Acadia Realty Trust Stock

Good day, and welcome to the Acadia Realty Trust Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the conference over to [ George Horst ], Summer Intern. Please go ahead.

Good morning, and thank you for joining us for the Second Quarter 2026 Acadia Realty Trust Earnings Conference Call. My name is George Horst, and I'm a summer intern for property management.

Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, July 29, 2026, and the company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

[Operator Instructions]

Now, it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Thank you, George. Great job. Welcome, everyone. As you can see in our press release, we had another strong quarter, driven by continued momentum across both internal as well as external growth initiatives. And while geopolitical events have certainly added unwanted uncertainty to the global economy, our results tell a different story. In fact, it's worth pausing at this point for a moment. For instance, the tariffs of Liberation Day were announced on April 2 of last year. So this is really the natural quarter to compare against to see what's actually happened to our business. And since then, we delivered earnings growth of 11% year-over-year. Last quarter, same-property NOI came in ahead of our projections at 8.7%. We produced record leasing activity with rent spreads exceeding 90% this quarter compared to single digits a year ago. So while the headlines have been relentless, what our retailers are telling us is a very different story.

The U.S. has become increasingly relevant, the consumer has remained resilient and retailers are doubling down on must-have real estate. That strength shows up across the key drivers of our business. First, with respect to internal growth, which A.J. Levine will discuss in more detail, our operating metrics continue to reflect the strength of our street retail thesis.

Second, with respect to external growth, as Reggie Livingston will discuss, we were busy last quarter on the transactional front with important street retail additions to our REIT portfolio and more to come. Simultaneously, we were harvesting profits from several assets in our investment management platform, where we've now disposed of or recapitalized over $500 million year-to-date at a nearly 2x equity multiple.

And then third, as John Gottfried will discuss, our balance sheet metrics are right where we want them with plenty of dry powder to fuel future growth.

But taking a step back, what this quarter really reflects is our street retail thesis being validated in real-time. On previous calls, we discussed why tenant demand and tenant performance in street retail is so strong. And those same drivers remain firmly in place, limited new supply, strong tenant performance driven by the affluent consumers who shop our corridors and then most significantly, the increasing demand due to the long-term migration of brands away from wholesale or department stores and towards their own direct-to-consumer stores. This DTC shift has been gaining steam over the past few years, and it appears we're still in the early stages of this important multiyear demand driver. It's an important reason why we are seeing the strongest growth coming from the street retail portion of our portfolio. But this increased demand and ensuing market rent growth is only half the story.

The other key driver of our results comes from the differentiated structure of our street retail leases that allows us to capture this growth faster than in other formats. First, our street retail leases generate higher contractual rent escalators generally with 3% annual growth. They also require lighter relative capital on re-tenanting. So more of that top line growth drops to the bottom line. But most importantly, our street retail leases carry fair market value resets that allow us to have faster and more frequent mark-to-market opportunities, a structural advantage that simply does not exist in other formats. This means that to the extent that we are now operating in a longer-term inflationary environment as we have experienced over the past couple of years, these resets provide for inflation protection as well.

The combination of superior contractual growth and more frequent mark-to-market opportunities means our street retail portfolio is positioned to generate 200 to 300 basis points of incremental same-store growth above what we achieved in our suburban portfolio. In fact, over the last 3 years, we have delivered closer to 400 basis points of superior growth. And given that demand seems to be increasing, we expect this outperformance to continue.

We're also seeing proof of concept where our performance is being further enhanced when we achieve scale in a given corridor. We have found that once we own about 20%, 25% of the retail on one of our key streets, we can better drive curation, better drive sales performance, market intelligence and operating efficiencies that results in about a 10% incremental NOI increase for our properties. Thus, with these tailwinds and goals in mind, our acquisitions are focused on those deals that both stand on their own from a return perspective, but also position us to further recognize the benefits of scale.

Since the third quarter of 2024, we have invested approximately $700 million in street retail acquisitions in our REIT portfolio. And with our current pipeline, our goal is to hit $1 billion by year-end, nearly doubling the size of our street retail portfolio. These investments have already created approximately 3% FFO accretion per share and an even higher percentage of NAV accretion. Importantly, this focus is bringing us closer to our goal of being the premier owner-operator of street retail in the U.S., which is also bringing scale benefits to our platform.

Now to be clear, our discipline here is unchanged. Our investments continue to be accretive to earnings and accretive to net asset value from day 1 and continue to deliver on our target of initial accretion of $0.01 of FFO for every $200 million we deploy. As a result, the benefits of scale that we hope to recognize in the future are additive to what these deals already deliver on their own.

So in conclusion, the results we are delivering today are a direct reflection of the strategy we have been executing for several years now, both with respect to our focus on street retail for our REIT portfolio, as well as our execution through our investment management platform. The internal and external opportunities in front of us give us a clear line of sight into multiyear top line growth with increasing confidence that this growth will continue to drop to the bottom line.

And with that, I'd like to thank the team for their continued hard work, and I will turn the call over to A.J. Levine.

Thanks, Ken. Good morning, everyone. I'll start off with an update on leasing activity and the trends that are driving our results this quarter. Then I'll focus specifically on the rent growth we've seen on our key streets and how that's translating through to pry loose and mark-to-market opportunities in our portfolio.

Starting with leasing activity. During the second quarter, we signed approximately $8.9 million in new leases, which is the highest volume for any quarter in our company's history. While we continue to see strong fundamentals and leasing momentum from all sides of our portfolio, street, urban and suburban, it's the performance of our streets that continues to fuel the majority of our growth. Approximately 80% of the new ABR signed in the second quarter is from our street and urban markets, where we'll see the highest contractual growth at 3% per annum, as well as more frequent opportunities to mark-to-market through FMV resets. And even with the record volumes we've achieved during the second quarter, the pipeline of prospective leases in advanced negotiation remains strong with over $10 million in additional ABR being actively negotiated.

As far as what's driving that demand, there are several factors at play. The first being the current supply-demand dynamic on our streets with vacancy rates in markets like Madison Avenue, Green Street in Soho, North 6th Street in Williamsburg, Armitage Avenue in the Gold Coast in Chicago and Melrose Place in Los Angeles at historical lows.

As far as tenant demand, the decline of traditional wholesale channels, coupled with the recognized benefits of DTC retail has given rise to the deepest pool of specialty, advanced contemporary and luxury tenants that we've seen perhaps ever. It's clear from the activity on our streets and from speaking with our tenants that retailer demand continues to meaningfully outpace supply. That is naturally creating heightened competition for space, supported by unmitigated consumer demand.

And that brings us to the second factor, which is tenant sales growth and occupancy costs, especially for those tenants catering to the higher earning customers that shop our streets. The annual sales growth that we've seen from tenants such as Aritzia on M Street, Alo Yoga on Michigan Avenue, Violet Grey on Melrose Place, DOEN on Bleecker Street, Tecovas on Henderson Avenue and Zimmermann in SoHo is averaging over 25% year-over-year. And the blended health ratio for those tenants is below 9.5%.

So unlike the 2015, 2016 cycle, when rents ran well ahead of what sales could support and ultimately had to correct, today's tenants remain healthy and 4-wall profitable, even before taking into account the halo effect and other benefits of omnichannel retail. So as we look for additional opportunities for growth, this is where we find it. And what the sales data continues to signal is that despite several years of elevated rent growth on our streets, we still have significant room to run.

And the third dynamic, which is perhaps the most intentional is the scale that we are building along these dynamic corridors that is allowing us to curate our streets, positively influence tenant performance and ultimately capture the outsized rent growth. A good example of these dynamics at play would be Armitage Avenue in Chicago, where we control over 30% of the retail on the street and have spent years thoughtfully curating with brands like Serena & Lily, Jenni Kayne, Huckberry, and Levain Bakery. Over 65% of our GLA on Armitage has undergone some form of rent reset since 2019. And over that time, rents on the street have effectively doubled. The street has virtually 0 vacancy, but that hasn't stopped us from unlocking embedded value, both qualitative and quantitative. Through our pry loose strategy and FMD resets, we continue to improve merchandising and drive rents on the street.

In our latest example from the second quarter, we re-leased the space on Armitage at a 75% spread. But when you consider that the prior tenants initial rent from 2019 was $76 a square foot and the new rent is $155 a square foot, that means that rents on Armitage have grown over 100% since 2019. That's 10.5% annual rent CAGR. And just 1 year ago, we signed a lease on Armitage at $130 a square foot, which means that rents on the street have increased by 20% year-over-year and signals that the market is, in fact, accelerating. That level of growth doesn't happen by accident. It flows from thoughtful, intentional merchandising, space by space, tenant by tenant, prying loose an underperforming tenant and replacing them with the likes of Jenni Kayne, who has the ability to generate sales at 2x the previous tenant, the type of planning and impact that can only come from achieving scale within a market. But while this level of rent growth is fairly unique to our streets, it is not unique to Armitage Avenue. We've seen a similar dynamic on M Street in D.C., on North 6th Street in Williamsburg, on Newbury Street in Boston and on Worth Avenue in Palm Beach.

On Green Street in SoHo, for example, where again, supply is near all-time lows and competition for space is the strongest it's been in over a decade. This past quarter, we signed a new lease with a European luxury retailer at a 34% spread. But when you factor in the 3% contractual increases typical of street retail, the true spread against the previous tenants starting rent from 2022 was closer to 43%. Again, that's close to 10% CAGR over the last 4 years.

On Melrose Place, we re-tenanted a space at a 48% spread. But again, when you compare today's market rent against the market when the previous tenant last renewed in 2021, the growth over that period is 66%. That's 11% CAGR. Those are just a few examples. But overall, spreads for the quarter came in at 91%.

Now let me be clear, we recognize that posting 90% spreads is extraordinary. But given the current market dynamics of street retail, the double-digit market rent CAGR over the last several years and the performance and demand we're seeing from our retailers, we do expect to see consistent double-digit spreads moving forward, plus the 3% contractual growth that is standard for our streets. The spread is the headline, but the compounding is what really drives returns over time.

What makes all of this particularly powerful for our portfolio is that because of FMV resets that are unique to street retail, we are able to capture this rent growth sooner than we can from suburban leases. And therefore, a meaningful portion of our portfolio will be resetting to current market in the near-term, allowing us to seize the momentum in real-time. John will walk you through what that embedded mark-to-market translates to in terms of earnings growth potential.

It's also worth noting that the average payback period for the quarter's new conforming street leases was slightly above 9 months. That's accounting for commissions and CapEx, whereas the payback period on a new suburban box is typically 5 to 7 years. That's just one more reason why not all spreads are created equal.

So in summation, despite a record quarter of leasing activity, the runway ahead remains significant. Market rents on our core streets have compounded meaningfully since 2019. Those rents continue to accelerate as available supply further contracts. And our lease structure ensures that we can capture that growth on a recurring basis. As always, I'd like to thank the team for their hard work.

And with that, I'll turn the call over to Reggie.

Thanks, A.J., and good morning, everyone. I'll start my remarks covering our recent transaction activity and current pipeline, which is keeping us on our traditional pace of $400 million to $500 million of street retail acquisitions per year. Year-to-date, we've closed over $228 million in acquisitions for our REIT portfolio, including $149 million in Q2 to date, all while hitting our key metrics, accretive to NAV, accretive to FFO at a rate of $0.01 per $200 million with NOI CAGR in excess of 5%. More specifically, our recent activity included 4 and 28 Newbury Street in Boston. These assets are anchored by Chanel and Cartier and possess a meaningful value creation opportunity we're actively working to harvest. 8800 Melrose Avenue in West Hollywood, which is leased to Jacquemus, the acclaimed French retailer. This, too, has value creation opportunities that could drive cash yields to north of 8% in the near-term through redevelopment and re-tenanting.

And finally, we added another door in the key Flatiron/Union Square market where we now own 5 storefronts and are further realizing the benefits of scale there. On top of those acquisitions, we're excited about our pipeline. We've built a platform that routinely closes $100 million a quarter of street retail, and we expect to exceed that pace for 2026, and John has raised all the money needed to do it. This pipeline has all the Acadia hallmarks, including off-market deals, leveraging the less crowded street retail space in our first call advantage, tenant-driven market intelligence infused in our underwriting, building more scale on corridors that continue to experience outsized rent growth and below-market leases that allow us to harvest that growth in a relatively short period of time and stabilize significantly above our going in yield. In fact, we've already delivered several examples of converting below-market leases to market rent on our recent acquisitions.

On our 2024 SoHo portfolio purchase, we've signed leases that will increase NOI by 90%, stabilizing to a 6% yield and a high-6s yield in a few years through another FMV opportunity, all on an asset that would trade below a 5 cap today. Same with one of our 2024 Williamsburg purchases, where we've more than doubled the NOI, also slated to stabilize to a 6 yield on an asset that would trade at a low 5 cap rate today. In other words, we don't just buy deals with upside, but we're actually executing on our plan to capture that upside.

On the IMP side, the increased capital appetite for open-air retail has certainly made competition for this product stiff, but we remain confident we'll secure the right assets at attractive prices, a confidence driven by our history of doing so. On the flip side, we're taking advantage of this increased competition through select dispositions of IMP assets where we've successfully completed our business plan. To date, we've sold and recapped north of $500 million with another $200 million plus of dispositions by year-end. This continues the success of this platform, where we've achieved a nearly 2x equity multiple and mid-teens IRR on these deals this year.

So in conclusion, the bottom line is we're well on our way to cross the threshold of $1 billion of street retail over the last 2 years, and we're doing it in a way that's accretive, disciplined and building scale with a growing pipeline to fuel more growth.

And with that, I'll turn it over to John.

Thanks, Reggie, and good morning. I will start off my remarks with comments on our second quarter performance, including building blocks for the balance of the year and into 2027 and then closing with an update on our balance sheet.

As outlined in our release, we delivered $0.31 of FFO. It was another clean quarter that exceeded our expectations, enabling us to once again raise our full year earnings guidance. And to keep it simple, it was our street retail portfolio that drove the quarter, contributing nearly 16% same-property growth, equating to nearly $0.02 of incremental FFO versus the prior year quarter. The growth was pervasive across our street markets. And in our scaled corridors, the growth was even more pronounced. For example, on M Street in Georgetown and Armitage Avenue in Chicago, we exceeded 20% same-property growth during the quarter. As a matter of practice, we do not revise our same-property guidance during the year. That said, with same-property growth of 7.3% through the first 6 months and continued strength expected in the second half of the year, our full year model has us trending above the midpoint of our 5% to 9% range.

I now want to spend a moment on our signed not open pipeline. As A.J. highlighted, through our team's record leasing, our SNO pipeline increased nearly 60% during the second quarter, reaching an all-time high of $16.5 million or roughly 7% of our pro rata ABR. About half of our pipeline is projected to commence in 2026 and is heavily weighted to the fourth quarter. That's when the grocer T&T and LA Fitness' Club Studios, both in our San Francisco redevelopment projects are slated to come online, with the balance of our SNO expected to commence throughout 2027.

And when factoring in our estimate of rent commencement dates, let me now translate the anticipated impact of our SNO pipeline on FFO. In aggregate, our SNO pipeline represents about $0.08 of incremental FFO, net of roughly $0.03 that we're capitalizing within our development and redevelopment projects. Based on estimated commencement dates, we expect to realize $0.01 or so in the second half of 2026, another $0.03 to $0.05 in 2027 and the balance in 2028, building to the full $0.08 run rate.

Now let me turn to a topic A.J. touched on in his remarks involving market rent growth and the potential earnings upside of below-market leases in our street retail portfolio. We have historically been reluctant to provide specific mark-to-market data across our streets. But given the high volume of leasing activity that has and continues to occur, we now have enough empirical data that supports our increased conviction in the opportunity ahead. And just to point out, we have already been capturing this market growth in our streets over the last few years, having increased our street and urban occupancy by over 500 basis points, accelerating mark-to-markets through fair market value resets that are unique to our street retail and through our pry loose efforts, all of which have been driving the double-digit rent spreads, same-property and FFO growth that we have been experiencing. And even after all of that, we still have plenty of room to run. We estimate that our high-growth streets are still approximately 25% below market today. And keep in mind, this does not include the additional upside we anticipate from market rental growth over the remaining lease term, which further increases the mark-to-market opportunity.

But for purposes of walking through the earnings impact, let's just stick with the 25% that we think we capture today. This represents about $20 million to $25 million with some of the largest contributors being SoHo in Manhattan, which we estimate to be about 35% below market, Henderson Avenue in Dallas, about 60%; Armitage Avenue in Chicago at about 50% and North 6th Street in Williamsburg at about 25%.

In terms of timing between natural lease expirations, FMV resets and our pry loose efforts, our team is highly focused on capturing a meaningful amount of this mark-to-market opportunity within the next 5 years. Thus, between several hundred basis points remaining street lease-up, 3% embedded contractual growth, the executed leases in our SNO and our below-market street retail portfolio, we are increasingly confident in our ability to continue producing 5-plus percent same-property growth and strong earnings growth over the next several years.

Let me now turn to our 2026 guidance. Given the strong operating fundamentals and increased confidence heading into the second half of the year, together with the accretion from our external growth, we raised our full year earnings guidance again this quarter, now targeting approximately 10% year-over-year FFO growth at the midpoint. And it's worth noting that this strength more than offset about $0.01 or so of positive event dilution from our investment management business, which is the short-term dilution we absorb when we profitably sell investment management assets ahead of redeploying the proceeds, which, as a reminder, we did not build into our initial guidance.

As you heard from Reggie, we have sold or recapitalized well in excess of $0.5 billion of investment management assets at nearly a 2x multiple with more in the pipeline. So while short-term dilutive, it gives us meaningful dry powder to redeploy into future earnings growth as we reinvest that capital.

And now moving to our balance sheet and starting with our capital raising activities. Our acquisition goal is to add roughly $400 million to $500 million of accretive street retail on balance sheet each year. Based on a $0.01 per $200 million target, this translates to over $0.02 of annual FFO accretion. And as you heard from Reggie, with a very busy second half of the year ahead of us, we remain on track to achieve that goal again. During the second quarter, as this pipeline of accretive external opportunities began to increase, we match funded it with approximately $200 million of equity. And following this raise, we have all the equity we need to achieve our current external growth goal, along with the funding we need to complete our Henderson development project, which we are continuing to anticipate an 8% to 10% yield on our cost.

