Brixmor (BRX) 2026年第三季度业绩电话会：FFO增长超7%，上调业绩指引

核心要点

• Brixmor Property Group公布2026年第三季度NAREIT FFO为每股0.60美元，同比增长超7%，同店净营业收入（NOI）增长6.6%。
• 总出租率达到95.6%，环比上升80个基点，同比上升150个基点。小铺位出租率创下92.8%的历史新高，主力店出租率升至97.0%。
• 公司完成了约160万平方英尺的新签及续租租赁。新签租赁租金价差为43%，其中主力店价差超70%，续租租金价差超过19%。
• 管理层上调了2026全年指引，将同店NOI同比增速预期上调至5.5%–5.75%，将NAREIT FFO预期上调至每股2.36美元–2.38美元。
• 今年以来已有约4200万美元的租赁生效，目前已签约但尚未生效的年租金总额为6900万美元，为未来的NOI及盈利增长提供了确定性。
• 董事会将季度股息上调了7%以上。管理层还预计，通过低于市场水平的租金、出租率提升空间以及再开发机遇，Slate交易将带来长期增长。

核心财务数据

业务与运营表现

管理层表示，零售商对Brixmor旗下以生鲜超市为主力的购物中心需求依然强劲。全年客流量有所增长，租户续租率保持高位，小铺位退租率处于该投资组合的历史最低水平。

公司的租赁业务继续填补现有租金与市场租金之间的差距。Brixmor与多家大型零售商签署了多份租约，并与Trader Joe’s签署了另一份新租约。管理层表示，更强大的全国性零售商合作关系、技术和人工智能有助于精简租赁流程、缩短闲置时间并加快租金生效。

再投资计划仍是主要的资本配置优先事项。Brixmor使四个投资额达5500万美元的项目走向稳定运营，平均增量回报率为10%。公司还新增了六个项目，总额约3700万美元，预计回报率为11%。

新项目包括位于佛罗里达州圣路西港 Eastport Plaza 的再开发项目（打造5万平方英尺的 Publix 原型店），以及位于芝加哥郊区 Westridge Court 的9.7万平方英尺的宜家（IKEA）项目。公司还在本季度新增了三个独立铺位项目，使今年以来的总数达到13个。

Brixmor以约5000万美元收购了南加州的 Village West 购物中心，并完成了约4300万美元的资产出售。今年以来的资产出售收益达到约1.66亿美元。管理层将这些出售描述为其现有资本回收策略的一部分，而非专门为 Slate 交易融资而设立的计划。

管理层业绩指引

Brixmor将其2026全年同店NOI增长预期上调至5.5%–5.75%。公司还将NAREIT FFO指引上调至每股2.36美元–2.38美元。

管理层预计第四季度同店NOI增长将有所放缓，原因是去年同期的辅助收入及其他收入处于较高水平。公司将此归因于时间节点和基数比较问题，而非投资组合基本面发生恶化。

预计2026年将有约5500万美元的年租金开始生效。管理层表示，在不计入未来新增租赁活动贡献的情况下，已签约未生效项目中还有4800万美元预计将于2027年开始生效。

公司预计将在第一季度完成 Slate 交易。然而，管理层表示，对2027年FFO的准确影响将取决于交割时间、收购会计处理以及交易融资的结构与定价。详细的2027年业绩指引预计将在公布年终业绩时一并发布。

风险与关注领域

管理层强调了利率、通货膨胀和资本市场的持续波动。借贷成本上升还可能影响严重依赖债务融资的资产，特别是新建项目和增长空间有限的物业。

Slate交易对资产负债表的影响将取决于其交割时间和最终融资需求。Brixmor正在筹备一项4亿美元的延迟提款定期贷款，并已对其现有的5亿美元定期贷款完成了4亿美元的远期生效利率互换，以提高借贷成本的透明度。

尽管租户财务状况和租金回收情况保持强劲，但管理层仍在继续监控可能出现关店的行业类别，包括药店。公司已减少对办公用品类租户的敞口。

分析师问答环节点评

• 出租率与租金生效：管理层表示，主力店出租率的反弹是由基础租赁需求驱动的，而非一次性波动。第三季度约有1700万美元的年租金生效，而已签约未生效的项目管线规模保持在6900万美元左右。
• 交易融资：Brixmor预计杠杆率将大致维持在当前水平，具体取决于交割时间和融资需求。约1.3亿美元的资产已签订合同或正在谈判中，其中包括收益率较低的地块。
• 资产定价：管理层指出，对露天零售资产的需求依然广泛，买家包括养老基金、主权财富基金、高净值投资者和1031同类财产置换买家。尽管利率出现波动，资产定价仅有微幅变动。
• 小铺位提升空间：管理层预计，随着再投资项目的完成，出租率还有进一步上升的潜力。管理层表示，更高的续租率、创纪录的低退租率以及实力更强的运营商将支撑租金持续增长。
• 租赁经济效益：除了表面租金价差外，Brixmor还在改进合同租金递增条款、公共区域维护费（CAM）条款和租赁选择权。固定CAM占年度基础租金的41%，增长率为4.2%。
• Slate整合：管理层表示，自收购公告发布以来与零售商的沟通进一步增强了其对该笔交易的信心。收购的资产组合预计将在租赁、出租率提升以及以生鲜超市为主力的再开发方面带来机遇。

业绩电话会完整文本

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完整财报电话会议逐字稿

管理层陈述

Operator

Greetings, and welcome to the Brixmor Property Group Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Stacy Slater.

