AHRT

Thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to the AH Realty Trust, AHRT, 2Q26 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers remark, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Chelsea Forrest, EVP of Investor Relations. Please go ahead.

Good morning. Thank you for joining AH Realty Trust Second Quarter 2026 Earnings Conference Call and Webcast. On the call this morning, in addition to myself, is Shawn Tibbetts, Chairman, President, and CEO, Matthew Barnes-Smith, CFO, and Craig Romero, EVP of Asset Management. The press release announcing our second quarter earnings, along with our supplemental package, were distributed yesterday afternoon. A telephonic replay will be available shortly after the conclusion of the call through Thursday, September 3rd, 2026. These numbers to access the replay are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, August 4th, 2026, and will not be updated subsequent to this initial earnings call.

During this call, we may make forward-looking statements, including statements related to the future performance of our portfolio, transactions involving our multifamily portfolio, our real estate financing program, and our construction business, and the use of proceeds from such transactions, our rebranding and the efforts thereof, the consequences of our strategic transformation, our liquidity position, as well as comments on our outlook. Listeners are cautioned that any forward-looking statements are based upon management's beliefs, assumptions, and expectations, taking into account information that is currently available. These beliefs, assumptions, and expectations may change as a result of possible events or factors, not all of which are known, and many of which are difficult to predict and generally beyond our control.

These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review the forward-looking statement disclosure in our press release that we distributed yesterday and the risk factors disclosed in documents we have filed with or furnished to the SEC. We will also discuss certain non-GAAP financial measures, including but not limited to FFO, normalized FFO, and FFO as adjusted. Definitions of these non-GAAP measures, as well as reconciliations to the most comparable GAAP measures, are included in the quarterly supplemental package, which is available on our website at ahrealtytrust.com. I will now turn the call over to Shawn.

Good morning. Thank you for joining us today. Given our year-to-date results, we are raising our full year 2026 FFO as adjusted guidance range to $0.53 to $0.57 per diluted share. I will discuss where AH Realty Trust stands today, some milestones we achieved this quarter, and portfolio highlights before closing with a look at our current capital allocation strategy and outlook. Let me be direct. This has been the most consequential and productive quarter in AH Realty Trust history. When we announced our restructuring plan just over five months ago, we made key commitments to our shareholders. Today, I am proud to report that we have delivered on every one of them even faster than expected, resulting in significant accelerated value creation. In recent months, we have fundamentally transformed this company.

We sold nearly all of the multifamily portfolio, exited the majority of the real estate financing positions, paid down debt, executing the most significant balance sheet de-leveraging in the company's history. Lastly, we exited the construction business. Today, our refreshed board has new directors with the skills and experience to oversee our new company as we move forward. We did all of this while continuing to operate our retail and mixed-use office portfolio with excellence and increasing occupancy. When we announced our strategic pivot, we stated our intention to exit multifamily and real estate financing for a total gross proceeds of approximately $750 million. We have become a pure play, high-quality retail and mixed-use office REIT. We are now, in every meaningful way, that company, AH Realty Trust.

In May, we completed the sale of nine of the 11 multifamily properties in our original portfolio sale agreement to affiliates of Harbor Group International for $485 million. At the strong valuations we received for these assets, which exceeded the value the market assigned them within our REIT structure, is a clear validation of our thesis that substantial embedded value existed and continues to exist in the portfolio. Greenside and Premier are under contract with HGI for an additional $77 million in combined proceeds. We anticipate closing on Greenside by year-end 2026 and Premier by mid-2027. We have also executed a purchase and sale agreement on The Everly and Solis Gainesville for an aggregate gross sales price of $95.5 million with the buyer's deposit now non-refundable, and we expect to close by the end of the third quarter of 2026.

As committed, we intend to retain Smith's Landing given its unique ground lease structure and stable cash flow. The proceeds from the nine asset Harbor Group sale were redeployed. Approximately $460 million went directly to debt reduction, materially reshaping our capital structure. As of quarter end, AH Realty Trust net debt to total Adjusted EBITDA stood at approximately 7.1 times, and our leverage trajectory is exactly where we said it would be. We remain on a clear path to our target leverage range of 5.5 to 6.5 times net debt to total Adjusted EBITDA. AH Realty Trust continues to hold a BBB credit rating from Morningstar DBRS, underscoring the strength of the balance sheet we are fortifying. In the second quarter alone, we paid down $353 million of variable rate debt, further improving our debt profile.

As of quarter end, our debt was 100% fixed or economically hedged. Beyond multifamily, we have fully exited the construction business and substantially wound down our real estate financing platform. The result is a company that is dramatically simpler with far less earnings volatility, far less balance sheet complexity, and far greater focus on what we do best: owning and operating high-quality, open air retail and mixed-use ecosystems in strong Sun Belt, Mid-Atlantic, and Southeast markets. Another defining element of our successful transformation is governance. We have made purposeful, strategic changes to the composition of our board to ensure that we have the right leadership in place for this next chapter. At our 2026 annual meeting, shareholders elected Theodore Bigman and Lori Wittman as independent directors.

The skills and expertise they bring are directly relevant to our business and transformation, as well as our focus on closing the gap between AH Realty Trust share price and its asset value. As previously announced, Dennis Gartman and George Allen completed their board service at the annual meeting. We thank them again for their years of contribution. This board refresh reflects a deliberate and ongoing alignment of governance with strategy, and we are confident AH Realty Trust is well positioned for shareholder value creation. I want to shift gears and discuss our capital allocation framework, which is built around one principle: deploying capital where it creates the most value for shareholders. In May, our board of directors increased the total authorized repurchase capacity to $100 million, doubling the original authorization and reflecting the board's conviction in the intrinsic value of this company.

Through June 30, 2026, we repurchased approximately $33.2 million, or 5.6 million shares at a weighted average price of $5.92 per share. We believe this was among the most compelling uses of capital. After giving effect to the increased authorization, approximately $54.1 million remains available for future repurchases. As we work to continue closing the gap between our current share price and intrinsic value, we will continue to evaluate a range of capital allocation options, including targeted redevelopment and out parcel development within the existing portfolio where we see near-term accretive opportunities. We will also selectively evaluate acquisitions in our target market, only at terms that are accretive to shareholders. We will not pursue acquisitions only for the sake of growth. Shareholder value creation is our North Star, it is through that lens that we will continually reassess capital allocation opportunities.

It is worth touching on the broader retail landscape. According to CoStar's most recent data, the sector's fundamentals are stabilizing and in key pockets tightening further. Net absorption rebounded to positive 9.8 million square feet in the second quarter after a negative first quarter. Announced store openings continue to outpace closures. Available retail space remains near a multi-decade low, roughly 12% below the 10-year average. While new construction is still well below pre-pandemic levels, keeping a lid on new supply. Grocery anchored space, which underpins our portfolio, is tighter still than the broader market. Landlords continue to capture meaningful rent gains on new leases, even as growth moderates. Investor demand for retail real estate remains strong as well, with sales volume up 26% year-over-year and cap rates stabilizing after peaking in 2025.

We believe all of this plays directly to the strength of the portfolio we have built. Against the backdrop of executing our transformation, our retail and mixed-use office portfolio continued to perform at a high level. Craig will take you through the details shortly. A few highlights worth noting up front. Our retail portfolio ended the quarter at 95.1% leased. Second quarter retail cash same store NOI was up 2.9% year-over-year, driven by a cash renewal lease spread of 8.7%. Rent commencements from prior leasing activity and a tenant base anchored by proven high traffic national retailers. Trader Joe's at Columbus Village continues to outpace the only other nearby market location by nearly two times in visits. Golf Galaxy at Columbus Village ranks in the top three of all Golf Galaxy stores nationally. Chartway Federal Credit Union recently opened at an outparcel at Columbus Village.

Another example of the redevelopment and NOI enhancement opportunities we continue to execute across the portfolio. Looking ahead, we expect full year 2026 same store NOI growth of approximately 2.5%-3.5%. We expect our retail lease percentage to continue building as our signed not occupied pipeline commences, with the bulk of that activity weighted toward 2027. Our office portfolio ended the quarter at 96.7% leased occupancy, with economic occupancy gains continuing to build as new tenants began paying rent. Last quarter, we completed the consolidation, downsizing, and relocation of AH Realty Trust's own corporate offices, moving from the main tower at Town Center into the least desirable retail space elsewhere in the Town Center portfolio that has been vacant for three years.

