管理層發言
Good day, and welcome to the Phillips Edison and Company's Second Quarter 2026 Earnings Call. Please note that this call is being recorded. I will now turn the call over to Kimberly A. Green, Head of Investor Relations. Kimberly? You may begin.
Thank you. I am joined today by our chairman and CEO, Jeffrey S. Edison, President Bob Myers, and CFO John Caulfield. As a reminder, today's discussion may contain forward-looking statements about the company's view of future business and financial performance, including forward earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties as described in our SEC filings. Our discussion today will reference certain non-GAAP financial measures. Information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings press release and supplemental information packet, both of which have been posted to our website. Please note that the caution on forward-looking statements also applies to these materials. Following our prepared remarks, we will open the call for Q&A. Given the number of participants on the call today, we respectfully ask that you be limited to one question. Please rejoin the queue if you have follow-up questions. With that, I will turn the call over to Jeffrey S. Edison.
Jeffrey?
Thank you, Kimberly, and thank you everyone for joining us today. During the second quarter, the PECO team delivered NAREIT FFO per share growth of 8.1%, Core FFO per share growth of 7.8%, and same-center NOI growth of 3.8%. Our strong performance is due to a combination of high demand for space in our grocery-anchored shopping centers and our team's ability to capture that demand with occupancy gains, great rent spreads, and superior operations. We are continuing to expand our ability to drive growth and create value while maintaining a strong balance sheet and a thoughtful approach to investing in long-term growth. These disciplines have always been core to PECO. As we look through the second half of 2026 and into 2027, we believe PECO is well positioned to deliver what we view as a compelling combination for our investors: more alpha with less beta. While macroeconomic headlines continue to evolve, the fundamentals supporting PECO's portfolio remain consistent. We are seeing continued traffic resiliency across our portfolio. Our centers generated 2% year-over-year traffic growth in June, and 2% traffic growth year-to-date. Consumers are increasingly seeking value, and they are continuing to make frequent trips to necessity-based destinations, which reinforces the strength of our growth tracker strategy. We also continue to see leading grocers invest in their businesses. Kroger's announced acquisition of Giant Eagle underscores the value large grocers place on growing market share and expanding their brick-and-mortar footprint in attractive markets. As Kroger's largest landlord and a longtime partner to both companies, we view this as another positive indicator for the long-term strength of the grocery-anchored shopping center sector. But healthy operating fundamentals are only part of the story. The larger opportunity is how PECO converts these fundamentals into long-term earnings growth. We have a number of ways we can create value, including strong internal growth from leasing, occupancy, rent spreads, retention, and development and redevelopment activity. We are also growing through acquisitions, joint ventures, and portfolio recycling. We think like owners. Every capital decision begins with a simple question: where can today's dollar create the highest return opportunities? During June and July, we strengthened our capital position by raising $92 million of equity to invest accretively in long-term earnings growth. Given the strength of our first half performance and the opportunities we continue to see, we are pleased to increase our full-year guidance for gross acquisitions to a range of $500 million to $600 million. Importantly, we are accomplishing this without changing our disciplined investment approach. We continue to target unlevered IRRs of 9% for our grocery-anchored centers and 10% for everyday retail centers. We believe patience and discipline matter more than volume. Our objective is not simply to grow the portfolio; it is to strengthen quality while refreshing and enhancing our growth profile. Looking ahead, we see attractive investment opportunities that allow us to create incremental shareholder value while preserving our balance sheet strength. Portfolio recycling remains another important competitive advantage. As assets mature or no longer meet our long-term return objectives, we recycle that capital into opportunities with stronger growth prospects. A strong acquisition market also means a strong disposition market, and we are taking advantage of both. A meaningful part of the active transaction market is institutional investor participation. The strength of retail real estate delivering necessity-based goods and services continues to attract direct investment. Our joint venture partners have recognized this for years, and we are very pleased with the returns that we have generated for them. We continue to explore the expansion of our current joint ventures as well as investments in new opportunities. At the same time, we remain equally focused on reducing risk. Growth is most valuable when it is funded responsibly, which we are doing through our recent equity issuance, portfolio recycling, joint ventures, and the strength of our balance sheet. Our growth plans are not dependent on a single source of capital, and that flexibility allows us to remain disciplined through volatile markets while still pursuing opportunities that meet our return thresholds. That is what differentiates PECO. We are the cycle-tested leader in right-sized grocery-anchored neighborhood centers located where America's top grocers are most profitable. PECO's portfolio is built around the daily needs of the consumer, supported by grocery stability, necessity-based demand, and a national operating platform that has delivered consistent growth through multiple economic cycles. That starts with the stability