KIM - NYSE

Good day, and welcome to the Kimco Realty Corporation fourth quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. Please note this event is being recorded. I would now like to turn the conference over to David Bujnicki, Senior Investor Relations and Strategy, please go ahead. Good morning, and thank you for joining Kimco Realty Corporation's quarterly earnings call.

The Kimco Realty Corporation management team participating on the call today includes Conor Flynn, Kimco Realty Corporation CEO, Ross Cooper, President and Chief Investment Officer, Glenn Cohen, our CFO, David Jamieson, Kimco Realty Corporation's Chief Operating Officer, as well as other members of our executive team that are also available to answer questions during the call. As a reminder, statements made during the course of this call may be deemed forward-looking, and it is 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. Please refer to the company's SEC filings that address such factors. During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco Realty Corporation's operating results. Reconciliations of these non-GAAP financial measures can be found in our quarterly supplemental financial information on the Kimco Realty Corporation investor relations website. Also, in the event our call was to incur technical difficulties, we'll try to resolve as quickly as possible, and if the need arises, we'll post additional information to our IR website. With that, I'll turn the call over to Conor.

Good morning, everyone, and thanks for joining us. My remarks today will cover the favorable supply and demand dynamics that continue to drive leasing across our portfolio, our well-curated tenant mix that is servicing the healthy Kimco Realty Corporation consumer, and our strategic accomplishments and future goals. Ross will provide an update on the transaction market, and then Glenn will cap things off with our Q4 and year-end results, and our outlook ranges for 2025. I first want to speak to the recently announced changes to the board and our management team.

With respect to Milton's retirement from his role as Executive Chairman and Director, on behalf of our entire organization, I want to thank Milton for his leadership, mentorship, and friendship. Milton will always be synonymous with Kimco Realty Corporation, and our ongoing success is a direct result of not only his stewardship but also the passion and optimism that he exudes every day. His enthusiasm for Kimco Realty Corporation is contagious and permeates through our entire organization. The great news is that in his new role as Chairman Emeritus, Milton will continue to challenge us every day and serve as an invaluable resource, making sure we can be the best we can be. Richard Saulsman's new role as Chairman comes at the perfect time. Other than Milton, no one understands the company's history better, and Richard brings vast experience, creativity, and insight to help lead us into the future. Additionally, I want to welcome Ross Cooper and Nancy Lechine to the board. Ross needs no introduction. His leadership role at Kimco Realty Corporation and his reputation in the industry make him a logical addition and will make for an easy transition to board member. As for Nancy, her capital markets and real estate background, along with her energetic and collaborative demeanor, makes for a compelling addition. I am truly excited about our evolving board and believe we are well-positioned as Kimco Realty Corporation moves forward. Now onto the quarter. We continue to drive significant leasing momentum across the Kimco Realty Corporation portfolio. The lack of new supply, now measured at just three-tenths of a percent of existing retail stock, combined with a near-record low national vacancy rate, continues to facilitate strong fundamental results and earnings growth. The only new shopping center development taking place is limited to third and fourth ring suburbs, where population growth has forced sprawl into new areas. Drilling down further, the favorable supply and demand dynamics we're benefiting from today is no accident. Part of our 2025-year strategic vision focused on repositioning our portfolio into first-ring suburbs with natural barriers to entry, making it difficult for new competition to out-position our assets, while at the same time producing natural pricing power advantages. Moreover, the population in these first-ring suburbs continues to grow as more and more people desire to be near central business districts while enjoying the suburban live-work-play experience. Kimco Realty Corporation's densification initiatives dovetail perfectly with the strong demand, pricing power advantages, and demographic trends enjoyed by our high-quality retail centers. More specifically, we reached our goal of entitling 12,000 apartment units a year ahead of schedule, providing the opportunity to further expand our mixed-use portfolio. We continue to believe our ongoing portfolio transformation to a grocery-anchored and mixed-use portfolio positions us to be in the sweet spot of the retail and multifamily sectors for the foreseeable future. At the property level, the Kimco Realty Corporation consumer continues to gravitate toward our merchandising mix of everyday goods and services. We continue to see positive year-over-year traffic increases, both on a quarterly and yearly basis. The average unemployment rate across our portfolio is 20 basis points lower than the national average. The strength in the employment market combined with robust traffic has led to increased sales at our retailers. Our grocery anchors, together with our off-price anchors, form the perfect blend of cross-shopping. This is further enhanced by our service-oriented retailers, including quick-service restaurants, that drive traffic at all points of the day. It's also worth noting that internet-resistant retailers, which include service providers, now make up more than 50% of our new lease volume. We have seen a surge in leasing to medical, health and wellness, fitness, medi-spas, hair, and nail salons that complement our traditional grocery-anchored tenants. In closing, we have built a portfolio in areas characterized by limited supply, high employment, and population growth, and curated our centers to meet the needs of consumers' tastes and preferences. Our portfolio is designed to generate growth and shareholder value. Our team is excited and ready to move the needle in 2025. Thank you for your ongoing support and interest in Kimco Realty Corporation. And now I will turn things over to Ross.

