Yahoo Finance InvenTrust Properties Corp (IVT) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and ...
Same-Property NOI: $41.5 million, up 4.1% year-over-year.
Net Effective FFO: $30.8 million or $0.45 per diluted share, up 9.8% from last year.
Core FFO: Grew 10% to $0.44 per share year-over-year.
Total Liquidity: $421 million, including full $350 million borrowing capacity on revolving credit line.
Net Leverage Ratio: 28%.
Net Debt to Adjusted EBITDA: 5.1 times on a trailing 12-month basis.
Weighted Average Interest Rate: 4.3% with a maturity of 3.7 years.
Dividend Payment: Annualized at $0.91 per share, a 5% increase over last year.
2024 Guidance: Same-property NOI growth now 2.75% to 3.75%; Net Effective FFO $1.71 to $1.77 per share; Core FFO $1.67 to $1.71 per share.
Leased Occupancy Rate: Ended the quarter at 96.3%.
Small-Shop Leased Occupancy: Above 92%.
Blended Comparable Leasing Spreads: 11.2% for the quarter.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
InvenTrust Properties Corp reported a strong same-property NOI of $41.5 million, marking a 4.1% increase over the previous year.
The company's leased occupancy rate finished the quarter at 96.3%, showing both sequential and year-over-year improvements.
InvenTrust Properties Corp declared an annualized dividend payment of $0.91 per share, a 5% increase over the previous year.
The company successfully executed 41 leases for over 180,000 square feet, indicating robust leasing activity.
InvenTrust Properties Corp has a strong balance sheet with $421 million of total liquidity, providing flexibility in a challenging capital markets environment.
Negative Points
The capital market environment remains frustratingly volatile, which could impact the company's ability to accelerate external growth.
InvenTrust Properties Corp is experiencing a more normalized first quarter of attrition in small-shop occupancy.
The company continues to face headwinds from the bankruptcies of Bed Bath & Beyond and Christmas Tree Shops, impacting NOI growth.
There is a potential risk associated with the cyclical nature of the retail sector, which could affect tenant stability and demand.
InvenTrust Properties Corp maintains a bad debt reserve of 50 to 100 basis points of total revenue, indicating potential concerns about tenant delinquencies.
Q & A Highlights
Q: Can you talk generally about the kind of deals you're underwriting today from the amount that you're seeing versus maybe three months ago? And then just finish and pricing or competition you've seen of late? A: Daniel Busch, President and CEO, mentioned that the volume of deals has improved, providing more options to underwrite. Dave Heimburger, Chief Investment Officer, added that they are observing their cost of capital and targeting appropriate IRRs, with recent acquisitions in Phoenix and Atlanta fitting their investment criteria. They remain cautious about overextending beyond their $75 million acquisition target due to current capital costs.
: With an insubstantial amount of uncollectible rent and recoveries reported in the quarter, why reaffirm 50 to 100 basis points of bad debt within guidance? A: Daniel Busch explained that they are trending at the lower end of the bad debt range, which includes some unforeseen tenant fallout offset by out-of-period rent collections. They maintain a conservative range to account for potential issues with tenants like Rite Aid and Jo-Ann Fabrics, despite current positive trends.
Q: What drove the decline in small-shop leased occupancy this quarter, and what are you hearing from leasing discussions with small-shop tenants? A: Dave Heimburger noted a normalized level of tenant fallout, with significant re-leasing already underway. Christy David, COO, highlighted strong leasing demand, particularly from quick-service restaurants and personal health services, which are driving healthy activity despite minimal available space.
Q: How bullish are you about the ability of landlords to push rents aggressively in the next five years? A: Dave Heimburger expressed strong confidence in the ability to push rents due to limited supply and strong demand. He emphasized the structural change in shopping habits post-COVID, benefiting categories like QSR, full-service restaurants, and medical services, which should support sustained NOI growth.
Q: Can you walk through what the key drivers were of the guidance range for non-CAT property? A: Michael Phillips, CFO, detailed that base rent, influenced by contractual rent bumps, was the primary driver of guidance, with net expense reimbursements also contributing. He expects operating expenses to align closely with the previous year, supporting stable NOI growth.
Q: How do you think about retailer cyclicality within this discussion about demand? A: Dave Heimburger acknowledged the cyclical nature of the business but pointed to structural benefits in certain retail categories that are likely to sustain demand. He stressed the importance of continuously adapting the merchandise mix to align with evolving consumer behaviors and market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
