BPG(US:BRX)2022-11-02 19:58Financial Data and Key Metrics Changes - Brixmor reported Nareit FFO of $0.49 per share in Q3 2022, driven by same property NOI growth of 3.6% [18] - Year-to-date, bottom line FFO grew by 6.5% on a comparable basis [12] - The company achieved a top line same-store growth of 4.8% despite a drag of 250 basis points from revenues deemed uncollectible [12][20] - An 8.3% increase in quarterly dividend was announced, reflecting strong growth in taxable income [14][26] Business Line Data and Key Metrics Changes - During the quarter, Brixmor signed 1.7 million square feet of new and renewal leases at a record rent of $19.26 per foot, with a blended cash spread of 14.2% [7] - Small shop occupancy rose to 88.8%, with new rents achieved of $24.78 per foot, marking a record for this metric [10][21] - Average in-place ABR increased to over $16 per foot, with new leases achieving nearly $20 per foot over the trailing 12 months [10] Market Data and Key Metrics Changes - Lease occupancy reached a company record of 93.3%, a year-over-year increase of 180 basis points [9] - The anchor leased rate now stands at 95.4%, up 60 basis points sequentially [21] - The spread between lease and build occupancy grew to 370 basis points this quarter [22] Company Strategy and Development Direction - The company continues to focus on a self-funded value-add strategy, which has shown resilience in both disruptive and strong market environments [6][16] - Brixmor has paused acquisitions but sees potential opportunities as less well-capitalized landlords face challenges [16] - The reinvestment pipeline is expected to deliver significant future value creation, with $400 million leased and underway [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth despite potential economic disruptions, citing strong tenant demand and a robust leasing pipeline [13][29] - The company anticipates that revenues deemed uncollectible will revert to historical levels, impacting future growth [20][85] - Management highlighted the importance of maintaining a balanced tenant mix to ensure stability in cash flow [32] Other Important Information - Brixmor has $1.3 billion of liquidity and no debt maturing until 2024, allowing for opportunistic growth [17][24] - The company has renewed its $400 million share repurchase program and $400 million at-the-market equity offering program [25] Q&A Session Summary Question: Will there be any pull back on the redevelopment investment given the potential for recession in 2023? - Management noted continued demand and highly accretive returns, indicating confidence in their reinvestment strategy [29] Question: What are the positives and negatives of having local tenants at 21% of your ABR? - Management emphasized the relevance of local tenants to community engagement and noted strong demand for backfilling any vacancies [32] Question: Are you seeing any change in the health or ability of your local small shop tenants to pay rent today? - Management reported strong performance from the entire tenant base, particularly small shops, with no significant increase in rent relief requests [34] Question: What are the expectations for minimum rent growth heading into 2023? - Management expects continued strength in top line growth, driven by a robust leasing pipeline [38] Question: Can you provide perspective on cap rates, especially for grocery versus non-grocery assets? - Management indicated upward pressure on cap rates due to financing costs, but noted attractive cap rates for core grocery-anchored shopping centers [41] Question: How are you accounting for rent from Regal at this point? - Management stated that all entertainment tenants have been on a cash basis during the pandemic, with revenue recognized as cash is received [60] Question: What is the expected fallout from tenant disruptions in 2023? - Management is monitoring tenants closely and believes their rent basis positions them well to handle potential disruptions [82]