Brixmor Property Group Inc. (NYSE:BRX) Q3 2025 Earnings Call Transcript

Brixmor Property Group Inc. (NYSE:BRX) Q3 2025 Earnings Call Transcript October 28, 2025

Operator: Greetings. Welcome to Brixmor Property Group Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Stacy Slater, Senior Vice President, Investor Relations and Capital Markets. Thank you. You may begin.

Stacy Slater: Thank you, operator, and thank you all for joining Brixmor’s third quarter conference call. With me on the call today are Brian Finnegan, Interim CEO; and the company’s President and Chief Operating Officer; and Steven Gallagher, Chief Financial Officer. Mark Horgan, Executive Vice President and Chief Investment Officer, will also be available for Q&A. Before we begin, let me remind everyone that some of our comments today may contain forward-looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties as described in our SEC filings, and actual future results may differ materially. We assume no obligation to update any forward-looking statements. Also, we will refer today to certain non-GAAP financial measures.

Further information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in the earnings release and supplemental disclosure on the Investor Relations portion of our website. Before turning the call to Brian, please note that out of respect for Jim’s privacy, we will not be addressing any questions regarding his medical leave, and we refer you to the company’s October 16 press release. We do ask that you join our Brixmor family in wishing Jim good health. [Operator Instructions] At this time, it’s my pleasure to introduce Brian Finnegan.

Brian Finnegan: Thanks, Stacey, and good morning, everyone. I first want to say on behalf of the entire Brixmor team that our thoughts go out to Jim and his family. We care about them deeply and are grateful for the well wishes and support for him that we have received from across the industry. In the meantime, the team he built remains focused on executing our business plan, which is demonstrated in the third quarter, continues to deliver outstanding results. As usual, those results begin with leasing. As this quarter, we executed 1.5 million square feet of new and renewal leases at a blended cash spread of 18%. New leases during the quarter were signed at a record rate of $25.85 per square foot as our team continues to capitalize on healthy demand to be in our well-located shopping centers.

We’re seeing strong activity in both anchors and small shops, with small shop occupancy hitting another record at 91.4%, with room to run as we deliver our reinvestment program. And on the anchor front, the team is making progress on backfilling the spaces recaptured over the past year with new leases executed during the quarter on those spaces with the likes of Marshalls, Total Wine & More, Bob’s Discount Furniture and Cavender’s Boot City. Thanks to the continued strength in leasing, the signed, but not yet commenced pipeline remains above $60 million despite commencing a record $22 million of ABR during the quarter, which Steve will comment on further. New tenant openings are among the most exciting aspects of our business, and the third quarter included Sprouts Farmers Market in Knoxville, Tennessee, Trader Joe’s in suburban Denver, and several openings at 2 of our most impactful redevelopments the Davis Collection in Davis, California, and Block 59 in Suburban Chicago.

Staying with reinvestment. During the quarter, we stabilized 8 value-enhancing projects with a total cost of approximately $46 million at an average incremental yield of 11%. This included College Plaza in Long Island, New York, where we added a new Chick-fil-A out parcel and reconfigured existing in-line space for Burlington, Five Below and Ulta to complement a strong performing ShopRite supermarket. We also stabilized the first phase of Barn Plaza in suburban Philadelphia, where earlier this year, we opened Bucks County’s first new Whole Foods Market. Thanks to the successful execution of the initial phase of that project by our North region team, we’re adding a second phase into our active pipeline this quarter, which includes, first, the portfolio of new leases with Pottery Barn, Williams Sonoma, Sephora and Lovesac.

This is one of the many examples across the portfolio where our reinvestment program is enabling us to attract a much higher caliber of tenant than we have historically. Finally, on reinvestment, our partnership with Publix continues to grow as we announced our second new project of the year in Hilton Head, South Carolina, with several more to follow in the future pipeline. Our percentage of ABR from grocery-anchored centers now sits at 82%. And as we’ve seen a 35% increase in year-over-year traffic when we add a grocer, we’re thrilled with the opportunities to add more grocers to the portfolio as we execute our reinvestment program. Switching to transactions. As we discussed at length on our second quarter call, we closed on the $223 million acquisition of LaCenterra at Cinco Ranch in suburban Houston and are pleased with our team’s progress out of the gate, with 7 new leases either signed or in process, all well ahead of our initial underwriting.

