...Okay, great. Well, welcome everyone to our next roundtable session with Brixmor Property Trust. I'm Jeff Spector. I head the US REIT team. I'm here with my colleague, Andrew Riehl. And with us today from the Brixmor team, to my right, Jim Taylor, CEO. We have Brian Finnegan, President and COO, Steve Gallagher, CFO, and Stacy Slater, SVP and IR. Similar to our other roundtable sessions, we're giving each company an opportunity to introduce themselves, provide an overview. I don't think there's been any operating updates, but if there's anything to discuss, you know, during the quarter, please do. Strategy, positioning, and we've been sitting in this room all day doing all retail meetings, so, you know- I am sorry for that. No, no, that's good. And so we're getting a good comparison between companies. Great. But I'm sure you're proud of certain things of Brixmor versus others. So if you wanna touch on that as well, that's great. Otherwise, we'll ask. First of all, thank you for having us, Jeff. We really appreciate the opportunity to see some familiar faces, and importantly, some new faces. Brixmor is an open-air shopping center company. We own about 360 shopping centers across the country. About 80% of them are grocery-anchored. Our largest tenants include the likes of Kroger and Publix, and TJ, and Burlington, and Ross. What's different about Brixmor is where we've gone, where we've come from, and where we're going. We started at the company several years ago and saw a portfolio of undermanaged, under-rented shopping centers that we believed were well located and could benefit from accretive reinvestment and re-leasing. So we set upon a plan of execution, of really transforming this portfolio and fixing the balance sheet. We sold over $2.5 billion to shopping centers, de-leveraged the balance sheet, and importantly, husbanded capital for attractive, accretive reinvestment in the properties that we thought had particular opportunity for upside. A big driver from that strategy was the fact that we have very attractive in-place rents. In fact, that persists today. If you look at where our average in-place ABR is per foot in this portfolio, it's about $17 and change, which we accreted from $12. Excuse me, but we're signing rents today in the low $20s, so that mark-to-market continues to persist, which puts this company in a position to outperform through a whole range of economic outcomes. We happen to be, as I'm sure you've heard today, in a very attractive environment for open-air retail in terms of limited to no new supply and significant demand from retailers to be in professionally, institutionally owned shopping centers such as the Brixmor portfolio. It's showing, and our performance and outperformance is showing in every one of our metrics. It's showing in our leasing spreads, it's showing in our new ABR, it's showing in our renewal spreads, it's showing in the yields that we're realizing on our accretive reinvestment. And importantly, our opportunities for growth are largely driven in the assets that we own and control today as we continue to transform the portfolio. We've impacted about 40% of the assets that we have, and we're setting new records in terms of rate, occupancy, build, both build and lease, as well as overall growth and bottom line. As we look forward, we're particularly encouraged by the opportunities we see, and as is evidenced by our signed but not commenced rent pipeline, where we have over $63 million of rent commencing over the next several quarters, which importantly, excuse me, gives us visibility on how we're gonna grow going forward without having to rely upon external growth or, capital-intensive activity. So that's maybe a bit about Brixmor. Would love to answer your questions. Thanks, Jim. You know, as I said, we've been in the room today. We've met with some of your peers, including you saw, you know, one of your peers who walked out. I guess from those that are newer to the retail sector, shopping centers, how does your portfolio, talked about the three hundred centers across the country, is there a key difference versus the peers in terms of again that geographic diversity or, you know, grocery category? I think the important thing to appreciate is we have centers where retailers wanna be, and we're demonstrating that in our sector-leading leasing volumes, our sector-leading leasing spreads. We're also demonstrating the benefit of that attractive rent basis, and I think versus other portfolios that may be out there, that's a key difference, because rent basis matters if you want to drive good growth and returns in our space. It's just simple, and when you have attractive in-place rents, it allows you to bring in better tenants accretively at better rents, and you're seeing that in all of our statistics. And then in terms of percentage to grocery-anchored versus big box versus other formats, is there- Yeah. Jeff, we've been very intentional about growing our percentage of grocery anchor. We're now over 80%, and we continue. As Jim mentioned, we're one of the largest landlords to Kroger and Publix. We've grown substantially with the likes of Whole Foods and Sprouts, and Trader Joe's has entered our top 40, and we continue to see very good runway there, particularly on the specialty side. With the nature of hybrid work, folks are staying home