Kimco Realty Stock

Why don't I kick things off and then we can dive into Q&A.

First, thanks for having us. We really are excited to be here and continue to resonate with the Kimco story. I think since our second quarter earnings call, the biggest change is, it's just gotten better. The operating environment is one that is very, very healthy. Lack of new supply, I think, is something that's pretty well articulated across the retail sector, specifically in our markets. 0.2% of existing stock under construction is the lowest of any commercial real estate sector. There's more office being constructed today than there is shopping centers.

We sit at an all-time high occupancy rate for our small shops, but our anchor occupancy is still 100 basis points below our all-time high. And that's meaningful upside for us because I think a lot of people are talking about, well, you're full. You don't really have any more upside to go in terms of leasing momentum. We actually think that's the case. Our spread between our physical occupancy and our economic occupancy, some people reference that as the SNO pipeline, the signed but not open pipeline is 400 basis points. That's $75 million of just annual base rent that has not yet started cash flowing.

So we are super excited about the future for Kimco because we think we are at the cross-section of a unique opportunity where we see margin enhancement, performance enhancement tied to the One Kimco platform where we're taking cost out of the business, that SNO pipeline delivering, so enhancing the cash flow, enhancing the margins, all while we trade at a meaningful discount to our net asset value from a multiple perspective and from a portfolio perspective and a balance sheet perspective, we think we offer a tremendous opportunity for investors. For the last 3 years, we've been running at near the top of the sector with over 5% FFO growth, over 3% same-site NOI growth and with a balance sheet of an A-/A3 credit rating, all while our multiple is almost 3 turns lower than the next peer. We think that's a unique situation to take advantage of.

And so we continue to articulate that there's a pretty wide disconnect between where the public and private pricing is today for our product. And we're highlighting that by showcasing and we just produced our updated transaction report where we just sold an asset for a 5.1% cap rate and continue to showcase that -- our stock is trading at north of a 7% implied cap rate, north of an 8% FFO yield. And we think it's a unique opportunity to, again, showcase that we can buy back our stock at this type of spread as a great use of capital.

I think from an overall transformation of the portfolio, that's another thing that we continue to be excited about. Kimco for the lion's share of its history was about 50% power center, 50% grocery-anchored. We're up to 87% grocery-anchored today. We have 28 grocery stores under construction. Just for reference point, Regency is 85% grocery-anchored. So it's a unique transformation that we've seen that we continue to see upside as that grocery anchor continues to create a flywheel of merchandising mix around that everyday shopper. And that's, I think, the big thing that we delivered that I think is starting to become more valuable today with AI and all the technology. We offer a human experience.

The U.S. consumer is a shopper. The U.S. consumer loves to treasure hunt, and that could be in our T.J. Maxx, Marshalls or HomeGoods or HomeSense, our Burlingtons, Ross, our Nordstrom Racks. Our grocery stores, people love to look and feel the product, the produce. And then the services, the medical, the health and wellness, the fitness, the everyday goods and services we provide is in your everyday path of travel, meaning that if you value your time and you value convenience, Kimco is that intersection that you drive by on a regularly scheduled basis. And that's what continues to drive our traffic higher. Our traffic counts are over 3% higher than last year. Our leasing momentum continues across both small shop and anchor occupancy. And we're constantly trying to improve the growth profile of our portfolio. That is a function of looking at the components of what the portfolio has.

And a unique attribute to Kimco is that 9% of our annual base rent is in flat ground leases. And that's from the history of Kimco. We were ground leasing to Home Depots, ground leasing to Costcos, ground leasing to Walmarts to take the risk out of the development cycle. You would do that because Milton and Marty would follow the utility trucks to where household formations were occurring and how could you take risk out of the development cycle by ground leasing a big portion of the asset to the best credit tenants. That's created in a lot of ways, some unvalued portion of Kimco's portfolio that we are starting to shine a light on.

And Ross can go through some of the initiatives we have to reinvest that opportunity where we can sell very low growth, low cap rate flat ground leases at 5 cap rates and reinvest it at a meaningful spread both on a cap rate perspective, but even more importantly, on a growth rate perspective. And every one of those trades, we're selling at like a 6% IRR and north of a 9% IRR. So every one of those transactions into a grocery-anchored center is helping the growth rate, and we continue to see more opportunity. And another differentiator for Kimco is our over 12,000 entitled apartments. This is an initiative we put in place over 5 years ago to showcase the highest and best use of our parking lots are just not being valued. Now there's no cash flow coming from those entitled apartments.

But we just round trip 2 apartment towers, sold them for a 4.9% cap and a 5.1% cap and gives us tremendous opportunity to say that can happen year in and year out in perpetuity because, in essence, we have active projects in the ground coming up, delivering year in and year out, and we can start to monetize those and reinvest, buy back stock or reinvest in a growth grocery-anchored shopping center. So those are the type of attributes that we think differentiate Kimco and that put us in a unique position to take advantage of dislocation. Sometimes it's good to be public, sometimes it's not good to be public, but there's always going to be opportunities. And at this point, we think we have the balance sheet, the platform, the team and the liquidity to take advantage of this dislocation.

The one thing you mentioned was the ground lease as you're selling those. I mean, where are you -- how much of that you sort of tapped at this point? What is that opportunity set? And do you expect to accelerate that going forward?

Yes, I'm happy to jump into that. So as Conor indicated, part of our strategy, it's almost a bit of an addition by subtraction. So we're able to sell really flat, low-growth single-tenant assets at very attractive cap rates and redeploy that capital into higher-yielding day 1, but more importantly, about a 300 basis point CAGR spread between what those leases are producing and what the reinvestment is able to produce. This year, we'll do just about $150 million of ground lease dispositions. We think, to Conor's point, that we can continue to do that on a recurring basis as our baseline. While we have 9% of our ABR that's coming from these long-term ground leases, as we're selling, we're also signing new leases with these tenants that become a future pipeline for disposition that we can continue to recycle.

