Federal Realty Investment Trust ($FRT)

Good afternoon, and welcome to Federal Realty's 2026 Investor Day. Thank you so much for joining us. We're really excited to have you here and to spend the day showcasing our company, our properties and our team. Before we get going, I'd like to point you to the forward-looking statements and safe harbor language on the slide. Please take a moment to review that as it applies to everything you'll hear today. Here's a quick look at our agenda for the day. We tailored this webcast experience specifically for our virtual audience. Those joining us in person are touring 3 of our properties, and we wanted to give you all a similar experience, so we put together short videos in the same order the in-person group is touring. You'll first tour virtually Westgate Center in San Jose, then Old Town Los Gatos and then Santana Row. Shortly after these video tours, our CEO, Don Wood, will come on and officially take us off. We'll have a live Q&A at the end of the program, and you can submit your questions virtually through the Open Exchange site. We'll do our best to get to as many as we can live, or at the very least, follow up with you. One quick heads up before we begin. In our in-person programming, we are also running breakout sessions with case studies that dig into how we lease, how we continue to drive productivity, which, as Don will touch on shortly, is what allows us to keep raising rents, and how we meticulously manage our assets and approach development. Those breakouts will not be carried on the webcast, but all of the materials will be posted on our Investor Day Open Exchange site. I'm flagging this now because you'll likely hear our speakers reference these sections throughout their presentations. So with that, thanks again for tuning in. We hope you enjoy the day we put together for you. [Presentation]

Located at the corner of Saratoga and Campbell Avenues in San Jose, Westgate Center is 650,000 square feet anchored on all sides in one of the most supply-constrained retail corridors in the Bay Area. Federal acquired this property in 2004 for $97 million. What you're looking at today is the product of over 2 decades of uninterrupted ownership and a growth trajectory that is accelerating. For most of those 20 years, Westgate compounded steadily. The center was remerchandised in deliberate steps. The building is screened and modernized, the tenant mix continuously refined. Sales per square foot grew at roughly 5% CAGR from 2022 to 2025. Federal's deep understanding of this market build the foundation for what's happening now. Several significant transactions are converging at once. Target is renewing at a nearly sixfold rent increase, reflecting the gap between prior contracted rents and today's market rent. TNT Supermarket is opening here, one of the first U.S. locations for Canada's largest Asian grocery chain. TNT is a destination tenant in the truest sense, customers drive past closer alternatives, visit frequently and lift the entire center around them. With TNT and Target, Westgate becomes one of the only dual grocer-anchored centers in the Bay Area. Meanwhile, we're planning to convert the interior mall space from food court to an anchor box, meeting leasing demand, reducing operating expenses. The result is a projected 14% NOI CAGR from 2025 to 2030. The path to approximately $17 million in NOI in 2030 reflects transactions already executed and plans already underway. This isn't a projection built on assumptions. The work is largely done. Just across Saratoga Avenue, new density, new [ roof docks ], a stronger customer base are arriving. Within Westgate's own site, our leases will allow us to pursue residential entitlements if it makes sense, future optionality that requires no near-term capital. Additional pad opportunities are in active negotiation, none of which is reflected in our current projections. Westgate has been a consistent performer for 20 years. What's different now is the convergence of catalysts. Anchors renewed at market, a transformative new grocer, operational simplification and a surrounding market that continues to build around us. 20 years of ownership gave us the knowledge to make the right calls. The calls are now paying off, and there's more ahead. Old Town Center sits on University Avenue just to the east of Downtown Los Gatos, one of the most affluent submarkets in Northern California with a high-income residential base and a growing concentration of corporate presence in the surrounding area, including Netflix, Sephora, RH, Teleferic Barcelona, Blue Bottle, Free People Movement, Warby Parker, Our House. The quality of what's here is evident. These tenants don't land in markets that can't support them. What's less visible is how the transformation happened and what it took to get here. 8 years ago, the rent roll was significantly underperforming the market. With sales hovering around $300 per foot and health ratios in the mid-20% range, the operating profile was not sustainable. The energy in Downtown Los Gatos was on the competing street. Old Town's merchandising hadn't kept pace with what this trade area had become. Our decision wasn't to compete with The Street. It was to create a new center of gravity, to build a distinct retail environment serving the same affluent customer. What made that possible was a structural advantage, Federal's critical mass on University Avenue. This allowed us to make the commitment to tenants that a single-building landlord never could, that if they came, we would build the right environment around them. What followed was instructive. Sephora opened, and Anthropologie, a tenant we had here for years, nearly doubled their sales. That performance improvement translated directly into a meaningfully higher rent, which strengthened our position for the next leasing conversation and the next. RH ultimately chose to relocate from the competing Street, further validating Federal's ability to change the center of gravity. Each deal raised the floor for everything that came after it. The NOI growth is expected to be approximately 14% CAGR from 2025 to 2030. The growth here is not dependent on new capital. It is embedded in the existing leases, and the market continues to move in Federal's direction. Santana Row sits at the center of one of the most dynamic markets in the world, minutes from downtown San Jose, surrounded by the headquarters of the companies that define the global technology industry. When your trade area includes the highest concentration of wealth and innovation in the world, you build accordingly. Santana Row is what that looks like. With Valley Fair located across the street, the 2 centers make up the dominant retail node in the market, drawing a combined 27 million visits annually, that complement each other, driving 1.7 million cross-shopping visits annually. Over 100 retailers and restaurants call Santana Row home, from Tesla to Blue Bottle, from Vintage Wine Bar to Vuori, the tenant lineup here isn't your typical shopping center roster. Santana Row's retail mix is deliberately curated to ensure there's always a reason to come and always a reason to stay longer. Living at Santana Row means the best dining, shopping and energy in San Jose are right outside your front door. It's an experience that has been in demand since we first built residential in the early 2000s. Misora and Levare, which were recently sold at a blended 4.4% buyer's cap rate, are a testament to this demand. In 2025, we broke ground on Lot 12. Located on the east side of Santana Row, the new development will have 258 new apartment units and is expected to be completed in 2028. Office space is everywhere. An office at Santana Row is something else, a place where Silicon Valley's top firms can recruit, retain and inspire talent in a mixed-use environment no suburban office campus can replicate. What makes Santana Row impossible to replicate isn't any single use. It's a life between them. Placemaking contributes to the energy that keeps tenant sales strong, apartments full and office leases renewed. It doesn't happen by accident. It's been almost 30 years in the making. Federal's business development platform harnesses Santana's unique energy and cache, creating a diversified revenue engine that turns every square foot and every visitor into an income opportunity. Santana Row is a place where retail thrives, residents put down roots and where every office user wants to be. We're almost 30 years of intentional building and produce something the real estate industry talks about but rarely achieves, a destination that is genuinely irreplaceable. Santana Row is the blueprint for the broader portfolio with the same principles learned being applied across Federal's assets to drive stronger performance and long-term value creation. This is where Federal learned what great looks like. [Break]

Well, good afternoon, everybody, and thank you so much for tuning in. I'm Don Wood, CEO and President of Federal Realty. I was very sorry that you're not able to join us in person. It is a beautiful day out in the middle of Silicon Valley at Santana Row. And I understand that you've just seen some videos of Westgate Mall -- or Westgate Shopping Center, you've seen Old Town Los Gatos, and you're seeing videos of Santana Row, which is our flagship. What you've actually just seen is $13 million of NOI from Westgate, you've seen $4 million Old Town Los Gatos, you've seen $100 million, which is where we are these days at Santana Row. So together, you're looking at about $2.3 billion worth of real estate. And there's more than effectively that we do here. Let's talk about not only these shopping centers, but what's to come. This is an asset also that is in San Ramon, California, some miles from where we stand, on the East Bay, called Crow Canyon. It's been an asset that we've owned for about 20 years or so now. We've created something like $40 million of value here. It is a Sprouts anchored shopping center in a very affluent area, about $225,000 of household incomes here, nearly fully leased. It's a great property that adds to what's happening here. And a lot of you have heard about our acquisitions, and 1 of those acquisitions is Del Monte. Del Monte in Monterey, California. Got a little video, one more video for you to see. And let me turn to that right now, if I can. [Presentation]

Del Monte Shopping Center sits on Highway 1 in Monterey, a central commercial corridor of the California coast. From Ventura County north to the Bay Area on Highway 1, the center is the only grocery-anchored lifestyle center of its kind. It is within 15 minutes of Carmel and Pebble Beach, broadening the customer base well beyond the local trade area. Del Monte has the kind of market position federal looks for: dominant, supply constrained, affluent and underserved by high-quality retail. Along the western side of Del Monte, the quality of the tenant base is clear. The center is anchored by one of the highest-volume [indiscernible] in the region, alongside it Apple, lululemon, Williams Sonoma, Anthropologie, Sephora. These tenants are here because the market and the asset justified it. Over time, much of Del Monte's tenant mix lost its thread. Service and convenience concepts moved in alongside stronger lifestyle brands, filling space without reinforcing identity. Two vacant anchor boxes and a failing Rite-Aid left the center telling 2 very different stories depending on which half you were standing at. Federal acquired the asset at 83% leased. The opportunity wasn't to rebuild, but to extend what the western half had already established. When we looked at Del Monte, our approach was to identify the first leasing moves that would most change the trajectory of the asset. It was leasing discipline in practice, deciding not just who belongs here but which moves to make first and in what order thereafter. The early results reflect that momentum. We are currently in active negotiations to backfill a tenant that exercised its sales termination right along with a percent rent only tenant, creating meaningful mark-to-market opportunity across both locations. In parallel, we're investing in targeted common area improvements, landscaping, gathering areas and play spaces designed around Monterey coastal character. When the property improvements complete later this year, we'll announce the new tenant and launch a new name, Shops at Del Monte, as a coordinated signal that the center is in a new chapter. The financial picture reflects this coordination. NOI is projected to grow about 60% from our 2025 acquisition to 2030, and we expect to create about $75 million of value from the work we're doing. Our next focus is an 8,000 square foot box at the east end of the property, the most significant remaining opportunity at the center. Beyond the near-term leasing plan, the site carries the optionality for longer-term densification potential, adding another layer of future value. The first moves are executing ahead of plan. Transformation isn't yet fully visible, but the path is well established.