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, CEO and President; and Steve Gallagher, Chief Financial Officer; and Mark Horgan, Executive Vice President and Chief Investment Officer. .

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 and as described in our SEC filings, and actual future results may differ materially. We assume no obligation to update our 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.

[Operator Instructions] We also note -- we would also note that today's call is intended to focus on our third quarter operating and financial results, and we'd appreciate it is questions focused on those topics. At this time, it's my pleasure to introduce Brian Finnegan.

Brian Finnegan

Thank you, Stacy, and good morning, everyone. We delivered an exceptional quarter, reflecting continued operating momentum and strong execution across the business. retailer demand for space in high-quality grocery-anchored centers remains robust. Traffic to our centers continues to grow and new supply remains limited. While there continues to be volatility in the broader environment, particularly around interest rates, inflation and the capital markets, the underlying fundamentals of our business remain very healthy.

Against that backdrop, we remain focused on what we can control. Executing our strategy with discipline and continuing to create value across the Brixmor portfolio. That execution was clearly reflected in our third quarter results. We increased [NAREIT] FFO per share by 7% over the prior year and grew same property NOI by 6.6%. We returned to our record level of total leased occupancy generated exceptional leasing economics and continue to advance our reinvestment pipeline at attractive returns. Given the strength of our performance during the quarter, we again raised our full year outlook for both same property NOI and NAREIT FFO per share.

Our board also increased the quarterly dividend by more than 7% and reflecting the strong visibility we have into continued earnings and cash flow growth. The strength of the quarter further reinforces our confidence in the Slate transaction announced last month. The opportunity is a natural extension of the strategy we have successfully executed across Brixmor, creating value through redevelopment, occupancy upside and meaningful rent mark-to-market. Our focus between now and closing is straightforward, making sure we are positioned to begin executing on day 1, and our third quarter results provide a clear demonstration of what our platform can deliver.

Starting with leasing. We executed approximately 1.6 million square feet of new and renewal leases during the quarter at a blended comparable rent spread of 25%. New lease spreads were 43% including anchor spreads above 70%, while renewal spreads exceeded 19%. These results show how effectively our team is capturing the significant mark-to-market embedded in our portfolio and the gap between our in-place rents and the rents reflected in our forward leasing pipeline gives us a meaningful runway to capture additional mark-to-market over time.

Just as importantly, we're using this environment to continue improving the quality and relevance of our centers. During the quarter, we continue to grow our relationships with leading retailers across a range of categories, including multiple leases with [Roth and TJX] as well as another new lease with Trader Joe's. Our team also continues to operate with greater speed and efficiency. We completed our [8th] largest anchor leases during the quarter in less than 60 days, including 1 with a leading off-price retailer in under 30 days. Our national retailer relationships, together with the investments we've made in technology and AI are helping us streamline the leasing process, reduce downtime and accelerate rent commencement.

Ultimately, that allows us to more effectively capitalize on the strong retailer demand we're seeing across the portfolio. That activity drove total leased occupancy to 95.6%, up 80 basis points sequentially and 150 basis points year-over-year. Small shop occupancy reached a new record of 92.8%, while anchor occupancy increased to 97%. And with anchor occupancy still 70 basis points below its prior peak, we see additional upside ahead. Those occupancy gains also benefited from an 88% retention rate, up 300 basis points year-over-year as tenants continue to succeed at our centers and renew with us at near record rates. And importantly, we continue to have excellent visibility into what comes next.

We ended the quarter with $69 million in our signed but not yet commenced pipeline after commencing approximately $42 million of rent year-to-date. That pipeline provides a clear bridge between the leasing activity we're generating today and future NOI and earnings growth.

Turning to reinvestment. It remains 1 of the most compelling uses of capital in our business and a key driver of long-term value creation, allowing us to deploy capital into assets we already own at attractive double-digit incremental returns. During the quarter, we stabilized 4 projects representing $55 million of investment at a 10% average incremental return. We also added 6 new projects to the active pipeline, representing approximately $37 million at an 11% return.

At quarter end, our active pipeline totaled approximately $322 million at an expected return of 10%. The Beyond the active pipeline, we continue to see a substantial runway of high-return reinvestment opportunities across the portfolio. The projects we added during the quarter illustrate both the depth and breadth of that opportunity. In Port St. Lucie, Florida, we're redeveloping Eastport Plaza to accommodate a new 50,000 square foot public prototype. This is our sixth reinvestment project with Publix with several more already identified in our future pipeline. At Westridge Court in Block 59 in suburban Chicago, we're building on the successful first phase of the transformation with the addition of a 97,000-square-foot IKEA, the retailer's first large-format location in our portfolio.

