Q2 2024 Kimco Realty Corp Earnings Call

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two.

Ross Cooper: As I mentioned, it's still a little bit unclear as to ultimately where that shakes out, but whether we get repaid and keep a position in the deal, or ultimately own it, I think that either outcome would be a fantastic one for Kimco. So you are correct that the coupon is clearly high. It is intended to be relatively short term while the borrower is considered what the next step is there, whether it be a refinance or sale or otherwise. So there are some moving pieces there, but we're in a really strong.

Note. This event is being recorded I would now like to turn the conference over to David Bouchey Nicky.

Good day and welcome to the Kimco Realty second quarter 2024 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation.

Speaker Change: Senior Vice President and Investor Relations strategy. Please go ahead.

David Bouchey: Good morning, and thank you for joining kinko's quarterly earnings call.

Speaker Change: <unk> management team participating on the call today include Conor Flynn Kimco CEO.

There will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.

Speaker Change: Ross Cooper, President and Chief Investment Officer, Glenn Cohen, our CFO, Dave Jamieson Kimco, Chief operating officer as well as other members of our executive team that are also available to answer questions during the call.

To withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to David Bouchey Nikki scene.

Alexander Goldfarb: And the next question comes from Alexandra Goldfarb, with Piper Sandler. Please go ahead. Morning and I'm still Alexander Goldfarb, Alexandra. I don't know, I guess I'm a new age fluid person. So question for you. On the small shop, because that's where a lot of the juice is coming from. Not sure if you've quantified, but maybe you could, you know, the impact to FFO or NOI margin as the small shop, you know, leases up, you know, becomes occupied paying rents. You mentioned 400 basis points, you know, lower small shop occupancy in the RPT versus Kimco. And, you know, obviously in the release, you highlighted the record least rate in the kid co portfolio, you know, 91.7.

Senior Vice President and Investor Relations strategy. Please go ahead.

Speaker Change: As a reminder, statements made during the course of this call may be deemed forward looking and it is important to note that the companys actual results could differ materially from those projected in such forward looking statements due to a variety of risks uncertainties and other factors.

David Bouchey: Good morning, and thank you for joining kinko's quarterly earnings call. The Kimco management team participating on the call. Today include Conor Flynn Kimco, CEO, Ross Cooper, President and Chief Investment Officer.

Speaker Change: Please refer to the company's SEC filings that address such factors.

Speaker Change: During this presentation management may make reference to certain non-GAAP financial measures that we believe help investors better understand kimco operating results.

Speaker Change: Reconciliations of these non-GAAP financial measures can be found in our quarterly supplemental financial information on the Kimco Investor Relations website.

Speaker Change: Also in the event, our lowest incurred technical difficulties, we'll try to resolve as quickly as possible and if the need arises we will post additional information to our IR website with that I'll turn the call over to Conor.

Glenn Cohen: Can you just give some framework around what the earnings benefit as this small shop takes effect, maybe every hundred bits of small shop occupancy versus the, you know, the larger boxes, because I got to believe that the earnings impact is superior, just given the better economics. Yeah, great, great question, Alex. The, but I'll do you doing the math quickly, so you have about 25 million. We're a few to small shop space. If you take a hundred basis points to that, it's about 250,000 average rent for our small shops. Around 32 bucks a foot to multiply the two, you get around 8 million of AVR coming from that.

Conor: Thanks, Dave and good morning.

Conor Flynn: I will begin with an overview of the kimco consumer provide an update on the favorable supply demand environment for our business and then share some highlights on our strong operating results all of which will underscore the resiliency of our high quality grocery anchored and mixed use portfolio.

Conor: We're also cover the current transaction environment and Glenn will provide additional financial metrics reported on our balance sheet position and provide our updated outlook.

Speaker Change: We continue to navigate an economy that gives off mixed signals a recent Bloomberg report noted that the American consumer savings have declined with the excess savings cushions that had been built up during the pandemic and used to offset rising prices that are no longer available.

Glenn Cohen: And that excludes obviously any recovery benefit you get from that as well. So you take that quantifying that you have a full gain. There's obviously significant outside, and when you look at, you know, so how we've been trending, obviously on the small shop back activity for Kimco. And what we anticipate, you know, what we could potentially do on the RPT side, you know, we see real benefits going forward on the snow pipeline that 63 million; you know, in the non-anchor side, it represents about 47% of that total 63. So you're starting to see real, meaningful contribution from the small shop growth.

Glenn: On the other hand, the labor market remains strong, reflecting both job growth and wage growth in the areas of our portfolio is situated.

Conor: This has led the consumer to remain resilient as they've tempered spending but not retrenched.

Speaker Change: As J P. Morgan recently reported that consumers know rotating towards staples and seeking value at Walmart Costco and off price retailers, who are gaining market share.

Conor: As such we benefited from the needs oriented nature of our portfolio as over 83% of our annual base rents come from grocery anchored open air shopping centers.

Glenn Cohen: All shops also typically take less time and less capital to come online. So really it's a focus. We understand the upside, and we continue to ride the momentum.

Conor: It is also a traffic at our properties has increased both sequentially and year over year.

Conor: This is translated positively to our operating fundamentals as our leasing team is firing on all cylinders.

Floris Dijkum: And the next question comes from the floor: is the end icon with compass point. Please go ahead. Hey guys, following up on the small shop concept, obviously, it's a huge earnings driver and upside potential. I know you guys are around 49% of AVR from shop space today. Where do you think once, you know, the portfolio stabilizes that percentage of AVR from shop space goes to where can go to. It's a good question, Flores. I mean, I think we are. These are focused on driving that small shop occupancy. Obviously, we're in uncharted territories. Because if you think about the drag that the RPT portfolio had on Kimco small shop occupancy, we're setting records this quarter.

Conor: Demand for our well located product remains strong as tenants seek to retain existing space or add new locations. Our retention levels are near all time high with heavy competition for any vacancies generating increasing rents better credit and higher valuations.

Conor: Nationally store openings are outpacing closings and the lack of quality retail is having a positive impact and tenant bankruptcy auction as leases are being acquired by healthy tenants striving to meet their expansion goals.

Conor: In terms of new retail supply the outlook remains in our favor. It has been well documented that shopping center development, which currently stands at approximately 2% of existing inventory remains exceedingly low.

Conor: The shopping center sector has been sub 1% since 2010 and has provided the retail sector, a meaningful tailwind to drive record low vacancies across the country.

Conor Flynn: So we have the ability to continue to push. We don't see any hurdles in front of us. That should sort of derailed the momentum that we're seeing. And trying to generate as much growth from the small shop side is really the focus. The occupancy on the anchors is over 98%. There's still a lot of demand there, as I mentioned earlier. A lot of leases that are in bankruptcy auctions are being acquired because they can't find good quality retail space. So they're acquiring it out of the bankruptcy process. But I think when you look at the small shop occupancy side, there's really we're not sure how high we can push it, but we're going to push it as hard as we can to all time high.

Conor: More importantly, we don't see this dynamic changing anytime soon as we have previously noted rents would need to increase upwards of 35% to make new development investment worthwhile.

Speaker Change: This assertion was recently validated by a notable REIT equity research firm, which calculated that the range of rent increases required to stimulate accretive development in the top 50 markets needed to be between 35% to 55% all of this highlights the strength and unique position of our portfolio.

Speaker Change: As I noted with our focus on grocery anchored necessity based off price retail we are able to generate solid results in all kinds of economic weather.

Conor: This includes uncertainty of national elections, and potential policy shifts pre.

Jeffrey Spector: The next question comes from Jeff Spector with Think of America. Please go ahead. Great good morning.

Speaker Change: Predictions of hard or soft landings and the like.

Conor Flynn: Conor, just based on your opening remarks around the economy, makes signals, the consumer, what are the marching orders to the leasing team at this point? Are you changing your leasing strategy or staying aggressive? Thank you. Thanks, Jeff. It's pretty consistent. I think when you've got the advantage that we have in terms of advantages of scale, we try and be proactive and work with our partners, our retailers, to try and make sure that we are the first call and looking out, you know, two, three, five years even for their growth strategy. So the benefit of Kimco's portfolio is a lot of our retailers are regional.

Speaker Change: Our company, which features a resilient well located portfolio strong demographic trade areas solid balance sheet and best in class team stands out.

Speaker Change: To further illustrate this point now let me touch a few operating highlights.

Speaker Change: During the second quarter, we signed 144, new leases totaling 669000 square feet of pro rata GLA with rent spreads of 26, 3% of our 11th consecutive quarter of double digit new leasing spreads for renewals and options continue their positive trend with 338 renewals and options completed at a spread.