We are very excited about Del Monte. I think it's going to turn out to be one of the best shopping center acquisitions that we've made. There's an awful lot to do there. And so when you look at our Northern California portfolio, you're seeing about $2.6 billion worth of real estate in our company. And as you know, our total market cap of the company -- total enterprise value of the company as valued is, in the marketplace, is $15 billion. I think we're worth more than that. So you're seeing a big portion of Federal Realty here today. And you'll notice, I'm sure, that everything that we're showing you is very different. So what can be the same? We're talking about grocery-anchored shopping centers, power centers, mixed-use properties, lifestyle centers with grocers. A very, very different mix of assets. So why in the world would one company have -- who has long been format agnostic in terms of what it is that we do, why would a company benefit by having all of these things together? And so we look for a way to talk about what that is. And effectively, what we're talking about is the red thread, the commonality, the thing that makes all of these the same from the standpoint of one big word, and that's productivity. This is -- these shopping centers, because we own all different types of formats, are more productive in a number of ways than they would be had we not owned all of them together. A couple of different ways. This is an interesting chart that I'm going to show you that comes -- that will be coming up throughout the day and throughout this presentation. Let's talk about this for a few minutes. Certainly, these assets have higher visits per location than what they would if we didn't own them all. And we're going to talk -- put some numbers behind that later. Higher dwell times. Being able to stay longer in a shopping center is critically important to the productivity of that shopping center, and our dwell times are longer. Tenant sales, the name of the game here. And you're going to say, will be able to put some meat behind that? Higher tenant sales than other shopping centers. Higher rents, certainly. But not only higher rents, but higher rents because they are more productive. And therefore, with more rooms, with very comfortable occupancy cost ratios, higher rents that are able to continue to move in the coming months and years. We'll talk about that too. Because of these properties and how they look, how they perform, how well known they are, this gives us more and better acquisition opportunities. We have the chance and the opportunity. We don't miss anything that is coming to market, on the market or, even more importantly, able to be convinced -- to convince sellers that this is the time to sell and be part of what it is that we do, and that benefit is huge. Same thing on the development side. We are a company that also develops. We have skill sets that we've shown for many years, we've got the ability now and are putting several hundred million dollars to work on residential assets that are infilling on our existing shopping centers because there is no cost of incremental land and higher rents, these things can work in a period in time. That's very difficult to develop. Again, you'll hear about that later on. All of this wouldn't matter if it didn't result stronger growth for the company and for the assets. You'll be hearing about that. That is a key tenet to what's going on. So in a way, this slide that is up in front of you now is the red thread for the rest of the presentation that you'll hear today. We'll be coming back to it and adding some meat to each of those pieces. This group was not at dinner last night. We had a live dinner last night at Old Town Los Gatos, where approximately 65 investors and sell siders were there with us. And one of the questions I asked as we sat and thought about it there today was, if we had not built Santana Row, if we did not go through what we've gone through over the last 20-plus years, would Old Town Los Gatos be as good, or would it not? Effectively, would our rents be low? Would it feel different? Would there be a different tenant basis? And [indiscernible] it was obvious that because we've done Santana Row, that the beneficiary of that are the rest of our properties, in this particular case, Old Town Los Gatos. What we call something like the flagship, something like Santana Row, it is the flywheel behind every Federal Realty property. Effectively, we have, because of things like Santana, Assembly, Pike & Rose, we've got retail relationships that are deeper, that are stronger, that allow us to be able to have more opportunity. And when you really think about our business, our business is one where we cannot predict the economy. We don't know what's going to happen up or down. But we do know that what we strive for, and it comes in and you'll see in a number of ways and certainly in retailer relationships, to have the most flexibility and the widest funnel by which to create value. Placemaking is really interesting. Lots of people look at Federal properties and say, yes, they're pretty. Isn't that great that they're pretty? They know how to placemake. It is so much more. That is such a disservice to what effectively happens with placemaking. What we do is economic placemaking. And that is not just spending money for the sake of making something pretty. It is smart investment, whether you're talking about landscaping, whether you're talking about construction, whether you're talking about layout, that can be done in an efficient way that adds to the property's value without adding to the cost. We've gotten really good at this. Got a few examples that you'll hear throughout the day in terms of how that works, but economic placemaking, not just placemaking. There's something to brand equity. And there's no question about it that when you say Federal Realty and you say Santana Row or Assembly Row or Pike & Rose, then it transforms those properties, goes through those properties to our other 105-or-so shopping centers. That brand equity is a critical advantage of what it is that we get by having a flagship like this one. And certainly, in a world where everybody wants to be extremely narrow in what has happened, we don't go that way. We've got the nonretail advantage. It's important in real estate, we believe, to have many arrows and equipment. We've become very accomplished residential builders, office builders, [ hotel view ] people. And so when you look at the ability to do those things, that's able to be transformed, not just from Santana Row, but through the rest of our properties, as exemplified by several hundred million dollars of residential development that we'll be talking about later in the day. It's the flagship effect and it's real. I've got one other big point before I get off, that I want to make sure you guys have. Why are we doing this Investor Day now? In the middle of May of 2026, why now? And I can tell you, this is an important question because it's a really important period of time. It seems to us that there are numerous important factors that seem to be coming together at this point in time that suggests that we are ready for a run of several years of outsized growth. And I want to go through some detail as to tell you why we believe that. This is a hard slide to read, I understand, and it's got 24 years, if you will, of information on it. That just happens to coincide with the first year I took over Federal in 2002. But very simply, the year, the FFO per share and the growth rate. And I want to take through this history because I think it's illustrative of where we're about to go over the next few years. Certainly, in the original period of time that the team took over, it was really about eliminating dilutive things, not doing dilutive things, focusing on the core, running the core better, new management team. And that resulted in a 7% plus FFO growth rate for a period of 5 years, right up to the GFC. This was a critically important period of time. It, frankly, sounds a lot like what some of the other companies are doing these days, make themselves better companies, better operations, not doing the things that diluted them in the past. Really important period of time for us when that was the key part of the business plan. Ironically, in GFC, the Great Financial Crisis, ironically, our reputation was solidified, got stronger and value reflected it. What happened during that period of time is we had set up, before the GFC, a much stronger balance sheet. We effectively used that period of time not to stop planning for developments. And accordingly, when the next -- as the GFC impacts subsided, we were looking at the next very strong period of returns for Federal. 2012 through 2016, we were hitting on all cylinders. Again, better than 7% annual growth over that period of time, again, with a development component, a redevelopment component of very strong core and some acquisitions. A really strong period to understand what the capability of the portfolio is. As now we get a little bit more recent, most people remember those years of 2017 up through the full pandemic. And that was retail armageddon. That's the period of time when nobody was going to need a shopping center, everything was going to be delivered to your door in a brown box. And I like to call that purgatory. We've bounced along. It was 4% growth during that period of time. And we'll never know, but my conjecture here is that were it not for the global pandemic, we would have been entering another period of dramatic growth, stronger outperformance during that 2020, 2021 period of time. Obviously, the global pandemic and its aftermath hurt us. And for the first time, hurt Federal Realty more than it hurt competitors. For 2 big reasons. Reason number one was clear. We are basically in the Blue states on the coast. COVID was treated very differently there. Those markets closed down stores, did not allow shopping, had COVID impacts that lasted far longer than others. So we couldn't do much about that. And the second is well documented, we had over $1 billion or so of development underway that hit exactly on March 15, 2020 in the case of of Santana West that at least that was supposed to be signed. And that has taken us years to build out to grow out of. Here's the news. All of that's gone. So as I sit here, and I'll give you a few reasons why it's very hard for me to not see the tailwinds that effectively should last over the next 5 years, some period like that, similar to the former too that worked out that way of outsized growth. Again, the slide -- Dan will be back later in the day, Dan G., to be able to put some more meat on this slide. But I'd like to tell you why I believe this in addition to the history. Check this out. Letting the core shine, that 2004 and 2008 period of time, 7.4% annual growth over that period of time, 180% return to Federal. 177 basis points better than the S&P, 161 better than the RMZ. That's what happened in '04 to '08. In '12 to '16, '16, the hitting on all cylinders period of time, 7.2% annual FFO growth over that period of time, 115% return for Federal, 37 basis points better than S&P, 85 basis points better than RMZ. I ask you, where do you think we're going? This is what we've started with the end of the dilutive effects, with what we started talking about middle of last year. We've been talking about we'll do over 6% growth this year, very much expect to do that and a great market reaction to that so far. Important stuff. Here's the reasons I'm very comfortable in at least looking at the factors that should result in this. The post-pandemic are actually gone. Talked about it. The ability to lease up Santana West, the ability to lease up 915, meeting in Pike & Rose and other projects along the way are not dilutive any longer. They're gone. Really important. Macro point coming due next. Demand exceeds supply. It's well documented, and there's no question that this is -- that it's very, very difficult to imagine in the next few years being strong from a standpoint of new supply coming on. Construction costs, rents do not -- they don't pencil in. You'll see some but nothing that should change that overall macro dynamic of demand exceeding supply. By the way, that is a benefit that did not help us in the '04 to '08 period of time or in the 2012 to 2016 period of time. In both of those periods times, it was widely accepted that supply exceeded demand. That's not the case. So that's a really good, important part of the next 5 years in terms of what you should see, in addition to number one. That's not all. The ability -- let's see. There we go. The ability to, as you started seeing this year, capital recycle, not selling things that we should have never bought in the first place, but rather reaping the strong gains and strong value that we've created over the last 20 years through the sale of things like Levare, Misora, I think you will see another sale announced over the next few weeks in the company of a shopping center. This gives us a capital cost of capital advantage that is unmatched. This stuff is great stuff that has created that value and can be redeployed into faster-growing assets. I think you saw that with respect to what happened out in Kansas City, in Omaha. I think you'll see better and better news coming out of places like that. Del Monte, which I've just announced or talked about a minute ago, hit the same -- is doing the same thing. So huge advantage to us going forward to turbocharge growth. And here was the last piece of it. I talked last night about a dinner about AI and our AI initiatives there. That will result in faster collection of money. That will result in other efficiencies throughout the organization, in addition to a development pipeline that includes several hundred million dollars of residential development at shopping centers that will incrementally add. In addition to that, you'll see ancillary income. You'll see sponsorships and other things that places like Santana Row, we haven't exploited to the fullest. When you take these 4 things together, I think, and you look at the history of the company, it's a pretty good argument that suggests that outsized growth should be what you see from Federal going forward. It is the red thread that makes us [indiscernible] company. It is that common productivity superiority that goes through each of these property types that works. Two points I'd love to make sure you know before I leave. We are format agnostic, and that is a real advantage of this company. And I very much believe that we're on the cusp of the next 5-year wave. Hope that's helpful to you. Enjoy the rest of the presentation. [Break]

Hello, everyone. I think we're going to start in a minute. If everyone can sit down. Okay.

