Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Core FFO per share grew by 5% both in the fourth quarter and for the full year, marking the third consecutive year of cash flow per share growth above 4%.
- Increased occupancy and solid leasing spreads contributed to above-sector average cash flow growth.
- InvenTrust Properties Corp (IVT, Financial) ended the year with lease occupancy at 97.4% and economic occupancy at 95.3%, indicating strong leasing performance.
- The company acquired eight properties for $282 million in 2024, expanding its portfolio with high-quality assets.
- The balance sheet remains strong with a net leverage ratio of 23% and a net debt to adjusted EBITDA of 4.1 times, providing liquidity and flexibility for growth.
Negative Points
- The company faces potential risks from tenant bankruptcies and store closures, although these are accounted for in their guidance.
- Retention rate is expected to be slightly lower in 2025 due to known tenant exits, such as Party City.
- The competitive environment for acquisitions, particularly in the Sunbelt region, may impact the company's ability to secure deals.
- The company has minimal exposure to certain distressed retailers, but disruptions could still affect financial performance.
- The reliance on market conditions for capital recycling and acquisitions could pose challenges if conditions change unfavorably.
Q & A Highlights
Q: Based on your previous comments about acquisitions, the $100 million net investment figure seems conservative. Does this assume an acceleration in dispositions?
A: Daniel Busch, President and CEO, explained that the $100 million figure reflects their intention to remain net acquirers throughout the year. The pace of acquisitions depends on their cost of capital. They are considering capital recycling, particularly with some properties in California, to redeploy proceeds into more attractive markets.
Q: Your retention rate was about 94% this year, up from 90% last year. What are your expectations for 2025, and will leasing spreads be comparable to 2024?
A: Daniel Busch noted that the 94% retention rate might be slightly higher than expected for 2025 due to known exits like Party City. Christy David, COO, added that they expect leasing spreads to remain similar to 2024 levels.
Q: How are you thinking about using the balance sheet to grow faster, given your under-leveraged position?
A: Daniel Busch stated that they are in a position to leverage the balance sheet if opportunities arise. They are considering capital recycling, particularly in California, to invest in more attractive markets.
Q: What is the appetite for your California assets, and what kind of cap rate are you applying to those centers?
A: Daniel Busch mentioned that California has a wide range of buyers, and demand has been strong. They are not obligated to sell unless they can redeploy proceeds effectively. Pricing expectations are set to allow aggressive acquisition of trophy properties in other markets.
Q: How do you think about the mark-to-market opportunities in your acquisitions?
A: Daniel Busch highlighted that market rents in the Sunbelt are outpacing their current growth profile. They focus on acquisitions with market-driven rents rather than significant occupancy or value-add upside, ensuring sustainable cash flow growth.
Q: How does pricing for a property like Nexon Square compare to a traditional grocery-anchored center in terms of cap rate?
A: Daniel Busch explained that Nexon Square is more of a lifestyle center without traditional anchors. The risk-adjusted returns fall between core grocery-anchored and power centers, with attractive in-place rents.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