Mark and team continue to raise attractive capital as we exited 8 assets where we had maximized value since our last earnings call, bringing our total disposition volume year-to-date to $148 million. We continue to evaluate opportunities to put our platform to work and still expect to be net acquirers at year-end. To that end, we have approximately $190 million of value-added acquisitions under control and look forward to sharing more about these exciting acquisitions soon. To summarize, our team continues to execute on all fronts, attracting great tenants in a supply-constrained environment at the highest rents we’ve ever achieved. Our redevelopment platform continues to deliver low-risk compelling returns with several years of runway for future growth.

And on the transaction front, we’re well positioned to continue to recycle capital out of low-growth assets into those where we see the opportunity to create value through our operating platform. Thank you to the Brixmor team for your continued focus and effort as we continue to create value for our stakeholders. With that, I’ll hand the call over to Steve for a more detailed review of our financial results. Steve?

Steven Gallagher: Thanks, Brian. I’m pleased to report on another strong quarter of execution by the Brixmor team as we continue to stack rent commencements from the snow pipeline that will accelerate growth over the next several quarters. NAREIT FFO was $0.56 per share in the third quarter, driven by same-property NOI growth of 4%. As expected, base rent growth decreased to a 270-basis-point contribution due to a 150-basis-point drop in build occupancy compared to the third quarter of last year. We expect base rent growth to accelerate into 2026 as build occupancy rebounds, and we continue to commence rent from the snow pipeline at higher rents. Additionally, revenues seemed on collectible contributed 80 basis points to growth in the quarter as we trend to the lower end of our historical run rate of 75 to 110 basis points of total revenue given the improvement in our underlying tenant credit.

As Brian noted, we commenced a record high $22 million of new ABR in the quarter. And capitalizing on the strong leasing environment, we executed $16 million of new leases at a record high $25.85 per square foot and ended the third quarter with a 390-basis-point spread between leased and build occupancy. Our assigned, but not yet commenced pipeline totaled $60 million, which includes $53 million of net new rents. In addition, the blended annualized rent per square foot on the signed, but not yet commenced pool is $22.30 per square foot, approximately 21% above our portfolio average, reflecting the below-market rent basis in our centers. We expect 80% of the snow pipeline to commence by the end of 2026, with 2026 commencements slightly weighted to the first half of that period.

From a balance sheet perspective, at September 30, we had $1.6 billion of available liquidity, including approximately $400 million from our September 2025 4.85% issuance, which prefunded our June 2026 maturity of $600 million at $4.125%. One note on the capital markets front, our SEC shelf registration statement is due to expire next month. So we’ll be filing a replacement shelf registration statement this week. As part of that process, we’ll also be reviewing our existing ATM program and DRIP. We will also be extending our buyback program for another 3 years, which together will continue to provide Brixmor with maximum flexibility to capitalize on a wide range of potential capital market environments and support the long-term execution of our business plan.

We are pleased to announce a 7% increase in our annual dividend to a rate of $1.23. The revised dividend, which approximates taxable income, allows the company to retain as much free cash flow as possible while meeting our REIT dividend requirements. In terms of our forward outlook, we have updated our FFO guidance to $2.23 to $2.25, and affirmed our same-property NOI range of 3.9% to 4.3%. Our increased FFO expectations is driven by higher-than-expected lease settlement income in the fourth quarter as we continue to capitalize on opportunities to proactively recapture and accretively backfill space. As such, we expect lease settlement income to be a headwind to 2026 FFO growth. We are excited about how we are positioned heading into next year with significant tailwinds from 2025 rent commencements a strong snow pipeline and reduced exposure to at-risk tenancy, coupled with the strong demand from tenants to locate in our centers.

And with that, I’ll turn the call over to the operator for Q&A.

Q&A Session

Operator: [Operator Instructions] Our first question is from Michael Goldsmith with UBS.

