Thank you for your patience, and welcome to Invest Trust's Third Quarter 2025 Earnings Conference Call. My name is Becky, and I will be your operator for today's call. Before we start, I want to inform our listeners that this presentation is being recorded, and a replay will be available in the Investors section of the company's website at inventrustproperties.com. I will now turn the call over to Mr. Dan Lombardo, Vice President of Investor Relations. Please proceed, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us today. On the call from the InvenTrust team is DJ 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 to DJ.

Thanks, Dan, and good morning, everyone. I'm pleased to report another strong quarter for InvenTrust, one that reflects the consistency of our execution and the strength of our strategy. Since our public listing 4 years ago, we've increased FFO per share by nearly 30%. That track record is a direct result of a deliberate and disciplined approach that has remained consistent. Our success stems from a proven playbook, maintaining high occupancy, embedding contractual rent escalators, attaining strong tenant retention, achieving healthy renewal spreads, and pursuing selective accretive acquisitions. This quarter, those fundamentals once again delivered tangible results as same-property NOI grew over 6%. Rent spreads remained healthy and leasing activity was positive across both anchors and small shops. We've built a scalable, high-performing platform that allows us to operate efficiently and grow strategically. Our hub-and-spoke operating model enables us to manage a broad network of top-tier assets across Sunbelt markets with minimal incremental G&A impact. As we expand our portfolio, our structure provides both operating leverage and flexibility, positioning us to continue scaling efficiently while maintaining the hands-on oversight that defines our approach. Turning to the macro environment. We continue to see encouraging fundamentals in the Sunbelt consumer base. While national data presents a mixed picture, we view the region's underlying dynamics as a net positive. Census data shows retail sales are up year-over-year, and industry research points to sustained strength in suburban centers across the Sunbelt, where foot traffic and occupancy remain well above national averages. Hiring momentum in major Sunbelt MSAs remains healthy, and CoStar recently noted that 9 of the top 10 U.S. retail metros are in the Sunbelt, the same markets where we are most heavily concentrated. That said, we're not ignoring the data points that signal caution. Household debt levels are edging higher, and consumer confidence has weakened. While sentiment has softened, day-to-day consumer behavior in our centers remains resilient, underscoring the essential nature of our tenants and the stability of our asset base. Another competitive advantage we see is the limited level of new open-air retail development. The economics for new strip center construction remains challenging; rising costs, tight capital markets, and restrictive zoning have kept new supply muted. Meanwhile, obsolete retail inventory continues to exit the market. Strategic capital deployment has been an important part of our success this year. During the quarter, we completed the full redeployment of proceeds from the sale of our California portfolio into higher-growth Sunbelt markets, a rare and highly accretive rotation of capital. Two of our newest assets located in Asheville and Charlotte, North Carolina, which Christy will discuss shortly, are perfect examples of what we seek: strong grocery anchors, exceptional demographics, and embedded rent growth potential. In addition to these recent acquisitions, we have been awarded 2 properties totaling over $100 million. Our capital allocation strategy remains measured and disciplined. We continue to target opportunities that align with our strict return thresholds and enhance the overall quality of our assets. Roughly 70% of our portfolio is comprised of neighborhood and community centers, with the remaining balance consisting of power and lifestyle properties that share similar market dynamics and demographic profiles. This balanced approach provides diversification while maintaining focus on the formats where we have the greatest operational advantage. Looking ahead, strip center fundamentals appear to remain favorable, supported by low vacancies, limited new development, and steady leasing demand. With a focused Sunbelt footprint, high-quality tenant base and financial flexibility, we are confident in our ability to deliver solid total returns for our shareholders. With that, I'm going to turn it over to Mike to review our financial results.