Speaker Change: 9%.

Speaker Change: Overall deal volume totaled two 3 million square feet with combined rent spreads at 11, 7%.

Speaker Change: Leasing velocity and retention drove Colorado occupancy higher by 20 basis points sequentially to 96, 2%.

Conor Flynn: And some of them have yet to even consider some of our target areas where we need to work together. We have a phenomenal portfolio. So when you look at some of the retailers that have done quite well recently, like Sprouts, Farmers Market, for example, they have yet to even really penetrate some of our markets, and the same goes for some other grocers. We did five grocery-anchored leases this quarter, and we feel like that demand is still accelerating. And when we look at our portfolio, a lot of our strategy is to utilize the platform and the team to go and unlock more value by adding groceries to it.

Speaker Change: Pro rata anchor occupancy increased 30 basis points from last quarter to 98, 1% and was up 40 basis points year over year.

Speaker Change: Small shop occupancy increased 20 basis points sequentially to 91, 7% matching.

Speaker Change: Matching our all time high set in Q4 of 2023, and representing an increase of 70 basis points year over year.

Speaker Change: Coffee with combined rent spreads of 11.7%.

Speaker Change: Of note, we continue to derive meaningful outperformance from the RPT portfolio, which further validates our acquisition thesis we.

Speaker Change: Leasing velocity and retention drove pro rata occupancy higher by 20 basis points sequentially to 96, 2%.

Conor Flynn: So there's a lot of momentum there. Clearly, the focus is on executing. We've got a lot of tools at our disposal. We just designed a brand new interactive site plan that we're really excited about that actually links to all of our data. So it's really sort of a unique tool that allows our field team to be able to utilize it in the field with the retailers to be able to generate more leasing opportunities. So a lot of things clicking on all cylinders right now.

Speaker Change: Pro rata anchor occupancy increased 30 basis points from last quarter to 98, 1% and was up 40 basis points year over year.

Speaker Change: We executed nine new leases in Q2 with comp rent spreads of 146%.

Speaker Change: Driven by a grocery anchor, replacing a furniture store and a strong fitness operator, replacing a weaker fitness credits.

Speaker Change: Small shop occupancy increased 20 basis points sequentially to 91.7% matching.

Speaker Change: We also executed 24 renewals and options during Q2 at a 17% average spread year to date, we have executed 19, new leases at over RPT sites with spreads with 87% and 46 renewals and options with spreads of 14%.

Speaker Change: Matching our all time high set in Q4 of 2023, and representing an increase of 70 basis points year over year.

Speaker Change: Of note, we continue to derive meaningful outperformance from the RPT portfolio, which further validates our acquisition thesis.

Speaker Change: The former RPT portfolio also produced same store NOI of four 5% for the quarter and three 7% year to date meaningfully outperforming our underwriting. We also increased our cost savings synergies to be realized this year as well as additional future revenue opportunities stemming from increasing the RPT small shop portfolio, which current.

Conor Flynn: Obviously, you can tell we're super excited to continue the momentum.

Speaker Change: We executed nine new leases in Q2 with comp rent spreads of 146%.

Ronald Kamdem: And the next question comes from Ronald Camden with Morgan Stanley. Please go ahead. Hey, just two quick ones. One on the RPP, just looking at the side of the deck, which was really helpful. I think we talked about the 420 basis points. So I'll stop occupancy.

Speaker Change: Driven by a grocery anchor, replacing a furniture store and a strong fitness operator, replacing a weaker fitness credits.

Speaker Change: He sits at over 400 basis points below kinko's.

Ronald Kamdem: But can you hit on just the Mary Brickell Village redevelopment, just the timing. I know it's farther out, but how is that sort of progressing? How are you sort of thinking about executing on that? Would be question one.

Additional growth in ancillary income will also be generated by our specialty leasing program.

Speaker Change: In closing we are enthused by the performance of our team in our portfolio, resulting in increases to our <unk> and same site NOI outlook. The growth profile of our portfolio continues to trend up and our team continues to look across the investment spectrum for new growth opportunities all while remaining vigilant on costs.

Glenn Cohen: And then, you know, the question, too, is just on the bread crumbs on same store and why it seems like you're going to continue to gain occupancy from here. The portfolio is pretty full. With sort of similar bad data assumptions. Is this here last year? Is there any reason in what you can't do another sort of 3% sort of long term going forward? Where do the puts it takes there? Thanks. Yeah, on the Mary Brickle side, you're right. I mean, there is a tremendous amount of opportunity there. Right now, near term, the, the reenvention of the merchandising plan and the releasing opportunities are significant.

Speaker Change: Ross.

Speaker Change: Thank you Conor and good morning, I hope everyone is having a wonderful summer on last quarter's call. We talked about the solid fundamentals of the open air retail format. We further discussed the volatility in the capital markets and how it has tempered the transaction environment.

Ross: Those same themes continue to persist we are positioned to take advantage of dislocations within the market to invest accretively, given our favorable access to capital and multiple investment platforms.

Conor Flynn: You're seeing friends go from the 40s up into the triple digits. And so our focus right now is near term opportunities to re merchandise reposition.

Speaker Change: We continue to see unique opportunities on both the structured investment side as well as via targeted acquisition opportunities for larger format open air centers and in the second quarter. We funded several new structured investments and all have unique attributes, but share a general theme of high quality real estate occur.

Glenn Cohen: Yeah, I have a lot of the portions of that asset, and that will be the focus in the near term as relates to your other question. Yeah, yeah, as it relates to the same site again, we are very comfortable with the guidance range that we have. So you're with record is to 3 and a quarter percent. Looking at longer range, obviously our intent is to continue to drive same site growth as much as we can. But again, it's an annual number; you know, quarter by quarter makes it. It's a little tricky quarter by quarter every 90 days, but you know, the team is incredibly focused on generating pieces quickly and getting those tenants open as fast as we can.

Speaker Change: Creative yields and a right to acquire if they are marketed for sale in the future.

Speaker Change: I'll touch on three of the more significant transactions, we provided $8 million of mezzanine financing for an infill core giant foods grocery anchored regional center in a dense market of Alexandria, Virginia.

$10 million of mezzanine financing the acquisition of a sprouts grocery anchored center in Atlanta, Georgia, and we also funded a senior loan at the rim and San Antonio for $146 million at a 9% interest rate.

Glenn Cohen: We've dedicated a lot of resources to helping our tenants get those stores open and getting the rent commencement as quick as possible. So that's the driving force today.

Speaker Change: We also converted our existing $50 million preferred equity position in the room to mezzanine financing, giving us greater control of the capital stack on a trophy asset that is one of the most visited properties not just in Texas all of the U S. On the acquisition side, we are encouraged by the deal flow and the possible.

Conor Flynn: The only other thing I would add on Mary Brickle Village is you've probably seen a lot of the news headlines of all the development going up around Mary Brickle Village, and the demand there from the retailers continues to accelerate; market rents continue to accelerate. And Mary Brickle Village was obviously part of the RPT portfolio, and that that price for square foot for the whole portfolio was $165 a foot, which included Mary Brickle Village.

Speaker Change: <unk> as pricing is moving closer to our hurdle rates.

Speaker Change: While neighborhood grocery anchored centers in our core markets remain aggressively priced in the 5% to 6% cap rate range larger format assets in similar geographies with solid demographics and densification opportunities are trading at higher cap rates due to their operational dynamics and a larger check sizes.

Caitlin Burrows: Next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead. Hi, good morning. Maybe just a little bit more on the leasing side. It feels like the environment's been pretty good for a while. So what are some of the key stats you guys use to gauge leasing interest and activity? If you like the size of the design number of leased proposals, et cetera. And how are they trending?

Speaker Change: These unique attributes align well with the kimco platform and is a differentiator that we believe allows for a better risk adjusted return for our shareholders.

Glenn Cohen: And has there been any change to who the active tenants are? Yeah, I mean, first on the start with retention. Obviously, our retention rates right now are about 90%, which are exceeding our historic highs over the last several years. So the demand for existing tenants to remain in place and want to renew and continue to operate their business with us has been really, really encouraging. On the newly side, the acceleration of both the anchor and the small shop activity, again, as Connor mentioned several times before hitting our all-time highs, I think that's your best indicator of showing the demand side.

Speaker Change: We remain confident in achieving our 'twenty 'twenty four acquisitions range of 300 million to $350 million that is inclusive of structured investments.

Speaker Change: As it relates to dispositions following the completion of the $248 million of RPT asset sales in the first quarter, we have substantially completed our 2024 plan.