more. That's leading to more trips to the grocery store. You've seen traffic continue to increase year over year at our centers. If you look at our traffic versus our peers versus the pandemic, we screen at the high end of that. I think a big piece of that is because of the daily needs grocery, and not just because of any grocers, but we're putting grocers in that really are best in class and have market share in the markets in which we operate. ... and you said 80%. We're at 80%. And is there a goal that you want that to be at? And is that achievable? I mean, we have been hearing that, you know, it's gotten even pricier, more expensive to buy or acquire- Yeah. Grocery-anchored centers. The best way to make money is to bring in a grocery use where one doesn't exist before. Okay. Where you're taking a center and converting it from purely a value-oriented center, and you're bringing in that additional use, which is part of how we've accreted that portfolio average of 80% grocery-anchored. As we continue to execute our strategy, you'll see that percentage grow. But in part, it's about, you know, astutely finding those opportunities to create value by bringing in a better use into the center. And with the grocer exposure, do you place an emphasis on number one, number two, number three in the market, or demographics, and/or both? Yeah. Like, what's the key focus? I think it's productivity, right? If you know, Jim was going through a number of comparisons since this management team joined the company in 2016. At the time, our grocer sales were just over $500 a sq ft. They're over $700 a sq ft today. So we generally have the top one or two grocer in the market, if not one of the better specialty operators. So and I think, Jeff, it's also who's the right grocer for that market, right? We've got a number of specialty, kind of, ethnic grocers in some markets, too, that are driving a significant amount of traffic, significant sales as well. So we really try to decide who's the best grocer for that center and that community. But if you generally were to screen, I think from a traditional standpoint, you'll find that we have kind of the one or two market players in those markets. And then, you know, is there anything important in terms of demographics that you do focus on? We think demographics, of course, are important, but they alone don't tell the story. Again, rent basis matters if you're trying to make money, and having the ability to take a rent from $10 to $15 or $16 is particularly attractive in our space. It's part of what's driving our outperformance when you look at our growth, and we believe we're delivering that growth on a very attractive, risk-adjusted basis. Demographics do matter, but they alone are not dispositive. We, with our national platform, understand the demand of tenants to be in particular centers, and we capture an outsized share of their new store openings, all reflective of the fact that we have the product the retailers want. But importantly, we have a rent basis that allows us to make money. And so, again, we haven't heard anyone talk about slowing and leasing. This morning, we did a thematic panel with Bank of America Institute. Right. Our economists were still calling for a soft landing. If there was a, let's call it, hard landing or recession, do you feel that you'd still be able to push the rate that we've been seeing? Like, how does that, through the cycles, like- One of the things that you have to appreciate about what's happening broadly in our business is there's been no new supply in the last 10 years, and the tenants increasingly are realizing the importance of the store to connecting with the customer. That's a critical backdrop to understand. The other thing is, we've been expecting a recession for some time now, but the retailers themselves, understanding better than ever the profitability of the store, are committing to new store openings in 2025 and 2026. So one thing to appreciate is that we're not in the retail business per se, we're a retail landlord. And so you can see the disruption from these tenants coming for some time, and you can plan around it and leverage better outcomes. So, you know, our tenants appreciate the need to be in our centers. They're willing to pay the rents, and we're driving an outsized share of their new store openings. I think all speaking to the strength of our strategy, but also to the commitment of these retailers who are growing today to the store. Yeah, and I think, Jeff, and important to Jim's point, retailers today are focused not just on 2025. For many of them, it's baked for the larger national tenants, and you have to have a lease signed within the next few months to be able to open that store next year from an anchor store. They are looking through to 2026, which is encouraging to us. And then, if you look at the other metrics in the portfolio, retention rate's at an all-time high. We're signing renewal rates at the best we've ever had. Move-outs are at an all-time low for the third year running. So the credit base of this portfolio is the strongest that it's ever been, and it's really a reflection of the investments that we've made, the tenants that we've been able to attract. It's something that we continue to monitor, to look at, to see if we do see any signs of weakness, but we've been really encouraged