Brixmor Property Group Inc. ($BRX)

And thanks for joining us today. We're looking forward to sharing our key takeaways from ICSC with you this morning, some quick housekeeping items. Please note that this presentation is being recorded and will be publicly available on our website for a period of time following the presentation. And some of our comments today may contain forward-looking statements. Please refer to our SEC filings for information about related risks. When we open today's discussion to Q&A, those on the screen, please feel free to ask questions verbally using the raise hand functionality. Everyone else can use the Q&A functionality on the bottom of your screen. With that, I'll turn the call over to Brian.

Thanks, Stacy, and good morning, everyone. Thanks for being here. This has been a tradition of ours for the last several years following the ICSC conference, you see the large X on the screen. We put a lot of time and effort into what is the largest commercial real estate conference in the world. And it's a great opportunity not just for you all to hear what we observed, but really to hear from our broader team. And we're thrilled to have on the screen today, in addition to Stacy, Steve and myself, Matt Ryan, our President of the South region and EVP of National Property Operations; David Gerstenhaber, our Head of Leasing; Laura Park Carson, VP of our North region in Leasing, who runs our Northeast portfolio based out of Philadelphia. . And Abby Gross, VP on our national accounts team. And they're going to give you some great insights from the conference. They're going to give you some of their feedback on the trends that they heard in what was another very successful conference for Brixmor. Before they do that, I thought I'd just give an overview on the environment and how we enter the show, Stacy, we can jump to the next slide. We entered the conference again with a lot of momentum in the business. As you can tell from our first quarter call, leasing demand remains incredibly strong. We're signing rents at the highest level that we ever have. And I think from a dynamic standpoint, we're in an environment where there remains no new supply by any marginal level. And we don't see that coming for some time. New deliveries are going to be a fraction of what has historically been delivered. And what that's doing is retailers that have been successful that are investing in their physical stores and growing their physical store footprint are looking for space that is becoming less and less available, leading to more competition and driving rents higher and we remain incredibly well positioned to capitalize on this environment because of the work that we've done, it didn't happen overnight. We've invested dramatically in the portfolio. we've been able to improve the tenant credit quality of our portfolio to the best it's ever been. The retailers both those that we have been growing with and many new ones that you'll hear from the team about today are coming to Brixmor because they see the execution that we've been able to deliver from a reinvestment standpoint and that's positioned us to accelerate things going forward. You look again at that leasing productivity, it's fueling the redevelopment pipeline. You see the embedded rent growth that we've been able to drive out of the portfolio. the rent increases, the intrinsic lease terms that we continue to improve significantly above in place. the occupancy runway that we have, growing small shop occupancy 100 basis points year-over-year, but not close to where that peak can get to. And then that clear visibility on growth from the stacking of rent in terms of signed but not commenced, which we grew 10% year-over-year despite the fact that we commenced $70 million of rent last year. So the portfolio is extremely well positioned in what we all recognize is a great environment for open-air retail. And I think what you'll hear from the team today is how that manifests itself into our retailer conversations, how they're thinking about expansion and how they're thinking about growing with us. So with that, why don't I hand it over to David Gerstenhaber to start off in terms of what he saw and what you'll hear from the rest of the team in terms of what they saw at ICSC last week.

Thanks, Brian. Appreciate it. Everybody. So it's no surprise to anybody on the screen that it's a very exciting time to be in our business. We had a super productive show last week. The team conducted over 700 meetings, which was up 10% versus last year. And it was across a really broad number of categories and tenants within those categories, which you're going to hear about from the team here. The overall tone for me at the show was super constructive, demand driven, our centers look better than they've ever looked before due to the continued robust pipeline of redevelopments. The retailers were focused on targeting grocery-anchored high-traffic centers, and they were in our booth in abundance. . They talked about securing sites early due to lack of supply. Many said they would sign leases on spaces that are several years out. They talked about increased flexibility around store size, format and utilizing existing conditions. And our core tenants continue to thrive. You see a lot of them on the screen here. The big 3 off-price guys, T.J. Burlington and Ross, they just continue to be positive comp machines, and they have over 400 open buys next year. the grocery demand is broad-based with specialty driving a lot of the activity, but even the traditional segment, which has been less active over the last decade, has started to heat up with grocers like Kroger and Walmart Market announcing investments into store growth plans. There are international concepts making a push into the U.S., specifically the Asian lifestyle category with Miniso Teso and Beso and the footwear and sporting goods category was a particular bright spot for me at the show. Boot Barn and Cavender's have enormous white space and are performing really well. REI who has grown fairly slowly historically, they showed up at the booth with a list of 8 centers of ours that they want to be in over time as opportunities arise. JD Sports inhibitor now fully integrated, and they're expanding all the banners in their umbrella, and there's renewed investment in Foot Locker by DICK'S Sporting Goods. New concepts were abundant at the show, categories like MedSpa, health and wellness, beauty and restaurants. We actually had 55 -- we met with 55 different aims that are currently not represented in our portfolio. And AI came up in almost every meeting I was in, you'll hear from the broader group here. Our leasing team is using it to canvas to market spaces, to prospect, to prepare for meetings and retailers talked about the different ways they're using AI to improve supply chain efficiency, marketing, site selection. Ultimately, the retailers, they're using all the data that they have at their fingertips to get the consumers into the store and ensuring the stores have the goods and services the consumer wants. I'm going to give it back to Brian to hit on the active transaction market we're seeing.

