Why isn't strong same-store NOI translating into better FFO growth, considering straight-lining, dispositions, or conservatism?

The FFO was partially offset by a $3 million charge in straight-line reversals due to recent box recaptures. Management aims for top-line growth to drop to FFO, and the same-property NOI growth is broad-based. “the disconnect was really just a result of about a $3 million charge in straight line associated with some of the boxes we took back in the quarter.”

Details on Q2 acquisitions (cap rates, redevelopment potential) and the broader acquisition market given strong private bid.

Acquisitions were high-quality, grocery-anchored assets with value-add potential. Blended cap rate was a low 6%. The market is competitive with private capital, but Brixmor focuses on relationship-driven, off-market deals, often with redevelopment opportunities. “Overall, the cap rate in the quarter blended to a low 6, which did include effectively that land that's saying they're rating for development in the near term.”

Are there specific strategies to accelerate FFO recognition from new leases and tenant rollover, beyond changing underlying economics?

The company is focused on accelerating growth by securing better intrinsic lease terms (growth, CAM clauses, percentage rent), getting tenants to take possession sooner, and doing work with tenants to cap costs. This can accelerate straight-line recognition. “everything that we're doing is to accelerate growth in our business plan. So utilizing the environment to get the best intrinsic lease terms that we ever have, whether it's growth, whether it's improving our can clauses, whether it's adding more percentage rent.”

BRX

Brixmor Property Group (BRX) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Jul 28, 2026

Source: earnings call transcript

Executive summary

Brixmor Property Group Q2 FY26 — Strong NOI Growth and Record Leasing Pipeline

Brixmor Property Group reported a strong second quarter, driven by robust same-property NOI growth and record leasing activity, particularly in small shops. The company raised its full-year guidance for both same-property NOI and FFO, reflecting confidence in its operating platform and embedded growth. Strategic acquisitions and a substantial reinvestment pipeline further position Brixmor for future earnings expansion, despite a sequential dip in occupancy due to planned recaptures.

Highlights

Delivered 5.8% same-property NOI growth.
Achieved $0.58 per share of FFO.
Record small shop occupancy and a record signed but not yet commenced pipeline of $71 million annualized base rent.
Executed 1.4 million square feet of new and renewal leases at a blended cash spread of 19%, with new lease spreads of 31% and renewal spreads of 16%.
Increased 2026 expectations for same property NOI growth (5% to 5.75%) and FFO ($2.35 to $2.37 per share).

Concerns

Total leased occupancy ended the quarter at 94.8%, down 30 basis points sequentially due to proactive move-outs at redevelopment assets and recaptures from Painted Tree and Rent Kitchens.
FFO was partially offset by lower noncash rental income resulting from straight-line reversals on the Rem and Painted Tree bankruptcies, a $3 million charge.
Implied deceleration in same-property NOI growth in the second half of the year due to strong Q4 FY25 ancillary income comps.

Guidance & targets

Category	Target	Timeline	Confidence
Same-property NOI growth	5% to 5.75% high materiality	FY26	High
FFO per share	$2.35 to $2.37 high materiality	FY26	High
Revenue deemed uncollectible	60 to 85 basis points of total revenues medium materiality	FY26	High

Orderbook & backlog

Signed-not-commenced pipeline $71M Q2 FY26 end

record

Annualized base rent; significant portion commences in 2027 and beyond.

Future reinvestment pipeline $700M Q2 FY26 end

exceeds

Across the portfolio, providing a long runway of high-return internal growth.

Investment volume under contract $50M Q2 FY26 end

Additional asset in Southern California under hard contract, expected higher cap rate than Q2 acquisitions.

Deals & partnerships

Various Acquisition of high-quality, predominantly grocery-anchored assets. $164 million

Included Mayfair Shopping Center (Long Island), Jones Crossing (College Station, Texas), Vintage Marketplace (Houston), and Stanford Station (Panama City, Florida).

Seller of Mayfair Shopping Center Acquisition using OP units as partial purchase price. Portion of purchase price

Mayfair Shopping Center on Long Island. Structured as a convertible preferred with conversion rate above equity issuance at negotiation time.

Various Additional asset under hard contract. about $50 million

Asset located in Southern California, expected cap rate higher than Q2 acquisitions.

Capital programs

Active reinvestments active $350M

Benefit:Expected 10% incremental yield

Nearly $350 million of active reinvestments, with 8 new projects added during the quarter.

Morris Hills Redevelopment underway

Start: Q2 FY26

Benefit:New specialty grocer

Large-scale redevelopment project in Northern New Jersey.

