KRG - NYSE

Good day, and welcome to the Second Quarter 2025 Kite Realty Group Trust Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Bryan McCarthy, Senior Vice President of Corporate Communications. Please go ahead.

Thank you, and good morning, everyone. Welcome to Kite Realty Group's Second Quarter Earnings Call. Some of today's comments contain forward-looking statements that are based on assumptions of future events and are subject to inherent risks and uncertainties. Actual results may differ materially from these statements. For more information about the factors that can adversely affect the company's results, please see our SEC filings, including our most recent Form 10-K. Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's earnings press release available on our website for a reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today from Kite Realty Group are Chairman and Chief Executive Officer, John Kite; President and Chief Operating Officer, Tom McGowan; Executive Vice President and Chief Financial Officer, Heath Fear; and Senior Vice President, Capital Markets and Investor Relations, Tyler Henshaw. [Operator Instructions] I'll now turn the call over to John.

Thanks, Bryan, and thanks, everyone, for joining today. The KRG team delivered another strong quarter, highlighted by our sound operational performance and excellent execution on the transactional front. Demand for space in our high-quality centers remains healthy, evidenced by our consistently solid leasing results. Blended cash leasing spreads in the second quarter were 17%, which is our highest quarterly blended spread in the past 5 years. Our ability to grow rents organically demonstrates the mark-to-market potential embedded within our portfolio. Leasing spreads for non-option renewals were almost 20% in the second quarter and 16% over the last 12 months. New leasing volume more than doubled sequentially, largely driven by 11 new anchor leases executed in the second quarter. Our anchor leasing activity included 2 new grocery leases with Whole Foods and Trader Joe's, alongside new leases with apparel, home furnishing and fitness tenants. While our lease rate declined sequentially due to the impact from recent bankruptcies, based on the depth of demand in our leasing pipeline, we will gladly trade the short-term earnings disruption for the opportunity to upgrade our tenancy and bolster the durability of our cash flows. We continue to make great progress in backfilling space with well-capitalized retailers, and to date, over 80% of the boxes that we recaptured as a result of the recent bankruptcies are leased or in active negotiations. Our small shop lease rate increased 30 basis points sequentially and 80 basis points year-over-year. In addition to pushing occupancy, we continue to have success elevating our long-term growth profile. Embedded escalators on our new and non-option renewal small shop leases were 3.4% for the first half of 2025. Activity this quarter included leases with Alo Yoga, Lilly Pulitzer, Buck Mason, Sweetgreen and Shake Shack. The consistent gains in our small shop lease rate are a result of our team's disciplined approach that prioritizes credit quality, strong starting rents and higher embedded escalators and most importantly, a compelling merchandising mix. At the midpoint, we are increasing our NAREIT and core FFO per share guidance by $0.01 and our same-store NOI assumption by 25 basis points. Our core FFO per share guidance now implies a 2.5% year-over-year growth despite the temporary disruption from anchor bankruptcies. At the midpoint of our 2025 guidance, our post-merger core FFO CAGR since 2022 stands at 4.1%. Our business is strong and will continue to improve as we lease space at attractive returns and enhance our long-term embedded growth profile. In recent quarters, we've alluded to an uptick in our capital recycling efforts to reshape the composition of our portfolio and reduce exposure to at-risk tenants. Through the first half of 2025, we've taken significant steps in executing our long-term portfolio vision. In a joint venture with GIC, we acquired Legacy West, an iconic asset that further solidifies our position as a prominent owner of lifestyle and mixed-use assets and expands our relationship with high-caliber retail brands. Subsequently, we expanded our strategic partnership with GIC by contributing 3 assets to a second joint venture, which includes 3 larger format community and power centers in Port St. Lucie, Florida and the Dallas MSA. Our strategic partnerships with GIC now comprise over $1 billion of gross asset value with the potential to grow the relationship as additional opportunities arise. In addition to the JVs, we've sold 3 noncore assets year-to-date. Stoney Creek Commons in the Indianapolis MSA and L.A. Fitness anchored center, Fullerton Metrocenter in the Los Angeles MSA, an asset that presented an opportunity to monetize our limited exposure to California at attractive pricing and relocate the proceeds into target markets and Humblewood Shopping Center in the Houston MSA, where the adjacent owner made an unsolicited offer and the sale reduced our exposure to at-risk tenants. These transactions immediately improve the quality of our portfolio, are accretive to earnings and have a modest impact on our net debt to EBITDA. As we move forward, we will remain active in refining our portfolio by reducing exposure to at-risk tenants while increasing our focus on smaller format grocery-anchored centers and select lifestyle and mixed-use assets. Our second quarter results, inclusive of the highest blended spreads in 5 years, growing our strategic partnership with GIC to over $1 billion, 3 noncore asset sales and an opportunistic bond issuance are the product of a dedicated team focused on executing our strategic initiatives. As always, we strive to produce strong results and deliver long-term value for all our stakeholders. Before turning the call to Heath, I wanted to thank our tenants and team members at Eastgate Crossing in Chapel Hill, North Carolina, for their continued partnership as we work toward quickly reopening the shopping center. Eastgate suffered flooding as a result of historic amount of rainfall caused by tropical storm Chantal. Fortunately, the company has comprehensive flood insurance with coverages well in excess of estimated damages. So now I'll turn the call over to Heath to discuss Q2 results.

