Q1 2025 Kimco Realty Corp Earnings Call
Good day and welcome to the Kimco Realty first quarter 2025 earnings Conference call.
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I'd now like to turn the conference over to David Bush, Nikki Senior Vice President of Investor Relations and strategy. Please go ahead. Good morning, and thank you for joining kimco quarterly earnings call. The Kimco management team participating on the call today include Conor Flynn Kimco, CEO, Ross Cooper, President and Chief.
Speaker Change: I'm, an 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.
Speaker Change: As a reminder, statements made during the course of this call maybe deemed forward looking and it's important to note that the company's actual results could differ materially from those projected in such forward looking statements due to a variety of risks uncertainties and other factors.
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 is operating results right.
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 call was to encourage technical difficulties, we'll try to resolve it 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.
Conor Flynn: Good morning, and thanks for joining us today I will start out with a summary of our stellar Q1 highlights provide an update on our strategy going forward and address the macroeconomic environment Ross will follow with an update on the transaction market and as usual Glenn will provide details on our financial metrics and guidance. We started 20 twenty-five withdraw.
Conor Flynn: Bus momentum demonstrating the power of Kimco strategy focused on high quality grocery anchored shopping centers our results speak to our ability to consistently execute our operating performance for the quarter was exceptionally strong we signed 583 leases totaling 4.4 million square feet delivering blended pro rata cash rent spreads.
Conor Flynn: 13.3%, including remarkable new lease spreads of 48, 7% the highest we've achieved in over seven years occupancy remains healthy at 95, 8% pro rata with small shops climbing 20 basis points year over year to 91.7% the demand for our high quality centers is clear.
Conor Flynn: As we completed nine grocery leases this quarter, which enabled us to reach our strategic target of deriving 85% of our annual base rent from these essential necessity driven properties, notably we finalized multi pack deals with sprouts farmers market dollar tree by below Barnes <unk> noble and others year to date, including April this achieve.
Conor Flynn: But highlights the competitive advantage provided by our significant scale strategic market positioning and best in class leasing team same property NOI outperformed as it grew 3.9% driven.
Conor Flynn: Driven by healthy leasing activity rent growth and disciplined cost management tenant.
Conor Flynn: Tenant credit loss remain favorable I, just 56 basis points, reflecting our portfolio's diversity and stability, even amidst the bankruptcies of party city big lots in joints.
Conor Flynn: Demand for these spaces have been exceptionally strong for party city, we started the year with 49 leases and we have successfully resolved half of these already with 12 being assigned and another 17, either leased or at lease with a blended rent spread of approximately 35%.
Conor Flynn: We also have LOI for nearly all the remaining spaces. Similarly for big lots, we have three spaces at least with a blended average spread of approximately 45% and L. O I's for most of the 11 remaining boxes or.
Conor Flynn: Our ability to quickly backfill and upgrade these spaces underscores kimco differentiator leasing platform and the benefits of well located high quality grocery anchored shopping centers.
Conor Flynn: Despite macroeconomic fluctuations and tariff changes consumer behavior has remained resilient as foot traffic at our centers is up year to date with April continuing this positive trend.
Conor Flynn: This resilience is not surprising considering seven of our top 10 retailers by annual base rent are either grocers are off price retailers and the vast majority of our top 50 retailers include additional grocers investment grade tenants or retailers that are one of the top in their respective category.
Conor Flynn: Nevertheless, we remain vigilant closely monitoring markets employment trends inflation and interest rates to proactively address any emerging challenges and capitalize on opportunities as they arise.
Conor Flynn: Turning to transactions, we completed a strategic $108 million acquisition of the market's at town center in Jacksonville, a premier grocery anchored asset that aligns perfectly with our investment strategy. Additionally, we continue to benefit from our structured investment program, creating a pipeline of unique investment opportunities position for future external growth.
Conor Flynn: As the current macro environment continues to evolve a rock solid balance sheet with 2 billion in liquidity provides another competitive advantage. Additionally, we repaid approximately $550 million of debt during the quarter significantly reducing near term maturities and enhancing our financial flexibility Moody's affirmed our.
Conor Flynn: B double a one rating and upgraded our outlook to positive further validating our prudent balance sheet management.
Reflecting confidence in our long term prospects, we repurchased 3 million shares at an average price of $19.61 subsequent to quarter end capitalizing on significant market and valuation dislocation in April given our strong first quarter results and visibility into upcoming rent Commencements were pleased.
Conor Flynn: To raise our full year guidance for both net income and <unk> per diluted share.
Conor Flynn: Looking ahead, our priorities remains straightforward and consistent continued.
Conor Flynn: Continued driving strong leasing results at.
Conor Flynn: Activity backfill spaces and upgrade tenancy.
Conor Flynn: And maintain our prudent approach to capital allocation and leverage kimco has financial strength to capitalize on opportunities as they arise.
Ross Cooper: With that I'll turn the call over to Ross.
Ross Cooper: Thank you Conor and good morning, we had a productive first quarter and a strong start to the second quarter as Conor touched upon we have built our strategy team portfolio and balance sheet to be resilient, allowing us to adapt to changing market conditions and unforeseen events.