Michael Goldsmith: Steve, a question for you. On the implied acceleration of the same-store NOI growth in the fourth quarter, can you walk through kind of the contributing factors there? Is that a function of the snow pipeline being activated, what you’ve already done, what you — what is due in the fourth quarter? And then also, can you just talk about the role of the comparisons in the acceleration to just — the sustainability of that?

Steven Gallagher: Sure. Yes. I mean, as we talked about, we commenced $22 million of rent in the quarter, right? And we’ve talked a lot over the last several quarters about just the stacking of rent and how that provides growth heading into future quarters. So you obviously get a partial benefit of that rent that commenced in the quarter. And then you get another partial benefit in Q4 as it’s fully in for the entire quarter. And then you also have approximately $19 million of rent that we expect to commence between the end of the third quarter and fourth quarter, that will provide growth into that quarter as well. I think the only other thing I would just remind you is, when you look to the prior year quarter ending 9/30, the entirety of the tenant disruption that we’ve experienced over the last year was in and billing as of that period.

So that rent starts to fall off the fourth quarter and then through 2025, just as you’re thinking about the year-over-year comparisons. But what we’re really looking forward to is that tailwind that the commencement of this new pipeline is providing.

Brian Finnegan: Yes, Michael, I would just add what we’re really excited about there on the commencement front, too, is some of these larger redevelopments starting to come online, like Block 59 in Chicago, which I mentioned. We’re also seeing the first of the boxes that we backfilled last year that we took back at the end of the year starting to come online as well to Ross boxes that we opened last week. So everything that Steve said, again, gives us good visibility to the end of the year, but some anecdotes there in terms of the nature of that as well.

Operator: Our next question is from Samir Khanal with Bank of America.

Samir Khanal: I guess, Brian, in your opening remarks, you talked about shop occupancy hitting another record and you also stated there’s more room to run. Maybe expand on those comments as we think about occupancy into next year.

Brian Finnegan: Yes. We’ve been pleased with the progress on the shop front, as I mentioned. But if you look at that future reinvestment pipeline, we’re several hundred basis points below where occupancy sits today. And Samir, when we’ve seen historically, as we bring those projects on, you’re seeing a lift in shop occupancy. So we do feel like we have several hundred basis points more to run. And when you think about the nature of those projects in that future reinvestment pipeline, a great future pipeline that we have with Publix think about Plano, Texas, other projects that we have in Florida, suburban Atlanta, Metro New York, which gives us real good visibility in our ability to drive that forward. So that’s really that piece in terms of what’s left and our ability to get it even higher than it is today, which, again, we’re pretty pleased about.

Operator: Our next question is from Craig Mailman with Citigroup.

Craig Mailman: Brian, you had mentioned some additional acquisitions that are in the pipeline. Could you just go through what the opportunity set looks like and where cap rates are trending? And kind of are these going to be more like LaCenterra that are longer-term opportunities that maybe aren’t initially accretive? Or are there some stabilizing there that can kind of boost FFO in the near term as well?

Brian Finnegan: Craig, I’ll hand this to Mark, but I would just say we’re really pleased with what we’re seeing on the transaction front, but also pleased with not just what we’re doing out of the gate in LaCenterra, but what we’re doing out of the gate with the $300 million of acquisitions that we closed last year. So maybe I’ll hand it to Mark to give an overview on what he’s seeing in the market.

Mark Horgan: Sure. the market remains really competitive. As we’ve discussed on past calls, we’re seeing new entrants and capital, actually on the sidelines really seeking exposure to open-air retail. A lot of that capital is actually seeking smaller, simple grocery anchor deals. And so what’s interesting is that’s really allowing us the opportunity to be efficient when we capital recycle. And we’re selling some assets where we see low hold IRRs from our perspective, well below IRRs when we’d like to generate. We’ve got the ability to recycle that capital into assets like LaCenterra, where we see really strong growth and the ability to drive strong IRRs and really drive our return on invested capital from here. With respect to the deals that we’re buying, we really try to focus on, from an acquisition perspective, value-added opportunities.