Thank you, Conor, for the kind words. I'm honored and excited about being added to the board and cannot be more enthused about the future of our company. First, I'd like to highlight our capital allocation achievements during 2024, starting with the most notable transaction we undertook, which was the RPT Realty acquisition, as we recently celebrated the one-year anniversary of its closing. Reflecting back, the speed and efficiency of our integration have enabled us to exceed our expectations in all facets. It is even clearer today that this was an incredibly opportunistic purchase with an implied cap rate of 8.5%, equating to approximately $165 per square foot, at pricing that could not be replicated in today's market. Beyond our initial underwriting assumptions, we were able to improve cost synergies by approximately 13% to $36 million. Integral to our success was the swift disposition of ten former RPT properties, which did not fit our strict investment criteria, for $248 million for the same cap rate we bought RPT. During the year, our operations team did a remarkable job with this portfolio, signing 57 new leases with an average pro-rata cash rent spread of 52% and completed 98 renewals or option exercises at a blended 9.9% spread. Overall, we increased RPT's occupancy by 120 basis points, with anchors rising 140 basis points and small shops 50 basis points, which helped drive the RPT same-site NOI growth to 6.2%. As we put a bow on 2024, I wanted to quickly summarize our fourth-quarter activity. As previously announced, Kimco Realty Corporation acquired Waterford Lakes Town Center in October, and we have already started to benefit from the purchase. In our view, the timing of this acquisition was ideal, as larger assets and portfolios were priced at a discount compared to smaller, less complex properties. Since that time, that pricing dynamic has shifted. Throughout 2024, we talked about institutional retail capital curiosity and questioned at what point that would convert to action. The ROIC acquisition announcement by Blackstone in November seemed to be the turning point, giving the sector an aggressive stamp of approval that the shopping center sector is one of the top convictions for investment opportunities. This sentiment and excitement for our asset class have continued through year-end and into 2025. As capital has gotten more aggressive on open-air retail, and investors have greater comfort making bigger investments, Waterford Lakes would likely trade at a higher price today. On the structured investment side, we continue to see significant deal flow potential to grow this platform responsibly. Since the inception of this program in 2020, we have touted its benefits for Kimco Realty Corporation. It is a strategy that allows us to get our foot in the door on high-quality real estate, generating outsized returns on a very safe and comfortable basis, while retaining a right to acquire in the future if the borrower elects to sell. To those points, in January of 2025, we successfully converted our first structured investment into an equity ownership position. We accretively purchased the Markets and Town Center in Jacksonville, Florida, for $108 million at a low 7% cap rate using the proceeds we raised from our ATM program in December. Originally sourced as a mezzanine financing in late 2021, we underwrote this property with the premise that it would be a great core acquisition candidate and align well with our own portfolio. While our borrower did a great job in the time they owned the asset, we believe there remains a meaningful opportunity to create additional value. We see significant long-term upside as we continue to push rents and further enhance tenant quality, benefiting from the property's location, which is adjacent to the Simon-owned St. John's Town Center, and the bull's eye of the rapidly growing Jacksonville trade area. Including common area pass-throughs, the competitive advantage we have is that the all-in rents are at a fraction of what St. John's Town Center is able to command. We are confidently looking ahead to 2025 with our outlook establishing us as a net acquirer inclusive of structured investments. The Markets and Town Center acquisition has given us a strong start toward this objective. We will continue to be selective on core acquisitions and structured investments, selecting opportunities accordingly. From a disposition perspective, our portfolio is performing exceptionally well, and we don't see the need for any significant disposition activity. Instead, we will focus on the opportunity to further enhance our growth profile and accretively recycle capital with two new initiatives in 2025. The first initiative is the disposition of several long-term flat ground leases in the portfolio at aggressive cap rates. The second focuses on monetizing select development entitlements where we believe the most prudent approach is to mitigate risk and sell the rights to a developer and still benefit from the densification of our centers. We plan to redeploy the capital from these flat growth and non-income-producing assets into core investments that offer a growing recurring income stream and value-add opportunities. We will continue to provide updates on our progress as we move through the year. I will now pass it on to Glenn for the financial update and outlook.

Thanks, Ross, and good morning. We finished 2024 with solid fourth-quarter results, highlighted by robust leasing activity, strong same-site NOI growth, and high single-digit FFO per share growth. In addition, our abundant liquidity position and modest upcoming debt maturities position us well as we start the new year. Now for some details on our fourth-quarter results and our 2025 outlook. FFO for the fourth quarter was $286.9 million or $0.42 per diluted share. This compares favorably to last year's fourth-quarter FFO of $239.4 million or $0.39 per diluted share, representing a per-share increase of 7.7%. Instrumental to this was a $60.8 million or 17.8% increase in total pro-rata NOI to $403.4 million over the same period in the prior year. Key drivers of the NOI growth include $38.1 million from the RPT acquisition, $7 million from other acquisitions, and $15.7 million from the balance of the operating portfolio, which benefited from higher minimum rents due to an acceleration of rent commencements. The NOI growth was offset by greater pro-rata interest expense of $16.4 million due to higher debt levels from the RPT acquisition and the prefunding of the $500 million bond that matures in February 2025. Our operating portfolio fired on all cylinders to end the year. Our year-end portfolio occupancy stood at 96.3%, reflecting a year-over-year increase of 10 basis points despite a 10 basis point sequential decline. This achievement underscores the strength of our leasing pipeline as we effectively managed to offset a nearly 40 basis point impact caused by the vacating of 16 leases associated with Lumber Liquidators, Big Lots, Conn's, and Bob's Stores in the fourth quarter. Same-site NOI growth was 4.5% for the fourth quarter. The primary driver continues to be higher minimum rent contributing 3.8%, mostly from contractual rent increases and faster rent commencements from the signed not open pipeline. In addition, overall NOI continues to benefit from lower credit loss. For the fourth quarter and full year, credit loss was 82 basis points and 75 basis points, respectively, meeting the low end of our 2024 outlook assumption. For the full year 2024, same-site NOI growth was 3.5%, outperforming our previously raised outlook assumption of 3.25% plus. Higher minimum rent was the primary contributor to the growth. As a result of the faster pace of rent commencements, the spread between leased occupancy and economic occupancy compressed to 270 basis points, a change of 40 basis points sequentially, and represents 374 leases totaling $56 million of future annual base rent. We anticipate approximately 80% of this to commence with a total of $25 million in rent being received from the signed but not open pipeline in 2025. Turning to the balance sheet. We ended the fourth quarter with consolidated net debt to EBITDA of 5.3 times and on a look-through basis, including pro-rata share of JV debt and preferred stock outstanding of 5.6 times, maintaining our best levels for these metrics. During the fourth quarter, we raised $136.3 million from the sale of 5.4 million shares at an average price of $25.07 per share through our aftermarket common equity offering program. These proceeds were accretively invested toward the acquisition of the Market at Town Center in Jacksonville, Florida, that Ross mentioned. We also conducted a cash tender for the outstanding depository shares representing the 7.25% Class A cumulative convertible perpetual preferred stock, successfully tendering for just over 22% of the shares and reducing the liquidation preference to $71.9 million. Our year-end liquidity position remained very strong, comprised of $690 million of cash and the full availability of our $2 billion revolving credit facility. As a reminder, included in the cash balance is $500 million from the 4.85% long ten-year bond issued in September 2024, which proceeds were invested accretively in short-term interest-bearing instruments. We recently used the cash to pay off our 3.3% $500 million bond on February 3rd. Subsequent to year-end, Moody's affirmed our Baa1 unsecured debt rating and changed our outlook from stable to positive. Our unsecured debt is rated A- with a stable outlook from Fitch, and BBB+ with a positive outlook from S&P. Now to our 2025 outlook. Notwithstanding some of the uncertainty given the economic and political environment, and several recently announced bankruptcy filings by a few additional tenants, we remain confident about the growth prospects of our operating portfolio and balance sheet positioning. Our initial 2025 FFO per share outlook range is $1.70 to $1.72, representing an initial per-share growth range of 3% to 4.2%. Our outlook range is based on the following assumptions. Same property NOI growth of 2% plus, included in the same property NOI outlook is a credit loss assumption of 75 basis points to 100 basis points. This is a similar level to our credit loss experience in 2024 and considers the potential impact from the Party City and Joanne's bankruptcy filings. In addition, the 2025 same property outlook assumption takes into account the boxes vacated at the end of 2024 related to the bankruptcies of Big Lots, Conn's, Lumber Liquidators, and a few others. Given the strength of our leasing demand, we view the recapture of these spaces as an opportunity to further increase rents and enhance the credit profile of our tenant mix. Other 2025 outlook assumptions include lease termination income between $6 million and $9 million, as compared to $4 million in 2024. Interest income from cash on hand is expected to range between $6 million and $9 million, approximately three cents per common share less than the $26 million reported in 2024 due to the significantly higher cash balances last year. Acquisitions, including structured investments, net of dispositions of $100 million to $125 million. This is inclusive of the Markets at Town Center's structured investment acquisition completed in January. Corporate financing costs ranging from $354 million to $363 million, comprised of consolidated interest expense and preferred stock dividends. Annual G&A expense ranging from $131 million to $137 million as we expect to realize annual savings from the board leadership transition that was undertaken to start the year. Lastly, the outlook range assumes no redemption charges or prepayment charges associated with the callable preferred stock outstanding or early repayment of debt obligations and no planned issuance of additional common equity. I want to thank all our associates for their unwavering effort given each and every day a successful 2025 together. We are now ready to take your questions.