Hi, everybody. testing. Can you hear me? So the people on the webcast, welcome. And for those of you here in person with us today, hopefully, you enjoyed the great breakout sessions that we just had, whether you were talking to Mark and Kari and looking at that ginormous trophy for the Philadelphia region and hearing about how we approached development and handled densification, or whether you had the retailers that I listened to a couple of those conversations, really good with Stu and our retailers. And then lastly, Vanessa and Liz and Michael talking about what we really -- what really drives revenue, how we approach it and how our different property types help with that. So we're going to zoom out, Stu and I, for a little bit and talk about just the different levers that we have to grow revenue across the company. And hopefully, the goal is so that when we get to Dan at the end and he puts up the projections that we expect for the next 3 years, you're going to have as much confidence in those numbers as Stu and I do. So when I think about our business model, right, it's really about creating that durable income stream that continually has ability to grow over time. And it's really kind of a simple formula. I kind of put it in 3 little buckets. It's wealth in density, so money and people, combined with great locations that we have, and various different format types. And that's really important on the format side. And that is really the engine that drives the productivity that you're hearing about all today and you'll continue to hear through the next couple of programs that drives our growth for the company.

So let's dive into demos a bit. Certainly, the foundation of our business all starts with the people that live around our centers. This is a map showing aggregate household income per square mile, a heat map, the darkest shade being the highest. When you overlay our properties in blue, it's probably not a surprise that they line up with those dark pockets. We truly operate at the intersection of income and density. So a lot of discussion last night today in all the panels about the K-shaped economy. We wanted to focus on the top of that K., so those households earning $200,000 and above. If you look within 3 miles of our centers, we have twice as many of those homes as our peer set. Not only are those affluent customers spending more, they are also spending faster. So if you look at that same 200,000 cohort in real growth and then the average household income both growing in a similar pattern. This is really critical. You heard this from our retailers. These are the customers that they are interested in. They are risk mitigants. They are places where you can push price increases, and they drive higher sales forecast, which is really important, and we'll touch on shortly.

So I think we skipped -- oh, here we are. Sorry. You've seen this before. So I think Don brought this up in the beginning. It's really our different format types and it's broken out with by NOI contributing to the overall revenue of the company. So it's everything from the center of universe here at Santana Row, mixed-use project, to some of our smaller grocery-anchored shopping centers and basically everything in between. So let's talk about how some of our properties compare to our peers. Generally, our properties are 80% larger than our peers, which gives us a wider breadth of retailers that we're in front of all the time. It also gives us opportunities to get at the real estate, which we harvest again over time. And on average, 53% higher visits than our peers. So strong visits, large properties and people hang out more. They dwell longer, about 20% more. So when you were talking to Vanessa and Liz, they were talking about the different relationships we have with the retailers and how we transfer those relationships from one property to another. And I know because I've had several of you talk to me about, I go to these events, I hear the earnings calls, and everybody, all your peers say they have great relationships. And we do. They do. And we do. Frankly, it's the best part of the business. The advantage that we have is that deeper, broader group of retailers that we are constantly in front of and that history and performance and, importantly, partnership with the retailers, that they want to know us. So for all the leasing department in Federal Realty that's listening today, and they say it's all about my relationships for the retailers. It is. I don't want to take that away. But it always gets it back to the location and the great real estate that we own. So let's -- we talked a lot about Placer.ai and visits. And we've -- I've heard in several of your groups visits translates to higher sales, visits and dwell time. So let's take a look at some Placer.ai data that tracks our -- some of our retailers and how that -- those number of visits on average compare to our peer set. So Chipotle, everybody likes Chipotle, they're in everywhere, 23% higher visits in a Federal Realty property than on average in our peer set. J.Crew, we heard from James earlier today, and J.Crew and their different formats because they have Madewell, J.Crew, J.Crew Factory, their properties 67% higher traffic in our shopping centers than our peers. Trader Joe's. It's a cult following. They do very well in our centers, frankly, everywhere, 12% higher. And lastly, our Sephoras are off the charts in terms of production, 77% higher visits in our centers than others.

All right. So we've got these great demos. We've got bigger centers with bigger dwell times, more traffic. Why does this matter? It matters because higher sales forecast equal higher rent. So hear me, I know this is an oversimplified chart. But just quickly, speculative 2,500 square foot tenant on the left column, let's assume that's their average volume at $1.25 million. If we can get them to underwrite, they're going to do 20% higher sales with us, at neutral [ occupancy ] cost, they're dropping $87,000 to the bottom line for other fixed costs and ultimately profit. So we get 20% higher rent, it's great, but it can be a lot better. What if we double the rent? Take that $25 rent to $50. Now we're at an 8% occupancy cost versus a 5%. It's got to be worse for the tenant, right? No. They're still making $37,000 more in this dropping to the bottom line. I think you heard it, I promise I didn't plan those earlier. Retailers approved deals based on ROI, not occupancy cost. And the things that are driving those sales forecasts are demos, traffic and the sales of the other tenants in the shopping center.

So let's touch on some different ways that we have to grow. So we've always had -- I love this -- there's 2 more categories that I love the most. Strategically investing in our properties that we own is a great way to grow revenue. These are typically smaller investments. They're somewhere between $3 million and $15 million. They drive occupancy, they drive sales, so they drive rents. And I heard this come up in a couple of different areas. It's not just about making that center pretty. It is about is it a proactive strategic investment that's often triggered by maybe there's a shift in the anchor? Maybe there's a shift that we want in merchandising. Maybe there's some type of functionality between ingress and egress that's not working, or maybe the common areas are not up to par with what the consumer wants. And frankly, they're not producing enough for what the retailers want oftentimes in order to -- whether it's additional sales or additional seating. So the results are -- and we have 19 of these, that this is where the results came from on the average. So for example, that incremental investment that we've made, we're earning a 10% on average on that investment. Our rent rollover from our shopping centers that we invested in right then to our set that we had not invested in, that rollover is 17% better. Higher occupancy, of course, 280 basis points. And when you look at the growth trajectory of the shopping centers that we invest in, it's 300 basis points more than what it was prior.

Another lever, raw material. So when we can find under managed centers that have the same core features we've talked about, the demos, the dominance of size, the existing traffic, we can supercharge their growth. These are an example for these combined projected 5-year CAGR of 7%, Grossmont 10%; Del Monte 9.5%; Village Point Omaha, 4.6%; Annapolis Town Center 5.3%. So looking at the 9 assets that we've acquired over the last several years, they equate to $1.7 billion in investment, 6% NOI growth projected through 2030, and an 8% to 10% IRR.

This is the second bucket that I'm really excited about. We've had a really solid traditional, what I would call, traditional specialty leasing department and team. And they've done a great job. You might think of it as ancillary revenue. And that's leasing temporary space that we have in line. It might be some sporadic EV charging. It might be storage. We also, with our properties like Santana Row and others, we have a great opportunity to take advantage of paid parking. That's another really nice income stream for us. When you put that program today all together, it's about a $30 million program. Now, and Don touched on this a little bit in the beginning, we are starting to lean into our leveraging of some of our bigger assets and leveraging and on brands and companies that want to get in front of the kind of demographics that our properties bring to the table. And they're willing to pay for it in a meaningful way. So we did a deal -- a global deal with Mercedes for 60 -- over 60 of our assets. You may have seen on the top trolley tour maybe, the Lexus pop-up that's going to be an activation that's going to happen. I know we've done it with BMW. And we even have a pop-up of Dolce & Gabbana coming to Leawood, Kansas. And so this -- I think we're just getting started on what this platform can produce. We've hired some new talent, both on the sponsorship side and somebody to drive our business development department. So I am very excited about where this can go over time. And basically, we haven't even begun to scratch the surface on technology. So when you're thinking about autonomous vehicles and drones, and we're out right now with an RFP on a digital media program that I think is going to be meaningful, we expect this $30 million program today to go to $50 million by 2030.

So in closing, when you have the best real estate with the highest retailer productivity, it gives you multiple sources of growth, and that compounds for decades. So we get to fill in the first 4 buckets of the thread: higher visits equates to 3.9 million on average; higher dwell times, 44 minutes on average, those produced higher tenant sales since 2019 growing at 5% a year; and yes, higher rents. Thank you.

Thank you, everybody.