That intentional move freed up our previous space. We recently leased 38,000 sq ft at 222 Central Park at top of market rent, creating $1.3 million of new ABR. It's an example of the same discipline running through this entire transformation. We lowered our own occupancy costs and, in turn, are capturing premium rent on the space we vacated. Second quarter office same store NOI was up 8.3% year-over-year, with a cash renewal lease spread of 21.6%. We expect full year 2026 office same store NOI growth of approximately 2.75%-3.75%. These metrics reflect the quality and differentiation of our mixed-use platform. Elsewhere in the office portfolio, Southern Post ended the quarter at 96% leased, with 44.9% economic occupancy. We expect that gap to narrow as free rent periods burn off.

We expect office economic occupancy to continue to build as 222 Central Park and other recently signed leases begin paying rent. Representing a share of the $4.6 million of signed not occupied ABR across our office portfolio, more than half of which we expect to realize this year. One point worth underscoring, 95% of our office square footage sits inside walkable, amenity-driven, mixed-use environments. We do not own standalone suburban office assets. That distinction is what drives leasing momentum and tenant demand you're seeing in our numbers. It's why we believe the valuation gap between our office platform and the broader publicly traded office sector should continue to close. Our tenant roster backs that up. Morgan Stanley, T. Rowe Price, EY, KPMG, and Constellation Energy anchor our largest office assets.

Our office leases carry a weighted average term of seven and a half years, giving us strong visibility into future cash flows. The traffic data tells the same story. The Interlock in Atlanta, Georgia, alone drew roughly 820,000 visits last year, with an average dwell time approaching 3 hours, in a community with an average walk score of 90. Given the continued strength of our retail and mixed-use office portfolio, the transformational actions we've completed, and our visibility into the coming quarters, we are raising our full year 2026 FFO as adjusted guidance range to $0.53-$0.57 per diluted share. For the second quarter, FFO as adjusted was $0.14 per diluted share, reflecting both the outperformance of our operating portfolio and the impact of our share repurchase program. AFFO for the quarter was $0.18 per diluted share.

Our dividend is comfortably covered with an AFFO payout ratio of approximately 77%. Every action we've taken this year points to the same outcome, a simpler, more focused AH Realty Trust with a strong balance sheet, durable earnings, and a clear path to delivering outsized returns for our shareholders. We have more work to do, but we're further along and faster than we expected. That is a direct reflection of the team's talent, discipline, and resolve. I want to acknowledge our people. Executing a transformation of this scale, including over $565 million in executed transactions, with all remaining assets under contract, one real estate financing position remaining to exit, a complete business model repositioning, a balance sheet overhaul, while maintaining sector-leading portfolio performance in under two fiscal quarters is extraordinary. It requires people who operate with urgency, precision, and an ownership mentality.

We have that team, and I could not be more proud of what they have accomplished. With that, I will turn it over to Craig to discuss portfolio highlights in detail.

Thank you, Shawn, and good morning, everyone. I'll briefly cover second quarter operating performance as well as expectations for the portfolio for the remainder of the year. With portfolio NOI split between retail and office, I'll spend a few minutes covering both segments, starting with retail. Approximately 75% of retail NOI comes from open air shopping centers with traffic-driving anchors like Whole Foods, Trader Joe's, Publix, Kroger, TJX, and Ross. Or shadow anchors like Costco, Target, and Walmart. The remaining 25% of retail NOI comes from mixed use ecosystem with ground level retail integrated with office, residential, hospitality, or public space components like we have in the Town Center of Virginia Beach and The Interlock in West Midtown Atlanta.

Retail same store NOI for the quarter was up 2.9%, driven by economic occupancy gains across the shopping center portfolio and at The Interlock, which more than offset anticipated vacancy and bad debt at Town Center. Same store NOI from the shopping center portfolio increased 5.7% year-over-year, driven by economic occupancy from the backfill of over 120,000 square feet of anchor space at a combined 35% positive cash spread. Anchor spaces previously leased to Bed Bath & Beyond, Party City, and Joann are now occupied by Burlington, Boot Barn, Bob's Discount Furniture, Golf Galaxy, and Trader Joe's. Successful anchor tenants drive traffic to our shopping centers, supporting sales for small shop tenants, thereby driving overall rent growth. I'll highlight two specific examples.

With the opening of Trader Joe's and Golf Galaxy, year-to-date visits to the redeveloped Columbus Village grew more than sixfold compared to last year, and inline shop and out parcel rents have doubled. At Southgate Square, the backfill restaurant tenant for the Joann anchor space opened for business earlier this year. Late last year, we leased a previously undeveloped area of the parking lot to 7 Brew Coffee. A prime example of our team's ability to find ways to incrementally increase NOI and create value. As a result, year-to-date visits to Southgate Square have increased 54% compared to last year. Second quarter renewal spreads on inline shop space at Southgate Square were 33% positive, and we're currently at lease with a leading national fast casual restaurant for space at a 55% positive cash spread.

Shopping center portfolio visits during the second quarter increased 6.6% year-over-year and are up over 11% compared to the second quarter of 2019. Anchor space vacancy in the shopping center portfolio is down to just 3%. While we negotiate terms with long-term backfill tenants, we intend to monetize the available space for temporary short-term seasonal uses to incrementally bolster third and fourth quarter retail NOI. At the end of the second quarter, small shop vacancy in the shopping center portfolio stands at around 8%, presenting growth opportunities as we intend to capitalize on the success of anchor tenants, increase in foot traffic, and demand for retail space in a supply-constrained environment. As I mentioned last quarter, we expected Town Center retail to weigh on current year same store NOI due to vacancy and store closures on 30,000 sq ft of space.

I'm pleased to report that 5,000 sq ft has already been re-leased to Abercrombie & Fitch with an anticipated store opening this fall. We look forward to Abercrombie joining Town Center's best-in-market retail lineup that includes Lululemon, Lego, Anthropologie, Madewell, Free People, Williams-Sonoma, and Pottery Barn. The remaining retail vacancy in Town Center presents tremendous opportunity to thoughtfully curate the overall merchandising mix to best serve all of Town Center's residents and visitors from the daytime weekday office population to nighttime and weekend guests in order to increase visits, prolong dwell time, and create an environment that supports rent growth. At The Interlock in West Midtown Atlanta, retail NOI increased 32% year-over-year, reflecting full economic occupancy of the rooftop space that was re-leased at a 64% positive cash spread.

Second quarter visits to The Interlock increased 33% year-over-year, and parking transactions are up 36%, driven primarily by the success of the new rooftop operator, World Cup events and activations, and the opening of Atlanta's first F1 Arcade. We expect further cash NOI gains from The Interlock during the remainder of the year with anticipated rent commencement from F1 Arcade in the third quarter. Portfolio-wide, second quarter cash spreads on new retail leases and renewals were positive 5.2% and 8.7%. At the end of the second quarter, the retail portfolio was 95% leased with just under 91% economic occupancy. Signed non-occupied ABR was $1.8 million, the majority of which we expect to realize in 2027. Year to date, retail same store NOI increased 2.5% over last year.

Looking ahead to the second half of the year, we expect consistent NOI contribution from the shopping center portfolio, with accelerating growth from The Interlock more than offsetting sustained declines at Town Center. All of which has been reflected in our revised same store guidance range for 2026. Turning to the office segment. Office same store NOI was up 8% for the quarter, driven by significant cash NOI increases at Harbor Point in Baltimore, Town Center, and The Interlock. Harbor Point accounted for over 55% of office same store NOI, with Town Center contributing roughly 25% and The Interlock about 8%. Second quarter office NOI at Harbor Point increased over 10%, driven by economic occupancy gains at Thames Street Wharf resulting from free rent burn off on Morgan Stanley's expanded premises, accounting for the sequential increase in economic occupancy to nearly 99%.

Looking ahead, economic occupancy and cash NOI at Thames Street Wharf is expected to reflect contractual future free rent periods in the third quarter of 2026 and the first quarter of 2027, with full economic occupancy in the fourth quarter of 2026, the second quarter of 2027, and thereafter. At Wills Wharf, we expect third quarter lease occupancy to increase approximately 275 basis points after re-leasing the 9,000 sq ft recaptured at the end of last year. Town Center office NOI increased 2.5%, driven primarily by contractual rent increases. At the end of the second quarter, Town Center office space was over 99% leased. Given the limited supply and sustained market demand, leasing spreads on Town Center office space were +9.5% on new leases and 13.6% on renewals.

