Hello, and welcome to Kimco's Third Quarter 2021 Earnings Conference. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions [Operator Instructions] Please note today's event is being recorded.

I now would like to turn the conference over to Dave Bujnicki, Senior Vice President of Investor Relations and Strategy. Please go ahead, sir..

Good morning, and thank you for joining Kimco's Third Quarter Earnings Call.

The Kimco management team participating on the call today include Conor Flynn, Kimco's CEO; Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; David Jamieson, Kimco'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's operating results. Reconciliations of these non-GAAP financial measures can be found in the Investor Relations area of our 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, and thanks for joining us. Today I will share the highlights of the quarter, provide a recap of our now closed strategic merger with Weingarten, and give update on the strong leasing environment.

We're also giving an update on the transaction market, and Glenn will cover our operating metrics in detail, discuss our improved balance sheet, Albertsons valuation, and the proactive use of our ATM and how we can take advantage of opportunities in the market. He'll close with an updated outlook for the balance of the year.

While we have only owned Weingarten for a partial quarter, our expanded portfolio of grocery anchored and mixed-use properties is already validating our investment thesis. To-date, we are exceeding our initial underwriting on all major metrics, including FFO, occupancy, spreads, and renewal rates.

As for synergies, as outlined in our earnings release, we have achieved the upper end of both ranges and anticipate achieving the full benefit of synergies by the end of 2022. our dedicated team has done a remarkable job closing.

Another merger ahead of schedule and implementing an integration plan that included onboarding and training over 100 new employees, significant systems integration, and property management, all while staying focused on executing our strategy. To all of my teammates, I just want to say, thank you.

On the operational front, leasing demand continues to be robust across the portfolio with the bright spot being the rebound in demand for small shops. This was illustrated by the portfolio delivering another quarter of improved results, including a sequential increase in occupancy and positive leasing spreads. Our pro rata U.S.

occupancy is up 20 basis points to 94.1%, while anchor occupancy remained flat at 96.9%. Small shop occupancy rose 180 basis points over prior quarter to 87.3%, an increase of 60 basis points year-over-year. New lease spreads were +5% with 141 new leases signed totaling 605 thousand square feet. Spreads for renewals and options finished at +4.9%.

We closed the quarter with 270 renewals and options totaling 1.4 million square feet, exceeding the 5-year average number of renewals and options reported during the third quarter by 40%, and exceeded average GLA renewed by 38%.

Combined spreads for third quarter 2021 were +4.9%, with total 3Q '21 deal volume reaching 411 deals totaling 2,050,321 square feet. 411 leases executed represents the most transactions reported during a quarter since the first quarter of 2018. Our same-site NOI growth was +12.1%, including a 30-basis point contribution from redevelopments.

The same-site population does not include the Weingarten sites, since we only had them for a partial quarter. With the continued strength in leasing, we have maintained our 300 basis points spread of leased versus economic occupancy, similar to last quarter.

As of September 30, 2021, we had over 400 signed leases representing 44.8 million of pro rata annualized base rents awaiting rent commencement. While the operating environment remains favorable, we cannot let down our guard. Inflation, supply-chain issues, and the labor market together or alone can impact our business.

And that is why we continue to look for the most resilient assets, improve operational efficiencies, and seek out ways to help our tenants succeed. We continue to grow our portfolio in the high-growth Sunbelt markets, and are committed to being the last mile solution for tenants.

There is no question that our mission critical last-mile brick-and-mortar locations are proving to be durable solutions for consumers, retailers, and many other businesses that want scale and reach to serve the end customer.

In closing, we are pleased with the progress we have made and believe that we have positioned Kimco for sustainable growth over the long term with a combination of internal and external growth levers. Our talented and deep team is focused on execution, as we are in a unique position to take advantage of a wide range of opportunities.

We continue to believe we're building something special, and the best is yet to come.

Ross?.

Thanks, Conor. And good morning. It's been quite an exciting quarter at Kimco and the excitement has continued into the fourth quarter, as I will discuss shortly. There is no question that open air shopping centers provide one of the best risks adjusted returns of all asset classes.

We continue to see additional capital sources, new and old, gaining conviction in quality, open air retail, leading to the compression of cap rates. We are fortunate to be in a position with multiple investment strategies that enable us to be active when opportunities arise but also patient when things become too frantic.

With the finalization of the Weingarten merger, we've been able to execute on several accretive investments and new initiatives. And with the addition of new joint venture partners inherited through Weingarten, we are excited about potential growth opportunities.

Subsequent to quarter end, we acquired the remaining 70% interest in a portfolio of six Publix -anchored, Sunbelt region shopping centers from our existing joint venture partner, Jamestown, for a gross purchase price of $425.8 million.

The Publix-anchored assets represent over 1.2 million square feet of gross leasable area in infill markets throughout the Southeast, with 5 located in the top-performing South Florida market and one in the high growth Atlanta market.

Subsequently, Kimco entered into a joint venture partnership with Blackstone Real Estate Income Trust, under which we will both own 50% and Kimco will continue to manage the portfolio. It is rare to have the ability to buy a portfolio like this with short-term mark-to-market opportunities and exceptional tenant sales.

We are thrilled to be partnering with Blackstone again on our new strategic venture. Also, post-quarter-end, and in-line with our value creation strategy, we were successful in buying out our partner's 85% interest in 2 grocery-anchored centers in California. Anaheim Plaza is one of the jewels of our Southern California portfolio.

with extraordinary highway visibility on frontage and two grocery anchors at the same property, both performing exceptionally well. The second asset is Brookdale shopping center, located in Fremont, California, anchored by a lucky supermarket and CVS. The gross purchase price of the two assets was $134 million.

Turning to our redevelopment program, it continues to move ahead, beginning with property level entitlements and then selectively and creatively activating a few at a time.

While the structure and exit strategy are determined on a case-by-case basis, we see the upside, knowing these infill locations are being built at a significant relative spread to the stabilized cap rate. Comps in multi-family industrial and other asset classes are regularly transacting with cap rates starting in the twos and threes.