Thanks, DJ, and good morning, everyone. Same-property NOI for the quarter was $44.3 million, representing a 6.4% increase compared to the same period last year. The growth was driven by embedded rent escalations, which contributed 160 basis points, along with occupancy gains and positive rent spreads, each adding 100 basis points. Further contributions of 60 basis points from redevelopment activity, 60 basis points of percentage and ancillary rents and a 220 basis point lift from net expense reimbursements. These gains were offset by a 60 basis point impact from the bad debt reserve. Year-to-date, same-property NOI totaled $128.3 million, a 5.9% increase over the first 9 months of 2024. For the third quarter, NAREIT FFO came in at $38.4 million or $0.49 per diluted share, representing an 8.9% increase compared to the third quarter of last year. Core FFO also increased 6.8% to $0.47 per diluted share for the 3 months ending September 30. Components of core FFO growth per share for the quarter were primarily driven by same-property NOI and net acquisition activity, and partially offset by the impact of an increased share count. For the first 9 months of the year, NAREIT FFO was $111.1 million or $1.42 per diluted share, reflecting a 6% year-over-year increase, while core FFO was $1.37 per diluted share, up 5.4% compared to 2024. Turning to the balance sheet. We continue to strengthen our financial position during the quarter by executing on an extension of our existing term loans. This recast moved the maturity dates on the 2 $200 million tranches to August 2030 and February 2031, increasing our weighted average maturity to 4.7 years. We entered into 4 starting interest rate swaps that locked in fixed rates of 4.5% and 4.58%, respectively, and will take effect upon the expiration of the in-place swaps in 2026 and 2027. As of September 30, total liquidity stood at $571 million, including $71 million in cash and the full $500 million available under our revolving credit facility. Our weighted average interest rate is 3.98%, and our net leverage ratio is 24%. Net debt to adjusted EBITDA remained at a sector low 4x on a trailing 12-month basis. With a long-term debt policy targeting a leverage range of 5x to 6x, we have ample capacity to execute our capital plan while maintaining balance sheet strength. We also declared an annualized dividend of $0.95 per share. During the quarter, we completed 4 acquisitions totaling $250 million. These transactions were funded primarily with cash on hand and 1 secured mortgage that we assumed with the transaction. Turning to guidance. Based on the year-to-date results and current visibility, we are raising our full-year same-property NOI growth guidance to a range of 4.75% to 5.25%, while reducing our bad debt reserve to 55 to 75 basis points of total revenue. We're also increasing the midpoint of our NAREIT FFO guidance to $1.87 per share and raising the low end of our core FFO guidance to a range of $1.80 to $1.83. As reflected in our guidance, we expect some deceleration in the fourth quarter, primarily due to property operating expenses being more backloaded in the fourth quarter and our remaining bad debt reserve. Finally, we have revised our net investment guidance from $100 million to a range of $49.6 million to $158.6 million. Further 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.

Thanks, Mike. Operationally, we continue to see strong tenant engagement and healthy leasing momentum across our portfolio. Our focus on necessity-based convenience-oriented retail continues to pay dividends. Anchor tenants are renewing at solid rates and small shop demand has been steady. Our proactive asset management approach emphasizes relationship building and real-time market awareness. By staying close to our tenants, we're able to anticipate needs, identify early renewal opportunities, and support them in ways that enhance retention and portfolio stability. The result is consistent occupancy and strong rent collections across the platform. We also continue to manage expenses effectively, supported by active oversight and strong vendor partnerships. At the same time, we are investing selectively in property enhancements that improve curb appeal, energy efficiency, and tenant and consumer experiences. These targeted upgrades help sustain the long-term competitiveness of our centers while supporting both rent growth and retention. A key area to highlight this quarter continues to be the consumer preference for dining out. Quick service restaurants and convenience-driven dining concepts remain a significant catalyst for retail demand. Restaurants, bars, and coffee shops represent a meaningful share of new leasing activity, reflecting the public's sustained appetite for experiential and on-the-go dining. These macro trends have translated into meaningful small shop demand. New leases for the third quarter achieved a 25.6% spread, while renewals averaged 10.4%, producing a blended leasing spread of 11.5%. Notably, more than 90% of our renewal leases include annual rent escalators of 3% or more. These built-in mechanisms, while straightforward, are a powerful driver for sustainable NOI growth over time. Our retention rate year-to-date is 82%, reflecting the impact of a single anchor space at our Gateway property in St. Petersburg, Florida, which will be going through a transformational redevelopment. Excluding that space, our retention rate was 89%, consistent with previous quarters. On the tenant health side, our exposure to bankruptcies or at-risk tenants remains minimal with a modest and actively monitored watch list. When an occasional vacancy does occur, our operations team is well positioned to mitigate downtime and secure high-quality replacements. At quarter end, total lease occupancy was 97.2%. Small shop lease occupancy maintained its portfolio high of 93.8% and anchor space finished at 99.3%. Equally important for our cash flow visibility is that approximately 90% of 2026 leasing is already executed. As DJ mentioned, since our last call, we added 2 high-quality assets in North Carolina, Asheville Market in Asheville, anchored by Whole Foods, and Ray Farms in Charlotte, anchored by Harris Teeter. Asheville offers a strong health care and education foundation, a vibrant tourism economy, and population growth projected to exceed the national average over the next 5 years. Charlotte, one of the fastest-growing large metros in the U.S. continues to see in-migration, job expansion in financial services and technology, and above-average household income. These transactions demonstrate our acquisition strategy in action, investing in high-growth markets and premier properties that fit our operating model. Looking ahead, we remain encouraged by the leasing pipeline as we move into the final quarter of the year. Renewal discussions are active and small shop inquiries remain strong across the portfolio. With that, I'll turn the call back to the operator for Q&A.