As expected, during the second quarter, we successfully re-leased the 8,000 sq ft recaptured at 4525 Main and over half of the 12,000 sq ft that expired at One Columbus. Looking ahead, we expect the gap between leased and economic occupancy at Town Center to tighten in the third quarter as rent commences on signed leases at One Columbus, Two Columbus, and the top floor of 222 Central Park, which we vacated in order to re-lease at the highest office rents in the market. Second quarter office NOI at The Interlock increased 23%, driven by rent commencements and free rent burn off, resulting in a sequential increase in economic occupancy of 430 basis points. We expect further economic occupancy increases in the fourth quarter, coinciding with anticipated future rent commencements on signed leases.

At One City Center in Durham, we anticipate both leased and economic occupancy to decline to around 65% in the third quarter because of lease expirations, but we remain optimistic given the quality of our asset and position in the market. Portfolio-wide cash spreads on office renewals were +22%, including a 32% positive cash spread at Province Plaza in Charlotte, indicating the significant mark-to-market rent potential in that asset. Office lease occupancy at the end of the second quarter was 97%, and economic occupancy was 90%. Signed non-occupied ABR was $4.6 million, over half of which we expect to begin realizing this year, and the rest throughout 2027. Year-to-date, office same store NOI increased 4.5% over last year.

Looking ahead to the second half of the year, we expect accelerating growth from the Interlock and Town Center to partially offset moderating growth from Harbor Point, all of which has been reflected in our revised same store guidance range for 2026. We continue to see organic growth opportunity across both our retail and office portfolios through our signed non-occupied pipeline, proactive leasing of vacant or soon-to-be vacant space, mark-to-market adjustments on new leases, positive renewal spreads, disciplined expense management, and targeted redevelopment and capital investment where returns justify it. This operational focus is central to how we intend to drive consistent NOI growth and deliver long-term value going forward. With that, I'll turn it over to Matt for more details on our second quarter financial results and an update to our fiscal year 2026 guidance.

Good morning, and thank you, Craig. AH Realty Trust delivered another quarter of solid execution against our transformation, highlighted by the first closing of our multifamily portfolio sale, a meaningful reduction in leverage, and continued strength across the retail and mixed-use office platform. The result this quarter demonstrates that we are ahead of schedule with our transformation substantially complete and the benefits of a simpler, higher quality operating platform increasingly evident. For the second quarter, FFO attributable to common shareholders was $15.4 million or $0.16 per diluted share. FFO as adjusted, which excludes the results of the segments we have classified as discontinued operations, multifamily, real estate financing, and general contracting and real estate services, was $14.1 million or $0.14 per diluted share.

Total property portfolio NOI for the second quarter was $35.3 million, an increase of 2.2% year-over-year, with same store NOI cash up 5.3% on a blended basis, 2.9% in retail and 8.3% in office. AFFO totaled $18.1 million or $0.18 per diluted share, which compares to our current dividend at a payout ratio of approximately 77%. As Craig went over in detail, our retail and mixed-use office portfolios continue to perform well. Retail renewal lease spreads on a cash basis were 8.7% for the quarter, and office renewal lease spreads on a cash basis were a strong 21.6%, reflecting the quality and location of our office assets, particularly within our mixed-use ecosystems at Harbor Point in Baltimore and the Interlock in Atlanta.

The broader flight to quality dynamic that continues to define the office leasing market nationally, with well-located, amenitized assets capturing a disproportionate share of demand, is playing directly to the strength of our mixed-use office portfolio. We believe our office same-store NOI growth this quarter and our broader financial performance is a direct reflection of that trend. As Shawn covered, our exit from multifamily, real estate financing, and general contracting is largely completed. That progress gives us the flexibility to keep executing our capital allocation priorities, continuing to pay down debt, investing selectively in high growth markets, and repurchasing shares. Our balance sheet metrics, discussed further on page 14 of the supplemental, continue to reflect the underlying quality and embedded value in our retail and mixed-use office real estate and remain central to how we evaluate capital allocation, including our share repurchase program.

Year-to-date through June 30, we repurchased 5.6 million shares for $33.2 million, or an average price of approximately $5.92 per share. Our common stock closed the quarter at $7.08 per share, up from $5.50 per share at the end of the first quarter. We view repurchases as one of the most attractive uses of capital available to us with our current cost of capital. Continuing with the balance sheet, this was a defining quarter for our de-leveraging efforts. The first closing of our multifamily portfolio sale generated $485 million of gross proceeds, which we used to pay down $353 million of net variable-rate debt and $456 million of net debt in total during the quarter.

As a result, total debt outstanding declined from $1.49 billion at the end of the first quarter to $1.04 billion at quarter end, and net debt to total Adjusted EBITDA improved to 7.1x, down from 8.3x last quarter. Net debt plus preferred to total Adjusted EBITDA improved similarly to 8.3x from 9.2x. We are pleased with this progress, though we recognize there is still work to do to reach our target leverage range of 5.5 to 6.5x, and we expect to make further progress as we complete the remaining multifamily and real estate financing dispositions over the balance of the year. As of quarter end, all of our debt was fixed-rates or hedged at a weighted average interest rate of 4.3%.

Our weighted average years to maturity stands at two years, which is intentionally short as we work through this final stage of the transformation, and we expect that figure to extend as we complete the refinancings I will now discuss. On loan maturity, specifically, we successfully refinanced Thames Street Wharf in Baltimore during the quarter. Effective June 2, 2026, we extended the maturity on this asset-level non-recourse loan by five years to September 30, 2031, and entered into a new interest rate swap effective September 30, 2026, fixing the all-in rate on this loan at 5.66%. This is consistent with the pricing and structure we discussed on our last call, and it reflects both the quality of this asset and the continued support we are seeing from our relationship lenders, even in a selective financing environment. We are also actively working on our remaining near-term maturities.

The Constellation Energy building loan, with $121.8 million outstanding, matures in November of this year. We continue to progress the refinancing discussions. Looking further out, we are monitoring our 2027 unsecured maturities, including the revolving credit facility and our unsecured term loans, and will keep investors updated as those discussions progress. Separately, in May, we exercised a 12-month extension on our TD unsecured term loan, pushing that maturity to May 2027 on its existing terms. Strategically, we will endeavor to consolidate all of these term loans under our primary credit facility that we will look to recast later this year.

We would like to note that we are executing this maturity schedule against the broader commercial real estate backdrop in which an estimated $875 billion of mortgage debt is scheduled to mature industry-wide in 2026, much of it originated at rates of 3%-4% and now facing refinancing markets in the 6%-7% range. Against that backdrop, we believe our fully fixed and hedged position at a 4.3% weighted average rate, together with the proactive asset-by-asset approach we have taken to our maturities, position us well relative to the sector, limiting the exposure we have relative to our peers. We ended the quarter with total liquidity of $267.1 million, including $203.7 million of availability under our credit agreements and $35.5 million of cash on hand.

84% of our properties, representing 71% of our annualized base rent, remain unencumbered, provided us with additional flexibility as we work through the remaining stages of the transformation. Turning to guidance, we are raising our full year 2026 same-store NOI cash growth ranges to 2.5%-3.5% for retail and 2.75%-3.75% for office. We now expect FFO as adjusted of $0.53-$0.57 per diluted share for the full year. This outlook assumes the dispositions of the remaining multifamily portfolio with the exception of Smith's Landing, the exit of our remaining real estate financing portfolio, approximately $57 million of additional secured debt paydowns funded by the expected dispositions of The Everly and Greenside, and approximately $100 million of further net unsecured debt paydowns, with no acquisitions currently planned for the 2026 fiscal year.

We remain confident that the actions underway simplified our operating model, exiting non-core businesses, strengthening our balance sheet, and executing share repurchases position us to drive long-term value for shareholders. We are committed to unlocking that value, and we will continue to provide the enhanced disclosures that allow investors to track our progress. With that, I will turn the call back over to Shawn.