In terms of our balance sheet, we have virtually no maturities over the next several years, nearly $1 billion of liquidity and significant dry powder to fund our REIT expansion and investment management businesses.

So in summary, we had an outstanding quarter, achieved record leasing volumes, better-than-expected operating metrics and a balance sheet that has ample capacity to support the disciplined execution of our growth strategy.

And with that, I will turn the call over to questions.

[Operator Instructions] Our first question comes from Craig Mailman with Citi.

It's Nick Joseph here with Craig. Just on the street retail strength that you're seeing, curious, number one, if the retailers or if you're hearing from any of the retailers on changes in consumer behavior? And then on the rent levels that you're seeing today, if you think these are as sustainable or are they stretching same-store economics at all?

So let me start and then A.J. chime in. There are some shifts underway that I think are important and we shouldn't lose sight of as it relates to open air retail in general, discretionary retail specifically, and you need to take into account omnichannel. And to be more specific, over the last few years, the move out of wholesale out of the department stores as department stores have been reducing the number of doors they have. Retailers are recognizing that the most profitable channels and the most important ones are them having their own store as opposed to being in department stores.

Similarly, in an omnichannel world, online is still very important to these retailers. But the store is the most profitable channel. So from an overall makeup, what we're seeing is a bunch of retailers that were not historically 5, 10 years ago, active users of their own stores showing up. So that's the first step.

And then, A.J., why don't you chime in, in terms of health and what our tenants are telling us in terms of the profitability and viability of these stores?

Yes. And there's a few things I would point to. First, sales growth, health ratios, sales growth is outpacing market rent growth. So health ratios are actually declining, which is a good indicator of where rents can go. As Ken mentioned, this is the deepest pool of tenants and the tightest supply that any of us can remember. And some of those are European retailers that are entering the U.S. for the first time, expanding in the U.S., looking to the U.S. as their main growth driver moving forward. Some of these are, again, traditional wholesale players that are pivoting to DTC and momentum, right? Most of the rent growth that we've seen has actually happened post 2024. So this isn't just a pop that happened coming out of COVID that's now leveling out. It is sustainable. And of course, don't want to discount our ability to actually curate because of the scale that we've achieved in a number of these markets. We can actually influence rents by influencing tenant performance through co-tenancy. So we do believe that this is a sustainable trend moving forward.

That's very helpful. And then maybe just on the kind of balance sheet and kind of tying that to the busy acquisition pipeline that you spoke of. How do you think about forward equity offerings from here? And how do you think about pricing relative to the returns that you're targeting?

Yes. So I think as outlined in our remarks, I think we have the equity we need. We talked about getting to about $0.5 billion of acquisitions, which we think by the end of the year, we get there. And we have the equity we need as well as to fund our Henderson project. So not looking to raise any additional equity to what we have currently under our graph.

So in terms of forward equity, I think just given the timing, if you think about why we like that product, Reggie is out shaking hands on deals, and we would look through the math as to does this hit our metrics. NAV accretive, FFO accretive, growth accretive, et cetera. And when we lock in that price of capital and oftentimes through the diligence and closing process, it takes several months to get to that point, I want to make sure Reggie has that capital on hand to fund it. So I think we do like that element to fund it, and we raise equity when we have conviction that we're going to put that to work.

Our next question comes from Andrew Reale with Bank of America.

My line has kind of been going in and out, so I apologize if either of these were touched on during the remarks. But I guess, first, I was wondering if you could just kind of tell us what are the going-in cap rates on acquisitions year-to-date? And then how should we think about both the timing and the magnitude of yield expansion on those?

Yes. And while we touched on it briefly, Reggie, why don't you explain? Unfortunately, as it relates to street retail, the cap rates are just one of the many components that we get to think about.

Yes. I think, Andrew, here's how I would look at it. The going-in cap rate maybe for suburban retail is a little more relevant. The way we think about it is think about everything that we've discussed with the expansion of rent growth in various corridors. It's really about where do we stabilize to? And how can we use the platform to pull certain levers to stabilize to, call it, 6-plus yield in a near-time frame? And a lot of that we can actually do because of fair market value resets, the rent growth in these various corridors, re-tenanting, pry loose, curation and et cetera. So we think about it less from a going-in cap rate standpoint and more about where we stabilize to. And we're often finding opportunities where we are stabilizing 100, 200 bps above where it would trade today. So that's really the difference between a going-in cap rate with meager growth and opportunities that we're able to harvest.

Okay. And then could you just remind us what share count you're assuming in the FFO guidance and if that includes settling all forward shares this year?

Yes, Andrew. So think of when we bring down the acquisition, that's when we will draw down on the shares. I think we're just going to continue match funding as we did this quarter. So it's really going to vary with the timing of the closing of the deals.

Our next question comes from Floris Van Dijkum with Ladenburg Thalmann.

Solid underlying results. Interested in your disposition a little bit as well, maybe diving into that. Obviously, you sold some of your JV assets, got pretty decent pricing on that. Maybe talk about how you thought about that. And I think the local press has also talked about Clark and Diversey portfolio being for sale in Chicago. Maybe you can talk a little bit about what -- where you think that would have to price that in order for you to put that off the books.

So let me start and then Reg chime in with some details. First of all, we don't comment on press articles. That's just a matter of practice. What we have said before and is the case for our on-balance sheet REIT dispositions is while we will entertain them periodically over time, they will not create earnings dilution. They will not create NAV dilution. We have the balance sheet we need, and so we can be just strategic about any dispositions with respect to that.

And then, Reg, why don't you just touch on the overall disposition market where it feels the most crowded, where we see opportunity.

Yes. I think we're -- what we've always said historically is that, one of the reasons we like street retail on balance sheet is a much less crowded field, and a lot of suburban product, grocery-anchored center, power centers, it has increasingly become a crowded field as retail is kind of having its day from an institutional investor standpoint. So we are kind of leaning into that in our Fund IV, Fund V dispositions that you've read about, we are getting solid pricing for it, and a lot of it is because of this increased competition that investors are out there for. So we -- but only when we have completed our business plan, are we doing it. So we're getting maximum value when we take it to market.

And my follow-up, I mean, you guys are in a couple of really hot street nodes. How would you rank in terms of medium-term upside and also in terms of your ability to invest capital, a SoHo market versus the Williamsburg versus a M Street and/or a Boston? Where do you see some of the opportunities or the greatest opportunities right now?

Let me start and then both A.J. and Reg feel free to add additional color to it. Where we are most excited by far is where we can own enough assets on a given corridor that we can create what we call the benefits of scale. And as I said in the prepared remarks, it doesn't mean 100%. Usually, when we get to about 25% of the stores in a given market because we, our team, are active day in, day out, we can have a meaningful impact on that given corridor.

So the ones I'm most excited about are those corridors where our curation can raise the sales of a given corridor, where our curation can help us really drive the rents. And we're at scale in about half of the key streets that we're active in.

In terms of which ones in the medium-term are going to have the most growth, well, to some degree, you're asking us to pick our favorite children. But to state the obvious, it's in those that are in the earlier or earliest stages of stabilization, Henderson Avenue in Texas would be a prime example.

But A.J., what else would you add to that?

Yes. I mean the Flatiron, Upper Madison Avenue, still not back to prior peaks. I think they still have a lot of room to run. Obviously, available supply is extremely constrained there. Bleecker Street is a market that's really resonating with a lot of these traditional wholesale retailers that are pivoting to DTC. And I also think SoHo still ranks at the top of the list. There's still a good amount of room to run just given the demand we're seeing in SoHo.

And I think a good amount of room to run to put more capital to work as well.

So that's as close as we'll get to talking about our favorite kid.

Our next question comes from Todd Thomas with KeyBanc Capital Markets.

First question, John, you mentioned that you do not regularly revise the same-store growth forecast during the year, but said that you're trending above the midpoint of the 5% to 9% range. Does the FFO guidance reflect that view? And has that been sort of adjusted accordingly? And can you clarify that and just discuss the driver of the $0.02 increase at the low end of the range and just talk about what -- where you sort of derisked the outlook as far as the year goes?

Yes. So again, Todd, we just have, I think, at the beginning of the year, in hindsight, put in a way too wide of a range at the 5% to 9%. But what we have not done is on a regular basis, update it. Rationale really being for us is, I think it indicates an element of precision on a portfolio of our size that we just don't want to articulate on a quarterly basis. So going forward, we are going to have a much tighter range, but at least at this point, do not want to update where we are going forward quarterly.

And then where we look to the components of the -- we raised the low end of our guidance $0.02, really a combination of things. One is, as we continue to redeploy the external growth from -- that we have deployed is one piece of it. Credit is a second piece of it. So I think we had credit built into our credit assumptions built in. We are continuing to see strength in there. We're getting spaces open. We have a very significant signed not yet open portfolio. You'll see that not only did we put a bunch of leases online this quarter, we've added more to it. And our team is getting those spaces open on time, if not ahead of where we thought those would be.

So between really a combination of the accretion from acquisitions, the ability to get stores open faster and really just the overall tenant health. That's what drove it. And I think in terms of where do we land in the midpoint between our new range, still half the year left. So I think it's -- we'll leave the -- where we trend, but definitely trending on the upward slope of that.

Okay. That's helpful. And then my second question, now that Acadia owns 100% of Fund II's interest in City Point, effectively 95% of the asset. Can you just talk in a little bit more detail about the NOI upside opportunity and time frame to realize the earnings growth from that asset? I think leasing has generally been excluded from the SNO pipeline that you've discussed. So can you clarify that a little bit or talk about that a little bit?

And then can you also just talk about the longer-term ownership of that asset and how it fits into the core portfolio, whether you plan to keep that on balance sheet or whether there's an opportunity to recapitalize that asset or perhaps monetize it in some way or form over time?

John, why don't you start and then A.J. add some leasing update color.

Yes. So I think a couple of things. One to point out, the $16.5 million of SNO that is pro rata across our entire portfolio. So that would include City Point. It's not in our -- because it's in the investment management, it's not in our same-store. So it is in our -- whatever share of leasing we've signed that has not yet opened, that will be in the $16.5 million. So as you pointed out, as we put into our materials last night, we did acquire the remaining pieces of the partners in Fund II. So just that complexity of the loan and the timing, that's now all behind us. And the upside is in front of us.

And I'll start off on some of the leasing. But I think as we look at the asset and the opportunity, we have made incredible progress in terms of what leasing we have done, what we have currently signed or in process of being signed. And we think the upside to that is, we are probably, again, call it, in the -- probably in the 12 to 18 months to really starting to see that lift from the asset. And if -- I mean, you've been to the asset multiple times. It's a combination of getting the couple of remaining spaces on the park, those leased as well as the -- getting the mark-to-markets that we think are available to us and increasingly playing out where we see the strength of some of the opens of some of the new -- the likes of Sephora, getting the mark-to-market on Prince Street within the SoHo -- I'm sorry, Prince Street within City Point, not SoHo, to be confused with SoHo, to get those mark-to-markets, which those will be the more of the longer-dated ones as we navigate through those. But we are seeing a clear visibility and now that the ownership is where it is, that gives us significant runway to do that.

And then the last point on where do we see the ownership of it. What I would tell you we're not going to do is that, given the future growth in front of us, we are not going to -- given we have the capital balance sheet, we don't need to sell that upside at a discount to somebody else. We are going to monetize that and then look to explore whether it makes sense to bring in institutional capital at that point, but not anything near-term where we'd be looking to bring in a capital partner.

So A.J., do you want to give a little more color on these?

Yes. As you mentioned, the space that we have left is our most valuable space. And the way that we're going to unlock that value is really just to stay the course, be selective, focus on curation, finding the right tenants and driving sales. This past quarter, we signed Warby Parker and Lovesac, Activate. They'll complement Lululemon, Sephora, Swarovski, of course, Trader Joe's. So we're creating that right ecosystem. We've seen really strong sales growth continue. We see it show up in the food hall as well as from our retailers. And of course, the spaces that are occupied on the ground floor, those are the spaces that are going to roll the most frequently, and we'll be able to again capture that upside in rent. So stay the course, focus on curation, and there's a good amount of upside ahead of us.

Our next question comes from Anthony Paolone with JPMorgan.

Our next question comes from Paulina Rojas-Schmidt with Green Street.

And your portfolio lease rate is at 94.7%. So 3 questions related to that. Where do you see the overall lease rates going over the next 12 to 18 months? And within that, where can Chicago realistically get to in that horizon? And then more broadly outside of Chicago, are there any specific assets you would call out as near-term needle movers on the leasing upside front?

Yes. So, Paulina, let me start with that. So I think the 94.7%, and this is just -- you're well of this. But keep in mind, that is a blend of our entire REIT portfolio, meaning suburban and street and urban. So if you look at our -- the street portion of that is lower, right? So I think that if you look at the street portion of that is a good 100 basis points lower than that. And that's our more higher dollar value per ABR space. That's the one thing I want to point out that still have several room -- several hundred basis points of room to run on the street.

And you would think full occupancy within the street, we peaked at in the 97% range, but I think we could safely say 95%, 96%, particularly given the strength that we've talked about today from the street, which is a significant upside.

And then in terms of suburban, I would say suburban, we're probably pretty full at this point throughout our suburban portfolio. So I think in the 95% to 97% range on suburban feels about full occupancy there. So on a blended, when you blend our mix of street and urban and suburban, you're going to be in the 95% to 96% range because you're always going to have a level of churn.

And then your question on Chicago. So I think if we look in Chicago, if we look across our markets, really do not have a lot of vacancy there with the exception of North Michigan Avenue, which is not in that statistic. So that's in our redevelopment pool. So that is 96,000 square feet we have on North Michigan that is currently a drag channel. So very meaningful upside. And A.J. could give some color that we're starting to see green shoots there, but meaningful opportunity from Chicago.

And then Paulina, your last question, can you repeat that, please?

Yes. Is there any other particular assets where you see meaningful upside? Because, for example, when I look at SoHo, West Village, it's at 93% today. And that sounds somewhat low given the strength that you're describing in the corridor and relative to the entire industry that is 96% leased. So yes, any specific things that you would like to call out on the upside?

Yes. I think you're always going to have some level of turn. So I think it's unlikely that we would ever be able to operate the second we get a space back that our team is able to immediately turn it. So there is always going to be a spot.

So in terms of upside, SoHo, as I pointed out in the remarks, there, the upside is, we think we're 60% below market. There, given just the naturally shorter lease terms, the fair market value resets and our team's pry loose effort, that's where the upside is that A.J. and his team could get that space back.

And then where I'd say there's meaningful upside is when we go through again, we look at where do we have the greatest opportunity, Henderson and Dallas. So there, given the development we're doing there, we're strategically holding space back. So there are meaningful growth in Dallas as well through lease-up. Also San Francisco. So in San Francisco, very big rebound, as you are aware, but I think between the -- we brought in 2 large anchors there between T&T at City Center, LA Fitness and Sprouts at 5559. We still have ample room to add to that. And again, in the 94.7% occupancy you mentioned because that's a redevelopment, that's not in that number as well. So meaningful vacancies in San Francisco that is a strengthening market that will -- that we can lease into.

And just to emphasize even further the importance, I would argue that fair market value resets are going to be over the next few years, more important than the important occupancy gains that we had over the last few years because not only does the natural maturity and fair market value reset when it occurs, create a pop for us, but what A.J. and his team have proven now multiple times is retailers coming to us years ahead of that FMV reset and negotiating well in advance the increase in rent because retailers often are putting significant dollars, their own dollars into stores, and they need to know that they have more than 1, 3 or even 5 years of certainty of rent. So all of that you put together, I feel more excited about the upside embedded in our portfolio today recognizable over the next few years than I did even when we were in lease-up mode a couple of years ago.

A second question is, when you underwrite acquisitions across your different street retail corridors that you like, do you find expected returns are broadly similar? Or do some markets offer meaningfully more credible upside than others today, whether because where they are in the recovery cycle, liquidity or something else?

It really does depend on the asset. It really is fact dependent. There are a ton of deals whether they're early innings, mature markets, it's all about rent to market. Can you get to that rent to market based on FMV? So it's less about the market delivering different returns and more about the asset and the business plan and the execution.

That being said, I will reiterate again, where you will see us most active is deals that check the box in terms of right price, right unlevered IRRs, right long-term growth, everything we've discussed, but also where we can build scale. We thankfully are able to, and we've proven this now, and I think you'll see in our upcoming acquisitions that we are adding 2 corridors that we have the highest level of confidence in. They are achieving our returns upfront. And then over time, I think they will surprise to the upside.

In fact, a deal we recently acquired over the last year, we underwrote, say, $300 a foot, and now A.J. and team are finalizing leases at 30% higher than that. That's just one example of where by controlling enough stores on a given street, we know the tenant's interest. We know who wants to be there, and we can do it promptly and professionally.

Our next question comes from Michael Mueller with JPMorgan.

Tried again this time with hopefully the right pin. So sorry about that.

We thought you were bringing Anthony in on us now.

Bait and switch. There we go. So I know I missed some stuff, but I did hear the comments about scale and terms to work. But when I look at the street portfolio, you're in 6 or 7 markets, if you include the smaller exposures. So, I guess, looking over the next 3 years, 5 years, where do we think -- where do you think you're going to see the most investment opportunities? Is it more in the larger existing markets like New York? Is it kind of focusing on building out those smaller markets or even adding kind of new markets to the list?

So I think you will see us add a couple of new markets. To be clear, my guess is when you came up with 6, you just lumped all of New York City as one market when I think our retailers view the West Village very different from SoHo, very different from North 6th Street in Williamsburg and certainly Northern Madison Avenue. So those are multiple different markets, but all New York.

As I said in the beginning, we are continuing to add to our capital acquisitions on Henderson Avenue in Dallas. I think you should expect to see us continue to deploy there given the strong tenant interest, strong results we're having. I think you should expect most of our additions to be in markets that we are currently active. Last quarter, we planted seeds in Palm Beach on Worth Avenue, on Newbury Street. So those are 2 more markets. If over the next few years, we added 2 more, I would tell you we would be in a position where we would be highly relevant to the vast majority of our retailers nationwide.

New York, Boston, Chicago, San Francisco, Los Angeles, Dallas, Florida, Georgetown and D.C., all really important markets, and that will enable us to be the premier owner operators of street retail in the U.S. without having to add a couple more. But if we -- if you wanted to guess, you could come up with 5 potential and we'll show up in 2.

