Brixmor Property Group NYSE: BRX reported second-quarter results marked by 5.8% same-property net operating income growth, record small-shop occupancy and a record pipeline of signed leases that have not yet commenced. The shopping center REIT raised its 2026 outlook for same-property NOI and funds from operations, citing tenant demand, lease commencements and portfolio reinvestment activity.
Chief Executive Officer and President Brian Finnegan opened the call by recognizing the death of Jim Taylor, describing his impact on Brixmor and its culture as significant. Finnegan said Taylor's values of “humility, integrity, and purpose” remain embedded in the company.
For the quarter, Brixmor generated Nareit FFO of $0.58 per share. The company said results benefited from underlying property performance but were partly offset by lower non-cash rental income from straight-line rent reversals associated with the bankruptcies of Wren Kitchens and Painted Tree Boutiques.
Leasing Activity and Occupancy
Finnegan said the company executed 1.4 million square feet of new and renewal leases during the quarter at a blended cash leasing spread of 19%. New leases carried cash spreads of 31%, while renewals produced 16% spreads. He said new-lease spreads have remained above 30% for three years and renewals have continued in the mid-teens.
The company also reported record embedded rent growth of 2.8% across new and renewal leases. Brixmor added retailers including Sierra, HomeSense, Barnes & Noble, Ross Dress for Less and Trader Joe’s, while demand from restaurant, service, health and wellness tenants helped small-shop occupancy reach a record level.
Total leased occupancy ended the quarter at 94.8%, down 30 basis points sequentially. Finnegan said the decline was expected and reflected proactive tenant move-outs at redevelopment properties as well as recaptures of Wren Kitchens and Painted Tree boxes. He said Brixmor had already leased six of the eight recaptured boxes at spreads exceeding 40%, with the related income expected to begin coming online in 2027.
Small-shop occupancy reached 92.6%, and management said it expects occupancy to return to a growth trajectory in the second half of 2026. The company’s signed-but-not-yet-commenced, or SNOC, pipeline rose to a record $71 million of annualized base rent. Chief Financial Officer Steve Gallagher said approximately $29 million of rent is expected to commence during the second half of 2026, while nearly $37 million is expected to begin in 2027, before additional leasing activity during the remainder of this year.
Higher 2026 Outlook
Brixmor increased its full-year expectations for same-property NOI growth to between 5% and 5.75% and raised FFO guidance to a range of $2.35 to $2.37 per share. Gallagher said the increased outlook primarily reflected improved expectations for revenues deemed uncollectible, now projected at 60 to 85 basis points of total revenue.
Same-property NOI growth in the second quarter was driven by a 440-basis-point contribution from base rent, according to Gallagher. He also cited favorable collections, expense recoveries and tenant performance. Management said expected second-half NOI comparisons include a headwind from unusually strong ancillary and other income in the fourth quarter of 2025.
Responding to analyst questions about the difference between NOI growth and FFO growth, Gallagher said a roughly $3 million straight-line rent charge related to boxes recaptured during the quarter created the principal disconnect. He said the company expects non-cash rental income to return to its normal run rate for the remainder of the year.
Reinvestment and Acquisitions
Brixmor ended the quarter with nearly $350 million of active reinvestment projects expected to produce a 10% incremental yield, alongside a future reinvestment pipeline exceeding $700 million. The company added eight projects to the active pipeline during the quarter, including redevelopments at Morris Hills in northern New Jersey, South Towne Centre in Dayton, Ohio, and Market Plaza in suburban Dallas.
The company also added four outparcel developments during the quarter, bringing first-half additions to a record 10 projects with an average expected incremental return of 16%. Finnegan said Brixmor expects several years of annual reinvestment activity ranging from $150 million to $200 million, although activity in 2026 will likely be toward the lower end of that range.
During the quarter, Brixmor acquired four predominantly grocery-anchored properties for $164 million: Mayfair Shopping Center on Long Island; Jones Crossing in College Station, Texas; Vintage Marketplace in Houston; and Stanford Station in Panama City, Florida. Executive Vice President and Chief Investment Officer Mark Horgan said the acquisitions had a blended cap rate in the low-6% range.
Horgan said the properties were acquired in markets where Brixmor already operates and can pursue rent mark-to-market opportunities, redevelopment and densification. Jones Crossing includes outparcel development potential near an H-E-B grocery store, while Mayfair and Jones Crossing were added to the company’s future redevelopment pipeline.
Mayfair also marked Brixmor’s first use of operating partnership units as partial acquisition consideration. Horgan said the transaction was structured as a convertible preferred security, with a conversion rate above the level at which the company would have issued common equity when the deal was negotiated. He said Brixmor is in active discussions with other potential sellers regarding similar structures, though such transactions can take time to complete.
Balance Sheet and Capital Allocation
S&P revised Brixmor’s outlook to positive during the quarter, which Gallagher said reflected balance-sheet and portfolio improvements tied to the company’s value-add strategy. Brixmor repaid a $600 million June maturity and issued $400 million of 5.375% senior notes. After settling a forward hedge at 3.99%, the company said the notes carried an effective yield of about 5.22%.
The company ended the quarter with leverage of 5.3 times on a quarter-annualized basis and $1.5 billion of liquidity, including $115 million of unsettled forward at-the-market equity issuance. Management said Brixmor has no material debt maturities until March 2027.
Finnegan said reinvestment remains the company’s first capital-allocation priority, with acquisitions pursued selectively through relationship-driven sourcing. He added that future acquisitions are expected to be funded primarily through normal-course capital recycling, including sales of assets where management believes NOI growth has been maximized.
About Brixmor Property Group (NYSE:BRX)
Brixmor Property Group is a publicly traded real estate investment trust (REIT) focused on the ownership, management and development of open-air shopping centers across the United States. The company acquires and leases retail properties that feature everyday, necessity-based tenants such as grocery stores, discount retailers, and service providers. Brixmor's core strategy centers on generating stable, long-term income streams through tenant relationships and targeted property enhancements.
The company's main business activities include proactive leasing, property upkeep and capital improvement projects designed to maximize occupancy and tenant satisfaction.
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