We also continued to build momentum in our outparcel program, adding 3 projects during the quarter and bringing our year-to-date total to 13. We see a deep pool of opportunities to further densify our centers and generate attractive returns. Turning to transactions. We acquired Village West Shopping Center in Southern California for approximately $50 million during the quarter. The center is anchored by a high-performing State of Brothers grocery store and is exactly the type of acquisition we target. High-quality, grocery-anchored real estate where our platform can create additional value through leasing, remerchandising and reinvestment. We also completed approximately $43 million of dispositions, bringing year-to-date proceeds to approximately $166 million.

Importantly, these sales are consistent with the capital recycling strategy we have been executing independent of Slate. We are selectively monetizing assets where we believe we have substantially completed our value creation plan and can redeploy those proceeds into opportunities offering more attractive long-term growth and returns. Despite higher rates, demand for grocery-anchored open-air retail remains deep, giving us confidence in our ability to continue executing our capital recycling strategy while remaining disciplined on pricing and certainty of execution.

So stepping back, the core business has tremendous momentum. Occupancy is at record levels with additional upside ahead. We have meaningful embedded rent mark-to-market and our reinvestment pipeline continues to generate attractive opportunities across the portfolio. Slate provides another meaningful avenue to put our platform and capabilities to work and extend that growth over time. Most importantly, our team continues to execute at a very high level. And I want to thank everyone at Brixmor for another outstanding quarter.

With that, I'll turn the call over to Steve for a deeper review of our financial results and updated 2026 outlook. Steve?

Steven Gallagher

Thanks, Brian. Our third quarter results reflect another period of strong execution across the portfolio. With growth in same property NOI and FFO supported by continued strength in the underlying business.

Same property NOI increased 6.6%, driven by a 480 basis point contribution from base rent, with healthy occupancy growth, strong expense recoveries and contributions from ancillary and other income also benefiting results. [NAREIT FFO] grew over 7% to $0.60 per share. That performance is reflected in our updated outlook for the year. We increased our expectations for same-property NOI growth of 5.5% to 5.75% and FFO per share of $2.36 to $2.38, reflecting the strength of our year-to-date results, including same-property NOI growth of 6.2% year-to-date.

The increase reflects broad-based strength across all components of NOI supported by our team's execution and the favorable operating environment. Of note, we expect fourth quarter growth to moderate as we lap elevated ancillary and other income reflecting prior year comparisons and timing rather than weaker portfolio fundamentals. As we look beyond the fourth quarter, we continue to have strong visibility into growth in 2027 and beyond, supported by the stacking of rent commencement and higher average build occupancy approximately $55 million of rent is expected to commence in 2026, with another $48 million from our [Sinmat yet] commenced pipeline expected to commence in 2027 before the benefit of additional leasing activity.

And the opportunity extends beyond rent commencements. Below-market rents continue to provide significant embedded upside. While the transformation of the portfolio has reset our rent growth opportunity meaningfully higher. Anchor leases expiring in 2027 without options averaged approximately $11 per square foot compared with new and renewal leases in the mid- to upper teens. Beyond the mark-to-market opportunity, contractual rent bumps add to that embedded growth. The health of our tenant base is reflected in high retention, solid collections and low bad debt, and our redevelopment pipeline continues to create meaningful value across the portfolio.

Taken together, these factors provide strong visibility into growth as we move into 2027, delivered efficiently with capital expenditures at historic lows for this portfolio. And importantly, that visibility is before considering the additional growth opportunity from Slate. The transaction adds an additional source of long-term growth through below-market rents occupancy upside, redevelopment and the benefits of applying our operating platform across the portfolio. The precise 2027 FFO impact will depend on close timing, purchase accounting and the ultimate mix and pricing of transaction funding. We'll provide details on our 2027 outlook with our year-end earnings as usual.

From a balance sheet perspective, we ended the quarter with approximately $1.5 billion of liquidity, including $183 million of cash, $1.25 billion of availability under our revolving credit facility and approximately $115 million of anticipated proceeds under unsettled forward equity contracts. Net debt to adjusted EBITDA was 5.2x on a current quarter annualized basis, and we expect leverage to temporarily improve further through year-end as we execute on our capital recycling activity ahead of this late transaction closing.

Subsequent to quarter end, we are currently working on a delayed draw term loan with our broader bank group for $400 million with closing expected in the fourth quarter and drawing in conjunction with closing. We also executed $400 million of forward starting swaps on our existing $500 million term loan, providing additional certainty around our borrowing costs. With our strong liquidity, access to mobile sources of debt capital and an active transaction market, we have significant flexibility as we complete the funding for the Fleet acquisition.

Overall, we are well positioned heading into 2027 with strong embedded growth and visibility in the existing portfolio, additional opportunities from the Slate transaction and the balance sheet flexibility to execute on those. And with that, I'll turn the call over to the operator for Q&A.

Operator

[Operator Instructions] And our first question will come from Michael Goldsmith with UBS.

分析师问答

Michael Goldsmith

Question is just on the leasing and in particular, the anchor occupancy pick up. I know it dipped last quarter, and that was well known at the time. I was just wondering if there was any sort of noise in the number this quarter? Or is that just kind of clean leaving? And then as you think about the snow pipeline, it compressed a little bit. So we're kind of approaching the period where kind of like the buildup in leasing is starting to get released and so we should start to see the benefit from that over the next couple of quarters.