We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're 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 two. Please limit yourself to one question and rejoin the queue for follow-ups. Our first question comes from Michael Goldsmith with UBS. Good morning. Thanks a lot for taking my question.

You mentioned the credit loss reserve of 75 to 100 basis points kind of in line with your historical average. Can you talk about what you have visibility to start the year where your watch list is? And then maybe try to put some context into how much exposure you have to potential trouble tenants to start the year, maybe to pre-pandemic levels, and how that I'm just trying to put to start up for 2025 into context with how it may have played out in the past.

Yeah. Sure. I appreciate it. So, you know, in terms of the watch list that obviously is going through the bankruptcy process, Big Lots, Party City, Joanne, starting beginning 2024 is about a 130 basis point impact. We already absorbed about a 10 basis point impact from Big Lots in 2024, so that's already into the portfolio. And so the remainder is in play, and they're currently going through the bankruptcy process. For Big Lots, the remaining 10 basis points that we have, bids are being collected next week. For the remaining five locations that we have. Party City, I believe the lease auction is actually running today, and then concurrently after that auction, there's still going to be an opportunity for retailers to bid for a period of time. And then with Joanne, they're currently collecting going concern bids next Wednesday. In which case, after the going concern, depending on what's remaining, they'd like to schedule an auction for late April. As it relates to our plan, we went through the portfolio. We made what we felt were the appropriate adjustments to budget, which are baked into our guidance for the year about what we assume we would either be able to backfill, we would get back, or would be assumed or purchased at auction. In terms of the demand side, it's robust. Dollar stores, footwear, books, grocery, beauty, across the board, there are a number of retailers that are looking at a variety of package deals to help absorb some of these boxes. On the Joanne side, you have a lot of the off-price guys. Grocery as well, etcetera. So we're very encouraged by that opportunity. There are a number of locations where we don't have grocery. We're able to actually backfill with groceries. When we're looking at the credit upgrade, it's significant. These are really the opportunities Conor mentioned in his script. A lack of new supply, these second-generation boxes are the opportunity for retailers to grow market share, to grow store count, which they are very focused on doing. And so I'd say the relationship between landlord and retailers couldn't be stronger today because of the collective opportunities that we have and we want to the relationship together. So in terms of the watch list and how it's evolved, it's really been status quo. When you look at those that have filed, they're repeat offenders. Right? They filed in the last two years. They came out of bankruptcy. And during the first bankruptcy, we were able to modify terms to our benefit. So in coming into this bankruptcy route, we're able to work with the, you know, new retailers on opportunities to better the terms and obviously secure better credit. So not much has really changed on our watch list, and from there, I'll pass it over to people. Sure. Hey. Let me just help frame it a little bit.

In terms of the numbers. If you look at our expectation of revenues, it's around $2.2 billion. So at 75 to 100 basis point range, you're looking at credit loss baked in of a range of $17 million to $22 million. We feel pretty comfortable with that based on the bottoms-up budget that we ran through and just the historic levels of where we've been, you know, pandemic aside, we feel pretty comfortable where this sits as a starting point.

And those $17 to $22 million credit loss that Glenn Cohen mentioned is inclusive of both just write-offs, as well as a potential loss rent you may have from some of those retailers that David Jamieson mentioned. Let me go bankrupt or during the course of the year.

Thank you very much.

And the next question comes from Craig Mailman with Citi. Please go ahead. Hey, good morning.

You guys have been a little bit more acquisitive as have some of your peers. You know, you took the opportunity to raise a little bit of equity. Just kind of curious it seems like in guidance, you just have what you've done so far this year. Kind of dialed in. But could you talk a little bit about what the opportunity set looks like today? And then maybe put some thoughts around, you know, sources of funds. Ross, I know you talked about some of the ground leases. Like, what's the magnitude of those sales? Kind of just talk through everything and also where, you know, cap rates and IRRs are.