Ross Cooper: This flexibility often creates the best and most unique opportunities for us to pursue in the first quarter, we closed on $100 million and net acquisitions, including the previously mentioned acquisition the market to town center in Jacksonville, which originated from our structured program as the loan matured.
Ross Cooper: Additionally, we acquired the fee interest in to Las Vegas grocery anchored shopping centers.
Ross Cooper: We are currently within our net acquisition target for 2025 with planned activity net neutral we kicked off the second quarter funding of $35 million senior loan on a grocery anchored center in South, Florida, with an 8% coupon and a well protected basis of 65% loan to value <unk>.
Ross Cooper: Consistent with all of our structured investments we retained a right of first offer or ROFO on this asset in the event, our borrower looks to sell while our capital is outstanding we anticipate funding our second senior loan on a high quality asset in New York for total proceeds of approximately $24 million during the current quarter.
Ross Cooper: This investment will also have a ROFO.
Ross Cooper: With respect to structure investment repayments, given the increase in interest rates and market volatility. We believe the likelihood of repayment in 2025 is low <unk>.
Ross Cooper: Nevertheless, we have factored some potential repayments into our <unk> guidance and are confident that we can redeploy any proceeds to maintain a net neutral position on the disposition side. We have identified a number of potential long term ground leases multifamily entitlements and non income producing assets in our portfolio that are <unk>.
Ross Cooper: Lower growth and ripe for sale, we expect to sell in the range of 100 million to $150 million of these assets in 2025 and have identified a future pipeline, which we intend to continue to monetize in later years as another accretive funding source as well as a strategy to remove lower growth properties from our portfolio.
Ross Cooper: We plan to reinvest into higher yielding higher growth opportunities with that capital looking at the broader market given the ongoing uncertainty of the tariffs trade dynamics and consumer and retailer appetite the outlook for transaction volumes and cap rates remained cautious with buyers and sellers in a bit of a wait and see mode.
Ross Cooper: Up through the end of the first quarter, we had seen pricing for high quality centers consistently in the sub 6% cap range with a very deep pool of bidders. This made competition fierce and accretive acquisitions challenging.
Ross Cooper: However, with our strong balance sheet and financial flexibility. We believe the current environment has the potential to create unique opportunities for us in both acquisitions and structured investments and we are well positioned to capitalize on them.
Glenn Cohen: I will now pass it to Glenn for the detailed quarterly results and updated 2025 outlook.
Glenn Cohen: Thanks, Ross and good morning, 2025 is off to a solid inactive start evidenced by double digit leasing spreads solid same site NOI growth and strong demand for vacant party city and big lots boxes.
Glenn Cohen: In addition, our superior liquidity position and modest upcoming debt maturities position us well to be opportunistic now.
Glenn Cohen: Now for some details on our strong first quarter results followed by our increased full year 2025 outlook F. F. O was 301.9 million or <unk> 44 cents per diluted share for the first quarter 2025.
Glenn Cohen: This compares favorably to last year's first quarter <unk> of 261.8 million with 39 cents per diluted share a per share increase of 12, 8%.
Glenn Cohen: The key drivers of the SFO increase were higher pro rata NOI of $23 1 million attributable to strong same site NOI growth contributing 15 million and an increase in lease termination income of $5 3 million.
Glenn Cohen: Also we had improved credit loss of 56 basis points as compared to 62 basis points last year.
Glenn Cohen: Other S. F. O drivers include a $6.8 million benefit from growing financing income attributable to our structured investment program offset by lower interest income of $5 2 million and higher interest expense of $5 2 million, we had a very productive quarter within the operating portfolio are.
Glenn Cohen: Our leased versus economic occupancy spread increased by 20 basis points to 290 basis points. The spread is comprised of 385 leases with total annual base rents of $60 million of this amount we expect about 60% of these leases to commence with $16 million anticipated to be received within this year.
Glenn Cohen: Combined with the $14 million from rents that began in the first quarter, a total of $30 million in rent is projected to commence and be collected in 2025, reflecting a $5 million increase from previous quarter's estimate.
Glenn Cohen: Turning to the balance sheet. We ended the first quarter with consolidated net debt to EBITDA of 5.3 times and on a look through basis, including pro rata joint venture debt and preferred stock outstanding at five six times matching our best levels for these metrics our debt maturities for 2025 are modest with Jud.
Conor Flynn: One bond totaling $240 5 million maturing in June and no. Other maturities until July 2026, as Conor mentioned, we took advantage of our strong balance sheet and liquidity position by utilizing our common stock buyback program in early April in response to the market sell off and on.
Conor Flynn: Dark trading at a significant discount we opportunistically repurchased 3 million common shares at an average price of $19 61 per share representing an <unk> yield of approximately 9% and a 24% discount to consensus NAV.
Conor Flynn: Now for an update on our 2025 full year outlook.
Conor Flynn: Based on our strong first quarter results the security of our long term leases with strong credit tenants and visibility into future cash flow growth coming from near term rent commencement.
Conor Flynn: We are confident in raising our F O from the previous range of $1 70 to $1 72 per diluted share to a new range of $1 71 to $1 74.
Conor Flynn: Our updated range reflects per share growth between 3.6% to five 5% over 2024.