Our first question comes from Andrew Reale from Bank of America.

DJ, I appreciate some of your comments at the beginning just on the Sunbelt consumer overall. And obviously, bad debt has been trending favorably. But I'd just be curious if you could talk a bit more about tenants in some of your more discretionary categories, including restaurants. And I know, Christy, you mentioned that consumer preference for dining out remains strong, but obviously, there have been some negative headlines in recent months just around quick service restaurants and dining out. So would just be curious to hear your thoughts on some of those categories and how you're thinking about renewals if we do see a pullback on discretionary spend?

Yes, Andrew, thank you. Regarding your question, we continue to observe strong demand from quick service restaurants, both fast casual and sit-down dining. In our portfolio, we're in a favorable position to evaluate each tenant individually to determine if there’s a common trend causing disruptions or if it’s primarily an operational issue. In most cases, it has been the latter. We have many more restaurants performing well in our portfolio compared to those that are facing challenges, and those issues can vary based on concept, operations, and other factors. Overall, the demand remains strong. We anticipate a few restaurant turnovers by the end of this year, but we already have robust interest, and some of these spaces have already been leased to other food operators.

Okay. And if I could just ask a follow-up. I guess, broadly, just within the acquisition pipeline, what percentage is core grocery versus more power and lifestyle? And then just any color around the size of the pipeline and the latest on what you're seeing on pricing?

Our acquisition pipeline remains strong, with over $1 billion in assets at any given time. Most of the properties we consider include a grocery component or essential merchandise. The two assets mentioned, which we've been awarded, are both anchored by groceries, sometimes with multiple grocery stores. The structure of our pipeline aligns closely with our current portfolio, as we prefer the majority of our assets to have that core grocery aspect, whether they are smaller neighborhood or community centers. We also include a small number of power centers that meet our strategy and are located in markets we believe in, along with some smaller lifestyle projects we've undertaken previously. Currently, over 70% of our pipeline includes core grocery components, with the remainder composed of open-air assets that fit within our strategy in our target markets. This is a balanced mix that we will continue to pursue moving forward.

Our next question comes from Linda Tsai from Jefferies.

Occupancy over 97%, how are you thinking about the trajectory over the next couple of quarters?