overall with the leasing environment. Our usual, and I know we keep asking this every couple of months, I mean, any change in tenant demand for space, and any change by region or demographics? Yeah, we really haven't seen it, and you're seeing it in, from a context perspective, when occupancy is at an all-time high, when the supply environment is as tight as it's ever been, and then when you have retail categories who are performing exceptionally well, they're looking to expand, and they have white space to expand. In the off-price segment, Sierra Trading Post and HomeSense and HomeGoods for TJX have tremendous white space in parts of the country where they're not located today. Ross has just entered the Northeast, for instance. Burlington has a lot of growth in their smaller footprint. We continue to see great demand from specialty grocery. Health and wellness has become essential, so you're seeing stronger fitness operators and stronger well-credited strong credit base from the medical uses as well. So I think from our standpoint, the demand is as broad-based as it's ever been, and we've been encouraged by the nature of what we're seeing week in and week out in terms of our leasing committee and the deals that we're adding to the pipeline. I'm sure you speak with your property managers. I mean, is anyone in any particular market talking about weakening consumer or concerns? I mean, again- Actually, you know, across the board, we're seeing through the execution of this strategy, increased traffic, and one of your peers did some research in terms of comparatively analyzing the year-over-year traffic trends, and we ranked at the top, which is not a surprise to us, given the success of our reinvestment and transformative strategy from a leasing and capital perspective. So, you know, we're not seeing any signs. In fact, quite the contrary, we're seeing the shopping centers being increasingly shopped. That's an interesting increase in.... You're saying you're ranked number one over the past year? Yes. Any particular market that It was pretty broad-based across our portfolio. Very interesting. Mm-hmm. In terms of demographics, is there a particular focus on whether it's density, household income, or in a sales set analyst, you know, maybe we focus on it a bit too much? I don't think you focus on it too much. I just think it alone doesn't tell the full story. Obviously, density matters, but competitive supply matter, particularly in an environment like the one that we're in today, and incomes matter. Our portfolio index is far above the national average, but we also have the opportunity, again, as I was saying, to drive fundamental growth because the tenants want to be there, and they're willing to pay us rent significantly above what we have in place. We've delivered quarter in and quarter out over several years. That strategy only continues to accelerate and gives us confidence into 2025 and beyond. So demographics are one indicator, and certainly, if you look at what we've done with the portfolio, the trend, the demographics have improved tremendously by over 30%-40%. But that's not the key driver. The key driver is rent basis. And then, Brian, you talked about retailers committing to 2025 and 2026. If we go back a year ago, and I got the timeframe to open, I think it's fairly steady. Yeah. Maybe it's improved a bit. Yes. I guess, how would you compare today versus a year ago in terms of, you know, what you've already, you know, achieved or executed for 2025 versus this time last year for 2024, and then already conversations around 2026? Yeah. So the leasing pipeline, the number of leases that we have out on the street right now is the highest it's been since this time last year. And I think the way I would describe it is similar level of demand and less space, right? There was a lot of talk last year about the absorption of the Bed Bath space or the Tuesday Morning space. We addressed effectively all of that space within a year. We're already starting to see those rents come online with much better tenants. So I'd say, as you think about today, we still have a significant amount or a similar amount of demand that we had from a broad range of categories, and there's just less space for those tenants. There's more and more tenants competing with that space, which is leading to us to not just drive better rents, but to drive other items in our leases, like flexibility, like annual rent bumps, and improving those as well, and we don't see that competition for space, really, really dying off, anytime soon. Follow up? Yeah. Can you talk about the range of outcomes for the Bed Bath & Beyond space? Sure. Sure. Yeah. And so it's many of the tenants that we've been signing leases with. So, we did leases with specialty grocers like Aldi and Sprouts. We did leases with several of the off-price users. We did leases with many of the fitness users as well. We said at the time, our rent growth on those spaces would be between 30%-40%. They wound up at about 37%, overall. And we were incredibly encouraged by the strength of demand for those spaces and how quickly our team was able to address them, and the fact that we've already started to receive rent on a big chunk of the portfolio. What about those big boxes? Yes, I think we had two split scenarios out of the eighteen boxes that we took back