The other piece of the disposition pipeline that Conor alluded to was our multifamily entitlements and completed projects. So we sold the first 2 multifamily projects. We own those in a joint venture, so we were 55% of the ownership of those. But the 2 projects at our Pentagon project sold at a 4.9% and a 5.1% cap rate. And with the structure that we've been undertaking to continue to create new multifamily projects, it's a CapEx-light approach where we've been contributing our land that's been entitled and shovel-ready into a joint venture. Our contribution sits in a preferred equity component of the capital stack.

So we're actually earning while the construction is happening. And at the same time, our partner, the developer, is responsible for the construction financing on their balance sheet. So it's a great structure that we can earn during the development phase. And then upon completion and stabilization, again, we'll crystallize that value, monetize it, get our percentage of the proceeds to then redeploy. We are utilizing, in most cases, 1031 exchanges to defer the taxable gains, which is something that we're very focused on. But again, able to continue to find that spread on the year 1 yield as well as the going-forward growth so that we can continue to enhance the growth profile of the organization and the portfolio as the impact of all of this recycling compounds on itself year-over-year.

And for that multifamily development, how do you decide between sort of monetizing it at completion or holding the project long-term?

Yes. It's a decision tree that we take and we look at on every single asset. So you've seen us undertake long-term ground leases with a developer where we're essentially just leasing them to dirt. That is the most CapEx-light approach possible, but also you're not really capturing that upside creation in the future, even though we do retain a right of first refusal in the event that, that gets sold because they are selling a leasehold interest at some point in the future while we retain the fee. I mentioned the structure that we're undertaking now on a number of projects where we're contributing our land in a marked-up basis once it's entitled. You have seen us, and particularly the 2 that we just sold were more of a traditional joint venture where we utilize more Kimco capital on balance sheet.

Realistically, you'll likely see us do less of that other than maybe some unique instances. But for the most part, our goal is to capture near-term returns and value while being able to take advantage of the crystallization on the exit. And then in certain instances, we're also looking at and we'll complete some land sales where we've entitled the land, we've created that value and made the determination that selling it prior to construction is our best course of action, take those proceeds that are on non-income-producing land and then redeploy that into our core multi-tenant shopping center business with growth. So I think you'll see all of those approaches. And then on a select basis, we'll decide at that point in time based upon market feasibility, based upon cost of capital, where it makes sense to undertake which path.

Yes. I mean, we're doing everything we can to just drive FFO growth. So being able to take a piece of land that's not earning anything turn it to something that's earning under construction. And then at the end, selling it at a low cap rate to take those proceeds, redeploy them into a higher cap rate, higher-growth asset. Well, we're going to do it all day long. And we've gotten it now fully started where we've now round trip 2 of them and we have 2 others that are in development and 1 that we just really completed at Coulter.

Maybe taking a step back, and I know, Conor, you talked about the consumer, but maybe expand on kind of the -- what you're seeing. I mean, you guys are clearly a big platform in the shopping center space. What are you seeing consumer performance or consumer behavior across retail categories? So kind of generally, what are you seeing across the board there?

Yes. We continue to be, I think, positively surprised by the resiliency of the consumer. The traffic is the leading indicator that we continue to focus on being up 3% year-over-year and showcasing that they continue to prioritize the grocery-anchored centers that we own in first-ring suburbs. We're in like the top 50 major MSAs in that first-ring suburb. There's no pullback. And so clearly, with oil where it is and where -- what could happen next, there's all sorts of questions on the macro noise getting louder. That being said, the employment market is still sort of the backbone in my opinion. And I think people are confident that in their jobs and their paychecks and their ability.

Now when they get to the shopping center, how do they stretch their dollar, I think, is still going to be a piece of it. But when you look at the offering that we typically provide, it's the value, it's the off-price, it's the grocery store, that's the discount type of opportunity that I think most people gravitate towards regardless of if it's a boom or bust cycle, it's a necessity-based item. And so we continue to look at the AR and see if there's any AR creep. So typically, in past cycles, we've been very focused on what's a leading indicator of any type of pullback. Usually, it's an AR buildup and primarily tied to small shops because usually, they don't have a balance sheet to weather the type of storm that might be coming. We've actually seen AR go down.

And so that typically doesn't make sense if you're going to see any type of pullback or tenant credit issues. Same with traffic, right? Traffic is usually a leading indicator. And then the same goes for the leasing, right? So like in terms of renewals, new deals, are people keeping all of their spaces, are people signing new deals? It's -- the velocity just continues to improve. And good retail is hard to find. There's virtually no new supply, as I mentioned. Occupancies are near all-time highs or at all-time highs. And yet what's changed is the dawn of e-commerce and all the working capital that went to go build these e-commerce platforms rate environment has changed meaningfully since then.

And now it's all about margin. And where is the margin enhancement, where is the margin continuing to head, the store base. And that's where the retailers are reinvesting in their stores, and that's why you're seeing retention rates at all-time high. Most of our anchor spaces, we've done an analysis that are 65% below market. And so the deal that they have currently is the best deal they're ever going to have. And so that's why I think you're going to continue to see this retention rate be high, retailers leaning into their store base because in all their earnings calls, the physical store fleet is the differentiator. When you buy online, you're going to be incentivized to pick up in store. That's where, again, the margin enhancement and the add-on things continue to add to the experience.

And I think there's a lot of upside still to come because of the gap in physical and economic occupancy. Retail has never really hit that trajectory or that glide path where the CapEx load starts to meaningfully come down because of the lack of churn. And I think we're very, very close to when that SNO pipeline compresses to seeing that meaningful free cash flow enhancement, which creates more of a flywheel where you can go and invest accretively. Almost every other cycle you can point to is when our physical occupancy hit an all-time high, the economic occupancy was very low and then something happened to disrupt it. And so we're at a point where with no new supply and the watchlist tenants to be as small as it's ever been, we feel really good about the credit quality and the upside going forward.