Got it. Okay. And for a second question, there was -- John, some nice color on the mark-to-market. And I know lease spreads are going to be volatile. But if we're trying to dumb it down and thinking about go-forward spreads, is there any reason we can't say, okay, for the street portfolio, we're taking your 25% that you threw out there, blend that with the suburban for 10%. And as a proxy for the next few years, outside of market rent growth, that should be a good starting point to think about spreads?

Easy for me just to say yes, Mike, but I think the reality is, it's going to be lease dependent as part of that, right? So I think that would be the only -- so over -- I threw out that our target is we want to do this over the foreseeable future. If you were to average those, then yes, that would be 25%. But when we have markets such as SoHo that are 60%, there is going to be volatility just inevitably quarter-to-quarter. So I would love for you to be able to just say to spread it equally, but I think I would disappoint you if that was -- if that played out. But over that extended period, our goal is to do 25-plus percent just given -- keep in mind, we are not trending rents, that rents are continuing to rise above the contractual growth we're getting.

Our next question comes from Ken Billingsley with Compass Point Research & Trading.

Yes, I was talking to myself. I wanted to ask a question on fair market value resets. I know you've given a lot of color. In general, are those resetting every 5 to 8 years? And can you give color on the percentage that's resetting in '27 and '28?

So the short answer is, in general, it's every 5 years after primary term. Sometimes when we sign an initial lease, it will have a 10-year primary term, but thereafter, it's on every option period, and those options tend to run 5 years.

A.J., in terms of the -- is the other question?

Yes, in terms of the number of leases that would be rolling to FMV in the next year, I mean it's definitely a significant number. And then when you add those to the active pry loose pipeline, we should be able to meaningfully capture that growth.

Okay. And the other question I have is, within the corridors that you're curating the corridor themselves, at what percentage of ownership do you tend to start pricing yourself out? Like where do you see that the benefit that's going to the other properties you don't own start to create acquisition problems for that corridor?

It's tricky. And Reg, feel free to chime in as well. I'd say it's more art than science. And remember, the economy comes into play. So there will be times where we feel like we are priced out of a given market, but then the cyclicality of the economy kicks in and other buyers disappear.

First and foremost, because when we are active in a given corridor, like Armitage Avenue, we have best market intelligence as long as we can afford to be patient and we can, you'll see us consistently every year, we may add 1 or 2 buildings, and there's not a lot of competition for that. Conversely, in a place like SoHo, when a market really gets moving, then we may have to step to the sidelines, pause for a bit. But thankfully, we have enough other markets where we have a unique position that we have been able year in, year out to do $300 million to $500 million of acquisitions without getting priced out. It does irritate us, as you pointed out, though, when we curate a street and make other people rich. So what you'll see in down at Henderson Avenue, for instance, is we're continuing to add buildings because we'd rather hold on to that for ourselves.

Our next question is a follow-up from Paulina Rojas-Schmidt with Green Street.

Short follow-up. You talked about the lighter CapEx as a structural advantage of street retail. Can you help quantify that, whether perhaps a CapEx run rate as a percentage of NOI or however you find it more intuitive to frame it?

Yes. So Paulina, what I would say, right now, we're in an extraordinary period of lease-up. If you were just to look at our CapEx right now, it's going to run at a higher percentage just because we're bringing so many tenants in. So let me talk about upon stabilization as to upon stabilization, what is between recurring lease-up, maintaining the asset, the CapEx to maintain the asset and the improvements that we need as part of that. So we'll start with what we see in our portfolio on power centers.

So on power -- on the power we own, which is primarily in our investment management, that's going to -- we target in the 15% range of NOI for that full CapEx load. Grocer is going to be lower by a couple of hundred basis points, so call that between 10% to 12%. And then street, the street we are in the 7% to 10% range on street CapEx. So that's, again, what we like about the street. It's more higher growth, lower CapEx, which gets us to the higher net effective rental growth.

And the other thing the part of the reason the street, the dollars may be higher, but your rents are higher, which make that percentage down, which is important to keep in mind.

So does that answer your question?

I'm showing no further questions at this time. I'd like to turn the call back over to Ken Bernstein for closing remarks.

Thank you all for taking the time. Anthony Paolone, we miss you, but we look forward to speaking to you all again soon.

Thank you for your participation. You may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the Acadia Realty Trust First Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Linnell Ray, lease administration and due diligence analyst. Please go ahead.

Good morning, and thank you for joining us for the First Quarter 2026 Acadia Realty Trust Earnings Conference Call. My name is Linnell Ray, and I'm a lease administration and due diligence analyst.

Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934 and actual results may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic filings with the SEC. Forward-looking statements speak only as of the date of this call, April 29, 2026, and the company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. [Operator Instructions].

Now it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Thank you, Linnell. Great job. Welcome, everyone. As you can see in our press release, we had another strong quarter in what is shaping up to be a very solid year both with respect to our internal as well as our external growth initiatives. And while geopolitical events have certainly added unwanted uncertainty to the global economy, thankfully, due to the tailwinds for open-air retail in general, and then even more so for street retail. We are seeing continued strong results driven by strong tenant demand, strong tenant performance and attractive investment opportunities. As the team will discuss in more detail, we delivered 11% year-over-year earnings growth, driven by nearly 6% same-store growth. And even with heightened uncertainty in the capital markets, we completed over $2.5 billion of transactional activity comprised of $600 million of new investments, over $500 million of recapitalizations within our investment management platform and a new $1.4 billion corporate borrowing facility.

Now since I have discussed in detail the key drivers of the tailwinds in open-air retail in our previous calls. I will limit my explanation a bit. But in short, our continued strong performance is being driven most significantly by our street retail portfolio and more specifically by 5 key factors: first, limited supply that continues to shrink. Second, and probably more importantly, increasing demand due to the ongoing focus by retailers to having their own physical locations rather than being so heavily reliant on either wholesale or digital channels. Third, strong tenant performance due to a resilient consumer, especially the upper-end shoppers at our street locations. Fourth, lighter relative CapEx in our re-tenanting of street locations. And finally, stronger annual income growth in our street locations due to both higher contractual growth and then more frequent mark-to-market opportunities.

These continued tailwinds are enabling us to deliver solid internal top line growth and having that growth hit the bottom line, both in terms of earnings growth as well as net asset value growth. A.J. Levine will discuss our progress last quarter and why we are poised to continue to deliver superior growth for the foreseeable future. And then supplementing this internal growth and ensuring that we can continue to deliver this steady growth well into the future is our external growth initiatives. Reggie Livingston will discuss our acquisition activity over the last quarter, where we continued to deliver on our goals, both with respect to our on-balance sheet acquisitions of street retail and our execution through our investment management platform.

But let me give a few observations. As we have seen more investor interest in retail over the past year, competition has increased for most formats of open-air retail. But so has the volume of deals coming to market. So even with increased competition, we expect to be able to meet our acquisition goals. And while we welcome the company, it has been a bit more difficult to simply buy existing yield to make our targeted returns. So as it relates to street retail investment opportunities, while competitive, it's still a less crowded field than in other formats with fewer capable buyers. So we're still seeing enough attractive investments that are accretive day 1, both to earnings and net asset value. And we are most focused on investments where there are near-term value creation opportunities where we can use our skill set and relationships to unlock that value. We're still finding deals that get us to a 6% plus yield in the near term, but require a few more moving pieces.

And since our team has never been hesitant to use its value-add skills and relationships, this shift is welcomed. Same is true for our investment management platform, the ability to achieve opportunistic returns by simply buying stable assets as we successfully did during our Fund V investment period a few years ago, is becoming increasingly difficult. Thus, our recent investments over the past year have been much more value-add focused, and we expect that focus to continue. And as it relates to our investment management activity, we can actually team up with the increasing pool of institutional capital and harness that increased interest. So we don't have to just beat them, we can join them as well.

And to be clear, with respect to both our REIT and investment management acquisitions, our goal continues to be to make sure our investments are accretive to earnings and to net asset value day 1 and to achieve a $0.01 of FFO for every $200 million of assets acquired. Reggie will walk through how our most recent activity is meeting our goals, both in terms of volume and accretion and then equally importantly, how we are planting seeds for continued superior growth down the road. Then finally, John Gottfried will walk through our balance sheet metrics and how we are positioned to continue to drive both internal and external growth with plenty of dry powder and diverse sources of capital. So to conclude, our street retail investment thesis is working. The internal and external opportunities we see provide a clear line of sight into providing solid multiyear top line growth and then having that growth drop to the bottom line. Then with ample balance sheet capacity, we're in a position to capitalize on the exciting opportunities that we have in front of us.

I'd like to thank the team for their continued hard work. And with that, I will hand the call over to A.J.

Thanks, Ken. Good morning, everyone. So I'd like to start out with an update on internal growth with a focus on trends and performance on our high-growth streets. Then I'll touch on some of our slower to recover markets with significant upside, namely San Francisco and North Michigan Avenue, and I'll finish with an update on Henderson Avenue in Dallas.

Overall, another strong quarter of leasing across the board, street, suburban, both within the REIT portfolio as well as our investment management platform. Our total volume of signed leases in Q1 was an additional $3.5 million at our share. We've grown our pipeline of new leases in advanced negotiation to $11.5 million, which is a net increase of nearly $2.5 million above the previous quarter.

As we sign leases, we are quickly reloading the pipeline and then some. As Ken articulated, because of the historically strong supply-demand dynamic and the resilient high-income consumer that shops our streets, all signs indicate that we'll be able to deliver similar results through the remainder of this year and beyond. In addition to an accelerating leasing velocity, we are also seeing a steady rise in market rents on our high-growth streets. We are currently negotiating new leases, fair market renewals and pry loose mark-to-markets along several of our streets, including Soho, Upper Madison Avenue, M Street, Armitage Avenue and Melrose Place. These are all markets that have experienced several years of double-digit rent growth and if we're successful in signing these new deals, it will result in a weighted average spread of just over 40%.

Now remember, street leases have 3% contractual growth. So a 40% spread after 5 years of 3% growth means that rents have grown closer to 60% over that time period. This is what we mean when we say that not all spreads are created equal. Now incremental to the sector-leading growth that we're seeing on our streets, we're also continuing to build conviction around historically strong markets that are in the earlier stages of recovery, like San Francisco and North Michigan Avenue in Chicago. At our last update, we reported that since the start of 2025, we had signed about 90,000 square feet of new leases across our 2 assets with LA Fitness Club Studio and T&T supermarkets.

Since our last update and following the end of the first quarter, we've added another 25,000 square feet by signing Sprouts Farmers Market, who will be joining Trader Joe's and Club Studio at 555 9th Street. And like T&T and Club Studio, this will be their first store in San Francisco. What's become clear is that tenants are strengthening their conviction around the recovery of San Francisco, and with another 70,000 square feet of space remaining to lease, in addition to some accretive pry loose opportunities, we are gaining increased confidence that we can continue to unlock the meaningful remaining embedded value within our 2 San Francisco centers.

Now right behind San Francisco is North Michigan Avenue, which continues to see steady improvement and has certainly moved beyond the green shoots phase of recovery. We still have a ways to go, but foot traffic has returned to pre-2019 levels. And since the start of this year, there has been a noticeable increase in tenant demand. Over the last year, we've seen new store openings and new lease signings from top brands like Mango, Aritzia, Uniqlo and American Eagle and most recently, the 60,000 square foot Candy Hall of Fame at 830 North Michigan Avenue. Even so, rents are still 50% below where they were at prior peak. North Michigan Avenue is an iconic, irreplaceable street and we are confident that the recovery will continue to accelerate. And when it does, we will be well positioned to capture that upside.

And finally, I'll end with an update on Henderson Avenue in Dallas. As a reminder, the vision on Henderson is to create a vibrant, walkable street, curated with the mix of today's most sought after retailers and supplemented with dynamic and recognizable F&B, mixing the best of what's worked on streets like Armitage Avenue in Chicago, Bleecker Street in New York, Melrose Place in L.A. and M Street in D.C. In short, Dallas is first and only true street retail shopping experience. The Street is already off to a great start with tenants like Tecovas and Warby Parker producing sales that could already justify rents doubling. And with 80% of our retail on the street now spoken for, our new leases are doing just that. I can't reveal the names of all of the brands that have committed, but to give you a flavor, the project will consist of a healthy mix of nationally recognized tenants like Rag & Bone, who is relocating from Highland Park Village, along with the collection of younger brands, that have had success on some of our other high-growth streets like Ezio, Cami and Margo.

And we're saving around 10% of our space for brands that are more local and authentic to Texas. Adding some fun high-volume F&B like Prince Street Pizza, Papa Bagel and Salt & Straw ice cream, and you have the makings of a well-curated walkable street. So in summation, the key takeaway is that despite consistently high levels of leasing activity over the past several quarters, we continue to see meaningful runway ahead, both in terms of mark-to-market opportunity and ongoing lease-up of our high-growth streets, as well as tapping into markets that have more recently begun to show the signs of a strong recovery. As always, I'd like to thank the team for their hard work.

And with that, I will turn things over to Reggie.

Thanks, A.J., and good morning, everyone. I'll cover two things: our transaction activity for Q1 and through April and then I'll share some perspective on what we're seeing in the market. On the transaction front, we've been incredibly busy year-to-date. We've closed over $1 billion in acquisitions and recapitalizations, gained footholds on 2 of the country's premier luxury retail corridors, all while achieving our accretion and growth thresholds and building a pipeline that should maintain a high level of activity for the balance of the year.

So let's walk through some details starting with the acquisitions not previously announced. At the end of the quarter, within our REIT portfolio, we made our inaugural investment on Worth Avenue in Palm Beach with the acquisition of 225 Worth for $43 million. The Street is one of the most irreplaceable luxury retail corridors in the country and it has all the ingredients for continued rent growth, including strong performing tenancy, a high-end customer base and limited supply. This asset contains Gucci, J.McLaughlin and G4 and possesses a meaningful mark-to-market opportunity that we'll harvest in the near future.

Our convictional work goes beyond this single asset. We have an active pipeline in our corridor and our strategy there mirrors what we've executed in other markets, acquire our foundational position, build scale and activate the benefits of concentration to drive returns over time. Subsequent to quarter end, also in our REIT portfolio, we closed on 4 and 28 Newbury for $109 million. These assets are anchored by Chanel and Cartier, two of the most sought-after luxury tenants in the world. These buildings are between Arlington and Berkeley Streets on Newbury, one of the best concentrations of luxury retail on the East Coast. And most importantly, this asset has a meaningful value creation opportunity that we expect to harvest soon.

The same scale thesis applies here. We understand the Newbury Street market and have relationships to create a path to building a greater presence on the corridor. For both Palm Beach and Boston, it's important to note they adhere to our metrics being accretive to NAV, hitting our FFO accretion target of $0.01 per $200 million with CAGR in excess of 5%.

On the investment management side, Q1 was defined by executing on recapitalizations. We formed a joint venture with TPG Real Estate that encompass the recap of Avenue at West Cobb and 6 Fund V assets, a [ $440 million ] transaction. The scale of this recap is a meaningful validation of our platform, our assets and our relationships. We also completed the recap of Pinewood Square and Palm Beach County with private funds managed by Cohen & Steers and a $68 million transaction. This is our second recap for Cohen & Steers, a highly regarded investor and their involvement reflects both the quality of the asset and the credibility of our business plan. These transactions in part demonstrate our incubated recap model at work and in total, free of capital that we can accretively redeploy.

Now turning to what we're seeing in the market. The retail investment landscape remains active. Even if the macro backdrop has grown more complex. Supply remains constrained, new development is sparse and institutional capital flows into quality of retail continue to grow. And none of the current macro noise has changed those underlying dynamics. What that environment rewards, though, is exactly what we've built. Recall, in the street retail world, the majority of our acquisitions are off market, and that sourcing advantage doesn't diminish in periods of volatility. If anything, it improves, as motivated sellers gravitate towards certainty of execution. And this rewards us disproportionately because there are just less players in the street retail segment, and our pipeline reflects that reality.

We have a number of opportunities in advanced stages of negotiation, and we'll continue to underwrite to the same discipline thresholds that have defined our recent activity. On the investment management side, while the institutional appetite remains elevated, so are the number of owners looking to monetize. Owners without the capital, patience or relationships to unlock value in their assets are looking for an exit, and that's creating a compelling opportunity for a platform like ours that has all 3. Our pipeline on this side is as active as it's been.

So to close, as I said, we've been busy buying the right assets on the right corridors with the right growth profile while continuing to accretively build the investment management business. We expect this activity to continue as we're on track to deliver transaction volume for the balance of the year consistent with our past activity. I want to thank the team for their hard work this quarter.

And with that, I'll turn it over to John.

Thanks, Reggie, and good morning. Our first quarter results are clear. Our internal growth is accelerating, and we are achieving our external growth goals on both accretion and volume. And these accomplishments are driving our bottom line earnings. Our year-over-year earnings are up 11% and with the acquisitions completed to date, we raised our full year 2026 earnings guidance. I will start my remarks by laying out the building blocks for the remainder of the year followed by an update on 2027 and then closing with the balance sheet.

For those of you that know our approach towards earnings expectations, we set robust targets for ourselves, and thus makes it unlikely of raising our guidance, particularly so early in the year. However, given the strength in our operations and the accretive acquisitions we've completed to date, we raised both the high and low of our guidance to $1.22 to $1.26, representing 9% growth at the midpoint over the $1.14 of FFO we reported in 2025. And with the simplified reporting that we rolled out last year, you can clearly see what's driving that growth. Based on our latest model, here's how that $0.10 of projected year-over-year growth breaks down.

We expect that our internal NOI growth, inclusive of redevelopments, should contribute about $0.07 to $0.09 of FFO. External growth is projected to add $0.04 to $0.05, driven by the full year impact of 2025 deals and those closed year-to-date in 2026. And the continued expansion and scaling of our investment management program should add another $0.01 to $0.02. And as we've previously discussed, partially offsetting our projected growth is approximately $0.04 that is embedded in our guidance from the anticipated conversion of the City Point loan in the second quarter.

Again, while dilutive in the near term, it will ultimately be accretive as the asset stabilizes. And the earnings growth that we expect to deliver in 2026 provides us with a road map for what we aim to achieve in 2027 and beyond. Before moving to same-store NOI, I want to give a few updates on our earnings model and anticipated quarterly FFO cadence for the balance of 2026. We anticipate our quarterly run rate will be in the $0.30 to $0.32 range for the balance of the year, which consistent with our past practice does not factor in additional acquisition accretion notwithstanding the active pipeline our acquisition team is underwriting. Secondly, and as I'll discuss shortly, rent commencements from our signed not yet open pipeline is weighted to the back half of the year positioning us for strong embedded growth heading into 2027.