Conor Flynn: Our updated F F O per share outlook range incorporates same site NOI growth of positive two 5% or better an increase of 50 basis points from our initial assumption.
Conor Flynn: Factoring in the vacating of all leases with party city and big lots that were not assigned to other tenants as well as those with Joe ends at the end of May as a result, we expect our occupancy to temporarily dip in the second quarter, followed by an increase thereafter.
Conor Flynn: Further the spread between our leased versus economic occupancy should expand providing additional cash flow growth for the remainder of 2025 and into 2026.
Conor Flynn: We are maintaining our credit loss assumption of 75 to 100 basis points as a precautionary measure our other outlook assumptions remain unchanged from our initial 2025 outlook I want to thank all of our associates, whose unwavering efforts contributed to our solid results.
Conor Flynn: While we cannot control the abrupt swings in the capital markets. We remain confident that we can deliver growth for our shareholders and.
Conor Flynn: And we are now ready to take your questions.
Conor Flynn: We will now begin the question and answer session.
Conor Flynn: Can I ask a question you May press Star then one on your Touchtone phone.
Conor Flynn: Using a speakerphone please pick up your handset before pressing the keys.
Conor Flynn: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Conor Flynn: Please limit yourself to one question and rejoin for a follow up question.
Conor Flynn: At this time, we will pause momentarily to assemble our roster.
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.
Speaker Change: Credit loss in the first quarter was 56 basis points.
Speaker Change: Which compares to your full year reserve of 75 to 100 basis points. So I just want to understand the dynamics of what happened in the quarter and how the rest of the year can play out relative to your expectations. So.
Speaker Change: Hum.
Speaker Change: Can you can you put the 56 basis points. So far this year into context of where that has landed compared to prior years and then.
Speaker Change: Do you have any other visibility to tenants.
Speaker Change: On your watch list or other areas of concern.
Speaker Change: And just like how does that how does that setup and reconcile with that 75 to 100 basis points that you put out at the start of the year.
Speaker Change: It's not a fair question and so I think it's important to lay it out starting off with a bankruptcy is and how we treat the so when you look at party city Big lots and Joanne.
Speaker Change: Guidance perspective, those assumptions are all bank and minimum rent line for our guidance. So is that our plan and they got to Anthony entire year Party City, we had it on March 1st and then J O N E.
Speaker Change: I mean, London mall, so for reference party city.
Speaker Change: On past that at March <unk>.
Speaker Change: That benefit is really the minimum rent line.
Speaker Change: Syed S. Joanne Smith to go out earlier, you would see that and cover it and let me say our credit loss assumption is within our guidance. So credit loss is really made up of two items in our assumptions one side of it is the potential for uncollectible receivables. So our cash basis that we talk about and historically that's been around the 75 basis.
Speaker Change: Point range I would say for Q1, you heard that we were at Lalor at 66 basis points, which is a positive metric. The second part of our credit loss assumption in our guidance is really related to any budgeted tenants that either vacate or filed for bankruptcy and weren't in our original plan and then brands so for reference.
Speaker Change: You look at two of our watch list tenants at home in writing if they were to vacate the second half of the year that would be about 15 basis points. So in our credit loss assumption for that unexpected maintenance, we have about 20 to 25 basis points in there so that 15 basis points from Rite aid.
Speaker Change: Would be covered in our credit loss assumption for that so and as where the market is and the uncertainties out there you'll get a feel very confident with that 75 to 100 basis points that we have in our assumption.
Dori Kesten: Our next question comes from Dori Kesten with Wells Fargo. Please go ahead.
Dori Kesten: Hi, Thanks, good morning.
Speaker Change: Believe it's been quite some time since you last repurchase shares I think with that 2018 or so can you just walk through the internal discussion.
Speaker Change: Had versus other potential capital uses.
Speaker Change: Okay.
Speaker Change: I think it's a good question I think when you look at the situation that we were in obviously there was only a few days we had posted liberation day before we went into a blackout when we saw our shares trade off dramatically.
Speaker Change: And I applaud our team to really circle up quickly and identify that we had a tremendous amount of free cash flow for this year. We had some disposition proceeds that we have not only executed in the quarter, but also add identified for the remainder of the year.
Speaker Change: And we felt like when you look at the <unk> yield the discount to NAV.
Speaker Change: And really sort of the opportunities that are buying kimco at those levels.
Speaker Change: It was hard to say that there was another use of proceeds that was better suited. So we really only had about three trading days to really execute.
Speaker Change: But we felt good about the opportunity we felt like it was the time to pounce and again, we also point to the fact that we issued equity.
Speaker Change: At over $25 really not only just a few months ago. So it is sort of a unique to be in a position where the volatility in the market creates these types of opportunities and we feel like we need to have every tool in the toolbox to be able to take advantage of these dislocations.
Speaker Change: And really sort of showcase that when the opportunity presents itself and it goes ready to pounce.
Samir Khanal: Our next question comes from Samir Khanal with Bank of America. Please go ahead.
Samir Khanal: Good morning, everybody Hey.
Samir Khanal: Hey, Glenn just looking at the supplement what what's driving the higher reimbursements in the quarter and maybe help us understand.