Sure. Happy to. Thanks for the question. As you mentioned, we really have already identified and closed on sort of the net acquisition activity primarily with the market's acquisition. So as we look to the remainder of 2025, the intention is really to match fund through some of the initiatives that I mentioned. As Glenn indicated, we don't have any additional equity in our plan. But as showcased in Q4, to the extent that we like where the stock is trading, we're not shy about tapping into that. So the intent for this year, which is a little bit different than what we've seen in years past, is to recycle capital accretively. So the dispositions of old at higher cap rates that were dilutive is not something that we're planning on undertaking. We don't need to. As I indicated, based upon how the portfolio is operating. So when we look at what are the opportunities in terms of source of funds, the ground leases, you know, we have close to 10% of our income stream right now that comes from long-term ground leases. Now that's a big pool. Obviously, not all of those are going to be considered for disposition. But when you break down that bucket, and you look at what is the use, what's the foot traffic that comes from that retailer, how much term do we have remaining, do we need to go back and look at blended extends, what is the location within that center? There is a pool of those opportunities that we anticipate and that will somewhat be opportunity-driven based upon what we see on the investment side in terms of the capital that we'll need to raise. In addition, on the entitlements, Conor mentioned it, we achieved our goal of the 12,000 units a year earlier than anticipated. So again, we have a tremendous pool of potential densification opportunities. And when you prioritize that list, based upon, you know, what is compelling geographically, financially, or otherwise, there are several opportunities that we think are better suited to potentially monetize and sell to a developer versus something that we may not activate ourselves for many years. And utilize that capital to reinvest. So we feel very comfortable in terms of the sources and uses of where the capital will come from in terms of new opportunities. You know, we continue to identify and look at a wide range of acquisition opportunities. We talked about in the past. Do you think that our both geographic and format diversification allows us to be active at all parts of the cycle? So, you know, we've been more focused in the last couple of years on larger format grocery-anchored, but with a lifestyle component. That's where we found better yields over the last couple of years. Now as more capital is coming into the system and into the market, I think that that quote-unquote discount had dissipated, so we'll continue to evaluate if there are other formats or geographies where we think that we can get a little bit of a better yield or differentiation. And, of course, with our structured investment program, we continue to see opportunities to put out capital. And the nice part about the structured program is the average check size for those deals is anywhere from $15 to $25 million. So they're not tremendous capital investments. But as showcased by the market's acquisition, it can be a small investment on our side on a larger asset that ultimately can become a $100 million plus acquisition. So when we look at all of those different opportunities rolled together, we're very confident in what we're going to be able to do on the investment side.

Yeah. I would just add though, you know, as I mentioned in my prepared remarks, in addition to the cash on the balance sheet, our availability of our lines, the company should generate around $140 million of free cash flow after dividends, CapEx, and TI. So that's another pool of capital, obviously, on our lowest cost. So kind of keep that in mind.

And the next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Hey. Good morning out there, and first to Milton. I'll let Tov. Congrats on a well-earned retirement. Ross, welcome to the board. Just a question on small shop. Sort of stagnated around 97.7, 97.8. And just sort of curious if this is sort of a frictional cap or if there are other issues going on with things given the comments about lack of supply and the robust demand that you outlined for backfilling a number of the troubled retailers, would think that small shop would be, you know, where people would be looking, especially as retailers get more flexible on their prototypes.

Yeah. Great question, Alex. Appreciate it. And I know Ross appreciated your kind words, so I'll say thank you all in every word. As it relates to the small shops, the one thing to you might pull up too though is we absorb RPT, and the RPT small shop documents were significantly lower than Kimco Realty Corporation's is in 88 plus percent. So year over year, we actually grew the RPT small shop portfolio by 50 basis points. Kimco Realty Corporation legacy is over 92%. So there was a way down and that ultimately contributed to the flat year over year. As it relates to the opportunity going forward, though, you're absolutely right, though. In terms of flexibility of format, people are looking especially at that mid to larger size small shop box. So I'm thinking, like, 6,000 to 9,000 square feet. Some of the retailers I've mentioned earlier on the on our city locations, you know, are looking to optimize their footprint and could absorb, you know, some of those units which will help contribute. For us this year, we're laser-focused on how do we continue to grow the balance of the small shop portfolio. And the deal teams are incentivized to push the small shop leasing as far as we can. Our goal is to, you know, break through that sort of viewed as a ceiling right now is at 91.8 and we want to extend that further and we think there's opportunities to do that.

Thank you.

And the next question comes from Haendel St. Juste with Mizuho.

Hey, guys. Good morning. Thanks for highlighting some of the one-timers influencing guidance like the lease termination fee interest. Four million dollars. Curious what's driving that. Is that some capitalized interest? Then maybe some color on the one the some of the items that could be swing factors getting you to the upper and lower end of guidance. Thanks.

Sure. Great question. As far as the G&A, actually, as you see, the G&A is actually down at the midpoint around $4 million. The bulk of it is related to the transition of Milton, you know, coming off as executive and off the board. But the balance of it, really, there's nothing related to capitalized interest. We don't have an enormous amount of development, redevelopment going on. Like, the target for that range for this year is $100 to $125 million. So the cap interest component is actually very, very small for us. We really just spend a lot of time focused on controlling costs. And even with, you know, annual increases that went through, the overall G&A budget is flat. But and then last by the amount of the management transition. As far as the other things that are in the budget, candidly, there are not a whole lot of one-time things that are forecast. It is a really, really clean forward-looking year for us. We called out the items that, you know, we think that people would focus on. But it's real straightforward. It is very much walking, tackling, run the business, keep plus, maintained, acquire accretively where it makes sense, and lease and lease and lease.

Yeah. I think the spread on the earnings guidance is reflective of really sort of what may or may not happen in the market with the bankruptcy proceedings. So that is sort of what gets you to the low end. And that's what gets you to the high end in terms of starting off the year.

And the next question comes from Greg McGinniss with Scotiabank. Please go ahead. Hey, good morning.

I just want to touch on the development redevelop spend again. Appreciate the clarity on what that expectation is for this year. Is this just less of a focus now and, you know, you be looking more at on the acquisition front and letting all the kind of redevelopment opportunity, mixed-use stuff just gonna be kinda sold off and joint ventured or ground leased out. And then also, can you also touch on CulturePlace where we saw the stabilized yield drop from last quarter?