of our grocers as the backbone of our earnings. Our centers are anchored by leading grocers and complemented by retailers that provide necessity-based goods and services, creating consistent traffic and durable cash flow. Consumers continue to shop close to home, and our neighbors want space at our centers in the neighborhood. The result is high occupancy, strong retention, and the ability to push rents while maintaining a high-quality cash flow profile. PECO also has a differentiated ability to execute tactically across markets. We are not limited to one geography or one capital channel. Our national footprint, locally smart market knowledge, and vertically integrated platform allow us to identify opportunities across the country, whether that is core broker-anchored acquisitions, undermanaged or under-occupied everyday retail centers, development, joint ventures, or portfolio recycling. That flexibility helps us allocate capital where the long-term risk-adjusted returns are most attractive. Everyday retail enhances that growth profile without changing who we are. Grocery-anchored neighborhood centers remain our core business, but everyday retail gives us another way to use the PECO operating machine—our leasing relationships, national accounts team, data, and merchandising expertise—to release, re-merchandise, and improve smaller centers in strong trade areas. We continue to see everyday retail as a complementary growth opportunity that can generate attractive returns while reinforcing our focus on necessity-based, close-to-home retail. Our balance sheet further distinguishes PECO. We have an investment-grade profile, significant liquidity, and proven access to both debt and equity capital markets, along with joint ventures and portfolio recycling. That gives us the capacity to match-fund growth responsibly. Taken together, PECO offers a combination that is hard to replicate: a resilient grocery-anchored base, strong internal growth from occupancy, rent spreads, and development and redevelopment activity, a complementary everyday retail opportunity, a disciplined national acquisition platform, and one of the strongest balance sheets in the sector. We believe that combination positions PECO to deliver durable same-center NOI growth and mid- to high-single-digit core FFO per share growth over the long term. More alpha, less beta. Looking ahead, we continue to believe the building blocks for 2027 are becoming increasingly visible. The investments we are making today are anticipated to support long-term earnings growth, not simply near-term volume. With that, I will turn the call over to Bob.
Bob?
Thank you, Jeffrey, and thank you for joining us, everyone. PECO's operating team remains focused on generating more alpha. Our second quarter results were marked by a record high number of leases and success in growing cash flows. We continue to see high retailer demand with no current signs of slowing. Necessity-based categories, including quick service and fast casual restaurants, health and wellness, beauty, fitness, services, and medtail continue to be excellent drivers of demand. Seventy-four percent of PECO's rents come from necessity-based goods and services. Second-quarter leased portfolio occupancy remained high at 97.3%. Leased anchor occupancy remained strong at 98.4% and leased in-line occupancy was a record high 95.5%. In addition, economic in-line occupancy was a record high 94.8%. During the second quarter, PECO's national leasing activity continued to be outstanding. New deals included 7 Brew, Cold Stone, Firehouse Subs, Wingstop, Jersey Mike's, and Urgent Vet. Retailers growing with PECO during the quarter included new deals with Crisp & Green, Happy Lemon, The Peach Cobbler, Sweet Frog, Club Studio, Fit Stop, Clio Med Spa, and Escapeology. Our rent spreads continue to reflect an extremely strong retailer environment. During the second quarter, PECO delivered comparable renewal rent spreads of 21.2%. Solid retention during the quarter means less downtime and lower tenant improvement costs, which translates to better economics for PECO. Comparable new rent spreads remained strong at 33.7% during the quarter. In-line leasing deals executed during the second quarter were very strong. On renewal activity, PECO averaged record-high annual rent bumps of 3.1%. This is another important contributor to our long-term growth. We are also pleased with record-high portfolio ABR per square foot during the second quarter, which was driven by respective highs for both anchors and in-line retailers. As it relates to bad debt, we are actively monitoring the health of our neighbors. Bad debt was lower than expected in the second quarter at approximately 70 basis points of revenue. Given the strength we have seen in the first half of 2026, we have lowered our guidance range. We expect bad debt for the year to be in line with or slightly better than 2025. Turning to development and redevelopment, PECO has 21 projects under active construction. Our total investment in this activity is estimated to be approximately $82 million, with average estimated yields between 9% and 12%. Year-to-date, 11 projects have stabilized with over 212,000 square feet of space delivered to our neighbors. This reflects incremental NOI of approximately $3.4 million annually. We are focused on continuing to grow PECO's development and redevelopment pipeline, which is an important driver of growth. In addition, the PECO team continues to find accretive acquisitions that add long-term value to our portfolio. Our year-to-date acquisition activity through this week reflects $278 million at PECO's share. This includes eight grocery-anchored shopping centers, three everyday retail centers, an outparcel, and land for future development. Currently in our pipeline, we have over $225 million in assets that we have been awarded or are under contract that we expect to close in the second half. Our pipeline reflects a combination of grocery-anchored neighborhood shopping centers, everyday retail centers, and opportunities for our joint ventures. I will now turn the call over to John.