Yes. Thanks, David. If Mark was on the call today, I think what you hear from him is that there are a lot of folks just lamenting the amount of competition that there is for space. all the things that I spoke about, all the things that David spoke about are bringing institutional capital into our space in the highest pace really in decades, driving more competition for assets really across the spectrum. We are still finding opportunities to put the platform to work. David mentioned on our first quarter call, what we had under control and expect us to be naming some of those opportunities shortly, but a positive you can see is how much competition is coming in, but how much institutional capital is coming in, but it certainly is leading to much more competition for particularly grocery-anchored retail, and that was a theme we heard throughout the show. With that, I think we're going to pass it to Laura to get some of her perspectives on the next slide.

Thank you, Brian. Good morning, everyone. Speaking of demand, there's really tremendous depth and breadth to the retail demand right now. It's a great time to be a landlord. It's coming from a whole host of categories, many of which David just touched on, but certainly off-price and grocery are leading the way. In the grocery sector, as David said, it's everyone from traditional to specialty, and it's really complemented by strong demand from restaurants, fitness, service, financial and as David touched on, the new Asian lifestyle brands. And I think Evie will be sharing a little bit more about those in a few minutes as well. But I thought I would highlight where we're seeing some of the demand by way of a couple of examples of how this is playing out in real time in the Philly portfolio with highlights of a couple of projects that we're working on here in Philadelphia, the first of which is a redevelopment in Bucks County PA, just north of Philadelphia in Bristol, Pennsylvania. we're in the early stages of a really dynamic redevelopment of this asset. And I think it's a great microcosm of what's happening in retail today. We're in the process of adding grocery to the center. We're in the process of adding not one, but 2 off-price apparel retailers. And that was teed up just as we headed out to Vegas, which paved the way for a whole host of really productive meetings around synergies that we can build and follow-on leasing that we can achieve. Now that we have an anchor lineup in place. We had great meetings with credit unions, financial institutions, multiple QSRs, family entertainment, boutique fitness, and we've got 2 LOIs in the door already on the heels of coming back from Vegas with a whole host of others anticipated. I think another great example of what we're seeing in this retail environment and what's really indicative of demand today, too, is staying in Bucks County, Pennsylvania and heading a little further north. We have a fully redeveloped asset in Newtown Box County. It's 100% leased. And yet, we continue to have outsized demand for this center. I can't tell you how many meetings I took where this project came up, and we talked about it. And what we're finding is that retailers we're increasingly willing to make commitments to be a part of a project that they know we want to -- they want to be in earlier and earlier. Case in point, we signed a national apparel retailer 2.5 years out from an existing tenant's expiration because they're so committed to finding a home in this market. And that's becoming much more common. And not only does that allow us to drive rate and optimize our merchandising but it gives us time to get the lease done, to get permits and approvals in hand so that the mid that original tenant vacates, so we can hit the ground running with our construction. I think we'll turn it to Matt.

We hit on readout a couple of times already, we're going to the next slide -- on this call, and it's because it's such a key part of the plan going forward. We've got more than $1 billion would be that projects that are advancing and the meetings last week really just add to that list. It really -- we're advancing projects we'd already worked on, and we're looking for new projects with the retailers in those meetings literally flipping through brochures, looking for voids where they don't exist today. and trying to find more opportunities for them. Some of those bigger opportunities are listed on the map here. But if you take down the supplemental, you'll see more than 50 projects listed for that future pipeline. And Laura just mentioned it, but those tenants are asking for opportunities historically 2 years out. We're now looking out 4 years, 5 years for -- we're looking at anchor expirations. We're looking at outparcel expirations for when we can really hit on kind of the next phase of projects. Some of those projects are -- we're working on half a dozen projects with Publix throughout the Southeast. There's an exciting project with at an HCV anchored center in Dallas that we own that will be coming out shortly and in the way that we've got a project about -- will get us in the next the next year or so. So it's been really exciting. Laura hit on another piece. A lot of the retailers were asking about to read our projects that haven't delivered, the projects that are done, it's the follow-on leasing that continues to get mentioned. There's just -- there's a lack of space. They know what the projects look like and they're frankly begging for opportunities in those centers, looking for when tenants are going to expire within their size ranges. And anxious to take advantage of that, whether it's next year, 2 years out, 3 years out, it's been really interesting. David, I think I'm going back to you at this point. Is that right?

Yes, that's right. Thanks, Matt. I appreciate it. So I'm going to ask some questions I know are on everybody's minds. And again, as Stacy mentioned, if you have any of your own questions, feel free to either hit the hand emoji or type it in the chat. All right. So let's start with the first one. In the meetings I attended, I didn't really hear any notable change in discussions around store opening plans given increased macroeconomic and geopolitical uncertainty. In the majority of the meetings I was in retailers were focused on how to find more opportunities in our portfolio, how we could be more efficient in getting deals done quicker and what do they do to win spaces and competitive scenarios. Let's hear from Eby and Laura on what the tone of their meetings were. Let's start with Levi. .