So it doesn't sound like as you think about retailers talking about store opening plans for '27 and even '28, it doesn't feel like they pulled back or any of that. It feels like they're just continuing to open.

Correct. They're still leaning into that. And I think they recognize that if they don't be aggressive today that the space is going to be gone tomorrow. And you're starting to see -- now this is a small sample size, but you're starting to see the economics of the anchor deal significantly improve for the landlord. Now that's been historically the issue with our sector is that the lack of growth coming from anchors has been the weight that's holding you down in terms of same-site NOI or other -- and the CapEx load, you're starting to see now that change in landlord's favor where, again, the amount of fitness players, off-price players, grocery stores, all bidding for the same space has created an opportunity to say, who's going to pay annual escalators and see who steps up, and we're starting to see certain players step up to get the space.

Right. So has that translated in your shop tenants into either a change in like co-tenancy clauses, percentage or overage rents or anything else? I'm just curious.

Yes, the carve-outs are very much landlord-friendly now. So instead of giving co-tenancy clauses, we're getting percentage rent, right? So like in essence, they're bear traps, they want you to step in are no longer there, and we're getting all the upside of the performance of the store. And you're continuing to look at other things as well. So for us, because our platform is very focused on highest and best use. And so our team is laser-focused on parking ratio requirements, what we can do to maximize the value of the asset longer-term, that's where you'll continue to see the lease evolve to have more landlord-friendly items for us to capture that upside longer-term.

I'm sorry if you mentioned this, but you've hit a record in small shop occupancy. Like kind of what's the path there? I mean what's kind of the target you're trying to achieve?

Yes. So we did just crest 93% of the small shop, which is an all-time high occupancy. But at the same time, that shouldn't be a ceiling in my opinion. When you think about the 28 grocery stores that are under construction, when you think about all the anchors that have yet to open, typically, the hardest space to lease is the small shop that's next to a dark anchor. And if you think about all that activity that's about to come online, that to me, continues to point to further upside in small shop leasing. You combine that with the diversity of uses that we see today, it's something that is sort of remarkable when you look at the diversity of demand for small shop spaces. We've sort of become the one-stop shop for medical, health and wellness, fitness, you name it in terms of like urgent care, pediatric urgent care, veterinarians, like outpatient physical therapy, you name it, it's become sort of this wide spread of what's the best location that's convenient to where their customer lives.

And the shopping center continues to capture that type of demand. And so we're being thoughtful about merchandising mix. Grocery stores usually create multiple trips per week. So you're able to merchandise off that and get more sales coming from the asset that way. And so we continue to lean into that. And I think our One Kimco approach allows us to leverage our scale to have portfolio reviews with tenants that are doing 50-plus, 100-plus new stores a year where they could do that with a one-stop shop like Kimco and have a trusted partner that they know is going to deliver on time, hopefully, on budget and give them the store opening plans that they so desperately need because their growth is fueled by those new store opening plans. And so that's where, again, our priorities and our focus continues, I think, to resonate with the retailers as well when we meet with them consistently.

And to Conor's point, we hit the small shop all-time high occupancy while we're still 110 basis points shy of our all-time anchor occupancy. So as those 28 grocery stores that are under construction are open and operating, as we get back to the all-time high on anchor, we believe that we'll continue to see high watermarks hit on the small shop occupancy as we go.

And what's -- because one of the questions I get is, okay, you get to kind of peak occupancy and what are the other levers of growth you can pull? You talked about maybe unlocking some of the anchor rents there. I mean talk about what are the other kind of positives or levers you can pull here to generate more than the growth you're achieving today even?

Well, it is sort of remarkable to think that we've done that 5% to 6% plus FFO growth for the last 3 years with no external growth, right? You think of other sectors that are spread investors or 100% externally growth focused, like our organic growth is really driving that, which is sort of remarkable, all while we don't have a cost of capital advantage. And so when you look at what else can drive growth going forward, that's where I think Kimco sits uniquely positioned to have more levers than other.

So Ross and his team have done a great job in terms of building a structured investment program that allows us to invest at a spread of about, call it, 10% on average yield to Kimco. That's usually in a preferred equity or mezzanine financing position. And it's on assets we want to own. It's in markets we love. It's in areas where we already have a big portfolio. So it's, in essence, getting paid to wait because every one of those investments has a right of first offer or right of first refusal. And we've acted on those and bought about 3 assets out of that program. So that's a big lever for us. If rates stay where they are or even go up, we think there's an opportunity set to continue to grow that book of future acquisition opportunities and getting paid to wait.

The other piece of it is, is that flywheel of development that we're now on in the multifamily side. We're, in essence, building to a spread of 300 basis points because our land is free. Like that's not income producing right now in our parking lots. And so we're able to contribute that with the entitlements that we put in place at a spread of 300 basis points to where those assets trade in the open market. And that capital is going to be an enhancing flywheel for us as well.

And so when you look at those unique situations alongside how every time we sell a flat ground lease and buy a grocery-anchored shopping center, the growth improves. Like those are all pieces of the puzzle that we have that we continue to look at and say, there's a lot of asset management we can do on the portfolio still to allow us to enhance the growth profile going forward. And look, we still have a mark-to-market of 65% on our anchors. And so we'll be working hard to try and generate those upside scenarios of recapturing space all at a time where there's virtually no new supply. And so clearly, the leasing front is still very much the driver of our growth. But the opportunity to enhance our margins, I think, is going to be one where platform, the scale, the advantages all come into focus, all while that economic occupancy still sits at 92.5%.

That's the really interesting dynamic of our sector, and it's a bit of an anomaly when you think about it compared to other sectors. Elsewhere, if you were at 95%, 96% occupancy, you're going to see a ton of shovels in the ground in other sectors. Retail is just not the case for all the reasons that we've talked about land is expensive when you're comparing it to other potential uses and asset classes that can be developed, construction costs, financing costs, the challenges of lining up a tenant, co-tenancy lineup and delivering all of those spaces at the same time, it is very expensive and challenging to deliver new retail construction. So we really don't see on the horizon any meaningful amount of new construction or development within retail anytime soon.