John?
Thank you, Bob, and good morning and good afternoon, everyone. Second quarter 2026 NAREIT FFO increased to $93.7 million or $0.67 per diluted share. Second quarter core FFO increased to $95.5 million or $0.69 per diluted share. And same-center NOI increased 3.8% in the quarter, primarily due to higher revenue, which was driven by increases in average rents and economic occupancy. PECO continues to focus on growth while maintaining lower beta. The acquisition activity Bob mentioned was funded by dispositions, the new equity raise, and our revolver. As Jeff mentioned, we remain disciplined about accessing the most efficient capital and match-funding our opportunities. PECO continues to have one of the best balance sheets in the sector. This strength was recently recognized by Moody's, which revised PECO's outlook to positive, reflecting our consistent operating performance, disciplined balance sheet management, and strong liquidity position. We believe Moody's positive outlook validates the strength of PECO's operating platform and credit profile. With $857 million in liquidity at the end of the second quarter, we remain well positioned to execute our accelerated growth plans. Our net debt to trailing 12-month annualized adjusted EBITDAR was 5.1x at quarter end and was 5.0x on a last-quarter annualized basis. At the end of the second quarter, PECO's outstanding debt had a weighted average interest rate of 4.4% and a weighted average maturity of 5.6 years when including all extension options. Ninety-five point nine percent of our total debt was fixed-rate debt, which includes PECO's share of debt for our joint ventures. Turning to guidance, we are pleased to increase our full-year 2026 guidance for NAREIT FFO per share, which reflects a 6.3% increase over 2025 at the midpoint. We also increased guidance for 2026 core FFO per share which represents a 6.2% increase over 2025 at the midpoint. We also updated our guidance for same-center NOI growth, which reflects 3.7% growth at the midpoint. These are very strong growth rates and are consistent with our long-term targets for growth. As Jeff mentioned, we also increased our full-year 2026 guidance for gross acquisitions to a range of $500 million to $600 million. As it relates to dispositions in 2026, we continue to target a range of $100 million to $200 million in asset sales. We have provided ranges for the other guidance items used in your models in our earnings materials. In summary, PECO delivered solid results this quarter, which allowed us to raise our earnings guidance and gross acquisitions guidance. We continue to see a resilient consumer, and we believe our portfolio will outperform as necessity-based retailer demand remains strong. As Jeff said, the investments we are making today position us exceptionally well for 2027 and beyond. In an environment where investors continue to see dependable growth and stability, we believe PECO is uniquely positioned to deliver both. With that, we will open the line for questions.
分析師問答
Operator? Thank you. We will now begin the question-and-answer session. Thank you. Your first question comes from Andrew Reel with Bank of America. Please go ahead.
Good afternoon. Thanks for taking my question. Just on the guidance: you raised the gross acquisition outlook by $100 million. You also improved the same-store NOI noncash and collectability assumptions. First, John, can you confirm that the net acquisition outlook is also increasing by that $100 million? Second, John, could you bridge the moving pieces of the revised FFO guidance and help us understand why the increase was modest at just $0.01 given the number of positive updates in the quarter? Thank you.
Great. John, you want to take that?
