Performance was characterized by a shift toward capital efficiency, highlighted by a re-REMIC transaction that reduces mark-to-market repo financing and is expected to be significantly accretive to annual cash available for distribution.
Management is intentionally avoiding ‘AI scare-trade’ assets, instead focusing on residential and self-storage sectors where AI integration is viewed as a margin enhancer rather than a threat of obsolescence.
Life science performance is driven by ‘first-to-fill’ assets in elite academic ecosystems, where purpose-built infrastructure commands a premium over cheaper, converted suburban alternatives.
The Alewife project’s success is attributed to its status as a rare purpose-built facility on mass transit lines, creating a ‘cluster effect’ where high-quality tenants like Lila Sciences attract further leasing momentum.
Self-storage outperformance relative to the broader industry was driven by superior occupancy and NOI growth, despite macro headwinds from a sluggish housing market and elevated mortgage rates.
Strategic positioning in multifamily relies on a multiyear supply trough, with construction starts in that segment approximately 70% below their 2020 peak.
Q1 guidance assumes a reduction in debt by $75.2 million and a decrease in the debt-to-equity ratio to 0.83x following the re-REMIC execution.
Management expects multifamily rents to inflect positively in 2026 as the market works through the current high supply cycle and enters a multiyear supply trough driven by significant declines in new deliveries and construction starts.
The company is actively reviewing several options to achieve the best execution and pricing for the refinancing of $180 million in unsecured notes maturing in May.
Life science leasing is projected to reach full occupancy in 2026, with debt yields expected to reach the 12% range as momentum from AI-related demand widens the tenant funnel.
Future capital deployment will prioritize ‘stretched senior’ debt and B-notes for new construction and lease-up deals in the build-to-rent and multifamily sectors.
A $12 million provision for credit loss was recorded, reflecting a more conservative CECL calculation that now includes a severe downside scenario.
Management identified approximately 66% of the credit loss provision as being tied to specific preferred equity deals previously flagged as problem areas.
Proposed federal regulations limiting institutional ownership in scattered-site SFR are being monitored, though management believes build-to-rent assets remain insulated as they add to housing stock.
The Series C 8% preferred stock offering is being used as a primary vehicle for raising capital to be redeployed at 200 to 400 basis point net interest margins.
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