Yeah. Just touching on Coulter. It didn't drop from us. Quarter. All we did was we because we only have one project posted right now on the mixed-use, we just tighten the range to what it always was. So there was actually no change on yield. It's just how it was guided to for this. And as we activate more projects, you know, the range of that guide may be modified as well. As it relates to the focus redevelopment, it's always a focus. It's really retail-driven. There's opportunities as you've seen through the robust leasing program that we have that there's opportunities to backfill the existing space. We went through a very extensive redevelopment program over the years to repurpose build better build better mousetraps for retailers and all of our portfolio is such that you know, we're opportunistic in nature. If it's the best use of capital given, you know, all the other opportunities that we have, we'll pursue it absolutely and it's something that we continue to focus on. But again, it's retail-driven, so if we're able to backfill space, less investment and less disruption. To get cash flow coming sooner, that's a great option. And most likely a better opportunity. So we'll continue to focus on that. And as it relates to the multifamily program, obviously, as you saw that we've exceeded our 12,000 units that was a corporate goal. We did it a year ahead of time. We have a number of projects that we're actively looking at right now to potentially activate and I mean, year or two, whether or not we develop joint venture, monetize the entitlements, all those options are you need to be on the table, and we'll just look at, you know, the market cycle what makes the most sense for our use of funds and proceed as such.

Yeah. We still think there's a lot of upside as we outlined earlier in the call. That mixed-use, you know, when you add those residential units to your retail center, you do get a significant benefit both from the retail side and on the residential side. The challenge for us is the cost of capital and those were returns for apartment developments. Are lower than what we're seeing in the open market for other uses of our capital. So what we're trying to do is make sure we prioritize the highest returns on our capital and then look to get creative on structuring those entitlements that we get the benefit of the density around our shopping centers without potentially having a lower-yielding investment versus what we're seeing in the open market.

And the next question comes from Andrew Reel with Bank of America. Go ahead. Good morning. Thanks for taking my question.

Just of the bankruptcy boxes you've already gotten back, and may get back this year, what's the average square footage on those? And how many would you have to really reposition maybe split up, versus what proportion do you think you could just fill as is?

The majority right now we're looking at are to backfill the single-use tenants. I mean, with Bed Bath and Beyond, we were very aggressive in terms of finding single-use operators to backfill the spaces and over time, you know, a substantial majority were similar. When you look at the Party City boxes, the average is, you know, 13,000 square feet. It does range though in size, you know, to sort of the 8,000 plus square feet to slightly higher. So as a result of that, that gives us that opportunity canvassing of retailers because of the variety of square footage. On the Joanne side, you're looking at, you know, a slightly larger box around 32,000 square feet. But you know, with that, you have groceries, you have off-price, you have fitness, and a variety of others that are interested in those. And those also range in size, pretty dramatically. So I think in general, we'll be fairly successful in backfilling with single-use operators.

The only thing I would mention is to think about the lack of new supply for our sector, and then if you think of this as shadow supply or potential opportunities for growing retailers, if you took that subset and added it to the new shopping center supply that's under construction, it's still extremely modest. And it's one of the lowest, if not the lowest, of the entire commercial real estate sector. So we feel very confident that because of the range of sizes of these tenants that are giving back space, we're going to be uniquely positioned to backfill with single-tenant users at significant mark-to-market rents.

And the next question comes from Juan Sanabria with BMO Capital Markets. Please go ahead.

Hi. Good morning. Just hoping for a little bit more color on the assumptions on the credit loss reserves. If I just look at Party City and Joanne, that's about 1.1% of the ABR. So just hoping you could help us square that with the 75 to 100 basis points in guidance and then and kind of a Part B of to the question, is there any skew in the timing of that debt? Is it more front-half loaded given the upcoming auctions you referenced and the recent headline BKs we've seen? Thank you.

Yes. Again, as I mentioned, we do feel pretty comfortable with that with the range with dollars that we're talking about of potential credit loss, Party City is, you know, working through their auction. We'll see what happens with their GOBs when they end. Joanne's, although they filed for bankruptcy, hasn't actually even started their GOB sales yet. So you're going to have rent that runs for, you know, a minimum for the first quarter probably well into the second quarter. And then it's going to come down to is there a going concern buyer for some of the boxes? So there's a lot of variability. And, again, that's why we feel comfortable with the range that we have. It takes into account what could happen both good and bad. Both Party City and Joanne's.

And the next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Hi, good morning. Maybe two quick ones. Guidance related. First, on the acquisitions and FFO, it seems like somebody else already mentioned, you've already met the net acquisition guidance. So are you just saying that from here, property acquisition volume would be offset by dispositions of ground leases and development entitlements, which would suggest, like, a meaningful spread. And then just on the FFO side, it seems like the range of two cents is quite tight. So wondering kind of how you're thinking about that and if it's more of what you might otherwise think of as, like, a bottom end of the range with upside potential.

Yeah. As I mentioned that and I'll take the second part first and I'll let Ross deal with the acquisition piece. But on the guidance, if you think about the range, the range really is about $20 million in total. So if you go, you know, again, we're a pretty large company. It takes $7 million of FFO for a penny. So that range, although narrow in terms of pennies, it is a $20 million range to start with. And as I mentioned, you know, we feel like we have pretty good visibility about what we're seeing in front of us. There's not a whole bunch of one-timers either way, you know, good or bad. But we feel very comfortable about where the portfolio is going. We know what we've done already in terms of this initial acquisition. And what's baked in. So it requires a little bit more of a narrow range.

Yeah. And the first part of your question, I think the short answer is yes. The expectation is a recycling of capital from some of the initiatives that I mentioned into new opportunities. So we have the ability to be patient, see what comes our way on the new deal side, new investment side, and then utilize those opportunities to source those appropriately. Obviously, to the extent that there is more opportunity at accretive yields, in excess. We have other capital sources as Glenn outlined earlier. And we'll certainly update it as the year progresses with our activity.

Thanks.

And the next question comes from Ki Bin Kim with Truist. Please go ahead.

Thank you. Good morning. Just want to go back to this one about that guidance. You know, if you can frame Party City and Joanne and some of these other couple retailers to your experience with Bed Bath. And I was curious about kind of when do you actually refer to really ramp up the marketing for these spaces? At what point during the bankruptcy process or before and what the potential rent upside looks like compared to what you experienced at Bed Bath? Thank you.