Sure. Afternoon, Andrew. First question: yes, it is a net acquisition increase of $100 million. As we think about the funding for that, we were pleased to raise a little over $90 million at the end of the quarter. Our leverage sits at 5.0 on a last-quarter annualized basis on net debt to EBITDA. Regarding guidance, we are very pleased with our first-half performance and our ability to raise our full-year guidance for all of our metrics. Operating fundamentals remain strong and tenant credit trends are healthy. The same-center guidance, which is now in the upper range of our long-term target of 3% to 4%, gives us room to move neighbors where we can drive more rent growth and improve merchandising. That is economic occupancy growth. At the FFO level, the midpoint of our guidance range is now above 6% for both NAREIT and core. Our dispositions are ahead of pace, but we view that as positive given the strength of our acquisition pipeline and the opportunity to reinvest that capital at higher spreads. There is a short-term cash flow timing gap, but this activity positions us well for 2027. Overall, we are confident in our increased guidance and remain focused on delivering results at or above that level.
Thank you. Your next question comes from the line of Haendel St. Juste with Mizuho. Please go ahead.
Hey, good morning. My question is on the acquisitions guide uptick. Is the new guide run-rate thinking beyond 2026 or more a reflection of your ability to opportunistically sell some noncore assets since there is a strong bid in the market today? And generally, how are you thinking about using equity to fund incremental acquisitions?
Great. Thanks, Haendel. We had a very good first half of the year on the acquisition side and feel really good about what we were able to buy. Looking forward, we think there is good opportunity. We have a variety of sources we will use to fund acquisitions in addition to the equity we already raised. John, would you go through the different pieces we are considering to fund this activity?
Yes. We have debt capacity and we raised equity recently. I should note our guidance for the year does not assume any additional equity issuance from here. When we think about future years, we still believe we can buy about $300 million on a net basis every year and remain leverage neutral. We have capacity of about $250 million, so considering what we have to buy this year and the future, we believe we can pursue higher acquisition activity while remaining net-leverage neutral. That said, we will look at it on a net basis because we want to preserve balance-sheet capacity and protect the business.
Great. Thank you. Your next question comes from the line of Caitlin Burrows with Goldman Sachs. Please go ahead.
Hi, everyone. Congrats on a great quarter. As we look at the acquisitions you did in the quarter, you mentioned how they are great for 2026 and set the stage for continued growth in 2027. Could you discuss the largest two or three deals or the most interesting deals from the quarter and what you see as the real upside potential for them?
Great. Thanks, Caitlin. Bob, could you walk through a couple of the assets?
Thank you, Jeffrey, and thank you, Caitlin. In April, we purchased an asset in Renton, Washington that is anchored by a Safeway and had misleasing opportunities with current occupancy at 82.8%. We believe we can make an immediate impact there and underwrote it for well above a 10% unlevered return. Across the assets we've bought, we're seeing significant mark-to-market opportunities—20%, 30%, even 40% mark-to-market in some cases. We are focused on buying acquisitions that solve for 9% to 10% unlevered or better. In everyday retail, we've been generating over 5% CAGRs; in the 12 everyday retail assets we've acquired, we've already moved occupancy up 450 basis points. We will continue to lean into areas where we remain disciplined on our unlevered returns. Our strategy is to stay focused on core grocery-anchored centers and complement them with everyday retail, aiming for less than 10% of the overall portfolio in everyday retail to capture that additional upside.
Your next question comes from the line of Floris Van Dijkum with Ladenburg Thalmann. Please go ahead.
Hey, thanks for taking the question. Following up on Caitlin's point: to get to 10% of the portfolio in everyday retail requires you to buy more of that product. Are you also looking at acquiring everyday retail centers adjacent to your existing properties? How are you thinking about centers and adjacency?
Thanks, Floris. Bob, can you walk through the breakup of what we bought and what we have looking forward, and comment on whether we're buying everyday retail adjacent to core properties?
Thanks, Jeffrey, and Floris. We're excited about everyday retail. For example, Prairie View Center in Minneapolis, anchored by Lunds & Byerlys, is a strong asset in a market where we've done well. Lunds & Byerlys is a specialty grocer with strong occupancy and upside: we see opportunities to push rents from the low $20s into the high $30s or low $40s. Regarding adjacency, we are targeting markets where we already have deep knowledge, incomes, and demographics that support everyday retail. We've identified over 50,000 of these opportunities across the country near our top grocer banners, where we can generate over 10% unlevered returns. For the 12 everyday retail assets we've acquired, we paid about $325 per foot and are generating unlevered returns around 10.5%. The pipeline under contract or already awarded is over $230 million in addition to what we've closed, which puts us well on our path to the low $500 millions. Right now, the pipeline is roughly 40% everyday retail and 60% grocery, and we remain highly selective.
