenants [11][12] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the economic environment, citing strong tenant health and minimal exposure to recent retail bankruptcies [7][19] - The company anticipates some impact on same property NOI later in the year due to announced bankruptcies, but expects to maintain guidance for same property NOI growth of 3.5% to 4.5% [15][19] Other Important Information - The company maintains a low leverage ratio of 23.4%, allowing for opportunistic growth without relying heavily on capital markets [14][12] - The current pipeline for acquisitions stands at $1.5 to $2 billion, focusing on grocery-anchored centers [11] Q&A Session Summary Question: How does the company expect to achieve the 3.5% to 4.5% same store NOI growth for the year after a strong Q1? - Management indicated that while Q1 was strong, there are factors such as anticipated bad debt and unique Q1 circumstances that may lead to deceleration in the following quarters [21][22][25] Question: What is the reception and pricing expectation for the California assets currently on the market? - Management reported strong interest in the California assets, with several in the due diligence phase, and expressed confidence in potential pricing outcomes [33][34] Question: Has there been any change in leasing conversations post-April 2 amid macro uncertainty? - Management noted that leasing demand remains healthy and conversations with tenants have not changed significantly [35][36] Question: What is the company's strategy regarding capital recycling and market expansion? - Management confirmed that capital recycling involves selling lower cap rate California assets and reinvesting in higher-yielding opportunities, with a focus on maintaining quality in smaller markets [41][42][48]