Speaker Change: Any dispositions in the second half of the year will be very modest and at a much lower cap rate there.

Speaker Change: Therefore, we have reduced our disposition guidance for this year to a new range of 300 million to $350 million, which is net neutral with our 2020 for acquisition target with a slightly lower blended weighted average cap rate.

Glenn Cohen: So you're retaining and then you're growing. And then in terms of how you're looking forward in terms of new retailers that are looking to expand into the portfolio, you're seeing a lot of ethnic brochures being very proactive in the sector right now, which is great. And they're looking, you know, not only one to two years, but really three plus years out now and in planning for well into the future because, as we've mentioned earlier, there is no new development supply on the horizon and any meaningful way to create new inventory. So it's all about second generation space.

Speaker Change: Now onto Glenn for an update on the financial aspects of the quarter. Thanks.

Glenn: Thanks, Ross and good morning, our high quality operating portfolio generated strong second quarter results as we maintained a strong balance sheet and enhance our liquidity position highlights.

Glenn: Highlights for the second quarter include continued positive leasing activity producing increased occupancy another quarter of double digit leasing spreads and solid same site NOI growth now for some details on our second quarter results.

Glenn Cohen: All of these retailers need to hit their mark and hit their own growth strategies. So they want to be asked proactive with us as we are with them. And you're seeing that too in terms of obviously deal terms and the flexibility of the space in which they target prototypes for something coveted in the past. And now they've become much more flexible of how they utilize the space; can either expand or contract to fit into the opportunity that's presented in front of them. And so it's really developed really strong partnerships with all of our retailers and resulted in all of us having to get creative to help achieve both collectibles.

<unk> was $276 million or 41 cents per diluted share as compared to last year's second quarter results of $243 9 million, a 39 cents per diluted share representing per share growth of five 1%.

Glenn: We produced $387 9 million of total pro rata NOI in the second quarter, an increase of $45 8 million over the same period in the prior year.

Speaker Change: This growth was driven by $38 3 million of pro rata NOI from the RPT acquisition, $12 8 million from higher minimum rents and $1 6 million from higher net recoveries from the balance of the consolidated portfolio.

Linda Tsai: And the next question comes from Linda Sal with Jeffries. Please go ahead. Hi, two part question. You mentioned SNO getting open faster. Is there any way to quantify how much more quickly this is happening, and do you think you have the ability to move it even faster? Sure. In the first part of this year, we anticipated our snow contribution at 25 to 30 million dollars. We're now at the upper end of that range. So 30 plus million for the year with as go I mentioned in his prepared remarks about eight million coming online for the second half of this year.

Speaker Change: These consolidated NOI increases were impacted by lower percentage rent and other income of $3 5 million, which was mostly due to timing and higher credit loss of $1.4 million.

Speaker Change: Our credit loss for the first half of the year was 86 basis points, the mid point of our bad debt assumption.

Speaker Change: The net NOI increase was offset by greater pro rata interest expense of $14 million due to the higher interest rate on the $500 million bond issued in the fourth quarter last year related to the refinancing lower coupon debt.

Glenn Cohen: And then when you look ahead in terms of what's going to be contributed as relates to that 63 million. between 24 and 25. How about 30 plus million? We'll start to come online in 2024 and then another 20 plus million will come online in 2025. So that's almost 85%, 90% of that's no pipeline, starting to flow over the next 12 months.

Speaker Change: $510 million of additional debt in connection with the RPT acquisition, and lower fair market value amortization related to the payoff of a weingarten bond.

Speaker Change: The operating portfolio continues to produce strong results as kind of outlined same site NOI growth was positive 3% for the second quarter. The primary driver was higher minimum rents contributing positive three 4% driven by quicker rent commencements from the signed not open pipeline, which compressed 10 basis.

Glenn Cohen: How we're doing this is just exhaustive work. It's simply put that the tenant ordination, the construction team, we see key safety, property management are all exhausting. All of their efforts to help solve problems in the field challenge, all opportunities to open them sooner of the only way.

Speaker Change: This points from last quarter to 320 basis points.

Speaker Change: At the end of June the signed not open pipeline represents 426 leases and 63 million of ABR of which $30 million is expected to commence in the second half of the year generating $8 million for the remainder of the year.

Glenn Cohen: And then just to follow up on the transaction environment, how much have cap rates compressed since the beginning of the year, and then what's the level of compression you might expect over the next 12 months. I think in the first half of the year, it's been fairly consistent. As we talked about, transaction volumes have been lower this year compared to 2023, but the deals that are getting done continue to be at fairly aggressive rates. So we haven't seen much movement for comparable product in terms of the cap rates that they're trading at. That being said, there, as I mentioned, is a fair amount of optimism that the back half of the year and into 2025 with the amount of capital that's been on the sidelines.

Speaker Change: For the six months of 2020 for same site NOI growth was positive three 4%. These results demonstrate the continued strength of our well located portfolio turning to the balance sheet.

Speaker Change: We ended the second quarter 2024, with consolidated net debt to EBITDA of five five times on a look through basis, including pro rata JV debt and perpetual preferred stock outstanding net debt to EBITDA was five eight times. These metrics would have been one tick better. If we included the full quarter of income.

Glenn Cohen: It's ready to invest. And with the expectation that the rate environment is stable, if not moving lower, the anticipation is that there's going to be more capital, which inherently should push cap rates down, you know, gradually over time.

Speaker Change: From the $146 million structured investment in the RIN shopping center made in late June.

Speaker Change: Subsequent to quarter end, we increased the size of our $200 million term loan by an additional $300 million.

Wesley Golladay: And the next question comes from West Galaday with Baird. Please go ahead. Hey, good morning, everyone. It looks like just under 30% of the week anchor leases, expiring through 2025, have no option. It looks like they're older leases, about a 40% market market. How should we think about retention here?

Speaker Change: 5.5 times on a look through basis, including pro rata JV debt and perpetual preferred stock outstanding net debt to EBITDA was five eight times. These metrics would have been one tick better. If we included the full quarter of income from the $146 million structured investment in the rim shopping center made in late June.

The terminal has a final maturity date in 2029, and we swap the $300 million to a fixed rate of 4.78%, including our credit spread for the full term.

Speaker Change: We used the proceeds to repay $220 million outstanding on our $2 billion revolving credit facility, which had a borrowing coupon of 619%.

Glenn Cohen: Would you look to force moveouts get more relevant, Tennyson? Yeah, that's a great question. So right now, you're right; it's about 52 leases that are rolling with no options in 25. We've resolved, or in the process of resolving, that half of those already. So it's a combination of identifying new opportunities to backfill space at higher rents, retaining the existing tenants in place at a market rent. And what we do is we look at today's environment, the merchandising mix, and what is best for the asset long term to drive shareholder value and best support the needs of the shopping center itself.

Speaker Change: Subsequent to quarter end, we increased the size of our $200 million term loan by an additional $300 million.

Speaker Change: The balance of the funds was invested in an interest bearing account, earning in the mid fives pending use for investment.

Speaker Change: The term loan has a final maturity date in 2029, and we swap the 300 million to a fixed rate of 4.78%, including our credit spread for the full term.

Speaker Change: Separately, we achieved the high end of our sustainability goals by surpassing our required scope, one and scope two greenhouse gas emission reduction targets.

Speaker Change: We used the proceeds to repay $220 million outstanding on our $2 billion revolving credit facility, which had a borrowing coupon of 6.19%.

Speaker Change: As a result, the borrowing spread on our 2 billion revolving credit facility and our $310 million term loan has reduced under the green pricing feature.

Glenn Cohen: So it's a combination of all those activities. But again, we're already looking ahead into 25 and feel very good about the outlook.

Speaker Change: The reduction is four basis points from the stated credit spread for both facilities and we get a one basis point reduction in our facility fee on our revolving credit facility now for an update on our outlook based on our strong first half results and our expectations for the balance of the year. We are again, raising our <unk> per diluted share.

Paulina Rojas: And the next question comes from Paulina Rojak's with Green Street Capital. Please go ahead. Good morning. As you described, the sector's background is purely very solid.

Speaker Change: Range from $1 56 to $1 60 to a new range of $1 60 to $1 62.

Glenn Cohen: And based on your experience, what level of year-over-year rent growth should be solid from the mental strength lady if you think about the next 12 to 24 months? And also, if you could comment on how your negotiating power is evolving with anchors, it seems to be to me that most of the rent growth is coming from the shop side of the business. Thanks. Yeah, a good question, Paulina. I think what you've seen is the trajectory of the same site NOI growth continues to improve. When you look at the components of that, as you know, a lot of it has to do with retention because we're so highly occupied.