Yeah. I mean, you're marketing these boxes well in front of any sort of filing. When you're looking at your watch list tenants, you're constantly looking to upgrade the tenancy and prepare for, you know, what can I believe be a bankruptcy. Obviously, with Joanne's and Party City, they're both repeat offenders. So from when the first time happened, we're already out marketing those boxes. For example, we already have a handful of leases executed for Party City boxes before they filed and it's just in our recapture. We felt confident in those recaptures because we reduced the term of those leases, so we knew an absolute end date there. And then, you know, we're constantly looking at upgrading the tenancies. So that's no different. When you look at the blend between Big Lots, Party City, Joanne's, you're seeing double-digit yield 10% plus. Over the blend of all of these. Obviously, there's higher ones and lower ones. And when you look at the Bed Bath activity that we had over the years, it was significant. The mark-to-market on those was higher just because they're more vintage leases, bigger boxes signed a long time ago. But, you know, again, most of those were backfilled with single-tenant users and then the interest was reflected.

Thank you.

And the next question comes from Floris van Dijkum with Compass. Please go ahead.

Good morning, everyone. Thanks for taking my question. Capital allocation question. Maybe Ross is best suited for this. But in terms of your apartment entitlements, I think you've got 8,900 currently entitled and other similar amounts in the process of being entitled. A couple of those are, you know, more than a thousand units. I think there are four of them out there. Are those the ones that are most likely to be JV'd or sold off because of exposure? And then maybe Conor, by the end of the decade, what percentage of NOI do you think Kimco Realty Corporation is going to get from apartments contribution? Is it ten, fifteen percent in that range?

I'll start and then I can jump in. You know, when we're looking at the prioritization of the entitlements and where we want to identify, it's a pretty detailed and involved analysis that includes market feasibility studies. We're working with all of our different regions to understand where trends are happening geographically. So it's not necessarily based upon size. We're looking at, you know, what is the timing, what is the supply and demand dynamic in that particular market? What are the yields that we're looking at for creating this project? And then ultimately making a decision given all of the information that we've gathered and the market intel, given our cost of capital and other uses that we have for that capital, where do we want to put that? And which projects are best suited for Kimco Realty Corporation to invest a substantial amount of our own capital, which you've seen us do on certain projects, where is it best suited to ground lease and to retain that ROFR allow somebody else to put their capital work, you've gotten creative in terms of structuring as you've seen on Coulter and some others that we're considering in terms of joint venturing and putting our entitled land into that venture at a marked-up basis and our component being preferred equity or different pieces of capital and then, of course, we have the option to potentially sell. So we're evaluating all of those alternatives on each one of these projects. And the beauty of the program is that based upon our geographic diversification and all the entitlements that we've had, we can be very selective in where and when we want to activate and how we want to do so.

So I just just to touch base on the on the two projects you mentioned, that have over a thousand units entitled. Those are both large master plans. One's in Kedlin's. The other markets were in Pentagon. And so when you go in for entitlements, there's opportunity sometimes to really to secure a large allocation of residential. That does not mean that you have to build it all at once. And so you take a thousand units and break it into five different phases of, you know, two hundred units a piece over an extended period of time. So you're managing, you know, new supply coming on, market absorption, etcetera, and then Ross' point, you can activate each of those phases. And whatever is most appropriate, you know, given the market cycle time and use of funds. So just for clarity there.

And then, Floris, I think for the long term, you know, we continue to push towards activating more multifamily entitlements where we can structure it accretively to our cost of capital. Putting a target, you know, the dream scenario would get to ninety-ten where ten percent is coming from apartments. And then build it from there. Again, where our cost of capital is today and where we can accretively deploy it, you know, it's limiting how much we can activate on the multifamily side. So we'll continue to use the structure like we have before, whether it's ground lease with the roper or it's a contribution to a joint venture, with the ROE for a bond stabilization as well. So those are ways that, again, we can take a CapEx light approach, hit our return hurdles, and still activate apartments. As you know, we've activated over three thousand and continue to take that approach to see how we can go about adding value, creating value for our shareholders over the long term.

Thanks. And the next question comes from Steve Sakwa with Evercore ISI. Please go ahead.

Yeah. Thanks. Good morning. I guess given the tightness in the whole industry and retailers still looking to grow and their, I guess, inability maybe to hit store opening plans. I guess, what's Kimco Realty Corporation's appetite to take on actual ground-up development in retail, and what discussions have you had, you know, with some of the bigger retailers to kind of jump-start that development process? Thanks.

Yeah. I mean, you're seeing ground-up right now. In more in, like, the second and third ring. You know, as urban or suburban sprawl extends out and some of the markets in, say, like, Arizona and Texas, you're not really seeing ground-up development in, you know, first-ring suburbs opportunities. You know, rents still have to reach, you know, a higher premium to justify the underwriting for a developed development yield that's accretive. Our cost of capital so in those more tertiary market development projects where you're doing, like, a large format target or whatnot? Are necessarily in the core markets that we're looking to expand.

For us, that opportunity is really working with these retailers on the backfill of second-generation space, further identifying, you know, or markets, how do they expand market share? They are starting to look at the tightness of their radius between, you know, individual stores, and those are starting to narrow realizing that they can operate more locations within, you know, a tighter trade area than they did historically. So there's real opportunities there for them as well. And that's where we continue to see it. But, you know, we do talk to them a lot, you know, if there's an opportunity that comes about, we would consider.

Yeah. It's a good question, Steve. And I think that's what gives us a lot of confidence about our credit loss reserve of 75 to 100 because if you think about the lack of options for retailers today, you know, we don't see a huge ground-up opportunity on the horizon that either we or others will take advantage of. And so the opportunity set is really on these bankrupt tenants, these second-generation boxes that are going through the auction process. As you saw from last year, there was a tremendous amount of activity from retailers in the bankruptcy process even outbidding us on a few ones that we tried to acquire and bring back on. We feel like there's a similar backdrop today with supply and demand. And that's what gives us a lot of confidence in our 75 to 100 basis point credit loss reserve.