last year, and where we split those spaces, we were paid for it. So we were able to get higher rents than we otherwise would have seen with a single tenant backfill. I think that's an important thing, again, to highlight here, is that relative performance of spreads of nearly 40% on the boxes that we took back. That enabled us to actually retenant them profitably. And so we drove great returns on our invested capital, but we also improved the center by bringing in, for example, specialty grocery, which would have much more of an impact than a tired, old Bed Bath. Yeah, and I think that's a really important point, right? We talk about the spread and the incremental return on that. When you take a Bed Bath & Beyond box in suburban Tampa that's doing $4 million, and you put a Sprouts in, that's gonna do $18 million, what that does for the rest of the center, the rents you're able to drive, the type of tenants that you're gonna bring in, it's impactful. The other thing you're doing is you're freeing up 30 years of restrictions, right? There's an out parcel that we can develop now that we might not have been able to do before. That doesn't always tie in to say, the incremental return on the box specifically, but it's the ancillary benefits that when we do get this space back, that we're able to execute on. Sure. Yeah. About your support? ... Sure. Again, I think it's helpful to provide context, right? These spaces are coming back to us in the tightest supply environment that we've seen. We've already reduced our exposure to Big Lots by 30% over the past three years, and have backfilled those spaces with the likes of Sprouts and national fitness operators and off-price users in places like Los Angeles and Orange County and Dallas. So we feel we're in a really good position heading into this. So we had four stores on their initial rejection list yesterday. Two of those were already at least with an off-price user and a national fitness user. The other two locations we're at LOI with, we expect to be signed by the end of the year. We had 10 total locations, inclusive of those four on the initial closure list. Six of those have been effectively addressed at this point, one of which we had already leased with an expiration in October of 2025 to Aldi outside of Portland, Maine. So our team has done a great job getting ahead of a lot of this space. Retailers have been coming to us in anticipation. No one in this room is surprised with the Big Lots news, right? From a timing perspective, in terms of ultimately how to go through, but ultimately, from a retailer demand standpoint, we have been in discussions on a lot of these spaces for the last few quarters. So out of the gate, we're pleased and encouraged with the demand that we're seeing, and we feel like we're well-positioned to address them quickly. Yeah, and again, it's a great question. We see it as a huge opportunity. Our average in-place rents are $7.50. We're signing new deals at $15-$16, so very healthy spread. We're hopeful that we get more of that space back. Brian and team have done a phenomenal job, just as we did on the Bed Bath exposure, getting those leases quickly backfilled at attractive spreads with better tenants. The same opportunity in this demand environment exists for the Big Lots spaces. We can't wait to get them back. We're leasing them as if we will by bringing in uses that are going to be more compelling to the shopping center, and this is important profitably because of that rent basis. And the last thing I would mention on that, I mean, I do think it, this will take some time to play out, right? There's a stalking horse bidder, it looks like for the go-forward business. It looks like they're going to go through an accelerated process here. For those initial rejections, there's an auction next week. We feel, based off of the nature of those leases, we're well-positioned to control our destiny on those four stores that are on the list. But I think to the overall point, this is an opportunity for the company, as was Bed Bath, as was Tuesday Morning, and our team has demonstrated historically, our ability to quickly address these spaces with better tenants at much higher rents. Let me also add some additional context there. When you think about our total rent exposure, because it's a low rent per foot, so Big Lots is about $60 million. We have over $64 million of signed leases in our pre-executed pipeline. We would love to get all of that Big Lots space back and market and add to our signed, but not commenced pipeline. Any intensification opportunities on any of the different properties around the country? Across the country, there are, but our strategy has been very disciplined. We look to pursue entitlements, and then we market that parcel for sale. So you'll see us do that time and again. It's part of some of the recent value that we've harvested in the portfolio. And you might ask why. Well, we can control what ultimately happens with that use through REAs and other devices, but, you know, the yields on development and the risks on development for multifamily, lodging, et cetera, just aren't that compelling. You know, we'd rather somebody else put their capital to risk and monetize the value that we've created. How much have you monetized in the last year or two? What's the potential monetization of? We've