Thank you, and good morning. I want to commend the KRG team on an incredibly productive quarter. I'm encouraged by the significant leasing momentum against the backdrop of a portfolio that has tremendous occupancy upside. I'm equally encouraged by the sheer velocity of transactional activity that showcases our allocation acumen and ability to seamlessly execute across our capital stack. Turning to our results. KRG earned $0.51 of NAREIT FFO per share and $0.50 of core FFO per share. Same-property NOI grew 3.3%, driven by a 250 basis point contribution from higher minimum rents, a 50 basis point improvement in net recoveries and a 30 basis improvement in overage rent. We are increasing the midpoint of our 2025 NAREIT and core FFO per share guidance by $0.01 each. This $0.01 increase is primarily attributable to lower-than-anticipated bad debt and higher-than-anticipated overage rent. Accordingly, we are increasing the midpoint of our same-property NOI assumption by 25 basis points and lowering our full year credit disruption to 185 basis points of total revenues with 95 basis points reserved for the general bad debt bucket and 90 basis points earmarked for the credit disruption associated with recent tenant bankruptcies. The 95 basis point general reserve is a function of combining the 84 basis points of actual bad debt we experienced for the first half of the year with a continuing bad debt assumption of 100 basis points for the balance of this year. As for the 90 basis point bankrupt anchor reserve, it's important to note that we realized 30 basis points in the first half of the year and expect to experience the remaining 60 basis points in the back half of 2025. This back half weighted disruption, together with the extremely strong same-store results in the third and fourth quarters of 2024 are responsible for the same-store deceleration in the back half of 2025. Finally, the sequential increase in our net interest expense assumption is driven by transactional timing, causing the balances on our revolver to remain longer than anticipated. Our investments and capital markets teams have been tireless. We sold 3 noncore assets and completed 2 joint ventures involving 4 assets with a world-class institutional partner. That represents over $1 billion of gross transactional activity. With investment-grade credit spreads at historic lows, we opportunistically returned to the public debt market by issuing a 7-year $300 million bond at a coupon of 5.2%. We also reduced the credit spread on our $1.1 billion revolver and 2 term loans representing $550 million. When all the dust settles, our net debt-to-EBITDA stands at 5.1x, which is among the lowest in our peer set. As John mentioned, we have consistently telegraphed our desire to accelerate the transformation of the portfolio within the confines of prudent balance sheet management. This past quarter is an excellent blueprint for what lies ahead. We are laser-focused on delivering strong results, exceeding expectations and creating long-term value. Again, thank you to our team, and we look forward to seeing many of you over the next couple of weeks. Operator, this concludes our prepared remarks. Please open the line for questions.

[Operator Instructions] And our first question will come from the line of Craig Mailman with Citi.

It's Nick Joseph here with Craig. I guess just on the leasing side, have you seen any meaningful changes in lease gestation periods? Has there been an increase in willingness from tenants to sign leases just as we get more clarity around tariffs?

No, I don't think we have. In fact, if you see the activity we had in the second quarter, you would say it's picked up substantially. So perhaps in the beginning of the year, maybe there was a little more indecisiveness. But at this point in time, it feels as though there's significant demand, and it's really all across the board. We mentioned how much we did in the anchor business, but we also improved our shop occupancy with a very diverse, high-quality group of tenants. So from my personal perspective, it's quite strong right now. Tom, do you want to add anything?