Perfect. Afternoon. I'm Jan Sweetnam, Chief Investment Officer of Federal, for those who I haven't met yet. I'm joined up here on the stage with Bob Franz, our Vice President of Acquisitions, who does transactions for us here in the West and the middle of the country; and Patrick McMahon, our Senior Vice President of Development, whom you met earlier today at Lot 12. We're going to talk about capital allocation. I'm going to start with just going through capital allocation, our capital recycling, some of our targeted returns. And I'll turn it over to Bob to talk about acquisitions in terms of how we source transactions, what we're seeing in our pipeline today. And as fresh off of ICSC, what the new Intel is. And then Patrick will bring us through development, our development team and what our development pipeline looks like going forward. So before I get started in terms of going over capital allocation, I just wanted to give a little bit of context on what we're seeing in the capital markets. I think it will be helpful for the discussion. And on the last earnings call, I mentioned that it's not new news that there's a lot of capital coming into retail right now. It's very competitive out there on the acquisition side, with the relative returns in some of the other sectors such as multifamily and industrial and with the performance of retail with the occupancy, NOI growth and that retailer health, we've talked about it last night too, a lot of capital has and is pouring into retail right now. And notably, core capital is back in retail for the first time in a long time. It's a really important piece for us that we'll spend a little bit of time as we go through this. So let's get started with our targeted returns. These are the 4 big buckets that we allocate capital to as we think about it, whether we're buying, selling or developing. These are our targeted returns, both in terms of what we're looking for in terms of a cap rate and the 10-year IRR. So when we're selling an asset, we're typically targeting returns 5% to 6% cap rates, 6% to 7% IRRs. We're looking to sell assets at or below our cost of capital. This is a source of capital fuel for us. And when we say the 6% to 7% foregone IRR, that's just simply saying, here's today's market price, we sold it for this. And just -- but we really held it, this is the IRR that we would not be getting for selling it. And we'll talk a little bit of that in a moment. And then the second is if we're acquiring assets, we're acquiring assets clearly above our cost of capital. We're acquiring them also to a premium above what we're selling assets for. And so one of the things is the capital markets today, it is more competitive out there, which is a double-edged sword for us because our acquisitions are more expensive. But at the same time, our dispositions are more valuable. And so what the key is what is the spread between the two. That's the important piece. And then development, we're really talking about residential development, residential over retail, what are the returns that we're looking for. And we're really targeting returns above the cap rates in the marketplace today, the cap rates are in the mid, high 4s, low 5s, depending on what -- where we're building, where the asset is and the type of product. And we're targeting returns on cost of 6% to 7% and IRRs of 10% to 12%. And you heard about some of the redevelopments that we're doing here. One of Wendy's favorite part is adding value by way of example to our shopping centers. That's where we get some of our fattest returns. We're targeting 8% to 10% stabilized returns on cost and 12% to 14% IRRs. A big source of growth for the type of assets that we own. Hopefully, today, you're taking that we love to create value. That's our business. We enjoy it. We enjoy the process. We deliver the outcomes, which is the most important part. And I thought I'd just go through the hierarchy of our IRRs that we're targeting for the different types of investment that we do because that's an important piece of what we do. As capital allocators, our job is to invest and earn an appropriate risk-adjusted return and use a lower cost of capital to pay for. And that's just -- that is a key piece. So if we're selling assets at 6% to 7%, we're looking to reinvest it in acquisitions at 9% to -- 8% to 9.5% or more, 150 or 200 basis points spread over what we're selling assets for. And that's kind of the key spread that's important as we think about capital recycling. We're developing assets, we're taking that type of a risk. We're targeting returns 300, 400, 500 basis points higher than our 10-year cost of capital of around 7%. That's the discipline we use to allocate capital, key pieces. Next is capital recycling. Capital recycling has to start with unlocking the value that we have created, and that we're just not getting paid for right now in the market. We've identified a pool of assets of about $1.5 billion that they're ready. We think the market is going to pay a premium price for them. And as we sell those assets, it will deliver a low cost of capital to be redeployed in accretive acquisitions. These assets generally are assets that we've owned for a long time, we've created a lot of value. The rent roll, the leasing is rock solid. There's very little risk for the buyer seeking to allocate capital and core capital into retail and/or residential as the case may be. So the strategy really is we've got to harvest the value that we've created, redeploy it. We need to buy assets that have a lot of elbow room that we can create the value over time. And then repeat that again, again and again. I mean that's kind of the key. It's as simple as we are trying to sell core returns and buy value-add returns and earn that spread. And we have the type of assets that both the market wants today from a -- as they're acquiring the assets. And as we are looking at assets in the marketplace, there's assets out there for us to require -- to create value to. All right. So on the acquisition side, as you know, we don't give guidance in terms of how much acquisitions we can do. The chart over here really gives an example as to why we can't do that. The market is just too lumpy. You just don't know when it's going to be open and when it's going to be closed. Coming out of COVID, the market opened up and there's a lot of volume in '21 and '22. And then the interest rates go up, the market goes into a freeze, the thaw starts in '24, '25, the market reopens again, a lot of product that comes to the marketplace. But it's just -- it's too lumpy. We don't -- we can't predict what we're going to acquire, and we're just not going to buy anything to fill it in. Really we want what we want and we just have to be patient about it. On average, over the last 5 years, we've acquired about $440 million per year. I'd be disappointed if we don't do better than that over the next several years. But look, we don't make the market. We have to see what we can get accomplished out there. All right. So I just wanted to turn to the buy box real quick. I know we've all seen it, but I think it's important to what we're still doing today. This is still where we're looking to allocate our capital to. Top metro areas with good jobs, good job growth, large, dominant centers that serve an affluent community, and retailers that do well. And most importantly, also that known, identified demand exceeds supply, right? So when we go in and we're looking for an asset, we talk to a lot of retailers understanding, if we buy this, would we go there? That's a key piece. And most importantly, the center has to be big enough and it has to have enough GLA that we can get to for us to make a difference. It's great if it's big, but if it's all locked up, we can't get to it, it really doesn't make sense for us. And this buy box is still a guiding light in terms of our acquisition strategy. You heard a little -- Stu and Wendy put it up there just for a minute or 2. And the reason is the performance has been so good. So we've purchased $2.2 billion of assets over the last 5 years. Nine of those assets -- or $1.7 billion of those assets are in 9 shopping centers that fit directly to the buy box. And the performance has been incredible. And as we get in there and we work it and we remerchandise it and we lease it and we really understand it, the forward-looking CAGR is just unbelievable. And so that just gives us continued conviction that those are the type of assets that we want to continue to buy because we can create value, we can harvest it and we can do it all over again, and rinse and repeat. All right. So we saw this map. Stu put it up here. So we -- our plan is to invest in 3 to 5 new markets. We have 2 of them done so far in Omaha and Leawood. Still in sight here, plenty of product for us to look at. We've got the dark magenta metro areas are areas where there's a lot of affluence, a lot of money, there's a lot of people there. There are a lot of cities for us to look at that have the type of centers that we're pursuing. So I assure you the plan is still in sight. We've plenty of places to mine and hopefully more to talk about from that standpoint in the future. So let me turn it over to Bob just to talk about acquisitions and what we're seeing.

Thanks, Jan. So how do we source these acquisitions, right? We talked about retail is competitive. Again, there's a lot of capital chasing it. Number one, we know real estate. We drive these markets. We drive these trade areas, we drive the neighborhoods. We want to understand the customer. We want to understand the consumer. We just spend a lot of time there. It's funny, Don, he came to Phoenix on Sunday before ICSC, and as always, I go pick up Don and I told him, "Hey, we're going to go drive shopping centers today, so we can look at opportunities that are out there. I want to show you what we're looking at, what we're thinking about, et cetera. Number two, existing broker relationships, both locally and the capital markets. We spend years building these relationships with these brokers, get to know them, understanding what's happening in the market, on a leasing front, on a capital markets front, knowing what opportunities are out there, knowing what opportunities are going to come. We do not miss deals kind of between those 2 things. Third is owner relationships, in existing markets that we're in and the new markets that we've been talking about, given all this work that we've done, boots on the ground, knowing shopping centers, we know exactly what we want to buy. So we spend time trying to get to know these owners, build relationships, educate them about Federal, who we are, what we do, why we'd be a good steward of the asset, et cetera. So all important. And then maybe mostly important, tenant relationships. We've talked about it a little bit today. Tenants trust us. They kind of understand our vision. They know that we can execute. Where do they want to go? Both in markets that they're already in and new markets, kind of similar to what we're doing on our new growth strategy. So active pipeline. This is before ICSC even. We've got $1.4 billion in our current pipeline that we're currently working on that fits our buy box that Jan just laid out. 30% of these are off market. We use kind of proprietary sourcing to mine these opportunities, which typically has less pricing pressure. We have the unique ability to structure deals. And then some owners, private or families, they want to pick the next steward of their asset that maybe their family has owned forever. So again, kind of educating who Federal is gives us a unique advantage to have those conversations in these off-market opportunities. 70% of this dollar amount are being marketed right now. They do fit our buy box. We look to selectively bid deals that are going to have a much thinner buyer pool though, not because the real estate is not good or anything like that. We like larger deals that are more complex. They're operationally, are more leasing intensive, and we think that that gives us a competitive advantage where we can create real value using our platform and our expertise on all the items that you've heard about today, whether that's leasing, development, remerchandising, redevelopment, et cetera. So we really like to get into those types of assets and create real value at the property level. Of that whole spectrum, 54% of those are in new markets, which would include Kansas City and Omaha. Now that we're there, we do think that we can add additional assets in those markets. And then 46% of the $1.4 billion is in existing markets that we're already in. And then just to kind of round out how we think about this. There is more competitive capital chasing retail today. A lot of that's core grocery anchored, right? So how do we differentiate ourselves? We want to focus on the more operationally and leasing intensive assets that are not only less competitive, but gives us the biggest opportunity to create real value at the properties. We have conviction in those assets. We have conviction in our buy box. And we believe that we can execute and deliver outsized accretive returns on all those assets. And then lastly, obviously, there's the pipeline that we currently have. There's a strong pipeline. Meeting with ICSC, we believe that there's more to come. And hopefully, we can prune some of this in the second half of the year.