Samir Khanal: Sort of the trajectory for that for expense recovery for the for the rest of the year. Thanks.
Samir Khanal: Okay.
Samir Khanal: Yes, I mean, recut recoveries are pretty strong.
Samir Khanal: Have a good collections I think the other thing that is we have a lot of tenants that are on fixed cam. So the recoveries. There those are pretty well set relative to the expenses that are going out the door. So some of it's a little bit of timing. We also did a little bit better on our insurance costs.
Samir Khanal: We anticipated so that also helped.
Samir Khanal: It's one of the benefits that again, we try and identify benefits of scale and advantages of scale and I think our insurance.
Samir Khanal: <unk> cost came in below what we anticipated from a budget standpoint, so that is one that again because of the diversity of the portfolio. The great results. We've had in terms of.
Samir Khanal: Loss prevention, so that really is a testament I think to the team and the property management team and our insurance team.
Speaker Change: Our next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Samir Khanal: Okay.
Samir Khanal: Hey.
Samir Khanal: Good morning, good morning out there.
Samir Khanal: So just a question, yes, clearly it's.
Samir Khanal: The uncertain macro backdrop.
Samir Khanal: Right your strong first quarter most companies out there have even if they had a good first quarter. They maintained guidance unless there was something truly like one time ish outsized.
Samir Khanal: No.
Samir Khanal: Either you guys or packing a lot more punch in there that gave you the confidence to raise or what else is giving you that comfort just yet.
Samir Khanal: There's a whole host of risks out there, whether it's unforeseen tenant bankruptcies job loss or whatever but clearly you guys are setting yourself up.
Samir Khanal: For a better outlook. So just want to really understand what key drivers gave you that confidence.
Samir Khanal: Yeah. It's a good question Alex I think when you look at the setup. We have you know clearly first quarter was it was a quarter that we thought.
Samir Khanal: With the bankruptcy noise in the market with the with the uncertainty of the consumer there's a lot of soft data out there that we identify that is really obviously gone pretty negative post Q1, the hard data, though continues to be in our favor. If you look at our traffic, which is really a leading indicator the consumer continues to shop with their feet and and and.
Samir Khanal: Really it shows up in not only Q1, but also in April that were posting very strong positive numbers in terms of traffic. The leasing demand continues to be rock solid I think that's another piece of it that gives us a lot of confidence you look at the signed but not opened pipeline and the forecasting we can do on that cash flow coming in it really.
Samir Khanal: It gives us a lot of confidence to say that even if theres a significant pullback that wide moat of that future cash flow coming online will still drive significant earnings growth going through this year and into next year. So you put that in.
Samir Khanal: Combine that with the strength of our balance sheet the strength of our team we really feel good about sort of the setup. We have because we've done a lot of work to position ourselves for these types of environments, where we've done a lot of work over the last decade to be really sort of kept goes in a great spot to take advantage of these dislocations and to prove out that like our thesis.
Samir Khanal: Reinventing the portfolio improving the balance sheet investing in our people will really pay off in these types of environments.
Samir Khanal: I'd just add the first quarter, we are a penny ahead of what we thought our budget was going to be so couple of things Our party city stayed in a little bit longer than what we had originally budgeted. So that was that was definitely a healthy operating metrics were better as I just mentioned our insurance costs are a little bit lower and we've been very very conscious.
Samir Khanal: It's about where the spending is going so those will those all help. In addition, we have good visibility into the snow pipeline and as I mentioned in my prepared remarks, we feel really good about where those are coming on and those are ahead of schedule as well. So between those two things and then buying back the stock which was.
Samir Khanal: Not part of the plan when we started the year combine all that together it gives us a lot of confidence about where we've raised guidance.
Craig Mailman: Our next question comes from Craig Mailman with Citi. Please go ahead.
Craig Mailman: Thanks, It's Nick Joseph here with Craig recognize it's only been a month, but just would like your.
Craig Mailman: Kind of color on how tenant conversations and how the leasing pace of spend.
Craig Mailman: In April post post the tariffs.
Speaker Change: Yeah sure I appreciate the question.
Speaker Change: So obviously, we came off a really strong Q1 and the expectation for everybody is what's to come and so when you look at April already we're about 46% of our total deal to execute relative to last year. So we're maintaining that pace and a very healthy way and actually on the non anchor side are about 65% ahead of plan.
Speaker Change: Plan as it relates to last year, so when you're doing a comparable year over year.
Speaker Change: We are maintaining this page and having good visibility into what we've already done in April and when we look at our pipeline relative to last year and I'm using that as a comparison.
Speaker Change: Stable.
Speaker Change: You are continuing to see the look through it has been very robust and so year to date and what we expect.
Speaker Change: And moving into Q2 is a path and attract that still remains healthy as it relates to the conversations.
Speaker Change: The conversation continue to look at look through the short term volatility retailers are really about long term strategic planning.
Speaker Change: There is a.
Speaker Change: History of disruption and a lot of retailers have learned from the past that it's very difficult to stop a retail growth program and then would you accelerate or reinstated.