So even as you're continuing to push occupancy to new levels, that is where we're going to continue to see the ability to push rents in addition to the other terms that create real value for us as a landlord. Conor mentioned it before, but you're seeing virtually no co-tenancy provisions in lease negotiations anymore. Exclusives have been completely watered down. It gives us a lot of flexibility to lease our space and to create a tenancy that is very important to have that traffic morning, afternoon and evening. As we talked about creating additional density, whether it just be outlets, urgent care facilities on the outparcels or a 26-story tower in our parking fields, having elimination of no build areas and having more control over your parking fields in your common areas, which we're able to negotiate today, based upon the leverage that we have, has real value when you don't need to go back to the tenant and ask for permission, where inevitably they'll have their hand out for something if you need their approval as well as control periods.

Long gone are the days where you have excessive amounts of tenant option periods for the anchor tenants. We are negotiating very hard to reduce and control the amount of options so that we can get to that mark-to-market sooner than what we've been able to do historically. Because when you look at the rent roll today, where it's 6% to 7% of our rent roll that rolls in any given year, you have 75% of them that have options of which are being exercised at a 90% clip. You're only getting to 2% to 3% of your rent roll to really hit that mark-to-market in any given year. So the more that we can push, the more that we can get to sooner, we'll be able to push NOI, FFO and rents much more aggressively than we've been able to do in the past.

Yes. We do have some pretty unique levers to help really drive the growth where we are today. The structured investment program, the initial yields are high single digit, low double digit, and we're getting paid to wait. Again, we bought a couple of the assets from there. We still have about $150 million a year of redevelopments that we're doing in the portfolio, which is generating a 10% plus yield. No one else has 9% of their ABR coming from flat leases that we're able to sell at low 5% caps, redeploy that capital at a minimum of a 6% or low 6% cap rate with a growth rate that's 300 basis points higher than the flat lease. And then if the stock is not performing well, we put the balance sheet together that is as good as anyone. We're A-/A3 across the board. We have more liquidity than anyone else in our sector. And if warranted, we can buy back stock. So we have any aspect of the cycle, we kind of built the balance sheet in the company today to actually be opportunistic.

And I think total shareholder return is what we continue to hammer like that to us and hopefully, to everyone in this room is super important. And so when you look at our dividend and we raised it 12% last quarter, it's all being driven by operations. It's all being driven by recurring cash flow operations. And it sits right on top of taxable income. So everything we do from the portfolio level is going to be distributed out. And so like that, to me, is like real upside that has yet to be reflected. Our dividend yield is 4.75% with FFO growth of north of 5% 3 years running with a huge SNO pipeline and an A-/A3 balance sheet that to me is pretty compelling.

So what's -- curious, what's the pushback you're getting from people? You said you trade what a 3 turn discount, give or take. I'm just sort of curious, what are they saying to you?

I mean it's sort of like what's your favorite flavor of ice cream, like it depends on who you ask. But I think when you look at the size and the liquidity we have, typically, I've always been taught fund flows is like 80% of your performance. And so when rates are going up and there's a potential rate hike on the horizon, that probably is a fund flow issue, in my opinion. Strips haven't really benefited from fund flows. I think the majority, if not the entirety of the sector is trading at a discount. When you look at the consumer and where oil is and where -- like some of the major macro issues, obviously, the point of the spear is the consumer for us. That could be an overhang as well.

I think when you look at the opportunity set of what else the incremental dollar can invest in, even though we're proud of our run here of really strong earnings growth, you stack that up relative to what's taking the oxygen out of the room, which is what data centers in the real estate space, but then you layer on top of that AI and space and all of a sudden, the growth profile is -- doesn't really capture a lot of eyeballs.

And then I think there's the overhang of retail still in the generalist like view of like it's the hardest sector. There's bankruptcies, there's consumer concerns, there's rate concerns, that incremental dollar may be going elsewhere. And so our mission is to show that -- the watchlist has never been smaller. The supply side is virtually 0. The demand side is super strong. And we continue to show that this is not like a 3-year freak incident of growth. We have really the runway to continue. And you stack us up relative to other sectors, total shareholder return is pretty compelling. And so -- and again, we have the balance sheet now to take advantage of the dislocations and buy back our stock when we think it's opportunistic.

It's interesting. We're a pretty cycle-tested management team. I mean we've been through pretty much anything bad that you can think of and kind of come out the other side of it. But when you look at the consumer, the interesting thing is this sector, our sector is pretty recession-resistant. Like we've been through all these bad cycles. People still shop. They still go to the grocery store. They may buy something different in their basket, and it could be chicken instead of steak. But they're still shopping at 2, 3 times a week.

They still get their hair done, they still get their nails done. They still go to the liquor store. They still feed their pets and they still treasure hunt. All through those cycles, good times, bad times, it's just -- it's kind of being a human being, and you want to be out and there's a social environment to it, and it's held up through every cycle you can think of COVID, Great Financial Crisis, Russian debt crisis, pick whichever one you want. This product is pretty resilient. So -- and we've actually made a lot of money during times when there's been a downturn, not that we're looking for a downturn, but we've been -- and we're in a position from a balance sheet standpoint where we can be really opportunistic today.

What do you think the rating agency is going to say on your share buyback intention?

What are they going to say? I mean we're an A- rated company. I think as long as we keep our leverage where we've committed to keep it, which is low 5x net debt to EBITDA on a consolidated basis and mid-5s on a look-through basis with our perpetual preferreds and pro rata JV debt, I think that they're going to be fine. I'll let you know I have a call with them on Thursday.

I mean I think we're at a point where we have capacity.

We have capacity.

So like that's, I think, the key where before we didn't. We're at near all-time low levels of debt. And so when we have capacity like we do, we believe we should take advantage of these unique opportunities where there's dislocation.

But is A- a must? Can you be a BBB+ if you see the right opportunity?