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

Hey. Good morning, everyone. Quick clarification. The savings from the management changes, would that start January or at the time of the annual meeting? And then Conor, on that point you just made about bidding on boxes, do you plan on doing a lot of that?

I'll take the first one because it's straightforward. It started at the time of the announcement, end of January.

And then on the auction process, I think again, we look at every box, we look at every opportunity set. We're talking to a lot of retailers both pre-bankruptcy auction and during the bankruptcy auction. We know a lot of these retailers will be in the auction tent. But they're also looking at doing package deals with us across multiple locations. So it really just depends on the returns that we can generate from the capital and what tenant we have to backfill that location. Where we've been unsuccessful in the auction process where others have outbid us, we were running with the grocery anchor to backfill a location that we were excited about, in another retailer that was not grocery was super aggressive for the location. And so again, not necessarily a lose-lose situation, because, obviously, the tenant that wins that bankruptcy auction has to fulfill, you know, all the back rent as well as to go forward lease obligation. So we're in a good spot where we can be selective. Really get aggressive where we think we can dramatically improve the valuation of the asset, not only on that box but on the surrounding retail that we own as well.

Alright. Thanks for the time. Take the next question.

And the next question comes from Paulina Rojas with Green Street. Please go ahead.

Good morning. Recent bankruptcies have been significant, right? Do you believe these bankruptcies will materially impact the rents that you can achieve for new oncolysis? For new oncolysis. And I understand that the mark-to-market of rents will likely be still very significant, I'm more focused on how the market dynamics will shift and how rents might change compared to a scenario where these bankruptcies had not occurred.

Yeah. That's a good question, Paulina. It's one that I think you have to think about a little bit from the amount of supply that comes available in the certain submarket. And if that will change the supply and demand dynamic of pricing power that we've experienced over the past few years. And if you look at the amount of locations that overlap between the that are in these submarkets, it's very few that will have multiple boxes coming available in the same submarket. So in our opinion, it really doesn't change the pricing power because if it's a good location in a tight trade area, that is usually the only box available in that trade area. As you can see, our occupancies are at all-time highs. Vacancy rates for the entire sector are at all-time lows. It's a very tight market right now for good quality retail. And so when these boxes are available, there's usually not a second option for retailers to fall back into. And so that's what's driving the competitive set. Take advantage of these unique opportunities and we feel confident that, again, because of that tightness in the market, you're going to see activity both in the auction tents, but as well post-auction with retailers wanting to do package deals on a number of these locations that are spread across multiple subsectors.

And the next question comes from Mike Mueller with JPMorgan.

Hi. You talked about the demand for medical and wellness. I'm curious, like, how do you size up the credits versus other national and local options? And in the past, have you had any meaningful bad debts from that category?

I can take it if you want. I mean, the nice thing about medical is they put a lot of money in themselves to build outs that they have with the equipment. They are very, very sticky tenants. You know, they stay for a long time, and I would say the bad debt on those is really de minimis. I mean, it really doesn't even come up very often. They're really, really solid tenants.

Yeah. A lot of the push recently has been from urgent care, pediatric urgent care, some off-site facilities from hospitals, because we've always had dentistry. We've always had, you know, physical therapy is becoming a bigger piece as well. But we continue to like that use. It's a service use. It's Internet resistant. You know, it does drive traffic. It does bring people that want convenience to the shopping center. And, usually, it does drive, you know, the right shopper as well because of cross-shopping opportunities. So always look at credit quality, and to Glenn's point, we've been very successful in underwriting medical uses that have come into shopping centers and haven't had really dramatic issues in any shape or form.

Got it. Thanks.

And the next question comes from Michael Gorman with BTIG. Please go ahead.

Yes, thanks. Good morning. Maybe just circling back to the transactions for a minute here. Just a question on match funding. And apologies if I missed it. But when we think about the match funding with the sales of either ground lease or entitlements in 2025. Would those proceeds also apply to future structured investments? And I guess if so, can you talk about maybe the scale of opportunity and the strategy of selling out of understandably slower-growing, but fee positions into a more structured investment for the long-term strategy. Thank you.

Sure. Yes, it does include structured investment. So we look at sort of our blended investments between the core acquisition strategy as well as the structured. You know, when we think about the structured program, as I mentioned previously, I mean, most of these investments are anywhere from $15 to $25 million. So you're looking at, you know, $15, $20, $25 million check sizes. So it really does expand and diversify the risk profile. You know, we feel very comfortable about our underwriting strategy and the basis at which we enter these properties. But to your point, we acknowledge that there is a differential between, you know, fee acquisitions of existing shopping centers and a structured investment that has a variable timeline. So as part of that program, we're constantly looking at the rollover schedule, where we might get redeemed or repaid on any of the structured investments in our building, a pipeline to consistently backfill and recycle that capital as well. So one component that I didn't mention in addition to the ground leases and the entitlement is there is always the opportunity to get capital back from prior structured investments. So as we see new investment opportunities on the structured, there is a recycling that occurs within that program as well. We feel very confident and comfortable with the size of that program right now being, you know, right around 2% of enterprise value. So we think that we can, you know, sort of responsibly, gradually grow that over time. As we continue to see more opportunity, but it's going to be, you know, at a slow methodical pace.

Thank you.

And the next question comes from Linda Tsai with Jefferies.

Hi. Could you provide color on upcoming refi's in 2025 and then 2026? And then how to think about the timing of when you might refi and the increased cost impacts?

Sure. Sure. So we just paid off a bond, as I mentioned, so that's done. The only debt that remains outstanding or maturing in 2025 is about $290 million. There's about $50 million of mortgage debt that's going to get paid off on March 10th. Then we have a bond that matures June 1st, so it's about $140 million. We have a whole variety of ways to deal with it, whether it be from free cash flow, again, some of the it could be come from some of the disposition activity. Our line is fully available to us and quite candidly, the borrowings on our line today are priced better than where we would do something even longer range. We have a whole bunch of opportunities. As far as 2026 goes, there's about $750 million in 2026. But it doesn't really start maturing until August. We have plenty of time to address the upcoming maturities.

The only thing I would add is it's nice to be on positive watch from S&P and Moody's because if you think about the timing of when they may make a move to improve our credit rating, it lines up nicely with some of our refinancing opportunities to take advantage of that tighter pricing we can achieve.