Speaker Change: In time, and so I think what Youre seeing is just understanding that yes in the short term volatility in the market doesn't want to disrupt what their long term growth plans are so we're continuing to see these opportunities to do package deals as Conor mentioned in his.
Speaker Change: Paired remarks with sprouts, we did five deals with sprouts in Q1, we did those.
Speaker Change: Not only as a package, but we did those in under 21 days, which is truly exceptional.
Speaker Change: It's a demonstration of not only our commitment to working closely with the retailer, but the retailers' desire to also get these deals done as quickly as possible because they want to continue to hit their growth profile get these stores open get them cash flowing.
Speaker Change: So there is a mutual benefit there and our whole team is structured around how do we get this done quicker remove friction from the process to execute these deals sooner. So we can get.
Glenn Cohen: Just on the core of their business, which is really opening and operating the stores and then when you look through as Glenn mentioned like the snow pipeline.
Glenn Cohen: In terms of the Activations in the openings.
Glenn Cohen: Have $16 billion remaining in the pipeline.
Glenn Cohen: Part of that is expected to flow through 'twenty five nine of which is supposed to expected to flow in Q2 alone.
Glenn Cohen: We already have half of that committed and open in the month of April So we're continuing to see the.
Glenn Cohen: The momentum as as planned for our guidance and in the luxury through the balance of the year has been a.
Glenn Cohen: Fairly strong and on the retention side always the opportunity for retailers to reconsider or rethink where they want to position their store location.
Glenn Cohen: We're right now trending year to date over 90% on our retention levels were just slightly at a plan, where we were last year by about 5%. When you look at the naked leases of anchors that have no options remaining we had 25 remaining and we're at 99% resolved at this point so again it just further evidenced.
Glenn Cohen: Demonstrating from the retailer side that they're committed to this space to committed in physical brick and mortar and the quality of our products such that there is a greater value than staying in leaving and and for US. It's really covenant that we stay very close to the retailers as they do navigate this volatility but create opportunities as well for both sides.
Speaker Change: Our next question comes from Handel St. Juste of Mizuho. Please go ahead.
Speaker Change: Hey, guys good morning.
Speaker Change: I appreciate the color on the Big lots Party city and Joanne outcomes expectations I was hoping you could add some color on the expected capital required to backfill.
Speaker Change: Some of these boxes, the timeline to cash flow from.
Speaker Change: Two cash flow from new tenant and will there be any subdividing of the boxes.
Conor Flynn: Yes, no great question. So on the party city spaces as Conor mentioned, we added 12, aside and we had over 13 executed in the quarter. So we actually had over half of those executed or assigned which is pretty remarkable considering it all happened in under 90 days and then the balance of those we almost have the remainder with LOI is or at least it's over.
Conor Flynn: That 90% basically in some form of resolution with the Jo Ann's Euro upwards of two thirds to 70% in some form of resolution as well and on the capital side, we're seeing similar to what you saw in on the bed Bath way back when the other party stage, it's like $40 50 Bucks a flight for those that have new deals executed on.
Conor Flynn: Joe adds around 50 as well.
Conor Flynn: We're targeting obviously single tenant users that's that is.
Conor Flynn: That is the priority one two and three initially and that ultimately it becomes just slipped box opportunities. It does require a little more capital, but youll see that reflected in the rents juice of net debt.
Conor Flynn: It's a really good outcome for both sides. We've also converted a handful to grocery so back to the nine deals that we signed on grocery a handful of those came from these opportunities that helped us exceed that 85% are in terms of the expectation of cash flow because we were able to execute so many so early this year there should be a.
Conor Flynn: Handful that start to cash flow it really at the tail end of 'twenty five it will have a de minimis impact in terms of cash flow for this current year, but wont see the full benefit of that in 'twenty six and then the remainder will start to cash flow in the Q1 Q2 of 26 as well so very encouraged by the momentum and the velocity that we're seeing today it really.
Conor Flynn: It all ties back to the lack of new supply I mean, if you think about our sector relative to other commercial real estate sectors with virtually no new supply coming out of the ground. This is really the opportunity set for the best quality highest credit tenants to capture market share, especially in areas, where they don't currently have presence.
Conor Flynn: So that's why you're seeing so much demand for these basis, because there's not many big.
Conor Flynn: Can seize available, especially in a quality shopping centers and then when you layer on the fact that it's super important to pick your landlord today with a thoughtful approach that who's going to be there through different tumultuous times retailers have proactively seen what we've been doing with our portfolio reviews with our package deals and had been more.
Conor Flynn: <unk> live on wanting to do deals with kimco.
Speaker Change: Our next question comes from one Santa Maria with BMO capital markets. Please go ahead.
Santa Maria: Hi, good morning.
Conor Flynn: Notice that the.
Conor Flynn: Same store pool, count changed a bit quarter over quarter. It seems like some of that was moved into the Redevelopments just curious.
Conor Flynn: I guess, what the same store occupancy change was with them without that pool changed because I didn't see that in the ER.
Conor Flynn: And it's up this quarter.
Conor Flynn: Thanks for the question. So yeah, you know we're filing our definition on the same happening anyway, and I call is really to provide a consistent performance measure so that when you're looking at the population year over year. What's in there is it providing some consistency and so what we're doing is we're providing there with or without which as you saw.