Great. Thanks a lot, Bob. Jan. Let's go back. There we go. I want to walk you through why our development why our development platform enables us to realize premium risk-adjusted returns today. We'll start first with one of our core differentiators, our development team, the team and -- as well as our development approach. We live in the markets in which we develop. We know those markets, we know the market drivers, we know the economic drivers there. We know the neighborhoods, we know the contractors, we know the brokers, we know the architects. We are the local developer. We also, when we develop, we manage the entirety of the development process, the full life cycle, entitlements, design, construction all the way through stabilization. The team that underwrites the deal is the team that delivers the deal. That continuity over the life cycle of development process is the single biggest contributing factor to why our underwriting holds up at stabilization. Our team living in these markets, working in these markets, we work for a very long time to cultivate strong, long-lasting relationships with municipal officials as well as elected leaders. We earn their trust. That trust is a primary major derisking factor on every entitlement. Over the past 15 years, our development team has put in place nearly 2 million square feet of office space, 1.3 million square feet of retail space and over 2,700 residential units. That experience, that execution capability sets us apart among our peers. A couple of other real true structural advantages. We build on land that we already own. Often that land is on our balance sheet at a low basis, sometimes at no basis. That changes the math dramatically. And it's one reason why our development pencils when others does not. We're not buying land at today's valuations and building at today's costs. Another reason why our development pencil sometimes when others does not, at our mixed-use assets, our residential and our office realize rent premiums in their immediate submarkets because of the amenity that we're delivering. The #1 office amenity, the #1 in residential amenity isn't found within the 4 walls of the building. It's a dynamic, thriving fully amenitized street, a complete neighborhood. And a complete neighborhood is something that is not easily replicated. And you can see here on the screen, those [ squigglies ] mean approximate, not less, those are your rent premiums on office and residential at Santana Row, at Assembly and at Pike & Rose as compared to their direct submarkets. These are structural advantages. I say structural because these are advantages that are not characteristic to 1 or even a couple of our developments. These are advantages that are characteristic to a development approach. It's how we do it. Talk a little bit about what we're delivering right now. You heard already from Mark, 217 units, 19,000 square feet at Bala Cynwyd delivered earlier this year. Just up the street in Hoboken, New Jersey, we've got 45 units, over 10,000 square feet of retail space under construction, right along Washington Street. It's a couple of blocks from the Hoboken ferry. That will deliver early next year. You passed Lot 12 this morning, 258 residential units. That too will deliver later in 2027. And finally, earlier this year, we broke ground on Willow Grove. 261 units, 52,000 square feet at Willow Grove Shopping Center in Willow Grove, Pennsylvania. That's going to deliver in 28. I'm showing -- we're showing you this slide not just because we want to show you what we're doing right now. This slide also gives you a glimpse into our disciplined execution strategy. Our target cadence is 1 to 2 deliveries per year that's in addition to our shopping center redevelopment as well, in parallel to that. That's not a swing for the fences development approach. Our pipeline is large enough to matter but small enough to never put the company at risk. And even in a stress scenario, our pipeline exposure is contained relative to our market cap. If we've got $0.5 billion, I missed a 0 there, if we got $0.5 billion at work right now, we do, against our market cap, that's approximate 3%. No single project is going to move our balance sheet. What you're also looking at on this slide is the pipeline that we're currently working on. We've got over 2,400 residential units entitled. And our development team right now is working on entitling another 4,000. That's what we're doing for our near-term growth. I want to talk a little bit about unlocking long-term growth, in the next couple of years, 5 years, 10 years. I'll give you a couple of examples. First, Grossmont Center. We've got 866,000 square feet in East County, San Diego, on 64 acres, it's 95% leased. It's irreplaceable real estate, irreplaceable real estate that have been underinvested in for decades when we bought it back in 2021. We've got a multiphase approach underway right now, with the first phase to position this asset for the next cycle. As I said, phase one is already underway. It's an $18 million physical reconfiguration of the north side of the site. Phase two will set up a long-term pad lease deal. Phase three is going to set up a ground lease deal to replace the Macy's with an anchor that we're very excited about. And phase four will undertake retail construction on the south side of the site. That will set this asset up not only for the next cycle, but we're going to realize near-term growth. As Stu just showed you, we're projecting a 10% CAGR over the next 5 years, '25 to 2030, at this asset. Here at Santana Row, Don already hit 2 Santana West today on the trolley tour. So I'm not going to go long on this. However, I think you made he point very passionate and very well, we've got 375,000 square feet sitting on that parking lot where you're trolley pulled in. It's fully entitled. Does it makes sense right now? No. However, for the very first time in a very long time, there are several large build-to-suit tenants in the marketplace. As I said, that's a trend that we haven't seen in a very long time. There are precious few build -- large build-to-suit opportunities in all of Silicon Valley. And of those opportunities, only one is connected to a place like Santana Row, and it's here. Finally, at Assembly, next to our 3.5 million square feet at Assembly Row is the asset that got us to Sommerville in the first place. We've got a 331,000 square foot dominant regional power center that's fully leased on 12 acres. We just spent the past 2 years master-planning those 12 acres with the City of Sommerville as well as the surrounding community, in preparation for a formalized zoning process that will commence this summer. That zoning process is intended to upzone this property, so that ultimately in the future, we can realize redevelopment there of upwards of 3.5 million to even 4 million square feet. And that's it.

That's it. Thank you. [Break]