I now want to give an update on occupancy, internal growth and same-property NOI. At quarter end, our REIT economic occupancy increased to 94%, but as we have said repeatedly, not all occupancy is created equal. Our street and urban portfolio, our most valuable space, sequentially increased 140 basis points and 570 basis points from Q1 of last year, and we still have several hundred basis points of embedded upside with the portfolio 91.7% occupied as of March 31.

As outlined in our release, we ended the quarter with $10.5 million or approximately 5% of our ABR in our signed not open pipeline. We grew our pipeline by approximately 18% during the quarter and that's even after nearly 25% of our pipeline commenced in Q1. And as A.J. discussed, our leasing pipeline remains robust and we anticipate that our SNO should continue to build over the next couple of quarters.

I'll now spend a moment to highlight a few key items on our $10.5 million pipeline for those updating models. We anticipate that approximately 80% of our SNO representing $7 million to $9 million of ABR will commence during 2026, with the remaining balance targeted for the first half of 2027. I want to highlight that over $4 million of this $7 million to $9 million is projected to commence in the fourth quarter of this year, primarily from the anticipated openings of T&T Supermarket and LA Fitness Club Studios at our San Francisco redevelopment projects.

And when incorporating the timing of commencement, we expect approximately $2 million to $3 million of incremental ABR to be recognized in 2026 with the vast majority being part -- with the vast majority of that being in our same-store pool, which leaves us with $7 million to $8 million of embedded incremental ABR growth heading into 2027. And lastly, on earnings flow-through with nearly half of our SNO coming from our redevelopment portfolio, we're capitalizing certain costs, primarily interest and real estate taxes. So not all of that incremental ABR flows to the bottom line. Of the $5.3 million of ABR in our SNO redevelopment pool, we expect to capitalize between $3 million to $4 million of cost on a full year run rate basis.

Moving on to an update on our 2026 same-store expectations. We remain on track to land at the midpoint of our guidance or 7%. I will likely regret providing this level of quarterly granularity, giving it only takes a few hundred thousand dollars to move us 100 basis points in either direction. But based on our current model, we see same-store growth trending 6% to 8% in Q2, 7% to 9% in Q3 and 5% to 7% in Q4, with our street and urban portfolio anticipated to outperform suburban by 400 to 500 basis points.

And now moving on to our balance sheet. So far in 2026, and it's still early, we have acquired over $600 million of REIT and investment management deals, and we did so without issuing any equity. And with the available capacity on our revolver, unsettled forward equity, and anticipated proceeds from our structured finance and investment management businesses, we have all the accretive capital we need to fund our acquisition pipeline. As highlighted in our release, we completed the refinancing of our unsecured corporate credit facility, entering into a $1.4 billion agreement. As part of this refinancing, we tightened pricing, extended maturities and increased our total borrowing capacity by $250 million to support our growth. The new facility was significantly oversubscribed and we strategically added 2 new banks to our incredible and long-standing lineup of capital partners.

Following the completion of this facility, we have very manageable maturities and swap expirations over the next couple of years, which means our top line earnings will largely drop to the bottom line. So in summary, we had an incredibly busy and productive start to the year. Our multiyear expectation of strong internal growth is intact, and we have a balance sheet that has ample capacity to support our expansion goals.

And with that, I will turn the call over to questions.

[Operator Instructions] Our first question comes from Craig Mailman with Citi.

So John, that was helpful going through the kind of the guidance detail there. Just kind of curious between A.J. and Reggie, I know there's not a lot incrementally for acquisitions. Maybe just to start there, Reggie, I think you said that activity for the balance of the year could be similar to what we've seen recently. I mean in terms of magnitude on gross and then maybe pro rata share, like goalpost, what you guys are looking at, what could conceivably close this year and maybe what the earnings impact of that could be?

Sure. I'll focus on what I think it closed this year. I guess taking a step back, run rate on the REIT portfolio side, we've done about $400 million or so the last year plus. We've done about $200 million of that so far this year. So I think we could pencil in doing basically the same volume that we've done last year from our REIT portfolio side. On the investment management side, where we've averaged about $250 million plus or so over the last 2.5, 3 years. per year. I think we can do that as well. That's by definition a little lumpier because we're focused more on value-add opportunities, but I think that's kind of how we think about it from a goalpost standpoint from a volume.

And then on the earnings side, so Craig, I think the one thing we pointed out is that our target, which is unchanged, is $0.01 of accretion, and that is both REIT. So on a $200 million worth of REIT acquisitions, our team is day 1 earnings accretion of a $0.01 per $200 million. And that same math, even though our pro rata share is much less of the equity, but when you factor in the fees, $200 million of investment management is also penny. So in terms of earnings impact, you would just prorate that throughout the year, but those targets are unchanged.

Okay. That's helpful. And John, you're breaking up a little bit. I don't know if it's my line or yours, but just a heads up. And then just similarly on the leasing side, A.J., you said you guys are working on a fair bit of fair market value adjustments and some other deals. I mean, how much of those are already embedded in guidance versus could be incremental upside as we head into the back half of '26 into early '27?

Craig, are you referring to what's in the pipeline of what could be in the pipeline and converted to show up in rents? Is that the question?

Yes. Like what's actually considered in some of the metrics you guys talked about versus could be additive to that. You guys don't want to put it in there yet because the predictability of it is not great. Just kind of...

Got it. So I think what any leasing that we need to happen has already happened to hit the midpoint of our guidance, both on same-store and earnings. So whatever A.J., if he gets something signed that's in his pipeline, and we get them open and operating, that would be additive to that, which in the street is possible.

Yes, we're typically fairly conservative with F&B assumptions, and it's typically upside for us.

Our next question comes from Andrew Reale with Bank of America.

Maybe if you could talk about your new corridors, Palm Beach and Prime Newbury. I guess, first, what's the time line for realizing the mark-to-market opportunities there that Reggie mentioned? And then are there any additional assets in the pipeline in either of those markets today? And how scalable do you think those markets could ultimately be?

Sure. I'll start with the second one, Andrew. So for us to identify a market, it's never just about one deal. We think how can we [indiscernible] 100, 200 plus over time so that we can enjoy the benefits of that scale that we've talked about being in the first call for sellers, the first call for tenants and et cetera. So we have an active pipeline that we feel pretty good about. We're always going to stay disciplined in our underwriting, as I've said before. But we think those markets we do, we think we can scale.

Before we even talk about scaling though, is do those markets have the same rent growth drivers and demand that we have in SoHo, in Georgetown and our other markets. And I think these guys -- I think these corridors do. There's tight supply. The tenant demand is very high. The sales volume is there, not only justified the rent run up from previous years, but continued rent growth in the future years. So we think both Worth Ave in Palm Beach and that [indiscernible] Newbury and some of Newbury generally have those. So we feel good about the opportunities that make sense there and that we'll be able to scale.

To your first question, I don't want to get into too many specifics. But I think big picture, the opportunities for us to harvest mark-to-market opportunities and harvest 6-plus yield really is fact-dependent. But I think the framework and the way to think about all of this is there's a lot of things happening in these markets from that rent growth from F&B resets. A bunch of retailers are actually reaching out to us even before their leases expire and say, hey, I want to invest in my space. So let's do an early renewal now. All those things in order to the benefit of us being able to achieve the yields in the near term instead of long term.

And Andrew, just to add on to that, the way that from a modeling perspective, 2 thoughts is when we look at -- and again, you should assume that in these instances, the lease would be for low market. So when we think of that in the bookkeeping we do, we are conservative as to where we think the market is on day 1. And just a rough rule of thumb that we think about is, ideally, we want to get to the 6s cash that Reggie referred to. Target is 2 years, but we'll tolerate up to 3 or 4 years for the right deal and where we have the level of conviction. But that's in terms of time line and what we do initially to establish the -- really the GAAP yield, which would be that below market impact.

Okay. That's helpful. And then, John, I think it was last quarter, you said pry loose could potentially be the most impactful variable within the 5% to 9% same-store range with the real benefit from that maybe accruing in '27 or '28. I mean if you were to maximize the pry loose opportunity in the second half of this year, how should we think about quantifying the NOI impact from that downtime?

Yes. So I'll go back to my remarks is that we're going to target the 7%, Andrew. So I think that was one we gave a wide range, and I'll start with our historical practice and maybe need to not be so stubborn. We could change our historical practice, but we have not updated same-store guidance once we've given that, which is why we're doing it this quarter. But I would say, assume we are targeting the 7% in the pry loose, I think, is very real, very actionable, but not going to deviate from the 7% target.

Good luck getting John to count his chickens before they hatch.

Fair enough. Thank you.

Our next question comes from Floris Van Dijkum with Ladenburg Thalmann.

Question, it doesn't seem to get a lot of attention these days, but your Henderson Avenue development, it's about $200 million, should investors expect something like a 9% or 10% return on that. And that's what you've indicated here the remaining ATM -- the forward ATM is going to be used to fund that. Maybe also talk a little bit about maybe the timing of that development and what kind of rents you're getting and how much of that is pre-leased?

So let me just start with the yields and timing, and then I'll turn it over to A.J. on the leasing specifics. But we've put out there and we are on, if not ahead of target that we think the development is going to stabilize to an 8% to 10%. So very consistent with what you shared. Other point of that, Floris, that's the 8% to 10% on the dollars we're spending incrementally. What that is not factoring in is that we have a whole other portfolio of assets that what A.J. is about to share with you is that, that whole entire portfolio of assets is proving out to be very below market that we are not factoring in the lift from the balance of the portfolio that the development is going to add to that.

In terms of time line, we'll be through our part of construction. Back half of this year, begin delivering space, stabilizing in '27 and up and running in '28. But I'll let A.J. talk about where we are in leasing and status there. But in terms of what we laid out as expectations, we are on track, if not ahead.

Yes. I mean I would say the interest and excitement on Henderson has been far beyond, I think, what we initially imagined. And I think what you have to remember, and we've said it before, is that existing sales on the street are already in excess of some of the sales we're seeing even in markets like Armitage Avenue and rents on Henderson are half of what we have currently on Armitage Avenue. So I mentioned in my prepared remarks, there's already justification for rents doubling on the street. And some of the more recent leases that we're signing are actually doing just that.

So Rag & Bone obviously having a lot of success over at Highland Park Village, deciding to shift to merchandising that's a little bit more in line with what they prefer from a co-tenancy standpoint, some of the younger brands like Margo and Ezio, I'm anxious to give you more names. I've shared what I can at this point, but we're off to a great start.

Great. And maybe as a follow-up question, if I can ask, wanted to touch base on Chicago. I know you talked a little bit about the momentum. And I think TPG is bought into your JV, if I'm not mistaken at 717. What is the appetite of those kinds of capital partners to perhaps take advantage of some of the opportunistic -- investment opportunities that could be achievable in that market? And maybe talk about some of that, where is the upside? Or is there only -- because all we hear about is typically when we talk to people is Chicago is terrible. What has changed? And why is it not a bad place to be?

So let me start with, first, the recap with TPG was Fund V, nothing to do with Fund IV, so that we still -- everything we own 717 is in Fund IV and still held by Fund IV. So just to clarify there, there's been no transactions.

Yes. I just want to correct one thing. I mean, Chicago is not terrible. It's not been a bad place to be. Certainly, in our neighborhoods, we've had many years of success there. The issue with North Michigan Avenue has never been an issue of fundamentals, right? Street footfalls are back in excess of 2019 volumes. The sales are seeing very real growth over the last few years. It's really always just been a challenge of difficult spaces, multilevel retail, historically been those flagship locations that have been sort of more difficult to backfill. But those spaces are filling in. I mentioned some names in, Uniqlo, H&M coming back to the street, American Eagle, Aritzia, large format spaces. As those fill in, we're going to continue to see increase in activity.

And then, of course, the challenge of having 3 underperforming malls on the street hasn't done us any favor. So as those pieces start to get figured out, we're just going to see more and more momentum on the street.

Our next question comes from Todd Thomas with KeyBanc Capital Markets.

First, I just wanted to ask about the some -- if there's any more markets or partners that you're evaluating today? Just curious how if we should expect some additional inaugural investments in the quarters ahead as we contemplate some additional investment activity?

And then, Ken, maybe a bigger picture question just for you or Reggie. You talked about the increased competition for open-air centers. I think you referenced that in context of speaking about Fund V assets, for example. But you indicated that you're still finding opportunities on the street and urban segment, a little less crowded. Why do you think it's less crowded? Why is the competition lower and the acquisition environment seems more favorable where there are strong IRR and risk-adjusted return opportunities, good rent growth. You talked about the escalators, just curious to get your thoughts there.

Sure. Let me make sure I understand the first part of the question, are you referring to our investment management platform and bringing in additional institutional partners for additional...

No. No. Just you made additional investments in Newbury, but sort of characterized it as like a newer market and your inaugural investment in Palm Beach. Just curious as we think about additional investments whether there's more markets being contemplated today, more corridors that we should expect to see the company enter.

Yes. So I'll tackle both and Reggie can chime in. In terms of additional markets, we spend a fair amount of time, A.J. and I especially, talking to our retailers, which markets are perhaps ones you might want to be in and which ones are going from nice to have to need to have. In the case of Palm Beach, it is transitioning from a seasonal market and for a variety of reasons that we all read about, it's now becoming a must-have market.

In those instances, where we see fragmented ownership where our retailers are saying, boy, we would welcome institutional high-quality ownership like Acadia or others. That is where we spend the majority of our time and attention. In some markets, Dallas, there was no place to buy so there we are building and creating that street retail environment. But for Palm Beach Worth Avenue, check that box clearly as does Newbury in Boston. There are probably half a dozen, perhaps a dozen additional markets that would fit into that spectrum that we're constantly spending time on.

And then what we're saying is, and Reggie touched on this, is there enough assets for us to acquire over a realistic period of time that we can build adequate scale? Is there a spine? Are there barriers to entry on a given corridor? So that it just doesn't keep on wandering up and down, left and right, east or west. And when it does, in the case of Worth Avenue and Newbury, and as I said, about a half a dozen others, you should expect over time that we'll focus on those. We don't have to add new markets in order for us to achieve our goals of being the premier owner operator of street retail in the United States, but it would be nice to have a few more. And from our retailer's perspective, they would welcome that.

Now in terms of competition. Street retail has a longer learning curve. It is pretty easy to underwrite some formats of open-air retail and that's why you saw capital move first and foremost back to supermarket anchor. You still need to underwrite thoughtfully and carefully your supermarket, but all of the things we talked about in terms of our tenants, you don't really hear in terms of the satellites, that dry cleaner, that coffee shop and otherwise, we don't get into that same level of underwriting. So there's just lower barriers to entry.

For street retail, you have to understand the market. You have to understand the tenants. You have to understand the local laws. And it has taken us well over a decade to get to the point where we are right now. And for a lot of institutional owners is that gearing up is just too difficult. They'd rather partner with us or otherwise. And so we are certainly -- we like our positioning in the street retail format. That being said, as Reggie pointed out, the team has been very active in other formats of open-air retail. Thankfully, volume is coming back. So we'll achieve our volume goals notwithstanding it being more competitive. We just have to work a little harder on it and so far, so good.

Okay. That's helpful. And then, John, just real quick. I appreciate the update on City Point, as it pertains to the guidance. What's the ABR upside opportunity there today? You're at a little over $21 million of ABR. Where does that stabilize? And what's the current thinking around the stabilization time frame?

Yes. So in terms of stabilization, Todd, it's one we've always thought of in 2 distinct phases. So I think the first phase and call that in the next 18 to 24 months where we should be able to add 10% to 20% of current ABR, we should add our goal, our strategy and our leasing plan, add that over the next year or two. Secondly, after we'd be able to -- again, the neighborhood is still filling in, proof of concept, we have some leases that we've signed that will be rolling.

Second stabilization. We think that A.J. chime in, but we think that we add another 30% to 40% off of that once we get to that second level of stabilization after we get through this, this first one.

Yes. for sure. I mean the last 18 months have been pivotal at City Point between Sephora and Swarovski, most recently, Warby

Parker, Van Leeuwen, it really is starting to get that Armitage M Street feel. So really, at this point, it's just about finding the right retailers completing that right mix of merchandising. But yes, there's a lot of runway ahead there as well.

And Tom, what we look at to give us conviction, there is the sales that are being generated and from -- we don't want to give individual tenant sales, but you could take a guess as to who they are. They are doing the increasing volumes that is attracting the attention to retailers that is what's giving us the conviction that it's a matter of when, not if.

Our next question comes from Michael Mueller with JPMorgan.

I guess first, you mentioned 8% to 10% returns for the Henderson expansion. What are some of the moving parts that pull you at an 8% versus a 10? I mean, is there that much variability in the rents being discussed?

Yes, Mike, some would be costs, some would be timing of open of when we declare we are at stabilization. And if you really looked at the math, when you're doing a full lease-up like this, 200 basis points of variability feels normal. Maybe it's a little wide so that we're being a little conservative, but it's not appropriate to say we're getting to 9% right now. I think give us a little latitude and hopefully, the tenant sales performance that we have seen so far, the tenant enthusiasm that we're seeing. And then a lot of it is just logistics. How long does it take to get the various different tenants open, a few month delay could change those numbers 10, 20 bps, one direction or another.

Okay. And I guess second question, you now have 3 buildings on Newbury, the 1 in Palm Beach. And I know the goal is to scale that. But could you operate those buildings efficiently over the longer term if you couldn't find additional acquisitions? Or do you really need to be -- have 5 or 10 assets in the market to kind of have it work over the long term?

Yes, we could absolutely operate them. When I refer to and when we have referred to benefits of scale, it's very different than G&A as a percentage of assets in a given corridor. And while there are benefits to scale like that, and that's how we traditionally in our industry think about it, what we're seeing is very different. What we're seeing is when we can control enough buildings on a given corridor as we have in Armitage Avenue, as we have on M Street, as you will see us continue to do on Green Street in New York and elsewhere. We can then pull other levers that enable us to, in fact, get higher rents, more efficiently, less downtime.