Brian Finnegan

Michael, thanks for the question. I think clean leasing is a good way to describe it. We had discussed on the last call the expected bounce back in occupancy in the back half of the year, and it did so in a big way. You look at the quality of tenants we continue to add to the portfolio, whether that's grocers like Trader Joe's, Roth, TJX and getting that done a lot faster. So -- as we think about the occupancy trajectory, there's certainly more room to run. As I mentioned in my remarks, we're still below prior peak. And then you think about that sign but not yet commenced pipeline. I mean we commenced about $17 million of rent during the quarter. We still have that sitting there at around $69 million. So we're continuing to replenish that pipeline and it gives great visibility on growth into next year.

So I kind of say as expected, but really, the team did a tremendous job of not just getting those anchor leasing done, getting them done as fast as we ever have.

Operator

We'll go next to Haendel St. Juste with Mizuho Securities.

Haendel St. Juste

Not a question specifically on Slate, but I guess I'm curious about the deal funding, capital recycling and balance sheet implications. Can we expect to see leverage tick up a little bit? Is the plan for that to kind of organically kind of delever over time for free cash flow? And then how much will dispositions perhaps play a role in the funding of that. So curious about that. And then maybe some color on the transaction market, what you're seeing and how that's impacting maybe your near-term deployment plans there. .

Brian Finnegan

Thanks, Haendel just start by saying our expectations are really the same as they were around a month ago, except we have additional clarity on the term loan. But maybe Steve and Mark can provide some color on the rest of the question.

Steven Gallagher

Yes. And I provided in my commentary just to help you understand. As Mark executes under the capital recycling as we sell assets heading into the end of the year and preparing for that closing, you will see us naturally delever as that cash goes on our balance sheet. Our expectation is that leverage ultimately remains sort of where we are. But ultimately, where that leads it will depend on a couple of factors, including the timing of the transaction and the funding requirements. And Mark can hit on sort of what we're seeing in the transaction market.

Mark Horgan

Yes, the market, look, it's been a very interesting market over the last several months. I would highlight we closed 2 deals in September that really price over the summer. They close out expected value. So we've seen rates go up a bit. We've seen rates come down back down a little bit. And through all of that pricing really has only moved slightly at best. And the reason for that is demand. We're just seeing very strong demand from capital seeking exposure to Open Air Retail and the really strong operating fundamentals that Brian and Steve kind of hit on in the call and that the demand is really what's supporting values. .

Frankly, we've been really popular since the late announcement well-capitalized buyers are reaching out, seeking assets because they're finding the market to be quite competitive. With respect specifically about funding the Fleet transaction as we talked about a month ago. We're in the market with assets today. We see very clear demand for assets. We've got about $130 million that we have under contract or in negotiations today. Preliminary discussions on a range of other assets, some of which we go to market with, some of which you might just go direct to all this capital looking for assets.

So the other thing I would highlight in that $130 million includes some land parcels really today are lower or lower yielding. So we're really confident in our ability to fund the transaction accretively here.

Operator

Our next question will come from Todd Thomas with KeyBanc Capital Markets.

Todd Thomas

I wanted to ask about the same-store NOI growth forecast, which implies a modest deceleration in the fourth quarter. Steve, you mentioned some ancillary income headwinds. Can you provide a little bit more detail there and thinking about your comments around nonoption expirations looking ahead and taking into account this year's leasing and earn-in heading into '27, Curious about the base rent contribution specifically, how we should think about the 4.8% growth in the quarter and whether that can be sustained heading into 2027.

Brian Finnegan

Yes, Todd, let me take the second part in terms of the rent growth upside. So we're almost 4 years running now of renewal growth in the mid-teens. We have higher retention traffic was up at our portfolio every month this year. Our tenants continue to perform. You've seen that percentage rent line outperform as well. We're getting percentage rent from operators we hadn't historically. So the health of that portfolio is very strong. So we see continued growth as it relates to mark-to-market and renewals -- and Steve can touch on trajectory that goes on a year-end for me.

Steven Gallagher

Yes. When you think about the headwind in the fourth quarter of last year, we really had 1 large incentive team in from a redevelopment that we did. That is coming through the entirety of the year. So it's not a year-over-year comparison issue. It's just all that hit in the fourth quarter versus being spread throughout the year. So that's why we highlighted it last year, we highlighted on our last earnings call, just to help people understand where that headwind is going to come. But ultimately, it's going to be part of our earnings trajectory going forward.

Brian Finnegan

Yes. And I think I would just add, look, we're pleased with the trajectory and NOI growth for the year. We raised our outlook again we had record low small shop move out. So from a health of the portfolio perspective, Todd and the core fundamentals, we're very confident in that trajectory. And like Steve said, where things may be lumpy in a given quarter, but this was as expected.

Operator

Moving on to Michael Griffin with Evercore ISI.

Michael Griffin

I wanted to touch on the small shop leasing for a bit. Saw leased occupancy reached 92.8% in the quarter. seems like there's more potential upside here, particularly within the snow pipeline. So can you give us a sense in the near to medium term, how further this leased occupancy can move on the small side and are you getting any pushback from tenants or occupancy cost ratios ticking up as it relates to resistance that they might have from signing higher rents or higher renewals? .