Thank you, Matt. Before I close, I want to step back for a moment because the numbers alone don't capture everything this team accomplished this quarter. Less than six months ago, AH Realty Trust was a multi-business, multi-sector company carrying significant complexity and balance sheet leverage. Today, we are a pure play retail and mixed-use office REIT with a dramatically simplified business, a materially stronger balance sheet, and a go-forward earnings profile that is clean, predictable, and durable. To repeat the numbers, over $565 million in signed or closed asset sales, $460 million of debt paid down, 5.6 million shares repurchased, and two new independent directors added to the board, all in under two fiscal quarters. That is exceptional execution for any business, and it is a direct reflection of the AH Realty Trust team's talent, discipline, and ownership mentality. There is more work to do.

We will execute the pending multifamily sales and continue to invest in our portfolio and our people. This should grow long-term shareholder value and close the NAV gap. The foundation has been built. Now we execute. We remain deeply grateful for the continued support and confidence of our shareholders and look forward to the opportunities ahead. Operator, we are ready for questions.

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Victor Fedev with Scotiabank. Your line is open.

Good morning, everyone, and thank you for taking my question. First of all, congratulations on a solid quarter and substantial progress on your transformation. Looking at the 2027 expirations, have discussions started with any of the larger tenants, and are there any known move-out or challenging renewals to flag? What are your expectations for renewal spreads on that cohort?

Sure. Thank you, Victor, and appreciate the kind words. Obviously, we're pushing as hard as possible here with quality and with speed, appreciate you recognizing that. In terms of renewals on kind of looking forward, our team takes a strategy to mitigate those as soon as possible, right? We're out a year or two years talking about those. We've been consistent in that regard, and that's how we keep that kind of rollover list minimized because we're proactive and obviously partner with the tenants in that regard. As it relates to spreads, Craig, and kind of Victor's question there, you want to take that and give a little insight into what you're seeing?

Yeah, happy to. Shawn and Victor, thank you for your question. As we look at the portfolio, we've got retail and office expirations coming up next year. I feel really good about the retail role next year. A lot of that consists of anchor spaces that have been long tenured at our shopping centers. As Shawn mentioned, we're proactive in that regard in terms of getting in front of that. No real risk that we see in next year's role on the retail side. If anything, there's some opportunity. There are pockets of anchor spaces that are probably below market that present some recapture opportunities to push rents a little bit. I'm excited about that. On the office side, if you look at the portfolio, Town Center, we're 99% leased. Not a ton of rollover there.

We continue to push rents even though we're at the top of the market. You see it in our spreads for this quarter. Really, the one thing we have our eye on is at The Interlock. We've got a ton of growth coming from The Interlock this year. We'll see it again next year. We do have some spaces rolling next year. Given the momentum we have at that asset, we feel really good about our ability to capture market rents there. All in all, still feel really confident about next year and our ability to manage the minimal rollover that we do have.

Makes sense. Then with retail leased occupancy at 95%, office closer to 97%, does the portfolio stronger occupancy position allow you to reduce free rent and TI concessions, or should we expect leasing economics to remain kind of similar to recent quarters?

Yeah, obviously, we would prefer pushing. I think, let's take the office. Let's break this down. Let's take the office first. In the office assets that we have, we do see a supply/demand situation there that leans in our favor, right? Similar to what I mentioned in my remarks, we have a situation where we're out of space in Town Center. Therefore, we moved our headquarters out, created $1.3 million of ABR. We're in a former kind of vacant retail space as we sit here and talk to you today. I think that's a proxy for, or an example of our ability to push rents, Victor, because people want to be in these amenitized office locations, these mixed-use ecosystems.

For that reason, we're able to have some pricing power, and we expect that to continue to be the case in the short to near term, obviously. At some point, I think the market bifurcates and differentiates between suburban office and the type of office that we own that's highly amenitized sitting in these ecosystems. In terms of retail, I think it depends on the retail asset. We have a couple of different types as Craig, I'm sure, will discuss with you here in a second. Yeah, we do see in some cases mark-to-market opportunities. In other cases, we see steady as she goes growth. I think it depends on which asset we're talking about. Craig, you want to kind of split that up quickly, if you don't mind?

Yeah, happy to, Shawn. Yeah, in the open-air shopping center portfolio, which comprises roughly 75% of our retail NOI. I think we do benefit from the supply-demand dynamic that currently exists. Sean mentioned, there's a lid on new supply in terms of development. The spaces that we do have are leasing, and we're able to push rents. I gave a couple of examples in my prepared remarks, specifically at Southgate Square, where we're seeing significant double-digit spreads on both renewals and new leases. With good traffic year-over-year and kind of pre-COVID. In the mixed use space, Town Center, Interlock, those are a little bit more capital intensive. To attract the right kind of tenants to complete the merchandising mix, those generally require a little bit more investment.

As with every deal, we are thoughtful and judicious, and we screen for the right economics. If the economics don't make sense, then those are deals that we pass on. All in all, still really optimistic about our growth prospects here next year and beyond.

Good. The last quick one from me. On your future opportunities, I appreciate the lease that you have in your disclosures. Which one of these projects you are the most excited about, and why?

You're saying for our future opportunity set. I think it's probably in the outparcel section, as we said here today, right? We're looking at a couple of opportunities. I think that's probably in terms of investment, the quickest benefit to shareholder and the least kind of capital intensive as we think about things that are additive to the embedded earnings that we know about today, i.e., 2026 into 2027. We think that incremental kind of additive income is most efficiently put on the table in outparcel leases and these outparcel redevelopments. There's some potential repositioning. I know Craig and his team are looking at a couple of things there in terms of repositioning boxes, similar to what you've seen us do here in Town Center with the Trader Joe's. Do you want to add any color to that, Craig? Happy to step back for a second.

I'll expand on exactly what you said, Shawn. A good example of outparcel development creating something out of literally nothing. Southgate Square, we were able to negotiate a deal with 7 Brew Coffee on an area of the parking field that we thought was undevelopable. It's too small to accommodate a traditional drive-through user. As the markets change, concepts change, smaller format concepts, we were able to capitalize on that and create additional NOI and value literally out of nothing. We constantly look through the portfolio for opportunities just like that where we can continue to create shareholder value.

Thank you.

Before going to the next question, again, if you would like to ask a question, press star one on your telephone keypad. Your next question comes from the line of Jana Galan with Bank of America. Your line is open.

Thank you. Good morning, congrats on the quarter and the progress on the transformation. I believe you touched on a few of these in the opening remarks, Can you walk through the timing of the sign not yet occupied NOI coming online for office? I think the largest pieces are the Southern Post and the Interlock.

Happy to, Janna. Thank you for your question. Yes. In regards to the sign not occupied pipeline, the amounts we quoted earlier were specific to the stabilized portfolio, that would exclude Southern Post. The majority of that $4.6 million of sign not occupied pipeline, a majority of that we expect to come in. Some of that will trickle in towards the second half of this year, most of it in next year in 2027. Primarily at the Interlock where we have executed leases from months ago starting to come out of free rent periods as space delivers.

Thank you. Nice retail leasing this quarter. I saw a couple new tenants enter the top tenant list. I also noticed lease terms this quarter were a little shorter on both renewals and new leases. I was just curious if there's anything driving that.

No. Nothing specific in that regard. Our renewal population is generally pretty small. What you're seeing is a lot of exercise of 5-year options from existing tenants. That's kind of the phenomenon driving the weighted average renewal terms this quarter.

Great. Thank you.

I will now turn the call back over to Shawn Tibbetts for closing remarks.

Thank you very much. I want to say thank you for taking the time to be with us this morning. Most importantly, thank you for your confidence in us. We are excited about the path forward, as I hope you can tell. Obviously announced a bunch of exciting things today, and we continue to execute, and that's been our commitment to do exactly what we said we would do. When possible, faster, and when possible, with a higher degree of quality. Thank you for your time, and thank you for your commitment to this company.

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

Good morning, thank you for joining AH Realty Trust first quarter of 2026 earnings conference call and webcast. On the call this morning, in addition to myself, is Shawn Tibbetts, Chairman, President, and CEO, Matthew Barnes-Smith, CFO, and Craig Romero, EVP of Asset Management. The press release announcing our first quarter earnings, along with our supplemental package, were distributed yesterday afternoon. A replay of this call will be available shortly after the conclusion of the call through June fourth, 2026. The numbers to access the replay are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, May fifth, 2026, and will not be updated subsequent to this initial earnings call.

