- Shop occupancy reached a record high of 92.5%, up 270 basis points YoY, with a target to exceed 93% in H2 2025.
- Management highlighted increased pricing power through better lease terms, including exclusives, radius restrictions, and faster store openings, leveraging high occupancy levels.
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- PECO has been actively acquiring shadow-anchored centers, which now constitute about 7% of their portfolio, with plans to potentially increase this to below 10%.
- Management views shadow-anchored centers as high-growth opportunities with stable, strong properties, especially in markets with strong grocers and traffic.
- The company has acquired 11 unanchored assets, representing approximately 3.5% of the total portfolio, in markets like Minneapolis, Chicago, and Dallas.
- PECO believes unanchored and shadow-anchored assets can deliver 50 to 100 basis points higher unlevered IRR compared to traditional grocery-anchored centers.
- Rapid leasing activity in these unanchored assets has demonstrated the ability to quickly ramp up occupancy, often within months of acquisition.
- This strategic shift aims to diversify the portfolio and capitalize on the strong demand for non-traditional retail locations driven by grocers and local retailers.
- The company continued to source attractive investment opportunities in a volatile macroeconomic backdrop, emphasizing middle market sale leasebacks with growing operators.
- 88% of investments ($334 million) were supported by existing relationships, highlighting the importance of recurring tenant relationships.
- Management highlighted the resilience of portfolio performance, with healthy tenant credit trends and rent performance, ahead of budgeted credit losses.
- Blended lease rate growth was 2.8%, driven by 5% renewal rate growth and 30 basis points new lease rate growth.
- Debt to enterprise value was 28%, net debt-to-EBITDAre was 5.5x, and liquidity was over $1.1 billion as of June 30.
- Occupancy averaged 96.9%, 30 basis points higher than historical second quarter averages.
- Second quarter FFO as adjusted per share was $0.64, exceeding the high end of prior guidance, a 5% sequential increase.
- UDR reported second quarter 2025 same-store revenue growth of 2.5% and NOI growth of 2.9%, both exceeding initial guidance.
- Year-over-year same-store expense growth was only 1.7%, better than expected due to favorable real estate taxes and insurance savings.
- Year-to-date results exceeded initial expectations, leading to a raised full year 2025 FFOA per share guidance range of $2.49 to $2.55.
- Acquired five shopping centers in South Orange County for $357 million, 97% leased, over 600,000 sq ft.
- Transaction was off-market, driven by seller’s preference for Regency’s UPREIT structure, quality operations, and future development potential.
- Strategic fit includes supply-constrained market, high-quality tenants, and future development opportunities.
- The lease of 466,000 square feet is the largest in Alexandria's history, signifying strong sector resilience.
- This lease underscores the company's brand trust, product quality, and long-term client commitment.
- Management emphasized the importance of trust and long-term relationships with high-credit tenants.
- AI leasing application pilots have reduced application completion time by over 50%
- Full deployment of AI delinquency management system expected by end of year
- Automation initiatives aim to improve customer satisfaction and operational efficiency
- Expansion of AI use in capital allocation and back-office functions to lower costs and improve decision-making
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