Brian Finnegan

Michael, thanks for the question. We continue to have significant visibility on upside in our small shops. And it's really consistent with what's driven small shops to date. It is deployment of our reinvestment pipeline. You look at that future reinvestment pipeline and small shop occupancy trails the portfolio by several hundred basis points. And you see that level of uptick as we bring those projects online. So we're pleased with the growth that we've had to date, but we definitely see a lot more room to run as it relates to small shops.

And I think in terms of your second question on small shop health and ability to pay increasing rents, -- our tenants are performing, right? Retention rates up 300 basis points year-over-year. Again, small shop move-outs this year are record lows for the portfolio for the fifth consecutive year. And what's really encouraging to us is the quality of those operators that we've been attracting. Consumers are demanding more of the suburbs. That leads to higher-quality quick-serve restaurants. It leads to higher-quality service operators, higher-quality users. And you can see that coming through in our portfolio. They're driving traffic, they're renewing with us.

So from that perspective, tenants are not paying increased rents at this level unless they're healthy and their sales correlate to the ability to pay those -- so that which gives us a lot of encouragement of not just driving small shop occupancy going forward, but doing it with great operators at continued higher rents.

Operator

Our next question comes from Craig Mailman with Citi.

Craig Mailman

I know Brian or Mark who wants to tackle this one. But just going back to the commentary about pricing being pretty sticky here despite the move in rates, just given the flow of capital kind of coming in to the group. Just kind of curious on the I guess, the makeup of that capital and the depth of it, like how much of that is just capital that needs to be put out the door because it was raised in the fund that has their deployment periods coming to an end. And so for them, pricing is less of an issue because they want to get fees on that. And once that kind of dries up, is there a potential that pricing starts to move because expectations have to change on that incremental capital that's raised and the return requirements that they're telling their kind of investors that they're going to be able to hit going forward? .

Mark Horgan

Well, I appreciate the question. From a scale perspective, from what we can tell, there is a range of capital coming into the space. So it's -- what you've seen return to our space is the very traditional pension fund capital, you're seeing sovereign wealth LP capital come in high net worth is seeking the capital, and we're also seeing [10-31] capital coming to the space for particularly on some folks in the data center space results in that for data centers are seeking exposure to retail given the fundamental of the business. .

As far as the scale of it, it seems very large. I mean what we're tracking from what we just have inbound calls on is billions of dollars of capital today. And as far as pricing being sticky to look at cap rates at retail over time, it has generally been stickier than some other asset types. That we really haven't seen things drop super low across the entire industry. They generally don't spike up that high when you see rates moving because of the overall fundamentals of the sector. So as far as we can see today, we feel very confident about liquidity, and we don't expect to see large pricing change.

Where I think you will see pricing changes, frankly, assets that require a lot of debt, so that's new construction pricing assets without growth. That's probably where we're seeing the biggest impact on pricing. But as far as assets with good growth opportunity that we chase and I think a lot of folks are looking for. You're seeing very tight pricing. We've seen assets real time, close rates move in price well into the 5s across multiple markets. That might be on the margin, but we're expecting to see a healthy demand for assets at a charge of cap rates today.

Operator

And our next question will come from Samir Kanal with Bank of America.

Samir Khanal

I guess, Brian, when I look at your in-process reinvestment pipeline, roughly $330 million now, I think it's around a 10% yield. And you talked about occupancy reaching record levels. I mean, how should we think about the opportunity there is that -- in that pipeline as sort of the size of that pipeline over the next couple of years?

Brian Finnegan

The redevelopment pipeline Samir? The -- so on the redevelopment pipeline, I think what encourages me about it is not just the size of it but the nature of it, right? As you've seen us the last couple of years, our projects have gotten larger with a similar risk profile. You look at what we've done in college towns like Davis, California, great suburbs like suburban Chicago, we're adding 100,000 square foot IKEA. And I mentioned the pipeline that we have with Publix. That pipeline is also part of what attracted us to the Slate portfolio as well.

But independent of that, you still have $1 billion just in what's in our active pipeline today and in the future pipeline, we show you every quarter. Three of the assets that we bought this year immediately went into that future pipeline. So Mark and team are finding those opportunities as well. But thinking about the rest of the public developments that we have, the outparcel opportunity that we have, and we've already done about 110 outparcels across the portfolio, we see a similar level in what we have today and the ability to densify our sites. So it's going to continue to be a core strategy for the company.

We've improved our expertise over time. And what really excites me about it is just the size of that pipeline and the types of projects that we've been able to deliver and will continue to deliver over the next several quarters.

Operator

We'll go next to Greg McGinniss with Scotiabank.

Greg McGinniss

Brian, you mentioned the improving ability to reduce downtime and accelerate rent commencements. Can you quantify that change in terms of how many days you've cut from lease signing to rent paying, whether for shop or big-box tenants and what's assumed with regards to the SNO pipeline disclosure for 2027 starts?

Brian Finnegan

Yes. Can you repeat the last part? Greg, I missed the last part.

Greg McGinniss

Just trying to understand if the acceleration in rent commencements is applied to what's been disclosed for expected 2027 starts on the [indiscernible] .

