InvenTrust Properties Conference Call Summary Company Overview - **Company**: InvenTrust Properties (NYSE: IVT) - **Type**: Open-air retail Real Estate Investment Trust (REIT) - **Portfolio**: 75 properties, primarily located in the Sun Belt region of the U.S. - **Key Focus**: Grocery-anchored properties, with approximately 85%-90% of the portfolio being grocery anchored [2][3] Core Investment Thesis - **Growth Markets**: InvenTrust focuses on markets with the fastest growth and favorable demographic trends, particularly in the Southeast [3] - **Financial Performance**: - Same Store Net Operating Income (NOI) growth has exceeded 4% annually since listing in late 2021, with the last two years above 5% [3] - Funds From Operations (FFO) per share growth has also been over 5% annually [4] - **Leverage**: The company maintains a low leverage ratio of just under 4 times on a forward basis, positioning it favorably for growth [4][25] Strategic Initiatives - **Capital Recycling**: In 2025, InvenTrust exited California, which constituted about 12% of its NOI, to reinvest in higher-return markets in the Southeast [6][7] - **Acquisitions**: InvenTrust acquired nearly $465 million worth of assets in the previous year, demonstrating its capacity for external growth [5] - **Market Expansion**: The company is expanding into secondary markets, including recent acquisitions in Asheville, Charleston, Savannah, and Nashville, which are experiencing strong demographic trends [11][12] Internal Growth Opportunities - **Portfolio Quality**: The portfolio is highly homogenous and well-leased, with an overall occupancy rate close to 97% [17] - **Remerchandising**: The company plans to enhance its properties through remerchandising and redevelopment, particularly in areas with anchor vacancies [19][20] - **Credit Quality**: InvenTrust has reduced its bad debt reserves for 2026, reflecting confidence in the credit quality of its tenants [34][35] Market Trends and Challenges - **Consumer Behavior**: The company acknowledges some softness in consumer spending, particularly in the food service sector, but remains confident in the resilience of its small shop tenants [36] - **AI Integration**: InvenTrust is exploring AI to improve operational efficiencies and underwriting processes, aiming to scale its business without significantly increasing overhead [46][49] Financial Outlook - **Same Property NOI Growth Guidance**: The company anticipates a deceleration in Same Property NOI growth to the high threes for the upcoming year, reflecting a more stabilized portfolio [18] - **Free Cash Flow**: Despite potential deceleration in NOI, Free Cash Flow is expected to accelerate due to lower tenant capital needs [20] Conclusion - **Investment Rationale**: InvenTrust's focus on essential retail in high-growth markets, combined with a strong financial position and strategic growth initiatives, positions it as a compelling investment opportunity in the retail REIT sector [2][4][5]

Financial Data and Key Metrics Changes - Fourth quarter Core FFO was $0.63 per share, a 17% increase year-over-year, and for the full year, it was $2.33 per share, up 9.4% from the previous year [4][14] - Same-Center NOI growth for the year was 4.3%, reflecting successful leasing and operational strategies [14] - The company ended 2025 with a pro forma weighted average interest rate of about 4% and a net debt to Adjusted EBITDA ratio of only 4.7x [20][21] Business Line Data and Key Metrics Changes - Leasing volume exceeded 3 million sq ft, marking the highest annual production on record, with year-end occupancy at 98.1%, a 70 basis point increase [5][6] - Tenant sales productivity was $473 per sq ft, up 7% from the prior year, indicating strong retailer demand [6] - The company achieved positive rent spreads and extended lease terms for both renewals and new deals [5][6] Market Data and Key Metrics Changes - The company noted strong population growth in many of its markets, which is driving demand and traffic [9][10] - Favorable market conditions, including limited new retail development and consolidation in the department store sector, have contributed to strong leasing demand [7][10] Company Strategy and Development Direction - The company is focused on adding new uses and categories, replacing underperforming tenants, and enhancing the merchandising mix to drive traffic and NOI growth [7][8] - Strategic initiatives include enhancing dining and entertainment experiences, which are expected to attract elevated brands and increase customer visits [8][9] - The company is leveraging technology, including AI, to improve operational efficiency and customer engagement [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, supported by favorable demographic trends and retailer demand [4][7] - The company anticipates strong