Conor Flynn: Basis points, which is a really small amount at work.
Conor Flynn: We're showing as a differential.
Conor Flynn: One it's day bridge Nikki also in terms of our same site. Those properties that are excluded that are under redevelopment are flagged on our redevelopment page. We have footnotes. So you can quickly see which ones are excluded from that calculation and again, we still disclose same site NOI, both with and without the reader.
Conor Flynn: And so you could still see what the impact is.
Michael Griffin: Our next question comes from Michael Griffin with Evercore ISI. Please go ahead.
Michael Griffin: Great. Thanks, maybe going back to the backfill strategy and clearly you guys have done a good job of finding signers for these leases as well as getting a lot of pre leasing done you know can you give us a sense of how you would justify maybe signing a lease versus saying Hey, we're going.
Michael Griffin: Take it back and try to lease it out I mean, I imagine it's a property by property basis, but you know are some just not good candidates for redevelopment like maybe give us a sense of your thought process really between those two buckets.
Michael Griffin: Sure.
Michael Griffin: When you look at the <unk>, obviously, you are they going to be a complement to the balance of the center first and foremost. Obviously these are all high quality retailers. So usually they check the box in that regard and then when you look at the current economics of the deal is there a benefit to recapture the space upgrade.
Michael Griffin: The tenancy and drive rents further north.
Michael Griffin: And it's worth.
Michael Griffin: <unk> capital to do so it could be a consideration obviously, if you're taking a space and there is an opportunity to combine it with an adjacent space.
Michael Griffin: To accommodate a grocery store or that space in itself could accommodate a grocer, which is first and foremost the.
Michael Griffin: A priority for us and a lot of these cases that would be a consideration do you go through the decision tree you look at the suite of options that are on the table.
Michael Griffin: And make the best.
Michael Griffin: Obviously financial decision, but also whats best for the long term value of the site and the complement to the surrounding merchandize mix to drive value in the future.
Greg Mcginniss: Our next question comes from Greg Mcginniss with Scotiabank. Please go ahead.
Speaker Change: So looking at the transaction market.
Speaker Change: Whether acquisitions are structured investments and there have been any recent indications of weakening on pricing that may lead to more activity, there yet or if sellers, taking a step back and if cap rates remain sub 6% does that 1950 ish level.
Speaker Change: <unk> for the stock buyback remains an attractive option for this year.
Speaker Change: Yes, it's a great question.
Speaker Change: We are seeing that in the last month or so since the announcement of the tariffs that there has been a little bit of a wait and see and when you hear it when you see a shop to assist unlike we had you don't typically see the impact overnight. So it drags out over a period of time. These deals do you have areas timelines. So you have to look at sort of where you are.
Speaker Change: In the in that particular deal. So some deals have still continue to go forward you have seen other deals that have been put on pause as it relates to our strategy.
Speaker Change: We are tasked with investing accretively at a spread to our cost. So we have to evaluate all of the opportunities for our capital you mentioned the stock buyback and just taking a step back and looking at what we've accomplished over the last six months, we've acquired several assets, including Waterford and markets at town Center, when we acquired the <unk> acquisition.
Speaker Change: On the grocery anchored centers in Las Vegas, a couple of structure deals in New Jersey, and South, Florida as well as another one that's in the pipeline in New York that I mentioned in the prepared remarks, and then of course, the buyback of the $60 million of stock. So we have all these tools available to us to invest capital and at any given point in time, we're really evaluating what is the best use of it.
Speaker Change: And I would say the beauty of our plan.
Speaker Change: As an organization for 2025 in particular that it is not contingent upon our external growth targets. So anything that we do with our capital Thats accretive and additive to that we will absolutely consider but to the extent that it's not attractive theres plenty of internal opportunities between redevelopment leasing and otherwise. So it's a really good set up for where we are.
Speaker Change: Sit today.
Speaker Change: Our next question comes from Wes Golladay with Baird. Please go ahead.
Wes Golladay: Hey, good morning, everyone I'm looking at your supplement you have about $200 million to $365 million of apartment land can you tell us about how much of that you sell this year.
Speaker Change: Yeah, I think I mentioned in the prepared remarks that there is a $100 million to $150 million of fault ground lease opportunities long term leases that will look to dispose of in addition to you.
Speaker Change: Some of the entitlements Android non income producing assets, what I would just tell you that the majority of that will come from the ground leases those are chunkier in nature just in terms of the size based upon the rents and the cap rates that we're able to achieve so we do anticipate that we'll be able to dispose of some of the entitlements on the margin, but it's going to be.
Speaker Change: We are pretty small percentage of that overall land value that we have now we're really looking at each and every one of our redevelopment opportunities on the mixed use side to determine what is the activation strategy and if it's a core or noncore redevelopment opportunities. So I think that will we'll monetize around the edges.
Speaker Change: But we still feel really good about the long term opportunity of a majority of our land that we have slated for future redevelopment and the west the only other thing I would add is that we feel like this is a program now that we've set up where we can do at recurring year over year. So the population of ground leases the population of entitled Land actually continues to grow.