Additionally, we're continuing our structured investment program with a disciplined approach and an emphasis placed on location, demographics, quality of tenancy, and operational strength of the sponsors.

We view the base case of these investments as a true win-win, either generating an attractive return with a repayment down the road, or exercising our right of first refusal and owning the properties outright. On that front, we completed a $21.5 million mezzanine financing on a strong performing center in San Antonio called Alamo Ranch.

In just a few short months, San Antonio has gone from a market that was on our target list at Kimco to a major contributor in our portfolio with the Weingarten merger and now our second structured investment there. We continue to pursue additional opportunities in San Antonio, one of the fastest-growing MSAs in the country.

We also sold 3 small low growth assets this quarter, 2 single tenant boxes, and an undeveloped parcel for a total of 23.5 million at a flat 5% cap.

While these positions will remain a relatively small component of our investment strategy, we will be prudent in disposing of low growth assets and undeveloped parcels from which we can redeploy the capital. To repeat Conor 's statement, we are confident that the best is yet to come. Off to Glenn for the financials..

Thanks, Ross, and good morning. We are pleased to report very strong third quarter results. Overall, the portfolio continues to produce improving results, including record quarterly revenue, increased occupancy, positive leasing spreads, strong same-site NOI growth, increased collections, and lower credit loss.

Our balance sheet metrics are also at the strongest levels ever. As you might expect, the completion of the $5.9 billion Weingarten merger, which closed in early August, was a key contributor. While we did not have a full quarter of contribution from the addition of the Weingarten portfolio, the benefits are clearly apparent.

Our team has put in enormous effort to accomplish the successful integration of Weingarten in a very short period of time. Many thanks to our highly motivated and skilled team; we couldn't be prouder. Now for some details on our third quarter results.

NAREIT FFO was $173.7 million, or $0.32 per diluted share, and includes $47 million or $0.08 per diluted share of merger-related expenses.

This compares to the third quarter 2020 NAREIT FFO of $106.7 million or $0.25 per diluted share, which includes aggregate charges of $16.1 million or $0.04 per diluted share related to severance for a voluntary early retirement program and early redemption of $485 million of unsecured bonds.

The increase in FFO was primarily driven by higher NOI of $98.7 million of which the Weingarten merger contributed $62.6 million. In addition, NOI benefited from lower credit loss of $30.7 million and higher straight-line rent of $14.5 million. Including $2 million from the Weingarten portfolio.

Improvements in collections and new leases commencing during the quarter were the major contributors. Specifically, during the third quarter, we collected approximately 98% of base rents. We also collected 80% of rents due from cash basis tenants, up from 77% last quarter.

Furthermore, collections of prior period amount from cash basis tenants totaled $8 million during the third quarter 2021. Our cash basis tenants comprised 9.1% of pro rata annualized base rents.

If we excluded the addition of the Weingarten cash basis tenants, this amount would have been 7.3%, which compares favorably to the 8.8% level reported last quarter.

In connection with the preliminary purchase price allocation for the Weingarten transaction, the debt we assumed was recorded at a fair value, which was $107 million higher than the face amount.

This resulted in $6.2 million of fair market value amortization for the third quarter, which reduces interest expense and is also part of the FFO improvement. We expect to finalize our purchase price allocation by year-end.

During the third quarter, FFO also included approximately $6 million or $0.01 per diluted share related to onetime contributions from several joint ventures and higher lease termination fees. Turning to the balance sheet, we had an active quarter in the capital markets.

We issued a new $500 million unsecured bond at a coupon of 2.25%, the lowest coupon for 10-year unsecured financing in the Company's history. Proceeds from this issuance were primarily used to fund the cash component of the merger consideration and the merger costs.

We also opportunistically used our ATM equity program to issue $3.5 million shares of common stock, raising almost $77 million in net proceeds to fund some of the investment activity Ross just mentioned. This is an addition to the 179.9 million shares of common stock issued in connection with the Weingarten merger, valued at $3.7 billion.

We also assume $1.8 billion of debt, including the fair value adjustment as part of the Weingarten merger. Total common shares outstanding at quarter-end was $616.4 million. And we expect this should be a good guide for the fourth quarter. As anticipated, the Weingarten merger was a deleveraging event.

As of September 30th, net debt to EBITDA on a look-through basis, including pro rata share of joint venture debt and preferred stock outstanding was 7 times. This metric, only includes 2 months of EBITDA from the Weingarten merger. But all of the debt assumed on a pro forma basis, including a full quarter of EBITDA from Weingarten.

Look through net debt to EBITDA would be 6.3 times, representing the lowest level since we began tracking this metric. Our liquidity position also remains very strong. We ended the third quarter with over $450 million of cash and full availability on our $2 billion revolving credit facility.

In addition, during the third quarter, the value of our Albertsons marketable security investment climbed to more than $1.2 billion after increasing by $457 million, which is included in net income, but not FFO for the quarter. We continue to evaluate our opportunities to begin the Albertsons monetization process.

As we look ahead during 2022, we will have a variety of potential uses for the capital, from the redemption of our preferred stock issuances that become callable, bonds that mature in October and November of 2022, and accretive investment opportunities.

As our overall business continues to recover from the effects of the pandemic, and as we begin to benefit from the successful merger and integration of the Weingarten portfolio, we are raising our full-year 2021 NAREIT FFO per share guidance range to $1.36 to $1.37, which includes $0.10 per diluted share of merger-related costs, and the inclusion of the Weingarten portfolio for 5 months.

This compares to previous NAREIT FFO per share guidance of $1.29 to $1.33, which did not include any impact from the Weingarten merger, except $0.01 related to merger costs.

As I touched upon, our third-quarter FFO includes a total of $0.03 per share related to items that were more one-time in nature and which were not budgeted for as recurring items. This includes $0.02 per diluted share from improvements in credit loss, and another penny from contributions from joint ventures and lease termination fees.

We will provide initial 2022 guidance on our next earnings call. And with that the operator will take your questions..

We want to make this an efficient process. So, you may ask one question with an additional follow-up. If you have additional questions, you're more than welcome to rejoin the queue. You may take the first caller..