Awesome. Thanks, David. I would just add that retailers today have more data than ever before, and they know exactly where their customer is coming from, what right co-tenancy mix for their store to be successful. And so these meetings were methodical and intentional just an example, but Cavender's Western wear was asking for a response to an LOI they sent over where we may control the space starting in 2028 and they're just looking further out than ever before because they want to be in the right real estate for the brand, and they know where that is. Barnes & Noble has a hole in Kansas City and our meeting was mostly focused on how it can get creative to deliver their prototype there now that we've signed Sierra as a brand-new anchor. So the retailers know where they want to be, and it's about getting creative to make that happen for them in our assets in the coming years.

How about you, Laura?

I would echo what Evie is saying, and I think part of what dovetails with that is because they know where they want to be, they're getting aggressive about the terms that they're willing to commit to. I had -- I would characterize the show as energized in a word. And people were asking me where do I need to be on rate to get into the center? What do I need to do? That was a common question. And it's because they recognize that they want to be in the market, they know it's a highly competitive landscape. and there are other retailers buying for those same opportunities. So it's really giving us a lot of ability to really make great decisions around the merchandising mix in our centers. And it's also giving us obviously driving rate, but it's also giving us the opportunity to leverage noneconomic points. We're making sure that we -- in return for getting good retailers, we're making sure that we have the flexibility to bring in Morgan retailers because I want to make sure that there aren't restrictions that are us and we have the leverage to have those conversations and have those outcomes work for us in this environment, which is great.

Okay. I'm going to hit on a few more. I know we got a bunch of hands up here, but let's just get through a couple more of ours, and then we'll turn it over to the broader group. Next question. Are there any changes in store prototypes, including footprints or markets? Let's start with Matt on that. .

Yes, I'd say, I mean, T.J. Maxx during the meeting announced their earnings, they announced the Sierra expansion, they announced the themes expansion, which from our perspective, it couldn't have been timed to any better. I had a meeting with them an hour or 2 later, a few of their real estate reps. So it was really exciting to have these discussions right after the earnings call. But I'd say flexibility in that size range from box tenants who let's say, historically, they had 1 in 22,000 feet and maybe you've been willing to flex 1,000 feet here and there. We're looking at spaces that are 17,000, 16,000 feet or 28,000, 30,000 square feet. In some cases, they just don't want to miss at opportunities. and they've been more flexible to take space. They're very focused on being efficient and making the most of those spaces, but it's -- it was noticeable to me that they were willing to take more space if necessary or less space than maybe they have been considering a year or 2 ago.

Yes. Ditto in many of my meetings, Matt, a lot of national retailers announcing new territory. You hit on TJ, taking both their new banners, Sierra and HomeSense National. Sprouts was in the booth telling us about 2 -- they're pushing into the Northeast and a bunch of new cities in the Midwest. Ross continues to push up into the Northeast. It was a common theme throughout the day. Let's jump to new concepts. Let's hear about some of the exciting new concepts or categories you met with Evie.

Awesome. Yes. I mean, you mentioned in tis the Asian lifestyle brands previously. But I'm really excited about this category and it's brand new. Miniso and Tesla Life are the biggest players with aggressive expansion plans. Miniso says they will open 100 stores a year through 2030. And Tesla Life is opening 40 to 50 a year for the foreseeable future, and they only have 20 open so far. So basically, the entire country is white space for them. And what I like about this stores in this category is it's experiential. So it really drives the customer into the store to discover and be inspired. They don't know what they want before they walk in, but they're creating this experience where they have toys that they sell in a blind box and kids don't know what's inside until they open it up. They have special beauty products that can only be found here and are not sold at Ulta or Sephora, so I love the newness that it creates. I'm also really excited as our merchandising mix only improves. We are attracting a higher caliber retailer to our shopping centers, including Warby Parker, who we've signed 2 new leases with so far, and that momentum will continue. They're doing to 45 to 50 new deals a year, and they love the better grocer category like Whole Foods and Trader Joe's, which puts us in a great place to find additional opportunities for them. And then Victoria's Secret is a brand that is relevant again and doing well in all assets of the business from athleisure to swim, their fashion show is back and they haven't traditionally played in the open end space, but we did sign our first deal with them at Rosebel Mall in Philadelphia and open air shopping center with some traditional mall retailers and I believe that we have sourced our second deal to follow in Vegas. So really exciting.

Awesome. Great stuff. And then let's do 1 more before we go to the screen here. How did you integrate AI in preparation for and utilization at the show? And what did you learn about retailers increasing you today. Let's start with Matt on that one.

