InvenTrust (IVT) Q2 FY26 earnings call: guidance and Q&A

What drove the anchor occupancy decline, and what is the expected trajectory for both anchor and small shop occupancy into year-end?

The anchor decline was primarily due to the former Painted Tree space, for which an LOI is in place. The company expects to approach all-time high leased occupancy by Q1 2027 and economic occupancy by Q3 2027.

“The primary driver, as you noted, was the Painted Tree, which we lost. It was not in our numbers last quarter, but we noted it on the call. That was at our West Park asset in Glen Allen, Virginia. So that's the primary driver of why the anchor vacancy went down. And as I noted, we only have 6 vacant anchors, of which we expect to hopefully bring 3 of those into execution by the end of the year. And as for the trajectory of where we think occupancy can go, we think we should be approaching leased occupancy all-time highs by the end of first quarter 2027 with economic occupancy about third quarter 2027.”

asked by Andrew Reale · answered by Christy David

Are you comfortable with the current net debt-to-EBITDA level, and how will equity or dispositions factor into the funding mix going forward?

The 5.3x net debt-to-EBITDA is an annualized number and is expected to come down materially to under 5x by year-end. Management is comfortable with a 5x to 6x range. The company can self-fund growth without needing to access equity markets immediately.

“Net leverage finished the quarter at 31.9% and net debt-to-adjusted EBITDA was 5.3x on a quarterly annualized basis. Our balance sheet remains strong and provides the flexibility and liquidity to continue executing on our long-term strategy. Andrew, yes, so interestingly enough, some of the assets that we closed were late in the quarter, and that's an annualized number. So that's going to come down materially. But the way we look at it on a forward basis, we'll probably still end the year based on our net investment expectations still under 5x. And as we've said, our range where we're comfortable is 5 to 6x on a forward basis.”

asked by Andrew Reale · answered by Daniel Busch

How large is the acquisition buy box, how quickly can expansion ramp up, and what is the outlook for the competitive transaction market?

The pipeline of opportunities is around $2 billion, with seasonality. Opportunities in new Sun Belt markets are fewer but high-quality. The company targets a blended initial yield in the low 6s and unlevered IRR in the low to mid-7s. The market is competitive, especially in larger core markets.

“our pipeline ebbs and flows. It always remains kind of the canvas that we're looking at, both in current and new expanding markets is right around $2 billion, give or take. There is a seasonality to the pipeline. It's always a little bit quieter midyear. We're seeing some interesting opportunities just pop up now. We've been very fortunate that some of these new expanding markets we've gone into, I wouldn't say we were a first mover, but they are tighter markets.”

asked by James Feldman · answered by Daniel Busch

Can you provide an update on disposition efforts, particularly in markets like Houston, and the timing relative to additional acquisitions?

Two assets are currently in the market, with hopes to close in the second half of the year. Disposition activity will be minimal after previous large sales. The company aims to match fund capital recycling more carefully, but has balance sheet capacity to use leverage for growth without immediate equity market access.

“There's 2 in the market right now that we're hopeful that we will get done in the second half of this year. And like you said, the strong properties that just don't fit the growth profile that we're looking for as we move forward, but still very solid properties. And we'll continue to look through the portfolio for those. But we're fortunate that the portfolio kind of top to bottom is increasing in quality. So the disposition activity will be kind of de minimis after from what you saw last year with California.”

asked by Todd Thomas · answered by Daniel Busch

How do you get comfortable with growing rents long-term in secondary and tertiary Sun Belt markets compared to larger markets?

The company has studied these markets extensively, noting that Sun Belt migration trends (population, income, business formation) are extending into them. This movement is expected to support rent growth for several years, similar to how Nashville experienced growth 15 years ago.

“And the reason for that is what we've studied the markets that we've currently been talking about, we've been looking at for a long time. And the most important thing is, and it really is a Sun Belt kind of story that continues, by the way. It's probably not as accelerated as it was just coming out of COVID. But the migration trends from population, the amount of income and business formation that's going into the Sun Belt, it's bleeding out into some of these other markets like a Knoxville, like a Greensboro, certainly like a Charleston. So those markets are seeing the types of movements, and I'm going to use this just as an example, like perhaps Nashville did 15 years ago.”

asked by Daniel Purpura · answered by Daniel Busch