Yes. Thank you. As mentioned, we will begin the question-and-answer session. [Operator Instructions] At this hour, we pause momentarily to assemble the roster. And the first question comes from Rich Hill with Morgan Stanley..

Hey, good morning, guys. First of all, congrats on a nice quarter. I wanted to start off with leasing spreads, maybe get some insights from you guys if this is what a normalized market feels like. I typically look at leasing spreads as leading indicator for same-store revenue and same-store NOI.

So, I'm curious, does this feel like a normal environment to you post COVID?.

Yeah, thanks, Rich. Good question. So, leasing spread, I imagine each quarter, it's really dependent on the population that is rolling and gets executed quarter-over-quarter. So, you do see volatility in that number.

Some quarters you could have significantly below market leases that role and you execute and any obviously you'll get a real net benefit out of that. This quarter we had, outsized amount of small shop volume, that came through which is typically closer to market.

So that's where you see that sub-5 range for this quarter, but it's not indicative necessarily what could happen next quarter if you have some outsized anchor activity that has a significant below market value that you can recapture. So, when you look at what we've been doing over the last trailing eight quarters and maintaining that positive spread.

There is some volatility in that number, and it's really just indicative of what's rolling..

Some pretty significant pricing power on escalating rents in the Sunbelt. I think that's where you're going to see the spreads continue to be quite strong as we're seeing really the market rent growth there outpaced the rest of the country..

Yeah, that's helpful. And the reason I'm just focusing on it is, I go back to your 2020 to 2025 guide. If you can put up these leasing spreads, that might mean that's a conservative guide, but well taken. Conor, maybe this is for you. I noted that Albertsons is worth $1.2 billion at the end of the quarter.

Have you given any thought to monetization, how you would use that in capital allocations? Any thoughts there?.

Yeah. As we noted in the remarks, we have a lot of optionality. I think that's the beauty of where we sit today, Rich. If you look at the business and where we sit, we've got obviously a lot of leasing momentum. Clearly, we're going to allocate a lot of capital to that. That's our first priority as that really fuels the earnings growth.

Then we have redevelopment opportunity as well. You've seen the entitlement work we've done throughout the portfolio. And the nice part is we're seeing a lot of external growth opportunities as well as Ross outlined. We do have some debt reduction opportunities as Glenn outlined in his script.

We're going to look at the menu and see what's really the most accretive towards our FFO growth because that's really where we're focused and we have a lot of different levers to pull, so it's a nice bucket of capital to redeploy.

It's not earning a tremendous amount right now, so we're going to be prudent with it and recognize that we have a great, great many to select from..

Great. Thanks guys. Congrats on a good quarter again. I'll jump back in the queue..

Thank you. And the next call comes from Alexander Goldfarb with Piper Sandler..

Hey, good morning. Good morning out there. Two questions. First, just going to the -- I know you guys are going to return to the Kimco 's name, but the sub-five CapEx that you guys bought at. 1. Just a little bit more beyond what is underlying that sub-five. 2.

Just bigger picture, not surprised to see CapEx compressing, but how do you guys -- how was your underwriting of acquisitions, whether portfolio or individual assets changed? Because obviously the price that you paid for Weingarten can't be replicated today.

So just curious how you're underwriting deals today, given where pricing is going?.

Yeah, sure. Happy to address that, Alex. As it relates to the venture with Blackstone, these are clearly 6 assets that we felt very strongly about. Between the location, Publix being one of the best grocery anchors that you can possibly have with exceptional sales.

As I mentioned, the script, having near-term mark-to-market opportunities in Publix anchored centers is somewhat rare. So, when you look at the vintage of those assets, it gives us an opportunity to create some additional growth probably sooner than some other opportunities that we have in the portfolio with Publix.

So, we're really excited about that. We're really excited about re-engaging our venture with Blackstone after a very successful one several years ago. Underwriting is still a very specific exercise.

If you look at every single asset, every single space taken into consideration the growth in the market's demographics, where the population growth is coming from, and just making sure that we have very strong conviction in our ability to push rents. We're not looking to invest in assets that don't have out-sized growth.

So, the ones that you do see us pulling the trigger on, you can rest assure that we believed very strongly that we're going to be able to push that out-sized growth beyond the average of our portfolio. So, I don't think that there's anything specifically changing in terms of our underwriting strategy, whether it's a single asset or portfolio.

It's really just making sure that we look at every single asset, every single space, and feel pretty good that there is below market leases that we can push over time..

So, as far as the Blackstone, the sub stock, what would you say that cap rate will get to in a few years out when you have an ability to roll rents?.

Yeah, it's hard to predict. We have opportunities to discuss things sooner than later, hopefully with the grocery anchors. So, the timing is going to depend on where those negotiations go. But, like I said, we're very confident that the growth there is going to outpace the average of our portfolio, hopefully by a wide margin..

Okay. And then the second is, as far as retailer demand for space, are you sensing -- not those retailers ever want to pay more in rent. Are you sensing that that rent conversation is easier today? So, when you're saying, "Hey, look, we have multiple tenants for a certain space. You guys have to pay more.

" Now, the tenants are more willing to engage in those conversations, whereas maybe a few years ago, they were more willing to push back? Do you sense a change there in the leasing dynamic in the rent discussion?.

Yeah. Great question. Dynamic is always evolving and I think where we are today is there's so much pent-up demand on the open to buy-side for retailers. So, you have some retailers that have really expanded the breadth of their offering. They have multiple brands that they're looking to expand, TJX being a great example.

And they actually increased their open-to-buy targets. So that just makes them more competitive for space. They want space, they need to grow. I think COVID -- the silver lining through COVID is that brick-and-mortar is essential for any omni -channel strategy. Retailers have really come to appreciate that. Customers have appreciated that.

It's a great form of distribution. The margins are better there. And then thirdly, obviously there's no news development supply coming online. It's really COVID inventory that's getting absorbed. So, to that third point, I think generally speaking, as more of that gets absorbed, you're able to push friends further north.