Your next question comes from the line of Michael Griffin with Evercore ISI. Please go ahead.
Thanks. Jeffrey, you mentioned grocer sentiment earlier. One of your large tenants reported earnings and took down outlook, commenting on a cautious consumer. Could this be a canary in the coal mine for grocery behavior—trading down at the grocery store—and could that translate into worrying leasing demand for PECO?
That's a great question we've been discussing internally. The Albertsons announcement shouldn't be a surprise; over the last three years they were operating with uncertainty about the Kroger transaction and effectively had to operate under multiple business plans. Now they are refocused and reinvesting in price, which is an important strategic move. Keep in mind Albertsons is the fourth-largest grocer in the country with strong brand banners and strong locations. We have a long relationship with them and have worked with them for years. Importantly, we curate our portfolio so we don't have concentrated exposure to any single grocer. We design the portfolio to avoid issues if one grocer runs into problems. Albertsons is one indicator, but you also hear Kroger and Walmart responding to consumer dynamics—reinvesting in price because they are seeing consumers trade toward private label from branded products. From our perspective, on the ground we are not seeing that translate into weaker performance: foot traffic was up 2% in June and up roughly 2% year-to-date. It's something we're monitoring closely, but our portfolio and grocer relationships give us confidence.
Your next question comes from the line of Samir Khanal with Wells Fargo. Please go ahead.
Thanks. Renewal spreads remain strong. Can you talk about the composition of the spreads between embedded mark-to-market versus strong incremental demand? How should we think about those two levers heading into the back half of the year and into 2027?
If you look at our overall results—occupancy at 97.3%, anchor occupancy at 98.4%, and in-line occupancy at an all-time high of 95.5%—we continue to see very strong retailer demand. We're retaining 90% of our neighbors, and retention costs remain low. Our pipeline and leases out for signature show significant demand. New leasing spreads are around 34% to 35% and renewal spreads are around 21% to 22%. We don't see anything slowing down. Our focus remains on necessity-based goods and services; 74% of our rent roll reflects those categories. We continue to participate in industry events and retailers continue to seek growth opportunities in our portfolio. There will be mark-to-market opportunities, but they're being driven by strong demand. We believe we can continue to move in-line occupancy another 100 basis points and increase anchor occupancy another 50 to 60 basis points by year-end.
To add, the mark-to-market is being driven by demand. Renewal spreads over 20% for many quarters are a function of other retailers seeking that space. Our locally focused leasing agents track market comps and the strength of our assets enables us to drive those spreads. So it's both mark-to-market and strong demand working hand in hand.
Next question comes from Todd Michael Thomas with KeyBanc. Please go ahead.
I wanted to follow up on core FFO guidance and the results. It looked like there was a positive variance in other nonproperty income of about two cents, comprised of some investment income and other income. Can you speak to whether that was contemplated in the guidance and if any of that income is expected to be recurring?
Yes. There was income related to an easement on a nonoperable piece of land of a little less than $1 million in the quarter, and I would not anticipate that as recurring. The other piece is investment income: we have an insurance captive that is continuing to grow and holds marketable securities. The growth there reflects participation in the market. That was contemplated and we include it in our numbers. We expect it to continue to grow as assets in that business increase. It is a durable component of our business, but the easement-related income was nonrecurring.
Is the investment income piece reasonable to consider as a run rate at roughly $1.1 million, or is there a way to quantify expected distributions?
The insurance captive securities portfolio is balanced between equities and fixed income. Some of the returns will be cash income and some equity appreciation. If you need a run rate, the current level is a reasonable guide, and we view this as durable income that should grow over time as the business grows.
Thanks, Todd. Your next question comes from Michael Goldsmith with UBS. Please go ahead.
Good afternoon. Jeffrey, you mentioned the building blocks for 2027 are becoming increasingly visible. Would you share some of those building blocks and how you're thinking about growth beyond this year? If it's too early, do you believe same-center NOI and FFO growth can accelerate from the current level given where occupancy stands today and the potential for transaction cap-rate compression?
We will provide more detail at our December investor event where we will give guidance for next year. The key point is that we make long-term decisions: what we buy today influences growth over the next three to five years. Our acquisition, development, and disposition models are designed to create long-term value. That value accrues over time, and that is the mentality driving our strategy. We believe the investments we are making today will support durable earnings growth beyond just near-term volume.
Your next question comes from the line of Richard Hightower with Barclays. Please go ahead.
