How did third-quarter results and full-year guidance change?

  • Brixmor’s third-quarter NAREIT funds from operations (FFO) per share was $0.60, in line with Goldman Sachs’ estimate and 1.7% above the FactSet consensus of $0.59.
  • The company raised both ends of its 2026 FFO per share guidance range by $0.01, to $2.36–$2.38; the midpoint of $2.37 is 0.4% above the $2.36 estimate from Goldman Sachs and FactSet.
  • Third-quarter same-property net operating income rose 6.6% year over year, with base rent contributing 4.8 percentage points. The company narrowed and raised its full-year same-property growth guidance from 5.00%–5.75% to 5.50%–5.75%.

Why was occupancy a highlight of the results?

  • Third-quarter rent-paying occupancy was 91.4%, up 1 percentage points sequentially and 1.2 percentage points year over year. It rebounded this quarter after falling in the second quarter when large leased spaces were recaptured.
  • Overall leased occupancy rose to 95.6%, up 0.8 percentage points sequentially; small-shop occupancy reached a record 92.8%, while anchor occupancy rose to 97.0%.
  • Over the 12 months through the third quarter, the overall cash rent spread on new, renewal and option leases was 17.0%, including 37.4% on new leases. Goldman Sachs expects the overall spread to remain around 15%.
  • Rent growth also faces cost constraints: net effective rent on re-leased space was 83% of base rent, down from 85% a year earlier.

Why does Goldman Sachs remain optimistic about 2027 after a fourth-quarter slowdown?

  • Same-property net operating income grew 6.2% in the first three quarters of this year, so the company’s updated full-year guidance implies slower growth in the fourth quarter. Goldman Sachs attributes this to the higher comparison base of 6.0% growth in the year-earlier period and the timing of signed leases yet to commence converting into rental income.
  • Expected rent from signed leases yet to commence totaled $68.9 million, up from $60.5 million a year earlier. Of that, $48.5 million is expected to commence in 2027, up from the $29 million expected to commence in 2026 at the same time last year.
  • These future lease commencements support Goldman Sachs’ view that same-property net operating income growth will accelerate again in 2027; the gap between leased occupancy and rent-paying occupancy was 4.2 percentage points in the third quarter, narrowing from 4.4 percentage points in the second quarter.

What factors will affect growth and valuation?

  • Revenue expected to be uncollectible in the third quarter represented 0.92% of revenue, above Goldman Sachs’ 0.60% assumption and the company’s full-year guidance range of 0.60%–0.85%; the cumulative rate for the first three quarters was 0.64%.
  • The company completed $54.6 million of reinvestment projects that reached stabilized operations in the third quarter, with an incremental net operating income yield of 10%. Projects in the pipeline totaled $331.8 million, down from $375.3 million a year earlier, while their expected yield rose from 9% to 10%.
  • Brixmor plans to acquire Slate Grocery REIT for approximately $2.34 billion, with completion expected in the first quarter of 2027, subject to closing conditions. Goldman Sachs maintained its buy rating and $33 12-month price target.