Yes. I think both sides are really trying to work together to find ways to improve scheduling, how to get drawings done earlier, how to sort out permits collectively to make sure they're done properly. So I'm actually seeing more cooperation between the 2 sides to open stores as quickly as possible.

That's very helpful. And then just on the actual negotiations, I mean what's the take for higher embedded escalators? What are you hearing from prospective tenants as you look to do that?

Well, I think the proofs in the pudding when you look at our results, it's clearly been successful in our ability to generate higher growth. Certainly, it's still a challenge at times with the anchor tenants, but we're quite a bit better than we were a few years ago. When you look at our anchor tenants, I think the average is like 1.5%, and it used to be like right around 1% a couple of years ago. So we've made strong strides there and with 3.4% embedded growth in the overall portfolio in the first half of the year, I'd say we're leading the pack in that regard.

One moment for our next question. And that will come from the line of Todd Thomas with KeyBanc Capital Markets.

I just wanted to stick with leasing and new lease volume in particular, which John, you highlighted, Heath, too. I wanted to ask about the forward leasing pipeline, if you can comment on July activity and your visibility to get additional anchor lease deals signed in the near term with some of the inventory that you recaptured? And also if you have any insight on re-tenanting spreads as you move ahead relative to this quarter?

Yes. Todd, I think we feel very good about the way it's picked up in the last couple of months. And I would say that where we sit here today, that, if anything, it's continuing to accelerate. We have a very good portfolio of opportunities for retailers, and there's a limited number of those spaces in good locations. So generally speaking, when we're looking at one of these deals, we have a couple of different opportunities per available space. And that was part of the point we wanted to make is that we're very focused on not how fast it happens, but rather how good the outcome is. And it's probably why the first quarter, we only did a couple of deals. In the second quarter, we did 11, right, in the anchor side. So I think the demand is strong. It's really more about us making smart decisions about what's the right merchandising mix, who has the best credit in terms of the tenants that we're looking at. And then also the growth that we talked about, we're very focused on that. But overall, it's strong. Tom, do you want to add some color?

Yes. I would. Todd, I just look at the -- look at the 11 boxes that we've executed in the quarter. Cash spreads were 36.6%. You have returns close to 25%. So when you include the first and second quarter, say you're at 13%, we're going to see that volume of new box inventory getting signed increase significantly. And we're in the process of making sure that happens. But we know we have the inventory out there to transact on. Now we just got to hit our key points that John talked about, making sure that the credit is there, the quality, the merchandising. And I think we're going to be successful with that.

That's helpful. You mentioned, John, that you would gladly trade the short-term disruption for the mark-to-market and all the tenant merchandising decisions that you're making. And Tom, it sounded like in response to an earlier question, the permitting and planning processes are getting a little bit more efficient. But does the anchor demand give you negotiating power over shortening that rent commencement time frame and that disruption seems to be a little bit of a challenge in how the cash flow and NOI growth trends. Is there anything that is under consideration or anything that you can do to sort of shorten that rent commencement period in general?

Yes. I mean, I think, Todd, the biggest thing we can do is work with the tenant, get their layouts done and then get drawing start. And we're not afraid to get drawings started early. We'll work out a reasonable arrangement in terms of a reimbursement if the deal doesn't move forward. But if we can get those drawings started, we can get the permitting started early, you start putting yourself in a positive 90-day position in terms of a normal delivery. And then we're also putting tremendous pressure on the tenant saying, look, if you want this deal, here are the terms and the parameters you need to work with us in to get open as quickly as possible. And that then gives you a leg up on other tenants that we're talking to. So we're trying to pull as many levers as possible, Todd.

One moment for our next question. And that will come from the line of Andrew Reale with Bank of America.

First, what's the latest on the sale of City Center?

City Center, we still are marketing the property for sale. In the last quarter -- well, recently, we were -- we had a buyer that was identified that is no longer capable of moving forward. So we're continuing to market the property. Meanwhile, the good news is at the property, we have some good new leasing activity. So probably just helps us, quite frankly, but we continue to market for sale.

Okay. Does the Humblewood sale satisfy the asset sale proceeds to fund Legacy West? Or is there still more dispositions if City Center is delayed?

Yes. Let me, listen, all cash is fungible, right? So to the extent that Humblewood is a replacement for City Center, I'd tell you that Humble traded at a better cap rate than we anticipate City Center will trade. So to the extent we're using Humblewood and a potential other sale to sort of complete that circle we had last quarter, it's only going to make the accretion more.