Speaker Change: Our increased <unk> per share guidance range incorporates the following updates to our full year assumptions.

Speaker Change: Same site NOI growth of two and three quarters percent to 3.25% from the previous level of two in a quarter to 3% and is inclusive of the RPT assets and a credit loss assumption of 75 basis points to 100 basis points.

Speaker Change: Full year cost savings synergies from the RPT acquisition, improving to 35 million to $36 million.

Speaker Change: Interest income expected to be between 13 million to $15 million and lower disposition guidance of $300 million to $350 million.

Glenn Cohen: So as retention rates remain high and we're getting the incremental growth from new leasing, you're seeing, you know, 3% plus over the past three quarters that we've been able to produce. So when you look out, you know, it's hard to extract exactly what the new live path looks like. You know, historically, our sector has produced around a 2% same site NOI growth profile. Obviously, we're treading towards higher than that, but we like the just executing on where we are today and continuing to look at the opportunities that go and forward. Clearly, we've talked a lot today about the small shop opportunity we have.

Speaker Change: Our other full year guidance assumptions remain intact.

Speaker Change: I want to thank all of our associates, whose efforts significantly contributed to our outstanding results, we are well positioned to deliver growth and with that we're ready to take your questions.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press star and then to.

Glenn Cohen: We think that will continue to manifest in our numbers.

Speaker Change: Also please limit yourself to one question only and rejoin the queue for follow ups.

Glenn Cohen: And then on the anchor side. Yeah, and on the anchor side, the conversation, you know, we break it into three broad categories. Obviously, on the terms you mentioned growth, we're continuing to push rent escalations both in the primary and the option period, ensuring that we retain as much control as we can into the future. When we look at the space, I mentioned this before; growth also comes from the accommodation of being more flexible with the space in which they're willing to occupy. So if you're able to show some flexibility and modify that prototype to get them in place, you then also get the halo effect benefit from the balance of the center with a tenant open and operating.

Speaker Change: Our first question comes from Michael Goldsmith with UBS. Please go ahead.

Michael Goldsmith: Good morning, Thanks, a lot for taking my question.

Michael Goldsmith: My questions on the guidance and you took the <unk> guidance higher to $1 60 to $1 62, and that was supported by both the higher same property NOI expectations as well as some other moving pieces. So can you just kind of walk through like how much of a contribution of the <unk> guidance is driven by.

Speaker Change: The same property NOI and then what are the other pieces that are driving our forecast higher thanks.

Speaker Change: So Michael the primary driver really is the operating portfolio again.

Conor Flynn: And then finally, with timing to, as I mentioned, you know, we're building a very robust pipeline into the future. And so we're working with our retail partners and our anchors to look well out in front, you know, 12, 24, 36 months and beyond to help achieve both collective goals. So we're seeing, you know, the conversation evolved pretty dramatically and several broad categories.

Speaker Change: Rent Commencements has.

Speaker Change: Quicker than what we had originally forecast and so that's a major driver and that also drives same site NOI growth because its cash base.

Speaker Change: Expense control is another piece.

Speaker Change: So we've been really very focused on expense control both at the property level and the G&A level. Those are the primary drivers, but it's really coming from the operating portfolio.

Haendel Juste: The next question comes from Handel St.

Haendel Juste: Just with Mizzouho. Please go ahead. Hey, good morning.

Speaker Change: Yes, I would also say Michael that.

Michael Goldsmith: As we talked about it's also the RPT, we've had better execution than planned so that's doing well for us as well from the guidance increase.

Ross Cooper: So I guess first question I have maybe for you, Ross, I guess I was surprised a bit in the reduction in the disposition here. No, it's not a sizable amount, but then that you're not in the position of needing to sell assets. But we've heard of scarcely premiums increased buyer interest. So I guess can you add a bit more color on why you're pulling back here, you're not getting the demand or pricing you want. Are the assets perhaps better than you appreciate it, or you're preferring to keep the cash flow. What are we not appreciating or what's changed since you first contemplated the sale of a greater portion of these former RPT assets.

Michael Goldsmith: Just as it related follow up here.

Michael Goldsmith: Not really.

Speaker Change: You've done the same property NOI of three four for the first half of the year. The guidance assumes that decelerate in the back half can you kind of walk through what are the factors that are going to drive a deceleration in the back half of the year.

Speaker Change: Yeah, I mean again, we've increased the guidance range of same site now twice during the year again the portfolio is performing very well, we do have a tougher comp in the third quarter of last year based on some one time things that were in there that has a little bit of an impact.

Ross Cooper: Thanks. Sure, it's just looking at the outlook of where we are right now, the first of August. We, as I mentioned, completed the vast majority of the decisions that we had planned. We were really excited with the execution on the RPT dispose. And when we look at the performance of the portfolio that we have right now, there really isn't a need to further dispose. We have the availability of our full credit facilities, so liquidity is in the best shape that it's been in. So it's not a capital need, per se. We do have several assets that are within our joint ventures that are currently in the market.

Speaker Change: Overall, we feel very comfortable with the revised guidance range that we put out and we also have we look at same site is an annualized number theres always as Glenn mentioned, there is noise quarter to quarter timing of expenses recoveries et cetera, really is always intended to be an annualized numbers. When you look at that the annual outlook and we've increase.

Speaker Change: That guidance is a good indication that there actually might feel regard.

Ross Cooper: We're not certain if a few of those or any of those may or may not transact, but if they do, they'll certainly be a significantly lower cap rates than where we've been, which is sort of what prompted the decision to drop the upper end of the cap rate range on the disposition. So it really is just a combination of the entirety of our capital plan and our outlook and the performance of our portfolio. And we feel really good about where we are. And we'll revisit where things shake out when we go through the budgets for 2025, but at least through the end of 24, that's where we feel most.

Speaker Change: Got it. Thank you very much good luck in the back half.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Samir Khanal with Evercore ISI. Please go ahead.

Samir Khanal: Good morning, everybody, Hey, Conor you spoke about the RPT portfolio, the 400 basis points spread in and shop occupancy.

Samir Khanal: I guess, just trying to understand kind of the ability to close this gap I mean, what's the timing on this considering that I would imagine some of that is probably harder to lease space right you need some capital spend on that for anchor repositioning. So help us walk through kind of how to think about the closure of the gap over the next several years. Thanks.

Michael Mueller: The next question comes from Mike Mueller with JP Morgan.

Samir: Yeah happy to Samir.

Speaker Change: Look when we look at that vacancy is real upside. So when you look at the <unk> pipeline of signed not open pipeline.

Glenn Cohen: Please go ahead. Yeah, hi, just a quick one on bad depth. So for the 86 basis points that you had in the first quarter or the first half of the year, you talked a little bit about the makeup of that, you know, how concentrated or diverse was it, types of tenants, anything notable there?

Speaker Change: I understand kind of the ability to close this gap I mean, what's the timing on this considering that I would imagine some of that is probably harder to lease space right you need some capital spend on that for anchor repositioning. So help us walk through kind of how to think about that closure of the gap over the next several years. Thanks.

Speaker Change: Warmer RPT portfolio, that's what's really getting compressed so we're driving that the first two quarters and that's why you saw over 4% same site NOI.

Glenn Cohen: Yeah, thanks so much for the question. So you're right.

Samir Khanal: In that portfolio for the second quarter now as those acres start to come on line, that's when you're going to start to see the pickup in the small shop leasing because typically you want to have an operating anchor that's easier to fill around where you can mark to market those rents around the former vacancy, whereas previously if you have a vacant anchor boxes, a lot harder to lease the small shops.

Glenn Cohen: The final last question. So the year to date is at 86 basis points. There's really nothing, no current tenants that are having concern inside that number that would make us go outside of our projected credit loss guidance of 75 to 100 basis points. So the quarter, there's definitely an impact of timing in there. So we bill a majority of our CAM bills as well as some real estate tax bills during the second quarter. And as such, any tenants that are cash basis. You have to put up 100% reserve right away. So it's definitely a timing impact.

Samir: Yeah happy to Samir.

Speaker Change: Look we look at that vacancy is real upside. So when you look at the the S. N O pipeline of signed not open pipeline of they are the former RPT portfolio. That's what's really getting compressed. So we're driving that the first two quarters and that's why you saw over 4% same site NOI in that portfolio.

Samir Khanal: Around that vacancy so we do anticipate because we've seen it in our own portfolio. The small shop leasing continuing to show the strength in the acceleration.

