Financial Data and Key Metrics Changes - The company reported $0.71 per share in FFO for Q4 2025, aligning with consensus expectations, and $2.84 per share for the full year, reflecting a 5.6% increase over 2024 [5] - The portfolio was 88.3% occupied at the end of Q4 2025, with a goal to achieve 90% occupancy by year-end 2026 [9][13] - The company introduced 2026 FFO guidance of $2.92 per share at the midpoint, implying a 2.8% growth over 2025 [11][31] Business Line Data and Key Metrics Changes - Leasing activity was strong, with 700,000 sq ft of leases completed in Q4, marking the second-highest quarterly volume in four years [5][14] - Average net rent for Q4 was $36.52, with leasing concessions at $10.58, resulting in an average net effective rent of $23.18 [14] - Excluding Northpark, cash rents increased by 10.4%, while total cash rents increased by only 0.2% [15] Market Data and Key Metrics Changes - In Atlanta, leasing volume increased by 5.8% quarter-over-quarter, with 361,000 sq ft of leases signed in Q4, the highest since Q1 2019 [16] - Austin's market saw significant leasing activity, with 1.3 million sq ft leased in Q4, the highest since 2021, driven by technology companies [17] - Charlotte experienced a 72% year-over-year increase in leasing activity, with three-quarters being new and expansion leases [17][18] Company Strategy and Development Direction - The company aims to grow occupancy and execute additional accretive investment opportunities, focusing on lifestyle office properties in target Sunbelt markets [9][10] - The acquisition of 300 South Tryon for $317 million is a strategic move to enhance the portfolio in a high-demand area [22][23] - The company plans to remain agile in acquisitions and dispositions, prioritizing earnings accretion while maintaining financial strength [10][24] Management's Comments on Operating Environment and Future Outlook - Management noted that demand for office space is accelerating, with a significant shortage expected in 2028-2030 due to low new supply [7][12] - The return-to-office trend is expected to continue driving demand, despite concerns about a slowing labor market [8][12] - The company remains optimistic about 2026, anticipating another busy investment year and continued robust leasing activity [28][29] Other Important Information - The company recognized impairments on two non-core assets during Q4, but these do not impact NAREIT-defined FFO [30] - The company is under contract to sell Harbourview Plaza for $39.5 million and a land parcel in Charlotte for $23.7 million [25][27] Q&A Session Summary Question: Can you talk about which markets are most supportive of development from a yield perspective? - Management indicated that Uptown Dallas, Charlotte, and Buckhead are markets with strong potential for development due to tight conditions and rising rents [36] Question: Can you provide insights on the late-stage leasing pipeline and rent spreads? - Management confirmed visibility into the late-stage pipeline, expecting continued positive cash rent roll-ups [38][39] Question: How are you thinking about funding the 300 South Tryon acquisition? - Management highlighted a low-leverage balance sheet providing flexibility in funding options, balancing financial and strategic aspects [40] Question: What are the underwriting criteria for new developments? - Management targets a pre-lease basis of around 50% and development yields of 8.5%-9% [44] Question: Can you discuss the leasing activity from West Coast and New York companies? - Significant activity was noted in Austin and Charlotte, particularly from technology and financial services firms [45] Question: What is the outlook for occupancy and tenant retention? - Management expects a retention rate around 50% and noted that many leases signed in Q4 will commence in 2026, impacting occupancy positively [68]

Financial Data and Key Metrics Changes - The company reported same property NOI for the quarter at $44.3 million, reflecting a 6.4% increase year-over-year, driven by embedded rent escalations, occupancy gains, and positive rent spreads [10] - NAREIT FFO for the third quarter was $38.4 million, or $0.49 per diluted share, representing an 8.9% increase compared to the same quarter last year [10] - Year-to-date NAREIT FFO totaled $111.1 million, or $1.42 per diluted share, reflecting a 6% year-over-year increase [11] - The company declared an annualized dividend of $0.95 per share [12] Business Line Data and Key Metrics Changes - Same property NOI growth was attributed to various factors: embedded rent escalations contributed 160 basis points, occupancy gains and positive rent spreads each added 100 basis points, and redevelopment activity contributed 60 basis points [10] - New leases achieved a 25.6% spread, while renewals averaged 10.4%, resulting in a blended leasing spread of 11.5% [17] Market Data and Key Metrics Changes - The company noted that retail sales in the Sunbelt region are up year-over-year, with foot traffic and occupancy levels remaining above national averages [5] - The company highlighted that nine of the top 10 U.S. retail metros are located in the Sunbelt, where it is heavily concentrated [5] Company Strategy and Development Direction - The company continues to focus on maintaining high occupancy, embedding contractual rent escalators, and pursuing selective, accretive acquisitions [4] - The capital allocation strategy remains disciplined, targeting opportunities that align with strict return thresholds and enhance asset quality [8] - The company aims to expand its portfolio in high-growth Sunbelt markets while managing a balanced approach between neighborhood/community centers and power/lifestyle properties [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Sunbelt consumer base, despite some caution signals such as rising household debt and weakened consumer confidence [5] - The company anticipates some deceleration in the fourth quarter due to backloaded property operating expenses and remaining bad debt reserves [13] - Management raised full-year same property NOI growth guidance to a range of 4.75% to 5.25% and increased the midpoint of NAREIT FFO guidance to $1.87 per share [13] Other Important Information - The company completed four acquisitions totaling $250 million during the quarter, funded primarily with cash on hand [12] - Total liquidity stood at $571 million, including $71 million in cash and a full $500 million available under a revolving credit facility [12] Q&A Session Summary Question: Thoughts on tenants in discretionary categories, including restaurants - Management noted strong demand from quick service and sit-down dining tenants, with more restaurants performing well than struggling [22][23] Question: Percentage of core grocery versus power and lifestyle in acquisition pipeline - The pipeline remains robust, with over $1 billion in assets being considered, predominantly featuring grocery components [25][26] Question: Trajectory of occupancy over the next couple of quarters - Management expects a slight decline in small shop occupancy but anticipates a reacceleration in 2026 [28][29] Question: Confidence in growing creatively from acquisitions moving into 2026 - Management emphasized the importance of responsible and creative growth strategies, focusing on high-quality assets in strong markets [37] Question: Remaining budgeted bad debt expense for the year - Management indicated that the forecast includes both visible and assumption-based elements, with a range of 55 to 75 basis points for bad debt [40] Question: Lease-to-economic occupancy spread and its future trajectory - Management suggested that the spread is influenced by timing and expects it to stabilize between 150 to 200 basis points [46] Question: Balance between grocery sector strength and dining out trends - Management observed that grocery and dining sectors have been complementary rather than substitutive within their portfolio [48]