So it's a cycle we've all been through. We were an A- company up until 2002. And then we were a BBB+ company from 2002 until 2024 or so. We think there's real merit in being an A- rated company. We're a very disciplined group. We think our capital allocation warrants being at that level. We're operating the company that way. And I think it sets us apart a little bit. There's only a dozen REITs that are A- or better. And it gives us access to different pockets of capital.

We have a commercial paper program that we established that we haven't even used yet that's available to us because of where we are. We have another segment of the bond investor that we can be approached by and invest in our securities because we're at that A- level. And I think it adds another level of discipline to the management team. So we think it's actually a really important piece, and it does separate us a little bit from the rest it.

Yes. It was a strategic goal for us to get there. For a good pocket of Kimco's history, we were towards the upper end of leverage in the sector. And we felt like because of the capital intensity nature of the business and the defensive nature of having a balance sheet you can lean on has become critical in terms of weathering the storm. And so we intend to maintain that. I think the key, though, is that our leverage is so low that we have the ability to buy back and have that still be in that A-/A3 rating range.

I can just tell you, I've been going to investor meetings for 30 years. I'm actually getting questions about how low you'll let leverage go. I've never heard that in my life. It's kind of an interesting thing to actually hear. But we're very cognizant of. We're also -- if you look at what we've done, we're one of the few that has issued 30-year paper -- so we went really long when rates were really low. We have $1.5 billion of 30-year paper that has coupons that range from 3.7% to 4.45% that don't mature until 2045.

We have 2 perpetual preferreds that are at 5.25% and 5.125% that they're just irreplaceable today. And we have a very laddered maturity profile. We have basically the longest maturity profile of any REIT. We're almost 8 years. So we can live through higher interest rates, lower interest rates and all the cycles because we've spread it.

Guys, I want to ask for the structured investment book that you have, the underlying assets, the credit quality is very similar to kind of what you guys own at this point?

Yes. That is a gating factor when we're evaluating any one of these investments. We have to be very confident and comfortable with the real estate. If we were to step in either via acquisition, which as we talked about, we acquired 3 assets from this program or in the unlikely event that there was a default situation where we had to step in and protect our collateral. We are very comfortable with the quality, the tenancy, the demographics. And with that right of first offer or right of first refusal that we have on every single one of these assets, if this is not an asset that we would want to or be very comfortable owning, then we won't invest in it.

Do you expect the structured investment book as a source of acquisitions to become more significant in the coming years?

It's hard to predict. It can be lumpy in nature, but having that first and/or last look, we know is going to continue to lead to opportunities. Now it's very much going to be dependent on timing, cost of capital, when it gets presented to us. We've acquired 3 from the program. We've been repaid in full on 19 of them. So it's not a situation where we expect that even half of them are ultimately going to be acquired. But selectively, when we have the right cost of capital and we have the right opportunity, it's a great opportunity to layer it into our acquisition program.

But we get paid pretty well to wait. We get paid in, we get paid out, we get paid while we're waiting. And then we have, again, the right of first offer, right of first refusal to take a look at the asset if it makes sense for us.

And it's actually a benefit to the borrower, too, because they're actually able to get better terms on their first mortgage piece when they know Kimco is in the stack. So there is a win-win situation that we continue to experience and that the players in this book continue to benefit from as well.

I mean it's an advantage you have, right, because the market -- it's very competitive.

Totally.

The transaction market and...

It's a differentiator for us. And while we refer to it as our structured investment program, we think of it as a capital solutions program. Every deal is bespoke. We're sort of solving a problem or a need for the borrower, whether it's a stretch senior pref equity, mezz financing on a new acquisition, on a repositioning of an existing asset where there's debt maturing and they need a bit of a bridge we can be a solution on high-quality real estate with good operators that we like and get paid handsomely for that participation.

Okay. I know we got a minute here. So rapid fire questions. I know, Conor, you like the stuff here. Okay. Number one, long-term rates stay higher for longer, which has the biggest impact on your sector, let's call it, sector earnings, higher refinancing costs, lower transaction activity or less new supply.

I think it's higher refinancing activity as the really sort of the hurdle that everyone is going to continue to jump over.

Yes. Number two, over the next 3 years, will third-party capital become a more important source of growth for public REITs than balance sheet capital? Yes or no, choose one.

I think so if we stay where we are. I mean I think, look, we have a large JV platform with Blackstone, GIC, CPP, New York Common, PGIM, you name it. So it's a portfolio of assets that we've had in the JV book for a number of years. And I think JV Capital comes into play when your cost of capital doesn't allow you to be competitive in the open market. And so I could see that becoming a bigger piece of the playbook.

Number three, 2000 -- next year same-store NOI growth higher, same or lower than this year for the sector.

For the sector, I think it's going to be at or above where we're at today.

All right. Thanks a lot.

Thank you.

Hello, everyone. Thank you for joining us, and welcome to Kimco Realty's Second Quarter 2026 Earnings Conference Call. I will now hand the conference over to David Bujnicki, Senior Vice President of Investor Relations and Strategy. Please go ahead.

Thank you all for joining Kimco's quarterly earnings conference call. With me today are Conor Flynn, CEO; Ross Cooper, President and Chief Investment Officer; Dave Jamieson, Executive Vice President and Chief Operating Officer; Glenn Cohen, Executive Vice President and CFO; as well as other members of the Kimco leadership team who are available for Q&A.

Before we begin, some of our comments today may include forward-looking statements based on management's current beliefs and expectations. These are subject to risks and uncertainties described in our SEC filings, and actual results may differ materially. We assume no obligation to update any forward-looking statements. We will also reference non-GAAP financial measures. Reconciliations to GAAP are available in our earnings release and supplemental package, both posted to our IR website, along with an accompanying presentation. The same forward-looking caution applies to those materials. Following prepared remarks, we'll open the call to Q&A. [Operator Instructions] And with that, I'll turn the call over to Conor.