Yes, that's a great question, Linda. We reached another high point this quarter in small shops. We anticipate a slight decline in small shop performance as we approach the end of the year and into the first quarter, with expectations for a resurgence in 2026. We hope to achieve another peak then, reflecting the strong demand we've observed in small shops, despite a small degree of fallout which is typical. In fact, we don't foresee exhausting our bad debt as we have in previous years. Regarding anchor vacancies, we currently have four and expect that number to rise to five by the end of the year. Three of these are associated with a redevelopment project in West Florida, where we’ve strategically vacated those spaces to make way for a rebuild with a grocer. The other two vacancies include a final asset in Southern California that we plan to sell and a promising opportunity in Dallas. It's encouraging when we can quickly address vacancies, which indicates the demand in that area. While there will be some changes in pace as we move into the year, we expect to see a resurgence, as mentioned, in 2026.

That's helpful. And then from where you sit today, how are you thinking about CapEx for leasing and TIs in '26 versus '25?

Yes. In 2025, we anticipate a similar level of spending. We have some redevelopment opportunities that will add significant value, particularly in grocery-related projects, which we have a few on the horizon. These initiatives require a considerable investment, but they yield substantial returns. As we've discussed previously, with most of our anchor leasing and build-outs completed, especially looking towards mid-2026, we expect our capital expenditure burden to decrease due to improved occupancy in the portfolio. This should result in increased free cash flow as we move into 2026 and beyond.

That's really helpful. Just one quick one for Mike. I think earlier, you mentioned that there are more back-end loaded expenses in Q4. Can you just give us some context there?

Yes. Just the last couple of years, we've had in the fourth quarter, just our normal operating cycle, we've had higher property operating expenses in the back half of the year. This year, that will show up in Q4. And then on top of that, our corporate expenses typically in Q4 just tend to run a little bit higher.

Our next question comes from Cooper Clark from Wells Fargo.

I was curious if you could walk through the puts and takes as we think about the current net investment range with respect to the last California disposition and the acquisition pipeline. Just thinking about some of the moving pieces into the end of the year that get us to the high or the low end of the range from a timing perspective?

Yes, the reason we adjusted the range is that we have two deals awarded to us, and it's uncertain whether they will close in 2025. It's mainly a timing issue. The lower end of the range reflects completed transactions, while the upper end represents deals we are optimistic about finalizing by year-end. If those do not close this year, they will be deferred to early 2026. Regarding the disposition in California, we anticipate selling it likely in early 2026 due to some administrative challenges related to environmental concerns. It's a valuable asset, and we do expect to complete this transaction, but it will likely not happen this year.

Okay. That's helpful. And then could you just talk about the confidence level to grow accretively from here on acquisitions as we move into '26? I appreciate the positive spread on the California dispositions year-to-date, but curious on growth from here as you shift towards funding acquisitions with balance sheet capacity?

Yes, we approach our various sources of capital in different ways. The California rotation presented a unique opportunity for us, allowing us to significantly enhance our portfolio in markets where we've experienced strong growth, which excites us. We were able to achieve this with a positive spread from day one, and we anticipate even better growth over time. When considering how we expand our balance sheet, the cost of capital changes slightly, and we have already begun adapting our approach through our investment committee as we look for new opportunities. It's crucial that we scale this platform responsibly and in a manner that benefits our shareholders. Regarding our overall transaction opportunities, we are exploring various formats and property types, and we see multiple pathways to generate accretive cash flow due to the opportunities available in our markets.

Our next question comes from Mike Mueller from JPMorgan.

First, regarding the remaining budgeted bad debt expense for the year, is most of the assumption for the fourth quarter based on what is visible or is it still more of an assumption?

Yes, I can address that. This is Mike. I believe it's a combination of both factors. Currently, our forecast indicates a range of 55 to 75 basis points. We have clear visibility into the lower end of that range at 55 basis points. Reaching the higher end of the range is somewhat reserved for any unforeseen issues that may arise.

Got it. Okay. And then going back to occupancy for a second. The small shops are a little under 92% occupied. What do you see as being a ceiling for that metric? And do you think the current backdrop is one where you can ultimately get to it sometime over the next few years? And I understand the comment about near-term, we may see a little drop off though.