Yeah. I mean, just in terms of pricing, like, if we would go to the bond market today, we're probably somewhere around 95 over on a ten-year. So it'd be somewhere in the, you know, I would 5.5 well, you know, 5.45% range today.

And the next question comes from Ronald Kamdem with Morgan Stanley. Please go ahead.

Hey, just a couple of quick ones, just some themes that's touched before. Back to the same store NOI, so sort of the 2% plus guidance. I think in the opening comments you mentioned that there was some sort of end of 2024 closures and stuff that impacted. Any chance we could sort of quantify what that hit was to 2025? And does that create an opportunity as you sort of backfill those into 2026 and 2027? Thanks.

Yes. I mean, again, the vacancies that I mentioned, they're out now of the same side NOI number. So that's all baked into overall 2% plus starting point. So it'll vary as we go through the quarters again because we do same-site NOI. The most part, it's on a cash basis. Right? The tenants have to be paying rent. That's what goes into the number. We don't include straight-line rents. We don't include lease termination fees in it. So it's all baked into that 2% plus starting point.

Yeah. And then as we backfill, you're right. I mean, it's going to be a contributor to the end of 2026.

Right. So if I could ask the question just a different way is like what's the bridge from 3.5% to 2%? Same store NOI? Like, what are the deltas there in the big pieces?

Well, I mean, again, we have to take into account all the different the bankruptcies we have to really see what we get back, what we don't get back. If we don't get a lot of the boxes back from whether it be Joanne's or Party City, there's more upside in that number, which is the plus point of it. So we're just trying to use we feel very comfortable that 2% is the floor. That we'll see how the rest of the year goes. And as we go through the year, we'll make adjustments to that guidance.

Ron, I'll also say we start the year out with a little more ambiguity. Right? Because last year, even when we started out, assuming how much we would get from the snow pipeline, it was between $15 and $20 million. We ended the year close to $35 million. Somewhere between $33 and $35 million. Same thing. We're starting the year up, making an assumption of the snow pipeline. We're going to have about $25 million. So that's sometimes an estimate you make and as we go through the course of the year, that can change and that can move from where you start the year out in your same site guide. So there's a number of different levers, but to Glenn's point, you feel confident where the floor is. It's just a question of how high the ceiling could be.

That makes a ton of sense. If I could just sneak my second one in, it's just on the net acquisition guidance. Obviously, the opening comments about selling sort of flat leases and so forth. Just a sense of the quantum of dispositions because it's hard to tell from the guidance is what could that look like this year? Like, is it a is it $50 million, $100 million? Could it be $300 million? Just how big is that opportunity on the sales side? Thanks.

Yeah. As I mentioned, I mean, it's having close to 10% of our income from ground leases. There is a large pool but it really is intended to be a match funding mechanism. So it's going to be very much dependent upon what we see on the new investment side as to how much we want to push into the market to potentially sell. But we'll be relatively measured to start the year, and then as we progress and we see opportunity, we'll update you and the market on what we're seeing and how much we anticipate doing there.

Great. Thank you so much.

And the next question comes from Omotayo Okusanya with Deutsche Bank. Please go ahead.

Yes. Good morning, everyone. You guys historically have been well known to come up with creative ways to create shareholder value. As you look at the landscape for retailers and as well as retail real estate over the next twelve to eighteen months. You just talk about, you know, the probability that you guys could do something of that nature as well, whether it's something Albertsons like, whether it's more of the SIP loan to own program or maybe something totally new and out of the box.

Yeah. I think we always look for opportunities. I think as you've seen us do in the past, our best deals typically when or occur when there's dislocation in the market or mispricing that we can take advantage of. We're excited that our balance sheet continues to improve and put us in a position that when the next cycle occurs, the balance sheet strength usually is rewarded. I think that's at a time where, you know, when the tide goes out, usually balance sheet strength, it becomes an advantage. So, you know, where we sit today, obviously, with the economy is today. There's not a tremendous amount of mispriced or dislocation occurring. Our sector because of the health of the cash flow growth that's occurring across portfolios. When you look at some of the individual retailers that are in trouble that we've talked about, not a tremendous amount of owned real estate in those portfolios. We really look for real estate-rich retailers, not where we can take advantage of owning or repurposing the properties. But that being said, we always take a look for unique opportunities. Albertsons obviously a complete home run. That we were able to achieve. We continue to look across the relationship spectrum that we have. And every deal is a little different, a little different shape or size. But our team is always looking for those unique opportunities to take advantage of. Create shareholder value.

Okay. Thank you. And then a quick modeling question, if I may ask. On the Waterford acquisition, the interest rate on the assumed debt.

The interest rate on the loan was 4.86%.

Thank you. Alright. Thank you.

And the next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Oh, hi. Quick one. I know over time, CapEx has been a big topic for certain property types including retail. So it looks like the midpoint of your CapEx guidance for 2025 is lower than 2024 actual was. So wondering what's driving that, and is it more timing-related or run rate improvement or any other details?

Yeah. I mean, as the tenants come online, obviously, the funding's been processed, and now you're getting the compression of the snow pipeline. So that's what we're seeing in 2025. Obviously, with these bankruptcies, right now, you know, we'd anticipate, obviously, investment would have to occur, but that would be more of a 2026 don't.

Thanks.

And the final question comes from Ki Bin Kim with Truist. Please go ahead.

Thanks for logging back in. Just a quick question on Daniel Point. I remember one of your office tenants was Spirit. Can you just remind us the structure of that deal? I can't remember if you sold that building to them. But just overall, curious about the potential impacts from their bankruptcy.

Yeah. Yeah. So, yeah, Spirit does own their own headquarters. They purchased it from us early on in the project, and then they built it and opened it. We do have a ground lease with them on the multifamily which they're current on. They are anticipating to come out of bankruptcy. If you may have read the headlines that Frontier is, you know, now going back and looking at Spirit as well. Currently, though, it's open and operating. There's, you know, nine hundred or so employees there, you know, that occupy Danny every day.

Okay. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to David Bujnicki.

Just like to thank everybody who joined our call today. We look forward to getting together with a number of you in the upcoming several weeks and at the same time have a wonderful weekend. Thanks so much.