Brian Finnegan

Got it. Got it. Got it. So I think we have constantly thought about here, what's the value of a day in rent right, on average across the portfolio through all of our functions. And I think where you can see it in the data across the board is in legal. So we're down about 25% in our time in legal over the last 2 years, we've reduced the size of our short-form lease, our legal teams, our leasing teams in terms of the relationships that they've developed on the -- with their tenant counterparts has really helped that as well as deploying technology.

It's taking us a lot less time today to generate a lease. It's taking us a lot less time to reconcile a lease when the lease is done and also understanding what some of those clauses are that tenants will live with. It can be hard to quantify just the days and the time from lease execution to opening because scopes are different. I would say though, and you can see this coming through in the reduced capital that we're having to spend is tenants are taking on more existing conditions, particularly national tenants have beefed up their construction departments so that they can take fixed cost TAs and be able to control both sides of the schedule.

So that's allowed us to deliver space and do it much more efficiently and get those tenants started a lot sooner. The other thing I'd point to is the relationships that our redevelopment folks have with local municipalities to work through the permitting process. It's another reason back to Samir's question why we've been able to get some of these projects done, particularly out parcels and very -- were historically very challenging jurisdictions. So if you put all that together, it really speaks to the outperformance of us pulling dates forward in the third quarter and something that we continue to be focused on improving this as we get into 2027.

Operator

Caitlin Burrows with Goldman Sachs has our next question.

Caitlin Burrows

I was just wondering if you could comment on debt in the quarter and then the watch list going forward. I know it's been relatively small recently, but wondering if there's been any shifts.

Brian Finnegan

Yes. I mean, Steve can touch on the quarterly trajectory, but I would just say, Caitlin, the health of the tendency is the strongest it's ever been. And 1 of the ways you can see that is in bad debt. We lowered our outlook at the start of the year. We improved that outlook throughout the year, and we've maintained it with -- because third quarter went as expected. If you think about the tenancy and who we've grown with. HEB entered our top 40 last quarter. We've grown with Trader Joe's, we've grown with Sprouts. We've grown with ALD. We've grown with all the off-price users. We continue to grow with publix. .

Thinking about the signatures that we have, we get a question on small shop tenancy earlier. We've done more with national and regional tenants. And even those local operators which we want unique local operators at our shopping centers, they still only represent 17% of our rent. And even the signature we're getting there are the strongest they've ever been. So as we think about collection trends, retention rate, and overall small shop occupancy growth and frankly, the growth that we're getting in renewals out of small shops the health of the portfolio remains very strong.

The watch list is lower than it was, Day. We continue to watch certain categories that may close stores like drug stores. We reduced our exposure to office supply significantly. But as we sit here today, we're operating from a great position of strength as it relates to the underlying tenancy of the portfolio.

Operator

We'll go next to Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb

Brian, question on Slate and the Brixmor platform. Previous to the deal you had spoken about the breadth of the Brixmor leasing relationships and how you were a top layer to many of the national tenants. Obviously, Slate makes you bigger. Just curious if -- in thinking about this deal and think about the company going forward, if you see like the need to be even bigger to create even better relationships and standing with the retailers?

Or if as you look over the national playing field, you see markets where some of your strong tenant relations don't really have a presence, and therefore, you guys acquiring there is a way to sort of expand those tenant relationships into new markets. Just trying to understand sort of how you look at it and if it's more a negotiating leverage standpoint or it's a chance to really bring tenant reach to new markets?

Brian Finnegan

Yes. It's a great question. And I think it's really 1 of the things that made us even more convicted about the opportunity here, Alex, over the past month as we've been talking to our national retail partners and their desire for us to not just show them what's available in the Slate portfolio, but to talk about our plans and our reinvestment plans, particularly on some of those public and other grocer reinvestments.

We have been growing the company ahead of half of the acquisition activity that we did as a public company was in the last 2 years. But it's been very intentional. It's been in markets that we know really well. It's been in places where we can put our platform to work to drive outsized value. That's exactly the way that we look at the Slate transaction. It was a unique opportunity for us, and we're thrilled to be moving forward towards closing in the first quarter. As we think about the scale of the portfolio, we had 900 million visits over the last year. We have 8,000 leases. We're among the top landlord to every major retailer in the country.

So we have the access and the partnership that we need to ultimately help them grow. And we're going to look at our acquisition strategy going forward and in the same way, is there ability in our markets to find new opportunities to put our platform to work to do it accretively to add assets that will complement the long-term growth profile. I expect us to be able to do that. But that's how we think about adverse growth for growth sake.

Operator

We'll go next to Jamie Feldman with Wells Fargo.

Unknown Analyst

Great. So you had new lease spreads at 42.6%, renewals, 19.4%, total spread 17.4%. Beyond these headline rents, where are you having the most success improving lease economics? Is it contractual escalators, term options, guarantees, and work? And then going back to your answer to a prior question just in terms of the improving quality of the tenants you're bringing into the portfolio. What does that mean for your negotiating leverage and can your 1.7% in place contractual rent growth realistically moved towards the 2.6% achieved on recent new and renewal leases?