Same-Center NOI growth in the range of 2.25%-4.25% for 2026, with a focus on retenanting and reinvestment [22] - Management highlighted the importance of adapting to the evolving retail landscape and maintaining a relevant value proposition for consumers [11][20] Other Important Information - The company was recognized by Newsweek as one of America's Greatest Workplaces for Culture, Belonging, and Community in 2026 [12] - Significant advancements in technology initiatives are expected to unlock further opportunities for innovation and insights [11] Q&A Session Summary Question: CapEx implications regarding Saks - Management clarified that Saks has not rejected any leases and that potential CapEx related to Saks is not embedded in the current guidance [25][26] Question: Retailer conversations and sales expectations - Management noted that retailers are optimistic about sales and open to buys, with no deceleration in their growth strategies [29][30] Question: Leasing trends and lease lengths - Management indicated that retenanting is more profitable than renewing leases, and they are focusing on longer lease terms to enhance growth [32][34] Question: Consumer health and demographic shifts - Management observed a shift towards younger consumers and families shopping at their centers, driven by enhanced digital marketing efforts [43][44] Question: Temporary tenancy trends - Management confirmed that temporary leasing remains a strategic focus, allowing for flexibility and maintaining cash flow during transitions [65][70] Question: Guidance for bad debt in 2026 - Management stated that guidance accounts for various credit scenarios and that their watch list remains manageable [78][79] Question: Retailer bankruptcies and demand - Management reassured that recent bankruptcies were anticipated and that demand for leasing remains strong, with record leasing activity [85][86]

Core Insights - Retail REIT investors often focus on Realty Income and Regency Centers for stability, but their growth strategies differ significantly [1][3] Realty Income - Realty Income's strength lies in its scale and diversification, owning over 15,500 properties with a portfolio occupancy of 98.7% as of Q3 2025 [4] - The company reported a 10% year-over-year revenue increase to nearly $1.47 billion in Q3 2025, with adjusted funds from operations (AFFO) per share at $1.08 [5] - Realty Income has declared 668 consecutive monthly dividends, with an annualized payout of $3.24 per share, supported by long lease durations and high-quality tenants [7] - The model prioritizes predictability and scale, but may limit upside during strong economic growth due to gradual same-store revenue growth [8] Regency Centers - Regency Centers achieved strong operational performance in 2025, with same-property NOI growth of 4.7% in Q4 and 5.3% for the full year, driven by high occupancy and strong rent spreads [9] - The company deployed over $825 million into investments in 2025, with ground-up development returns exceeding 7% [12] - Regency maintains strong financial health with A3 and A- credit ratings, and emphasizes strong free cash flow without the need to raise equity for its development pipeline [13] - The focus on grocery-anchored suburban retail provides a competitive edge, although it carries risks related to consumer spending and tenant disruptions [14] Comparative Estimates - The Zacks Consensus Estimate for Realty Income's 2025 and 2026 sales implies year-over-year growth of 8.54% and 7.15%, respectively, with FFO per share growth of 1.91% and 3.83% [15] - For Regency, the 2026 sales estimate suggests year-over-year growth of 3.41%, with a revised FFO per share for 2025 indicating a 3.88% increase [18] Price Performance and Valuation - Over the past three months, Realty Income shares rose 15.6%, while Regency stock gained 9.1%, outperforming the Zacks REIT and Equity Trust - Retail industry [20] - Realty Income trades at a forward price-to-FFO of 14.63X, while Regency trades at 15.61X, both above their three-year medians [21] Conclusion - Realty Income offers stability and predictable cash flow through diversification and long lease durations [24] - Regency Centers is positioned for faster internal growth with strong leasing spreads and development yields, making it a more attractive option for investors seeking durable earnings momentum [25]