I mean so AI gets as Scott mentioned -- mentioned every meeting. It came up in almost every single conversation we had. It's been really interesting to hear about how other people are using it and share some of the ways that we're using it. So 1 of our meetings are 1 of the leasing reps I was sitting with, we have a vacant space, she was meeting with the restaurant tenant, she asked AI to create a view or a rendering of what this space would look like if that tenant was in the space. So she has their signage on the facade. She has a sample buildout of what this space would look like when they're in there, which is just to even think about that 12 months ago would have been complete science fiction, and it took her 10 minutes. The Levitin team is using it for canvasing for coming up with voids in markets, they're going to AI and asking what use categories that are growing are represented in our center today and give me 10 to 15 of the most active retailers in those categories so that we can reach out to them. So it's a backup. It's really -- it's helping to be more efficient and thoughtful. Through the Letica process, we're using it for lease comments, we can upload a redline copy of a lease and get recommended responses based off for the last 10 weeks we've signed, and it gives them a better guide for how to respond to leases. And then from operations, we sat down with the group, we've been working with drone companies for the last year or so. I was able to meet with 1 or 2 of them last week that they're flying our centers. They're flying our roofs and points. They're able to tell us the conditions of the roofs, conditions of the parking lots. They're able to sense the temperature of the roofs. So you can see actually where there may be a leak, and you can detect it early so we can address it. fast before it comes an issue. The 1 retailer mentioned, this was wild. They mentioned drones flying through their space at night, taking picture of their inventory and then sending an e-mail out to the store manager with recommendations for where they need to go fold their shirts or where they need to update their the stance. So it's just -- it's been added in so many different facets of the business and it just continues to grow. It's been really interesting to track.

Wild stuff. How about you, by Evie.

One of the biggest themes I heard from retailers in terms of how they're using AI is to make sure that they are in stock in stores when the customer goes there to eliminate friction. That is the most important thing. And then me, personally, I am definitely using it for follow-ups. And just to make that a more efficient process. We can be the first landlord in the retailers in box after the show, there's a ton of value in that. So using AI to transcribe notes that were taken during meetings and help transfer those into client-facing follow-up e-mails to the retailers has been really helpful. .

Yes, all about efficiency. If you think about the amount of time it took us to do the follow-up even a year ago, how much has changed in just a year. It's great stuff. All right. Let's go to the screen here. Why don't we start with you, Lars, I think your hand was up first. .

Thanks, David. I don't know whether that's a good thing or not, whether my hand is first or not. I'm very intrigued, you're not the only landlord that's talking about getting to expirations early. And the question I have for you is how do you weigh if you're dealing with 27 or 28 expirations today when there's no new supply and rents are going to spike? How do you know that you're not giving away the space too cheaply? And how do you know -- and what do you think the impact of presumably getting a nice spread on the rent would mean for the rest of the tenants that are leasing space in that center. Is this a way for you to accelerate growth or are you -- how do you balance that from not -- in getting that maybe the high spread, maybe not signing that lease too cheaply because, frankly, there's not going to be any supply for the next 2 to 3 years. And that means that there's going to be significant pressure on rents going forward.

Yes. Thanks. It's a great question. What I'd say there is every situation and every scenario is completely different. As you know, our cheapest form of growth is renewals. We have existing tenants that are in those spaces with term for a couple of years out. We're looking at things like what's the future merchandising plan of this asset? What is replacing them? And possibly spending capital now to get a better tenant in there 2 years from now. How is that going to impact the trajectory of the rest of the asset? What's going to be the follow-on leasing. What is the health or performance of the current tenant, can they afford to pay the market rents? To your point, what are the market rents 2 to 3 years from now? And we're seeing growth historically, which allows us to have a pretty good lens or visibility into what rates will be 2 to 3 years from now. But I'd say those competitive scenarios are driving outsized results, whether it's renewing the existing tenant or improving with the new tenant there. All right. Let's go to Todd.

All right. My question, Brian, you touched on the capital markets environment and the increased level of competition that you're seeing for acquisitions. Can you just talk about the committed pipeline today and expand on how that increased competition is impacting your ability to transact and you noted it's particularly competitive for grocery anchored centers. Does this push you a little bit more toward either secondary markets or a segment of the industry like power or lifestyle that might be a little less traffic at the margin?

Thanks, Todd. Our True North is going to be what's the IRR, right? What -- how can we drive growth? And then how does that compare to the growth profile of what we currently own and control today. So as we look at that, we remain encouraged that our team mark's team is out there able to find opportunities. We do have to challenge ourselves in terms of the underwriting because we're still seeing what's that IRR cap rates blow out 50 basis points, but also the things that we're able to do under our platform, for instance, like we bought Lassentera last year, that's overseeing that project. We've been able to add $100,000 in specialty income out of the gate. Matt was able to recast the theater to add another $100,000. It wasn't in the underwriting through adjusting onerous CAM caps. So those are the things that we're looking at to ensure that we can out position ourselves to position ourselves to win in certain scenarios. Grocery-anchored is important to us, everything that we bought over the last 1.5 years has had a grocer. And as we look forward, we want that component or the ability to add a grocer if it's not there today. I think to your point of where it pushes us we're going to remain disciplined. We don't need acquisitions to grow. We have seen that our team has been able to execute on what we've been able to add to the portfolio and what we're selling is growing far less than what we've been buying. So we've been able to recycle that capital and make it accretive to growth. But to the extent that the market in certain areas gets too expensive for us, we're going to remain disciplined. Having said that, we have a great team, and we believe we're going to continue to find opportunities. We look forward to sharing with you all what we're working on here over the next few weeks, but it was certainly competitive, particularly in that core grocery-anchored market from what we heard over the last few weeks at ICSC.

All right. Let's go to Andrew.

