Brixmor CFO Says 2027 Is 'Definitely Not' Business As Usual With Slate Deal And Expiring Swaps
Steve Gallagher points to the pending Slate purchase and July swap expirations as 2027 swing factors; guidance is due in February.
Brixmor Property Group's next year will look different from this one, CFO Steve Gallagher told analysts on the company's third-quarter earnings call: "it's definitely not going to be business as usual with the slate coming on." The shopping-center landlord raised its 2026 outlook to $2.36 to $2.38 in funds from operations per share, and Gallagher said formal 2027 guidance will come in February.
Slate and the July swaps
Asked by a Deutsche Bank analyst whether 2027 would be clean, Gallagher named one other item: interest-rate swaps that burn off in July. The company has put in $400 million of new hedges for when they drop off, and he said the rest is well disclosed.
He said the precise 2027 earnings impact of the Slate acquisition depends on closing timing, purchase accounting and the mix and pricing of its funding. CEO and President Brian Finnegan said the company is moving toward a closing in the first quarter.
On funding, Gallagher said Brixmor is working on a $400 million delayed-draw term loan, expected to close in the fourth quarter and be drawn at the Slate closing. It also executed $400 million of forward-starting swaps on its existing $500 million term loan. Leverage was 5.2 times net debt to adjusted EBITDA, and Gallagher expects it to stay roughly where it is.
Executive Vice President and Chief Investment Officer Mark Horgan said about $130 million of assets are under contract or in negotiation to help fund the deal.
Raised 2026 outlook, softer fourth quarter
Brixmor raised its full-year same-property net operating income growth outlook to 5.5% to 5.75%. Third-quarter same-property income rose 6.6% and the company's core funds from operations rose to $0.60 per share, over 7% higher than a year earlier. Year to date, same-property growth is 6.2%.
Gallagher said fourth-quarter growth should moderate as the company laps elevated ancillary and other income, which he described as prior-year comparisons and timing rather than weaker fundamentals. In the Q&A he tied it to one large incentive from a redevelopment that landed in last year's fourth quarter.
The business behind the numbers
Brixmor owns open-air shopping centers, mostly grocery-anchored, and earns money leasing space to retailers and service providers. Total leased occupancy reached 95.6%, up 150 basis points from a year earlier, and new leases were signed at spreads of 43%.
Gallagher said about $55 million of rent is expected to start in 2026, with another $48 million from the signed-but-not-yet-commenced pipeline expected to start in 2027, before additional leasing. That pipeline stood at $69 million at quarter end. The board also raised the quarterly dividend by more than 7%, Finnegan said.
Brixmor will give its 2027 outlook with year-end results in February.
Sources
- Brixmor Property (BRX) Q3 FFO and Revenues Top Estimates — Yahoo Finance
- Brixmor (BRX) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates — Yahoo Finance
- Brixmor: Q3 Earnings Snapshot — Associated Press
- Brixmor Property FFO of $0.60 beats by $0.01, revenue of $359.6M beats by $3.85M (NYSE:BRX) | Seeking Alpha — seekingalpha.com
- Brixmor: Q3 Earnings Snapshot | 9news.com — Associated Press