Financial Data and Key Metrics Changes - InvenTrust reported Same Property NOI growth of 5.3% for 2025, marking the second consecutive year above 5% and the fifth consecutive year of growth exceeding 4% [4] - Core FFO finished at $1.89 per share, representing a 6.2% year-over-year increase [4][10] - Total liquidity at year-end was $480 million, with a net debt to adjusted EBITDA ratio of 4.5 times, which is a sector-low [11][12] Business Line Data and Key Metrics Changes - Same Property NOI for the fourth quarter was $44.3 million, up 3% year-over-year [10] - Nareit FFO for the full year totaled $147.8 million, or $1.89 per diluted share, reflecting a 6.2% increase over 2024 [10] - The company completed two acquisitions in the fourth quarter totaling $109 million, funded with available liquidity [11] Market Data and Key Metrics Changes - Top-performing retail markets in 2025 included Charlotte, Tampa, Orlando, and Dallas, with Charlotte showing robust population growth and job creation [8] - Retail sales increased, and announced store openings exceeded closures, indicating sustained confidence in physical retail [16] Company Strategy and Development Direction - The company aims to expand its portfolio in Sun Belt markets, focusing on grocery-anchored assets and areas with long-term population growth [5][8] - InvenTrust plans to invest in targeted redevelopment initiatives to maintain portfolio quality and drive incremental NOI growth, expecting these efforts to contribute approximately 50-100 basis points of incremental NOI growth annually [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the retail landscape's resilience, despite increased store closures, due to low new retail construction and improved retailer decision-making [6][7] - The guidance for 2026 includes core FFO per share growth expected in the mid-single-digit range and net investment activity of approximately $300 million [8][12] Other Important Information - The board approved a 5% increase in the annual cash dividend for 2026, raising the annualized rate to $1 per share [11][12] - The company remains selective in its acquisition approach, focusing on opportunities that meet return thresholds and enhance operational footprint [5] Q&A Session Summary Question: Funding sources for $300 million net acquisition activity - Management indicated that they have ample room on the balance sheet to fund acquisitions, likely using a line of credit and possibly issuing debt in the private placement market [20][21] Question: Impact of Amazon Go and Fresh store closures - Management stated that they do not have Amazon Go stores in their portfolio and that Whole Foods locations are performing well, with no risk from Amazon's closures [28][30] Question: CapEx requirements and renewals business - Management expects renewals to become a larger part of the business, leading to lower CapEx requirements as credit quality improves [31][32] Question: Acquisition pipeline and pricing - Nearly half of the $300 million acquisition guidance is either under contract or awarded, with a competitive market for assets in the Sun Belt [36][37] Question: Disposition strategy for 2026 - Management indicated that dispositions will be a source of capital once acquisition opportunities are identified, with one asset in California expected to close in 2026 [39][40] Question: Same-store revenue impact from signed-not-open pipeline - Management expects most of the signed-not-open revenue to come online this year, with minimal impact from weather events [43] Question: Competitive market dynamics - Management noted that the competitive landscape remains consistent, with strong demand for quality assets, and they are optimistic about future opportunities [55][56]

Financial Data and Key Metrics Changes - In 2025, the company achieved over 4.5% growth in AFFO per share, with a total investment of $1.55 billion across its three investment platforms, marking over 60% year-over-year growth [6][8] - Core FFO per share for Q4 was $1.10, representing a 7.3% year-over-year increase, while full-year Core FFO per share was $4.28, reflecting a 5.1% increase [21] - AFFO per share for Q4 was $1.11, a 6.5% year-over-year increase, and for the full year, it was $4.33, indicating 4.6% year-over-year growth [21][22] Business Line Data and Key Metrics Changes - In Q4, the company invested approximately $377 million in 94 high-quality retail net lease properties, with notable transactions including ground leases to Lowe's and Home Depot [11][12] - For the full year 2025, nearly $1.6 billion was invested in 338 retail net lease properties, with over $1.4 billion originating from the acquisition platform at a weighted average cap rate of 7.2% [12][13] - The development and DFP platforms had a record year with 34 projects completed or under construction, representing approximately $225 million of committed capital [13][14] Market Data and Key Metrics Changes - The company's investment-grade exposure at year-end stood at nearly 67%, with occupancy increasing to 99.7%, reflecting a 50 basis point improvement since the first quarter [16] - The weighted average cap rate for acquired properties was 7.1%, with a weighted average lease term of 9.6 years [12] Company Strategy and Development Direction - The