Thanks, David, and thanks, everyone, for the time this morning. I guess on the leasing side, small shop specifically, that occupancy is now over 92%. So first, I guess, just how much runway is left on the small shop side. And maybe just how are leasing conversations with small shop and maybe your mom-and-pop tenants overall.

Yes. I think this is a good 1 for Laura to hit on, specifically with the activity she has in her portfolio on SHOP and her occupancy rates. Why don't you take that, Laura? .

Yes. I mean, look, we have -- we continue to have opportunities in the portfolio to mark some of these in-place shop rents to market, particularly at these assets where we've reinvested and redeveloped. I think 1 of the nice things about the way that we've managed our portfolio and the reinvestment that we've made is that even our small shop tenants tend to be higher and better caliber than they were a number of years ago. We have a lot of small shop retailers who are multiunit operators who are savvy business folks who appreciate the value of being in a redeveloped center in joining a Whole Foods-anchored center in Bucks County or a fully redeveloped Village at Newtown in Box County. And we're actually able -- in cases where we do have some older leases with in-place long-time tenants, we've been able to do some dynamic repositioning that wouldn't necessarily be apparent. And if you're looking at a site plan, I can give you some examples at Barne Plaza in Doylestown, where we have Bucks County's first Whole Foods Market and our Barnes & Noble we're gearing up now to break ground for the second phase of our redevelopment there, which involved taking down a former Regal Cinema, and we're building 3 new multi-tenant outparcels with several first-to-portfolio retailers in Brixmor's portfolio. And on the other side of the site, on the Whole Foods side of the project, there are some long-standing older tenants that had been in the center for -- in this case is a couple of decades, we were able to upgrade those with no downtime in rent with like-kind categories, but better operators at significant rent spreads with little to no TI, so we have sort of these embedded opportunities to really capitalize on the investment and the groundwork that we've laid at these centers to continue to drive rate and improve the quality and the caliber of our small shop tenants.

And Laura hit it. I would just add to that. Our portfolio, in particular, had a much higher percentage of reinvestment over the last few years. So the small shop occupancy in Laura's protection portfolio is pushing close to 95%. And as we look at the balance of the portfolio and see that future reinvestment pipeline, the 1 that Matt mentioned with those 50 projects, it's 89% today. And we generally see a 300 to 400 basis point increase when we bring those redevelopments on. So oftentimes, we get asked what's left. That's what's left in terms of our ability to grow. That provides for, call it, 100, 150 basis points more of growth ahead of what is already record small shop occupancy for the portfolio. So everything Laura said relative to being able to put better tenants in, to remerchandise much more efficiently, to drive rate through reinvestment. She's doing every day in our portfolio. That upside, though, is fairly broad-based in terms of where we do have a drag from future redevelopment.

All right. Eric, you're next on my Brady Bunch box.

Great. Could you just maybe talk about a little about the negotiating leverage between you and the retailers and how that has shown over the years past and your ability to kind of renegotiate maybe parking easements to add pads and just some of the less quantifiable metrics that we may not see in the supplemental and just how that has evolved over time.

Yes, this is actually 1 -- I'm going to give this to Matt, but what I'd start off with there, Eric, is we negotiate a very long lease document with the tenant. 1 page of it is the rent and the delivery condition and the rest of it is just control. And you're hitting on these things that are very important to us. its control over uses, it's control over development. And the environment that we're in today is giving us really good leverage into limiting the control that those retailers get over our assets so that we can really drive future value there. Matt, why don't you jump in on that?

Yes, it's been -- I mean, the focus has been term we've been able to achieve longer terms, less options, better increases, all those metrics. But David hit it, it's historically where a retailer box anchor tenant may have had control the entire parking lot. We're freeing up outparcels. we're freeing up the ability to add 2,000 foot outparcels, 10,000-foot outparcels. It's the ability to have flexibility in the parking lot and expand other parts of the centers, to expand on to the existing property. That where they may have been more restrictive in the past. And then as we're working with tenants, we have a relationship with across the country, it may not even be in a specific center. We're going to have conversations with them to free up some restrictions and other in other markets, sometimes when we have projects moving forward. So that's been the leverage we've been able to take advantage of. So as we're signing a handful of leases with 1 anchor tenant on the East Coast, we may be able to free up some restrictions around the West Coast that allow us to advance the red project in that part of the country.

And Eric, I would just add, retailers have been much more accommodating as it relates to densifying projects. I was in a meeting with David where we're literally looking at building a grocery store in the middle of the parking lot in front of a larger format retailer. And we were talking to them about the truck turn radius and visibility, but they're recognizing the demand and traffic that they would bring. You see the same things relative to restaurants and pad operators upfront. The other thing is municipalities have been much more willing as well in terms of densifying large parking fields. We mentioned on the last call, we brought more outparcels into our active pipeline last quarter than we ever had. We've done 100 of those projects over the last 10 years outside of redevelopment and have much more ability to do so going forward because of that accommodation from both the retailers as well as municipalities. The other thing, giving credit to this team on the screen, we've got 300 kinsets over the past year. And many of them to do and execute on a lot of those reinvestments, many of them at no cost because of the partnership that our teams have. So it's important for us to free those things up going forward. we have seen both retailers and municipalities be much more accommodating to allow us to do so. But when we do need consents, we have a team that's readily able -- to be able to secure those so we can execute on reinvestment.