Samir Khanal: And we are very focused on driving the small shop occupancy in that portfolio, because again, that's where we see upside thats really sort of the investment thesis that we continue to focus on and execute on.

Glenn Cohen: But overall, we're not seeing anything in the AR in terms of creep or any, you know, acceleration on your level; there are pretty stable and flat. So we're very comfortable with our 75 to 100 basis points that we have in guidance.

Samir Khanal: The next question comes from Dori Kesten with Wells Fargo. Please go ahead.

Unknown Executive: Next question.

Dori Kesten: Hi, Thanks, Good morning, and that's the strip had a nice run earlier this week and based on your discussions with private equity peers. How would you describe interest in assurant today versus say six months ago, and then how are you viewing your own any pay versus where you're trading.

Michael Gorman: And the final question comes from Michael Gorman with BTIG. Please go ahead. It's ratio, and my you would cut off and just start start again. Sure.

Dory: Thanks Dory, yes.

Speaker Change: Been pretty consistent this year that capital formations continue to accelerate for open air shopping centers I think when you look at the recent <unk>.

Conor Flynn: Sorry if I missed it, but can you just talk for a minute about the occupancy cost ratio that you're seeing as you're out there doing the new leasing. And I guess specifically the reason I'm thinking about this is obviously from the traditional real estate supply-demand perspective. There's a lot of strength there. I'm just wondering how much continued strength and rank growth that tenant environment can support here and has been any shift in the tenant thought process in terms of how much of their cost structure can go towards rent and towards real estate. Yeah, occupancy cost ratio is very sector sector retail and retailer because it's a combination of really how they run their business and the margins associated with the products they sell.

Samir Khanal: Transactions that have been announced co.

Speaker Change: Cohen <unk> steers, obviously coming in in a joint venture to abide a grocery anchored shopping center. When you look at the amount of capital formations from the institutional investors private equity I mean, it's very clear the supply and demand that we've been talking about is starting to come into focus because it's showing up in the numbers and it is.

Speaker Change: It really producing significant growth and I think the other big piece of it is that the cap rates for the product are still relatively attractive when you look at other sectors and I think that is really driving a lot of interest because of the lack of new supply on the horizon I feel like that really opens people's eyes back up to the shopping center sector.

Conor Flynn: But it's always a continued dialogue between, you know, what is the the all in cost, you know, for our leases, both on the on the base rent and the and the cam associated with that rent. And it's a negotiating point, obviously, when you have multiple bidders at the table; you have that opportunity to push those rents higher. But it's something that we're mindful of; they're mindful of. But, you know, right now what we're seeing, we're still continuing to see very healthy, strong rank growth from where we work historically and are encouraged by the direction. Yeah, my don't forget that now most of brick-and-mortar retail is used as a distribution and fulfillment point.

Speaker Change: Yeah, and I would just add I mean, we have a pretty strong curb view given the joint venture partners that we have that are all pretty diverse and have different views on retail and across the board. What we're seeing is a lot of private equity and other formation that have really gone from I would say retail curious to retail active and that really is something that we think is going to push both <unk>.

Speaker Change: I think the other big piece of it is that the cap rates for the product are still relatively attractive when you look at other sectors.

Speaker Change: And I think that is really driving a lot of interest because of the lack of new supply on the horizon I feel like that really opens people's eyes back up to the shopping center sector, Yeah, and I would just add I mean, we have a pretty strong per view given the joint venture partners that we have that are all pretty diverse and have different views on retail and across the board what we're seeing.

Samir Khanal: Cap rates activity and investment in the back half of the year and forward and beyond that.

Samir Khanal: And the next question comes from Juan <unk>.

Speaker Change: Santa Maria with BMO capital markets. Please go ahead.

Conor Flynn: So the occupancy cost of the old days of just the four walls has changed dramatically. And I think we're just honestly, I think we're just scratching the surface in terms of value proposition is of the store and the true occupancy cost because the margin gets enhanced if you can run the e-commerce sale through the store. And most retailers have that as their business model, which continue to show why they're putting a lot of capital towards expansion goals today. Yeah, it's actually a great point because they're now looking at like trade area in its totality and how much market share they're grabbing out of the entire trade area.

Speaker Change: Hi, Thanks for the time I'm just curious on the structure investments. If you can comment on the types of opportunities incrementally youre seeing in the market and yield expectations.

Speaker Change: <unk> is a lot of private equity and other formation that have really gone from I would say retail curious to retail active and that really is something that we think is going to push both cap rates activity and investment in the back half of the year and forward and beyond that.

Speaker Change: And you kind of mentioned as well maybe more opportunities for some bigger centers and how we should think about incremental deal flow.

Speaker Change: And the next question comes from Juan Santa Maria with BMO Capital markets. Please go ahead.

Speaker Change: Could have and going into 2025.

Speaker Change: Absolutely, yes, the structured investments is a unique product that every deal is a little bit different I indicated at three of the transactions that we closed on in the second quarter. It was a combination of a recap of an existing owner one was acquisition financing and then of course the room was.

Conor Flynn: So the way in which they're viewing the world is very different than just a days of old where it was just for a while.

Conor Flynn: It's not even a growth, but the larger Cashman area is at this store.

Speaker Change: An exciting unique opportunity, where we have the ability to further strengthen our position in a in a dominant asset that has a tremendous amount of equity embedded in it and ultimately could become an acquisition target. So whatever the outcome of that asset and investment is going to be a positive for kimco I think that on a go forward basis as we look at.

Unknown Executive: This concludes our question and answer session.

David Bujnicki: I would like to turn the conference back over to David Bujnicki for any closing remarks. I just like to thank everybody that purchased me on our call today. We hope you enjoy the rest of your day, as well as the rest of the summer, so thanks so much.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

Speaker Change: The third and the fourth quarters, our expectation is that our investment activity will be more heavily weighted toward core acquisitions as some of the structured investments have been completed and again, there there's sort of one off and unique in nature, but there's definitely a place for our capital within the stack whether it be repositioning financing.

Unknown Executive: You may now disconnect.

Speaker Change: Our new acquisitions as we've seen volumes starting to increase in a lot more optimism as the rate environment. There is an expectation that the cuts might be coming in there just seems to be a bit more stability and optimism in the environment. So I think that in the back half of the year is going to be.

Speaker Change: They have been positive for kimco.

Speaker Change: And the next question comes from Greg Mcginniss with Scotiabank. Please go ahead.

Greg Mcginniss: Hey, good morning.

Greg Mcginniss: Uh huh.

Greg Mcginniss: That's just a better understand on the acquisition guidance, a seven 5% blended cap for the year on the midpoint $325 million of investments seems to imply a zero percent cap rate on the remaining $80 million is there.

Speaker Change: I mean, it sounds like you're talking about core assets, but we're missing something on the math there or is there a plan to buy land.

Speaker Change: It's not certainly not a land play I think when you look at the guidance. It is a blended spread between our structured investments in our core activity as you've seen clearly the the first half of the year has been heavily weighted towards structured investments. We do anticipate that in the second half of the year theres going to be more active.

Speaker Change: Uh huh.

Speaker Change: Ross just to better understand on that acquisition guidance, a seven 5% blended cap for the year on the midpoint $325 million of investments seems to imply a zero percent cap rate on the remaining $80 million.

Speaker Change: There are.

Speaker Change: On a core acquisition, so as we have a little bit more color and clarity on the specifics of the deals that we're looking at now I will certainly update that guidance in that range, but with where we sit today and what we know is in the pipeline, we're comfortable with where we sit.

Speaker Change: I mean, it sounds like you're talking about core assets, but we're missing something on the math there or is there a plan to buy land.

Ross Cooper: It's it's not certainly not a land play I think when you look at the guidance. It is a blended spread between our structured investments in our core activity as you've seen clearly the the first half of the year has been heavily weighted towards structured investments. We do anticipate that in the second half of the year theres going to be more.

Greg Mcginniss: Okay.

Speaker Change: And on the development side.

Speaker Change: Culture place seem to have pretty limited investment this quarter is there a slowdown to development happening there any color would be appreciated.

Speaker Change: Yes, right now we are the foundation for the out of the park in the subterranean parking and then.

Speaker Change: Ground floor retail constructions underway, just as a reminder for us it's a preferred equity structure. So our capital investment is limited.

Speaker Change: As a matter of fact I would just add that our capital is actually fully is correct. So you won't see any increase going forward correct.

Speaker Change: And the next question comes from Craig Mailman with Citi. Please go ahead.

Craig Mailman: Hey, guys just to go back to maybe the returns that you guys are about $200 million of the capital stack now could you give us a sense of.