company aims to increase its 2026 investment guidance to a range of $1.4 billion to $1.6 billion, representing a 10% increase from the prior range [9] - The company is focused on maintaining a fortress balance sheet and executing on its investment guidance without raising additional equity capital [20] - The company is enhancing operational efficiencies through IT improvements and anticipates a material reduction in G&A as a percentage of revenue [8][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals supporting the company's outlook, citing a strong portfolio and exceptional team depth [6] - The management noted that the current economic environment is challenging for middle-income consumers, which may impact retail trends [101] - The company expects to maintain a growth trajectory with a goal of delivering 10% operational returns and achieving two-year stacked AFFO growth [108] Other Important Information - The company raised approximately $1.5 billion in capital during the year, including a $400 million bond offering and a $350 million term loan [17][18] - The company achieved an A- rating from Fitch, which is expected to deliver long-term benefits to its cost of capital [16][20] Q&A Session Summary Question: Increase in 2026 investment guidance - Management indicated that the increase is due to secured transactions, including sale-leaseback deals and increased confidence in development projects [26] Question: Non-core asset sales - Management explained that capital recycling focuses on opportunistic sales of non-core assets, driven by valuations in the market [27] Question: Cap rate trends - Management noted no material changes in cap rates and that rent escalators have been stable, reflecting historical inflation [31][32] Question: Construction costs - Management confirmed that construction costs are not decreasing and are in line with last year's levels, with efforts to find efficiencies [33][34] Question: Sale-leaseback interest - Management stated that while there is no increase in sale-leaseback velocity, they have specific transactions lined up with existing tenants [40] Question: Development investment commitments - Management expressed optimism about growth in development investments but noted that timing is often subject to third-party approvals [69] Question: Credit loss assumptions - Management indicated that credit loss assumptions for 2026 are in line with 2025, with a focus on maintaining a strong portfolio [70]

FEBRUARY 2026 Agree Realty Overview (NYSE: ADC) NET LEASE REIT FOCUSED ON THE ACQUISITION & DEVELOPMENT OF HIGH-QUALITY RETAIL PROPERTIES OUR COMPANY Founded in 1971 by Executive Chairman, Richard Agree Public on the NYSE since 1994 $12.6 billion retail net lease REIT headquartered in Royal Oak, Michigan(1) 2,674 retail properties totaling approximately 55.5 million square feet in all 50 states Investment grade issuer ratings of A- from Fitch, Baa1 from Moody's, and BBB+ from S&P RETHINK RETAIL Capitalize o ...

Financial Data and Key Metrics Changes - Same property NOI grew by 4.2% for the year, with a 6% increase in the fourth quarter, supported by a 360 basis points contribution from base rent growth [8][14][15] - FFO for the year was at the high end of guidance at $2.25 per share, up 5.6% year-over-year [8][15] - Record leasing year with $70 million of new rent executed, and small shop occupancy increased to a new high of 92.2% [8][9] Business Line Data and Key Metrics Changes - New lease rent growth for the year was 39%, and renewal rent growth was 15%, marking the third consecutive year of mid-teens renewal growth [10] - Retention rate improved to 87%, a 180 basis point increase from the previous year [10] - Overall Capex spending decreased by 14% year-over-year, the lowest since 2021 [10] Market Data and Key Metrics Changes - Demand from high-quality tenants remains robust, with significant new leases signed with operators like Publix and Sprouts [9] - The average net effective rent reached a record $23.66, with a payback period averaging two years [18] - The company ended the period with $1.6 billion of available liquidity, including $360 million in cash raised [18] Company Strategy and Development Direction - The company plans to continue capital allocation towards opportunities that create outsized value without relying solely on acquisitions for growth [6][8] - The operational realignment from four to three regions has led to greater efficiency and stronger leasing execution [7] - The company is focusing on technology and analytics, with early initiatives in AI and automation yielding positive results [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the portfolio and the ability to capture continued demand for well-located open-air retail centers [14][15] - The company anticipates 4.5%-5.5% same property