InvenTrust Properties Q2 2026 Earnings Call Transcript

On Tuesday, InvenTrust Properties (NYSE: IVT ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

1% increase in NAREIT FFO per share year-over-year. The company acquired six properties and one outparcel for approximately $290 million, focusing on expansion into emerging Sunbelt markets like Charleston, Greensboro, and Knoxville. 07 per share. 7%.

The company plans to continue acquisitions while considering selective asset sales to recycle capital into higher-growth opportunities. Management highlighted the use of technology and local market expertise to enhance operational efficiency and support long-term growth. Full Transcript Ellen, Operator Thank you for standing by, and welcome to InvenTrust's second quarter 2026 earnings conference call. My name is Ellen, and I will be your conference call operator today.

com. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again.

I would now like to turn the call over to Mr. Dan Lombardo, Vice President of Investor Relations. Please go ahead, sir. Dan Lombardo, Vice President, Investor Relations Thank you, operator.

Good morning, everyone, and thank you for joining us today. On the call from the InvenTrust team is Daniel J. Busch, 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. Daniel J. Busch, President & Chief Executive Officer Good morning, everyone, and thank you for joining us.

InvenTrust has 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. 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 outparcel at an existing center for approximately $290 million.

A key part of that activity has been expanding into emerging Sunbelt 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 Sunbelt 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. , and good morning, everyone. 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. 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 reflects timing of operating expenses associated with scheduled projects. From there, we expect the fourth quarter to reaccelerate as leases commence and signed-not-open leases continue converting into rent-paying occupancy. 1% increase from the second quarter of 2025. 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. 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.

3 years. 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. 25 per share, a 5% increase over last year.

25%. 96 per share. 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, and with that I'll turn the call over to Christy to discuss our portfolio activity.

Christy L. David, EVP, Chief Operating Officer, General Counsel & Secretary 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 and 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. 9%.

94. 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. 1%, down 40 basis points from first quarter. Retention remains a key driver of internal growth.

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 Properties. 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. We have worked with Publix on similar projects before, and we are excited about the value this type of investment can bring to the center. We expect the project to break ground in 2026.

6 million of annualized base rent. We expect 77% of ABR to commence by the end of the year, and over $1 million is expected to be recognized in 2026. Turning to acquisitions, we continue to build on the momentum DJ outlined earlier. During the quarter we closed on three properties and one asset subsequent to quarter end.

Together these four assets represent more than $165 million of investment, showcasing our ability to acquire in a competitive transaction environment. Our acquisition pipeline is strong, and we will continue to target well-located centers in attractive trade areas supported by necessity-based uses and clear opportunities to create value as we integrate the assets into the InvenTrust operating platform. The first acquisition was 3609 South in Charlotte, North Carolina. This property is a 100% leased unanchored strip center located in Charlotte's South End submarket with favorable surrounding demographics and visible rent upside.

While unanchored assets are not a large portion of our portfolio, we will pursue them selectively when the location fits within an existing market where we already have operating knowledge and relationships. We also closed on Western Plaza in Knoxville, Tennessee, an approximately 162,000 square foot community center anchored by The Fresh Market and Crunch Fitness. Knoxville is an example of the type of emerging Sunbelt market where we are seeing attractive long-term fundamentals and healthy retailer interest. Western Plaza provides us with a position in an established retail node with grocery and fitness anchors that drive consistent traffic.

In the Charleston MSA, we acquired Sweetgrass Corner, an approximately 95,000 square foot community center anchored by Trader Joe's, HomeSense, and Golf Galaxy. This high-quality asset marks our fourth acquisition in Charleston in less than two years. On July 1st, we closed on New Garden Crossing in Greensboro, North Carolina. This property is a 100% leased, 169,000 square foot community center anchored by Lowe's Foods, Marshalls, HomeGoods, and Office Depot.

We like the combination of grocery, off-price, and service-oriented tenancy, and we view Greensboro as another attractive emerging Sunbelt market that is complementary to our existing regional footprint. Tenant interest reinforces where we are investing. National and regional retailers are increasingly looking to emerging Sunbelt markets for expansion opportunities. Charleston, Greensboro, and Knoxville are places where retailers want to grow, where consumers are moving, and where owning high-quality assets fits our strategy.

Operator, that concludes our prepared remarks, and we are ready to open the line for questions. Ellen, Operator We will now begin the question-and-answer session. If you would like to ask a question, please press star-one to raise your hand. To withdraw your question, press star-one.

Again, we ask that you pick up your handset when asking a question to allow for optimum sound quality and, if muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Andrew Riel with Bank of America. Your line is open.

Please go ahead. Andrew Riel, Analyst at Bank of America Hi, good morning. Thanks for taking my questions. I guess just to go back to the occupancy, obviously your small shop occupancy improved sequentially but anchor slipped.

Can you just remind us what drove the anchor decline? And then how should we think about the trajectory of both anchor and shop occupancy into year end? Christy L. David, EVP, Chief Operating Officer, General Counsel & Secretary Sure.

Andrew, this is Christy. Thanks for the question. The primary driver, as you noted, was the Painted Tree, which we lost. It was not in our numbers last quarter, but we noted it on the call.

That was at our West Park asset in Glen Allen, Virginia. So that's the primary driver of why the anchor vacancy went down. And as I noted, we only have six vacant anchors, of which we expect to hopefully bring three of those into execution by the end of the year. And as for the trajectory of where we think occupancy can go, we think we should be approaching lease occupancy all-time highs by the first quarter 2027, with economic occupancy about third quarter 2027.

Andrew Riel, Analyst at Bank of America Okay, thanks. And then just on the net debt to EBITDA, that's moved to five and a half times from about four and a half at year end. Are you comfortable running at this leverage level? And then how should we think about equity or dispositions entering the funding mix going forward?

Mike Phillips, Executive Vice President - Chief Financial Officer & Treasurer Thank you. Hey Andrew. Yeah. So interestingly enough, some of the assets that we closed were late in the quarter, and that's an annualized number.

So that's going to come down materially with the way we look at it on a forward basis. We'll probably still end the year, based on our net investment expectations, still under five times. And, as we've said, our range where we're comfortable is five to six on a forward basis. So we still have plenty of capacity on the current balance sheet.

Obviously there's been volatility in the equity markets. We want to be very careful and patient with our equity capital. But we still can self-fund this business and continue to grow cash flow for the next several years if need be. Ellen, Operator Your next question comes from the line of Jamie Feldman with Wells Fargo.

Your line is open. Please go ahead.