That said to Connor's point earlier, we are seeing REM progressions in the Sunbelt and coastal markets, Southern California, for example, is becoming extremely competitive. Where we are seeing some nice traction pushing that run forward even beyond where we were pre -pandemic levels.

But I'd say generally speaking, you are in a very healthy environment from the landlord perspective as a result of all those variables. Thank you..

Thank you. And the next question comes from Greg McGinniss with Scotiabank..

Hey, good morning. So, thinking about the synergies, which I guess I was pleasantly surprised to you guys, expectation at the top end of those synergies.

But given the fairly quick achievement of those goals, is there any potential for additional cost savings through 2022 perhaps?.

Yeah, there are, yes. So, we're really proud of the team and how we're able to integrate both companies so quickly that the majority of those initial synergies were really related to staffing and G&A, which is something that you could anticipate and plan for pre -merger.

What we're really seeing now as an opportunity, once we merge these companies and really looked at professional services,.

information technology, and the longer-term contracts at Weingarten had had where we can now merge them and or dissolve at some in time will create some additional synergies that will help us push that number further northward. From the outset, we felt very good.

We invested a tremendous amount of time upfront with the integration management office, kicking off 60 days prior to the merger. We really did a deep dive on how the combined Company will look and operate, which enabled us obviously to achieve the numbers we did today and feel very good about what's going to get happen in 2022..

Maybe one thing I would add is Kimco is laser focused on efficiency. We always have been built-in -- has ingrained that in our DNA. So yes, we're happy with the integration and where it is today, but we're a combined entity going forward. And so, we'll make sure that same focus continues going forward..

Okay, thanks. Going back to the shop leasing really quick. Is there anything you can tell us in terms of the trends you're seeing in that space? How much of that demand may have been in that demand which tend to categories and generating most inquiries and demand for space? Any color there would be appreciated..

Sure. Yeah. There's demand across almost all categories right now. Grocery is the obvious one. They're the clear beneficiary of the pandemic. They now have the surplus cash that they're looking to reinvest in their four walls. Expand our open-to-buy, grab market share and really investors future, so how did they create better connected to the customers.

So that's going to be really important for them as well as all sectors. Off-price, as I mentioned earlier at CJ about bras, Burlington, and others, Old Navy, they're all actively expanding their footprint. Again, they see, I think all retailers see this opportunity, where it's a short window to upgrade the quality of their portfolio.

Maybe penetrate a market or expand their market share in certain areas that pre -pandemic there was no inventory available. And so, you do have this COVID inventory that's creating this unique opportunity for them. But what I found was actually interesting.

This last quarter when we go back to our small shop activity, is that 35% of our new deal activity was related to restaurants, and the fast casual side on the small shop side. So, it's nice to see the fast casual and QSRs are coming back; the crumble cookies of the world, etc. So, you're starting to see that expand out.

And I think as COVID anxiety starts to subside, people want to go back and reengage. They want to socialize for social creatures. That's creating that opportunity on the food service side. Fitness, that the value-oriented fitness, Planet Fitness. I mentioned early on several quarters ago that planning crunch.

And I'm very proactive and wanting to expand their footprint and recapture. You're also seeing that now extend out into the boutique fitness categories. So that's again, attracting the small shops. So, you are really seeing it from a variety of areas and then people are playing with formats.

With [Indiscernible] who's experimenting with the smaller format right now. So, it's giving them optionality, appreciating that they may be able to provide different service offerings to different customers and different areas. And so, it's important that they have a power to lakefront..

Thanks.

And this all seems like sustainable demand in your view? Like if you look at the forward pipeline still just as strong as it has been?.

I do. I think it goes back to the validation of open-air, and the validation that brick-and-mortar is an essential part of any retailer strategy.

We've obviously gone through a very volatile evolution over the last 6 years about people's views and opinions, and now the market's responded to different ideas related to e-commerce and whether or not what's essential. But let's go all the way back to the core basics.

People like to engage, people like to touch and feel product, retailers need multiple forms of distribution to reach that customer. And so, brick-and-mortar we see it very much as being essential to them..

We're more convinced than ever that last mile retail is where we want to be and where we want to continue to focus strategy. If you look back five years ago, that's exactly where we're focused. And so, we feel like we're in a really good spot to benefit from that increased demand..

Great. Thank you..

Thank you. And the next question comes from Michael Goldsmith with UBS..

Good morning and thanks a lot for taking my question. My questions on the lease side. We thought you've been seeing the occupancy spread. Given that, there is a myriad of supply chain and labor issues. And maybe a slowdown from lease signing to rent commencement.

Like, how should this, how should this metric kind of progress from here, given that the time to go from lease signing to rent commencement is expanding. And at the same time leasing has been so strong.

How did those dynamics impact you -- impact the progression from here?.

Sure, the question is whether or not least economic will expand or contract as we look out into the future. And I think what we could see is 300 basis points is more or less at our high watermark on a historic basis.

And you could see some additional expansion as we approach first part of '22, but as these tenants start to come online and open, you are going to start to see that compression set in through the back half of '22 and into '23. And then, I believe our normalizer is on 170 basis points on spread.

I don't think you see that for a period of time, but you are right. To your points about supply and opening to something that we watch it very, very closely. We worked hand-in-hand with our tenants. We have a very substantial tenant coordination program, which really is designed to shepherd tenants through the permitting and build-out process.

Those that don't have the resources available to them to address all of these issues that are coming out to the market. Obviously, that's been really helpful. In addition to that, we're trying to get well ahead on pre -ordering supplies and materials when we can, when it makes sense. We all lived through the backlog.

It doesn't matter who you are and no one's immune to it. So, we're just eyes wide open about that process. We will manage it as best we can and apply the resources that we need to do to get it done..

I would just have the one big benefit that Kimco has is our scale and our efficiencies of scale. So, we were not buying small amounts of HVAC units or roofing materials or anything that's needed for a fit-out for a specific tenant. We usually buy in bulk and we usually get premier pricing as well as relationship pricing.

So, we feel like we have the ability to, as Dave mentioned, to utilize our network and to utilize our efficiencies as best we can to try and mitigate supply chain issues..