NOI growth for 2026, driven by expected base rent contributions [16][17] - Management highlighted the strong credit quality of the tenant base and limited exposure to high-risk sectors [21][85] Other Important Information - The company acquired two high-quality grocery-anchored centers in Denver and Southern California in the fourth quarter [12] - Dispositions totaled $170 million during the quarter, focusing on assets with limited ROI [13] - The company is seeing strong competition for space, which is driving down cap rates for lower-growth assets [78] Q&A Session Summary Question: Guidance for bad debt this year - Management indicated that the guidance of 75-100 basis points reflects improved tenant health trends and a stronger underlying tenancy [21][23] Question: Acquisition environment and capital recycling - Management expressed optimism about the transaction pipeline and emphasized the focus on redevelopment opportunities for capital deployment [27][30] Question: Upper end of same-property NOI guidance - Management explained that the guidance reflects a conservative approach, considering the compounding of rent commencements and the need to execute on the SNO pipeline [35][38] Question: Use of technology and AI for tenant health evaluation - Management discussed the implementation of data-driven decisions to monitor tenant health and identify early signals of potential issues [87][88] Question: Sustainability of lower CapEx spend - Management believes the current lower CapEx run rate is sustainable due to improved tenant quality and reduced deferred maintenance [90][92]

Financial Data and Key Metrics Changes - Regency Centers achieved NAREIT FFO per share growth of close to 8% and Core Operating Earnings per share growth of nearly 7% for the full year 2025, driven by strong operating fundamentals and substantial external growth from acquisitions and development projects [15][18] - Same-Property NOI growth finished at 5.3%, supported by substantial base rent contributions and low levels of uncollectible lease income [7][15] Business Line Data and Key Metrics Changes - The company reported a significant increase in same-property shop occupancy by 40 basis points, reaching a record of 94.2% leased at year-end [7][8] - Cash rent spreads of 12% in Q4 and renewal spreads at a record 13% highlight the depth of embedded mark-to-market in the portfolio [9][10] Market Data and Key Metrics Changes - The grocery leasing activity was significant, with leases signed with major retailers such as Whole Foods, Sprouts, and Trader Joe's, indicating strong demand in the grocery sector [8][9] - The company noted that tenant demand remains exceptionally strong across nearly every category, with a notable increase in leasing activity for shop spaces [7][10] Company Strategy and Development Direction - Regency Centers is focused on ground-up development as a primary driver of external growth, with over $300 million in new project starts in 2025 and a pipeline translating into meaningful NOI growth in 2026 and beyond [5][12] - The company is leveraging its expertise and long-standing tenant relationships to build high-quality shopping centers at meaningful spreads to market value, positioning itself favorably in a low-supply growth environment [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating environment, noting that physical retail, particularly grocery-anchored real estate, continues to benefit from limited new supply and strong tenant demand [6][18] - The guidance for 2026 anticipates same-property NOI growth in the range of 3.25%-3.75%, driven by rent spreads and redevelopment deliveries [16][17] Other Important Information - The company has a strong balance sheet with A3, A- credit ratings from Moody's and S&P, and nearly full availability on its $1.5 billion credit facility, providing a solid foundation for future investments [18] - Regency Centers is not planning to raise equity or sell properties to fund its investment pipeline, relying instead on strong free cash flow generation [18] Q&A Session Summary Question: Thoughts on acquisitions and market opportunities - Management noted that there is growing demand for grocery-anchored real estate, with a broad range of opportunities available, but emphasized that acquisitions will only be pursued if they meet quality and growth profiles [20][22] Question: Impact of Amazon closing grocery stores - Management reassured that the closure of Amazon Fresh stores does not indicate a pullback in physical retail, as Amazon still owns Whole Foods and is expanding that brand [28][29] Question: Development and redevelopment spend guidance - The company indicated that the $325 million development and redevelopment spend is roughly two-thirds ground-up and one-third redevelopment, with a strong focus on ground-up development moving forward [35][37] Question: Current tenant health and consumer resilience - Management reported that tenant health remains strong, with below-average accounts receivable and increasing sales and foot traffic, indicating confidence in the current market conditions [51][53] Question: Construction cost assumptions and pressures - Management expressed confidence in stable construction costs and good visibility in their underwriting, indicating no anticipated pressure on development yields [94][95]