During this call, we may make forward-looking statements, including statements related to the future performance of our portfolio, transactions involving our multifamily portfolio, our real estate financing program, and our construction business, and the use of proceeds from such transactions, our rebranding and the effects thereof, the consequences of our strategic transformation, our liquidity position, as well as comments on our outlook. Listeners are cautioned that any forward-looking statements are based upon management's beliefs, assumptions, and expectations, taking into account information that is currently available. These beliefs, assumptions, and expectations may change as a result of possible events or factors, not all of which are known and many of which are difficult to predict and generally beyond our control.

These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the forward-looking statement disclosure in our press release that we distributed yesterday afternoon and the risk factors disclosed in documents we have filed with or furnished to the SEC. We will also discuss certain non-GAAP financial measures, including but not limited to FFO, normalized FFO, and FFO as adjusted. Definitions of these non-GAAP measures, as well as reconciliations to the most comparable GAAP measures, are included in the quarterly supplemental package, which is available on our website at ahrealtytrust.com. I will now turn the call over to Shawn.

Good morning, thank you for joining us today. Today, I will briefly reflect on the quarter results, our progress on the company's transformation to date, discuss portfolio highlights, and conclude with a review of our capital allocation activity. Since announcing our strategic restructuring on February 16th, we have executed more transformation milestones in a single quarter than in any comparable period in the company's history.

We entered into a binding agreement to sell 11 multifamily assets for $562 million, completed the sale of the construction business, advanced the wind down of our real estate financing platform through multiple dispositions, repurchased 4.3 million shares of common stock, nominated 2 highly qualified independent directors to the board, secured term sheets or reached final stages on all 3 2026 debt maturities, launched our new corporate identity as AH Realty Trust, and raised full-year FFO as adjusted guidance. The pace and magnitude of these actions reflect our unwavering commitment to unlocking shareholder value. I will walk through each of these in more detail. In the 1st quarter of 2026, we delivered solid operating results reflecting strong performance in our retail and mixed use office portfolios and the benefits of our disciplined operating approach.

AH Realty Trust is a pure play, high-quality retail and mixed use office REIT focused on identifying and realizing dominant market competitive advantages throughout the Sun Belt, Mid-Atlantic, and Southeast. Our company is primarily comprised of and focused on open air shopping centers and mixed use ecosystems within our markets. We are encouraged by a combination of the retail market strength and the leasing activity we are experiencing in both retail and office. We are also mindful of macroeconomic conditions and geopolitical uncertainty, including higher interest rates, elevated financing costs, and heightened global tensions as they continue to influence the broader real estate landscape. That said, our results exceed our internal expectations and reflect the actions we are taking to restructure AH Realty Trust into a simpler and more focused real estate platform positioned for long-term value creation.

As a result of the performance of the retail and mixed-use office portfolio, our visibility into the coming quarters and the transformational actions we've taken to date, we are raising our full year 2026 FFO as adjusted guidance range to $0.51-$0.55 per diluted share. We are here first and foremost for shareholders, and every single action we take is aimed at identifying and clearly demonstrating the underlying value in our portfolio. Another key initiative as part of this transformation is ensuring that we have the right board skills and governance profile to help guide us. I trust you saw our press release last week announcing planned changes to the board as part of our ongoing refreshment process to add directors with skills and experience that align with the company's evolved strategy.

This includes the board's nomination of Theodore Bigman and Lori Wittman to stand for election at the 2026 annual meeting of stockholders. Ted brings deep capital markets and real estate investment experience honed over decades at leading institutional platforms. Capabilities that are directly aligned with our capital allocation priorities and balance sheet optimization objectives. Lori brings extensive public REIT, operating, and financial leadership experience that will be invaluable as we execute the next phase of our strategy as a focused retail and mixed-use office REIT. Together, their skill sets are purpose-built for the company AH Realty Trust is becoming. I would also like to recognize George Allen and Dennis Gartman, who will not stand for re-election to the board at the annual meeting. We are very grateful for their years of service and significant contributions during their tenure.

The first quarter of 2026 was pivotal in AH Realty Trust's strategic transformation. We made meaningful progress implementing our new operating model and disciplined capital allocation framework. We are reshaping our business by exiting multifamily properties and focusing on high-quality retail and mixed-use office assets in markets where we have durable competitive advantages. As evidenced by our actions in the first quarter, we are taking decisive and deliberate steps to simplify the company, reduce leverage, and reallocate capital to advance a new operating strategy. During the quarter, we entered into an agreement with an affiliate of Harbor Group International to sell 11 of our 14 multifamily assets for $562 million. This transaction represents a major milestone in our strategy to exit the multifamily property sector and will meaningfully strengthen AH Realty Trust's balance sheet and materially reduce complexity across the organization.

Importantly, this sale reflects a significant premium to the value the public market was implicitly assigning to these assets within our REIT structure, which we believe further validates our thesis that substantial embedded value exists across our portfolio. We expect to close the sale in the coming weeks, subject to customary closing conditions. We are marketing the remaining two multifamily assets in Gainesville. Following these sales, we intend to retain only Smith's Landing in the residential category because its ground lease structure is unique relative to the remainder of the portfolio, and the property continues to generate stable cash flow. As a result, we concluded that given the stable cash flow generation, combined with the ownership structure, retaining Smith's Landing is appropriate at this time and remains consistent with our value preservation objectives.

Exiting the multifamily sector unlocks significant embedded value that has not been reflected in our share price, and there was a robust private market demand for our well-located and young assets. We also concluded that we prefer to compete in the commercial market, and that future growth for our company in multifamily would be difficult given the low cap rates. Given the highly volatile nature of Southeast U.S. multifamily, where supply cycles are long and absorption predictions are often inaccurate, we are far more excited to return that value to shareholders through de-leveraging our stable go-forward portfolio of well-leased, well-located retail and mixed-use office assets. Outside of multifamily, we made considerable progress exiting other non-core businesses. Last week, we completed the sale of the construction business, fully exiting. We also advanced the wind-down of our real estate financing platform.

We closed the previously announced sale of two multifamily financing investments. Additionally, I'm happy to announce that our partner closed on the sale of Allure last week. Collectively, we expect the asset sales already underway and those that have been completed will provide us with approximately $750 million in proceeds. Which we intend to use to de-lever the balance sheet and achieve our target leverage ratio of 5.5x to 6.5x net debt to total adjusted EBITDA, while also repurchasing shares in the market. We will do this while ensuring the dividend remains fully covered by core property operating cash flow. We will also have removed dependency on uneven construction fees and mezzanine investment revenue. I am proud of the significant progress we have made on our transformation in 2026.

We have already achieved a number of key milestones in our journey, and we are well-positioned to complete the transformation this year. A focused and agile AH Realty Trust will operate as a pure-play model, retail and mixed-use office real estate investment platform. Our retail portfolio consists primarily of open air shopping centers and mixed-use retail environments located in strong, fundamentally supported markets. Importantly, 95% of our office investments are concentrated in vibrant mixed-use settings rather than standalone suburban office assets. These properties benefit from integrated retail, residential, and experiential components, which continue to support consistently high demand from high credit tenants. At quarter end, our stabilized retail and mixed-use office portfolios were 94.8% and 96% leased, respectively.

In contrast, while our office product delivers superior occupancy and performance metrics that exceed those of our peers' office product nationally, we would like to see a better appreciation of its value. This disconnect reflects broader sector sentiment rather than asset-level fundamentals. 95% of our office portfolio is situated in mixed-use ecosystems, and therefore is highly differentiated and not suburban office product. As a result, our assets benefit from integrated retail, residential, and experiential components. These characteristics support durable demand, consistently strong occupancy, and a high-quality tenant base, resulting in operating performance that stands apart from prevailing conditions affecting the broader publicly traded office sector. The strength of our retail and mixed-use office portfolios was evident in their performance this quarter.

For the first quarter, FFO as adjusted was $0.15 per diluted share, exceeding our internal expectations and demonstrating the earnings power of our go-forward retail and mixed-use office platform. Craig will discuss portfolio performance in detail in his remarks. Turning to capital allocation, we remain disciplined and shareholder-focused. Since the beginning of the year, we have repurchased approximately 4.2 million shares for a total of $24.1 million at a weighted average price of approximately $5.70 per share, representing more than 4% of the common equity and reflecting our confidence in the underlying value of the business. Our commitment remains allocating available capital where we believe it is most beneficial to shareholders. Our NAV demonstrates the intrinsic value of our real estate and simultaneously informs our capital allocation decisions.

