BRX Q3 2025: $22M Rent Commencements Accelerate Redevelopment-Driven Growth
Bricksmore’s third quarter showcased the power of its redevelopment and leasing engine, with $22 million in new rent commencements and record small shop occupancy fueling forward growth visibility. Strategic capital recycling and an expanding grocery-anchored footprint are reinforcing the company’s supply-constrained advantage. Management’s confidence is underpinned by a robust leasing pipeline and disciplined capital deployment, even as competitive pressures and macro uncertainty persist.
Summary
- Leasing Engine Drives Visibility: Record rent commencements and a robust signed-not-open pipeline extend growth runway.
- Capital Recycling Targets Value Creation: Dispositions fund higher-return acquisitions and redevelopment, sharpening portfolio quality.
- Grocery-Anchored Focus Deepens: Expanding partnerships and reinvestment with grocers like Publix support traffic and tenant health tailwinds.
Performance Analysis
BRX reported third quarter results marked by continued momentum in leasing, redevelopment, and disciplined capital allocation. The company executed 1.5 million square feet of leases at a blended cash spread of 18 percent, with new leases signed at a record $25.85 per square foot. Small shop occupancy hit a new high at 91.4 percent, reflecting strong demand for well-located, necessity-based retail space. Anchor leasing also advanced, with notable backfills by national tenants such as Marshalls and Total Wine & More.
The standout operational driver was the commencement of $22 million in new annual base rent (ABR), a record for the company and a key accelerant for future same property net operating income (NOI) growth. The signed-not-open (SNO) pipeline remains elevated above $60 million, with 80 percent expected to commence by the end of 2026 and rents roughly 21 percent above the portfolio average. Redevelopment activity delivered eight stabilized projects at an average incremental yield of 11 percent, supporting both near-term returns and long-term rent growth. On the capital front, BRX closed the $223 million acquisition of La Centera at Cinco Ranch and disposed of $148 million in assets year-to-date, maintaining its net acquirer stance while recycling capital into higher-growth opportunities.
- Rent Commencement Momentum: $22 million in new ABR commenced, stacking growth for upcoming quarters.
- Redevelopment Yield Strength: Eight projects stabilized at 11 percent incremental yield, reinforcing return discipline.
- Capital Markets Flexibility: $1.6 billion in liquidity and a 7 percent dividend increase signal balance sheet strength and confidence.
Management’s focus on reducing exposure to at-risk tenants and expanding grocery-anchored assets (now 82 percent of ABR) further de-risks the portfolio. The company’s proactive approach to lease settlements and asset recycling is supporting both earnings growth and portfolio quality in a competitive transaction environment.
Executive Commentary
"Our team continues to execute on all fronts, attracting great tenants in a supply-constrained environment at the highest rents we've ever achieved. Our redevelopment platform continues to deliver low-risk, compelling returns with several years of runway for future growth."
Brian Finnegan, Interim CEO, President and COO
"We commenced a record high $22 million of new AVR in the quarter, and capitalizing on the strong leasing environment, we executed $16 million of new leases at a record high $25.85 per square foot, and ended the third quarter with a 390 basis point spread between leased and billed occupancy."
Steve Gallagher, Chief Financial Officer
Strategic Positioning
1. Leasing Pipeline Depth and Visibility
BRX’s leasing pipeline remains robust, with the SNO pool at $60 million and future rents signed at a 21 percent premium to current portfolio averages. Management expects 80 percent of this pipeline to commence by the end of 2026, supporting multi-year growth visibility. The company continues to benefit from strong tenant demand, particularly from grocers, off-price retailers, and health and wellness operators.
2. Redevelopment as a Core Value Driver
Redevelopment projects are central to BRX’s value creation strategy, producing double-digit incremental yields and attracting higher-caliber tenants. Recent projects like College Plaza and Barn Plaza have not only increased rents but also upgraded tenant mix, with national brands such as Whole Foods, Pottery Barn, and Sephora entering the portfolio. This reinvestment focus is expected to drive both occupancy and rent growth for several years.