So the ones that were in the pipeline today, which we think will continue to grow over time, that pipeline will continue to grow. They look pretty similar to LaCenterra and that they have very strong growth opportunities, and we’re going to leverage our platform to drive strong cash flows through occupancy gains through rent mark-to-market and some redevelopment. I would say the ones that we’re looking at today are not lifestyle centers. They’re more traditional open air retail centers that fit right into our platform. A good example on one of those assets were using a platform to drive an immediate increase and an anchor rent that’s giving us better growth through the term of the anchor rent and increasingly going in cap rate by about 50 basis points, which we feel is very compelling from an acquisitions perspective.

And really, I think, speaks to the strength of the platform as we think about future acquisitions from here.

Operator: Our next question is from Michael Griffin with Evercore ISI.

Michael Griffin: Great. And first of all, my thought to Jim and his family, wishing him a speedy recovery. Brian, maybe you could talk a little bit about how the leasing pipeline looks as we head into next year? I mean, our retailers still looking to expand and grow their business. You guys have done some pretty strong new leasing year-to-date, but just give us a sense of what those conversations are like kind of caveating that while it seems like we’ve gotten some trade deals done, there is still this macro uncertainty as it relates to tariffs and the potential impact to retailers.

Brian Finnegan: We appreciate the kind words about Jim, Michael. And we remain very optimistic and encouraged by what we’re seeing in the leasing environment. The pipeline today is higher than it was a year ago despite the fact that we’ve signed 10% more in GLA this year. The retailers who were growing with are not only looking to add store count in both infill locations and where they have additional white space with specialty grocers, off-price apparel, health and wellness operators, the tenants are performing. If you listen to those second quarter calls, you saw — you heard some very strong results from a lot of the retailers that we continue to grow with. From a tariff perspective, they’ve been able to navigate this with suppliers.

And so as we think about our core tenant mix as well as the new operators who are expanding with us in the portfolio, they continue to have strong open-to-buys as they head into 2026. And interestingly, we have a full slate for New York ICSC coming up in a few weeks. Those discussions will be primarily around ’27, right? There are still deals that we’re signing towards the end of the year that we’re going to get open in late ’26, part of that focus to is 2027 pipeline. So we remain very encouraged. We continue to keep a close eye to see if there are any cracks in that, but to date, we’re really not seeing it.

Operator: Our next question is from Todd Thomas with KeyBanc Capital Markets.

Todd Thomas: I wanted to go back to the same-store growth and ask a bit about the building blocks for ’26, if I could. You talked about the headwinds from bankruptcies and tenant disruptions for the year. I think you noted it was about 230 basis points last quarter. Any early thoughts about how we should think about that drag today as we look into ’26? Whether you expect that to alleviate, or do you see a similar level of drag?

Brian Finnegan: Yes. I mean, as we sit here today, right, I think the one thing we’ve talked about a lot over the last couple of quarters is just to reduce exposure we have to average tenancy, right? When you look at our watch list today versus — even versus our peer, but especially compared to 5, 10 years ago, right, you just see a lot less exposure to some of those names that you all were worried about as were we, Big Lot, Party City, JOANN. And you’re seeing more exposure to things like Whole Foods, Sprouts, Publix, right? So I think as you look into ’26, I mean, obviously, one of the headwinds is going to be we did recognize rent for that bank of space in ’25 that’s not going to recur in ’26, right? But I think sitting here today, there doesn’t look to be a lot of significant tenant disruption out there moving forward.

Obviously, we’ll see how the next couple of quarters play out, but we really feel comfortable sitting here today with the tailwind from that snow pipeline commencing in ’25 and then also into ’26. But obviously, just reminding that there is some [ BK ] headwinds for the rent be recognized in ’25.

Operator: Our next question is from Greg McGinniss with Scotiabank.

Greg McGinniss: Brian, I just want to touch back on the tenant health commentary. Looking at the bad debt expense, guidance was maintained and despite previously trending towards the low end, Q3 was up versus Q2. Could you just provide some insight on that increase? And then generally — more generally, how you’re feeling about the range in the year?

Brian Finnegan: Well, I’ll let Steve hit the guidance piece. But just to expand on what he just said, right? Our office supply exposure has been cut in half. We have a very low drug store exposure. If you look, we have 17% of our ABR comes from local tenants. And the underlying credit quality of the tenants who backfilled the space we took back over the last year, is very strong. So we feel very confident in terms of where that watch list exposure sits today. There’s always categories that we’re keeping a close eye on. But as Steve noted, that has dropped meaningfully from where this portfolio was historically. And Steve, maybe you could touch on the guidance piece.