never given guidance on that, but, you know, in the past year, it's been probably around $10 million, and, you know, expect us to harvest $10 million-20 million of that annually. Dollar Store exposure that you have in the portfolio? Yeah, I mean, the dollar store exposure is primarily Dollar Tree. We have very, very small exposure to the other operators. They've been a good partner of ours for some time. That overall dollar store exposure is down from where it was historically, but they're still a fairly large tenant of ours. But, I would think about our dollar store exposure as generally just Dollar Tree. Are you worried about that concept, the whole Dollar General kind of grew up recently and had a very bad quarter? And I'm just wondering, is that just part of what's happening to their customer base, just making it very, very tight for them, or is this something- Yeah. You think about that? Again, I think from a the dollar store operators that are focused on the lower-income segment, we have a very small exposure to those. I think Dollar Tree has a broad base in terms of the consumers, the wide range of consumers that they go to. They're in markets that are in high-end suburban markets, as well as more value-oriented markets. So I feel like they're better positioned. There's certainly some stress on that consumer overall, and they've certainly seen some of the impacts and talked about the impacts from inflation. But I think overall, of all the dollar store operators, they're the most well-positioned. Jim, in terms of other platform initiatives, I guess I just want to make sure we've, you know, hit on those as a key differentiator versus peers. Any other initiatives that you're working on, you'd want to share with us? You know, our business plan is pretty simple, and it's consistent. If you were to hear us talk in this room, a couple of years ago, we'd be talking about the very same things, which is aggressive leasing to take advantage of the mark-to-market, accretive reinvestment, portfolio and capital recycling, and importantly, delivering growth at the top of the segment in a business model that's self-funded. We fund our reinvestment with free cash flow, and as we continue to capital recycle, importantly, we're recycling out of assets that we think have limited growth into assets where we see exceptional growth opportunities. So that's the focus, that's the discipline. We are seeing interesting external growth opportunities in this environment. We're having a platform like ours, with national leasing and great tenant relationships, allows us to leverage opportunities that we're seeing to acquire new assets and drive attractive returns. But I think there's one thing to always appreciate, we don't have to do that to outperform. So it really allows us to remain very disciplined from a growth perspective. Contrast that with a business model that's premised on external growth, and that's much more market-dependent. So we're seeing some attractive opportunities. We're seeing the benefits of leveraging our platform against these opportunities, but we'll remain disciplined. The free cash flow payout ratio, how much do you retain for reinvestment? We generate about $140 million of free cash flow, which we put to work in about $150 million-$200 million of accretive reinvestment. So you think about that. As we reinvest that free cash flow, we're actually delevering because we're investing it at 9, 10-plus incremental returns. You know, our FAD payout ratio is, what? About 60- Yeah, I think so. Sixty percent. That's fully, fully loaded with CapEx, with current CapEx, right? Yes. On the external opportunities, Jim, I know you, you've touched on it a couple of times this year when we've seen you. Is anything improving on that front from a few months ago, or it's similar, or- Yeah. Just one-off opportunities? As I talked about on the call, we're finding opportunities, importantly, in our core markets that meet our underwriting. And those are assets where, again, we see an opportunity to do an anchor repositioning, add density, add out parcels, drive rents to market, and get to appropriate returns. We're not pursuing the core flat, grocery-anchored shopping center. We're looking at those opportunities with more moving pieces, where we can apply our platform to leverage better growth and outcomes. I guess, can you talk about what pricing, like, what are, where are our cap rates, and are you able to do this on balance sheet? We can do it on a capital neutral or dilution neutral basis through capital recycling, and you know, you're seeing cap rates in the 6%-7% range, but most importantly, Jeff, you're seeing an opportunity to grow ROI better than 4%, which gets you to an unlevered IRR of high single, low double digit. Going back to your leasing. Yeah. Have you been able to... I think you mentioned this recently, and others have been saying, to get higher in-place growth rates now? Yeah. Are you getting, like, fours now or threes? In some places. I think, look, taking a step back, when Jim joined the company, our in-place rent bumps across the portfolio were 1%. They're 1.5% today. So this is not something, an initiative we just started, it's something that we've been focused on. Broadly across the portfolio and new leases, we're averaging about 2.5%, closer to 2% for anchors and 3% for small