Brixmor Property Group NYSE: BRX reported higher third-quarter funds from operations and same-property net operating income, supported by leasing activity, occupancy gains and rent increases across its grocery-anchored retail portfolio. The company also raised its full-year outlook for same-property NOI and NAREIT FFO per share and increased its quarterly dividend by more than 7%.
Chief Executive Officer and President Brian Finnegan said retailer demand for space in high-quality grocery-anchored centers remained strong, while new supply was limited. He said traffic at Brixmor’s centers continued to grow despite broader uncertainty surrounding interest rates, inflation and capital markets.
“We delivered an exceptional quarter, reflecting continued operating momentum and strong execution across the business,” Finnegan said.
Leasing, Occupancy and Rent Growth
Brixmor executed about 1.6 million square feet of new and renewal leases during the quarter, generating a blended comparable rent spread of 25%. New lease spreads were 43%, including anchor-tenant spreads above 70%, while renewal spreads exceeded 19%, according to Finnegan.
Total leased occupancy reached 95.6%, rising 80 basis points from the prior quarter and 150 basis points from a year earlier. Small-shop occupancy reached a record 92.8%, while anchor occupancy rose to 97%. Finnegan said anchor occupancy remained 70 basis points below its previous peak, leaving room for additional gains.
The company’s retention rate was 88%, up 300 basis points year over year. Finnegan attributed the results to tenant performance and continued demand for space, citing new or expanded relationships with retailers including Ross, TJX and Trader Joe’s.
Brixmor ended the quarter with $69 million of signed but not yet commenced rent, after commencing about $42 million of rent year to date. During the third quarter, the company commenced approximately $17 million of rent. Finnegan said the remaining pipeline provides visibility into growth next year as leasing activity continues to replenish it.
Management also highlighted efforts to shorten the period between lease execution and rent commencement. Finnegan said the company’s legal processing time has declined about 25% over the past two years, aided by technology, streamlined lease forms and retailer relationships. He also said tenants have increasingly accepted existing property conditions and fixed-cost tenant-improvement arrangements, which has helped accelerate openings and reduce capital spending.
Financial Results and Updated Outlook
Chief Financial Officer Steve Gallagher said same-property NOI increased 6.6% during the quarter, driven by a 480-basis-point contribution from base rent. Occupancy growth, expense recoveries, ancillary income and other income also contributed to the increase.
NAREIT FFO rose more than 7% year over year to $0.60 per share. Brixmor raised its outlook for full-year same-property NOI growth to 5.5% to 5.75% and increased its FFO outlook to $2.36 to $2.38 per share. Year-to-date same-property NOI growth was 6.2%.
Gallagher said fourth-quarter same-property NOI growth is expected to moderate because the company will lap elevated ancillary and other income from the prior year. He described the expected slowdown as a matter of comparison and timing rather than a change in portfolio fundamentals. One large incentive from a redevelopment had been recognized in the fourth quarter of the prior year, he said.
Looking toward 2027, Gallagher said approximately $55 million of rent is expected to commence in 2026, followed by another $48 million from the signed-but-not-yet-commenced pipeline in 2027, before any future leasing activity. He also pointed to rent mark-to-market potential, noting that anchor leases expiring in 2027 without options average approximately $11 per square foot, compared with new and renewal leases in the mid- to upper-teens per square foot.
Management said contractual rent bumps are another source of embedded growth. Finnegan said average in-place contractual rent growth has increased to 1.7%, from 90 basis points in 2016, while new and renewal leases have recently carried average growth of 2.6%.
Reinvestment and Capital Recycling
Brixmor stabilized four redevelopment projects during the quarter representing $55 million of investment and a 10% average incremental return. It added six projects to its active pipeline, representing roughly $37 million of investment at an 11% expected return.
The active reinvestment pipeline totaled approximately $322 million at quarter-end and carried an expected return of 10%. Finnegan said Brixmor sees about $1 billion of opportunity across its active and future reinvestment pipelines.
New projects included redevelopment of East Port Plaza in Port St. Lucie, Florida, to accommodate a 50,000-square-foot Publix prototype. The company also plans to add a 97,000-square-foot IKEA at Westridge Court and Block 59 in suburban Chicago. Brixmor added three outparcel projects during the quarter, bringing its year-to-date total to 13.
During the quarter, Brixmor acquired Village West Shopping Center in Southern California for approximately $50 million. The property is anchored by a Stater Bros. grocery store. The company also completed approximately $43 million of dispositions, bringing year-to-date disposition proceeds to roughly $166 million.
Executive Vice President and Chief Investment Officer Mark Horgan said the company had about $130 million of assets under contract or in negotiations as it prepared to fund its pending Slate acquisition. That figure includes land parcels that currently produce little or no income, he said.
Balance Sheet and Slate Transaction
Brixmor ended the quarter with approximately $1.5 billion of liquidity, including $183 million of cash, $1.25 billion available under its revolving credit facility and about $115 million of expected proceeds from unsettled forward equity contracts. Net debt to adjusted EBITDA was 5.2 times on a current-quarter annualized basis.
Gallagher said the company expects leverage to improve temporarily through year-end as it completes asset sales ahead of the planned Slate transaction closing. Brixmor is working on a $400 million delayed-draw term loan expected to close in the fourth quarter and be drawn in connection with the acquisition’s closing. The company also executed $400 million of forward-starting swaps on its existing $500 million term loan.
Management said the Slate transaction is expected to close in the first quarter and represents an additional long-term growth opportunity through below-market rents, occupancy upside, redevelopment and application of Brixmor’s operating platform. Gallagher said the precise 2027 FFO impact will depend on closing timing, purchase accounting, and transaction funding mix and pricing.
Finnegan said Brixmor will continue to assess joint ventures and management-fee opportunities selectively, based on business-plan alignment and whether the opportunity justifies added complexity.
About Brixmor Property Group (NYSE:BRX)
Brixmor Property Group Inc NYSE: BRX is a real estate investment trust that owns and operates open-air shopping centers across the United States. Its portfolio is primarily focused on grocery-anchored community and neighborhood centers located in established, densely populated markets.
The company leases retail space to a diverse mix of tenants, including grocery stores, restaurants, service businesses, health and wellness providers, and other essential retailers. Brixmor also manages property operations and pursues redevelopment, re-tenanting, and leasing initiatives designed to enhance the functionality and long-term value of its shopping centers.
Brixmor became a publicly traded company in 2013 after being separated from an ownership structure associated with Blackstone.
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