Steven Gallagher: Yes. I mean, obviously, we are trending to the lower end of the range. I’m still within the range. I’d just remind you about things we’ve talked about over the last couple of years, right, is the first half of the year, due to some of the out-of-period cash collections on real estate taxes, generally has a lower — when you’re just looking at as a percentage of total revenue. And then the back end is all — a little bit higher. So I think we feel comfortable where we’re headed within the range, but I’d just remind you that third and fourth quarter, when you’re looking as a percentage, is a little bit higher. But I think when you’re comparing to the prior year, obviously, it’s a favorable trend.

Operator: Our next question is from Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb: And just echoing the speedy recovery thoughts for Jim. Mark, the cap rates in the acquisition world have definitely come in even Power Center. I know you guys really aren’t looking at that, but even that’s getting a strengthening bid. As you look at your opportunity set, do you sort of have a minimum threshold where you’re like we can’t buy below x yield because the deals need to be accretive from Day 1? Just trying to understand with more focus on REITs delivering earnings growth — true earnings cash flow growth, do you find that you have a floor that you won’t go below? Or how do you balance that given the increased competition for assets?

Mark Horgan: Look, I think everyone in the room understands that our job is to grow earnings [indiscernible] and that’s what we’re going to be focused on over time. Our acquisitions program historically and today remains focused on driving high unlevered IRRs. When we look at the deals, we’ve been delivering, that tends to be in that 9.5% to 10.5% range. So when we find compelling opportunities, we’re going to go after them to acquire. Last year, we acquired Plaza Britton — Britton Plaza pointing down in Tampa, which was a lower going-in yield, where we see very, very significant value-add opportunities in that asset. So we’re not going to pass up the ability to buy something like Plaza Britton in the future. With that said, the assets we’re working on today, we think have attractive going in yields and growth. So we’re really focused on both parts of that plan from an acquisitions perspective.

Brian Finnegan: And Alex, since we’re funding that through capital recycling, we’re funding that with assets that we don’t see that long-term growth potential into assets, just to Mark’s point, where we do. So with everything Mark said, we feel that there are a lot of compelling opportunities out there for us today despite the fact that it is…

Mark Horgan: The other thing I would add, and we talked about this in the past, we continue to mine out things like land parcels in this portfolio, which are not yielding any casual today are really native cash flow given the carry cost. We did that earlier this year. We have some in our pipeline today that again, will provide us some really well-priced capital to put the work in the acquisitions market.

Operator: Our next question is from Cooper Clark with Wells Fargo.

Cooper Clark: It looks like G&A came down in the quarter around $2 million to $3 million. Curious what drove this? And if $26 million is a good run rate moving forward, or if it was driven by a more one-timing item?

Mark Horgan: Yes. I mean, we’re obviously not going to provide guidance on G&A right now. But if you just look at the comparison to the prior quarter, we did do a restructuring in the prior year, which did have a charge in that quarter and importantly, gave us a better run rate going forward of a reduced G&A, which you’re seeing in that line year-to-date. So it’s really about the comparison and what happened in the prior quarter. We feel pretty comfortable where G&A is today.

Operator: Our next question is from Juan Sanabria with BMO Capital Markets.

Juan Sanabria: Thoughts with Jim and his family. I just wanted to ask about the Publix relationship you kind of noted at the top in your prepared remarks and what we could see going forward? Any opportunities for some greenfield developments?

Brian Finnegan: Yes. I’ll first — touching on the Publix relationship one, our South region team has a long-standing relationship with them. We’ve done into the double-digit projects in terms of in-place redevelopments. We’ve got 2 new projects that we’ve done this quarter in Southeast Florida and Hilton Head, South Carolina, which we recently announced. We just announced yesterday another redevelopment in St. Pete with them. And we’ve got a long pipeline with them and a great partnership in terms of they’ve been reinvesting, like a lot of our grocer partners in their stores in both Florida and some other Southeast markets. So team in the South region has done a fantastic job with them, and we look forward to continuing to see that grow.