Core Insights - The retail REIT sector is showing signs of stabilization and improvement, with expectations to surpass Q4 2025 earnings estimates due to steady consumer demand and limited supply growth [2][4][6] Retail REIT Performance - Key retail REITs such as Simon Property Group, Regency Centers, Kimco Realty, and Federal Realty Investment Trust are set to report their Q4 results, reflecting the market conditions from late 2025 [3][4] - Cushman & Wakefield's report indicates a positive net absorption of approximately 3.4 million square feet in Q4 2025, marking the strongest quarterly improvement since Q4 2023 [5] Market Conditions - National retail vacancy rates are at 5.7%, indicating tight conditions compared to historical norms, with limited new supply stabilizing occupancy rates [4][6] - Retail real estate fundamentals are expected to maintain steady performance, with vacancy rates projected to remain below 6% into 2026 and rent growth anticipated in the 2-2.5% range [6] Company-Specific Insights - **Simon Property Group**: Expected to report revenues of $1.63 billion for Q4 2025, reflecting a 2.84% year-over-year increase, with a focus on high-quality assets and omnichannel integration [10][11] - **Regency Centers**: Anticipated to report revenues of $398.94 million, a 7.09% increase year-over-year, supported by a well-located portfolio and strong demand for grocery-anchored shopping centers [12][13] - **Kimco Realty**: Projected revenues of $537.59 million for Q4 2025, indicating a 2.32% year-over-year increase, benefiting from a diverse tenant base and focus on mixed-use developments [15][16] - **Federal Realty**: Expected to report revenues of $328.96 million, a 5.63% increase year-over-year, driven by improving demand for premium retail assets and strategic acquisitions [18][19]

Core Insights - The retail REIT sector has stabilized after years of uneven recovery, supported by steady consumer demand and disciplined supply growth, with holiday sales showing resilience [1][3] - Several retail REITs, including Simon Property Group, Regency Centers, Kimco Realty, and Federal Realty Investment Trust, are set to report their fourth-quarter results, which will clarify the impact of late-2025 market conditions on earnings [2] Retail Real Estate Market Conditions in Q4 2025 - Cushman & Wakefield's report indicates strengthening retail demand, with net absorption positive across all major U.S. regions and national retail vacancy at 5.7%, reflecting tight conditions compared to historical norms [3] - Approximately 3.4 million square feet of net absorption was recorded in Q4 2025, marking the strongest quarterly improvement since Q4 2023, with asking rents trending higher to $25.29 per square foot [4] Retail Real Estate Outlook - Retail real estate fundamentals are expected to perform steadily, with vacancy rates projected to remain below 6% into 2026 and rent growth anticipated in the 2-2.5% range [5] Company-Specific Insights Simon Property Group - Simon Property Group has a Zacks Rank of 2 and an Earnings ESP of +0.67%, with an expected revenue of $1.63 billion for Q4 2025, indicating a 2.84% year-over-year increase [8][11] - The company is expected to benefit from high-quality assets and a strategic focus on omnichannel integration and mixed-use developments [9] Regency Centers - Regency Centers holds a Zacks Rank of 2 and an Earnings ESP of +1.11%, with a revenue estimate of $398.94 million for Q4 2025, suggesting a 7.09% increase year-over-year [12][14] - The company’s well-located portfolio and focus on grocery-anchored shopping centers are expected to drive solid demand and leasing activity [13] Kimco Realty - Kimco Realty has a Zacks Rank of 3 and an Earnings ESP of +1.43%, with a revenue estimate of $537.59 million for Q4 2025, indicating a 2.32% year-over-year increase [15][17] - The company benefits from a diverse tenant base and a focus on developing mixed-use assets in strong economic areas [16] Federal Realty Investment Trust - Federal Realty has a Zacks Rank of 3 and an Earnings ESP of +0.90%, with a revenue estimate of $328.96 million for Q4 2025, suggesting a 5.63% increase year-over-year [18][20] - The company is expected to gain from improving demand for its premium retail assets and a focus on value-accretive acquisitions [19]