More and better acquisition opportunities, $1.4 billion pipeline, 3 to 5 new markets, 8% to 10% targeted returns, and then more and better development opportunities. $500 million active pipeline, 6% to 7% forecasted ROI on those residential. Premium risk-adjusted returns. Did I handle that? There we go. Let me get to [indiscernible] building blocks of durable growth, kind of my version of the red thread from a financial perspective. I view it as building blocks as being more appropriate. What I'm trying to do in the next 20 minutes is, it may go 25, I apologize, is to give you kind of a framework to how to think about growth and our growth model kind of going forward. We've given you guidance for 2026, but how do you think about '27? How do you think about '28? Looking to simplify the approach in terms of how to look at it. We're complicated, maybe a little bit more complicated because we grow in a diversity of ways, whether it be within our comparable portfolio, whether it be through development and redevelopment, through capital recycling, not as easy to model. So I want to try and simplify that approach and kind of give you a framework for the next 2 to 3 years. I'm going to touch upon those building blocks of comparable growth, of incremental POI coming from our development, redevelopment, growth coming from our capital recycling, as well as really what the impact of our balance sheet looks like and how that impacts kind of growth going forward. I also want to touch upon kind of a little bit at the end to give you -- I'm not going to give an NAV. But I do want to give you the components of NAV that maybe are not readily visible from our disclosure, and we're going to work to improve that, to give you maybe a way to get to an implicit cap rate given where we trade. And then last and probably the most important is free cash flow for us is expected to grow significantly, as is AFFO. Free cash flow starting this year, AFFO starting next year. I'm going to touch upon that because I know that's an important lever that I think is certainly something that I think is a differentiator for us going forward. Here, this is the growth algorithm. And what are the primary drivers? I just touched upon it: comparable growth, incremental redevelopment, POI, capital recycling, financing impacts and then other, which G&A probably is one item that can move from year-to-year. And I want to put it in the context of 2026 as guidance, okay, to kind of give you a sense of how we got from 2025 of $7.06 per share of 2025 core FFO and got down to our guidance right now, which is kind of 7.50% to 7.51% or 6.3% growth. And really comparable growth, if you look at our 3-1/8% to 3-5/8% current guidance on a comparable basis in 2025 of $790 million, that roughly gives you about $0.28 to $0.33 at the high -- the low and the high end of that, okay? That $0.28 to $0.33 drives 4.3% FFO growth. Incremental redevelopment POI, we talk about, we've given guidance. $14 million to $15 million of incremental POI coming from incrementally this year versus 2025. That $0.16 to $0.17 of incremental redevelopment POI translates to about 2.4% of FFO growth. Subtotal that, it's 6.7%. Add in capital recycling, obviously, we bought a lot last year, we're off to a reasonably good start this year with the $92 million we have acquired, $753 million last year -- some of the benefit last year was from what we bought. But the incremental benefit is $0.12 to $0.13 or 1.8%. So that gets us into the mid-8s before you get to the headwinds of refinancing and capitalized interest, which between refinancing of 1.25% bonds and the move-in guidance from $13 million to $11 million to $12 million on capitalized interest, gets us to a headwind of roughly 1.9%, a little bit higher G&A on the margin due to investments in personnel and in technology, in ancillary income, sponsorships, we get to the 7.46% to 7.55% guidance range and gets us to the 6.3% current guidance. That's how I'm going to set up talking about '27 and '28. First thing, comparable growth. Now this was a much more complicated slide. I took out some of the detailed numbers there to try and simplify it. But focus on the bottom. We report both GAAP comparable growth, and that's been our history of reporting it on a GAAP basis. Our approach has been -- because FFO is tied to GAAP, okay? So it seems as though if you want to know what our comparable growth is and how it impacts FFO, comparable GAAP -- same-store or comparable is the way to go. We've also expanded our disclosure to make it easier for folks to understand what our cash NOI growth is. And over the next 2 years, I'll jump to the punch line, we're expecting 3% to 4% on a GAAP basis over those in each of the 2 years, in that range, and 3.5% to 4.5% on a cash basis, okay? 75% of that or, call it, 2.5% on a GAAP basis, 3% on a cash basis, is really driven by the primary drivers, kind of really what are the -- and it's contractual increases, rollover, occupancy. People don't talk about downtime and other things that kind of can offset that. Those are the primary drivers. That's where most of the growth comes from. But because of our business, we've got other ways to grow. Residential rents. Wendy talked about a big growth from $30 million to $50 million in parking and ancillary income. Term fees. Term fees are part of our business, okay? We include them. We don't exclude them. Yes, they're lumpy. They are recurring, maybe not forecastable with precision, but they are part of our business because we have great real estate, we have better contracts, we're able to extract additional income when retailers want to not honor their contracts as they move forward. Expenses and credit reserve can move from -- but these are all the things. That's what makes it a little bit difficult for folks to maybe model comparable growth. Use this as a check. I know you're going to get -- go down into the weeds in your models, but use this as a real check to make sure that you're in line in terms of your model outputs. One of the things also the primary drivers up top, they are going to be different between a GAAP and a cash basis. Contractual increases on a cash basis are in that 2% to 2.5% range. On a GAAP basis, it will only refer to, we'll only really see that growth on our cash basis tenants because with our -- on a GAAP basis, rollover is where we catch the majority of our GAAP increases in rollover. Our GAAP rollovers, straight-line rollovers are in the mid-20s. Our cash rollovers are in the low to mid-teens. So that's where you're going to see some of those differences. That's why we report it the way that we do. So with those numbers at the bottom, cash of 3.5% to 4.5%, comparable growth of [ 3.4% ] on a GAAP basis, with operating leverage, our G&A, and interest expense, our financial leverage translates to about 4% to 5% of FFO growth coming from the comparable pool, '27 and '28. If you look at in '26, we have 3-5/8%, translated to 4.3%. So you see kind of how that operating leverage works. Now let's focus on -- this is a busy slide, and I apologize, but I wanted to combine a couple of concepts. What we have is kind of the top of the page looks a lot like Page 16, our development schedule in our 8-K, where we disclose a lot of the detail of kind of the returns we're going to get, the projected costs and so forth. We also -- the bottom of the page kind of heightens or is focused primarily on the bottom of Page 27, our guidance page, in terms of how much incremental POI will come online from the development pipeline, okay? We've also added in, trying not to bog you down with too much detail, but there's a Gantt chart in there that shows how much on a go-forward basis or just in what years you'll see some contributions from the individual projects, which include Huntington, which is done but was not done in 2025; one Santana West; 915 [ Meeting ], you see them all there. And then what's in process and not contributing yet is Bala, Hoboken and the other projects that we talked about. So you see on the bottom, in years '27 and '28, you see about $10 million roughly of incremental POI coming online. That's a roughly $0.11 to $0.12 of incremental FFO or 1.5% at the midpoint. So call it, 1.25% to 1.75%. That brings the 4% to 5% plus roughly 150 basis points of incremental FFO growth coming from incremental -- from development. We're at 5.25% -- roughly 5% to 7%, 5.25% to 6.75% more precisely based upon these building blocks, okay? And that's 5% to 7% before we even get into capital recycling. Now let me start with capital recycling. Here, we've got, I think, a similar slide to I think what -- I won't spend too much time on the detail. But $1.5 billion, 3 different buckets, mature, low-risk retail, peripheral residential, as well as strategic and other -- nonstrategic and other, probably lower-quality assets in our portfolio that we probably shouldn't own kind of over the longer term. This $1.5 billion is a huge, huge advantage for Federal Realty. Jan highlighted it previously. The details, 5.5% to 6% is what we've been achieving, sub-7% blended unlevered IRR range. Now that $1.5 billion is not going to be done all in 1 year. It's really probably a 3 to 4-year source of capital based upon the $400 million to $450 million that we do on an average basis. I think that the biggest -- if you look here, the key considerations that we'll be focusing on, timing will be dictated by acquisition velocity, okay? We really like to match up acquisitions with dispositions. So acquisitions will lead, dispositions will be shortly behind. Under a longer-term consideration beyond this $1.5 billion, I would say we have another couple of billion dollars of assets that we would consider for sale on a longer-term basis. Now most of this also in terms of the $1.5 billion and potentially the longer term, we would consider primarily selling 100% of the assets. We'd also consider selling joint venture interest, passive joint venture interest in some of these assets, if that's the right way for us to move forward. Some of the assets that we own, people want us to be staying in. The last thing, tax planning is paramount. We've created a huge, huge amount of value over time with a lot of the assets we have. A lot of times, a lot of these assets that are here are assets where it's just now time for us to harvest. We've done as much as we can do. They're still really good assets, but they don't show the growth profile relative to what we think we can redeploy into new acquisitions. So I think people talk about acquisitions, we've got it in scale and I think we've demonstrated over the course of the last -- certainly 18 months, but even beyond that. Here is a kind of a detailed slide. We've averaged -- it's really a sensitivity table that gives you a sense of, from this capital recycling, how can you model or how can you kind of give an approach with respect to how much acquisition and what is the initial yield spread between what we're buying and what we're selling? And the spread is what is the foregone yield on the dispositions and how much higher is the initial GAAP yield on the acquisitions. The last 18 months, over $800 million of acquisitions were acquired, and initial GAAP yields in the low to mid-7s. And the foregone yield on our over $0.5 billion of dispositions are in the low to mid-5s. So 200 basis points. Here, we've set it up at 150 to 200 basis points conservatively, okay? 150 is roughly our low end of the range over the last 5 years, 2023, high end, the last year, 750 that midpoint in kind of the 350 to 550 range gives you a nice range, 80 basis points to 170 basis points, let's tighten that in, 1% to 1.5%, or 1.25%. That gives these 3 buckets -- these 3 building blocks of comparable development and capital recycling, gets us to 6.25% to 8.25% FFO growth from those buckets. This brings me to the balance sheet. Now I'm going to take a little commercial before I get into kind of maybe what the headwind might be. Let me talk about the strength of our balance sheet. It's $15 billion public, it's actually higher today, but $15 billion enterprise value. $5 billion debt portfolio. High BBB rated, BBB+ from S&P, Stable; Baa1 for Moody's. Metrics are improving. We are forecasted over the course of the next 2 years to head from the mid-5s down to the low 5s on a net debt to EBITDA, increase above 4x on a net debt -- fixed charge coverage, as well as unencumbered EBITDA will continue to grow as we pay off mortgage debt over the course of the next couple of years and replace it in our unencumbered pool. The biggest thing to focus on here is in the red in the lower right corner. What is the interest rate on our maturing debt? We've got $50 million for the remainder of the year at about over 6%. Next year is a big year. Blended rate there is $350 million in 2028. The blended rate on all of that debt is about 4.5%. I would say that a composite today of where we could achieve 5, 7, 10-year debt, maybe substitute in a convert on the 5-year level, probably brings us inside of 5, high 4s. So there will be, in terms of refinancing, over the course of the year, probably a little bit of headwind there. Add in some modest drag in terms of capitalized interest. Don't know exactly what that will be. But our forecast with regards to the range of headwind is probably 75 basis points to 125 basis points of headwind, which brings FFO, our FFO growth range, now it's a wide range, 5% to 7.5%, by just looking to build up with these 4 major building blocks with regards to what contributes to FFO. I would say that that's not necessarily guidance. It's not guidance. It's a framework for what is the algorithm in terms of these building blocks and how much can you guys get around in terms of -- I think it's a good range. I think guidance would probably be tightened in, maybe it's 5.25% to 7.25%, maybe it's 5.5% to 7%, so forth. But that's a range of what we potentially could achieve given kind of the business and how we sit today. Remember, as Jan said, we do not include speculative acquisitions in our guidance. So when we do give guidance, it will be in and around this range, in '27 and '28 when we give it in February. So I am not giving guidance until February of 2027 and not giving guidance on '28 until February of '28. So let's be clear. But guidance probably will be a little towards the lower end of where we -- because it won't include those speculative acquisitions. And we'll increase guidance as we make those acquisitions or dispositions, because we do that accretively. Going back to Don's chart, which I've looked at for every Board meeting for the last 10 years, that's 40 Board meetings. Actually, it's 41 probably. I attended the -- but it's really quite impressive in terms of going through, letting the core shine. We saw a really strong outperformance from us as well, hitting on all cylinders. I kind of feel like the next wave is something that -- not going to go out to 2030, I'm not going to give you 5 years, but I think we can feel like a 5% to 7.5%, it's at least a 3-year range, that we feel like we're getting back, 6.3% this year, hopefully going higher. And the midpoint of this algorithm range, in the 6.25%, hopefully, we do better. My objective and my hope is that we're -- hopefully, 7%. Hopefully, we can hit on all cylinders like we did back in the mid-teens where everything was hitting, comparable was hitting at a strong number. Redevelopment and development was hitting at a strong number. You've got capital recycling and acquisitions contributing. So hopefully, this kind of gives you a sense of kind of how confident we feel kind of heading into kind of this next kind of 2 to 3 years. Next thing I want to talk about is to give -- I've got a lot of requests to kind of say, what is the value of your non-income-producing assets? Now this is a busy slide, and I apologize. There was more on it. I pulled stuff off. It's hard for me to read here, so I'm going to -- but we've got, long story short, between top of the page, big 3 existing entitlements, what we have here at Assembly Row, Pike & Rose, both residential and commercial. Future entitlements in process at Assembly Row or really Assembly Square that Patrick alluded to earlier. Santana Row, where we are, looking to do on a long-term basis enhance and add additional density. And then resi over retail entitlements, which is at our shopping centers. 1,800 units are entitled or very close to being entitled. So it's a little bit more than what Patrick alluded to, and then to be entitled, which are a little bit longer term, you've got in total residential units, about 8,600 potential residential units, over 6 million square feet of commercial FAR, 14.6 in total okay? You've got on a rough blend basis $50 in FAR, you're about $0.75 billion of entitlements. So here is not my NAV. This is my -- it's supposed to give you some components to get to an NAV, but I reversed it and I said, "Hey, look, what's the implicit cap rate based upon where we're trading today?" So $15 illustratively, roughly a $10 billion equity market capitalization. Our pro rata share of outstanding debt includes debt that -- on our unconsolidated entities, deferred stock, less cash gets you roughly a $15 billion enterprise value. The value of our in-process development, which is the project cost to date of everything that's not producing income, okay? Most of it is on that development. So $642 million. It ignores the profits. It ignores, maybe if you want a mark-to-market, kind of it's just at projected -- at existing cost. And then the value of the entitlements at $757 million, that's $1.4 billion is management's estimate of the development and process as well as our entitlements. Adjust for net other liabilities and assets, you get down to roughly almost $13.7 billion, is the implicit value of our operating portfolio, trading at $115. This is an important piece of information. Our estimate of the next 12 months, cash, next 12 months, NOI, $870 million. Implies a cap rate at $115 at 6.4%. Sensitivity on the left, you can match up with share price, red and red. We're very clever here to try and make it easy. Black, which you can't really see, is the in-process development value and the value of the entitlements across the top. And you get to 6.4%. Free cash flow, growing. 2025 we had about $80 million of free cash flow. That's growing to this year. Our estimate is $100 million. We're going to see that almost double by 2028, over 2025 to $150 million. And that's really the drivers there are primarily, one, POI is growing pretty significantly. But the biggest reason is we're converting straight-line rent to cash rent, and that will happen over the next couple of years. Plus we're also seeing moderating capital costs, tenant improvement, landlord work, leasing costs, maintenance capital, so forth. 2026 AFFO, roughly in line with this year to 6% with FFO. So AFFO at around 6%, FFO a little bit higher. The next 2 years, we would expect AFFO, because of some of the things we're seeing, the acceleration into '27 and '28 of the cash-producing nature of the business, FFO should grow 200 to 300 basis points higher than FFO in '27 and '28 on average in each of those years. Brings us to the last building block, AFFO growth range of 7% to 10% by our algorithmic model in terms of the building blocks of growth. So here I get to fill out the last one, stronger growth going forward. We're seeing strong growth this year. At this point in the year, 6.3%, hopefully goes higher. Upper end of the range is closer to 7% in terms of our guidance. 5% to 7.5% is '27, '28 on an FFO basis and 7% to 10% on an AFFO basis in both '27 over '26 and '28 over '27. And how could I avoid a presentation and not talk about the fact that we are the only dividend king in the entire REIT sector. Nobody is even really close. Given the growth we have, it is the Board's decision of whether or not we increase dividends. But I would say, given the dividend -- the FFO growth, the AFFO growth, I think you can assume that we'll be in the 60s over the course of the next few years. And here we are. Q&A.