Hi. I wanted your perspective on the Kroger-Giant Eagle merger, which you referenced. Kroger is increasingly using storefronts for online fulfillment. How do you think about that dynamic as a landlord, and how do you position the portfolio for it? What should investors be looking out for?
We are very positive about the Kroger-Giant Eagle announcement. When Kroger enters a new market, they tend to invest in stores, price, and push sales, which benefits the Giant Eagle stores we own. Historically, Kroger has preserved strong local management and banners in acquisitions. We have only ten Giant Eagle centers, and they are in strong locations with strong sales, so we see this as positive. Importantly, Kroger is choosing to invest in bricks-and-mortar retail where they believe they can best deploy capital, which signals the long-term value of stores and centers. This trend is positive for landlords like PECO because increased sales and investment by grocers support stronger rent performance and improved credit.
Your next question comes from the line of Ronald Kamdem with Morgan Stanley. Please go ahead.
Thanks. Following up on the in-line occupancy record highs and your comment about potentially another 100 basis points to go, what's different this cycle versus history? What categories are really active, and what are you staying away from?
Bob, can you take that?
Absolutely. We've seen strong occupancy increases; we had a 25% increase in leases completed in the second quarter versus the first quarter, which demonstrates momentum. Active categories remain consistent: fast casual, health and wellness, beauty, fitness, services, and medtail. One of our strategies has been to target the largest NOI- and ABR-generating vacant spaces and put additional leasing incentives in place. Out of around 100 targeted spaces, we've leased about 65 so far. We focus on leasing vacancies that have been vacant for years, investing to clean them up and re-merchandise them. That targeted, disciplined approach is driving our success in spreads, retention, and occupancy.
Your next question comes from Mike Mueller with JPMorgan. Please go ahead.
Notable fluctuations given how the 10-year has moved around and backed up closer to 4.7%. Have you seen any notable fluctuations in cap rates this year given the change in rates?
The transaction market remains aggressive and competitive. We're seeing more product, but not a broad reduction in cap rates due to higher interest rates. The demand for retail real estate is strong among many buyer groups, so cap-rate movement has not materially increased despite the rise in the 10-year.
Your next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.
A lot of peers want to be acquisitive, but it is competitive. As you think about the deals you did year-to-date, was it particularly competitive? How are you getting an edge—markets, submarkets, prior relationships, or something else?
The market has been competitive, and that means we must be disciplined and work harder to find opportunities that meet our return thresholds. Being in 30 states gives us a broader opportunity set. The team has executed well in the first half and kept the pipeline full. Bob, any additional color?
We are seeing a 33% increase in deals coming through the pipeline and a 25% increase in deals presented to our investment committee. We added resources to our acquisitions team, including hiring an acquisition officer out West, which expanded our coverage and helped us find off-market opportunities. Some deals we've acquired this year were off market. We continue to buy disciplined cap rates—our deals have averaged in the mid-6s cap rate mix and our pipeline cap rate is around 6.5 for the second half. We're solving for returns between 9% and 11% unlevered and will continue to pursue opportunities where we can meet those targets.
I will now turn the conference back over to Mr. Jeffrey S. Edison for closing comments.
Thank you, everybody, for being on the call. I want to highlight a few takeaways: we beat and raised; we met our mid- to high-single-digit FFO per share growth for the quarter and the first half of the year. We have 95.5% in-line occupancy, 90% retention, new rent spreads of 33.7%, and renewal spreads of 21.2% with strong annual contractual rent bumps. Leasing is strong and FFO performance is strong. We increased our acquisition guidance by $100 million. We received a positive outlook from Moody's on our debt and reduced our net debt to EBITDA to 5x on a last-quarter annualized basis. We disposed of almost $100 million of projects that were at a 6.3% cap and an IRR below 7.5%, allowing us to redeploy that capital accretively. Our development and redevelopment activity is at about $84 million versus almost $50 million last year. We also won two awards—the Digi RealComm award and the ICSC Tech Innovation Award—which reflect our technology and innovation progress. These achievements drove our first-half performance and position us well for the second half and for 2027. We deliver alpha across multiple areas of the business while maintaining low beta, and we believe that combination is compelling for investors. A special thanks to the PECO associates—this performance is a result of their hard work—and to our shareholders and neighbors for their continued support. Thank you and have a great weekend. We look forward to a strong second half of the year.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.