InvenTrust Properties (IVT) - 2025 Q2 - Earnings Call Transcript

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]