When combined with our transformation, we believe the implied yield relative to other capital allocation alternatives is compelling. To put it simply, we believe that investing in our own assets above a 9% cap rate is very attractive and creates more shareholder value than other available capital allocation options. We expect that our transformation will create additional financial flexibility to allow us to invest in future growth opportunities while building on the performance of the portfolio and the momentum of this transition. As you know, as part of the transition planning, we initially modeled up to $50 million of retail acquisitions to offset potential gains associated with the multifamily sale.

As we move closer to closing the residential transactions, we now have improved visibility into the timing and magnitude of the related tax considerations. We expect, in this case, that the transactions do not result in a material tax consequences to the REIT. With that clarity, given our current cost to capital and leverage objectives, we have reallocated approximately half of that previously modeled acquisition capital towards share repurchases to date. As stated, we believe this is the most compelling use of capital. We continue to evaluate our remaining allocation options while being mindful of leverage. Factors such as market conditions and potential dispositions will also figure prominently into our analysis. I want to acknowledge the key role our people play in our company's ongoing transformation.

Over the past several quarters, we have made meaningful changes across the organization to ensure that we have the right people, focus, and operating discipline to deliver on our full potential in this next chapter. We are investing intentionally in our people and building a culture centered on accountability, execution, and disciplined decision-making. We believe these efforts are critical to sustaining performance and successfully executing the next phase of our strategy. In closing, our transformation continues to gain momentum. The multifamily sale is a defining step forward, and we remain committed to executing our strategy with discipline, transparency, and strong governance. With a simpler platform, a strengthened balance sheet, and continued governance enhancements, we are confident that we are positioning AH Realty Trust with the resiliency and flexibility to capitalize on opportunities while generating consistent cash flows, disciplined growth, and superior risk-adjusted returns.

We appreciate the continued support of our shareholders and look forward to the opportunities ahead. With that, I'll turn it over to Craig Romero to go through our portfolio highlights.

Thank you, Shawn, and good morning, everyone. Before discussing first quarter portfolio performance, leasing activity, and expectations for the rest of this year, I'll draw your attention to additional information presented in this quarter's supplemental financial package, particularly economic occupancy. Economic occupancy, as opposed to leased occupancy, which we've historically presented, considers free rent periods, rent abatements, and periods prior to rent commencement, therefore providing stronger correlation to cash NOI. We believe reporting both economic and leased occupancy going forward will provide investors with greater clarity on both past and expected future results. Retail leased occupancy at the end of the first quarter was 94.8%, and economic occupancy was 92.5%. We expect rent commencements primarily at Columbus Village and the Interlock to drive retail economic occupancy increases during the second half of 2026.

Retail same-store NOI for the quarter was up 2.2%, driven by rent commencements on new leases across the portfolio, as well as positive cash spreads on both new leases and renewals. We anticipate growth to slow through the rest of the year because of certain vacancies and store closures, with annual same-store NOI growth ultimately settling well within our projected range of 1%-2%. Higher economic occupancy at the Interlock, Patterson Place, Overlook Village, and Columbus Village was the primary driver of first quarter growth. We expect these properties to continue to boost same-store NOI for the rest of the year, driven by rent commencements from new tenants, including Trader Joe's, Golf Galaxy, and F1 Arcade.

First quarter visits to the new Trader Joe's at Columbus Village continue to outpace the only other location in the market by nearly 2x, while the new Golf Galaxy ranks in the top 3 nationwide. During the first quarter, F1 Arcade opened at the Interlock, driving a 30% year-over-year increase in visits and a 45% increase in parking volume, solidifying the property's destination status in the market. Partially offsetting first quarter gains were vacancies at Southgate Square, Broadmoor Plaza, and Broad Creek Shopping Center, as well as store closures at Hilltop and Town Center. We expect these properties to weigh on current year same-store NOI as we work to backfill spaces previously occupied by Conn's, Party City, Jo-Ann, West Elm, and Orvis. However, we anticipated these closings and tenant demand for these spaces is strong, creating future growth opportunities.

We are already in the process of securing high quality national tenants to fill these storefronts at positive spreads and enhance the merchandising mix at these properties to create longer term durability. I look forward to providing further updates in the coming quarters. Our retail portfolio remains well positioned to capture sustained tenant demand for retail space at higher rents, as demonstrated by positive first quarter spreads of 14.4% on new leases and 4.5% on renewals. Office lease occupancy at the end of the first quarter was 96% and economic occupancy was 87.7%. We expect rent commencements at the Interlock and Town Center to drive economic occupancy gains during the rest of the year.

Office same-store NOI for the quarter was up 0.7%, driven by contractual rent increases on existing leases, new rent commencements, and 7% positive cash spreads on new leases. These economic occupancy gains were partially offset by vacancy at One City Center from space reclaimed from WeWork in the second quarter of last year. Nevertheless, we expect to end the year comfortably within our projected range of 1.4%-2.5% annual growth, supported by scheduled rent increases and anticipated rent commencements during the second half of 2026. At The Interlock, we've already begun realizing nearly $1 million of new ABR, with the majority expected to commence in the third and fourth quarters.

We anticipate that these economic occupancy gains, combined with additional increases at Thames Street Wharf, Two Columbus, and 222 Central Park, formerly Armada Hoffler Tower, will outpace temporary challenges at One City Center, 4525 Main, and Wills Wharf. While we are not forecasting any new rent commencements at either One City Center or Wills Wharf in 2026, we are seeing good activity and interest in the market and remain confident in our team's ability to re-lease the space. At 4525 Main, we remain on track to re-lease the 8,000 sq ft we recaptured last quarter, with lease execution expected by the middle of this year.

At One Columbus, while we expect lease occupancy to decline by roughly 10 basis points in the second quarter because of anticipated lease expirations, we expect economic occupancy to slightly increase, driven by rent commencements for new tenants at positive spreads. Additionally, we're already at lease on over half of the expiring space at One Columbus and are confident in our team's ability to backfill the rest, given the tremendous demand for Town Center office space. Just last week, we completed the consolidation, downsize, and relocation of AH Realty Trust's offices to accommodate this demand.

As a result of this intentional move, we unlocked and leased 38,000 square feet at 222 Central Park at top of market rents, creating $1.3 million of new ABR, which we expect to begin fully realizing in the third quarter of next year, with partial recognition weighted towards the third and fourth quarters of 2026. Town Center is a case study example of the type of asset in which we invest, high quality, differentiated, mixed use, and located in markets with high barriers to entry. Another good example is Southern Post, our newest mixed use asset delivered at the end of 2024, where this quarter we leased 22,000 square feet to Industrious. Just last week, our team executed another 9,000 square foot lease, bringing office lease occupancy at Southern Post to over 93%.

We expect economic occupancy to increase to over 60% by the end of this year and over 80% by the first quarter of 2028 as free rent periods for existing office tenants burn off. Office portfolio fundamentals remain strong with nearly eight years of WALT, high credit tenancy, and less than 2% rollover for the rest of 2026, as well as our team's demonstrated ability to lease space and grow rents. We see continued organic growth opportunity across both our retail and office portfolios through proactive leasing, mark-to-market adjustments on new leases, positive renewal spreads, disciplined expense management, and targeted redevelopment and capital investment where returns justify it. This operational focus is central to how we intend to drive consistent NOI growth and deliver long-term value going forward.

With that, I'll turn it over to Matt for more details on our first quarter financial results and an update to our fiscal year 2026 guidance.

Good morning, and thank you, Craig. AH Realty Trust delivered solid first quarter performance, laying a strong foundation for the 2026 fiscal year. The results reflect the resilience of our assets and the benefits of the actions we are taking to reshape our portfolio and implement a simpler operating approach with less debt, focused assets, and shareholder value that recognizes our asset quality. For the first quarter, FFO attributable to common shareholders was $20.6 million or $0.20 per diluted share above our expectations for the period. FFO as adjusted attributable to common shareholders was $15.1 million or $0.15 per diluted share, also above our expectations for the period. FFO as adjusted excludes the segments classified as discontinued operations, multifamily, construction, and real estate financing, therefore represents the clearest measure of the earnings of our go-forward retail and mixed use office platform.