3. Capital Recycling and Acquisition Discipline
BRX continues to recycle capital from low-growth assets into value-add acquisitions like La Centera, where early performance has exceeded underwriting expectations. The acquisition pipeline is focused on traditional open-air centers with strong mark-to-market and redevelopment potential, rather than lifestyle centers. Dispositions are opportunistic, with cap rates largely in line with acquisitions, but with a clear focus on improving long-term internal rate of return (IRR).
4. Grocery-Anchored Dominance and Tenant Health
Grocery-anchored centers now comprise 82 percent of ABR, with partnerships such as Publix expanding through both redevelopment and new projects. This focus has resulted in a 35 percent increase in traffic year-over-year when adding a grocer and improved underlying tenant credit quality, reducing exposure to at-risk categories like office supply and drugstores.
5. Balance Sheet and Capital Markets Readiness
With $1.6 billion in liquidity and proactive debt management, BRX is positioned to capitalize on market opportunities. The extension of its buyback program and review of ATM and DRIP programs provide flexibility to respond to shifting capital markets, while a 7 percent dividend increase signals confidence in cash flow growth and capital allocation discipline.
Key Considerations
BRX’s third quarter demonstrates the interplay between leasing strength, redevelopment returns, and disciplined capital allocation in driving shareholder value. The company’s proactive management of tenant risk and focus on necessity-based retail further insulate it from broader retail volatility.
Key Considerations:
- Rent Growth Upside Remains: Future leasing pipeline sits about 40 percent above in-place rents, supporting continued spread realization.
- Redevelopment Pipeline Longevity: Several years of reinvestment runway remain, with yields expected to stay in the high single to low double digits.
- Tenant Credit Quality Improves: Reduced exposure to at-risk categories and strong backfill tenant credit lower future disruption risk.
- Competitive Acquisition Market: New capital is chasing grocery-anchored assets, but BRX’s platform enables value creation through operational synergies and rent mark-to-market.
- Balance Sheet Flexibility: Pre-funding of maturities and extended buyback program provide optionality in volatile capital markets.
Risks
Competitive acquisition dynamics may compress returns on new investments, especially as more capital targets open-air retail. Macro uncertainty, including tariffs and consumer headwinds, could impact tenant expansion plans. Lease settlement income, which boosted 2025, is expected to be a headwind for 2026 FFO growth, and some redevelopment returns may face cost inflation or permitting delays.
Forward Outlook
For Q4 2025, BRX guided to:
- FFO per share of $2.23 to $2.25 for the full year
- Same property NOI growth affirmed at 3.9 to 4.3 percent
Management highlighted several factors that will shape upcoming quarters:
- Tailwinds from rent commencements and SNO pipeline expected to accelerate growth into 2026
- Lease settlement income will be a headwind in 2026 as one-time items normalize
Takeaways
BRX’s leasing and redevelopment flywheel continues to generate above-market rent growth, with a high-quality tenant mix and capital recycling strategy sharpening portfolio returns. The company’s grocery-anchored focus and disciplined balance sheet set the stage for multi-year growth, though acquisition competition and normalization of one-time income present watchpoints.
- Growth Engine: Rent commencements and redevelopment yields are stacking multi-year NOI and FFO growth, with a robust pipeline sustaining momentum.
- Portfolio Quality: Asset recycling and tenant upgrades are improving risk-adjusted returns and reducing exposure to challenged retail categories.
- Watch for Normalization: Investors should monitor the impact of lease settlement income normalization and competitive pressures on acquisition returns in 2026 and beyond.
Conclusion
Bricksmore’s Q3 results underscore the strategic value of its leasing, redevelopment, and capital allocation model, with tangible progress on occupancy, rent spreads, and portfolio quality. The company’s focus on necessity retail and disciplined execution position it well for continued growth, though investors should watch for evolving competitive and macro dynamics as the cycle matures.
Industry Read-Through
BRX’s success in driving record rent commencements and redevelopment yields highlights the ongoing strength of necessity-based, grocery-anchored retail in a supply-constrained market. The influx of new capital into open-air retail and the focus on tenant credit quality are sector-wide trends, suggesting further consolidation and competition for high-quality assets. Operators with robust redevelopment pipelines and the ability to recycle capital efficiently are best positioned to sustain growth as transactional markets tighten and macro headwinds persist.