Yes, based on our observations in the pipeline and the ongoing demand, we expect to see continued growth. Once we reach mid-90s occupancy, we're primarily dealing with frictional vacancies, making it challenging to push occupancy higher due to some spaces being inherently difficult to lease. We have a comprehensive strategy in place, including lowering rents and offering percentage rent deals to help tenants succeed in spaces that have been vacant for some time. This is a common issue in the industry, as there will always be less desirable spaces regardless of the overall quality of our centers. We will keep pursuing this, but ultimately, if we can maintain our current occupancy levels and continue receiving the escalators we've been seeing, it should contribute to real net operating income growth year over year. Furthermore, we’ve experienced double-digit spreads on renewals for eight consecutive quarters. With high tenant retention, this presents a significant opportunity for us to enhance our free cash flow growth since we're not experiencing as much tenant turnover as we did in the past. While there will still be some churn in retail, the quality of our tenant base is significantly higher than in previous years. We are not dealing with the large anchor tenants that are currently facing challenges. Whether this situation will change in the next couple of years remains to be seen, but presently, we are very confident in our anchor stores, and our national and regional small shops, as well as the local small shops, have been performing exceptionally well for quite some time.

Our next question comes from Michael Gorman from BTIG.

Just wanted to ask a question on the lease to economic occupancy spread continued to compress in the quarter. And I'm just curious, given the strength of the leasing in the pipeline, strength of demand, the strong retention rate, can that compress below the 2021 levels? Or where should we expect that to stabilize as you move into 2026 and beyond?

Yes, Michael, that's a great question. When we examine the spread, much of it is influenced by timing. It depends on when we sign new deals compared to when we expect a tenant to leave and when the new tenant is anticipated to take occupancy. Thus, a significant portion of the spread is tied to timing. From our viewpoint, a normal range is probably between 150 to 200 basis points, though this will fluctuate. We focus on what's in the pipeline, which includes $5 million in signed but not yet opened projects. We're anticipating that around 80% of that will come to fruition next year, resulting in many of them being open, occupied, and paying rent in the first quarter. This will contribute significantly to new net operating income in the coming year. However, the spread will continually fluctuate, and you are correct that it did tighten slightly this quarter.

Great. That's helpful. And then, DJ, you talked about some of the macro signals that you were looking at but not seeing in your portfolio yet. One of the things that we've been trying to understand a little bit more is, obviously, the grocer sector continues to be pretty strong. But at the same time, you're seeing a climbing percentage of spend on eating out and takeaway food and QSRs and everything. How do you think about that balance going forward? Can both of those sectors continue to grow and be strong here? Or how does the consumer adapt if it continues to show some weakness and the economic environment continues to soften? Like how do those 2 balance out?

It's a great question, and I don't have a clear answer. However, within our portfolio, it's been interesting to observe that our grocery sector and quick service restaurants are not acting as substitutes; instead, they complement each other. Our restaurants across various formats have performed well, and our grocery business has also thrived. While some of this can be attributed to inflation, our grocers continue to advance. This likely reflects the markets we are in, which have experienced significant in-migration growth that benefits everyone. The grocers we work with, such as Publix in the Southeast, HEB in Texas, and Kroger and Albertson's, are among our top tenants. They've been actively investing in their stores, contributing to sales growth. Over the past couple of years, we've seen both food at home and food away from home grow.

Our next question comes from Paulina Rojas from Green Street.

Looking at your recent acquisitions, I see that they have skewed towards secondary and tertiary markets. And I'm curious, would you be comfortable if tertiary Sunbelt markets grew to represent a materially larger portion of your portfolio and perhaps doubling their current share? How do you think about that?

Yes, that's a good question, Pauli, and I appreciate your observation. We don't focus too much on whether a market is classified as primary, secondary, or tertiary. Most of our portfolio is in what we refer to as 18-hour cities, which are primarily big central business districts. I would argue that Charlotte is one of the fastest-growing markets, even though it is traditionally seen as a secondary market. The conditions in Charlotte are quite different, and as I mentioned earlier, we are very fond of the hub-and-spoke model. Charlotte is a central market for InvenTrust, and from there, we can also invest in places like Asheville, which has experienced significant migration. Asheville has transitioned from being primarily a vacation spot to a more permanent living area. Although Asheville has faced some challenges recently, we are confident it will recover strongly. That said, when discussing secondary and tertiary markets, we need to ensure a higher level of quality. In a secondary market, it's important that we own and operate the best asset or at least the second-best asset there, since larger primary markets allow for a wider range of investment given their greater population and density.