All right. Let's go to Sidney next. Sidney.

So on the acquisition front, maybe jumping off Todd's question. You mentioned you can still find opportunities, but where have you seen the sources of these assets coming to market, given the competition from institutional capital and is it mostly marketed transactions or maybe more off-market deals that you can source with private families or relationships that you have?

Yes. So you hit on it, Sidney. Some of it is families. They're recognizing the same dynamic. There's tax advantages for us being a REIT in those conversations. Historically, those discussions have resulted in cash transactions. But I think more so, that's become part of the discussion. Some of them are marketed deals. All 3 deals we bought last year were marketed deals from pension funds. But we felt that we had the ability to come in to execute on a plan that would drive growth out of the gate and long term. . So I would say it's been a mix. And those dynamics that I just talked about, right, relative to, hey, can we pull that anchor rent forward. Floris's question of, hey, you may replace a tenant 2 years out, but we're renewing tenants 2 years out and they're paying us market rent today to do that, and we're freeing up all kinds of things. in the lease, having an understanding that you can do that with a specific tenant going in, having understanding that hey, wait a second, I know we can get a consent from this operator, and there may not have been a pad in the underwriting because to Matt's point, we may have done that in 2 or 3 other places around the country. So it's executing on the business plan, but it's also spending time with those families having a target asset list that our teams, our acquisition teams who are partnering with the regional folks in the field are constantly monitoring, hey, when this could come to market? Is this a corner that we want to own. You've seen us cluster and buy centers or buy a pad at a shopping center that we've frankly been talking to people for years on and have been able to jump on, and ultimately, those are either going to come to market. or before they come to market. So those are some of the things that we do, but it's really for us the ability to execute and drive growth that gives us conviction about what we're buying.

The only thing I'd add there, Sidney, and Brian hit on this was the relationships we have with our retailers and their -- they know our ability to execute. We're talking to them constantly, and they're saying there are centers we want to be in, the landlord can't go through the entitlement process with the municipality. They can't get the needed consents from the other tenants. They can't get construction financing. We know bricks more you can deliver, can you go in and try to buy this asset. And that's another really good source for us.

So just lastly, that 2 of the projects that we bought with Publix in Southwest Florida were exactly that. Yes. There are private landlords that have invested in the shopping centers, 1 of which we've already completed a development in Sarasota, the other 1 is 1 of the larger projects that Matt mentioned in South Tampa. So we're doing that and you can see us doing that, but that is also a key component in terms of understanding what the growth levers are when we enter into an acquisition discussion.

Okay. How about you, Michael. you're muted. Still muted. You went off for a second. .

Just curious, did any of the tenants in the meetings talk about what would cause the slow plans at all?

I didn't hear a peep of it. Not in 1 of my meetings, I see a lot of heads shaking no here. Again, there are some uncertainity out there in the economy. But in our meetings, there was no mention of a slowdown.

Yes. I would say though, Michael, to that point, there was an acknowledgment of what David started with, right, that there are some -- whether it's geopolitical macro headwinds, I do think that conversation and it was -- we had said to our team, hey, we're going to communicate how we're using, let's just call it, technology, right? AI is a component of that. technology to make better decisions, to be smarter about who's shopping our centers. And what was really encouraging to me in meeting after meeting similar initiatives on the retailer side to do exactly what Evie hit on. to figure out how that store can continue to be as productive as it ever has been. People that are going on their phone to look at some things in stock, making sure that, that's in stock when they go into those stores, understanding in a trade area, what type of product is getting delivered, right? What type of product is getting picked up. And there was this and you definitely heard it from the off-price operators in terms of the better brands that they're putting into their stores as across the income spectrum, folks are searching for value. So I agree with David 100%, the meetings that we set in on, there wasn't a discussion of, hey, here's a pullback? Or if this happens next quarter, we're in a pullback. What there was is, hey, here is how we're making decisions in an environment where there are some macroeconomic headwinds, and we're going to make those smarter than really we ever have going forward going into a 5- or 10-year lease commitment.

Let's go to Connor.

So you guys discussed that retailers going to know where they want to be. And you hit on this a little bit. You mentioned the Northeast, but just wondering if you saw any other trends in what sort of markets that tenants are kind of eyeing or looking for? Does it happen to be urban, suburban, regional like the Northeast, you mentioned? And then maybe what's driving this from heated conversations or what you guys are kind of seeing through some of your work on the back end?

Yes, I think the Northeast is a popular topic for this year just because it was kind of like the last frontier for Ross, who had covered the rest of the entire country. It was the last piece for them to push into, sprout who is generally come across the bottom half of the country through the Sunbelt into the Southeast. It's their next frontier. I think retailers generally are looking for good suburbs where their customers are located. Some other new markets, I heard of Rally House is a sporting goods and sporting wear retailer who's in 25 states today has been very active in our portfolio. They announced 6 new states. It's not just the Northeast. They're pushing west into the Midwest and more into the Southwest. How about you, Evie? What new markets did you hear about?