Brian Finnegan

Yes. Well, Jamie, the answer is your question, I'd say kind of all of the above, and let's point to some specific data points on that. You look at a portfolio today that's recovering a few hundred basis points ahead of build occupancy. That was the direct opposite in 2019. So our team's focus on improving CAM clauses strategically deploying fixed CAM, which is now 41% of our ABR and growing at 4.2%.

You mentioned our average growth. it's 2.6%. We've been continuing to drive that higher. It's not something that we just started working on the last few quarters. I mean, we've taken that from 90 basis points in 2016 to 1.7% today. So we definitely see the ability to grow that further. We don't get to touch all of the portfolio in a given year, but our team is being very opportunistic. As it relates to removing or reducing options, we're doing that as well. We've almost completely removed those from local tenant leases. If you look at the options that we are giving to some regional tenants, we've introduced fair market value concepts, so we're growing them well in excess of their growth rate.

With national tenants were reducing what was historically a number of options that were just kind of commonplace in those leases. We're negotiating those much harder. And I would say, just as it relates to kind of leverage, the reason that we're driving these rents is because our tenants are succeeding in our centers. We've transformed so much of the portfolio. We've invested a lot. We bought a lot of great tenants in that are continuing to drive traffic. When you do that, it ultimately helps the entire shopping center. It's a business where it matters to your neighbors.

And we continue to see that. And that's why we're so excited about what we have going forward, the tenants that we're opening the redevelopments that we're bringing online, including the ones that we brought in during the quarter, but expect to see that not just in the headline rent growth, expect to see it in the continuing improvement in those other aspects of the lease.

Operator

We'll go next to Floris Van Dijkum with Ladenburg Solman.

Floris Gerbrand Van Dijkum

Following up on the cruising speed question, your cruising speed, as you rightly point out, Brian, has increased quite nicely at 1.7% in place today, I think [$2.6 billion] on the new deals over the last 12 months. Question is, how does Slate compare to that? Does that add to the cruising speed or detract? And then number two, I guess, is how many years of 2.6% growth in new leases do you need to achieve before you hit a 2% average cruising speed in your portfolio. Presumably, you model these things out because you know you're your pipeline pretty well. How long of a trajectory to get to that? And again, does the Slate portfolio add or detract from that growth?

Brian Finnegan

Well, I think we're entering with a pretty good starting point as it relates to Slate. I mean, that team has been delivering renewal growth in the mid-teens over the last year. They've been doing new lease growth in the 40% range. And so for us, that gets us very excited about ultimately what we think our platform can deliver as we start to take on these assets, particularly as we think about the redevelopment upside in those a subset of that portfolio. And what we've learned over the last month has only made us more convicted in that opportunity. I think it can be challenging to model that level of growth out for several years. What I can say is we continue to improve it. And the growth rates at 2.6% are again off the highest rents we've ever signed as a company.

So we continue to see a long runway. Steve touched on it in his opening remarks in terms of what's expiring and where we're signing those leases. Retention rates going up, renewal growth continues to be in that kind of mid- to high teens level. So look, on top of that, we expect to continue to improve our in-place bumps. And going forward, we will continue to improve what the underlying growth is in the portfolio. It is tough to quantify today how many years that will take, but we are seeing steady improvement.

Operator

Next question will come from Linda Sai with Truist.

Unknown Analyst

I think the 88% retention ratio is near Brixmor's historical high. you view the high 80s as a new steady state? Or does that change temporarily with incorporating the Slate acquisition in terms of potential remerchandising?

Brian Finnegan

Look, I think, Linda, this is more of a result than kind of an aim for us to get to a higher retention rate. So if you think about the portfolio historically, it was in the kind of low 80s. I mean that has gone higher into the mid- to high 80s. I think you can expect us around this level probably towards the high end part of our business plan will always be to recapture space that is either under market or underutilized when we have the ability to do that upon a lease expiration. And we're not going to let a retention rate that drive that decision at an asset level. And ultimately, we think that's the best thing for the property and we can create a lot of value going forward. .

But what I would say though is I think what you're seeing in those retention trends are really the health of the portfolio, everything that we've done coming through in terms of improving our tenancy, improving the ability of our tenants to succeed at our centers, and that's just 1 stat that of many that shows you the health of the portfolio in addition to loan move-outs in addition to the renewal rates that we've been able to achieve.

So we're proud of it. I think you can expect kind of that mid- to high 80s range but it's not something that, say, we're definitely striving to achieve. It's more a result of the work we've done.

Operator

Moving on to John Peterson with Jefferies.

Unknown Analyst

Another question on the Slate acquisition. I think if you run some of the demographics on it, the household income and population density is below the portfolio. But if you look over the last few years, the growth of income and population is much higher than your existing portfolio. I'm just curious if you think about deploying capital, how you think about that trade-off between kind of infill high-income locations versus more higher growth areas? .

Brian Finnegan

Yes. We've never managed the portfolio specifically for demographics. As we think about the markets that we're going into, though, that growth rate, John, is something that we paid a lot of attention to as well as our conversations with the with the tenants. And frankly, the demand that we're seeing from tenants to want to explore opportunities in the portfolio. You think about the strength of the grocers there, whether it is [publix, Harris Teeter or Kroger], how they've reinvested in those stores. They certainly see the growth that's happening in those markets and something that we do as well. So it's a data point. It's something that we consider, but as we looked at this and said to ourselves, we're growing in Atlanta, we're growing in the Carolinas, we're growing in Orlando. We're growing in Jacksonville.