So A.J. and team are constantly shuffling tenants. We just had a meeting this morning on this, where some tenants want to be larger, others are ready to leave. And by having enough choices on a given corridor, and being a trusted landlord for these retailers, the benefits of scale that we're referring to are not cost related. It's really the ability to drive rents and NOI over time, and that requires more than just a couple of buildings on any corridor. So in order for those benefits of scale, if I'm referring to it, I look forward to Reggie and team adding to both of these corridors over time.

That concludes today's question-and-answer session. I'd like to turn the call back to Ken Bernstein for closing remarks.

Great. Thank you, everyone. Look forward to speaking with you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Acadia Realty Trust Fourth Quarter 2025 Earnings Conference Call [Operator Instructions] Please note that today's conference is being recorded. I will now hand the conference over to your speaker host for today, Will Delves. Please go ahead.

Good afternoon, and thank you for joining us for the Fourth Quarter 2025 Acadia Realty Trust Earnings Conference Call. My name is Will Delves, and I'm an analyst in our asset management department. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward-looking statements.

Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, February 11, 2026, and the company undertakes no duty to update them. During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. Once the call becomes open for questions, we ask that you limit your first round to 2 questions per caller to give everyone the opportunity to participate. [Operator Instructions] Now it's my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Thank you, Will. Great job. Welcome, everyone. Our strong fourth quarter results added to an overall strong year with both solid internal and external growth. and this momentum is continuing as we head into 2026. A.J., Reggie and John will discuss our performance last quarter and our outlook going forward. But before diving into the details, I'd like to take a step back and discuss the key initiatives we put in place over the past few years and how they have positioned us for not only strong current performance, but also for strong long-term growth.

A few years ago, after the very painful multiyear headwinds, first from the retail armageddon, then from COVID and related issues, it became clear that the strong rebound in our portfolio performance was likely more than just a COVID rebound and was setting up for a longer-term positive fundamental shift for retail real estate. As we've discussed on prior calls, these tailwinds benefited most open-air retail, but they have been especially beneficial for the street retail component of our portfolio and for several reasons.

First, the lack of new development of retail real estate for almost a decade has caused a rebalancing of supply and demand and has been a powerful tailwind for all open-air retail. But more importantly, the additional shift by retailers away from a heavy reliance on selling through wholesale and department stores. And they're recognizing the need for their own physical stores has been an additional important driver of demand. And this increased demand has applied much more to discretionary retail, especially in key must-have corridors.

Then second, while the consumer has generally been more resilient than anticipated, the so-called K-shaped economy has meant that tenant demand and tenant performance by discretionary retailers who serve the upper segment of the economy has continued unabated. Thus, the general bias in the equity markets last year to pivot to necessity-based retail following Liberation Day appears overdone as the street retail portion of our portfolio continued to outperform our other segments.

Then third, the structure of street retail leases enables us to capture higher rental growth sooner than in our suburban assets. While increasing market rents are good for all real estate, it is most beneficial for those properties like street retail that have a combination of stronger contractual growth, fair market value rent resets and lighter relative CapEx on re-tenanting. Sooner or later, all retail real estate will benefit from increases in market rents, we just prefer sooner.

So as we saw these trends unfolding, we positioned ourselves to capture this growth. As we stated, our goal has been to deliver multiyear NOI growth of 5% and for this growth to hit the bottom line, both in terms of earnings growth and net asset value growth. Consistent with this goal, we have now delivered 4 consecutive years of same-property NOI in excess of 5%. And we want to make sure that we are not only producing strong current results, but are positioned to do so for the foreseeable future. We are delivering on this growth goal through several different initiatives or levers.

First and foremost is leasing up a vacancy. Over the past 4 years, we have increased our economic shop occupancy from approximately 81% at the end of 2021 to over 90% today. And at 90%, we still have room to run. Then beyond this lease-up, a second lever is our ability to capture rental growth on our streets from both our PryLoose strategy and our fair market value resets. And A.J. Levine will discuss the opportunities we're seeing here.

Then a third lever will come from the meaningful growth coming out of our redevelopment pipeline, most immediately from our 2 assets in San Francisco as well as our development on Henderson Avenue in Dallas. John and A.J. will also give further color on these needle movers as well. And then finally, to supplement this internal growth and to better ensure that we can continue to deliver our long-term growth goals has been our external growth initiatives.

For our on-balance sheet REIT acquisitions, our focus here has been primarily on street retail investments where we can benefit from building operating scale, on must-have streets. While we have found the benefits of scale on the suburban side of our business to be somewhat elusive, we are seeing the benefits more clearly through owning multiple stores on given key streets where we are able to better both curate a street and then drive incremental growth. We saw this playing out on several of our existing corridors such as Armitage Avenue in Chicago and M Street in Georgetown, and this gave us the conviction to focus our future street retail investments on those corridors where we can own enough concentration to create benefits of scale.

So we doubled our ownership stake in Georgetown and D.C. and now control nearly 50% of the street retail in this key corridor. And last year, we delivered in excess of 10% NOI growth. We also doubled down in Williamsburg, Brooklyn, investing approximately $160 million by adding 10 storefronts on North Sixth Street. We also doubled down on Green Street and SoHo, investing over $80 million. And we more than doubled down in Henderson Avenue in Dallas, where we will be increasing our investment there by almost $200 million by adding additional assets and commencing our 170,000 square foot development there.

We also expanded into new corridors such as Bleecker Street in the West Village and just this quarter, Upper Madison Avenue in New York City. All told, over the past 24 months, between our street acquisitions and planned investments into Henderson Avenue, we have invested about $700 million. And all of these investments are with a view towards further recognizing the benefits of scale and is extending our long-term growth goals well into the future.

And while the benefits of scale are important on a corridor-by-corridor basis, they also benefit our overall platform as we are well on our way to being the premier owner-operator of street retail in the United States. Then complementing the street retail side of our business is our investment management platform. For as long as Acadia has been in business, we have leveraged our institutional capital relationships to pursue alternative and complementary investment opportunities.

More recently, our investment management model has shifted from running single traditional closed-end funds into multiple JV channels. And as Reggie Livingston will walk through, including our most recent activity, we have successfully executed over $800 million in JV acquisitions over the past 24 months. Big picture, we have been deploying our capital using a barbell approach on one side. Our on-balance sheet activity has been focused on high-growth street retail, well suited to long-term ownership.

And then for our investment management platform, we are focusing on opportunistic and higher-yielding investments for this buy, fix, sell side of our business. So to conclude, the internal and external opportunities we see provide a clear line of sight into providing multiyear top line growth of 5% and having that growth drop to the bottom line. Then with ample balance sheet capacity, we're in a position to capitalize on the exciting opportunities that we have in front of us. With that, I'd like to thank the team for their hard work last quarter and last year, and I'll hand the call over to A.J. Levine.

Great. Thanks, Ken. Good morning, everyone. So before I dive into the quarter, I'd like to take a minute to highlight another record year of leasing for us in 2025. Driven largely by the trends that Ken mentioned, most notably retailers increased focus on DTC and the remarkable strength of the high-end consumer, our tenants invested in both new and existing stores with confidence and at an accelerated pace. That momentum remained consistent throughout the year and shows no signs of slowing as we look ahead to the balance of 2026 and beyond.

Over the course of 2025, with a focus on pry loose opportunities and thoughtful curation, we leaned into our growing scale to add several new and exciting brands while also expanding relationships with some of our most dynamic, highest-performing tenants. Notable additions would include T&T Grocery and LA Fitness Club Studio in San Francisco, Google and Swarovski on M Street in D.C., Richemont's Watchfinder and Veronica Beard in SoHo, Rag & Bone on Henderson Avenue in Dallas, UGG on North Sixth Street in Williamsburg and most recently, an expansion and extension of the Row on Melrose Place in Los Angeles.

In addition to curation, 2025 was also a year of unlocking the outsized rent growth we've seen across our streets over the last several years. Through a combination of lease-up, pry loose and fair market resets, the team consistently delivered spreads in excess of 50% on our streets. 2025 was also a banner year for tenant performance and sales growth across our advanced contemporary, aspirational and specialty street tenants. Year-over-year sales on our streets ranged from 10% to as high as 30% to 40% in some markets.

As we've said, tenant performance remains the most important indicator of future rent growth and where sales go, rents inevitably follow. And we expect that the last several years of outsized sales growth on our streets will continue to translate through to outsized mark-to-markets in the coming years. But given where occupancy cost ratios are on our streets today, even if that growth were to moderate, our tenants and our markets would remain healthy.

Now turning to the quarter. In Q4, we signed another $3.5 million of ABR with nearly 75% coming from high-growth markets, including Melrose Place, Williamsburg, Newbury Street and Henderson Avenue in Dallas. Highlights included the addition of UGG at one of our more recent acquisitions on North Sixth Street in Williamsburg, replacing lululemon, which we successfully relocated and expanded elsewhere on the street. Because of our scale on North Sixth, we were able to add UGG at an unreported 72% spread while also retaining an important tenant in lululemon.

While that spread was not included in our release, it's another strong data point and indicative of what we're seeing across the street portfolio. Similarly, during the quarter, we signed a new lease on Newbury Street at a 58% spread and on Melrose Place at a 60% spread. And as is typical for street leases, all of these deals included the added benefits of 3% annual contractual growth and fair market resets. Beyond signing new leases, we continue to create value through our pry loose and mark-to-market strategy.

As a byproduct of the sales growth we've highlighted, tenants are increasingly reinvesting in existing stores, especially in must-have A markets like SoHo, Gold Coast Chicago and Melrose Place. In many cases, tenants are approaching us several years ahead of lease expiration for additional term, which allows us to secure these tenants long term and recast those leases to market.

For example, in January, a tenant of ours in SoHo was planning a substantial reinvestment in their store, but had just 2 years of term remaining. In exchange for extending the lease today, we were able to immediately reset the rent to market, effectively pulling forward mark-to-market by 2 years and achieving a 51% spread. This transaction alone contributed close to $0.005 of FFO. But the pry loose and blend and extend strategy is not just about accelerating mark-to-market. It is also a critical component of portfolio maintenance and risk management.

In many cases, it allows us to upgrade credit merchandising. While in other cases, including this one in SoHo, it allows us to lock in credit long term, helping mitigate any potential short-term market volatility. In that sense, the strategy is both proactive and defensive. Looking ahead, we've identified additional pry loose and early extension opportunities across SoHo, M Street, Armitage Avenue, Henderson Avenue, Bleecker Street and Williamsburg. While we still have a healthy amount of lease-up ahead of us on our streets, we also expect to continue mining the portfolio and capturing outsized rent growth while setting the portfolio up for long-term success.

Now looking ahead to 2026 and beyond, tenant demand appears to be accelerating, and our pipeline of leases in advanced negotiation currently exceeds $9 million, up roughly $1 million from last quarter with the majority of that future growth coming from our streets. And finally, in terms of markets in the earlier stages of recovery, we continue to be encouraged by the interest and the activity we're seeing in San Francisco.

John will walk through the economic impact of our progress in the city, but over the past year, we've signed 90,000 square feet of leases at 555 Ninth Street and City Center that currently sit in our SNO pipeline. At both assets, we saw the elimination of formula retail restrictions, which will help these retailers and future tenants get open faster and with fewer obstacles.

So with the winds in our backs picking up and a pro-business administration in office, we expect continued progress in San Francisco, and we are in active negotiations on several more high-impact deals that we look forward to discussing in the coming months. So overall, we remain very encouraged by the trends and the performance we've seen over the past year. And as we look forward, we see clear indications that this momentum will continue. I want to thank the entire team for their hard work and focus throughout the year. And with that, I'll turn things over to Reggie.

Thanks, A.J. Good morning, everyone. As noted in our earnings release, our Q4 and to-date acquisition volume stands at nearly $500 million. And to give our recent growth further context, over the last 24 months, we've closed in excess of $1.3 billion of acquisitions, including over $500 million in street retail for our REIT portfolio and over $800 million in value-add deals for our investment management platform.

That volume is certainly a needle mover for a company of our size, but it isn't volume for volume's sake. As Ken mentioned, in our street retail acquisitions, we doubled down in dynamic growth markets and expanded into new markets with those same growth characteristics. And for our investment management platform, we did more volume than any comparable period during our commingled fund business as we continue to find great assets with strong upside and capitalize them with top-tier institutional partners.

By design, our dual platform approach has continued to find ways to profitably grow as our REIT portfolio and our IMP deliver the accretion consistent with our goals of $0.01 per $200 million. We're excited by how much we've grown, and we see nothing on the horizon that should slow us down. Now diving into specifics of our most recent activity and some 2026 visibility. Last month, we purchased 5 retail storefronts at 1045 and 1165 Madison Avenue in Manhattan with tenants such as Le Labo and Todd Snyder. These assets sit within the Upper Madison retail district, which is attracting a new generation of contemporary brands.

This influx is driving a rent growth surge that places the current rents in these assets below market. And further, if we can find accretive opportunities, we plan to add more assets in this corridor to generate the benefits of scale that we've enjoyed in other submarkets. Looking ahead in our street retail business, we continue to see prime opportunities and currently have north of $150 million of deals under agreement that could close in Q1.

This pipeline is being driven by sellers who continue to come off the sidelines and our priority position as the first call for many of those sellers. Our reputation as a group that knows how to underwrite and close these transactions is well known throughout our target markets and continues to serve as a competitive advantage. And while that positive reputation has underpinned our street retail growth, it also contributes to us executing the other side of our barbell investment approach, that is finding value-add and opportunistic deals for our IMP.

In that platform, alongside our partners at TPG Real Estate, we closed on Shops at Sky View for approximately $425 million. The asset is a 550,000 square foot center in Queens, New York with national tenants, including Marshalls, Burlington, Uniqlo, and BJ's among others. The investment delivers similar yields to other recent IMP deals, but the population density and trade area spending power is substantially higher here. The asset attracts nearly 12 million annual visitors, which is only poised to increase with the recently approved Hard Rock Hotel & Casino, an $8 billion mixed-use development located a short walk from the asset.

Our business plan will continue to drive value through accretive remerchandising and harvesting mark-to-market rents. We're also in advanced stages of recapitalizing Pinewood Square and Avenue at West Cobb with first-class institutional investors. Again, demonstrating another arrow in our quiver, using our balance sheet to close quickly on IMP assets while being thoughtful about matching the investment with the right partner.

These transactions, along with others we have currently teed up, should make for an active Q1 for the investment management side, so stay tuned. Looking ahead, we anticipate this side of our business will continue to find attractive value-add deals this year even as the surge of investment interest in retail has made finding such deals, frankly, harder. But in those competitive environments, our platform has a history of being able to profitably source, analyze and harvest outsized returns.

So in summary, we closed nearly $1 billion of 2025 and to-date acquisitions. That amount includes nearly $400 million of REIT portfolio transactions that resulted in an attractive GAAP yield in the mid-6s and 5-year CAGR in excess of 5%. And most importantly, these deals across platforms delivered accretion in excess of our $0.01 per $200 million target. And further, we're excited about our 2026 pipeline. And while my goal isn't in John's numbers, I'm confident we should be able to deliver volume consistent with our run rate in the past 2 years, and it will deliver the earnings and NAV accretion consistent with our mandate, not to mention strong CAGR to complement our internal growth. I want to thank the team for their hard work this quarter. And with that, I'll turn it over to John.

Thanks, Reggie, and good morning. My remarks today will focus on our quarterly results, our 2026 outlook and then closing with an update on our balance sheet. And our message is clear. We are continuing to see strength across our dual platforms. And with multiple avenues of growth, our team is laser-focused on driving earnings and NAV growth.

Starting with our fourth quarter results. We reported same-property NOI growth of 6.3% for the quarter and 5.7% for the year, coming in at the upper end of our guidance with our street and urban portfolio once again driving our growth. And this top line growth is hitting our bottom line earnings. We reported $0.34 a share for the fourth quarter, which included $0.03 of gains from our final sale of Albertsons shares. And just to lay out a clean run rate, once we back out the $0.03 of Albertsons gains and the onetime $0.01 of net real estate tax savings highlighted in our release, we're at $0.30 for the quarter, which is sequentially up an incremental $0.01 from the $0.29, also net of the gains and promotes that we reported in Q3.

Additionally, and in line with our goals, we increased the REIT's economic occupancy another 30 basis points to 93.9%. It's also worth highlighting that our street and urban economic occupancy sequentially increased an additional 80 basis points during the fourth quarter and 370 basis points over the course of 2025. But as we've said before, not all occupancy is created equal, with street and urban occupancy at approximately 90% versus prior peak levels that were in excess of 95%, we continue to see meaningful embedded NOI and earnings growth.

I'd now like to highlight a few items from our signed not open pipeline. First, our pipeline of $8.9 million at December 31 remains elevated with ABR at our share of approximately 4% of in-place rents. And with the incremental leasing opportunities that A.J. discussed, we should be able to maintain with an opportunity to exceed our current pipeline, setting us up for continued growth heading into 2027 and beyond. Substantially all of our $8.9 million pipeline is expected to commence in 2026, with roughly 25% commencing in each of Q1 and Q2 and the remaining portion commencing in the second half of the year, heavily weighted towards the fourth quarter.

And based on this timing, we expect approximately $4 million of ABR to be reflected in NOI in 2026 with the incremental $4.9 million in 2027. Secondly, in terms of the portion of our pipeline related to our same-store pool, we executed $1.5 million of new same-store leases, fully replacing the $1.5 million of leases that commenced during the quarter, meaning our ongoing same-property growth trajectory remains intact.

Third, and as a reminder, our pipeline reflects only incremental ABR and excludes leases on occupied space, and we have over $1 million of executed leases on spaces currently occupied, which is incremental to the $8.9 million in our pipeline. Now moving on to our guidance. As a reminder and outlined in our release, we have simplified our reporting beginning with our 2026 guidance. And we want to thank both the buy side and sell side for their input and their strong support in making this important change.

Our new metric, FFO as adjusted, excludes gains from our investment management business, along with any material noncomparable items that we believe are not reflective of our core operating results. As outlined in our release, we are anticipating 2026 FFO as adjusted between $1.21 and $1.25 and projecting same-property NOI growth of 5% to 9%, excluding redevelopments, with our street anticipated to deliver about 400 basis points of outperformance as compared to our suburban portfolio.

I want to start with a few thoughts on our guidance ranges and what factors will determine where we ultimately land, keeping in mind that $1.4 million currently represents about $0.01 of FFO and 100 basis points of annual same-property NOI growth. And 3 key factors will determine where we land within these ranges. First, our assumptions regarding rent commencement dates on executed leases with 4% of our ABR anticipated to commence in 2026, each month of an acceleration or delay as compared to our initial projection equates to approximately $750,000.