A lot of demand for Florida and Texas, I would say. And really, it's where the retailer is not. So wherever they have white space, they're looking at not just demographics to compare markets and make decisions but psychographics as well. DSW just opened a few new stores in California where they didn't have as big of a presence. So yes, a lot of broadband -- broad space demand across the country.

And they're using the data at their fingertips to identify where their customers are and where they're going to succeed.

From the Southeast of Texas, Florida, Georgia, the Carolinas, it's incredible. The demand out there was just literally off the charts. So I mentioned the Publix rate of projects. There's 6 or 7 of them, we are working on the pipeline now. The tenants are asking where they are. They want to be there. good meetings with Kroger, talking about their growth, Harris Teeter growth in that part of the country. So I really think it was just broadly spread out the interest. I don't really think it was just focused on the north. And Brian mentioned a little bit of how the North Reader projects that were delivered a couple of years ago, we're say, wait the South, the projects that are being delivered in the south are probably a year or 2 behind some of those. So the shop activity in those projects is -- was happening in those meetings and should be getting signed to the next few quarters and showing up in our numbers. So it's -- it feels like it's there.

You bet. All right. Ravi is next. Ravi?

Can you discuss the Publix' refreshed strategy that you have up on the slides there? What specifically are some of the projects and objectives? And how should we think about you being a capital source to your tenant base as they look to upgrade and modernize their fleet?

Yes. I'll let you take that, Matt. Go ahead. .

So 1 of the large landlords, they have a fleet of stores that once they get to be 30, 40 years old, they want to offer their most recent prototype of customers. Those stores for -- from my perspective are low rents, in-place rents with a number of options that are still remaining. So they have control. So if we have an ability to deliver a new store to a shopping center, we'll reset their rent. We get a new 20-year term with Publix. At the same time, we typically will renovate or update some of the facades in the center to make it look like a new property. We see traffic drive 30% increases at those properties. We see the sales increase for Publix typically about 30% and the tenants that are in our properties, their traffic is increasing, their sales are increasing. So it's really an opportunity for us to improve the tenant lineup that's in the property today or reset leases the same prorate we've talked about a couple of times on this call. So it's really a refresh for the whole property, and it puts us in another -- it ramps us up.

And Ravi, just to your comment being a capital source for our tenants, and this is 1 of the most well-capitalized businesses in the world. These are also among the most attractive returns of our entire redevelopment pipeline, not even considering the cap rate compression that you're getting from brand-new Publix with 20 years of term. To Matt's point, we're getting a new store. We are freeing up years of restrictions and ultimately, the follow-on leasing there has been fantastic. So they've been an amazing partner. Matt and team have done a great job, and they've done this now where they're now going outside of Florida. Matt's working on the first one, literally on the first 1 in suburban Atlanta that they're doing. We're looking at some projects as those stores in Atlanta and the Carolinas, get to that, call it, 25, 30-year vintage, they're now starting those discussions, and they're doing them with landlords that can execute. So we love what we're doing with them. We've shown the ability to execute their fantastic returns, and we're excited with what we have going forward.

All right. Alex.

Question for you about the retailers themselves and obviously trying to get a little bit inside baseball, if you will. Rents are up. So obviously, we like that from the REIT side, but labor costs are up, the financing costs are up. So the retailers themselves are under more pressure. At the same time, customers have stomached huge price increases over the past 5 or so years. Are you seeing the retailers that you're talking to, especially the expansion ones or the ones that are really taking on more cost. Are you seeing them just solely relying on raising the prices that they're charging for their products as a way to compensate? Or are you seeing your customers, your tenants -- are you seeing them sort of rethink their business to make a more streamlined such that they can afford higher labor, afford higher rents. But at the same time, that's not necessarily translating to higher prices because, ultimately, the customer only has so much money that they can spend at the centers.

Yes. I think it's similar to Brian's point on the acknowledgment that there are labor headwinds, there are food cost headwinds in the restaurant industry. I think what we're seeing in our portfolio is we're getting much better tenants who are able to not only stomach the additional costs from labor costs, labor cost headwinds, but they know where their customers are. They're using the data that they have. they're opening stores where they know they're going to succeed. They're relocating stores to better centers and I think overall, the universe of retailers that we're seeing active in our portfolio are able to weather these items and be successful. Again, an acknowledgment of what's going on.

Yes. I think to add on that, Alex, just you think of who our tenants are, right? And the environment today and some level of hybrid work has stuck. I mean here in New York City, utilization rates are still 30% less than what they were in 2019. That's 1.5 days, right, that people are home more. What does that mean for the refrigerator, right? That helps our growing service? What does that mean for the daily habits that they have of going in a cup of coffee, going to work out? There has been a fundamental shift in wellness. People are going to be much less apt to give their gym membership, you've heard it from those fitness operators, what that does for our centers in terms of the service operators and the quality of QSR restaurants. And then across the income spectrum, people are searching for value. And that's why you're seeing the comps and performance that's been happening with Ross and TJX and Burlington. So I do think it's the nature of who we've been able to bring in to our centers as well and some of those shifts in consumer habits and the consumer has been adapting to what's happening. So it's something that we remain laser-focused on, it's something that we're talking to our tenants about. But I also think everything David said, is the truth. And then also, you just think about on top of that, the nature of who our tenants are and how our centers are shopped today, is a benefit to it as well.