Do you think cap rates change if you go to markets that are less by typical institutional investors where local trade area demographics are equally strong. Do you see the cap rate different?

Sure. It really depends on the risk-adjusted return you are aiming for, which is why quality is crucial. You need to ensure you are at the top tier of quality when entering a smaller market. I wouldn’t label it as a tertiary market, though some may fall into that category. We generally avoid markets with low population unless there are signs of strong future growth. What we typically look for, Pauli, is an initial yield in the high 5s to high 6s range, which helps achieve our risk-adjusted returns comfortably in the 7s. While people may calculate IRRs differently, our perspective allows us to enhance our business. However, there are certainly variations in cap rates, not only across different markets but also by property type and depending on your mix of assets.

Yes. I guess what I was getting to is something that is more an opportunity, more a market inefficiency because fewer investors are looking at those markets and where perhaps the return that you were able to get it is not really explained by higher risk and that it's really a function of that demand.

No, that could be the case. I think one of the interesting dynamics is our decision to exit California, which was a strategic one for InvenTrust. It's a core market for nearly every other operator, whether private or public. California behaves differently than most other states and its markets differ significantly from those in the rest of the country. This is largely due to the demand and liquidity it provides. However, as a public REIT and a perpetual vehicle, that aspect is not as crucial for us. What matters is creating sustainable free cash flow growth over the long term for our shareholders. We can achieve that in other regions outside of California, allowing us to capitalize on what we might consider arbitrage opportunities.

Our next question comes from Cooper Clark from Wells Fargo.

You spoke to operating leverage in your prepared remarks and margins look to be up about 100 basis points year-over-year. I was curious if this is mostly timing related as you noted some backloaded expenses earlier on the call. And if you could provide color on the potential for further upside to margins as additional occupancy comes online.

Yes. So like, obviously, we get operating leverage as our occupancy climbs higher, as you mentioned. We do expect to continue to get marginal operating leverage as we continue to grow the portfolio. That's one of the best things about having the platform that we have is we can continue to scale it, and there should be real tangible benefits not only at the operating margin level, but also at the EBITDA margin level. And that's just going to come as we continue to grow the asset base. The piece that you're probably alluding to this quarter is our recovery rates continue to get stronger as we continue to transition to a more fixed CAM model.

Our next question comes from Hong Zhang from JPMorgan.

I guess if I think about same-store growth, you've managed to sustain mid-single-digit same-store growth historically. But just reading between the lines of your comments about occupancy, do you expect that to be sustainable going forward? Or do you think occupancy is going to be a little bit of a headwind to same-store growth in the near term?

Thanks for the question. I wouldn't call it a headwind. And this goes back to my comments on CapEx. As we move forward, obviously, you do get a decent amount of same-store growth out of occupancy gains, no doubt. But with those occupancy gains, as you're doing new leases comes with real costs, especially in the retail business. So we look at it as an opportunity even if our same-store NOI growth would slow down from what's been a real nice run of, I think, 5% for several years running now. Even if that were to moderate a little bit, it would only be due to a higher retention rate across the portfolio. So we'd be doing more renewals. We'll get our embedded escalators, a little bit of redevelopment. And then with that should be stronger free cash flow growth.

We currently have no further questions. So I'll hand back to Mr. DJ Busch for closing remarks.

Thank you, everyone, for taking the time. Thank you for your interest in InvenTrust. We're excited about finishing the end of the year strong, and we're even more optimistic as we move into 2026. Looking forward to seeing you guys at many of the conferences coming up later this winter and into next year. Have a great day.

This concludes today's call. Thank you for joining us. You may now disconnect your lines.