And you could see many of those projects in the future pipeline. As it relates to new development, our focus is on redevelopment. We’ve got several years of runway of future growth in that future reinvestment pipeline. As Mark touched on, he’s adding additional opportunities to that as well. Never say never because we do have great relationships with the likes of Publix, Kroger, HEB, I could go down the list that we have a lot of — we’ve had a lot of good report — not just report with, but we’ve been able to execute with historically. So we’ll continue to look at things, but generally, that focus is going to be on redevelopment.

Operator: Our next question is from Haendel St. Juste with Mizuho Securities.

Haendel St. Juste: Best wishes to Jim. I wanted to build on the last question, it looks like the average yields for redevelopment projects ticked down a bit sequentially to 9% versus 10% last quarter. Is that a mix issue? Are you starting to see the impact of tariffs or higher cost or maybe this is a new level we should expect near term? And then some thoughts broadly, I guess, on minimum yield or hurdles in light of the lower debt costs. I’m curious if you’re changing that at all in light of lower debt cost?

Brian Finnegan: Juan, — I’m sorry, Haendel, we — if you look at where we said historically and where we’ve been delivering, it’s been high single digit, low double-digit returns. So it’s just effectively the mix that we had of what was stabilizing during the quarter. As we look out in that future reinvestment pipeline, we still see, as I said, several years of runway similar returns. There have been instances where there have been some cost increases, but we’re getting it back in terms of our rents. And we continue to be able to invest accretively. These are incremental returns. We’re also not including in those returns the follow-on leasing that we continue to see in these projects several years after. So we remain very encouraged by what we’re seeing in terms of the projects going forward and the nature of what those returns look like.

We’re not changing our threshold. If anything, as we’ve done some of these larger projects we want a higher pre-lease threshold from where we’ve been historically to limit our risk. These projects are still fully bought out, and we have a great line of sight on where costs are going to go. But generally, we’re very pleased with what we’ve been seeing both in the existing and future pipeline as it relates to those returns.

Operator: Our next question is from Caitlin Burrows with Goldman Sachs.

Caitlin Burrows: A big part of the Brixmor story is your ability to quarter after quarter achieved large leasing spreads as you bring rents up to market rates. So I guess with Jim having become CEO almost 10 years ago, it would seem like a lot of this opportunity has been realized by now, but maybe that’s not true. So could you give some detail on how you think about what portion of that upside, the outsized leasing spreads has been realized? How much is left? And how long leasing spreads can continue in the like mid-teens rate?

Brian Finnegan: Yes. Well, Caitlin, I would just say we’re very pleased with the rent growth trends in the portfolio, both with what we’ve been able to execute as well as what we see coming down the pipe. So if you think about the quarter, we signed the highest rents we ever have in overall small shop and anchors. Over the last year, we’ve signed the highest rents that we ever have in all those categories as well. If you look at that future leasing pipeline, it sits at about 40% higher than our in-place rents today. And as we continue to reinvest in the portfolio, we expect to continue to drive rents higher. And we still have a low rent basis in terms of the spaces that we are taking back, and we’re backfilling these boxes accretively. So we still see a long runway for future rent growth. You could see some fluctuation in a given quarter, but really pleased with what we’re seeing from the team.

Operator: [Operator Instructions] Our next question is from Floris Van Dijkum with Ladenburg Thalmann.

Floris Gerbrand Van Dijkum: Wanted to ask about the recycling of capital. One of the unique elements that you guys had is selling stabilized low-growth assets at attractive cap rates and reinvesting into your significant redevelopment activity. As I noticed, you haven’t sold that much year-to-date. I think it’s $190 million-ish or thereabouts, less than what you’ve acquired. Could you talk about the pipeline of dispositions and what the impact of that is going to be? Because you do have a significant redevelopment pipeline as well that is in the works and you’re adding on to it.

Brian Finnegan: Well, Floris, I’ll start and then maybe I’ll hand it to Mark. There’s always going to be, and Jim has said this historically, a portion of the portfolio where we’ve maximized value. And then we’re going to take that capital and recycle it in to places where we see more compelling growth opportunities that align with the growth profile of the company. So with that, maybe I’ll hand it to Mark in terms of some more detail on the pipeline.