Good morning, and thanks for joining us. Today, I'll walk you through our solid second quarter results, which continue to validate our growth strategy and the strength of our portfolio, platform and operating model. Dave will cover our leasing accomplishments in detail. Ross will take you through our transaction activity, and Glenn will close with our financial results and updated outlook. We delivered another strong quarter with FFO per diluted share of $0.46, up 4.5% year-over-year and same property NOI growth of 3.5%, driven by higher minimum rents and stronger net recoveries. Small top occupancy reached a new record of 92.9% and overall pro rata portfolio occupancy matched our all-time high at 96.4%, even after absorbing a 16 basis point impact from the painted tree bankruptcy lease rejections.

These results reinforce the depth of demand across the portfolio with the growth potential stronger than the headline numbers suggest. Leasing remained one of the clearest indicators of demand for our portfolio. Across the quarter, we continue to see retailers compete for space in high-quality open-air grocery-anchored centers with demand outpacing available supply as new shopping center development remains limited in more detail. Dave will cover the details of our but the broader takeaway is that our centers continue to attract growing retailers, drive strong rent growth and from positive shopper traffic and healthy tenant sales.

That trend remained evident during the quarter, with foot traffic across our centers increasing 3% year-over-year, including 3.2% growth in June, and spending across our tenant base also remains robust. With respect to our mixed-use portfolio, I want to share a meaningful proof point and what it means for future value creation. During the quarter, we completed the sale of the Milton a 253 unit multifamily building at our Pentagon Centre mixed-use property in Pentagon City, Virginia. The sale of the Milton marks an important milestone for our mixed-use platform and our first full cycle monetization of a ground-up multifamily development, within our value-add redevelopment program.

The transaction provides a tangible proof point of the embedded value we can create by entitling, developing, stabilizing and then selectively monetizing mixed-use assets at the right time. Ross will provide more detail, but the broader message is clear. Our mixed-use platform is another meaningful source of long-term value creation. Our capital recycling program continues to be an integral and recurring part of our strategy. Recent asset sales and ground lease monetizations demonstrate our ability to harvest value from low-growth assets and redeploy capital into shopping center investments with stronger long-term growth prospects.

This approach enhances the quality of the portfolio, supports future earnings growth and allows us to create value with that depending solely on external capital. This strategy was further illustrated by the acquisition of 2 high-quality shopping centers in Florida, utilizing 1031 exchange proceeds. We purchased Pompano Marketplace a Walmart-anchored center in Pompano Beach, Florida, for $53 million, marking the third acquisition sourced through our structured investment program, a differentiated platform you need to Kimco. The other center was Sunshine Plaza, a Publix-anchored center in a first-ring suburb of Fort Lauderdale, Florida for $56 million.

On the balance sheet, it remains a clear competitive advantage for Kimco. Glenn will provide more detail on our recent capital markets activity, including our inaugural $600 million exchangeable notes at an attractive 3.5% coupon. The key point is that our liquidity position, access to capital and investment grade profile give us the financial flexibility to remain opportunistic and play offense while maintaining discipline in the current environment.

Lastly, reflecting on our strong first half performance, improved visibility into the balance of the year and confidence in the underlying strength of the portfolio, we are raising the midpoint of our full year outlook. In addition, our Board has increased the quarterly common cash dividend by 12% over the prior year, supported by our strong operating performance. Earnings growth and rising taxable income and confidence in the company's long-term growth outlook. Together, these actions underscore the durability of our cash flows and commitment to delivering long-term value for our shareholders.

In conclusion, I want to thank our entire team. The second quarter only reinforced what we believed at the very start of the year. Kimco has the right platform portfolio and balance sheet to drive sustainable earnings growth. Strong retailer demand, positive shopper traffic, visible cash flow growth from our sizable Signed But Not Open pipeline, accretive capital recycling and disciplined balance sheet management, all position us to continue creating long-term value for shareholders.

With that, I'll turn it over to Dave to cover leasing in more detail.

Thanks, Conor. I'll cover second quarter leasing results, occupancy trends, the snow pipeline and the launch of our new operating model, all of which continue to support the growth trajectory we laid out last quarter. We signed 461 leases across 2.5 million square feet in the second quarter at a blended spread of 13.1%, bringing our total leased for the first half of the year to over 7 million square feet. New leasing activity remained a clear standout with 161 deals covering $685,000 per rata square feet at a blended spread of 40.4%, marking our 19th consecutive quarter of double-digit new leasing spreads. .

This quarter included several notable lease transactions that highlight the strength of tenant demand and our ability to enhance the merchandising mix across the portfolio. On the anchor side, we replaced a former Rite Aid with Peso Life, a Japanese-inspired homewares retailer at Marketplace at Victoria and at our Woodland Center in Charlotte, North Carolina, we added Lowe's Food, bringing a new grocery component to the site.

Within our Lifestyle portfolio, we signed our first ever unique lease, further validating the appeal of that segment of our business and the growing interest we're seeing from leading retailers. On the nonanchor side, leasing activity remained broad-based with particular strength seen in service-oriented tenants, including fitness, health and wellness, restaurants and professional services. This includes several solid core leases that not only complemented our lifestyle portfolio, but also we're a nice addition to our core grocery community assets, which further demonstrates the leverage of our operating platform and our ability to cross-pollinate between the lifestyle and core assets.

Our package leasing initiative also continued to gain momentum this quarter, signing 7 deals with 2 retailers that further enhance small shop occupancy. This disciplined approach is helping us accelerate deal velocity, capture efficiencies of scale and deepening relationships with growing retailers. Together, these deals reflect what we continue to see across the portfolio. Today's retailers are willing to pay premiums for our high-quality locations and are actively upgrading our merchandising mix in the process.

Renewals and options totaled 300 deals across 1.9 million square feet at a blended spread of 7%, comprising 6.1% of renewals and 8% on options. This is another clear example of the health and stickiness of our portfolio with retention remaining at historically high levels as tenants continue to prioritize our open air, grocery-anchored locations. Small shop occupancy hit a new record high of 92.9%, and we continue to see room for further occupancy gains as demand for smaller format space remains exceptionally strong.