Sergio?

[indiscernible]

Look, there were different things that really drove some of that growth. And I think we tried to name kind of what that -- some of that stuff was. Don, if you want to come up and -- because this -- conservatism. I think we're about to hit on all cylinders again. But I think we're being a little conservative. Look, it's a volatile environment, right now out there with regards to the capital markets, with regards to the geopolitical landscape, with regards to interest rates and where they're heading. Look, I think the 5% to 7.5%, I'm hopeful that that midpoint, 6.25%, is something we can count on and hopefully do better. Just like this year, we're roughly at 6.3%, 6.25%. Hopefully, we'll do better. I think it's kind of a similar type time frame. We've got development that pencils for us just as it did, because we had a low cost of capital in the mid-teens. And I think that we're seeing the opportunity to deploy capital and recycle capital very, very effectively. I think the comparable portfolio is set up to grow. I think cash growth over the next 2 years of 4% at the midpoint feels pretty good, cash POI growth. So I think our ability to kind of find more opportunities to develop and our ability to find more opportunities to recycle capital, I think is -- kind of positions us, hopefully, to get back into that 7% plus range. But look, it's tough to forecast, '27 and '28 today.

That's the CFO, and that's the appropriate thing. I hope you like that presentation. I think it's actually -- it's certainly more detailed and more thoughtful and informative than we've ever done before. Dan, I thought that was amazing, frankly. But it is just that. It is the building blocks. Your question, Serge, is exactly right. I mean I look at a period of time when this company was able to exceed 7% of your growth. And you can be assured that the people who are running the place are sure as heck going to be trying to do exactly that or better. That's different than trying to lay out building blocks for the investor world. So I hope you can understand that difference. What else? What do you guys want to know? I want Wendy here also on the operating side, Jan, on the capital allocation side. What are you guys worried about? Sure.

I guess on the topic of just the other category, G&A, AI, could you just give us some context about just what the upside, downside is and how I think about that?

Sure. And you may want to quantify this buddy, but the question is in the other category of G&A, AI, et cetera, what kind of numbers and what kind of stuff could that be. There is no doubt that as this world changes and as there are more technology tools that are available to us, I want to make sure that this company includes the type of human capital that complements what is here today. I don't want to be looking at things from a 2005 or 2015 world in 2030. And so we talked about it at dinner a little bit last night. There will be resources that are added, business resources that are added, important point, business resources with a technology bent, to be able to help that. And absolutely, with respect to the ancillary income that -- and sponsorship, et cetera, that Wendy went through, there's a big push there, and there's a number there. Now you saw kind of a range of that, but it's that type of thing. Hard to sit here on May 21 and forecast quantify, but you can be sure that there will be a benefit from those initiatives. I just don't know how big at this point. Greg, you were next, right?

Yes, Don. I just wanted to talk on the capital recycling side. The sensitivity table you provided, it seems like it's more of a starting point on initial acquisitions versus where the dispositions are priced at. So I'm curious, when you're going into these acquisitions, obviously, immediately accretive. But what are you looking for long term? How are you achieving that, right? And what's kind of the ultimate goal with the assets you're buying?

Yes. Great point. And I'm going to start, and you want to add in. It's, financially, it's very simple. It's that IRR. Business wise, what is behind IRR requires us to -- in order to get numbers like that, you have to be in places which are clearly underserving that consumer base, clearly. And the evidence that suggests an underserved consumer includes taking that affluence, what choices do those people have, what have they used in other markets and where are the holes in that retail base. That's really important from my perspective. Because what I want to be able to do always at this company is intensify the land. I always want -- I want there to be more GLA, more income stream, et cetera. The easiest way to get it is on the -- from higher rent from better retailers, really important. So that's the foundational important piece that I'm trying to get to. But I also love opportunities that I cannot underwrite upon the initial underwriting, like you're seeing at Pembroke. We're not there yet on the residential piece. We didn't underwrite one incremental residential unit, and it's very likely that you're going to see hundreds of incremental units on that site. So it's a combination, and that stuff tends to happen in bigger properties rather than 8 and 10-acre smaller properties.

Don or Jan, on the expansion markets, I know there's still more to come there, but would you want to build out more of a presence in finding opportunities in either Kansas City or Omaha? Or are you confident if you can get a dominant center in suburban Atlanta or Dallas that you can just go kind of asset by asset and then build up the scale from there?

Griffiths, yes and yes. So first of all -- and we've talked about this before. I mean we're looking at a couple of smaller assets now, for example, in Omaha. I would have never started by going to Omaha, Nebraska with a smaller asset. But by starting with Village Point and seeing what it is that we're able to do there and understanding that marketplace more with local folks, et cetera, it's very clear that there are 2 or 3 other assets in that marketplace that are smaller, but I would love to supplement what's there. Same thing for Kansas City. Now having said that, Yes. Let's get that big, dominant asset. Let's see what happens later on the year with Avalon and the other stuff that will come to market as they go in Atlanta and other places like that. Yes, we'll be at the table. But we're not going to do it to the extent we can't see and figure out what Greg asked. And that is that true ability to be able to transform and make a better retail tenant base there to be able to create places like this. Not that it's going to be Santana Row, but these pieces of what happens here is what we are looking for when we go to market.

I guess, Dan, can you talk about -- you talked about 4% NOI growth over the next sort of 2 years. Talk about the breakdown of that. How do you think about occupancy, the rent bumps, I mean, given that occupancy is sort of at a high level for the industry now, help us think through that?

Yes. Look, I think that it's a combination of all of those things. I mean that was on a cash basis, the 4% or 3.5% to 4.5%. It's going to be a cash basis, something in the 2s on a blended basis, kind of mid to upper 1s and north of 3, in and around 3 for everything up to 10,000 square feet on a small shop basis. These things, everybody is talking about 3% and 4% and 5% kind of bumps are on small shop, not 8,000 square foot small shop, okay? You'll see rollover. I think we're going to have good solid, solid rollover in the low to mid-teens. I think over the next 2 years, occupancy probably grows a little bit more aggressively in the next -- in '27. And then maybe I'm probably forecasting kind of a settling out but still some more runway in '28, but really seeing the growth over '26 in terms of a weighted average occupancy in each, '27 over '26. And I'm hoping to see some real contributions from ancillary income, and maybe it doesn't happen in '27, but certainly, longer term, taking kind of our parking income, our ancillary income, which has multiple components from marketing and sponsorship and so forth, specialty leasing, getting up and having that be a nice contributor as well. And so those will be the, I think, the bigger movers of building blocks of that average, that range of 3.5% to 4.5%.

Maybe just a 2-parter on the FFO growth rate here. Dan, the 10-year has been moving pretty quickly the last couple of weeks. So just in terms of the drag that you're seeing or inputting here, kind of what assumptions were you using? I know you said maybe you could price all-in below 5%. Like could you just talk about what that assumes on the convert versus just a straight-up...

I think it's a composite of 7-year, 10-year and a 5-year convert. I've got $1.2 billion, $1.3 billion to refinance over the next 3 years. Very little to do this year. But at a pretty attractive refinancing rate, 6% in place on what's maturing. I think that that composite is just an indication of what we could do today, okay? If it goes wider, look, we did a 75 basis point headwind to 125 basis point headwind. I think I'm -- hopefully, I'm conservative there, but that also includes a little bit of an expectation that capitalized interest may continue to burn off. So that's the combination of those 2. So interest rates are going up, and that's why having a wider range in terms of the building blocks is prudent. And that's also why I think we're -- maybe we are a little bit more on the conservative side.

What we tried to do with this whole presentation was there's a reason there's a bunch of matrix boxes there. And if that -- and you used the word a lot of times, this is really what -- has some general assumptions in terms of how to build what the algorithms are to be able to build to back where -- what this real estate can and should be able to do. Every one of you will make your own assumptions with respect to interest rates. Samir, you'll make your own assumptions with respect to vacancy, so what's going on in the world. And so what we tried to do is to give you enough of a tool here to not take the midpoint of a range and put it in a place, but to take these tools, make your own assumptions as to where you think you can go. But to make sure you know that to the extent the world stays reasonable, as defined by you, whatever you think that means, that this is going to be a strong next period of time. Obviously, things can drop it off. But the algorithms of how we are putting this thing together and where we see the combination of tailwinds, macro points and the overall portfolio. it certainly looks better than it looked coming out of COVID for the last few years for us. That's really the main point.

And I guess the other part of the question is, I guess it dovetails a little bit with rates, but on the acquisition side, you guys have a pretty good pipeline, the 1.4%. At ICSC, we heard you guys kind of pique people's interest in going into the Midwest now and so you may start to see more competition from pension funds and others. Just the potential disruption in transaction volumes with rates resetting and people figuring out where you can price the debt, how that impacts your ability to close on that $1.4 billion and even the $1.5 billion, where there's a good amount of resi there at sub-5, how that could impact that pace here? In other words, just your thoughts on that in the near term?

So just a couple of thoughts on that. So first of all, we haven't heard any friction on deals that are pricing right now as a result of the run-up in the treasury. And if we're continuing to go up from 4.65 to 4.85, I think there would be. But across the board, we just have not seen that friction yet from a pricing standpoint. And from our standpoint, we are going to match acquisitions with dispositions. So if we're paying a higher price and getting a lower yield on the acquisition, we're going to be pretty confident that we're going to be able to sell something to match it after the fact or concurrently to get that spread that we're looking for, that 150 or 200 basis point spread between what we're buying and what we're selling. So to us, that's a consistent part. Again, that pool of $1.5 billion, it's ready. I mean those assets are ready to go. Again, not all at once because you got to match it, but we can go to the market with what is appropriate at that time pretty quickly to make that match.

Dan, a question for you on your FFO, I won't call it guidance because you didn't call it guidance, but the FFO framework makes sense. The AFFO does not. So if you think about free rent, there's always free rent because every year you guys are leasing, you're restocking the free rent kitty. So it sort of never burns off holistically because you're always restocking the kitty. So can you just talk a little bit more about why you think free rent will go away when you guys are actively leasing every year, you're always adding new free rent, so that's sort of always a constant?

