InvenTrust Properties Corp.

If you'd like to ask a question on today's call, please press star followed by one on your telephone keypad to enter the queue. To withdraw, please press star followed by two. I would now like to turn the call over to Mr. Dan Lombardo, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for attending our call today. Joining me from the Inventrust team is D.J. Bush, President and Chief Executive Officer, Mike Phillips, Chief Financial Officer, and Christy David, Chief Operating Officer, and Dave Heimberger, Chief Investment Officer. Following the team's prepared remarks, we will open up the lines for questions. As a reminder, some of today's comments may contain forward-looking statements about the company's views on the future of our business and financial performance, including forward-looking earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties. Any forward-looking statements speak only as of today's date, and we assume no obligation to update any forward-looking statements made on today's call or that are in the quarterly financial supplemental or press release. In addition, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our investor relations website. With that,

Thank you, Dan, and good morning to everyone joining us today. I'm going to touch briefly on our second quarter results, provide some high-level thoughts regarding retail real estate fundamentals, and Inventro's opportunity to grow cash flow over the near, medium, and long term. Mike will discuss our financial results and provide some color regarding the increase to our 2024 guidance, and Christy will end our prepared remarks with additional commentary regarding our leasing efforts. I'm going to start with this. The retail real estate environment is more of the same. The last several quarters from an operating perspective have been very consistent, which Inventrust continues to benefit from the momentum supporting open-air retail operating fundamentals in the Sunbelt where 95% of our net operating income is generated. Necessity-based retail remains the cornerstone of the communities in which we serve, and frequency of visits continues to structurally change due to the shift to the hybrid work model that allows consumers to be at our centers more often. The good news is that many of the trends in which we are seeing are not cyclical, but rather more permanent demand tailwinds. Inventra's simple and focused strategy of owning and operating essential open-air retail centers exclusively in the Sunbelt region of the U.S. is working. Equally as important, our low-level capital structure gives us the ability to accelerate our cash flow growth when the opportunity arises. Least occupancy finished the quarter at 96.4%, up both sequentially and on a year-over-year basis. This is a new high watermark for the portfolio and remarkably was achieved only a year after experiencing 140 basis point occupancy loss due to tenant closures and bankruptcies in 2023. Blended spreads remained in the low double digits and our retention ratio stayed above 90%, 92% to be precise. This means our team is achieving higher initial rents while pushing annual rent bumps higher, but also keeping tenants that remain additive to the merchandise mix of our centers, which in turn preserves tenant related capital in an environment where construction and build-out costs remain elevated. More simply put, our leasing strategy is one that is centered around driving sustainable free cash flow year in and year out. And the team continues to put building blocks in place to deliver on this strategy. Small shop tenant health continues to surprise to the upside with less tenant fallout than predicted at the beginning of the year. Mike will talk about our guidance in greater detail shortly, but lower tenant fallout and quicker-than-expected rent commencement dates were the primary drivers of our guidance raise. Our watch list of troubled tenants is short, and the demand for space at our centers continues to be extremely robust. 2024 leasing activity is effectively complete, and 2025 deal activity is well underway. Christy will provide more color on our leasing efforts in her remarks. We have been appropriately conservative this year regarding our net investment activity, but have certainly found deals that have been added to the portfolio. We added one such property in the second quarter. We acquired McGuire Groves, a small 33,000 square foot center in the Orlando MSA, which is directly adjacent to Plantation Grove, a fantastic public anchored center that we already own. The transaction allows us to add small shop GLA to a center that has tremendous prospects and significant tenant demand. The additional GLA will allow us to better merchandise our center and to control one of the best retail nodes in the fast-growing suburb of Orlando. Our balance sheet remains one of the most conservative in the sector. With a healthy transaction environment in our markets, external growth opportunities are enticing. But our team is still being patient and at the ready to accelerate growth when the time is right. With that, I'm going to turn the call over to Mike to discuss our financial results. Mike?