Mark Horgan: Yes, sure. The one other comment I’d make with respect to our funding of the business, but don’t forget, we do generate significant free cash flows here post dividend, post our normal leasing spend. And that’s really what’s funding our — the vast majority of our redevelopment program. So yes, there’s probably some limited amount of dispos that go into keeping us leverage and neutral there. But ultimately, I wouldn’t forget that as you think about how we’re funding the business. On the pipeline for dispositions, as I mentioned, what’s most interesting to us in the market today is this new capital coming in, again, is seeking exposure to the space. We think we’ve got the ability here to be opportunistic and sell assets that Brian highlighted that have less growth in our overall portfolio and put it back to work in assets where we are compelled to see higher growth rates and really drive that ROIC for us over time.

Floris Gerbrand Van Dijkum: And just to make sure, the cap rates on the dispos are broadly in line with what your acquiring except maybe the lifestyle center, but that it should be on a — sort of a cap rate neutral basis? Or is there a little bit of dilution involved there?

Mark Horgan: Yes. Our year-to-date cap rate, like it’s been for many years, it’s in and around 7%. The acquisitions are going to be slightly lower than that when you blend them all together this year. Last year, we think it was about neutral. So it depends on the mix of what we’re selling. But importantly, we’re really focused on that long-term hold IRR. And we think that growth of what we’re buying is significantly better than what we’re selling, and we’re seeing that through looking back at the assets we bought. So we remained convicted in the adjustment program to add value to the company over time.

Operator: Our next question is from Linda Tsai with Jefferies.

Linda Yu Tsai: Can you comment on the yield for LaCenterra? And then in terms of traditional open-air centers being in your acquisition pipeline, just wondering why you highlighted that they are not lifestyle centers?

Brian Finnegan: Well, I’ll take the second part first, Linda, sorry about that. And we did touch on LaCenterra the last quarter, but Mark can spend a little bit more time on that. I think what Mark was saying is we are looking for assets that have compelling growth profiles. And if you look at that in terms of what we bought historically, it’s been a mix. And so when Mark was comparing it to LaCenterra, it’s very — these assets are very similar in that they’re grocery anchored, and we feel like we can put our platform to work to have compelling growth out of those properties. So maybe, Mark, I don’t know if there’s a little bit more to add on for LaCenterra?

Mark Horgan: Yes. I would really point to the comments we made last quarter, we went through it in detail. And what I would highlight is that since last quarter, we’ve outperformed what our expectations were in the initial ownership periods. So we remain convicted in the growth that we’re generating. We remain convicted that the yields were going to roll will be a little bit higher in year 1 and moreover, the growth that we see coming from that asset. We think it’s a really compelling opportunity for Brixmor. And just to highlight what I was trying to highlight was the assets that we’re buying, we have high conviction in growth, just like we did with LaCenterra. The ones in the pipeline today that we have under control are just — they look more like traditional shopping centers. We’re always going to focus on growth.

Operator: [Operator Instructions] Our next question is from Hong Zhang with JPMorgan.

Hong Zhang: I guess your lease to occupied spread has gone down throughout this year, but still remains above historic levels, just given the strong rent commencements you expect in 4Q in 2026, do you expect to be back to more historic levels by the end of 2026 going to 2027?

Brian Finnegan: I’ll take that. I would expect that to still remain wide. I mean, obviously, you’d expect it to tighten since we commenced a record amount of ABR during the quarter, but we’re also leasing a lot of space. And we’ve got a large legal pipeline that where we continue to fill deals in the leasing committee in terms of the flow in the leasing committee on a weekly basis remains strong. So the pipeline remains elevated. We like what we’re seeing from a demand perspective. You should expect that to remain somewhat elevated, but it is exciting in terms of the commencements that we’ve had here that we had in the third quarter and that we look forward to seeing in the fourth.

Operator: There are no further questions at this time. I would like to turn the floor back over to Stacy for closing remarks.

Stacy Slater: Thank you, guys, for all joining today.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.