We believe this is the metric investors should focus on as it reflects the simplified, higher quality earnings profile that will define AH Realty Trust following the completion of our transformation. Net operating income for Q1 was $34.7 million, representing a 1.8% increase year-over-year and approximately $700,000 ahead of guidance. AFFO totaled $19.9 million or $0.19 per diluted share, which exceeds our current cash dividend as outlined in the supplemental with a payout ratio of 72%. Starting with the supplemental package, this quarter reflects a comprehensive refresh aimed at enhancing transparency and aligning disclosures with how we evaluate the business internally.

We introduced several new metrics and disclosures, including economic occupancy, a refreshed NAV page, and rental revenue disaggregation, all of which are designed to provide clarity on cash flow durability, asset performance, and the embedded portfolio value. We believe these changes allow investors to more effectively track our continued progress by assessing both the quality and sustainability of our earning streams, specifically as it relates to future cash flow growth. A key highlight is the NAV section illustrated on page 30. This page is intended to provide a clear and transparent view of the underlying per share asset value, excluding the segments and assets categorized for discontinued operations. The analysis reflects the strength of our underlying real estate portfolio, including our high-quality office and mixed-use assets with the non-stabilized component currently representing Southern Post at development cost.

The NAV framework plays a central role in how we evaluate financial performance and deploy capital. As our transformation progresses, we believe the quality of our assets is increasingly positioned to translate into durable earnings and shareholder returns. Our NAV analysis points to the intrinsic value of the real estate and serves as an important reference point in our capital allocation decisions, including share repurchases. As Shawn touched on, we remain committed to executing a disciplined capital allocation approach centered on shareholder interests. To that end, we have continued to take advantage of the dislocation between our share price and underlying asset value through our share repurchase program. Year to date, we repurchased $24.1 million of common stock at a weighted average price of $5.70 per share, representing an implied yield that we view as highly attractive relative to other investment opportunities.

We see this as having a chance to invest our own assets at an effective implied cap rate for this quarter's share purchase above a 9% cap rate. Where else can we create more shareholder value than doubling down on our market-leading portfolio? As Shawn highlighted, dispositions of the multifamily portfolio, real estate financing platform, and construction entity are all either complete or well underway. Based on the headway made, we are well-positioned to continue advancing our balanced capital allocation strategy, paying down debt, making disciplined investments in select high growth markets, and continuing to execute our share repurchase program where appropriate. Turning to the balance sheet, we are proactively managing maturities and maintaining flexibility in what continues to be selective capital market environment. Looking ahead to the remainder of 2026, we have 2 office asset loans and 1 term loan scheduled for refinancing.

We are actively engaged with lenders on all notes and expect to complete these refinancings consistent with our broader balance sheet strategy. Starting with the term loan. Maturing at the end of May, we have received a term sheet from our current lenders and are working to extend this loan and maturity for 12 months under the same terms and conditions, including extending the pricing that we have today. Thames Street Wharf matures at the end of September. We are in the final stages with a relationship lender to close in the coming days on a five-year non-recourse asset-level note priced in the five and a quarter % to five and a half % range.

To round out the refinancings, we've also received a term sheet from a large institutional life insurance company for both five-year and seven-year fixed rate debt on the Constellation Building asset priced around 200 basis points plus the corresponding treasury, with the expectation to close on this refinancing in the next two months. We are pleased with the pricing and terms of each of these loans. This reflects the quality of the underlying assets and the credit strength of the tenants and reinforces our track record of prudent liability management and our ability to navigate an especially challenging office debt market. Reducing leverage to strengthen the balance sheet remains a core priority. Upon completion of the transformation, we anticipate approximately $700 million in total debt paid out, a material reduction that is expected to fundamentally reshape our capital structure.

Net debt to total adjusted EBITDA was 8.3 times at quarter end, temporarily elevated relative to the prior quarter. We intend to use proceeds from the sale of 11 of our 14 multifamily assets to meaningfully reduce leverage to our target range of 5.5 to 6.5 times net debt to total adjusted EBITDA, which we anticipate closing in the coming weeks. We ended the quarter with approximately $142 million of liquidity, providing adequate coverage of our capital needs. We are committed to maintaining a flexible balance sheet, disciplined capital allocation, and sufficient liquidity to navigate a potentially prolonged higher rate environment. Now moving to our updated guidance.

We are raising full year 2026 FFO as adjusted guidance to $0.51-$0.55 per diluted share, reflecting the continued restructuring progress, retail and mixed-use office portfolio strength, and the solid first quarter performance. We are confident that the actions underway, including simplifying our operating model, exiting non-core businesses, strengthening our balance sheet, executing opportunistic share repurchases, positions us to drive long-term value for shareholders. We are committed to unlocking that value one way or another. We have enhanced disclosures that will provide shareholders with additional transparency to continue to track our progress as we advance these initiatives. With that, I will turn the call back over to Shawn.

Over the past several quarters, we have taken many of the hard but necessary actions to reposition the company for long-term success. We have completed the majority of our strategic transformation, simplifying the business, strengthening our foundation, and sharpening our focus on a high-quality operating portfolio. Today, AH Realty Trust is a pure-play retail and mixed-use office REIT, owning and operating open-air shopping centers and thoughtfully integrated mixed-use assets in strong markets across the Sun Belt, Mid-Atlantic, and Southeast. With these actions largely behind us, we are now squarely focused on execution and on delivering sustainable performance that drives long-term shareholder value. The path forward is clear: Close the multifamily transaction, reduce leverage, continue to invest in our shares at a compelling discount to intrinsic value, and demonstrate through consistent operating results that this portfolio deserves to trade at a valuation commensurate with its quality.

We have never been more aligned with our shareholders. We remain deeply grateful for the continued support and confidence of our investors as we move into this next chapter. Operator, we are ready for the question-and-answer session.

Thank you. We are now opening the floor for question-and-answer session. If you'd like to ask a question, please press star followed by 1 on your telephone keypad. That's star followed by 1 on your telephone keypad. Your first question comes from the line of Yana Gan of Bank of America. Your line is now open.

Thank you. Good morning, and congratulations on the progress of the restructuring. The capital markets activity is especially impressive given the macro and interest rate volatility. I was hoping if you could talk to kind of the breadth and depth of buyers for multifamily and for the construction platform and maybe the decision to go with the portfolio versus single assets.

Yeah, good morning, Yana. Thank you for the question. We appreciate the congratulatory remarks. We're excited to be able to beat our forecast and raise. We're excited about the path forward. In terms of the capital markets, we've continued to see, especially in the multifamily and retail, obviously, the depth of the market. It's good to see that those markets remain strong even given the kind of macro headwinds. That being said, we had an opportunity to sell to Harbor Group here. Great deal for our shareholders, obviously, at a mid 5 cap on in place, and likely, hopefully good deal for their investors.

We saw interest, we talked to quite a few folks, we were able to make the best deal for shareholders, all things considered, with Harbor Group, we feel good about that. We're excited by the way, we're a couple of weeks out, that'll be a material move, as you're aware, for our firm at $562 million paying down debt, as you heard, buying back some of our own shares at what we believe is a nice discount. In terms of construction, that business was and has been in wind down mode. Our view was, let's sell it, the best buyer for that was actually the employees of the company.

We essentially traded that for a price that's north of what was due to the shareholders anyway in terms of gross profit. We sold that at a slight uptick from what gross profit would've otherwise been received by the shareholders. It's a tough business right now, as you could imagine, with interest rates, and we think this is the best move for the company, for the shareholders to create a more simplistic company, reduce not only confusion, but reduce risk, quite frankly, over the short, mid, and long run. We're excited about that.

Thank you. Super helpful. Appreciate the enhanced disclosure. You mentioned, you know, several lease commencements in second half 2026 for both retail and office, but also some offsets and known move-outs. Can you give any type of year-end 2026 economic occupancy projections or ranges for either portfolio?

Sure. I'll just start by saying that we are encouraged, by the tailwinds, by the strength of the market and the leasing kind of momentum and velocity activity out there broadly, especially, in terms of our retail and mixed-use office portfolio. I think, Craig, why don't you drill down a little bit, if you don't mind, just quickly, and talk a little bit about what's out on the horizon here.