Craig Mailman: Maybe what the LTV of that overall property is I mean, given the 9% rate seems like.

Craig Mailman: And versus what others are getting four for high quality kind of stripping up in the air that seems kind of a high coupon I mean is this I know you alluded to you guys I always look for loan to own but is this something in the.

Craig Mailman: Near term you guys could get an equity stake in how should we kind of think about.

Speaker Change: This particular investment.

Speaker Change: Sure happy to yes, the room is really an exceptional asset performs really well our.

Speaker Change: Partner Slash borrower has executed on the business plan exceptionally well.

Speaker Change: Seeing is strong were right around 100% occupied there.

Speaker Change: Our expectation in terms of recent valuations is that there is at least $50 million of equity in that deal. So when youre looking at it from our position being just under 200 million from an LTV standpoint, we're right at that 80%, which is really where the structure and investment program is intended to sort of cap out so we feel.

Speaker Change: Very comfortable with where we sit.

Speaker Change: As I mentioned, it's still a little bit unclear as to ultimately where that shakes out, but whether we get repaid and keep our position in the deal or ultimately own. It I think that either outcome would be a fantastic one for kimco.

Speaker Change: You are correct that the coupon is clearly high it is intended to be a relatively short term, while I think the borrowers consider what the next step is there whether it be a refinance a sale or otherwise so.

Speaker Change: We're right at that 80%, which is really where the structure and investment program is intended to sort of cap out. So we feel very comfortable with where we sit.

Speaker Change: As I mentioned, it's still a little bit unclear has too as to ultimately where that shakes out, but whether we get repaid and keep our position in the deal or ultimately own. It I think that either outcome would be a fantastic. One for kimco you are correct that the coupon is clearly high it is intended to be.

Speaker Change: There are some moving pieces there, but we're in a really strong position.

Speaker Change: And the next question comes from Alexander Goldfarb.

Alexander Goldfarb: Goldfarb with Piper Sandler. Please go ahead.

Alexander Goldfarb: Hi, Good morning, Ed.

Alexander Goldfarb: Still Alexander Goldfarb Alexandra.

Speaker Change: Relatively short term, while I think the the borrowers consider what the next step is there whether it be a refinance a sale or otherwise so.

Speaker Change: I don't know I guess on the new H fluid person.

Speaker Change: Quick question for you.

Speaker Change: <unk>.

Alexander Goldfarb: On the small shop, because that's where a lot of the juice is coming from <unk> not sure. If you quantified, but maybe you could.

Speaker Change: There are some moving pieces there, but we're in a really strong position.

Speaker Change: The impact to <unk> or NOI margin as the small shop leases up.

Speaker Change: Comes occupied paying rent you mentioned 400 basis point, lower small shop occupancy and the RPT versus kimco and obviously in the release you highlighted the record leased rate and the kimco portfolio 91, seven can you just give some framework around what the earnings benefit as the small shop takes it.

Speaker Change: Maybe every 100 bps of small shop occupancy versus the larger boxes, because I got to believe that the earnings impact is superior just given the better economics.

Speaker Change: Yeah, Great Great question Alex.

Speaker Change: Yeah.

Speaker Change: Doing the math quickly and say about 25 million square feet of small shop space. If you take 100 basis points of that it's about 250000 average rents for our small shops throughout 32 Bucks a foot to multiply that you'd get around $8 million of ABR coming from that and that excludes obviously any recovery benefit you would get.

Speaker Change: From that as well so you take that quantified that yet so again, there's obviously significant upside and when you look at yeah. So how we've been trending I would say on the small shop activity for kimco.

Speaker Change: We anticipate what we could potentially do on the RPT side, you know, we see real benefits going forward on the snow pipeline that $63 million and the non anchor side. It represents about 47% of that total 63, so youre starting to see real meaningful contribution from the small shop growth.

Speaker Change: Apart from that as well so you take back quantifying it yet so again, there's obviously significant upside and when you look at.

Speaker Change: All shops also typically take less time and less capital to come on line. So really it's a focus clearly we understand the upside.

Speaker Change: How we've been trending obviously on the small shop activity for kimco.

Speaker Change: And what we anticipate you know what we could potentially do on the RPT side, you know, we see real benefits going forward on the snow pipeline that $63 million and the non anchor side. It represents about 47% of that total 63, so you're starting to see a real meaningful contribution from the small shop growth.

Speaker Change: We continue to ride the momentum.

Speaker Change: And the next question comes from Floris Van <unk> with Compass point. Please go ahead.

Speaker Change: Hey, guys.

Speaker Change: Following up on the on the small shop concept obviously.

Speaker Change: It's a huge our earnings driver and an upside potential I know you guys are around 49.

Speaker Change: Most shops also typically would take less time and less capital to come on line. So really it's a focus clearly we understand the upside and we continue to ride the momentum.

Speaker Change: Percent of ABR from.

Speaker Change: Shop space today.

Speaker Change: Where do you think.

Speaker Change: Once the portfolio stabilizes that percentage of ABR from shop space goes to where it can go to.

Speaker Change: It's a good question Floris I mean, I think we are.

Speaker Change: Laser focused on driving that small shop occupancy obviously, we're in uncharted territories, because if you think about the drag that the RPT portfolio had on kimco small shop occupancy we're setting records. This quarter. So we have the ability to continue to push we don't see any hurdles in front of us that should sort of derail the momentum that we're seeing.

Speaker Change: And trying to generate as much growth from the small shop side is really the focus of the occupancy on the anchors is over 98% there's still a lot of demand there as I mentioned earlier a lot of.

Speaker Change: Leases that are in bankruptcy auctions are being acquired because they can't find good quality retail space. So they are acquiring it out of the bankruptcy process, but I think when you look at the small shop occupancy side, there's really we're not sure how high we can push it but we're going to push it as hard as we can to all time highs.

Speaker Change: The next question comes from Jeff Spector with Bank of America. Please go ahead.

Jeff Spector: Great. Good morning, Conor just based on your opening remarks around the economy mixed signals. The consumer what is the what are the marching orders to the leasing team at this point.

Speaker Change: If you're changing your leasing strategy or <unk>.

Speaker Change: Staying aggressive thank you.

Conor Flynn: Yeah. Thanks, Jeff it's pretty consistent I think when you when you got the advantage that we have in terms of the advantages of scale, we try and be proactive and work with our partners our retailers to try and make sure that we are the first call and looking out 235 years even for there.

Speaker Change: Growth strategy. So the benefit of Kimco portfolio is a lot of our retailers are regional and some of them have yet to even.

Speaker Change: Consider some of our target areas, where we have phenomenal portfolio. So when you look at some of the retailers that have done quite well recently like sprouts farmers market. For example, they have yet to even really penetrate some of our markets and the same goes for some other grocers, we did five grocery anchored leases this quarter five and.

Speaker Change: We feel like that demand is still accelerating and when we look at our portfolio a lot of our strategy is to utilize the platform and the team to go and unlock more value by adding groceries to it. So theres a lot of momentum there clearly the focus is on executing we've got a lot of tools that are at our disposal. We just designed a brand new.

Speaker Change: <unk> interactive site plan that we're really excited about that actually links to all of our our data. So it's really sort of a unique tool that allows our field team to be able to utilize it in the field with the retailers to be able to generate more leasing opportunities. So a lot of things clicking on all cylinders right now and obviously you can tell we're super excited.

Speaker Change: To continue the momentum.

Speaker Change: And the next question comes from Ronald Camden with Morgan Stanley. Please go ahead.

Ronald Camden: Just two quick ones one on the RPT pop just looking at the site and the DAC, which was really helpful. I think we talked about the 420 basis points small shop occupancy, but can you hit on just the mere brickell village.

Speaker Change: And then just the timing.

Speaker Change: I know, it's farther out, but how does that sort of progressing how you're sort of thinking about executing on that.

Speaker Change: Would be would be question, one and then.

Speaker Change: Question. Two is just on the bread crumbs on same store and why it seems like youre going to continue to gain occupancy from here are the portfolio is pretty full.

Speaker Change: What sort of similar.

Speaker Change: Bad debt assumptions as this year as last year is there any reason why you can't do another sort of 3% you know sort of a long term going forward what are the puts and takes there. Thanks.

Speaker Change: Yeah on the very vertical side.

Speaker Change: You're right I mean, there is a tremendous amount of opportunity there right now near term b the reinvent.

Speaker Change: Reinvention of the merchandising plan in the re leasing opportunities are significant youre seeing.

Speaker Change: Ensco from me at the forties up into the triple digits and so our focus right now it is near term opportunities to remerchandise reposition yet.