Anchor occupancy only dipped 10 basis points quarter-over-quarter to 97.8% despite a 23 basis point impact from [ Panote ] but remains up 110 basis points year-over-year. Turning to our snow pipeline, economic occupancy increased by 20 basis points to 92.4%. The pipeline now represents $95 million in annual base rent, of which $75 million is incremental and 48% of that is projected to commence by the end of the year. Importantly, this pipeline continues to track ahead of our original plan with construction and leasing tightly coordinated to keep converting signed leases into cash paying rent as quickly as possible.

In terms of the actual cash flow from rent commencements, we're now projecting $33 million to be received in 2026, which is 16% higher than our initial estimate. The timing of the rent commencement includes $24 million from tenants that opened in the first half of the year with an additional $9 million projected for the back half of 2026. Effective July 1, we launched our new operating model, moving from a regional structure to a nationally aligned functional team organized around our assets. It sharpens accountability around the metrics that drive value, brings greater consistency across the portfolio and accelerates execution. This leverages the scale of our national platform without adding incremental cost.

We expect the benefits to build over time through improved FFO growth, same-site performance, leasing productivity and margin expansion that structural change is the most visible piece of a broader effort we call One Kimco. Alongside it, we're investing in the operating infrastructure behind it. First, a unified data platform that brings our portfolio, leasing and property data into one place. Second, AI tools that are helping automate routine workflows. And third, modern collaboration tools we're rolling out across the organization. Taken together, this is how we build durable operating leverage, converting the scale of our platform into speed and margin.

To sum up, leasing demand remains healthy. Spreads continue to run solidly double digits, small shop occupancy reached a new all-time high, and our snow pipeline continues to convert into cash flow growth. Combined with continued momentum in package leasing, growing retailer interest in our lifestyle portfolio and a more focused operating model, we believe the setup for the back half of the year remains strong.

With that, I'll turn it over to Ross for an update on the transaction market.

Thank you, Dave, and good morning all. As anticipated, we had an active second quarter and followed that up with a busy July. Our transaction execution has been quite strong, and we expect it will continue through the rest of the year. While the market is as competitive as ever, we are utilizing pre-existing relationships, contractual purchase rights in the forms of right of first offers and right of first refusals and JV relationships to find accretive opportunities for external growth. .

Simultaneously, we are benefiting from aggressive pricing as the market continues to place substantial value on highly stable, lower growth assets that do not fit our long-term growth objectives. Paired together, this capital recycling strategy we put in place is truly helping to enhance the growth trajectory of the portfolio looking forward. I want to add some additional color on a few of the sales Conor highlighted to showcase the benefits and rationale. The monetization of the multifamily building the Milton is part of our Pentagon Centre mixed-use project that we developed in a partnership with CPPIB. It is a true reflection of the bottoms-up approach that we have taken with the multifamily densification program over the past decade.

While the real estate was always exceptionally well located, we view the opportunity to create value through a different lens, beginning the formal process of entitling the project for mixed use and selectively and methodically activating 2 multifamily buildings over the past 10 years. This meaningfully enhance the value for each component of the project, including the existing retail at dislocation. We felt this was a good time to crystallize that value and monetize our ownership in the asset. The first transaction was the Milton at a 4.9% cap rate emphasizing the tremendous demand and capital available for the best located real estate and the premium that is created with the synergies between well-executed residential and strong performing retail.

We anticipate monetizing the remainder of Pentagon Center in phases with the second residential tower, the Whitmer, most likely next and the enclosed retail thereafter, but no formal time line has been determined. As it relates to the flat to low growth lease disposition initiative, the Costco transaction is a prime example of accretive capital recycling. While the face cap rate is important, the bigger benefit of the transaction is the future cash flow growth of the reinvestment.

From an investment perspective, the long-term return profile of the Costco assets was materially below that of the properties we acquired. The Costco leases that were sold had a compound annual growth rate or CAGR, of under 1%, translating to a sub 6% unlevered IRR based on a 10-year hold with tenant control on those leases for decades. We were able to take the proceeds from the sale and utilize the 1031 exchange to acquire 2 grocery-anchored centers in South Florida in a tax-efficient manner with a CAGR for the 2 assets more than 350 basis points higher than the Costco properties.

As such, we turned to sub 6% unlevered IRR into north of a 9% unlevered IRR. Most importantly, these transactions demonstrate how capital recycling can create earnings growth without relying on external equity issuance. And while simultaneously improving the long-term growth profile of the portfolio. Additionally, the assets were acquired off-market due to a long-standing relationship with the seller. One of the 2 properties, the Pompano Center was a structured investment that was converted into equity ownership.

This is the third acquisition from our structured investment program, all of which were grocery-anchored centers that we intend to hold long term. Further evidence of the program being both an accretive way to get yield and another important avenue for our acquisition pipeline. We expect the capital recycling from low cap rate multifamily and flat to low growth leases to continue with the proceeds reinvested into higher growth assets that will further enhance our portfolio.

I will now pass it to Glenn for the financial results of the quarter.

Thanks, Ross, and good morning. As the team has outlined, Kimco delivered another quarter of strong operational and financial performance, highlighted by 4.5% growth in FFO per share, continued improvement in credit trends and further strengthening of our balance sheet and liquidity position. These results reflect the quality of our portfolio, the resilience of our cash flows and the benefits of our disciplined capital allocation strategy. I'll focus on the key drivers behind the quarter, our capital markets activity, the balance sheet and our outlook. .

FFO for the second quarter was $309.2 million or $0.46 per diluted share compared to $297.6 million or $0.44 per diluted share in the second quarter of last year. Operationally, the portfolio continues to perform at a high level. Same property NOI increased 3.5%, driven by the growth in minimum rents, stronger net recovery income and continued improvement in tenant credit performance. Credit loss came in at 57 basis points for the quarter compared to 89 basis points for the second quarter of 2025. Year-to-date, credit loss is just 54 basis points, reflecting the continued strength and resilience of our retailer base. These operating fundamentals translated into another quarter of FFO growth.