Second is credit loss. At the midpoint of our guidance, we've assumed approximately 115 basis points against minimum rents, which is in addition to known or to specific reserves we have factored in for known tenant issues. And for context, the 150 basis points feels fairly conservative relative to the roughly 50 basis points we have averaged over the prior 2 years. And lastly and potentially most impactful is the pry loose strategy that A.J. discussed.

And while it's not factored into our base case, our active management and leasing teams are actively pruning our portfolio to accelerate these opportunities. And while greater success in these efforts may impact our short-term results, it accelerates our long-term growth and value creation. I also want to hit on a few other items as it relates to our 2026 assumptions. First, alongside our projected 5% to 9% same-property NOI growth, we expect total pro rata NOI, including redevelopments and investment management to increase approximately 15% to roughly $230 million at the midpoint compared with the approximately $200 million that we reported in 2025.

Secondly, and as outlined in our release, our earnings guidance, including the numbers -- the NOI numbers I just mentioned do not factor in any acquisitions or dispositions other than those that we reported in our release. And as you've heard from Ken and Reggie, we have consistently delivered in excess of $500 million of annual transaction volume, and we continue to target $0.01 of FFO accretion for every $200 million of incremental gross asset value acquired, whether it's for the REIT or our IM business.

And finally, I'll close with an update on our balance sheet. With our pro rata debt to EBITDA at about 5x, meaningful liquidity on our credit facilities, along with anticipated capital coming back from our investment management and structured finance businesses, not only have we fully funded our Henderson development project, our balance sheet has several hundred million dollars of dry powder on call to play offense. Additionally, we do not have any material debt maturities in 2026 and are well hedged against interest rate volatility.

And with our weighted average borrowing cost of 4.5% and 5-year unsecured funding available to us today at similar pricing, we do not expect any material interest expense pressure as our debt maturities roll. And over the course of 2026, we intend to continue working with our capital partners to strategically and accretively refinance and extend duration across our portfolio. The debt markets remain wide open to us with both the availability of credit and spreads at record lows.

So in summary, not only are we projecting strong earnings and NOI growth in 2026, our multiyear goal is to position our portfolio to deliver sustained 5% growth. And as we look beyond 2026, we have multiple clearly identifiable drivers that position us to achieve just that. And as Ken laid out in his remarks, those drivers include street lease-up and mark-to-market opportunities. We have roughly 500 basis points of embedded street occupancy upside, along with meaningful mark-to-market on expiring leases.

And when combined with the 3% contractual rent growth in our existing street leases, this adds an opportunity for several hundred basis points of incremental growth. Second is our redevelopments. We already have $3.5 million of executed leases in our redevelopment pipeline that we anticipate will come online in late 2026, with the vast majority of it coming from our 2 redevelopment projects in San Francisco. And as A.J. mentioned, leasing momentum in San Francisco continues to build as tenant demand returns.

And upon stabilization and inclusive of our SNO pipeline, we estimate these 2 projects alone will contribute an additional $7 million to $9 million of NOI beyond those amounts included in 2026, translating to approximately $0.03 to $0.05 of incremental FFO, net of the capitalized interest and re-tenanting costs. Third is Henderson Avenue. As we've discussed on past calls, Henderson is tracking to stabilize in 2027 and 2028, and we continue to anticipate a high single-digit yield on our cost. which means that upon stabilization, the project is poised to deliver $0.03 to $0.05 of incremental FFO.

And keep in mind, that's just Phase 1 of the project. We already have and will continue to add sites on Henderson Avenue, which we anticipate will quickly become one of our top-performing street retail corridors. And lastly is external growth. With the balance sheet positioned for offense and several hundred million dollars of available capacity, we will remain disciplined, but anticipate being highly active on the investment front.

And these are just a few of the key drivers that give us confidence of achieving sustained 5% growth with opportunity for additional upside on items I haven't even touched on, whether it's City Point in Brooklyn, lease-up of 840 North Michigan Avenue in Chicago, the pry loose opportunities on our street or the numerous and accretive redevelopment opportunities embedded throughout our portfolio. At the sake of getting to your questions, I will stop here and turn the call over to the operator for questions.

[Operator Instructions] Our first question coming from the line of Samir Khanal with Bank of America Securities.

I guess, Ken or John, I mean, you gave a lot of good details on kind of the acquisition environment, the advanced stages of negotiations you're in. Maybe expand a little bit on kind of the markets and then kind of what you're seeing from a pricing perspective.

Sure. I'll start it off and then, Reggie, perhaps you'll add some more color to it. In general, the markets that we are currently active in and that you've seen the acquisitions over the last couple of years, ranging from New York, SoHo, Williamsburg, down to D.C. continue to be very exciting for us. There are probably half a dozen other markets that we either have been active in and we'll continue to add and some new markets.

In terms of pricing, it gets very tricky to talk about going in cap rates because rents have moved. A.J. mentioned the mark-to-market in SoHo of 50%. So a cap rate would be substantially lower on a lease that you know you have near-term 50% increase than one that is at market. So I'm hesitant to give going in yields other than to say we are still shooting for our overall goal of acquiring assets that through contractual growth and periodic fair market value resets mark-to-market can throw off a 5% CAGR over the next 5 years.

And we're seeing that in the markets we're currently active in and our retailers are showing us other markets that makes sense in that same profile as well. Reggie, I don't know if there's anything additional you want to add.

Yes. I would just say that we go through a rigorous process, Samir, of looking at potential new markets, just making sure they have those same growth characteristics of our existing markets, the tight supply, the tenant performance and work extensively with A.J. and his team, as Ken said, to understand well, where do tenants want to be and how can we find the right entry point in those markets. And then is there an opportunity to scale in those markets as we've often talked about the benefits of that scale. So we go through a rigorous process with that, and we think there are new markets on the horizon.

And then, John, on the assumption for same-store NOI growth, I know that 5% to 9%, you talked about sort of the swing factors there. I just want to make sure, is rent commencement and sort of credit loss assumption sort of the main factors to kind of get you the high end and the low end there? Or are you kind of missing on something else?

Yes. I mean I think it's a combination of the 3, Samir, but I would say it's really the pry loose piece that I wanted to highlight that I think as we've been posting and talking about, there's a lot of below-market leases in our portfolio. And to the extent we could get those leases out, that's going to create short-term downtime, which we haven't built in into that, but one we are actively hoping to do it.

So I'd say the other ones could move 100 basis points here or there. But I think if we do our job and we could accelerate mark-to-markets on this, the short-term quarterly downtime that we could get from that, we're going to take that to get the long-term growth. So I would say that's probably the most impactful of where we land within that range. And we'll update throughout the quarters as to our progress on that.

And then under any circumstance, we're still looking at a robust 5% to 9% barring significant credit loss or other things, which feels pretty darn good.

Our next question is coming from the line of Craig Mailman with Citi.

I don't want to put words in your mouth, but John, maybe it feels like reading between the lines, there's plenty of variables that could make guidance here a little bit conservative. I'm just trying to figure out some of the things that A.J. talked about on the kind of blend and extend and the pry loose. Like how do you guys go about figuring out what to include in guidance versus what's lower probability? Or maybe another way of asking that is like how much of low probability kind of upside could there be that you didn't include in guidance, but maybe relative to the past couple of years, you guys have been able to capture above and beyond that initial projection?

Yes, correct. So I think if you've known the way that we put out our guidance, we tend to set realistic goals and we achieve those versus putting in super soft assumptions that we would miraculously beat the next quarter. So I'll just start with that, that, that philosophy is unchanged. What I would say has changed is the environment that we're in.

So in terms of we are not going to -- as much as I trust A.J., if he tells me he's going to get a 50% spread and open that lease in 2 weeks, I am absolutely not going to put that in our guidance. So I think if there's things that are not within our control, we're not going to layer that assumption in there. I do think our credit is conservative, as I put in my remarks. It's double what we needed in the prior 2 years. And we've also pulled out known specific issues. I think to the extent we had a tenant struggling, so think we have a single container store.

You should assume that is not included in our guidance. So I think there is a bit of conservatism there. But I think where we -- I will say we have a lot of conservatism is on the active -- on the investment side, several hundred million dollars of forward equity. Reggie talked about the pipeline, and we're going to be busy there. So I think that's where the upside is. The other things can add $0.01 or $0.02 here or there, but I think it's really our upside is going to be from the external growth in '26. Some of the drivers for '27 and beyond, there's a lot of upside in those, which I tried to articulate with that setup going beyond the current year.

And just to reinforce that, whether it's pry loose, fair market value resets or other drivers, it will probably have less of a needle-moving impact this year in '26 and more set us up for stronger '27 and '28, which is how we're really thinking about this. We like how our numbers are stacking up for the foreseeable future. We want to make sure we're continuing to extend that.

That makes sense. That's helpful. And I apologize, my line was breaking in and out. Reggie, was the -- did I hear you say $500 million of kind of the near-term deal pipeline? And is that correct?

I would say there's $150 million under agreement, but we feel confident we can always do the run rate that we've done in the past 2 years with half of it IMP and half of it Street. And that's where the $500 million would come in.

So is it another -- sorry to belabor. But you guys already did the $425 million through Sky View, like do you view that as your 20%?

So the $150 million that Reggie is referring to is on balance sheet, 100% owned street retail assets.

New and not discussed until right now.

Okay. And what do you think timing on that could be?

Q1, but stay tuned.

Our next question coming from the line of Linda Tsai with Jefferies.

Any thoughts on where the 90% street occupancy could end by year-end?

Yes. I think, Linda, again, what I would say is that I look more in terms of NOI than on occupancy. So we have a single location in SoHo. That's going to have a far greater impact than a location that we have elsewhere in our portfolio. So the percentage, I will say, is less relevant. But what I would say our goal continues to be is that we want to get to that 95%, call that within 18 months.

And just one question for Ken. Any high-level color on how tariffs might have shown up in retailer results in '25, either from a sales or margin perspective and how this might change in '26?

So I've had a variety of those conversations with as many of the retailers that we have in our portfolio that we meet with regularly. And the first answer is it's somewhat varied retailer by retailer. The general takeaway would be most of our retailers believe that they have navigated through the toughest parts of that storm. Now obviously, things seem to change every day, and we would all welcome more predictability, but it feels, first and foremost, that the most difficult parts of that are in the rearview mirror.

Secondly, and probably the most important to us on the street retail side. This is a little different on our mass merchant side, but for our street retailers, they've been able to adequately navigate around tariffs and hold on to margins defined from our perspective such that the traditional rent-to-sales ratios that we have always talked about, whether it's 8% for a restaurant or 12% for certain advanced contemporary and 18% for others.

Those ratios are holding. And thus, and this is important, as sales increase, whether it's due to slightly stronger inflation, or strong consumer, consistent consumer demand, as you see top line sales grow, you should expect retailers' ability to pay that increased rent has remained very similar today to where it was 5, 10 years ago. There's not been that shift of margin pressure resulting in any kind of pushback in terms of our rent requests. Our retailers are opening these stores. They are profitable. And while they always want to pay less rent, they are not looking to or blaming the noise around tariffs as the gating issue.

Our next question coming from the line of Todd Thomas with KeyBanc Capital Markets.

I wanted to just go back to the acquisitions and the pipeline, I guess, really the $150 million that the company has been awarded and maybe perhaps a little bit more broadly as you think about investments during the year, you've been active in New York more recently. And Ken, you mentioned there could be some new markets. But is the opportunity set that you're seeing in New York on a risk-adjusted basis, just most favorable today? How should we think about future investment activity in the markets that you're sort of focusing on or readying to deploy capital on more near term here?

Yes. So let me start and Reggie then chime in. New York is probably a more competitive market. So where we can find deals often they are more often than not off market and in New York, we'll continue to do those. But you should expect to see us go into other established markets, established, meaning obvious that our retailers are there and want to be there as long as we can have a view that there can be follow-on deals such that we can build scale. And we have built a nice portfolio in New York, continue to plan on adding to it, but my expectation is other markets will kick in as well. Reggie, anything you want to add to that?

Yes, I would just say with the competition you alluded to, there's certainly more competition. But I would say not too long ago, the issue was bringing sellers for street retail, bringing them off the sidelines to decide whether they wanted to sell or not. A lot of them because of the retail fundamentals, they've decided to sell. And so now we're just in competition with others, and I'd like that fact pattern for us because it usually goes to those who have the reputation, have the capitalization and have the experience, and we feel we do well in that environment.

Okay. And then Ken, you didn't mention Chicago when you were discussing markets that remain exciting. I know you just listed a couple, but how are you thinking about Chicago today in terms of both capital deployment for newer deals and also as a potential opportunity to maybe recycle capital out of?

Yes. So let's first start with fundamentals because I think Chicago has until recently been getting a bum rap. And if you look at our metrics, if you look at our rental growth, especially on our major markets, whether it's the Gold Coast or Armitage Avenue, one of our tenants is paying percentage rent on State Street. That's fantastic, and it puts that store in one of the top of their chain. So in general, the fundamentals have recovered pretty darn strong, and that's good and encouraging to us.

That being said, we still have too much ownership in Chicago relative to the rest of our portfolio, and it would make sense over the next year or 2 as we lease up assets, if they are not part of our scale strategy on a given corridor, it would make sense for us to prune. A goal of ours, we'll see if we can get there is over the next 2 to 3 years to get Chicago to that right balance, which would mean even though we do periodically see some good acquisition opportunities and even though we have seen some really strong rental growth, we don't intend to add and we probably will subtract in Chicago in due course.

But thank goodness, we did not fire our sales stuff because the rent spreads and new tenant demand, the deals we've done, whether it would be Mango or [indiscernible], thank goodness, we didn't exit before those, but we recognize the rebalancing.

Our next question coming from the line of Michael Mueller with JPMorgan.

I guess, first of all, I think you made a comment you'd like to be at 95% street occupancy in the next 18 months. Is that a leased number or an occupied number? And how should we think about a ballpark blended rent per square foot for that 500 basis points, at least a range?

Yes. So Mike, I would say that it would be when we say leased to give us some room with upside to have it occupied and paying. And then in terms of -- and Mike, we've had this conversation a bunch of times. It's going to absolutely matter what within that 95% we get leased up. So for example, we could look through our portfolio. We have a single location in SoHo.

That is going to be in the -- that's going to be a very large lease, which will have a big economic impact and a relatively small impact on the occupancy. So it's really -- and I know it makes it challenging in your seat, but to put a blanket number on every 100 basis points equals x, it really is case by case. But what I would say is that stepping back, it is several hundred basis points of NOI growth and several cents of bottom line FFO growth.

Got it. Okay. And then for the second question, I guess just looking across the portfolio, and I was thinking about the Madison Avenue investments, but just generally speaking, is there a cap to a level of single-store investment that you would make? Like is it $25 million, $50 million, $100 million? Like what should we be thinking of there? What sort of guidelines for that?

Yes. Generally, for the streets that we're active in or most active in, it's more how small an add-on deal are we willing to do. And we -- you see periodically, we'll do some small bolt-ons on Armitage Avenue. On the 2 large you're really talking about Fifth Avenue boxes, and we have been hesitant to jump into that because the outcome or the volatility of a very large single-tenant acquisition, and we live that on North Michigan Avenue.

The volatility is at least for a company of our size at this time, something we've always been cautious about. So worry more about us doing too many small deals than us biting one big chunky single asset deal, if you're talking about a single building. If you're talking about buying a corridor and putting several hundred millions of dollars to work quickly, that we would do all day long.

Our next question is coming from the line of Floris Van Dijkum with Ladenburg Thalmann.

Wanted to touch on the acquisition pipeline a little bit more. I think, Reggie, you indicated it was $150 million of transactions under agreement right now. Can you give us a percentage of what is New York versus other markets?

Without getting too far ahead, I would say that those are the other markets that fall into the other markets category.

Got it. Okay. So the $150 million under agreement would typically be outside of New York. Is that the right way to interpret that? Okay.

Correct.

And then one of the other things that we've seen happen in SoHo, in particular, I think with Ralph Lauren and with IKEA buying -- retailers buying their own store. Are you seeing competition for transactions from retailers themselves and/or have retailers indicated a desire maybe to purchase a store from your portfolio?

I'll take that one. So, so far, and A.J., correct me if I'm wrong, it's very rare that retailers -- well, 1 or 2 have come to us. But usually, it's retailers as competition, they're fairly to very selective we tend not to, when we're working on deals, have a retailer be our competition. But I think, again, it speaks to the commitment that retailers are willing to make to these corridors. And in general, I find it encouraging. That being said, if I find we're bidding against one and we lose, then I'll be pissed. So stay tuned.

And I'm showing no further questions in the queue at this time. I will now turn the call back over to Mr. Bernstein for any closing remarks.

Great. Well, thank you all for the time, and we look forward to speaking to you next quarter.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to the Third Quarter 2025 Acadia Realty Trust Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to Gabriella Vitiello, Junior Lease Admin Analyst, please go ahead.

Good afternoon, and thank you for joining us for the Third Quarter 2025 Acadia Realty Trust Earnings Conference Call. My name is Gabriella Vitiello, and I'm a Junior Lease Administration Analyst in our Lease Administration department.

Before we begin, please be aware that the statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, October 29, 2025, and the company undertakes no duty to update them.

During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. [Operator Instructions] Now it's my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Thank you, Gabriella, great job. Welcome, everyone. Last quarter, I commented that in the ongoing tug of war between economic uncertainty and resilience, resilience seems to be winning. Well, looking at our third quarter results, this continues to be the case. Notwithstanding, continued noise and uncertainty around the broader economy, tenant performance and tenant demand at our properties, especially the street retail component, is continuing, and if anything, this positive momentum is accelerating.

In fact, we are probably at an inflection point for our portfolio's operating performance. As John Gottfried will explain, as we look at our forecast for 2026, we see both total NOI growth and same-store growth accelerating, keeping us well above our long-term goal of 5% growth. And we remain focused on making sure that this top line growth hits the bottom line with respect to our earnings.