Yeah, sure. Happy to, Shawn, and Yana, thank you for the question. When it comes to leased and economic occupancy, I think, you know, the widest gap is obviously today in the office portfolio, as you can see. The biggest pieces of that are the interlock, which we expect to see that gap narrow during the second half of the year as new tenants that we've secured and leased in prior quarters begin to pay rent. You know, one interesting anomaly is the Thames Street Wharf. You'll see a decent sized gap there between leased and economic occupancy. The main tenant there is Morgan Stanley. They have, you know, a month of free rent every other quarter. That happens to be this quarter.

You will see that gap narrow, actually close in the second quarter. Again, widen in the third, then close again in the fourth. A little bit of volatility there. Overall, macro speaking, you'll see the difference between leased and economic occupancy from our expectations to narrow as we progress through the second half of this year due to rent commencements.

Great. Thanks, Craig. Thanks, Shawn.

Again, if you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your next question comes from the line of Viktor Fediv of Scotiabank. Your line is now open.

Good morning, everyone, thank you for taking my question. I have a question on your decision to kind of shift from acquisitions to share buybacks. It kind of makes sense given where your stock is trading. Just trying to understand the financial implications, because if I'm not mistaken, you were planning to use some 1031 exchange, money to kind of do these acquisitions. Just trying to understand financial implications for you, connected with this decision.

Sure. Thank you, Viktor. Good morning. I think, you know, it's pretty straightforward. As we get closer to closure in a couple of weeks on the kind of biggest material part of our transaction or transformation, we have a better line of sight on the tax consequence to the REIT, and it looks like that will not be material. We chose to, given the value the stock was trading at and kind of capital allocation, opportunity cost, if you will, versus buying a retail center at a 7 cap, we said, "Look, north of a 9 cap, it's better to invest in our assets that we have perfect information on," and obviously to the benefit of the shareholder, kind of reduce that share count. We think that was the best move.

Obviously we'd like to get into a mode where we're acquiring additional properties, but not at all costs, right? It needs to be accretive to the shareholder. You know, our view was let's take the opportunity while there is a discount, and let's take also the opportunity to close that distance between current share price and what we believe NAV is. We will move through that chapter, as well as kind of look at some repositioning, kind of some redevelopment opportunities on the smaller scale within the portfolio as we close that gap. Continue to focus on our FFO growth to grow the value of the firm.

We thought it made a lot of sense, especially given that gap, to buy the shares back, kind of opportunistically, especially given that the REIT is not facing a material tax consequence as a result of the sales of the assets or otherwise the real estate positions.

Makes sense. Then on these two multifamily assets which are left in Gainesville, I see that now you're kind of expecting to close it in Q4 2026, first quarter of 2027. Just trying to understand your logic here. Are you trying to kind of reach full stabilization for those assets and then sell them at the highest price? Like, just trying to understand whether you will be willing to sell it earlier or later. How do you think about that?

The reality is they are stabilized now, and there's some market timing to this as well, in addition to the fact that the buyer was not willing to pay us what we wanted for those assets, and we believe the market will bear a better price. We're gonna take those and sell them at the market to get the best number that we can, and obviously, benefit the company, and therefore the shareholder, the best that we can in the form of paying down debt and bringing capital back on the balance sheet.

Got it. Just last for me on In terms of you mentioned kind of some opportunities to invest capital in redevelopments, or do you have, like, any out parcel, that you can invest in or, kind of upcoming redevelopment that are not on the list that you're kind of considering? Can you provide some additional details on that?

Sure. There is a page in the supplemental. Forgive the page flipping because I didn't memorize your page. Yes, page 29 of the supplemental, Viktor, includes opportunities that we see kind of on the horizon given the portfolio that we currently own. There are a number of out parcels there as well as some assets that I would characterize as maybe underutilizing the real estate. Out parcels are probably the quickest move, right, in terms of getting some accretive opportunity into the earning stream. Also there are some opportunities there with assets that may not be using the real estate in terms of the size of the plot they sit on. The box, quite frankly, may not be the best, you know, may not have the best tenant.

Kind of repositioning in terms of something like we did with the Bed Bath & Beyond to Trader Joe's out parcels. We have 2 other opportunities with assets with large parking lots and sitting on a large amount of acreage that we could think about more in the midterm. Yeah, we're thinking about that a lot. Candidly, we're doing a lot of work on that. Yeah, we'll continue to look for those opportunities and strike at the right time when it makes sense to best deploy that capital.

Got it. Thank you.

Your next question comes from the line of Jon Petersen of Jefferies. Your line is now open.

Great. Thank you. On the share buybacks, I mean, you talked about the implied cap rate of your company being well north of 9%. I mean, how do we think about, you know, where your share price needs to go, where you hit some sort of break even, where share buybacks make less sense and maybe investing in, you know, future acquisitions or buying back more debt is, you know, it makes more sense?

I think, Jon, you know Thank you for the question, first of all. Second of all, I think, when we get within a line of sight of NAV, I think would be the way to think about that for us, right? Theoretically, if we're at NAV, we can begin to think about deploying capital. I think that implies that our, you know, we're trading at a cap rate that's compressed relative to where we are today. We don't think we're there. Candidly, we think we've got some work to do to close that gap. In the short run, as you know, we bought back these shares, and we may do some more.

Yeah, I think we've got a little ways to go before we can think about actually deploying capital into, you know, an acquisition or otherwise. Obviously yield dependent and market dependent.

Okay. If we look at your lease expiration schedule over the next two or three years, are there any material mark-to-market opportunities, maybe particularly in the retail portfolio, that we should be thinking about?

Craig, that's squarely down the middle of your plate. Why don't you take that one?

Yeah, happy to take that, Jon. Thank you for the question. As far as expirations for this year, you know, about half of those we've actually already renewed at positive spreads. Feel pretty good about near term expirations. Looking out further, a lot of this is big box anchor spaces, which, you know, we'll expect to be able to push rents, you know, nominally on those. That's, you know, that's kind of the balance of the retail side. In office, I think there's still tremendous opportunity to mark to market, particularly in Charlotte at our Providence Plaza asset, where I know we are, you know, significantly below market. That asset's a little bit older, but we have plans to reinvest in that particular location so that we can drive further rent growth.

Still, you know, lots of organic growth opportunity in both sides of the coin, retail and office, and, you know, bullish about our prospects going forward here.

Okay. If we kinda, you know, Shawn Tibbetts, just bringing together all your comments, and just all the moves that you guys have made with the board refresh and the, you know, selling multifamily, you know, what would you say is the most meaningful movement that the company has made this year?

Wow, that's a tough one. As you can tell, Jon, and I appreciate the question, we're excited about where we are and more importantly, where we're headed. It's hard to single one out, but I think from an economic standpoint, the sale and the momentum created here as of late on the sale of the multifamily and the real estate financing as well as the construction business. I mean, we came to the market 3 months ago and said, "We are going to do these things," and we have materially done those things. I think when you add to that, you know, this kind of evolution of our company, the ability to bring highly skilled directors on board is, in my mind, metaphorically accretive to the board, right?

It gives us an opportunity to have some additional guidance. We appreciate more than they know the kind of contributions from George and Dennis. As we evolve this company, we're bringing two folks with deep capital markets, REIT, public REIT experience onto this board. We think that is helpful to us to kind of challenge some assumptions, work through the challenges that face us ahead, and continue to grow this company. Grow, again, close that NAV gap and grow the FFO and in turn, grow the shareholder value over time. We're just excited about this, excited about the opportunity, thankful for the directors that were with us, and very thankful for the ones that will be joining us.

I think, look, I'd be remiss not to say I'm thankful for the team for digging in and plowing through this challenging yet rewarding kind of phase in our company here. We're fired up, we're excited, we are bullish, and we are executing and we're excited about the future.

All right. Thank you.

Yes, sir.

Thank you. This concludes our question and answer session. I would now like to turn the call back to Shawn Tibbetts for closing remarks.

Thank you very much. First and foremost, we appreciate your interest in our firm. For the shareholders, your investment in us. For the employees, your continued resolve to see our company continue to succeed. I just wanna thank you for joining us today. We look forward to more exciting quarters in the future, look forward to some press releases from us. We're excited about where we're headed, couldn't be more excited for the support that we're receiving along the way. Thank you for joining this morning, have a nice day.

Thank you for attending today's call. You may now disconnect. Goodbye.