Scale is a good segue to my next question.

Now that you've had Weingarten tucked into business for about 3 months, how can -- how has your scale changed your conversations with national tenants? Is there a willing -- is there willingness to partner and -- you've used tenants to go further with you because of your scale and you're able to offer more opportunities for leasing than maybe smaller landlords?.

I think --.

I'm trying to understand the revenue synergy. I'm trying to understand like if there are revenue synergies associated with the transaction. Thanks..

Sure. Well, on the retailer side, I mean, prior to the transaction, we're typically the largest landlord for a lot of these retail partners. So that's just compounded as a result of the merger. That conversation obviously always has its benefits. They can pull both ways, dependent on what's being discussed.

But in general, it does afford us the opportunity to be out in front of those retail partners. They have a very aggressive opening buy strategy. We now have over 560 sites that we can show them to help accommodate and still fill that void. Obviously, you can do that at scale. That's a good thing for both parties.

But also helps us progress the conversation beyond that. Retailers are trying to figure out and innovate and change to become and stay more relevant to the customer.

We want to work with them to be part of that solution and understand from a landlord perspective, what do we need to do? So, it creates a very, very constructive dialogue to help drive our business forward and to your point, revenue and top-line growth..

Thank you very much..

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

Hey, good morning..

Morning..

Morning..

So, The recent JV, the transaction with Blackstone, I found very interesting, a case study of capitalizing on the market moves in cap rates. And then you bought the 2 JV assets out in California, further spotlighting the embedded acquisition opportunities.

So, I guess my question is, what's your interest level in pursuing further deals like this? And can you discuss the funding sources if that would involve Albertsons stock at all? Thanks..

Sure, happy to address that. So, for us, we really view it as a significant level of optionality. We've said, even as we've been skinning down our joint venture exposure over the last 7 or 8 years, on the Kimco side, we've had 3 very strong long-term partners that we continue to do business with.

And as we've said from the start that we like having the ability to potentially grow opportunistically if there is the reason to bring in a new partner, like you felt here on this particular transaction.

But for those that are potentially looking for a monetization event, we are willing and able to be able to have that discussion with them, hopefully in a negotiated basis, if not having that right of first refusal to be ready to take advantage of that if the partners looking to exit.

So, one of the nice benefits that we see in the Weingarten merger is after getting down to really just three major partners on a Kimco side, there are now about 14 new joint venture partners from that transaction, some of which are looking to do long-term business with Kimco and we welcome that.

Others that are potentially looking to take some chips off the table or monetize their retail investments, and we're also prepared to have those discussions as well. And we are having those conversations as we speak. So, for us, given all the levers that we have, Conor mentioned and Glenn both mentioned in their prepared remarks.

Between the significant amount of cash availability on our credit facility, ultimately, Albertsons monetization opportunity, we'll just be very prudent and selective with where we want to utilize that capital, but having a lot of different ways to take advantage of opportunities as they present themselves..

Great. Appreciate the thoughts. One follow-up on the side but not least ABR, I think you mentioned $44.8 million. How much of that should we expect to hit in 2022? Thanks..

Right now, we're tracking around $25 million to about $30 million potentially that could flow in '22. And that would be obviously back-loaded..

That remainder in '23?.

Yeah. Yeah..

Got it. Thank you..

Thank you. And the next question comes from Craig Schmidt with Bank of America..

Great. Thank you. I want to talk bigger about the current operating environment, which seems to have real strength from the consumer. And then, just the aggressive leasing from retailers. This looks like an environment that's much better than 2019 when you go back to look at people's earnings results.

So, beyond revenge spending and then, retailers looking to take advantage of opportunities, what's beneath this impressive growth that's happening in the operating environment?.

Yeah, I think again, it's -- on the retailer demand, it's a lot of the points that I mentioned earlier, Craig, but it's appreciating that the value of brick-and-mortar is real. The operators see it in their margins, consumer s see the convenience and the efficiencies, the last mile distribution.

It goes into this very complex network of how to distribute goods from the retailer to the customer. And so, I think COVID -- the irony of COVID was it sort of validated that open-air was really essential. It's closest to the customer. I think you also now have this hybrid work environment.

We don't really know what that will look like long term, but I think the one thing that's clear is going to be a little bit different for everyone.

And as a result of that, you are having people that are staying more in that first-ring suburban markets that are maybe starting to appreciate the value proposition there too, which also then creates an opportunity to engage in open-air out in the first-ring suburbs where the majority of all of our portfolio resides.

We're seeing that benefit as well, and that could probably carry longer term into the market. So, I think you're just starting to see all these pieces that were in flux and in development over multiple years come to a head and now creating this environment that we're in today.

So going forward, I think you'll continue to see the open-to-buys be aggressive as we start to absorb that COVID inventory. And then, from there, I think the consumer s in a very strong position right now to take advantage of that..

Great thanks. And then, just on your net debt to EBITDA, I guess it's at 7 or pro forma 63.

Glenn, what's your long-term target for net debt to EBITDA?.

Yeah. I mean, again, we want to try and keep it in that 6 to 6.5 times range on a total look through basis. So, we're on a proforma basis. We're right in that sweet spot right now. And again, we continue to focus on just bringing leverage down over time.

I think as you continue to see EBITDA grow, again, we're being very cautious about how much debt comes on. We've been doing a lot to reduce debt levels, absolute debt levels over time. Again, the Weingarten merger added $8 billion in total, doing $7 billion on a face value, $8 billion on a fair market value adjustment.

But again, on an absolute basis, you'll continue to see us reduce debt and we continue to try and reduce as much secured debt as we can as well. So, we did assume about 300 million of mortgages. But over time, we'll just continue to pay those off with unsecured debt or cash flows from the Company..

Thank you..

Thank you. And the next question comes from Katy McConnell with Citi..

Thanks. Good morning, everyone. Now that you have another quarter of leasing underway, can you update us on your expectations for a March market upside within the near-term explorations within Europe portfolio, especially on the anchor side? And now you're expecting some upcoming longer [Indiscernible]..