Speaker Change: One of the portions of that asset and that will be the focus in the near term.

Speaker Change: As it relates to your other question, yes, yeah as it relates to look at the same site again, we are very comfortable with the guidance range that we have so with.

Speaker Change: And three quarters to 3.25% looking out longer range. Obviously, our intent is to continue to drive same site.

Speaker Change: Growth is as much as we can.

Speaker Change: But again, it's an annual number again quarter by quarter makes it it's a little tricky quarter by quarter every 90 days, but the team is incredibly focused on generating pieces quickly and getting those tenants open as fast as we can.

Speaker Change: A lot of resource to helping our tenants get those stores open and getting the rent commencement as quick as possible. So that's the driving force today.

Speaker Change: Drive same site.

Speaker Change: Growth as much as we can.

Speaker Change: The only other thing I would add on <unk> ability as you've probably seen a lot of the news headlines of all the developments going up around them.

Speaker Change: But again, it's an annual number go quarter by quarter. It makes it it's a little tricky quarter by quarter every 90 days, but the team is incredibly focused on generating leases quickly and getting those tenants open as fast as we can we've dedicated a lot of resource to helping our tenants get those stores open and getting the <unk>.

Speaker Change: Barry Brickell village and the demand there from the retailers continues to accelerate market rents continue to accelerate.

Mary: Mary BRCA village was obviously part of the RPT portfolio and that that price per square foot for the whole portfolio was $165 a foot which included very vertical village.

Speaker Change: Rent commencement as quick as possible. So that's the driving force today.

Speaker Change: Next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Speaker Change: The only other thing I would add I'm married Brickell village as you've probably seen a lot of the news headlines of all the development going up around very brickell village and the demand there from the retailers continues to accelerate market rents continue to accelerate.

Caitlin Burrows: Hi, Good morning, maybe just a little bit more on the leasing side. It feels like the environment has been pretty good for a while so what are some of the key stats that you guys use to gauge leasing interest and activity.

Speaker Change: And married BRCA village was obviously part of the RPT portfolio and now that price per square foot for the whole portfolio was $165 a foot which included very brookwood village.

Speaker Change: It's like the size of the spine number of lease proposals et cetera, and how are they trending and has there been any change tends to be active tenant sorry.

Speaker Change: Yeah, I mean first on the Saar with retention, obviously, our retention rates right now are about 90%, which are exceeding our historic highs over the last several years. So the demand for existing tenants to remain in place and want to renew and continue to operate their business with us has been really really encouraging on the newly.

Conor Flynn: <unk> signed the acceleration of both anchor and small shop activity again as Conor mentioned several times before it hit all time highs I think that's your best indicator of showing the demand side. So you're retaining and then you are growing.

Speaker Change: And then in terms of how Youre looking forward in terms of new retailers that are looking to expand into the portfolio, you're seeing a lot of ethnic grocers being very proactive in this in this sector right now which is great.

Speaker Change: And they are looking not only one to two years, but really three plus years out now and planning for well into the future because as we mentioned earlier there is no new development supply on the horizon in any meaningful way to create new new inventories. So it's all about second generation space all of these retailers need to hit there.

Mark: Mark and hit their own growth strategy. So they want to be as proactive with us as we are with them.

Speaker Change: And youre seeing that too in terms of obviously deal terms and the flexibility of their of the space in which they target.

Speaker Change: Prototypes for something covered it in the past and now they become much more flexible with how they utilize the space can either expand or contract.

Speaker Change: Tori so it's all about second generation space all of these retailers need to hit their mark and hit their own growth strategy. So they want to be as proactive with us as we are with them.

Speaker Change: Into the opportunity that's presented in front of them.

Speaker Change: So it's really developed really strong partnerships with all of our retailers and resulted in all of us having to get creative to help achieve both collectibles.

Speaker Change: And youre seeing that too in terms of obviously deal terms and the flexibility of their of the space in which they target.

Speaker Change: And the next question comes from Linda Tsai with Jefferies. Please go ahead.

Speaker Change: Prototypes for something covered it in the past and now they've become much more flexible with how they utilize the space can either expand or contract.

Linda Tsai: Hi, two part question you mentioned SNL getting open faster is there any way to quantify how much more quickly. This is happening and do you think you have the ability to move it even faster.

Speaker Change: To fit into the opportunity that's presented in front of them and so it's really developed a really strong partnerships with all of our retailers and resulted in all of us having to get creative to help achieve both collectibles.

Speaker Change: Sure in the.

Speaker Change: The first part of this year, we anticipated our snow contribution that $25 million to $30 million. We're now at the upper end of that range, so $30 million for the year with as Glenn mentioned in his prepared remarks about $8 million coming online for the second half of this year and then when you look ahead in terms of.

Speaker Change: And the next question comes from Linda Tsai with Jefferies. Please go ahead.

Linda Tsai: Hi, two part question you mentioned SNL getting open faster is there any way to quantify how much more quickly. This is happening and do you think you have the ability to move it even faster.

Glenn: What's gonna be contributed as it relates to that $63 million between.

Glenn: Between 24, and 25, how about $30 million will start to come online in 'twenty four and then another 25 million will come online.

Speaker Change: In 2025, so that's almost 80, 590% of that is no pipeline starting to flow over the next 12 months. However.

Speaker Change: How we're doing that suggests exhaustive work.

Glenn: Simply put that tenant coordination the construction team leasing team safety.

Glenn: Our all exhausting all of their efforts to help solve problems in the field challenge.

Glenn: Opportunities to open them sooner that's the only way you can get it.

Speaker Change: And then just a follow up on the transaction environment, how much have cap rates compressed since the beginning of the year and then what's the level of compression you might expect over the next 12 months.

Speaker Change: Yeah, I think in the first half of the year, it's been fairly consistent as we talked about transaction volumes have been lower this year compared to 2023, but the deals that are getting done continue to be a fairly aggressive rates. So we haven't seen much movement or a comparable product in terms of the cap rates that theyre trading at that being.

Glenn: Said, there as I mentioned is a fair amount of optimism that the back half of the year and into 2025 with the amount of capital that's been on the sidelines, that's ready to invest and with the expectation that the rate environment is stable if not moving lower the anticipation is that theres going to be more capital, which inherently should push cap rates down.

Glenn: Gradually over time.

Glenn: And the next question comes from Wes Golladay with Baird. Please go ahead.

Wes Golladay: Hey, good morning, everyone. It looks like just under 30% of the anchor leases expiring through 2025 have no option I would think they are older leases about a 40% mark to market. How should we think about retention here would you look to force move outs get more relevant tennyson.

Speaker Change: Our.

Speaker Change: Anticipation is that theres going to be more capital, which inherently should push cap rates down gradually.

Wes Golladay: Yeah.

Speaker Change: Gradually over time.

Speaker Change: Great question, So right now Youre right. Its about 52 leases at our rollout with no options in 'twenty five we've resolved or in the process. There is only about half of those already so it was a combination of identifying new opportunities to backfill space at higher rents are retaining the existing tenants in place at a market rent.

Speaker Change: And the next question comes from Wes Golladay with Baird. Please go ahead.

Wes Golladay: Hey, good morning, everyone. It looks like just under 30% of the anchor leases expiring through 2025 have no option. It looks like they are older leases about a 40% mark to market. How should we think about retention here would you look to force move outs get more relevant tennyson.

Wes Golladay: And what we do is we look at in today's environment, the merchandising mix and what is best for the asset long term to drive shareholder value.

Speaker Change: Yeah. That's a great question, so right now youre right. Its about 52 leases at our rollout with no options in 'twenty five we've resolved or in the process. There is only about half of those already so it was a combination of identifying new opportunities to backfill space at higher rents are retaining the existing tenants in place at a at a market rent.

Speaker Change: <unk> best support the needs of.

Speaker Change: The shopping center itself. So it's a combination of all those activities.

Speaker Change: But again, we're already looking ahead into 'twenty, five and feel very good about the outlook.

Speaker Change: And the next question comes from Paulina ROE Jacks with Green Street capital. Please go ahead.

Speaker Change: And what we do is we look at you know in today's environment.

Speaker Change: Good morning.

Speaker Change: Merchandising mix and what is best for the asset long term to drive shareholder value.

Speaker Change: Can you describe the sectors background is clearly very solid and based on your experience what level year over year rent growth should be solid fundamentals translate into.

Speaker Change: And the best support the needs of yeah.

Speaker Change: You think about the next 12 to 24 months.

