InvenTrust Properties Corp. 2026 Q2 Earnings Call

Good morning, everyone, and thank you for joining us today. On the call from the InvenTrust team is DJ Bush, President and Chief Executive Officer, Mike Phillips, Chief Financial Officer, Christy David, Chief Operating Officer, and Dave Heimberger, Chief Investment Officer. Following the team's prepared remarks, the lines will be open for questions. As a reminder, some of today's comments may contain forward-looking statements about the company's views on the future of our business and financial performance, including forward-looking earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties. Any forward-looking statements speak only as of today's date, and we assume no obligation to update any forward-looking statements made on today's call or that are in the quarterly financial supplemental or press release. In addition, we will also reference certain non-GAAP financial measures.

The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our investor relations website. With that, I'll turn the call over to DJ.

Good morning, everyone, and thank you for joining us. InvenTrust delivered another solid quarter, supported by continued strength of our portfolio and the consistency of our operating platform. Cash flow is growing, leasing activity and tenant retention remain strong, and our signed but not open pipeline continues to convert into occupancy and cash flow. Same Property net operating income growth accelerated to 4.1% in the second quarter, while year to date, Nareit FFO per share increased 11%, and Core FFO per share increased approximately 9%. Retailer demand remains concentrated in well-located, open air, necessity-based centers, and limited new supply continues to provide a favorable backdrop for long-term rent growth. Our first half results, combined with the visibility we have from contractual rent growth, lease commencements, and redevelopment activity, continue to support our full year outlook. Mike will walk through our financial results in more detail in a few moments.

We made strong progress executing our external growth strategy during the first half of 2026. To date, we have acquired six properties and one out parcel at an existing center for approximately $290 million. A key part of that activity has been expanding into emerging Sun Belt markets such as Charleston, Greensboro, and Knoxville. Importantly, we're finding opportunities not only in our existing markets, but also in adjacent complementary markets where our operating model and retail relationships give us confidence that we can create long-term value. These markets offer many characteristics we value, including population growth, household formation, relative affordability, and strong retailer demand. For us, they are a natural extension of our strategy, allowing us to expand while remaining disciplined and focused on the fundamentals that have driven our success thus far. This activity represents strong progress toward our full year net investment guidance.

Our acquisition pipeline remains active, and our balance sheet provides the flexibility to pursue additional investments where risk-adjusted returns are compelling. As we continue to grow, we expect to pair future acquisitions with selective one-off asset sales, recycling capital from assets that are less aligned with our long-term growth strategy into opportunities with stronger growth characteristics. As our portfolio expands, we remain focused on scaling the organization efficiently. Technology, including artificial intelligence, will help us streamline workflows, enhance reporting, and evaluate investment opportunities more effectively. While local market expertise, tenant relationships, and disciplined decision-making will always remain at the center of our business, these tools will help us operate more efficiently and support our long-term growth. In closing, our priorities remain clear.

Continue owning high quality, necessity-based retail centers, thoughtfully expand across our core and complementary emerging Sun Belt markets, maintain a disciplined balance sheet, and leverage the strength of our platform to drive sustainable growth in cash flow, net asset value per share, and long-term shareholder value. With that, I'll turn the call over to Mike.

Thanks, DJ, and good morning, everyone. For the quarter, Same Property NOI was $48.5 million, up 4.1% compared with the second quarter of 2025. Growth was led by base rent increases of 320 basis points, including approximately 180 basis points from contractual rent bumps, along with contributions from leasing spreads, redevelopment activity, percentage rent, specialty income, and net expense reimbursement. These gains were partially offset by a 50 basis point expected temporary occupancy impact and 20 basis points of bad debt. Year to date, Same Property NOI totaled $97.2 million, up 3.3% compared with the first six months of 2025. On our quarterly cadence, we expect Same Property NOI growth to be somewhat uneven for the remainder of the year. The third quarter reflect timing of operating expenses associated with scheduled projects.

From there, we expect the fourth quarter to re-accelerate as leases commence and sign not open leases continue converting into rent-paying occupancy. Nareit FFO for the quarter totaled $39.8 million, or $0.50 per diluted share, reflecting an 11.1% increase from the second quarter of 2025. Core FFO rose 9.1% to $0.48 per share year-over-year. FFO growth was driven primarily by higher Same Property NOI and net acquisition activity, partially offset by interest expense. For the first six months of the year, Nareit FFO was $81.1 million, or $1.03 per diluted share, reflecting a 10.8% year-over-year increase, while Core FFO was $0.98 per diluted share, up 8.9% compared to 2025. In June, our $250 million private placement of senior notes funded, and we used the proceeds to partially pay down our line of credit.

At quarter end, total liquidity stood at $489 million, including $64 million of cash and $425 million available on our revolving credit facility. Our weighted average interest rate was 4.36%, with a weighted average term to maturity of 4.3 years. Net leverage finished the quarter at 31.9%, and net debt to adjusted EBITDA was 5.3 times on a quarterly annualized basis. Our balance sheet remains strong and provides the flexibility and liquidity to continue executing on our long-term strategy. Finally, we declared a quarterly dividend payment of $0.25 per share, a 5% increase over last year. Turning to guidance, we are reaffirming our full-year Same Property NOI growth guidance range of 3.25%-4.25%. We're also maintaining our Core FFO guidance range of $1.92 to $1.96 per share.

For Nareit FFO, we are raising our full-year guidance range to $2.01 to $2.07 per share, which reflects a non-cash revenue increase from our recent acquisitions. Additional details on our guidance assumptions are available in our supplemental disclosure. With that, I'll turn the call over to Christy to discuss our portfolio activity.

Thanks, Mike. From an operating standpoint, leasing activity remained healthy during the quarter, and retailer feedback has been consistent. National tenants continue to have multi-year expansion plans, but their biggest challenge remains finding quality space in the right trade areas. In response to tight supply, some retailers are becoming more flexible on format and box size while remaining disciplined on build-out costs and store-level economics. This reinforces the depth of demand while also showing that retailers are focused on opening locations that will perform well over the long-term. During the quarter, we executed 76 leases covering approximately 464,000 square feet, and our retention rate was 88% year-to-date. Comparable blended lease spreads were 8.5%, with new lease spreads of 18.7% and renewal spreads of 7.9%. Annualized base rent per square foot increased 3.8% year-over-year to $20.94.

Leased occupancy ended the quarter at 96.2%, down 20 basis points sequentially, primarily due to the former Painted Tree anchor space. We already have a letter of intent from a prominent national retailer and expect to provide an update on this space in the near term. Importantly, large format availability remains limited and manageable. We ended the quarter with only six vacant big box spaces. Four are tied to redevelopment or disposition activity. One is the former Painted Tree space just mentioned, and the remaining space is a former Party City at one of our Dallas properties. Small shop lease occupancy increased 30 basis points to 93.2%, while anchor lease occupancy ended at 98.1%, down 40 basis points from first quarter. Retention remains a key driver of internal growth. Excluding tenant exercise options, renewal spreads were 14.4%, which underscores the value we continue to capture through renewals.

When we can retain a productive tenant, achieve a solid rent increase, and do so with limited incremental capital, the all-in economics can often be more attractive than pursuing a higher headline spread that requires downtime, tenant improvements, and leasing costs. Our goal is to build partnerships that support tenant success while creating durable cash flow growth for InvenTrust. Given the quality of our portfolio and the strength of the current retail backdrop, we are well positioned to capture these mark-to-market opportunities. A significant lease signing during the quarter was with Publix at our Plantation Grove property in the Orlando MSA. This lease is an important first step toward a future redevelopment of the center, where we are replacing the existing store with Publix's new prototype.