Sure Katie. We're in the process of going through our '22 budgets now. So, when you look at our '22 rollover schedule and for anchor is it is below market and it's below our anchor baggage trends as well, so we do see a nice mark-to-market opportunities.

As we either start to renew those leases, avoids where we're well underway there and or sign new leases. So, we do see a net benefit as we go into 22, but we're in the process of finalizing our budgets right now and we'll have a better perspective in the net call..

Thanks. And then on the retailer side, how do you expect the supply chain disruptions in labor shortages to play out through your tenants around the holidays this year.

and are you concerned about any potential rent collection fallout, or impact to a new leasing momentum?.

On the rent collection side, we don't have a material concern there. I think on the supply chain, every retailer has tried to address it differently.

Some have actively and aggressively focused on trying to figure out ways and alternatives to redirect their supply chain, yet through the course of this entire year appreciating that this may be an issue. Some have brought inventory levels up in back -- onto the mainland to their preparation for the holiday season.

But it's clear that there is -- there are pressures there. I'd suggest we all buy early. We don't want to disappoint any of our loved ones during the holiday season. And what that means too, that means as a result that retailers can probably.

have fewer promotion. So, there's a smaller promotional window which helps drive top-line revenues, which is in a benefit to them. So, it's a really interesting dynamic that's all playing out. On the labor shortage side, obviously there are a number of job openings now. It's very robust job market job for it's just always driving 500 --.

[Indiscernible] 4.6..

-- Yes. I mean, that's very encouraging, but yeah there's clearly a need for more workers at the retailers and the restaurants. And I think that will continue to play out through the first part of '22..

The only thing I would add is, our traffic levels are at 105% of 2019 levels, and we see that in this environment where there is supply chain disruption, we're watching closely as what we think may occur is people will probably buy at the store more often than buying something online and potentially having to wait where it might not arrive in time.

So that's the dynamic we're watching closely that we think might play out..

Thanks for the color..

Thank you. And the next question comes from Caitlin Burrows with Goldman Sachs..

Hi, good morning, everyone. Given the issued $77 million of equity in the quarter and your share price is now above the highs of 2019.

Can you just go through the thinking on issuing equity in the quarter and going forward and does it suggest you could equity fund the acquisitions going forward?.

I'm sure. Again, we issued some -- we used the ATM a little bit during the quarter. Again, it was really to match up against some of the investment opportunities that we had and again, just a continued focus on a balance of our capital structure to further improve our leverage metrics.

So, we're always looking at our cost-to-capital, and we're looking at the opportunities that we have ahead of us. So, it's the modest supplement of equity during the quarter to match up related -- some very accretive investments that we have..

We're very fortunate position to have a number of different pools of capital sources. So, we're trying to make sure that we look at everything. And again, our cost of capital and use it effectively to continue to grow in an accretive manner..

Yeah. If we are, as I mentioned, we ended the quarter with over -- we have a $480 million on the balance sheet. We have some obviously activity nevertheless mentioned subsequent to quarter-end. So, it's still sitting with $330 million of cash, no real near-term debt maturities, and full access to our revolver.

In addition, we have the Albertsons investment. So, we're in very, very strong liquidity position to deal with things that are upcoming..

Okay. Great. That's all for me. Thanks..

Thank you, and the next question comes from Kevin Kim with Truist..

Thanks. Good morning.

Can you hear me?.

Yeah..

We hear you..

So just going back to that demand question. Obviously, things are great. I'm just curious about where you're seeing the hottest pockets of demand, and conversely where it's a little bit weaker. And I know you mentioned Sunbelt versus not, but maybe you can go little bit deeper.

Does it matter like what type of center, Power Center, grocery incurred? Is that just location demographic phase where you're seeing more customers or more population growth? Am just trying to understand just a little more granularity on where demand is..

Sure..

I don't mean today. I mean, over the next couple of years..

Yeah, I think the next couple of years could be somewhat reflected today as well. So, just thinking of geographic first, could you mention that the Sunbelt, out of the 141 leases that we signed this quarter, over 52% came from Sunbelt markets. And then within that the substantial majority were actually coastal Sunbelt.

So, I think you will continue to see that trend progress over the next couple of years. That is where population growth is continuing to rise greater than the rest of the country. Second to that though, on the coastal markets, for that remaining, say 48% of leases signed, it was heavily weighted towards the coastal markets.

I think you still see that high demand there. So, between the coastal Sunbelt, that's where we have seen the majority of activity. Beyond that too, like Southern California, as I mentioned earlier, is extremely aggressive. It's a very, very tight market to penetrate.

So, this COVID inventory created opportunities, multiple demand factors that helped push rents further north. In the north east, it's typically been a fairly mature portfolio, usually having higher occupancy levels.

And so, it's just their natural constraints there to actually add any new supply as well, and people wanting to penetrate Long Island, for example. I think it will continue to be difficult.

So, when there is that opportunity, do you see multiple bidders at the table wanting to enter the market? And then I think that's what you continue to see play out over the next couple of years..

And thinking about the Weingarten portfolio, how has that performed relative to your own portfolio.

And I guess looking forward, how much more accretive can Weingarten contribution be to the overall enterprise?.

So, when we actually quote -- when we first went under contract on the transaction, their occupancy levels are less than ours. But by the time we actually closed, it was very, very close to where we were. So, we're getting that net benefit now, those signed leases that have yet to slow.

And so, we always have the original thesis that it was a very complementary portfolio be additive in nature. I think when you look at the small shop gains that we had about a 180 basis points, a 120 wedge came from the Weingarten portfolio 60 of which came from Kimco gains, which was one of our high watermarks as well, quarter-over-quarter.

So, you're so, seeing a real benefit there from Weingarten. And then obviously combined as the entity where we're both growing together now..

The other part of it is the 3 mixed-use projects that they have they're now, the concessions are rolling off, so the mark-to-market on those renewals is pretty far strong on those three projects. And then when we look at the future entitlement opportunities within that portfolio, that gets us really excited.

Because that's obviously where we've been focusing a lot of our time and effort for future value creation. And we feel like there's going to be some incremental opportunities embedded throughout their portfolio. Specifically, Miami, Houston, and Silicon Valley that we're digging our teeth into right now..