Okay. And I guess just one more. If I can just think long term, what's a realistic ceiling for small shop occupancy?

Well, I mean, Hard to say. We don't put a cap on it, right? I mean we were -- I think our occupancy in 2019 was 92.5%. And so we're obviously getting closer to that. I would think we could exceed that. And I mean, I know we can exceed it. I wouldn't think we can. I know we can exceed that. So the goal is to continue to push it. But again, no different than any of our strategies. We're always looking for the best outcome, not the fastest outcome. So -- but it happens to have a lot of momentum right now. So we feel very good about continuing to grow it.

One moment for our next question. And that will come from the line of Paulina Rojas with Green Street.

You mentioned the efforts to reduce exposure to at-risk tenants and progress on that front already. But more broadly, how are you seeing investor interest in these larger, I assume, community centers or more power center like type of assets? And are there any particular retailers that the market is showing more hesitation to absorb sharing your concerns?

To the first part of the question in terms of, I think the demand is quite strong in that category, Paulina, in the larger format. Obviously, when you look at the yield dispersion between the different property types, it can be very attractive to an investor, and there's leverage available as well. So -- and in fact, when we transacted in our second joint venture with GIC, that's a good indication of very sophisticated investor with an interest in the product type. And I think that carries through to a lot of other assets that we would consider. In terms of -- I think the second part of that about investors, I believe, having issues with certain retailers. I mean, generally speaking, when you're buying a center, especially when we're talking about the larger format centers, they're large enough that not 1 or 2 tenants is really going to change the view of the value. It's really more important to us on the backside of that just to, over time, change the makeup of our cash flow. So it's really more about us and less about what some other investor would think about a particular property.

And then my other question is, so you're starting from a lower occupancy than your peers impacted by these recent bankruptcies. To what degree do you believe that sets the stage for above peer group growth in '26 and '27? And is this dynamic something we should expect this out performance? And to what degree do you feel comfortable being held accountable for an expectation like that?

Well, that's a multipart question you got there. But I'll say this that, yes, when you look at where we are from a lease percentage and an occupancy percentage, and where we've been and you look at the activity that is brewing and that we just delivered in the second quarter, I would say we feel very optimistic that the lease percentage will gain significantly in the next 3, 4 quarters. Obviously, as Tom pointed out, when a big part of this disruption is obviously in the anchor space and the anchor space turning on rent takes time. So -- and we've always said that if you look at the deliveries that we've had and the rent commencement dates that we've had over the last few years, that generally is somewhere between 12 and 18 months to turn on rent after lease execution. So pick the middle, say it's 14, 15 months. Obviously, leases that we signed in Q3 would be lucky to begin -- we probably begin turning on rent in late '26. And then leases we signed in Q4 would obviously be turning on in '27 based on those time lines. Now the flip side of that is we're doing everything possible to accelerate that. In fact, if you look at some of the leases that we signed this year, we are having -- we have 3 or 4 tenants that are opening within the calendar year, anchor tenants. So it can be done. And that's what Tom and his team are very focused on is this can be done. So that's -- I would say that when you look at the next couple of years of growth, you look out over the next 2, 3 years, we are positioned extremely well. And I think it's not reflected in the stock. And I think whether you own the stock today or you're thinking about investing in it, I guarantee you, you won't be able to buy it for this price over the -- in the next couple of years. So I think we have a tremendous upside in front of us, and we're totally comfortable with pressure. That was the third part of your question. That's what we're here for is to deliver. Obviously, we took a hit on these bankruptcies. We were more exposed. When you look at the last major bankruptcies, we were more exposed. And that's part of our strategy to move away from some of that and boost our cash growth. So I actually think this is a great time for us and a great time to get into the stock.

One moment for our next question. And that will come from the line of Alexander Goldfarb with Piper Sandler.

John, I like that money back guarantee on where the stock will be in a few years. So gives Tom and the team a bunch to work on. So 2 questions here. The first one is on tariffs. Based on what you guys have reported and your peers, it doesn't seem like there was any impact in leasing activity, demand, anything from the retailers. So in your view, were the tariffs sort of a nonissue from a retailer perspective, either because, one, all the weaker tenants were sorted out a few years ago or two, lack of supply? Or why do you think that there was just no consequence despite the stock market turmoil, the talking head turmoil, but it doesn't sound like from a retailer perspective, there was any slowdown at all?