Speaker Change: And so we feel like that range is achievable year end and you're out and so that that the mix might be a little different because sometimes the closing.
Speaker Change: Entitled Land takes a little bit longer.
Speaker Change: We are we see a lot of opportunity to continue to mine the portfolio and we're still doing deals with ground leases with home depot, Walmart Costco Lowe's you name. It so as we sell some of these were actually basketball in the portfolio with more product to be put into that 10, 31 triple net market to achieve very low cap rates and the same on the entitled side.
Speaker Change: You saw we entitled over 400 units this quarter and we continue to look at that pipeline of opportunities as ways to Accretively reinvest which is very different from the past when we had to transform the portfolio.
Speaker Change: Our next question comes from Floris Van they come with Compass point. Please go ahead.
Speaker Change: Hey, guys, so coring up on the.
Speaker Change: Recycling opportunities, obviously the ground rents.
Speaker Change: Those tend to sell for five to six percentage.
Speaker Change: Maybe even a little bit lower depending on where the where the rent is.
Speaker Change: Two market.
Speaker Change:
Speaker Change: Significant accretive.
Speaker Change: Accretive.
Speaker Change: Opportunities to if you were to buy back stock at a 9% plus implied cap rates or sorry.
Speaker Change: S F O yields.
Speaker Change: If you could talk a little bit about the the 100 to 150, you say this is going to be a recurring thing.
Speaker Change: What percentage of that do you estimate could be used to repurchase.
Speaker Change: Repurchased stock in and also in terms of share repurchases will you set something up whereby it's sort of on autopilot.
Speaker Change: Depending on the share price or will you want to have control of your share repurchases.
Speaker Change: You determined exactly when and where you are you repurchased based on on disposition proceeds.
Speaker Change: Yes, I think we always wanted to be in control of our decision, making right. So at any given point in time things changed pretty quickly I think Conor outlined how quickly the team really came together to execute on the on the buyback that we did just about a month ago and Conversely, I think we outlined a little bit of the thought process behind when we issued the.
Speaker Change: Equity in the fourth quarter. So we really enjoy the fact that we can be nimble and we can make decisions based upon where the market is what's happening in the macro what we see in terms of the opportunity set so.
Speaker Change: In terms of buybacks stock buybacks as I alluded to before we have a host of ways to invest capital accretively between acquisitions structured redevelopment leasing buyback is just one of many tools that we have.
Speaker Change: In October <unk>.
Speaker Change: I'd just add also it is also a balance right.
Speaker Change: And just buyback loads and loads of stock.
Speaker Change: Generally right Youll start to have impact on your balance sheet metrics. So we kind of take all of the pieces into account.
Speaker Change: What we can do with the capital Accretively, while making sure that our balance sheet remains incredibly strong.
Speaker Change: Our next question comes from Mike Mueller with JP Morgan. Please go ahead.
Mike Mueller: Yeah, Hi.
Mike Mueller: Quarter in physical occupancy was 92 nine a little under 93.
Mike Mueller: He noted QQ dip just curious like where where do you think you could end the year with this guidance speaking for ending the year on a physical occupancy basis.
Speaker Change: Yeah, Yeah, Yeah, you're talking about economic occupancy right now, yes, I mean, right now Joe and obviously, if they all vacate as we have in our guidance at the end of May I think it's about 68 basis point impact to occupancy so you're going to have be navigating the ups and downs with.
Speaker Change: Some of that fall out obviously, our goal is to sustain it and grow it as best we can but we wouldn't we would anticipate a bit of a dip in the in the in the interim as we and then offset as we started to get some of these other retailers open tourists that pipeline, we don't embed any occupancy guidance.
Speaker Change: And the numbers, so, but we do anticipate obviously a lot of leasing because the momentum is there.
Speaker Change: The demand is there and we continue to think that.
Where we ended last year near our all time high we obviously our goal is to leases as much as possible and we feel good about both the demand side on the anchor boxes that we're recapturing as well as the demand on the small shop as they went through in terms of how far. We are ahead of last year at this point in time in the year.
Speaker Change: Our next question comes from telling you know Rojas with Green Street. Please go ahead.
Speaker Change: Okay.
Rojas: Good morning, and could you elaborate a bit on the two projects at least attempt or ground up developments north pump platform Gordon Plaza.
Rojas: Both of them 15 million and the projects that seems a bit unusual in the sense that they are hearing existing land.
Rojas: And at least one of them seems to impulse and completely redoing the center.
Rojas: So more color on that and if you could and.
Rojas: Indicators, you see more opportunities to pursue similar projects in the future.
Rojas: Yeah I appreciate the question, yes. So we have two projects that we've listed on the stuff this quarter on a ground up development, starting first with North town Plaza. It parlays very well into the five sprouts leases that we talked about earlier. This is legacy Atlanta acquired from Wanger from the Weingarten transaction.
Rojas: Well years ago, Theres, a bunch of vacant parcels that are yet to be developed but the infrastructure is in place. Currently there is a there's lows on site. There's a handful of small shop buildings ever constructed better partially occupied this as opportunity is in line with sprouts growth strategy to bring them to the <unk>.