Speaker Change: And and also if you could comment on Halloween your negotiating power evoking with and of course, it seems to be to me that most of the rent growth is coming from the shop site.

Speaker Change: Thank you.

Paul: Yes, good question, Paul and I think what you've seen is the trajectory of the same site NOI growth continues to improve.

Speaker Change: When you look at the components of that as you know a lot of it has to do with retention because we're so highly occupied so as retention rates remain high and we are getting the incremental growth from new leasing you're seeing 3% plus over the past three quarters that we've been able to produce so when you look out it's hard to extra.

Speaker Change: <unk> exactly what the new glide path looks like historically, our sector has produced around a 2% same site NOI growth profile, obviously, we're trending towards higher than that but we like the just executing on where we are today.

Speaker Change: <unk> to look at the opportunity set going forward clearly, we we've talked a lot today about the small shop opportunity, we have and we think that will continue to manifest in our numbers and then on the anchor side on the anchor side. The conversation, we've sort of break it into three broad categories, obviously and the terms you mentioned growth.

Speaker Change: We're continuing to push rent escalations, both in the primary and the option periods period and.

Speaker Change: Ensuring that we retain as much control as we can into the future.

Speaker Change: When we look at this space I've mentioned this before.

Speaker Change: It also comes from the combination of being more flexible with the space in which they are willing to occupy so if you're able to show some flexibility and modify that prototype to get them. In place. You. Then also get the Halo effect benefit from the balance of the center with a.

Speaker Change: Tennant open and operating and then finally with timing too as I mentioned, we're building a very robust pipeline into the future and so we're working with our retail partners and our anchors to look well out in front.

Speaker Change: 12, 24, 36 months and beyond.

Speaker Change: To help achieve both collective goals. So we're seeing the conversation evolved pretty dramatically in several broad categories.

Speaker Change: The next question comes from Handel St Juste with Mizuho. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Hey, good morning.

Speaker Change: I guess first question I had maybe for you Ross I guess I'm surprised a bit in the reduction of the dispositions here no without a sizable amount but.

Speaker Change: And that you're not in a position of needing to sell assets, but we've heard of scarcity premiums increased buyer interest. So I guess can you add a bit more color on why you're pulling back here, you're not getting to the band of pricing you want or the assets, perhaps better than you appreciate it or are you preferring to keep the cash flow.

Speaker Change: What do we not appreciating or what's changed since you first contemplated the sale of a greater portion of these former RPT asset. Thanks.

Speaker Change: Sure. It's just looking at the outlook of where we are right now the first of August.

Speaker Change: We as I mentioned completed the vast majority of the dispositions that we had planned we were really excited with the execution on the RPT dispose and when we look at the performance of the portfolio that we have right now there really isn't a need to further dispose we have the availability of our full credit facility. So our liquidity is in the best shape, it's been in.

Speaker Change: So it's not a capital need per se, we do have several assets that are within our joint ventures that are currently in the market. We're not certain if if a few of those or any of those may or may not transact, but if they do they will certainly be a significantly lower cap rates and where we've been which is sort of what prompted the decision to drop.

Speaker Change: The upper end of the cap rate range on the dispositions. So it really is just a combination of the entirety of our capital plan and our outlook and the performance of our portfolio and we feel really good about where we are and we will revisit where things shake out when we when we go through the budgets for 2025, but at least through the end of 'twenty four.

Speaker Change: But if they do they will certainly be a significantly lower cap rates than where we've been which is sort of what prompted the.

Speaker Change: We feel most comfortable.

Speaker Change: The decision to drop the upper end of the cap rate range on the dispositions. So it really is just a combination of the entirety of our capital plan and our outlook and the performance of our portfolio and we feel really good about where we are and we'll revisit where things shake out when we when we go through the budgets for 2025, but at least through.

Speaker Change: The next question comes from Mike Mueller with JP Morgan. Please go ahead.

Mike Mueller: Yeah, Hi, just a quick one on bad debts. So for the 86 basis points that you had in the first quarter or the first half of the year you talked a little bit about the makeup of that you know how concentrated or purse was the types of tenants.

Speaker Change: Notable there.

Speaker Change: At the end of 'twenty, four that's where we feel most comfortable.

Speaker Change: Yeah. Thanks, so much for the question so you're right the credit loss for the year to date is at 86 basis points and there's really nothing no current tenants that are having concerned inside that number that would make us fell outside of our project and the credit loss guidance of 75 to 100.

Speaker Change: The next question comes from Mike Mueller with JP Morgan. Please go ahead.

Mike Mueller: Yeah, Hi, just a quick one on bad debts. So for the 86 basis points that you had in the first quarter or the first half of the year you talked a little bit about the makeup of that you know how concentrated or traverse once the types of tenants anything notable there.

Speaker Change: At this point for the core there is definitely an impact of timing in there. So we are on the journey of our candela that's awesome.

Speaker Change: Yeah. Thanks, so much for the question so you're right the credit loss for the year to date is at 86 basis points.

Speaker Change: During the second quarter and as such any tenants on a cash basis, you have to put up a 100% reserve right away. So it's definitely a tiny impact, but overall, we're not seeing anything in the a or in terms of creep or salary.

Speaker Change: Calibration on year over year, our levels are pretty stable and flat. So we're very comfortable with that 75 to 100 basis points. They havent guidance.

Speaker Change: Next question.

Speaker Change: And the final question comes from Michael Gorman with BTG. Please go ahead.

Michael Gorman: This ratio in Seattle.

Speaker Change: And Mike you would cut off can we just start start again chart sorry.

Michael Gorman: Sorry, if I missed it but can you just talk for a minute about the occupancy cost ratio that you're seeing as you're out there doing the new leasing and.

Michael Gorman: And I guess, specifically the reason I'm thinking about this is obviously from the traditional real estate supply demand perspective, there's a lot of strength. There I'm just wondering how much continued strength in rent growth the tenant environment can support here and has there been any shift in the tenant.

Speaker Change: Thought process in terms of how much of their cost structure can go towards rent and towards real estate.

Speaker Change: Yeah occupancy cost ratios vary sector sector retail and retailer.

Speaker Change: It's a combination of really how they run their business and the margins associated with the products. They sell but it's always a continued dialogue between you know what is the all in costs for our leases both on the on the base rent and Cam.

Speaker Change: Cam associated with that rent.

Speaker Change: And it's a negotiating point obviously when you have multiple bidders at the table you have that opportunity to push those rents.

Speaker Change: Sector retail at retailer because it's it's a combination of really how they run their business and the margins associated with the products. They sell but it's always a continued dialogue between you know what is the all in cost you know for our leases both on the on the base rent and Cam.

Speaker Change: Higher, but it's something that we're mindful of their mindful of but right now what we're seeing we're still continuing to see very healthy strong rent growth.

Speaker Change: From where we were historically and are encouraged by the direction Yeah, Mike don't forget that now most of brick and mortar retail is used as a distribution and fulfillment point. So the occupancy cost of the old days of just the four walls has changed dramatically and I think we're just honestly I think we're just scratching the surface in terms of the.

Mike Mueller: Cam associated with that rent.

Mike Mueller: And it's a negotiating point obviously when you have multiple bidders at the table you have that opportunity to push those rents.

Mike Mueller: Meyer, but it's something that we're mindful of their mindful of but you know right now what we're seeing.

Speaker Change: <unk> proposition is of the store and the true occupancy cost because of the margin gets enhanced if you can run the ecommerce sales through the store and most retailers have that as their business model, which continue to show why they are putting a lot of capital towards expansion goals today, yes, that's actually.

Speaker Change: We're still continuing to see very healthy strong rent growth.

Mike Mueller: From where we were historically and are encouraged by the direction Yeah, Mike don't forget that now most of brick and mortar retail is used as a distribution and fulfillment point. So the occupancy cost of the old days up just the four walls has changed dramatically and I think we're just honestly I think we're just scratching the surface in terms of <unk>.

Speaker Change: A great a great point, because they're not looking at it like trade area in its totality and how much market share. They are grabbing out of the entire trade areas for the way in which they are viewing the world is very different than just the days of old when it was just four wall EBITDA growth, but instead, where to set the bar larger catchment area that this store.

Speaker Change: <unk> proposition is of the store and in the true occupancy cost because of the margin gets enhanced if you can run the ecommerce sales through the store and most retailers have that as their business model, which continue to show why they're putting a lot of capital towards expansion goals today, Yeah, it's actually.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to David Bush Nikki for any closing remarks.

Speaker Change: Just like to thank everybody that participated on our call today, we hope you enjoy the rest of your day as well as the rest of the summer. So thanks so much.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.