Well, I think, obviously, there's a big difference between the stock market, which is trading all day long, consistently, headlines are moving around. The retailers are looking out over much longer periods of time, Alex, obviously, when -- especially the national retailers who signed 10-year leases. A lot of the -- as we've all said, a lot of the retailers pivoted during COVID to diversify their distribution channels and their supply channels. Now to say it's irrelevant, it's not irrelevant. It's still a factor in the sense of stability. And we've just gotten a lot more stable as these deals have been announced over the last few weeks. There's obviously still a few major trading partners that need to be buttoned up. But I would think that it's pretty clear that we're moving to a place of stability. And that's been a big part of it. But bottom line is, it kind of goes back to the supply-demand equation that we always talk about. There is very limited supply in our space. And so when you have an opportunity to get a new space and you're a retailer looking to grow, you want to move on that. We've obviously taken a disruption in the last few months in this kind of really strange set of events with bankruptcies and then how people felt about all this. But now it seems to be very -- we're in a much better place today.

Yes, it's interesting. I mean it shows the resilience of their supply chains that they can pivot, adjust to price accordingly. Second question, Heath, can you just remind us on RPAI, I know you're not '26 guidance, but still on RPAI specifically, what is the noncash burn off that we should be thinking about as we're updating our '26?

Sure. So going in from '24 into '25, you will recall it was about $0.05. Good news is it's about half of that going in from '25 into '26. And that will be split between marks on the debt and marks on the leases.

Okay. So about $0.025.

About $0.025, correct.

One moment for our next question. And that will come from the line of Michael Goldsmith with UBS.

Given your strategic transformation and capital recycling, you probably have some of the most unique insight into the raised buyer interest in the retail real estate space. So what have you learned about the buyers? What are they looking for specifically in the centers? And how are they thinking about cap rates? And then just -- I know this is a lot, but given that you had a buyer back out of City Center, do you think that is going to be more frequent just given the raised interest in the buyer pool going forward?

To take the last part, no, I think that's kind of an aberration with one particular group and those things happen. And it's why you have a pool and you go back to the pool. But as it relates to overall, I just think that there is very strong institutional demand for open-air retail. It was a kind of a product type that some investors did not invest in for the last 5-plus years. And as the ground has got a lot firmer and returns have improved, you've seen a lot of people move into the space. I just think it's a great kind of risk-adjusted return for investors when you compare it to other product types, certainly from a going-in cap rate perspective, but more importantly, from an IRR perspective. And so I think that you're just seeing a catch-up. There's people that weren't in the space that now are very actively trying to rebalance their portfolios. Obviously, if you look at the typical institutional investor, they were probably overweighted to office, and now they're probably pivoting to other things, including retail. And when you look at the IRRs that can be generated, this is -- if you ask me, it's still undervalued. I mean, I would say that's going to change. And so you can't put one specific cap rate on it because of the different product types within the retail genre, so to speak. But it's -- demand is strong, and I think we continue to transact on both sides.

I would say that we're seeing some themes in product type, Michael. Obviously, core grocery, that demand has remained steady. You're seeing a pickup in demand for larger format. That's a lot due to just the capital formation that's happening and the return hurdles that these guys need to make. So you're seeing, again, a better bid for larger format because of the ingoing yield. And you're also seeing sort of the lifestyle mixed-use also increase in the buyer pool, also the sellers as well. Legacy West, for example, Scottsdale Quarter, Birkdale Village, you're starting to see more of these sort of generational lifestyle assets trading and pricing accordingly. So it's been really interesting. We're seeing broad demand across the entire spectrum of the asset class.

That's super helpful. And as a follow-up, you noted earlier, over 80% of the boxes that you recaptured as a result of the recent bankruptcies or leased or in active negotiations. For the remaining 20% or so, are those in lesser locations and maybe more difficult to lease? Or is that just kind of the result of timing and competition and whatnot? Just trying to get a sense of the first 80% came pretty quickly. Does the next 20% take a little bit longer to get done just due to like they're just -- they're not as in demand?