<unk>, which will have a significant upgrade in terms of our ability to lease now the remaining vacancy that's already been construction is sitting there that'd be about <unk> 23000 square foot sprouts, and then we'd look to most likely ground lease the adjacent parcels that are there. So it's just a continuation of <unk>.
Rojas: Further maturing the site that's been there for a number of years.
Speaker Change: Thank God imply there was actually an existing shopping center that that became.
Speaker Change: Somewhat to fogged Theres a lot of vacancy it was somewhat obsolete in its current configuration. So what we ended up what we're ending up doing is actually demolishing the center and doing three major deals while at home depot, Walmart All day, along with Chase Bank. Our responsibility. There is just the infrastructure work so.
Speaker Change: So it's definitely in clearing the site putting in the critical infrastructure at NAND constructions being passed on to you.
Speaker Change: Adjacent tenant so.
Speaker Change: Both were higher and better uses for the existing land, obviously that very much is in line with our strategy of always trying to identify highest and best use it while also being.
Speaker Change: Our risk adjusted and making sure that we're seeing the rate of return that's appropriate.
Speaker Change: Our next question comes from Linda Tsai with Jefferies. Please go ahead.
Linda Tsai: Hi in terms of the 68 the dip in occupancy in May from Joanne is your expectation that the different economic occupancy two key was the trough and would you expect more discernible improvement in <unk> or in <unk>.
Linda Tsai: It's going to be probably it.
Linda Tsai: <unk> and then into <unk> as you start to get the tenants open from the south pipeline to offset some of that debt.
Speaker Change: Here's a follow up question from Alexander Goldfarb with Piper Sandler. Please go ahead.
Linda Tsai: Hey.
Conor Flynn: Conor just wanted to go back to.
Speaker Change: Yeah, the RPT in your whole sort of under promise over deliver just sort of curious from the time that you did the deal till now.
Speaker Change: How how much extra you are getting out of it I'm curious I don't know if you still break out the performance, but how the same store of that portfolio is trending versus the kimco portfolio.
Yeah. Thanks for the question Alex I think when you look back at the timing of that transaction. You know it was really Q1 last year. So really that first year of outperformance I gave a lot of credit to the snow pipeline that was really built up by the RPT team and this is really the first year, where I think the kimco team has been able to shine and <unk>.
Speaker Change: Okay. So what they can do with it because in essence, if you sign deals last year, they're really starting to commence this year and this quarter was a highlight for us because RPT produced nine 9% same site NOI for US, which is which is really incredible when you think about the ability of the team to execute both on the anchors and small shops converting a number of those sites.
Speaker Change: The grocery anchored assets and we continue to mine for future opportunities as you know Mary Brickell village is the Crown jewel there and we continue to see significant mark to market on leases there as well as future density opportunities. So we're excited about that transaction. We continue to squeeze juice out of it. We continue to think it's gonna be a big win for kimco shareholder.
Speaker Change: There is over the long term, yes, I would just also add that on the small shop side that was that was it.
Speaker Change: A big point that we are highlighting when we acquired the portfolio as an opportunity to increase and just quarter over quarter, It's up 50 basis points year over year up over 100 basis points. So she's doing a great job in that regard.
Speaker Change: Our next question comes from Michael Gorman with B T. I T. Please go ahead.
Michael Gorman: Yeah. Thanks, Good morning, maybe just quickly understanding there's still a lot of demand out there from retailers, they're moving forward with plans I wonder if in the last month and your conversations theres been any shift in their requests for Capex work, our capex budgets or discussions that retailers are going to have to spend more dollars on their supply chain.
Michael Gorman: Jane or on holding extra inventory and may be requests for more build out work has any of that shifted in the last 30 days or so.
Michael Gorman: No. It hasnt materially I think it's right now they're sort of they're working through their supply chain issues. Obviously, there's a number of headlines with how retailers have frontloaded their inventory levels into the U S. They've been working on diversifying their supply chains over the last several years is as per the first round of tariffs into 2007 2008.
Michael Gorman: <unk> I think a lot of retailers have been preparing for the event, obviously theres still disruption on their end, but from a cost standpoint, right now there's there's no material impact.
Michael Gorman: Again, if you have a question. Please press Star then one.
Speaker Change: Do you have a follow up question from Linda Tsai with Jefferies. Please go ahead hi.
Speaker Change: I just wanted to ask how much was traffic up and you know any differences by region and how does that compare to <unk>.
Speaker Change: Yeah April travelers sorry.
Speaker Change: Sorry April traffic is actually up 6%.
Year over year, so it's moving we're continuing to see the.
Speaker Change: Activity at the shopping centers are geographically, it's pretty well evenly distributed obviously that it's out but also the Pacific southwest.
<unk> seen are seeing levels slightly higher than that so where do we continue to be encouraged by the activity from the consumer.
Speaker Change: Zillions relative resiliency of our product.
Speaker Change: This concludes our question and answer session.
Speaker Change: I would like to turn the conference back over to David Bouchey Mcgee for any closing remarks.
Speaker Change: Thanks for joining our call today, we look forward to meeting a number of you at the upcoming NAREIT Conference in June have a great day.
Speaker Change: The conference has now concluded.
Speaker Change: You for attending today's presentation you may now disconnect.