As A.J. Levine will discuss, we see enough internal growth opportunities beginning to take shape to enable us to maintain this 5% plus annual growth well into the foreseeable future. A.J. will walk through in detail our continued progress in the third quarter. But in short, we were busy both harvesting current opportunities as well as planting seeds for longer-term internal growth. This includes realizing a 45% lease spread in SoHo, a 70% mark-to-market on Bleecker Street while successfully opening new stores, representing nearly $7 million from our SNO Pipeline and then positioning us for future growth. We also added nearly $4 million in new leases into our SNO Pipeline.

I discussed in detail on previous calls, the tailwinds for open-air retail demand. They're still continuing and remain encouraging, both for our suburban and our street retail portfolio, but the tailwinds for our street retail portfolio seem to have even more momentum for a few reasons. First, is the longer-term secular trend of retailers recognizing the critical need to establish their own network of stores, what we refer to as or DTC or direct-to-consumer stores. This trend is increasing the demand from mission-critical locations, especially in the key markets where we are most active.

Second, is the continued resilience and increasing importance of the affluent consumer who are the majority of the shoppers at our street locations. And then third and perhaps most encouraging is the noticeable resurgence of foot traffic and energy on these streets. This energy and excitement was on full display earlier this month at Kith's grand opening at our Walton Street property in the Gold Coast of Chicago. Hundreds of eager customers waited online for hours to shop this exciting 10,000 square foot flagship store.

If you've recently shopped at Gold Coast of Chicago and were impressed by what you saw, you're not alone. Our team consistently hears from investors after touring [indiscernible] a given city, how they did not appreciate the vibrancy that is occurring until they saw firsthand. And if you've not toured some of these markets, and are simply relying on your new speed, especially depending on what cable channel you watch, you are missing out on the power of these retail markets. Thankfully, our retailers get this. This is why Melrose Place in L.A. or Green Street in SoHo are experiencing the continued tailwinds well in excess of our expectations. And it is expanding beyond a few major markets and in ways that might surprise you. For instance, in Georgetown in D.C.

Notwithstanding all of the attention and concern around Washington, D.C. and surrounding markets due to DOGE or government shutdowns for the majority of our retailers on M Street, foot traffic and sales are up year-over-year and tenant demand has not been this strong in a decade.

New York experienced this rebound earlier than most markets. But now we are seeing this play out across all of our urban markets. San Francisco is the most recent example of this momentum, driven by the growth in artificial intelligence, accelerating a return to office and a new mayor, who is making important progress on quality of life issues, that had burdened the city coming out of COVID. And what we are seeing on the ground is that the live, work, play vibrancy that San Francisco has historically enjoyed is coming back and so are our retailers.

That resurgence is coming at the right time for our 2 significant San Francisco redevelopment projects. At City Center, we have our new T&T supermarkets slated to open in late 2026, and at our 555 9th Street redevelopment, we recently expanded our Trader Joe's and have a new lease with LA Fitness' high-end club studio, slated to open next year. On a combined basis, these 2 projects have close to 100,000 square feet of additional space for us to lease and are slated to add roughly 5% to our REIT NOI. And if the positive momentum continues, we'll have even more growth.

Along with continuing to drive our internal growth, a key additional driver of our business is adding accretive and complementary external growth, both on balance sheet and then through our investment management platform. While we saw a bit of a pause in investment activity around Liberation Day concerns, based on the current status of our pipeline, we are now confident that our 2025 investment activity will match the strength of 2024, which was also a great year for us in terms of external growth.

Reggie will walk through our transactions closed last quarter and the opportunities we see going forward, but to reiterate our goals and outlook, given our size, we see our acquisition activity continuing to enable us to move the needle. And while our cost of capital increased some last quarter, we are confident that we can still invest accretively and we will.

For our on-balance sheet street retail investments, this confidence is due to a few factors. First, Acadia is in somewhat of a unique position of being a buyer of choice. There are certainly private market participants that are active competitors, but we have carved out a niche and a reputation that gives us a competitive advantage in the street retail space, an advantage that does not exist in other segments of open-air retail where there are too many well-capitalized private participants for any one public or a private player to have a unique advantage.

Second, along with being a buyer of choice, many retailers view us as a landlord of choice, and they are steering acquisition opportunities our way as well. And then finally, as we discussed on the last call, the scale that we continue to build, both in terms of ownership concentration in a given corridor as well as tenant relationships nationwide, is giving us increased visibility into the accretion potential we can achieve in any given investment and providing us a competitive advantage over other bidders.

All of this makes us uniquely well positioned to continue to attractively add street retail to our portfolio, and it provides further support for why we are focused on building Acadia into the premier owner operator of street retail in the U.S.

Then for our Investment Management platform. The volatility in the REIT market is less of an issue. Perhaps, it's even a tailwind, since we rely on our institutional partners for the majority of the capital and are generally recycling our equity in this complementary and profitable by fixed sell arm of our business.

So in conclusion, as we look forward, our peer-leading internal growth looks like it has several years of tailwinds behind it. Coupled with continued strong external growth and a balance sheet with multiple avenues of access to capital, we are well positioned to absorb any speed bumps and more importantly, capitalize on the exciting opportunities in front of us. I'd like to thank the team for their continued hard work. And with that, I will hand the call over to A.J. Levine.

Thanks, Ken. Hi, everybody. Good afternoon. So jumping right in, I'm happy to report another successful and productive quarter of leasing, with the team executing on another $3.7 million in ABR and bringing total signed leases year-to-date to $11.4 million, keeping us well ahead of last year's record-setting pace. To put that into some context, for every $1.4 million of new revenue we add, that equates to about $0.01 of FFO. And overall GAAP spreads for new and renewal leases on our streets were 32%.

Looking forward, we've seen no signs of a slowdown in tenant demand. And in addition to the leases we signed during the quarter, we've increased the size of our lease negotiation pipeline to $8 million, which is $1 million ahead of where we were at the end of Q2. In short, that translates to an increase in leasing velocity, fueled by pending new leases on North 6th Street in Williamsburg, Newbury Street in Boston and on Melrose Place in Los Angeles, all markets where we will see the highest level of contractual growth at 3% per annum.

The pipeline also includes another impactful deal in San Francisco, where so far this year, we've executed on over 90,000 square feet, including new leases with T&T Supermarkets, LA Fitness Club Studio and a long-term renewal and expansion of Trader Joe's.

John will get into the details of our SNO pipeline, but in Q3, we converted approximately $7 million of ABR from SNO to open and paying tenants. Impactful openings from the quarter included the Richemont brand Watchfinder, John Varvatos and Alex Moss, all in SoHo; Kith on the Gold Coast of Chicago; Moscot on Armitage Avenue; and J.Crew on M Street in D.C.

But this is not just leasing and delivering space. In addition to filling vacancies, we are prying loose and profitably backfilling space while improving the curation and merchandising along our high-growth streets. In the third quarter, we pried loose and replaced 4 tenants in high-growth markets, including M Street, Williamsburg, Bleecker Street and SoHo at an average GAAP spread of 36%. Each of those leases is subject to 3% contractual increases and the opportunity to once again mark-to-market in the relative near term through FMV resets.

During the quarter, we added, expanded or renewed some highly coveted brands, including Veronica Beard, Faherty, Theory and Frame Denim, again, all in SoHo. Sezane on M Street, Doen on Bleecker Street, Tecovas on Henderson and Practice Room in Williamsburg, just to name a few.

I'm also happy to report that momentum on Henderson Avenue in Dallas continues to build, and the redevelopment is ahead of pro forma. Over 60% of the retail is spoken for with some of today's most recognizable and coveted brands, several of which you will find elsewhere in our portfolio on Armitage Avenue, the Gold Coast of Chicago, in SoHo and on Melrose Place. Which become clear over the last several quarters is that our strategy of building scale in must-have street markets means that our team is getting the first call, the early call and the urgent calls.

Our recent lease with Sezane in M Street is a perfect example of our first call advantage. Like many recent negotiations, this one started with the simple question, where can you put me? As the largest owner of retail on M Street, Sezane knew that we were the right landlord to help them find a long-term home in Georgetown. And true to form, we were able to pry loose an under-market tenant, increase the rent by double digits and upgrade the overall curation of the street.

Historically, tight supply means that tenant calls are coming in early, sometimes 12 to 15 months before a space will become available. We are currently in active negotiations with tenants on Melrose, in SoHo and on North 6th Street for space with expirations that are all more than 12 months out.

And finally, the strong sales performance we continue to see on our streets is creating a sense of urgency amongst our tenants. There is a very real fear among tenants of missing out on the incredible sales growth that our highest earning consumers are continuing to drive on our streets. From reporting tenants on our streets, year-to-date comparable soft goods and apparel sales continue to outperform. In SoHO, sales are up 15%; on Bleecker Street, north of 30%; and on the Gold Coast of Chicago, driven largely by an accelerated recovery on North Michigan Avenue, sales are up over 40%.

Even on State Street in Downtown Chicago, which has certainly felt the effects of hybrid work over the last several years, we are seeing the early signs of a strong recovery with sales in our portfolio up over 10% year-to-date with one flagship tenant in particular, up over 20%. And on M Street, despite all of the headlines in D.C. this year, sales are up 16% year-over-year and show no signs of slowing. To be fair, we are seeing positive sales growth in our suburbs as well, but nothing resembling the double-digit growth on our streets.

So when we consider the overall landscape, accelerating sales growth on our streets, strong tenant demand and the scale we've built to capture that demand, it's full steam ahead.

With that, I'll echo Ken on thanking and congratulating the team for their hard work this quarter, and I will turn things over to Reggie.

Thanks, A.J. Good afternoon, everyone. As noted in our earnings release, our Q3 activity brings our year-to-date acquisition volume to over $480 million. And based on our current pipeline, we're looking to double that amount by year-end. It's important to note for a company of our size, that's extraordinary growth unmatched within our sector, but it's not simply growth for growth's sake. These deals are poised to deliver the earnings and NAV accretion consistent with our goals, not to mention strong CAGR to complement our internal growth.

Our year-to-date activity and our pipeline are being driven by a few factors we're noticing. As Ken said, while street retail opportunities slowed down midyear, caused in part by Liberation Day hangover, we're starting to see more of those sellers come off the sidelines. And just as A.J.'s leasing team gets that first call from tenants, we're getting that first call from sellers of street retail as our reputation as a group that knows how to underwrite and close these transactions is well known throughout our target markets. Recall, the vast majority of our street retail transactions this year have been off market, and we expect that competitive advantage to continue.

It's also worth noting the improved debt environment is causing sellers to test the sales market more in open-air retail across the board. And as that environment continues, we're confident we'll get more than our fair share. Turning to specific activity in Q3. Within our investment management platform, we acquired Avenue at West Cobb for $63 million. This asset is a 250,000 square foot lifestyle center in an affluent Atlanta suburb, where we will deliver value-add returns through a combination of significant lease-up, upgrading tenancy and harvesting mark-to-market opportunities.

As we've done previously for assets slated for the investment management platform, we closed the asset on balance sheet and we'll recapitalize with an institutional investor. And speaking of that capability, we're close to selecting a top-tier investor to recapitalize Pinewood Square, the Florida Power Center we purchased back in Q2, and we expect that transaction to close in due course.

So to summarize, through 3 quarters, we've acquired approximately $0.5 billion of assets, and we're looking to double that amount in the fourth quarter. And with respect to our metrics, that nearly $1 billion in deals will yield an attractive going-in GAAP yield in the mid-6s and 5-year CAGR in excess of 5%. And most importantly, these deals will deliver accretion consistent with our $0.01 per $200 million target, a target we could achieve, frankly, with either our balance sheet transactions or our investment management deals.

Bottom line, we're achieving our growth goals, and we're excited about a Q4 pipeline that will be keeping our team very busy across street acquisitions in our target corridors and value-add deals for our IMP. I want to thank the team for their hard work this quarter. And with that, I'll turn it over to John.

Thanks, Reggie, and good afternoon. I'm going to dive straight into the quarter, and my remarks today will focus on 3 key themes. First, our differentiated street retail business hit an inflection point this quarter, delivering same-store growth of 13%, and we expect to have this above-trend growth continuing into 2026 and beyond.

Secondly, as you just heard from our team, we are on offense, and we have the balance sheet flexibility and liquidity to fund it with our debt-to-EBITDA at 5x and over $800 million available under our revolver and forward equity contracts.

And lastly, simplification. We recognize that our guidance methodology of including investment management gains and other items is unduly complicated and results in a level of volatility that is not at all indicative of our underlying NOI growth. And as discussed on our last call, we will be refining our 2026 FFO definition to provide investors with a single metric that directly links to the growth of our real estate business to bottom line earnings, driven by our highly differentiated street retail portfolio.

Now diving into our results. The third quarter was an inflection point for us, and I want to discuss a few key data points that's driving our confidence of above-average NOI and earnings growth for the next several years.

Starting with NOI. Same-store NOI came in ahead of our expectations at 8.2% with our street retail portfolio delivering 13% growth during the quarter. And with expected same-store growth of 6% to 7% in Q4, we are on track to come in at the upper end of our 5% to 6% projection for the year.

And now for those modeling on the call, here come some numbers. Our growth was driven by approximately 5% of our ABR comprised of $6.7 million in pro rata rents commencing during the third quarter, with virtually all of it representing leases in the same-store pool. In terms of the earnings impact, approximately $1 million was recognized in Q3 earnings. The full $1.7 million impact will show up in Q4, leaving us with an incremental $4 million in 2026. Additionally, the $6.7 million of commencing rents increased our occupancy by 140 basis points this quarter, keeping us on track to achieve 94% to 95% by year-end.

It's also worth highlighting that our street and urban occupancy sequentially increased 280 basis points this quarter, with several hundred basis points of future growth in front of us with just 89.5% of our street and urban portfolio occupied as of September 30. And our leasing team continues to set us up for future growth. We signed $3.7 million in new leases or approximately 2% of ABR during the third quarter, resulting in an $11.9 million signed not yet open pipeline as of September 30.

Over 80% of the $11.9 million pipeline resides in our street and urban portfolio and is comprised of $4.4 million in our REIT operating portfolio, which, as a reminder, means our same-store pool, $6.5 million from our REIT redevelopment projects and $1 million from our share from the investment management platform. And in terms of the estimated timing and earnings impact of the $11.9 million signed not yet open pipeline, approximately $5.5 million of ABRs are projected to commence in Q4 with the remaining $6.4 million in 2026.

And when factoring in the expected rent commencement dates, this results in anticipated earnings of approximately $700,000 in Q4 2025, of which roughly $200,000 is same-store, $7.4 million in 2026 with about $3.5 million of it being in same-store, leaving us with $3.8 million in 2027.

Additionally, consistent with our discussion last quarter, approximately $9 million of the $11 million will hit our bottom line earnings after adjusting for interest and other carry costs that we are capitalizing, primarily for REIT assets and redevelopment, with the vast majority of these capital costs attributable to our City Center redevelopment project in San Francisco and our new grocer TNT, which we are targeting a late 2026 rent commencement date.

I recognize that I just dropped a lot of numbers on you. But when stepping back, it's these data points that are driving our confidence in Q3 being an inflection point and setting us up for outsized growth in 2026 and beyond. And more specifically, our increased conviction of achieving the 10% REIT portfolio NOI growth target in 2026 that we discussed on the second quarter call.

Based on our current model, we are projecting total same-store growth inclusive of redevelopments between 8% to 12% and between 5% to 9% same-store growth, excluding redevelopments, with our street and urban portfolio projected to contribute growth in excess of 10%. In terms of dollars, the projected 8% to 12% NOI growth approximates $12 million to $14 million of incremental NOI over our 2025 projected results or roughly $0.09 a share of FFO at our current share count. And while we're still finalizing our budgets and have some more leases to sign, we are well on our way of hitting our targets.

Now moving on to earnings. The NOI growth from our street retail portfolio is dropping to the bottom line and the simplified method of reporting FFO that we discussed on our last call will provide even greater visibility. Driven by the 8.2% same-store NOI growth, we sequentially increased our quarterly FFO by $0.01, to $0.29 as compared to the $0.28 we reported last quarter after adjusting for the gains from our investment management business. And this growth was achieved despite the short-term dilution from the partial conversion of the City Point Loan.

In terms of City Point, as mentioned on the last call and disclosed in the second quarter Form 10-Q, about half of our partners converted their interest during the third quarter. As a reminder, had all the loans converted at the beginning of the year, it would have been approximately $0.06 dilutive on an annualized basis against 2025 FFO. So as we've previously discussed, while the loss of interest income will be short-term dilutive for the balance of 2025 and into 2026, this sets us up for meaningful future NOI and earnings growth over the next several years as we continue to stabilize the asset.

Moving on to guidance. As highlighted in our release, even with the dilution from City Point, we maintained our FFO prior to the realized gains we earned from our investment management business. Additionally, we have revised and tightened FFO inclusive of gains of our investment management business, driven primarily by the decline in share price of Albertsons.

In terms of 2026 guidance, as we discussed last call, we will be moving to a simplified reporting metric. Our new metric will be FFO as adjusted and will exclude the gains from our investment management business, along with material noncomparable items that we believe are not reflective of our core operating results. Please take a look at our investor deck on our website, which further discusses the reporting change and what this revised metric would have looked like for our 2025 earnings. And for those on the sell side that have not yet done so, please update your 2026 earnings estimates based upon our revised definition.

Additionally, while an important and highly profitable part of what we do, we are no longer going to include investment management gains and promotes in any of our earnings guidance metrics going forward. So we would ask that you please also exclude these from your metrics to avoid any inconsistencies amongst the analyst community. Thus, NAREIT FFO and our new metric, FFO as adjusted, should be identical when we provide our 2026 guidance in February.

And when we earn a promote in any given quarter, it will be included in NAREIT FFO and excluded from FFO as adjusted. And please keep in mind, while we won't be including investment management gains and promotes as part of our guidance, this profitable part of our strategy will continue to be an important part of our business with approximately $30 million of near-term gains anticipated.

And finally, I'll close with an update on our balance sheet. With our pro rata debt EBITDA at 5x and meaningful liquidity, our balance sheet has a dry powder to play offense. We raised approximately $212 million of equity at the quarter at just under $20 a share to accretively fund our acquisition pipeline and the Henderson Redevelopment project in Dallas. As A.J. mentioned, Henderson is on track, and we are in advanced stages of lease negotiations on a significant portion of the project, giving us increased confidence of achieving our targeted 8% to 10% development yield and $0.02 to $0.04 of projected incremental FFO growth commencing in 2027 and into 2028.