These are all places that have very high growth rates you're seeing positive trends throughout their economies. You're seeing investment. And from that perspective, we like the trajectory, but more importantly, we like what we're hearing out of the gate from the tenants in those centers.

Operator

We'll hear next from Paulina Rojas with Green Street.

Paulina Rojas Schmidt

This may transaction brings a JV partner, preferred equity investments and also fee income, a different mix from Brixmor's rational growth. My question is how -- what is your appetite for repeating this template in the future? How often are you to management fees playing a bigger role going forward. So more transactions like this? .

Brian Finnegan

Yes. Probably, I think the answer is the same as it was before the Slate transaction. It is we'll consider it. And for us, it's always been is there alignment from a business plan perspective, is the opportunity in front of us. justify some of the additional complexity that does come along with JV partnerships. This is not our first rodeo. We with joint ventures. We've had them with large institutions in the past. It's something that we haven't done in a few years, but we've certainly had them in the past. So I think it's something that we will consider. We do like the aspect of having the bulk of the portfolio with property-level debt. Steve, Stacy and team have worked very hard on our balance sheet.

But where the opportunity presents itself, particularly with a great partner like Everview and another institution that's investing alongside them with [Audio] that with the opportunity that we had in front of us made a lot of sense. Will we look at it again? The answer is it depends. I think for us, we'll continue to look at these on a one-off basis, but I'm really proud of the team in terms of how we move forward with the transaction. We are starting and integrating a joint venture partnership and came through with 1 of the best operational quarters we've had in the company's history. So I think from that perspective, it continues to be -- it's an option for us, but it's really going to be opportunity dependent.

Operator

We'll hear next from Mike Mueller with JPMorgan.

Michael Mueller

Your reinvestment pipeline has about a 10% return expectation. Does the underwriting here and the returns you need flex up and down with larger interest rate moves like it does with acquisitions? Or is it just kind of a different animal because of the implications for the whole property and you're kind of starting off with higher yields became with?

Brian Finnegan

Yes. I think we've always approached investments, Mike, through the lens of interest rates going up and when that -- whether that is acquisitions or our reinvestment underwriting, I think from a reinvestment standpoint. If anything, as we've done larger projects over the past few years, the change you've seen in our underwriting is much more confidence in those pre-leasing levels. We're not bringing anything into that active pipeline that's spec.

We've actually increased those pre-leasing levels fairly significantly and then ultimately to having great visibility on costs. despite some of the uptick in rates and inflation, we actually had seen material costs kind of moderate this year. We have had some pockets of labor pressure, but it hasn't been material. And so from that perspective, having great visibility on that and conviction on that when we move into these projects is something that we're really focused on.

So I think if anything, that's been the additional focus versus the rates on the reinvestment investments. But I'd say, across the board, we're always approaching these through the lens of rates going up.

Operator

Greg McGinniss with Scotiabank has our next question.

Greg McGinniss

Steve, I just wanted to follow up on the guidance. We appreciate that the increase in same-store gave us a contribution to the increased FFO per share expectations, but term fees are also coming in higher year-to-date than prior commentary indicated. What's the balance between those 2 items in terms of the penny increase to the midpoint? And what are terms of expectations for Q4?

Steven Gallagher

Yes. If you go back to where we really started the year, right, we knew term fees were going to be a headwind as we look to our '26 guidance. It's a $0.03 high headwind in our initial guide. Now term fees, as you know, can be lumpy. If you actually look at the term fee that we recorded in the quarter, the majority of it was actually for [Ren]. I think it talks about -- it gives us a lot of what Brian was talking about, the quality of the name on these leases of an entity going bankrupt in the U.S. and having a U.K. guarantor allowed us to click over $2 million from that tenant.

So when we talk about the health of the leasing dynamic, that's a lot of what we're referring to. So that's what really led to it in the quarter. But when you look at the move in same property, Obviously, that implies about $0.01, $0.015. The LSI is more or less within our expectations for the year.

Operator

[Operator Instructions]

And we'll go next to Omotayo Okusanya with Deutsche Bank.

Omotayo Okusanya

Yes. Just a quick question around 2027 as you kind of start to shopping up our models. Just curious if anything in '27 that the team would like to kind of point out from a modeling perspective that maybe we should be aware of whether you kind of expect '27 to be kind of fairly clean and kind of business as usual.

Brian Finnegan

I mean it's definitely not going to be business as usual as Slate's coming on. So I'll point that and obviously, we'll give guidance on that. in February. I think the 1 item -- and I mentioned it in my script is we do have a burning off in the middle of the year in July, and we did put in $400 million of new hedges for when those drop off. But outside of that, I think everything else is pretty well disclosed as far as where we stand heading into '27.

Operator

And this now concludes our question-and-answer session. I would like to turn the floor back over to Stacy Slater for closing comments.

Stacy Slater

Thanks, everyone. We'll see a lot of you at New read in a few weeks. .

Operator

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.