So we got a little under 10 minutes left. It looks like we have 1 more from Daniel. Let's go to you, Daniel, and then I'm going to go around the room for 1 last question for our group.

I know you mentioned some of the items that you've been working on adding into leases. I was wondering if there's anything that you've been trying to work into leasing discussions around e-commerce sales and the benefit of having a store in a market has on increasing e-commerce sales in that trade area.

It's a great question. And the answer is yes, absolutely. Many retailers are not only fulfilling online orders in the store, but delivering online orders from the store, the majority of our leases allow us to capture those sales. And there are some that don't. And we have a big initiative here to make sure that any sales that are coming out of that box, whether it's online, pick up in store delivery, we are getting the benefit of as it relates to percentage rent and our upside in those deals. But yes, we are laser focused on it. That's a great question. All right. So let's go around the horn here on what surprises you heard out of show. Let's start with Laura.

Well, I'll tell you, I had a couple surprise visits from retailers, which -- that surprised me. It's not typical that an unscheduled -- a retailer makes an unscheduled appearance in the booth looking for me and hoping to get a few minutes of my time. So that was kind of a refreshing development this year. And then I had a broker come into the booth and grab me to tell me that she had an LOI for me and that she was going to be sending it over for a credit union for 1 of our assets in Maryland. So those were some positive surprises.

Our favorite kind. How about you Evie.

Yes. I mean I had 33 meetings over 2 days and first time ever, no, no shows, which is a little unheard of, and I think just speaks to the demand in the space and for our asset class. I had a 2:30 meeting on Wednesday, which is the very last spot and the show floor was practically empty by then. And they came a Canadian retailer who's entering the U.S. called Labin Rose, which has a very similar merchandising mix to Victoria's Secret. They have 5 opened so far in the U.S., and they're looking to do a big expansion. they came to tell me that they reviewed the prep that I sent over before the meeting, and they're touring this week, 1 of our shopping centers, and they needed a lockbox code. So great way to end the show on a really high note and just excited for all the follow-ups here to come. .

Good stuff. How about you, Matt?

I had a couple, a few tenants that hadn't historically been opened the ground leases were looking for creative ways to get into some of our centers, which I'm excited to explore, the student activity at ICSC. So prices on the ICSC Foundation has been really involved in it. There are 600 students that attended the show, which just shocking that we were able to drive that much traffic from colleges both want to be with inflam, which was great. I mean our office day, there's a handful of interns here. So it's been really nice to meet with them. And then I mentioned that AI had came up at every meeting. Literally, it came up at almost every meeting. It's just been such a hot topic and some of those uses and cases that things that I had -- in ways that I hadn't considered using it, just hearing how other people were taking advantage of what was really great, it was helpful.

For me, this might sound a little cheesy, but the surprise for me at the show was actually the lack of surprises, right? I mean every year, we all have some level of bad news that gets delivered to us, whether it's a store that's not performing, a store that's relocating, a tenant that's mad us for some reason, there was 0 of that for me this year. And if I look at the conversations we're having with our national retailers, we mentioned this several times across getting control and all the consents we get, there really aren't any retailers out there that we don't have a solid relationship with where we're able to navigate these things. And historically, there's always been 2, 3 or a handful of them that have had constant challenging conversations. And this year, thankfully to the environment we're in. And thankfully to the relationships that everyone on the screen has built with our retail partners, there's really none. And it's been really great to see. I missed 1 question here with Omotayo. Let's finish with you unless anybody has anything else.

Peers had a similar presentation yesterday, met a couple of your peers also at ICSC and I guess kind thematically, everyone kind of sounds the same if I may use that word. So I am just kind of curious a little bit from bricks loss perspective, what can you tell the investment community in regards to 1 and maybe something you're doing a little bit differently versus everybody else, and how should we kind of think about it differently in a world where everything just sounds fantastic for me.

Yes. I can take that, David. It's a message I frankly said to the team we get together every year, right? And we've done this for a long time too. By the way, I know some folks are a little bit new to it, but this is something that we love doing and spending time with all of you. And so this portfolio wasn't always in the same position it is today. And there were things that we had to do in terms of our approach, right, in terms of the relationships that we developed, in terms of the resilience that we had to have when we were more defensive. And to be able to take that same mindset and then do that with a portfolio that has been transformed with relationships that have been strengthened, gives us the ability to drive growth I think at the top of the peer group going forward and gives us the ability and visibility to do larger scale acquisition, at longer scale reinvestments based off of how we've executed with the team, be able to take on acquisitions like we did at LaCenterra and out of the gate are well ahead of our underwriting. So it's the experience that you all have seen and how we've been able to demonstrate that execution through cycle after cycle that puts us in a position to outperform when it's a great environment or when it becomes more challenging environment. There is a reason that we had the highest collection rates during COVID, right? There is a reason that we saw some of the biggest lift in small shop occupancy coming out of that as well. And there's going to be a reason where we're going to continue to drive growth going forward. And it's really due to everybody on the team and the resilience that this group has had over many cycles.

All right. I don't see any other questions. I want to thank you all for coming. Appreciate the time today, and everybody have a great day. Thank you.

Thanks, everybody. We appreciate it.