Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| But for the vast majority of our tenants, they continue to see a remarkably strong consumer |
| You have to have the ability to capture that rent growth in a strong supply demand, strong rent to sale, you need to have the right contracts and we do |
| even mentioned 30% in one of our markets year-over-year, I do think that Street retail is poised for high single digit market rent growth and thus our ability to capture it and others' ability to capture it in Street retail as follows as John touched on, 3% contractual growth is industry standard, fair market value resets, also fairly common |
| And we are excited about the internal growth that we are poised to generate in 2024 and for the next several years along with the potential to be in our expectations, whether it's the continued acceleration in our Street portfolio, and/or the accretion from external growth |
| As you can see in our earnings release, our 2023 performance was very strong |
| So in summary, we are starting the year with a strong balance sheet, along with a near term and non-dilutive path to get it back to best-in-class |
| Fourth quarter results also showed continued strength, driven by the Street retail portion of our portfolio, delivering 10% same store NOI growth and strong leasing spreads |
| But in short, our goal of creating superior top line growth at the property level and having that growth translate into bottom line's earnings growth remains on track |
| And with the vast majority of our floating rate exposure in the funds already being the mark-to-market in terms of both spread and base rates, we have some upside in our earnings if and when the interest rates begin the downward trend that the market is predicting |
| And the percentage could change quarter-to-quarter, period to period, but we're seeing strong revenue |
| And while in some respects, last quarter might be viewed as just another solid quarter from an internal growth perspective, I think there is a more meaningful shift going on |
| With a core balance sheet that is fully hedged and no meaningful maturities over the next few years, we are well positioned to have overall stability in our earnings related to interest cost |
| And so we're looking forward to that really nice combination of strong internal growth and now the ability to add a penny here, a penny there, which on a company of our size really adds up |
| But as it relates to internal growth, these secular tailwinds should add further support to the multiyear growth goals that we have been discussing and delivering on for the last couple of years |
| But in this unique instance of being able to raise a moderate amount of equity on a non-dilutive basis, it enabled us to accelerate our balance sheet goals by at least a year, if not more, and put our balance sheet in a much better position to go on offense |
| So between leasing getting a lease signed and our property management team that is making incredible strides on accelerating the time from signing to commencement, those are the two areas where we beat it |
| With $13 million of executed leases in our signed but not open pipeline, representing 7.5% of our core and fund NOI, coupled with a long and growing list of LOIs out for available space, we are in great shape to not only hit our 2024 leasing goals, but with a lot of calendar left in the year, a very realistic opportunity to beat them, and not to mention that the rental rates our team is achieving on new leases is routinely beating the rents we had assumed in our model |
| Increased optimism about improving borrower cost, coupled with resilient tenant demand is helping underwriting |
| Last point on earnings, with strong year-over-year earnings growth of about 5% or over 7.5% before promotes, we see the potential for upside in our numbers from a few areas |
| And that combination, strong rent to sales, strong supply/demand and strong contractual growth means we think we will be able to, over the next one, three, five, 10 years, recognize more growth in that component of our portfolio than in the other open air that we mentioned |
| As you may recall from our last quarter's call, our 2024 earnings growth is being driven by the underlying strength of our core business |
| It's also worth pointing out that in addition to the extraordinary growth we are projecting from the Street, we are also seeing solid trends across our core and fund platforms |
| We still think this area can provide attractive risk adjusted returns |
| And to be clear Craig, I think our shareholders will benefit from earnings accretive acquisitions on balance sheet of assets that are consistent with 50% of our portfolio that is Street retail |
| In terms of Street retail, after several bumpy years, we believe this segment will have the highest long term net effective growth |
| And what that means for Street retail, which should have about twice the growth rate as what we're seeing in our supermarket portfolio, that creates an interesting opportunity |
| And this is creating an opportunity for asymmetrical upside |
| Not only have we been anticipating this acceleration but we are feeling increasingly confident that this double digit growth will continue with our model projecting about 10% annual growth from our Street portfolio over the next several years |
| Our multiyear core internal growth of 5% to 10% remains intact, along with a balance sheet that is now in a position to capitalize on an expanding pipeline of accretive opportunities, which sets us up for above trend same store NOI and FFO growth over the next several years |
| As outlined in our release, we had a strong finish to the year with our same store NOI and earnings coming in above our initial expectations |
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| The biggest challenge facing by retailer counterparts today is the lack of well located, high quality space |
| And while not all Streets, not all markets are recovering equally, the initial fear that Street retail was too idiosyncratic or a zero sum game with the Sunbelt winning and other key markets losing, it's turning out not to be the case |
| And I would be very disappointed if that is the case |
| And then on credit, we have again, and what I would say is each month, wake up thinking we're going to have some sort of deterioration in credit |
| Now granted, the inverted yield curve and elevated interest rates are still a headwind for improving deal flow, but this is beginning to shift |
| And by around 2019, it was becoming clear to a variety of our retailers that the ability to use online sales as the main driver of profit was going to be too elusive |
| So I think within our 2024 guidance highlighted that the pain is behind us |
| There was what I referred to feared of a zero sum game that SoHo loses and, let's say, Nashville wins |
| But the overall Street portfolio is about 85% occupied, and I know rent spreads can be erratic |
| But despite this momentum in many respects the leasing story at City Point is just beginning |
| And so certainly, during COVID, it didn't matter that you had that structure, you have to deal with the realities of a very difficult time period |
| And if you say we are back to prior peaks across the board, I would disagree as well |
| When one of our luxury tenants on the Gold Coast tells me that despite a relative slowdown in 2023, they are still comping up 50% against 2019, it no longer surprised me |
| Ki Bin Kim First question, just on the G&A guidance, it's a little bit lower than I thought |
| But in either case, growth opportunities will have to be compelling |
| The migration online occurred but the profitability didn't |
| Thus, you saw the lack of volume of a friend called and said, hey, I want to sell an asset |
| I would say it's been a tough time to be a seller of assets |
| So if we are unable to acquire accretively on balance sheet, for Street retail, we absolutely will utilize some of those relationships |
| The demand for new stores well exceeds the supply of desirable space |
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