Southtown Reconfiguration underway

Start: Q2 FY26

Benefit:Accommodate HomeSense, Sierra, Barnes & Noble

Reconfiguring center in Dayton, Ohio.

Market Plaza Repositioning underway

Start: Q2 FY26

Benefit:Elevate asset with Kirby ICs and compelling merchandising mix

Repositioning underutilized space in Suburban Dallas.

Risks & headwinds

Sequential decline in total leased occupancy Q2 FY26

94.8%, down 30 basis points sequentially

Mitigation:Expected due to proactive move-outs for redevelopment and recaptures (Painted Tree, Rent Kitchens); already leased 6 of 8 recaptured boxes at >40% spreads, income commencing in 2027; expected to return to growth trajectory in H2 FY26.

Impact of straight-line reversals on FFO Q2 FY26

$3 million charge

Mitigation:Associated with Rem and Painted Tree bankruptcies; noncash rental income expected to return to run rate for the remainder of the year.

Implied deceleration in same-property NOI growth in H2 FY26 H2 FY26

Comping off strong Q4 FY25 ancillary and other income

Mitigation:Base rent expected to continue growing from new pipeline commencements, setting up for strong stack rent into FY27.

What to watch in Q3 FY26

Total leased occupancy recovery

H2 FY26

Current 94.8%

Target Growth trajectory

Why it matters

Indicates demand strength and successful re-leasing of recaptured spaces, impacting future NOI.

Total leased occupancy ended the quarter at 94.8%, down 30 basis points sequentially as expected due to proactive move-outs at redevelopment assets and the recaptures from painted tree and rent kitchens. Importantly, we are already at least on 6 of the 8 recaptured rent and painted tree boxes at spreads of over 40%. So occupancy is not always linear. As we talked about, we do expect to get back on the trajectory of growth in the back half of the year.

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Q&A highlights

Was the Q2 occupancy decline expected, and what's the outlook for recovery and redevelopment projects enabling it?

The decline was in line with expectations due to proactive move-outs for redevelopment. Occupancy is expected to return to growth trajectory in H2 FY26, with recaptured spaces already leased at over 40% spreads, commencing in 2027.

“It was definitely in line with what we expected. As we talked about, we do expect to get back on the trajectory of growth in the back half of the year.”

asked by Michael Goldsmith · answered by Brian Finnegan

2 min read 6 chapters

Detailed narrative

Tribute to Jim Taylor

The call began with a tribute to the late Jim Taylor, acknowledging his profound impact on Brixmor's culture, values, and people. Management expressed gratitude for his foundational work and the industry's support, emphasizing that his legacy of humility, integrity, and purpose remains deeply embedded in the company.

Leasing Momentum and Rent Growth

Brixmor continues to see strong tenant demand, executing 1.4 million square feet of new and renewal leases. New lease spreads remained above 30% for the third consecutive year, while renewal spreads were in the mid-teens. The company also achieved a record embedded rent growth of 2.8% across new and renewal leases, reflecting the value retailers place on their centers and the low rent basis.

Record Signed-but-Not-Yet-Commenced Pipeline

The signed but not yet commenced (SNO) pipeline reached a record $71 million of annualized base rent, providing significant visibility into future NOI growth. A substantial portion of this pipeline is expected to commence in 2027 and beyond, extending the earnings growth trajectory well into the future.

Strategic Reinvestment and Development

The company maintains a robust reinvestment pipeline, with nearly $350 million in active projects yielding an expected 10% incremental return, and a future pipeline exceeding $700 million. Eight new projects were added, focusing on optimizing tenancy and creating long-term value, alongside 4 new outparcel developments at a 16% average incremental return, indicating a strong runway for future densification.

Disciplined Acquisitions and Capital Recycling

Brixmor completed 4 strategic acquisitions totaling $164 million, primarily grocery-anchored assets in existing markets. Notably, Mayfair Shopping Center marked the first use of OP units as acquisition currency, providing a new tool for disciplined external growth. The company emphasizes relationship-driven sourcing and a focus on assets with remerchandising and reinvestment potential.

Balance Sheet Strength and Liquidity

S&P revised Brixmor's outlook to positive, reflecting balance sheet improvements. The company addressed its near-term maturity by issuing $400 million of 5.375% senior notes and settling a forward hedge at 3.99%. Leverage stands at 5.3x on a quarter annualized basis, with $1.5 billion in liquidity, including $115 million of unsettled forward ATM issuance, positioning it well for future capital allocation.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.