Okay. Thank you..

Thank you. And the next question comes from Wes Golladay with Baird..

Hey, good morning, everyone. When looking at the balance sheet, it looks like you're in a good spot right now, especially with the Albertsons look-through.

So, I'm just wondering why you look to do a joint venture on the Jamestown portfolio when there's so much upside in the assets?.

It's a good question. We thought long and hard about the best approach here. We have a huge, tremendous amount of respect for Blackstone. We've continued conversations with them since the success of our early venture. Ultimately, we felt that it was a perfect opportunity for us to reengage the venture that we had with them.

We think that there could be some future opportunities here and this could be the beginning. There's no guarantees one way or the other. But we thought this was a great jumping point given all the activities that we have in the market, all the things that we see. to engage that adventure and see where it takes us.

So, that's really what the conversation was and we're excited about it..

Got it.

And then when we look at Albertsons, how should we think about the monetization of that asset, maybe on a, I guess a max dollar per year, if you wanted to maximize your retained cash flow and not payout a special dividend?.

It's a great question. I think there's a few components that we have to look at when it comes to Albertsons because of the significant increase in its value. Keep in mind our basis is incredibly low, our basis today is still a little over a $100 million. So, the real governing factor for us is real compliance.

So, if you think about the real rules, 75% of your gross revenues have to come from real estate related items. So that leaves about -- you have 5% net income bucket and then, you have the other 20% that could be interest in dividends and capital gains.

So, the governor is going to be, how much our gross revenues are? And our gross revenues today, on a look-forward basis with the merger, somewhere around $1.8 billion. So, monetization-wise, about somewhere around $350 million to $400 million a year of gain is what we could absorbed today. The larger the gross revenue number is, the more we could do.

But I would say today that we're looking at somewhere around $400 million on an annual basis is what we can do..

Got it. Thanks for the time..

Thank you. The next question comes from Tammi Fique with Wells Fargo Securities..

Thank you.

Just maybe Ross, thinking about -- you said earlier, I guess that you would think about selling some assets going forward, but given your strong capital proposition, I'm wondering what we can expect in terms of that sales activity in 2022 and if that will be driven by geography or will it be more one-off based upon asset growth profile?.

Yeah, I think we believe that our dispositions program will continue to be just a pruning of select assets for a variety of reasons. I did mention how there are several joint venture partners that we have that might be looking to exit. So, we have conversations with them every day.

Many of the assets of which we're talking to them about potentially buying out their position, depending on where that pricing is or the quality of those assets. Some of them defer. We may be market sellers if we think the pricing is too aggressive or the asset just doesn't necessarily fit the growth profile for the portfolio.

So, you may see a little bit more activity from the joint venture portfolio both on buyouts and some potential spike dispositions.

Otherwise, part of what we inherited with the Weingarten portfolio as well as from the previous Kimco portfolio, is some undeveloped land parcels that we're constantly evaluating as to whether we believe they're prudent to be developed over time, or if we are better off recycling that capital, selling from non-income producing assets, and then taking that capital for higher growth opportunities.

So that's really where you're going to see the bulk of the disposition activity. But again, we don't think it's going to be a tremendous component of our capital set..

Okay, great. Thanks. And then maybe one for Glenn. It looks like FFO per share is $0.99 year-to-date, I guess with the guidance raise, it implies $0.37 to $0.38 per share in the fourth quarter. Is there anything in that fourth quarter implied FFO that is non-recurring or is that a pretty good run rate as we think about 2022? Thank you..

Well, again, the $0.37, $0.38 level, again, that is a recurring rate. As I mentioned, the third quarter did have some call it one-time in nature items.

You had some real benefit coming from the improvement in credit loss, and we did have about a penny coming from just higher lease termination fees and some of the contributions from the joint ventures on a one-time basis. But $0.37, $0.38 is really a recurring number that we would expect in the fourth quarter..

Great, thanks..

Thank you. And the next question comes from Samir Khanal with Evercore ISI..

Good morning, guys. Just in terms of occupancy, when I look at that number, you're already at over 94%. We've talked about how strong leasing is.

Can you provide some color on how you think occupancy could trend maybe into the end of the year and how much pick up you could see next year? I mean, you're at sort of your high watermark level as you call it, sort of the 96.5%, so trying to figure out how much upside there is next year..

Yes. Obviously, the last few quarters have been very strong with, on average, about 30 basis point gains between when you blend the 2 together. I tend to like to look back to try to understand what's going to happen going forward.

During the Great Recession, when we're going through the recovery period, we averaged about a 15-basis point gain, when -- over an extended period of time to recover back to the occupancy that we lost.

Now when you look at the pandemic and COVID, we ended up losing less, about 270 basis points versus around 400 basis points in occupancy; it was over a much shorter period of time. So, you're starting to see that recovery cycle pick up a little bit sooner.

And when I look out, if you're ranging that 10 to 30 basis point occupancy gains quarter-over-quarter, that feels about right..

Just to clarify, that 15 basis point gain in occupancy, that's a sequential average..

Right.

And then, in terms of shop leasing, I know we've talked a lot about it in the call today, but is this a scenario where you could even go beyond 90%, which is sort of the high-water mark in prior periods?.

Has to go off, has to go off. Push it every day, push as aggressively as we can. And then, hoping with the higher-quality portfolio and all the efforts in the investments that we made at site -- on-site is that we have that opportunity to do you so. I think we're well positioned to do it.

One thing we haven't mentioned is the pandemic really shined a light on the quality of the landlord. And the landlord and its ability to make critical investments for the health and support. And in some cases, the survivability of the tenant when we launched that TAP program back in April of 2020.

It was a real lifeline to help a lot of these great operators that we're just struggling through something that was completely outside of their control. And that helped us really secure and retain a number of tenants, and you start to see that now with our retention levels. Achievement is of historic highs on our end as well.

So, I think when you mix-in all of these components, we have the right ingredients, and now it's incumbent upon us to execute..

Okay. Thanks guys..