I also want to point out that over the past few quarters, we have acquired 5 additional properties on Henderson Avenue, which we've set aside for future development. And combined with our existing holdings, this brings our ownership to well over 50% of this premier retail corridor. So in summary, with strong embedded internal growth and meaningful dry powder on hand to accretively fuel our large and growing pipeline of external opportunities, we are incredibly excited as we look forward over the next several years.

And with that, I will turn the call over to the operator for questions.

[Operator Instructions]

And our first question will come from Floris Van Dijkum with Ladenburg.

Obviously, underlying results appear to be really solid here and you did raise some equity. Maybe my first question is, can you lift the veil a little bit on your -- the pipeline of acquisitions you're looking at? You did talk -- I think, Reggie, you indicated that about a chunk of the doubling of investments or ballpark figure, $500 million of investments is Henderson, which I believe the total cost is around $190 million, $200 million. Maybe talk about some of the other potential investments you're looking at and maybe talk about the difference between cash yields versus GAAP yields.

Before I turn it over to Reggie, just to clarify, the acquisitions Reggie is mentioning are separate and beyond what we're talking about for Henderson. So those are incremental to Henderson. So Reggie, do you want to take the...

Yes. Let me start with the bottom of GAAP yield and cash yield. As I said before, we feel really confident that we're finding the right opportunities in street retail that may take a 5% cash yield into the mid-6s, which is our target for GAAP yield. So trying to find those deals with the right attributes of lease duration and mark-to-market. We found those. We're continuing to find those in the pipeline as well. So we feel good about not only getting deals done, but getting deals done at our metrics. What was the first part, Floris?

Are they in existing markets in particular? I'm curious what percentage would you say is New York versus other areas?

They are in existing markets. We still like New York and still doing a lot of activity there. But they go kind of up and down the East Coast, but I would say most of it is focused on New York, just looking at our pipeline today.

Floris, again expect our geographies, though, to expand, and it's a fluid situation. So we'll be in other spots as well.

Great. And then maybe the momentum in the street appears to be really strong. You guys are seeing no signs of slowing down in terms of tenant demand? And are retailers focused on their occupancy cost, i.e., are they able to generate the sales to be able to pay the rents to be in your street locations?

Yes. I think a few things are at work in terms of that. Some of the economic recovery that we're going through that some refer to as a K recovery. Certainly, the affluent consumer is driving more of this recovery, more of the spending than was historically the case, and that seems to be continuing. Couple that with the fact that the affluent consumer is who drives street retail and from our retailers' perspective, the shift from wholesale to stores, the shift to DTC, as I touched in my remarks, means that these retailers in order to capture that customer have to be on these key streets, means that they need these stores. And to your point, the sales are showing up, the profitability is showing up.

The other thing, as I reflected on the last 6 months, we, as investors, perhaps were fighting the last war. And so immediately, when Liberation Day hit, we were all focused on, oh my gosh, the consumer is going to focus only on necessity items. Well, for some segments of the consumer, that may have been the case, those living paycheck to paycheck. But in general, the affluent consumer has continued full speed ahead and thus, our retailers has followed.

And I guess my takeaway was we thought with Liberation Day, it was what you are selling, i.e., necessities versus discretionary. And it's really more about who are you selling to and how are you selling? Who, meaning to the customers who are shopping on our streets and then how our retailers recognize that the physical channel in an omnichannel world is by far the most profitable. All of that's leading to this much longer-term trend, what I refer to as a secular trend of the street locations being must-have for a wider and wider variety of important retailers, and that's why you're seeing the kind of results that A.J. discussed.

And our next question will come from Linda Tsai with Jefferies.

A question for John. The 5% to 9% same-store growth ex redevs in '26 is impressive considering the tough comp in '25. But could you go into some of the considerations of what would make you hit the 5% versus the 9% since it's a wide range?

Yes. Linda why don't we first start with -- and I know I throw a lot of numbers out there. When you look at the transcript, you could digest them. But a couple of data points that gives us confidence in doing that. If you look at the commencements, this quarter alone, right, with the $6.7 million that commenced, our incremental pickup from that is $4 million plus of what we have in our SNO that will commence. So this is all same-store, another $3.5 million. So when you apply both of those numbers together, you're above 5% already in that number.

You then have contractual growth that's going to go on top of that. And not to accept there's going to be move-outs as there's always in that portfolio. But in terms of our level of conviction, we feel really good about the 5%. And to get us to the 9%, it's -- as I mentioned, we have some leasing in the normal course to do. So it's how quickly do we get some of those spaces leased and open, gets us to the 9%. But that factors in as we sit here today, rollover credit, et cetera. But we'll update that as we get closer, but feel pretty confident of that range for sure.

And I have a follow-up for Ken. If you could snap your fingers and vastly increase your street retail concentration in 1 or 2 specific markets, which would they be?

Oh, no. Thank goodness. I don't get to snap my fingers. So of our existing markets, there are some that are up and coming and intriguing. San Francisco certainly would fall into that category. Their new mayor is doing a fantastic job, and we're enjoying the tailwinds in our 2 redevelopments. I'd be happy to see more there.

Dallas, certainly of one of our existing markets, strong demographic trends, and we're capturing the right retailers at the right time. So those will be 2 that would add good balance, good diversity overall. But open order from, frankly, most of our markets. M Street, there's no reason we shouldn't continue to add there. New York selectively, no reason we shouldn't add there as well.

And our next question will come from Craig Mailman with Citi.

Just to go back to the acquisitions, just to clarify. So Reggie, should we take away from it that there could be up to $500 million of potential deals in 4Q? And is that like a gross number and maybe your net would be lower as you partner with people? Can you just kind of put some goalposts around it?

Yes, that's a gross number. And just to be clear, when I talk about this pipeline, this is the product of exclusive negotiations, right? So it's not just, "Oh, there's an OM on the street and I'm just included in the pipeline." These are specific conversations we're having, but that is a gross number that we could achieve in the fourth quarter.

And keep in mind, Craig, somewhat coincidentally, but conveniently, the earnings accretion, whether it's on the investment management platform side or on the street retail from an earnings perspective only, they're both about equally accretive on a gross-to-gross basis and our effective input. So from an earnings perspective, the same. That being said, we certainly appreciate the importance of us adding the street retail piece, the long-term permanent ownership.

Right. And so it could be $0.025 accretive on an annual basis is what you're saying, given the magnitude in your historic $200 million or $0.01 for every $200 million.

Exactly. And that's still playing out at...

Okay. Then...

Go ahead.

Okay. So I was just going to say from the financing perspective, right, you guys have -- you did the forward equity. You potentially have some capital coming back in from the recap of the 2Q acquisition. And then you guys have -- clearly, the debt market is wide open here. So from a -- as we think about kind of sources to fund this and maybe timing with taking down some of that forward ATM and some dispo proceeds, like how should we think about that whole mix given maybe what you guys have in the fourth quarter plus Henderson Ave financing to continue, right? And that's a higher return, so maybe you earmark more equity for that versus more debt for acquisitions? I mean could you just talk about the puts and takes on how you guys are thinking about that to maximize accretion?

Yes. Why don't I start and then, Ken, if you want to jump in. But I think, Craig, the way we want to -- the way that we're going to manage the balance sheet is that we're going to stay on a pro rata basis debt-to-EBITDA, inclusive of whatever share we do in Investment management, sub-6 and sub-5 where we just look at rebalance sheet debt to EBITDA. So that's just sort of our goalpost as to where we're looking for. And we look at -- you mentioned the liquidity in the debt market, and it is outstanding in terms of both primarily on the secured side, we're seeing incredible tightening of spreads and availability of capital. But on the unsecured side, we are borrowing at 120 over. So we look at on a 5-year swap that we borrow on an unsecured basis, we'll be able to do in the mid-4s.

So when we look at the mix of what we do -- so think of those goalposts as to where we're going to keep our debt-to-EBITDA targets. We have plenty of liquidity available. Our revolver is virtually completely untapped. And you mentioned we have the proceeds coming back from the recap of the asset we did during the second quarter. So plenty of liquidity that are going to be able to manage the acquisition pipeline that's coming on, and we're going to do that in the most efficient way possible.

Yes. And just to clarify or just so that there's no doubt, we are in a position now to fully fund all of those opportunities as well as play offense going forward. And what John is articulating is the wide variety of choices we have in terms of how we fund this, both in the secured debt market for our investment management platform and then the unsecured market.

And our next question comes from Andrew Reale with Bank of America.

I guess first on the investment management platform. First, on West Cobb, Reggie, I think you said you're close to closing with an institutional partner there. So I'd just be curious to kind of hear how the level of demand from potential partners was after you closed on that asset? And maybe just more broadly, are you seeing increased partnership interest from institutional capital? And how might that be shaping your investment management strategy overall?

Yes. We're seeing broad demand. There's a lot of institutional investor demand. All of the fundamentals that A.J. and Ken have discussed are not a secret anymore. I feel like they were a secret for some time with institutional investors. But now the note is out, everyone gets it and everyone is looking to do retail. What they're finding at the same time is retail can be very idiosyncratic. And so you have to have best-in-class operators in order to do it. So we're certainly on inbounds of a lot of groups saying, "Hey, we want retail, but we need a best-in-class operator to do it." So whether it be Pinewood or Cobb, we have no shortage of opportunities to recap those 2.

And as far as on a go-forward basis, we feel really good that we'll be able to do all the deals that we want to do from the investment management platform and find the capital as needed.

Okay. And maybe one for A.J. Specifically at the core properties you've acquired this year, I'd just be curious what proportion of that mark-to-market and pry loose opportunity kind of has already been addressed or is going to be addressed by year-end versus how much is still left to be realized in '26 and beyond?

Yes. Well, we're not going to get into specific numbers, but I'll tell you a few things, right? I mean we look to number one, the incredible growth we've seen in these markets, right? 15% sales growth in SoHo, 30% Bleecker, 40% in Chicago. We look at tenant health, right, which is stable and only improving as those sales outpace contractual growth, demand at the highest level it's been in a decade.

And then, of course, the scale that we've built in these markets to capture that. Couple that with what we've already accomplished this year through our pry loose strategy, right, taking back 9 spaces, re-leasing them at an average spread of about 32%. That should give you an indication of where our markets stand and the opportunity that we think is ahead of us in each one of those markets.

And our next question will come from Todd Thomas with KeyBanc.

First, I wanted to follow up on the funding questions around investments. Any sense what the split might look like on that $500 million pipeline between core and investment management deals? I'm trying to just get a sense what the net number might sort of look like as you're looking at that today?

And then, John, it doesn't sound like the accretion math changes right now for the current pipeline with the capital that's been raised. But does the current stock price and your current cost of equity capital change how you would think about funding future investments or the returns that you might require going forward?

Yes. Let me start with that and then kind of Reggie can take the second piece. So Todd, at the current, and we highlighted where we raised the equity just under $20 a share, which is lower than we had done previously in the past year or so. But what has counterbalanced that where we look at our funded cost of capital is the debt market. So if we do and what we're going to do is on a leverage-neutral basis. So with the mix between the debt portion and the equity portion, we're in the mid-5s when we look at the -- when we put in -- using the FFO yield on the equity raising at the price that we did it at, plus the mid-4s on the debt piece.

So that's where our all-in funding cost, and I'll let Reggie and Ken talk about where we can deploy that and grow accretively at that $0.01 per 200. But that's how we're looking to fund it, and we can do it accretively and it's stuff we want to buy with the current capital markets.

Let me take a stab then at the first part of the question where Todd asked, how much is the breakout between the investment management platform or on balance sheet. Let me take a stab at not answering that, Todd. And I apologize, but I've always struggled with providing too much information about deals that are in our pipeline because I don't think it creates shareholder value. I think it actually hurts to provide too much information and sellers hear about it and this or that. We have a robust pipeline. Otherwise, we wouldn't mention it.

It is earnings equivalent either way. And as John just said, we are in a current position where we can fund all of it if it were all street retail or all investment management platform. So no one should have any funding concerns. And then I will be that, and we're going to be that vague until we see which ones get done by year-end, how much of those then fall into the next quarter. But I'm confident that there are investment management platform deals that are going to be very accretive, very exciting, very profitable.

And I'm even more confident over the next quarter, but more importantly, over the next year or 2 that we're going to continue to grow that street retail accretively, notwithstanding a volatile REIT market, accretively and profitably as we continue to drive Acadia to be the premier owner-operator of street retail in the U.S. Quarter-to-quarter, I just don't want Reggie to answer that question, even though he knows the answer.

Okay. Understood. My other question, A.J., you mentioned that the suburban portfolio is performing well, but noted the growing delta in growth rates between the street and suburban portfolios, which we've seen now for quite some time. The company sold one asset in Dayton from that suburban portfolio. Can you just comment on pricing for that disposition and whether or not you'd consider selling more suburban strips to improve portfolio growth and sort of further reshape the complexion of the portfolio overall or accelerate that?

I'm happy to take a guess, but I'll pass it off to Reggie. I think he's probably better equipped to answer that one.

Yes. Look, if we can accretively dispose of assets that are no longer core, Dayton, that's a legacy Acadia asset. If they're no longer core and the business plan is finished, and we can sell those assets and accretively redeploy, we'll always look at those opportunities to do so.

Todd, the devil's in the details of transaction costs, friction costs, tax issues and all of that. So it's not as easy as snapping my fingers as someone said earlier. But you should expect the majority -- vast majority of our growth to be street and urban and over time, whether we cycle assets into our investment management platform, which you have seen us do or just outright sell them, that's how we will be dealing with the suburban side.

That being said, and it's important to note, suburban retail has real tailwinds as well. There's nothing about us focusing our long-term REIT ownership on street retail that in any way negates us being opportunistic on acquiring shopping centers in our investment management platform. That's where they belong, utilizing more leverage and being leveraging off of our institutional equity partners as well.

And the next question will come from Michael Mueller with JPMorgan.

First, I guess, what was the ballpark range of rents that you achieved on the 300 to 400 basis points of street openings that occurred during the quarter?

Yes. So A.J., maybe give some color on the biggest markets where of the openings were in Chicago and D.C. So maybe just talk about those 2 markets that -- on Walton and M Street. So maybe to see what -- just talk through the range on that.

Yes. Specific to the properties that we rolled online. I mean those are -- especially in those markets, those are multilevel space. There's a lot of nuance within those markets. So it's really hard to peg a per foot number. I can talk to you about growth in each of those markets...

[ Footage ] on the ground. What would you say the ground would be on...

Armitage. Yes. Ground on Armitage is, let's call it, between $120 to $130 a square foot. And Wisconsin Avenue seeing real increase in rents there. I mean, rents are up to the $150 a foot range.

And then on Walton Street.

On Walton Street, ground floor space at this point is leasing for, call it, $350 to $400 a square foot, which again is pretty remarkable when we look at where we were even just a few years ago.

Got it. Okay. So if we think of those numbers and try to do some blending, that's probably representative of the blended rent for the 360 basis points that came on?

Probably is, Mike. And then here's the challenge that I know you and I have had multiple conversations on. A, just a wide range that A.J. gave would give one challenge. Secondly, if you just look at square feet, and if you look at the one building that came on in Chicago, it's 2 floors, right? So it's 2 floors. So the second floor is going to get a different attribute. So I would -- as we've talked about in the past, I would love to just say you could just use a single dollar mark, $137.5 per square foot, but it really, really depends on the building that's going in because it really can move the needle dramatically.

Got it. Okay. And then the second question, for the City Point conversions, are there any more expected over the near term?

I would say at this point, we don't have new information as to -- we now own 80%, so there's another 20%. Look, I would say that -- and we're not putting out guidance, but I was putting out -- if I was forced to put out guidance at this point, I would assume that, that comes out in '26, Mike. But we don't have new information. But I think for modeling, you should assume that, that does come out in '26.

And our next question will come from Paulina Rojas with Green Street.

I only have one question. The strong underground fundamentals you have described extensively in this call, I don't think they have been reflected in the year-to-date performance of the stock. So what do you see as the main drivers behind that share pullback? And what would be your contra arguments to the market's reaction?

I wish I could control our stock performance, I can't. We are doing as good a job as we can is providing additional clarity, and I think this will be important of top line growth hitting the bottom line. But what we have seen, and I've been through more than a few cycles, is if we take care of our day-to-day business, meaning leasing and acquisitions, sooner or later, the market follows. I always prefer if it's sooner. And I'd say over the last 6 months, it's been a little frustrating that it's taking longer for us than I think is deserved.

But Liberation Day was very disconcerting for a lot of different folks. And the immediate conclusion that discretionary retail was going to somehow be significantly impacted and high rent street retail even more so turned out to be dead wrong. Our retailers have done a fantastic job of navigating around supply chain and the consumer has hung in there.

Now whether it takes us 3 months, 6 months or 9 months, sooner or later, what we have found is shareholders get it. And when we're posting the kind of results that we are at the real estate level, well, I'm going to rely on you, Paulina, to get the story out of what you saw in Chicago, what is going on in San Francisco, what is happening certainly in M Street and things like that because when people see it with their own eyes, then sooner or later, it shows up.

And if we continue to deliver at the property levels, both in terms of internal growth, external growth, we've seen time and again the stock recovers, not fast enough for my impatience, but overall, it tends to work. And so I believe it will. That being said, I'd rather it be sooner than later.

Okay. Hopefully, you're right and things go your way.

We're counting on Green Street to help us. Did you have a follow-up?

My apologies.

No, I'm going to add one other thing to help Green Street and everyone else, and John maybe chime in. One area that continues to frustrate me is leasing spreads. We have said in the past, not all spreads are created equal. John, why don't you chime in just quickly because we have a minute or 2.

Yes. And I think where we look at that calculation, there's lots of metrics out there. I think the one that Ken mentioned, not created equal, and we have a -- anyone interested, we have a page in our deck, but the simplest form that if we look at, and we have both of them, a suburban lease and a street retail lease that we would need to accomplish the same growth rate that from the time the lease started to the time we get to mark that to market, we would need probably more than double the spread that we get from suburban than we would on the street because of the 3% contractual growth as part of the street piece.

So that's one metric that I think that we want to keep reminding folks that we have the 3% contractual growth. And when you look at a spread, that sort of ignores what you have done historically.

So Paulina, you can add that to your thoughtful pieces. And operator, I think that concludes all of the questions. So I'd like to thank everybody for taking the time to meet with us. Thank you to the team for producing some extraordinary results.

This concludes today's conference call. Thank you for participating, and you may now disconnect.