shops. In some parts of the country, particularly with local tenants, we've been able to push that between 3% and 4%. That's on top of sector-leading rent growth and record rents that we've been able to sign in the small shop space at close to $30 a sq ft the last few quarters. As Jim mentioned, anchor space, it's a record $16 over the past 12 months. We're getting that initial bump, and then we're making improvements as it relates to the annual rent growth. The other thing that we're making improvements on is relative to our expense reimbursements. We're removing caps, we're removing carve-outs in our leases. We're increasing- Is that Fixed CAM, or are you just- We have done a significant portion of Fixed CAM, primarily with small shop tenants. It's about 26% of our GLA. That's up from 18% pre-COVID, and we're growing those across the portfolio at 4%. So far, our leakage on the OpEx side? No, in fact, our recovery rate is the highest it's ever been. We're over 90% in the last three quarters. Assets, do you have plans to do during Q2 2024 what that looks like? So when we look at our forward shadow pipeline, which we provide some color on in our supplement, we see close to $1 billion in future opportunity, which takes us out several years as we invest $150 million-$200 million a year. But Gina, the other thing to appreciate is assets that we're acquiring feed that future redevelopment pipeline as well, because we are a value-added investor, and we are looking for opportunities to leverage this platform to create value and growth in ROI. I think it's gonna be in line with what we've delivered in the high single digits. Does anybody map out their own replacement costs these days to do in the centers in your locations, and how far below that do you trade? We trade pretty meaningfully below where replacement cost is. You know, you look at all-in costs, including land, you're probably well over $300 a foot to, you know, from a replacement standpoint. Yeah. Just like Yeah. Even with some depreciation, you're already close. Correct. We're a good value. I guess, turning to the balance sheet, I think you had some swaps that were running off this summer? Yeah, we actually replaced those in November... Okay. so they're burning off, and as we disclosed in the supplemental, the new ones were already put in place. Okay. and have become effective, so. Okay, and then some debt maturing in February? Yeah. Yeah, we have $670 million maturing in February. $400 million of that, we did a bond deal in May to pre-fund some of that. We're holding that cash in stable, high-yielding money market accounts. And then, you know, we're continuing to keep an eye on the market. Obviously, we have, you know, several months between now and that maturity, and, you know, the last deal we did was 10 times oversubscribed, so the support of the fixed income community for Brixmor has been very strong, and we feel pretty confident that we'll be able to find a window here in the coming months and fund the rest of it. Great. I think we are down to our rapid-fire questions. We're just asking three quick questions, but before we do that, was there any... just any other questions from the group or anything we didn't ask that you wanted to mention? No, I think we're well positioned as a company to continue to outperform, and you need to look no further than what we've been delivering over the last several quarters, which I think provides, together with our signed but not commenced pipeline, excellent visibility on how we're gonna outperform going forward. External growth for us represents an incremental opportunity above and beyond that, and I think we do so in a way that's attractive from a risk-adjusted standpoint because it is self-funded. We're not relying upon the timing of the capital markets to fund. We maintain a very conservative balance sheet with debt to EBITDA of 5.6 times, and as Steve just enumerated, we dealt with our near-term debt maturities. So I'm excited about how the company's positioned to outperform, continue to deliver that outperformance. If you don't own Brixmor, take a hard look. Look at that historical performance, and you'll see in every metric you look at, what we're talking about in terms of driving outperformance. Thank you. Andrew? Three rapid fires. First, do you expect real estate transactions to increase once the Fed starts to cut, yes or no? Yes. Okay, and when do you expect them to pick up, fourth quarter of this year, first half 2025, or second half 2025? I think you're already seeing real estate activity increase even before that, even before the action of the Fed, and I think part of it is an unthawing of the market and a realization that sellers need to be reasonable from a price standpoint. Second, how would you characterize demand for space today? Improving, steady, or weakening? Improving. Okay, and lastly, how would you characterize your AI spending plans over the next year? Higher, flat, or lower? Higher. You know, we're already using the tool internally to accelerate our leasing, drafting, and we're finding interesting use cases with our own ChatGPT BRX to leverage that technology, which, you know, as we utilize more and more data to make capital allocation decisions, I think will be a good tool. Great. Thank you to the Brixmor team. Thanks, everyone. Thanks, everybody. Thank you.