Thank you. And the next question comes from [Indiscernible] with JP Morgan..

First question, you saw a pretty good sequential growth in small shop occupancy this quarter.

I was wondering how much of that was due to the inclusion of Weingarten in your portfolio compared to last quarter?.

Sure. Yes, we mentioned is 180 basis point gain, 120 of those basis points were related to Weingarten and 60 was related to Kimco..

Got it. And, in terms of thinking about your development, redevelopment pipeline, I guess, when should we expect to see some projects from the Weingarten portfolio be added in there..

Sure. I think it's important to look at our redevelopment pipeline in 2 separate but complementary categories. The first is our core retail and repositioning effort.

So, the repositioning and remerchandising of the anchor boxes, building a better mouse trap for the existing retailers, that's where you're going to continue to see a lot of investment, and we're just in the process of integrating those opportunities and those projects into the combined Kimco portfolio, so that should start to be reflected in the coming quarters.

And then the second part of that is obviously our signature program. The one project we did activate earlier on was The Milton, the second tower at the Pentagon, where we had recently completed the Whitmer, and that's a 250 residential unit project. And when we look at those projects going forward, we have a real menu of options.

We have over 4,000 in total residential units that we can draw upon now. Our goal is to obviously expand the entitled and the built population to over 10,000 -- 10,000 to 12,000 in the next five years. So, we'll look at those selectively and determine at what point in time it makes sense to activate them. And at what structure.

And the structure will then -- it influences in factor and how much capital we actually have to deploy out in the market..

Thank you..

Thank you. And the next question comes from Anthony Powell with Barclays..

Hi, good morning. Just a question on the demand related to last mile. Given warehouses are sold out nationally, it seems like it could be a pretty powerful driver of demand.

Could you quantify how much leasing demand you're seeing related to retailers and meeting more distribution in their local areas?.

Sure. It's hard to quantify right now, but anecdotally what you're seeing is, retailer is looking to potentially either expand their back of house so they are looking for some additional square footage to do some inventory.

You're also seeing others like some of the grocers that are actually repurposing some of their square footage within the four walls to utilize for last mile fulfillment and micro fulfillment. And so, they'll actually receive the goods from the loading dock and then, split and distribute them into different categories. One goes to Florida.

So, the customers that walk in the store while the balance goes to the micro -fulfillment's facility, which is actually within their existing four walls. And I think what you're seeing right now is all the retailers that have the means, experimenting with what works best for them.

I can't say that I'm an expert on supply chain logistics and distribution, but I know it's really complex and so it's really about foundationally how they're set up. But it is clear that we are having these conversations and that last mile, a brick-and-mortar distribution is going to be a critical part for them going forward..

Yeah. And just anecdotally, the last I would say, 5 to 10 years, we've been dealing with the narrative of shrinking box sizes, downsizing, downsizing, downsizing and now the question is, hey, is there additional adjacent space that we can take to enlarge the box.

So, it has changed, I think the narrative on becoming more flexible and how you use the square footage and integrating that last mile distribution inside the box. So, to your point, it's one that we're watching closely..

Thanks. Maybe on supply and I know it's not a huge issue now. But given the strong fundamentals, I would imagine that some people will start to try to build extra supply.

What do you think will change the dynamics of low supply growth in your markets? At what point does it become more of an issue?.

The costs are a big issue. So, if you think of the land values where we're located. So, if you look at our portfolio of map, that's the main reason why we transformed our portfolio to where it sits today. It's because we wanted to be in locations that have high barriers to entry.

So, when the supply cycle does come back, it's very hard to make it pencil to go and buy land and develop a shopping center that would compete with one of Kimco's. You've got to look at the obviously the FAR as well in terms of the build versus the parking lot. And that's again another barrier to entry of these dense areas.

You just don't have the luxury of putting 80% of your property as parking lot and not generating any revenues from that. And so, we're watching it closely. We do think there's a good amount of slack still to be absorbed from the pandemic, and we're experiencing that throughout our portfolio.

But to your point, if rents get to a point where they justify new development, it should start to happen. We haven't seen it yet.

But those barriers to entry is why we've positioned our portfolio where it is because we don't want to be sitting in an asset that has tremendous amount of unbuilt dirt around it where you can have a competitor come quickly, reap our positioning, and so that's why we've done a lot of work to be in the position we are today..

Got it. Thank you. Good quarter..

Thank you. The next question comes from Chris Lucas with Capital One..

Good morning, everybody. 2 questions from me. You guys closed the brief deal. There's no mortgage debt on that joint venture. Is there plans to put mortgage debt on that or given the -- where your balance sheet sits and where their balance sheet sits it's just going to stay debt-free at this point..

Yeah. Chris, there actually is a small amount of debt about $170 million on that portfolio, which we assumed in the new joint venture..

It does mature though soon, doesn't it? And I thought we paid it off, but I know it mature soon..

Yes, it does. We're having conversations now internally with the partnership, and we'll determine what the next steps are there. The expectation though, is, again, with this partnership, as you've seen in many of our joint ventures that they'll be property level debt on it..

Okay. And then Glenn, while I've got you, the portfolio is bigger, it's more diverse. You deleveraged some, got a lot more liquidity and different levers to pull.

Is there a goal of getting ratings increase from the rating agencies given that backdrop? Or are you comfortable where you sit right now?.

As we've talked about, and again, it is clearly an objective and a goal of ours to get put on positive outlook and eventually get to an A3 A - level. We think it's a separator -- a differentiator for us.

And it's something that we think actually should just happen naturally as EBITDA continues to grow, and we continue to just improve overall capital structure. I mean, we really check almost all the boxes for them. Some monetization of Albertsons, I think over time will -- should hopefully steal the deal for them..

Thank you. And that's all I had this morning..

Thank you. And that concludes the question-and-answer session. I would like to turn the floor to Dave Bujnicki for any closing comments..

Just I want to thank everybody that participated on the call today. We look forward to connecting with a number of you at next week's upcoming NAREIT conference. Until then, have a great weekend..

Thank you. The conference has now concluded. Thank you for attending today's presentation. [Operator Instructions].