Yes. No, I don't think it's necessarily about that. And I don't think you can paint a broad brush when you're talking about 20% of these vacant boxes. I mean if you go back in time, I think we peaked at like 98% occupancy in our box inventory. So I mean, you're always going to have some that are more difficult than others and for various reasons. But also, I think it goes to the way that we negotiate and the objectives that we have. We -- I can't overemphasize the fact that this is not a race to fill space. This is more about creating value for our stakeholders over the long term, not the short term. And frankly, if we wanted to fill space in a race, we would have done some deals that we don't want to do that just aren't good for the long-term value of the shopping center. So I think it's all going to come together over time, and we're just not counting quarters. We're thinking about the next 2, 3, 4, 5 years.

One moment for our next question. And that will come from the line of Cooper Clark with Wells Fargo.

I wanted to ask about the JVs with GIC and comments earlier on continuing to grow the relationship. Could you provide any color on the current pipeline of deals you're underwriting with them on the acquisition side? And how we should think about the JV portfolio at GIC growing longer term as you execute on some of the strategic goals?

Yes. I mean, look, in terms of our relationship with GIC, of course, we couldn't be more happy to partner with one of the world's most active and sophisticated investors. I don't think we want to comment on specifics on underwriting with them. But bottom line is, as Heath mentioned, there are more and more opportunities for larger scale deals that we could look to JV. We both have an understanding of what each other is interested in. So we will go about that one at a time. But yes, we're super happy with the relationship, and we want to go do a great job for them as a partner. Heath, do you want to comment?

Yes. I would just mention that neither party has a specific mandate. We don't have to or exclusive with each other. To the extent that we're looking at something that they find interesting, that's where the opportunities will arise. So we don't have to partner with them on the future, neither with us. So again, it's been a great partnership, over $1 billion in value, and certainly, it's repeatable.

Let's just say it went from 0 to $1 billion pretty quickly.

One moment for our next question. And that will come from the line of Floris Van Dijkum with Ladenburg.

So going back on legacy and returns, I think you talked about a 6.5% return that you're getting from that investment. How does that compare to the latest Power Center deal that you just disposed? And then maybe also talk about the purchase accounting because I think your prior 6.5% cap was a cash yield. The GAAP yield, how does that differ? And what does that mark the retail market -- retail rents to market at? If you can give some more details, please.

Sure. So I'll first start with the yield, Floris, and you're correct and you're remembering correctly, which I think is a really elegant part of this joint venture transaction is that our effective yield, taking into account the management fees on Legacy West is right around 6.5%. Conversely, the 48% that we contributed into the partnership, the sell yield on that is also 6.5%. So in essence, what we're doing is, we took portions from our power centers and we used it to buy a portion of Legacy West at the same exact yield, which we think, again, is extremely elegant. In terms of the purchase price accounting for us, it is going to be on a noncash basis, minimally accretive. So basically, we're saying is that the mark-to-market on the below-market leases is greater than the mark-to-market on the below-market debt. So again, slightly accretive, nothing material, but net-net positive.

Great. And then I guess my follow-up, more, I guess, maybe for Tom or John, but your recovery ratio, I believe, is the highest in the sector, around 92% and it went up even though your occupancy went down this past quarter. I'm curious, what are the initiatives that you are doing to keep improving that recovery ratio? And how much higher can that go? Is there a ceiling there?

Well, I don't -- I mean, first of all, as you said, we are, if not the highest, one of the highest recovery ratios. I think the first thing to look at is that we have probably the most fixed CAM in our portfolio as compared to peers. And that's taken years to develop. So you can't just start it and think that it's going to make a big impact in a year. We've been working on this probably for 7 years of converting to fixed CAM. 94% of the deals, I think, or maybe 95% of the deals we've done so far this year have been fixed CAM. So we know what we're doing in that space. And again, it's not just a simple transition. You have to kind of understand how do you run these portfolios when you set a budget and you need to hit that budget. I think we're very, very aggressive about how we operate. You know how we do that. You've seen how we do that, Floris, on the ground. And that flows through the whole organization that everyone is very laser-focused on efficiency, but yet presenting a Class A product, which obviously we have, and you've seen that, too. So I think it's -- I would turn to that and then just overall expense control, how we control expenses at the property, how we control expenses in terms of pass-through. So it's not just one silver bullet. It's a way of living. It's a way of operating. Tom, do you want to?

Yes. I mean this is really where the team earns their keep, and this is where the grinding occurs in terms of making sure we're bidding out these contracts every year, getting efficiencies, doing the things that we need to do while keeping the balance that John said of delivering a first-class center. But I think we're even more proud of not just the components of fixed CAM, but that below the belt just really digging into the numbers, and we'll continue to do that.

