Brixmor Property Group Inc.

Greetings and welcome to the Bricksmoor 3rd Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the call over to Stacey Slater.

Thank you, Operator, and thank you all for joining Bricksmoor's 3rd Quarter Conference Call. With me on the call today are Jim Taylor, Chief Executive Officer and President, and Angela Ahman, Executive Vice President and Chief Financial Officer, as well as Mark Horgan, Executive Vice President and Chief Investment Officer, and Brian Finnegan, Executive Vice President, Chief Revenue Officer, who will be available for Q&A. Before we begin, let me remind everyone that some of our comments today may contain forward-looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties as described in our SEC filings, and actual future results may differ materially. We assume no obligation to update any forward-looking statements. Also, we will refer today to certain non-GAAP financial measures. Further information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in the earnings release and supplemental disclosure on the investor relations portion of our website. Given the number of participants on the call, we kindly ask that you limit your questions to one or two per person. If you have additional questions regarding the quarter, please re-queue. At this time, it's my pleasure to introduce Jim Taylor.

Thanks, Stacey, and good morning, everyone. Once again, Bricksmore continued to deliver as a value-add leader in the shopping center space, with strong leasing volumes at attractive spreads, highly accretive reinvestment deliveries, growing cash flows, improving traffic, and a strong leasing and reinvestment pipeline that set us up for continued growth and outperformance for several quarters to come. When you step back and consider how we've outperformed before, during, and now emerging from the pandemic, the key value-added drivers are evident. First, the proven tenant demand for our well-located centers from growing retailers such as Target, Marshalls, HomeSense, Burlington, Ross, Ulta, and Five Below, specialty grocers such as Whole Foods, Sprouts, and Aldi, fast casual restaurants such as Chipotle, Cava, Chopped, and Starbucks, and many other national, regional, and local tenants across our core categories, as well as exciting new concepts that seek the proximity to their customer our centers offer. Speaking of grocer demand, when you factor in the grocer leases in our pipeline, the overall grocery percentage within our portfolio climbs to nearly 80%. Second, our very attractive rent basis, which is reflected in our consistently high leasing spreads. In fact, our in-place average base rent has increased in each of the last 21 quarters since this team has joined, a track record of which we are very proud. And importantly, as I will discuss later, We have many more years of below-market lease expirations to harvest. Third, our sector-leading leasing and operating platform, they continue to capture leading market share of new store openings while delivering attractive margins. And fourth, the highly accretive reinvestment deliveries that act as a flywheel for our growth, continually improving our centers and driving follow-on leasing. Importantly, we've now impacted over 150 of our centers, delivering over $600 million of investment and an average incremental return of 11%. Through our performance, we've demonstrated a unique ability to capitalize on disruption, grow beyond pre-pandemic levels, and create real value for our shareholders. And that momentum continues. As always, it begins with leasing, where this quarter we signed 332 new and renewal leases comprising 1.7 million square feet, including over 700,000 square feet of new leases at a cash spread of over 26%. These leasing volumes spread, and importantly, delivered new ABR rival those realized at the peak of 2019, and again, underscore not only the strong tenant demand to be in our well-located centers, but importantly, the continued improvements we've made to them. Overall leased occupancy increased 30 basis points year-over-year, and I'm particularly pleased by the acceleration in small shop leasing, where occupancy grew 140 basis points year-over-year to 85.7%. As we've highlighted on previous calls, the upside in small shop occupancy is an additional growth lever for us as we deliver our reinvestments and anchor reposition. It's a growth lever where I believe we have several hundred basis points of continued occupancy upsides, not to mention significant upside in small shop rates. Our anchor rent upside complements that small shop growth, where this quarter we achieved cash spreads on new deals of over 34%. When you compare what anchors we have expiring over the next few years without options, which average a rent of $8.99 a foot versus our average new anchor rent achieved over the last 12 months in the $12 to $13 range, we are confident in our ability to continue to drive growth and anchor rents. During the quarter, we also capitalized on strong tenant demand to drive great intrinsic lease terms, with options in only 51% of our leases and 92% of our leases containing embedded rent growth well over 2%. Further, we remained disciplined with leasing and tenant-specific capital, achieving average net effective rents of $15.26 a foot, well above our historical averages. We also delivered another $52 million of reinvestment in the quarter at an average incremental return of 10%, creating over $34 million of incremental value. As we've observed before, to create the same amount of value in ground-up development, we would have had to deliver over $200 million, or four times the investment, at much higher risk. Our value creation engine continues to deliver impressively, and I'm very encouraged by the follow-on leasing momentum these investments are driving, not to mention the cap rate compression they realize. And we are excited as we look forward to 2022 and beyond. The trifecta of our signed but not commenced ABR of $44 million, our forward leasing pipeline, which is comprised of $51 million of ABR, and our in-process reinvestment pipeline, which includes 400 million of projects and an incremental 9% return, provide us tremendous visibility on future growth and continued improvement in value. From an operations standpoint, we continue to embrace sustainability as a primary objective through solar power generation, LED lighting, low-water landscaping, and other practices that are not only environmentally responsible, They help us achieve some of the best operating margins in the sector. I'm also pleased to report that Gresby has once again recognized our efforts with a Green Star rating and ranked us first in our peer group in their public disclosure score. From an external growth standpoint, we've announced the acquisition of a public anchored center with shop lease-up and marked market opportunities in the high-growth coastal market of Pawleys Island, as well as an additional $250 to $300 million of grocery-anchored acquisitions under LOI or contract. Importantly, each of these are opportunities in our existing markets that allow us to leverage our value-added platform to drive growth and compelling returns even in a compressing cap rate environment. Mark will provide some additional color on our pipeline as well as the overall investment market during Q&A, but suffice it to say I'm very encouraged by our momentum here. In just a minute, Angela will provide detailed color on our results, our improved guidance and expectations, the timing of our signed but not commenced pipeline, as well as our strong balance sheet and liquidity. As you would expect, we are pleased with our continued performance, as well as our visibility on forward growth. Simply put, the Bricksmore Value-Added Business Plan continues to deliver. In recognition of that, our board voted to increase our quarterly dividend to 24 cents. an increase of 12% to reflect our growth, meet our minimum taxable income distribution requirements, and as always, position us for growth in the future. With that, I'll turn the call over to Angela.