BPG(US:BRX)2020-02-11 19:09Financial Data and Key Metrics Changes - The company reported a same-store NOI growth of 5.1% for Q4 2019, bringing the full-year growth to 3.4%, exceeding previous guidance [7][22] - FFO for Q4 was $0.47 per share, or $0.48 per share excluding non-comparable items; for the full year, FFO was $1.91 per share, or $1.93 per share excluding non-comparable items [19][22] - The company achieved cash spreads of over 33% on new leases during the quarter [8] Business Line Data and Key Metrics Changes - The company signed 1.7 million square feet of new and renewal leases in Q4, with record small shop occupancy reaching 86.2% [8][9] - The watch-list tenancy decreased by over 10% for the year, one of the lowest in the sector [10] - The preleased reinvestment pipeline at year-end represented over $410 million of investments with an average incremental return of 10% [10][11] Market Data and Key Metrics Changes - The company noted strong demand for its well-located centers, signing leases with tenants like Burlington, HomeGoods, and ALDI [9] - The company has taken back all 11 Sears/Kmart locations and is actively repositioning these spaces [22][24] Company Strategy and Development Direction - The company plans to continue reinvesting in existing shopping centers to drive growth and ROI, focusing on below-market in-place rents [13][36] - The company aims to maintain a balanced approach to acquisitions and dispositions, leveraging its platform strengths [16][75] - The company is committed to operational enhancements, including sustainability initiatives like solar power generation and LED lighting [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving same-store NOI growth at the top end of the sector, despite potential disruptions in the retail environment [25][33] - The company anticipates some quarterly variability in same-property NOI growth due to the inherently volatile nature of the metric [28][62] - Management highlighted the importance of tenant demand and the ability to create value through strategic leasing and redevelopment [36][81] Other Important Information - The company has virtually no debt drawn under its $1.2 billion credit facility and no debt maturities until 2022, providing financial flexibility [17] - The company reinstated its share repurchase and ATM equity programs [31] Q&A Session Summary Question: Insights on dispositions and transaction market trends - Management noted attractive pricing liquidity in tertiary markets and opportunities to leverage their platform for acquisitions [38][39] Question: Leverage trajectory expectations - Management is committed to reducing leverage to the six times debt-to-EBITDA range, with expected quarterly volatility due to redevelopment spending [44][45] Question: Leasing spreads sustainability - Management indicated that significant rent rollovers from below-market anchor leases will sustain strong leasing spreads for several years [48][49] Question: Bad debt reserve assumptions - Management provided a bad debt expense assumption of 75 to 100 basis points, consistent with historical experience [56][58] Question: Future occupancy trends - Management expects occupancy rates to trend higher throughout the year, with fluctuations due to known events [101] Question: Cap rate expectations for acquisitions and dispositions - Management indicated cap rates for asset sales are likely to remain in the 7% to 8% range, with acquisition cap rates potentially 100 to 150 basis points lower [103][104]