One moment for our next question. And that will come from the line of Hongliang

Two questions. I guess the first question, with the fact that you have 2 JVs with GIC, could you provide some guidepost to how we should think about how the equity and JV line should trend for the rest of the year?

You mean from an accounting perspective?

Yes, within the income statement.

Okay. So geography-wise, on the balance sheet, you're going to see it all netted out and unconsolidated subsidiaries. And then you also see -- you'll see the NOI, the depreciation and the interest expense all netted out again in the income statement under the unconsolidated line. However, what we've done is in the new presentation in the supplemental, you'll see we've consolidated all. So we've given you all those pieces individually, and that's for all of our unconsolidated JVs. So take a look in the supplemental, and you'll see the information in there.

Got it. And I guess my second question, your noncash rents bounced around a little bit so far this year. I was just wondering if there's anything onetime in the current quarter's numbers tied to the bankruptcies.

I don't think there's anything. There's just natural lumpiness in that sometimes. So there's nothing in there that's -- other we had -- with the Big Lots bankruptcy, we did have a onetime acceleration. So other than that, it shouldn't be too bouncy.

One moment for our next question. And that will come from the line of Alec Feygin with Baird.

I guess one for me is what is the appetite for share buybacks today?

I mean I think like we always say, we have -- we concurrently have a buyback plan in place and an ATM plan in place. And we always want to be thinking about that from an opportunistic perspective. Also, what we've been clear about is that we're spending a lot of capital right now and getting really high returns on the backfilling of the space. And we still are growing our dividend, and we still generate free cash flow. So bottom line is, I think we're always looking at that and always thinking about it. Certainly, as we move forward over the next several quarters and continue to backfill and continue to generate new cash flow, that probably becomes more of an opportunity to look at. But you never know. I mean we're always analyzing the best place to invest.

One moment for our next question. And that will come from the line of Ken Billingsley with Compass Point Research.

I wanted to follow up just on the anchors. You had discussed and it was in the press release about -- on the new anchor cash lease spread of 36%. And just looking at the supplement, that looks like that was about 40% of anchor signing in the quarter. What were you getting on the other piece?

I'm not sure we understand. Can you -- comparable versus noncomparable?

Ken, are you trying to ask what's the comparable versus the noncomparable anchors? Or what's...

The new anchor leases looks like it was 207,000 feet, but it looks like you did 557,000. So I was just curious what you were getting on the other 350,000. What was the lease spread on those anchors?

Yes, I believe those are probably close to 25%...

And as we look into the remainder of the year, the expiring ABR, I think it was $20.11 that jumped up. It's a very small sample, so less than 200,000 square feet. Is there any reason that that's significantly higher? Is there something unique about those tenants? Or are we likely to still see over 20% cash lease spreads through the remainder of this year, even on that group?

Yes. I would say that, that composition of that pool is shop -- is more shop heavy, which is why you're seeing a higher number. So there's nothing really happening there other than just the mix of leases that are left to get done.

So nothing unique about those anchor tenants themselves that to be done. Okay.

And that will come from the line of

This is

No. I think in terms of performance, I think when we look at our markets, it's pretty broad-based in terms of -- I think it's pretty tightly packed together in terms of how these markets are performing. We continue to be happy with the composition of our portfolio. I think we had made it pretty clear that in terms of California, that our representation there just was not big enough for us to continue to want to be there, quite frankly. And look, the reality is there are some difficult things about doing business there. But we only had 3 properties in California. We've sold one. One of them is going through a rezoning, which we will then sell. And then the third one likely would be probably a candidate to sell as well. But as it relates to the rest of the -- those markets like Seattle and New York and Chicago, which we would consider gateway markets. We feel very good about our positions in those markets. That being said, we're always thinking about it. We're always thinking about what's the best place for us to operate, where do we generate the highest return. We compare margins. We look at demand in the pipeline. But right now, that demand is pretty strong across the board. And I think if you look at where we're doing deals, we're doing deals across the board in all those markets that you mentioned. So we'll see how it evolves. We're very happy. By the way, we have 40% of our revenue comes from Texas and Florida. We still think that that's pretty smart. And then the balance in the Southeast has become -- is strong, too. So we'll continue to always monitor it, but we're happy where we are right now.

I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. John Kite for any closing remarks.

Well, I just want to say again, thank you all for taking the time to be on the call with us today, and we look forward to seeing you soon.