Oct 29, 2026 earnings call — Fixed-rate refinancing and rent growth
Normalized FFO was $21.3 million, a 42% year-over-year increase this quarter.
Revenue $0.1B (est $0.1B) · EPS $-0.46 (est $-0.14)
Key quotes
"We completed 645,000 sq ft of leasing at GAAP rents that were 163% above prior rents with a weighted average lease term of nearly 16 years."
"Accordingly, all of our debt is now fixed at a weighted average rate of 5.48% with no maturities until 2029."
"Beginning this quarter, Normalized FFO, Adjusted EBITDAre, and CAD include estimated incentive management fees as they accrued under GAAP and have recast prior periods to conform."
Analyst Q&A 3
expiring leases and pipeline
Q (Mitch · Citizens Bank): He asked whether about 8% of the portfolio coming due next year includes any big move-outs, and whether the 5 million square foot pipeline includes renewals. He also asked if Hawaii still has the same strong leasing demand.
A: Management said it's business as usual and nothing material. They said the 5 million square foot pipeline includes about 4 million tied to lease renewals. In Hawaii, scarcity of land means very little downtime—three months, maybe six in a worst case scenario—and they see rent roll-ups and strong demand.
"If you look at the pipeline in totality of the 5 million square feet, about 4 million is associated with lease renewals." — Yael Duffy (CEO)
occupancy change, development plans, cash
Q (John Massocca · B. Riley): He asked why occupancy ticked down quarter-over-quarter and whether that was a move-out and if the space will be backfilled. He also asked about the company's view on development versus acquisitions, required yields, and whether they might use cash to pay down debt.
A: They said one tenant vacated in the Columbus, Ohio market in July and they are marketing the space with good activity. Columbus vacancy is about 4.7% and they expect to re-lease the strong southeast sub-market before much of the new product comes online. They said development would likely come from tenant expansion options, they'd look for returns upwards of 10%, and they will retain cash to naturally de-lever and keep optionality for tenant expansions.
"We had one tenant vacate in the Columbus, Ohio market in July, and so we have been marketing that space." — Yael Duffy (CEO)
free rent impact and accounting changes
Q (Craig Kucera · Lucid): He asked how much of the $0.04 straight-line rent increase came from rent abatements and free rent, how long the Hawaii and Indianapolis free rent periods are, and how the company will treat incentive fees in NFFO/AFFO and CAD.
A: They said much of the $0.04 is related to the Hawaii lease-up free rent and that Indianapolis had a free rent period that ended in August, so Q4 will reflect a full quarter of cash rent. The Hawaii lease is 53 years and the free rent period is three years; the tenant will pay real estate taxes immediately, which is over $800,000 a year. On accounting, if an incentive fee is recognized on the GAAP income statement they will let it flow through all non-GAAP metrics, and CAD starting at Normalized FFO will naturally include the incentive fee.
"No. What we are going to do is, if it is recognized on the GAAP income statement, we are going to let that flow through on all of our non-GAAP metrics." — Anthony Paula (CFO)