It is, except we're not refilling the kitty at the moment of 375,000 square foot office buildings and 275 square foot office building at Santana West and at Pike & Rose. And so converting a lot of that cash rent, that straight-line rent to cash rent is really what the driver is over the course of '27 and '28. And yes, you're restocking the kitty, but we expect more renewals and less new leasing is also a driver, okay, which will reduce straight-line rent and free -- caused by free rent periods. And then also, we expect lower capital costs, one because we've been able to keep new leasing capital costs lower, we've reduced them over the course of the last several years. Hopefully, we'll continue to exert the negotiating leverage to kind of keep those down and hopefully continue to drive them down. But also as we are approaching stronger occupancy levels, again, we'll be doing more renewals and have less new leases, which will reduce kind of straight-line rent from free rent periods.

But in fairness, as Don mentioned, [indiscernible] to Santana West, you guys are looking at more office development potential, assuming pre-lease anchor. So yes, it may burn off, but then it's going to come back as you guys do what you do, which is add incremental components to your...

It's just a bubble, Alex, is all we're saying. There's a bubble. There's 2 big giant buildings that have just been completely leased up that will convert to cash rents over the next couple of years. It's a bubble. So you will see the higher cash coming in incrementally period-over-period, it makes perfect sense. To the extent there is a new building because there's a build-to-suit, nothing spec over there, just to be clear on that, then yes, there'll be economics of that at a point, and we'll talk about that when there's something to talk about. But as he's forecast, clearly, the conversion of straight-line rents to cash rents, is happening and will continue to happen bigger numbers over the next 6, 9, 12 months.

Speaking of bubble, you mentioned you'd tell us about the theater potential.

Yes. This -- so some of you have noticed there is the ugliest building on that piece of land over there, that was an old Century Theater, which has been marked historic, correct? And so technically, that building has to be approved in terms of whatever it's going to be used for. That, by the way, is not on the lot of the other 275,000 feet. That's an incremental thing. And by the way, we've got some ideas for that, that get into the ancillary income piece that could be interesting. But that's in none of the numbers you've seen.

And by the way, just to clarify, at Westgate, we talked about potential long term for residential entitlement there. That has nothing to do with the entitlements that I talked about here. That's so far out in the future and so forth. So just so there's some clarity from that perspective. .

What else?

I think the team has done a fantastic job. And not to be the bad guy, but Don, just curious on how you and we should be thinking about succession. You obviously have a very talented team.

Yes. No, I appreciate that. Yes, I'm not going to be doing this at Federal Realty for the rest of my life. And this -- how's that for clarity? Is that clear? But I got to tell you this, man, the period that we're in right now and this entire Investor Day and what it is that we are pushing for, to be able to create and harvest the value that we are -- that we have created and the ability to reinvest it is one of the most exciting periods in my 25 years here, 28 years or whatever it's been. I want to get through this a bit. I really like this. And I'd love to be able to see some of the stuff that we talked about today actually coming to fruition. I really believe that there's a good chance to have that. Having said that, there will be a process starting in the not-too-distant future. And I don't want to put a time frame on that, but not too distant future where we'll hire a recruiter and we'll start looking for a replacement for me. And when you look at our team, this is what I've been doing just nonstop for the last 2 and 2.5, 3 years, is to make sure we're not just a bunch of old guys and women who've been around here forever, but that we are bringing in new talent, that we're combining the best of the experience. Let's use experience buddy, right? The experienced people, all of us up here, with new and the best talent. What we have found, which I do think is a critical important thing, this company has an amazing reputation with retailers, with other owners of shopping centers, with vendors that do the work for us and look for prospective employment. And so I don't think it's going to be -- it hasn't been very hard to attract great talent into this company, in a period of time that macro isn't an easy time to attract great talent. But we've been able to do that because of this reputation. I couldn't be more proud. I couldn't be more proud of the team you see. And I hope today that what you saw were truly the best in the field in each of their ways. I was blown away by Patrick McMahon here, talking specifically about the development pipeline. I was worried about that for you guys, in terms of how that was going to come across, how do you view residential development within. It's impossible -- it was -- I think it's impossible for a real estate person to sit and listen to him talk that through and not say that's really cool. And that's a real distinguishing difference. So the whole notion of succession and building a great company and keeping the company great, I just want to make sure you guys know is first and foremost in my mind with respect to this entire team, including the ability to make the case that this company is worth more than it is currently trading for. I was hoping that was a mic drop. No, we're good.

We needed some space to breathe after that. We just spent the last 24 hours seeing and hearing about the strength of your portfolio. And then, Dan, you provided this context around the implicit cap rate of where the shares are trading at, at 6.4%. And then at the same time, a lot of people were at ICSC and hearing about the competitiveness of the acquisition market. So can you just talk about how that large pipeline compares to the opportunity of buying back your own stock at just given where the current valuation is and just given all the great things that we've seen over the last...

Michael, I love that you just said that. Because the one thing that was missing from that slide, and you would expect it to be missing from the Chief Investment Officer, is the buyback of stock. Because he doesn't want to buy back stock, he wants to buy stuff and grow the company. And by the way, so do I. That is the mission of why we're there. That does not mean though that, to the extent the best investment is not our own equity, that you will not see that happening. You will. Because to the extent -- and you bet, we are trying to match dispositions with acquisitions. Of course, we are, for tax reasons and other reasons. But sometimes, there is a way to effectively create a disposition capital in a way that suggests we want to do it now. And if we don't have the right acquisitions to do, you'll see stock buybacks. Because there is complete conviction in the ability of a non-NAV slide that Dan put up there. So that is an investment option. It clearly is. Yes, we're making progress in conveying our message and in the stock base and all of that. But sometimes, those things are fleeting and all kinds of things happen. Don't believe for a minute that we won't buy back this equity to the extent we don't find better opportunities to buy, and we have great disposition opportunities.

Can you talk a little bit more about the ancillary? Because you're basically talking about doubling it from 30 to 50. Is it going to be very broad based? Is it going to be very chunky items at, say, Santana? And then just as a quick clarification follow-up. On the $1.5 billion dispositions, I know there's a little note that said potentially $2 billion long term. Is that an extra $500 million or $2 billion more on top of that?

It's an extra, on top of the $1.5 billion -- there's the potential for monetization of an incremental $2 billion.

Okay. So it's not $1.5 billion plus $500 million?

No. No, it's $1.5 billion plus $2 billion.

I'm glad you asked the question on additional sources of revenue. I think over years, we've had a little bit of a change here at Federal Realty. We always had, like I said, a traditional program that was pretty robust, and we approached it in a simplistic way. And now what we're -- and we never want to -- just to your point, we never want to jump up our properties or not do something that supports our overall brand for the company. But with 25 to 50-acre sites attracting the kind of demographics that we've been talking about all day, we are really finding that there is some pent-up demand for how to brand ourselves in collaboration with other companies and do it in a way that can activate the shopping center that will complement the people that are coming here. And we've seen a huge, over this past year, a huge opportunity, and we haven't fully gotten our arms around it yet, but we're working on it. And I'm really excited about it.

And parking. I mean, we are finding ways to really take advantage of the parking that we have, which is part of that component. Parking and ancillary.

Placer data has changed things. Being able over -- at least to me. So really, over the past few years, really understanding Placer.ai and understanding traffic and getting a better view of the number of eyeballs that are effectively coming and going, the dwell time, all of the stuff that you saw today suggested to us that we are not fully exploiting all of those eyeballs and what is happening at these properties, combined with a maturation process where, when you talk about these big places, whether it's Santana, Assembly, these are not development sites. They have development capabilities on them. These are the most stable, best-performing assets in the portfolio. These things kill it. And so the notion of really having more data to exploit and use with potential other people that care about that has been really enhanced with Placer and other technological improvements. So we're just very positive about it. Yes, it may be lumpy, sure, Michael. But it will be incremental. And we'll see where we go. But more on that as we get some progress along their way.

I have heard today a few examples of fair market rent renewals. So my question is, how prevalent are these type of lease structures? And given the solid backdrop in terms of fundamentals, is there an intentional goal to increase this? And how much can you meaningfully move their importance for the portfolio?

So fair market renewal options, first of all, we don't love options of any kind because they're always at the tenant's option and never at our option. But yes, we do, do options. And so one of the ways that we can mitigate if we have to give an option is make it a fair market value option. In that way -- and we typically always put a floor in that, so the rent is never going to go below, but it gives us the ability. Because what we found over time is the more opportunities we can get back to the real estate, we can drive the rent higher. So if we have a fair market value, we're getting to the real estate, say, in year 6, maybe it's in year 11, it gives us an opportunity to provide a true mark-to-market versus just whatever was negotiated 5 or 6 years ago. So we encourage that all the way across the portfolio. Can't get enough of them.

It feels like you want to go home. That's the feeling I'm getting over here. Any last questions, any last things to talk about, Samir?

Don, yesterday, you spoke about the AI initiatives at dinner. How much of that like do we start to see flow through into kind of all this you're bringing up here with the...

Yes. I don't think -- that's a great question. I don't think they're -- you're seeing any of it in the numbers and stuff that you see. This is very interesting. So everybody's got an AI initiative of all different, as we talked about at dinner last night, specific applications. And they have had -- so have we, whether you're talking about sourcing of the tenants, whether you're talking about lease abstracts, whether you're talking about tenant improvements, tenant coordination, estimating, all of that. But if you were to ask me how much of that is finding its way into Dan's algorithmic model, I will tell you 0. And it's not going to be 0. And when you approach it the holistic way that I talked about last night, from a business perspective of reducing time and the other ways we've talked about, it is going to have a benefit. So in my way -- in my -- in answer to the first question of, how about the other [indiscernible] and ancillary and everything? That's in there in my head, that effectively there will be measurable improvements in time to rent, time to lease to rent start, that will, by nature, whether Dan puts them in his algorithmic model or not, will come through in the actual results. One of the things I'm most excited about. Guys, thank you so, so much for being part of this. I hope this was informative to you. Have a safe trip back. It is raining like crazy on the West Coast -- on the East Coast, which means all flights are going to be a mess or whatever. So if you want to hang out another day at Santana Row in this place, and drink, please do so. Man, we'd love to have you. So enjoy. If not, have a safe trip back. Thanks for coming.