Pennsylvania Real Estate Investment Trust (NYSE:PEI) Q2 2016 Earnings Conference Call - Final Transcript
Jul 27, 2016 • 11:00 am ET
Welcome to the PREIT Second Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this conference is being recorded.
I would now like to turn the conference over to Heather Crowell. Ms. Crowell, please go ahead.
Good morning and thank you all for joining us for PREIT's second quarter 2016 earnings call.
(Forward-Looking Cautionary Statements)
Members of management on the call today are Joe Coradino, PREIT CEO; and Bob McCadden, our CFO.
It is now my pleasure to turn the call over to Joe Coradino.
Thanks Heather and good morning everyone. We're coming to you today from Philadelphia, a city on the rise. Over the past year we've hosted major events including welcoming the Pope, and this week the Democratic National Convention. PREIT is not only -- Philadelphia is not only PREIT's headquarters city, but one of two concentrations of properties in Top 10 MSAs and where our most transformative redevelopment project is underway.
Yesterday we capitalized on having the DNC in town and proudly hosted a luncheon for DNC Delegates and Elected Officials representing four districts in which we have properties in various stages of redevelopment that will contribute to the company's growth in the coming years. It's an exciting time for us as we continue to build on the successful transformation. We set in motion a few years ago by executing on our strategic plan to call the lower productivity assets and remerchandise our portfolio.
We've established a pattern of execution and are confident that our reshaped portfolio will continue to produce strong quarterly results. The formula is pretty simple, a robust leasing pipeline driven by demand for quality space in a constrained supply environment, plus renewal spreads that exceed our historical performance driven by a stronger negotiating position, plus margin improvement driven by a focus on common area revenue growth, plus quality redevelopment projects generating yields of 8% to 10%; all equals continued NOI and NAV growth. This morning we're pleased to outline for you the results we have achieved are approaching the retail environment that is morphing quickly and our expectations for the balance of the year including increasing the midpoint of our guidance range.
Highlights of our results include achieving strong same store NOI growth, excluding lease terminations averaging 4% for the first two quarters when Springfield Town Center is included. We made a point to share our same store NOI growth including this asset because we thought it was important to give people a view of what they can expect from our improved portfolio going forward and highlight the strength of this property. We also registered nearly double digit growth in sales with over one-third of this growth being organic. We delivered impressive 13.4% renewal spreads. We executed leases for 30% more spaces compared to last year. We improved lease base to 94.3% of non-anchor space excluding properties marketed and held for sale.
We closed on a highly profitable sale of street retail properties acquired two years ago