Importantly, there were no material onetime adjustments or noncash items affecting comparability this quarter. Turning to the balance sheet. We ended the quarter with consolidated net debt to EBITDA of 5.2x or 5.5x on a look-through basis, including pro rata JV debt and preferred stock. We ended the quarter with $2.7 billion of total liquidity, including $700 million of cash on hand, much of which will be used to satisfy our upcoming 2026 debt maturities.

A few additional details regarding our successful inaugural exchangeable note offering. On the strength of investor demand, we upsized and issued $600 million of 3.5% exchangeable senior notes due 2031. The notes carry an initial exchange price of approximately $32.36 per share, representing a 27.5% premium to our stock price at issuance and nearly 60% above our stock price at the beginning of the year. In connection with the offering, we repurchased approximately 4.1 million shares of common stock for $104.7 million at $25.38 per share. This structure was deliberately designed to mitigate the potential dilution from the offering while diversifying our capital sources, extending our maturity ladder and securing an attractive cost of capital.

It was also compelling from a capital allocation perspective, given our dividend yield exceeded 4% at the time of the issuance compared to the 3.5% coupon on the notes. Subsequent to quarter end, we also repurchased 516,750 shares of our 7.25% Class and convertible preferred stock for $33.3 million funded through the issuance of 549,250 common shares, which was sized to cover the holders related hedge positions and $19.6 million of cash. This transaction will result in a charge of approximately $3.8 million in the third quarter, reflected in both net income and FFO.

As we look ahead to 2027, we remain exceptionally well positioned with substantial liquidity and a broad set of financing alternatives, including the unsecured bond market, term loans, commercial paper and the exchangeable note market. As always, we'll remain opportunistic with respect to timing and execution. Given our strong first half results, we are raising the lower end of our full year 2026 FFO outlook to $1.83 per diluted share from $1.81 previously, while maintaining the top end at $1.84. The revised outlook reflects strong first half operating performance, improving credit trends and greater visibility into the remainder of the year while still maintaining flexibility for the timing of transactional activity.

We are also raising our same-property NOI growth assumption to a range of 3% to 3.5%, up from 2.8% to 3.5% previously, and tightening our credit loss assumption to 55 to 75 basis points from the prior level of 65 to 90 basis points. We've also adjusted downward our assumption for interest expense and preferred equity dividends reflecting the financing activity to date. As always, our outlook considers the timing of capital activity, including financing, acquisitions, dispositions and redevelopment spend and all other assumptions remain substantially unchanged.

We I'd also note that the Board declared a quarterly cash dividend of $0.28 per common share or $1.12 on an annualized basis. The 12% increase over the dividend declared in the third quarter of the prior year reflects continued growth in operating cash flows, earnings and taxable income. We believe a growing dividend remains an important component of total shareholder return while maintaining the flexibility to invest in future growth opportunities.

In closing, the quarter reflected continued operating momentum, disciplined capital allocation and further balance sheet strengthening. Combined with improving credit trends and significant liquidity and we believe Kimco remains well positioned for the second half of the year to further execute our growth strategy and create long-term value for shareholders.

And with that, we are happy to take your questions.

[Operator Instructions]

Your first question comes from the line of Michael Goldsmith with UBS.

This is Conor here with Michael. Just wanted to touch upon the transaction activity and the capital recycling. Obviously, you guys made a lot of progress in the quarter with activity in ground leases, shopping centers, apartments and incorporating the SIP as well. So while you didn't change guidance on the acquisitions and transaction activity, we were just wondering if you'd be able to kind of share your thoughts and provide some color on what we should expect for either a similar level of activity in the back half of the year and maybe just like the mix of transactions that you currently have in the pipeline.

Sure, Conor. Happy to answer that. So yes, I mean we're really excited with the execution thus far. As we've talked about at the beginning of the year, the accretive capital recycling is really critical in enhancing the growth profile of the portfolio. So selling some of those Costco at super aggressive cap rates, we're cycling that into the grocery-anchored assets with a significantly higher growth profile with a great trade, converting on the value creation of our first multifamily crystallization, I think, was an important step, and we do anticipate that we'll see more of that.

As I mentioned, the Whitmer is the next multifamily project that we would anticipate closing while we haven't identified a definitive time frame, we do think that, that will happen this year as well. So with that, we feel really confident in some of the sources of future acquisitions that we've been working on. Obviously, the disposals have been front-weighted in the first half of this year, but we do anticipate that the activity on the acquisition side will continue to grow here in the back half, and we have a couple of things that we're excited about that we're working through.

So the structured investment program continues to be a source of opportunity. And not only are we excited about the yields that we've been able to achieve within that program, but do believe that the quality of the assets within that book have continued to improve. And with the third acquisition from that program taking place with 1 of those 2 grocery-anchored assets, we think that future acquisitions from that program will continue with quality that we're really excited about.

And then of course, we continue to have a pretty substantial amount of ground leases to dispose of at low cap rates and low growth profile that will continue to recycle. We can be pretty methodical with the timing on that. As we've talked about, tax efficiency and conversion into 1031 exchanges will continue to be an important part of that program, but we feel really good about the execution and think that we can continue to recycle out of the lower growth, lower cap rates and into some acquisitions that will have significantly enhanced growth profile.

So that will continue through the back half of the year and then, of course, into 2017 and beyond.

Your next question comes from the line of Juan Sanabria with BMO Capital Markets.

I guess a question for Glenn. Could you just comment a little bit about the implied FFO in the second half? I think it's flat, but same-store NOI is said to accelerate. It sounds like you have more acquisition activity also expected as per Ross' last answer. And I know you called out like a $0.01 plus onetimer on the cost side. But just curious on how we should think about the earnings trajectory in the second half.

Sure. Again, we did raise the bottom end of the guidance. We lifted it $0.02 from where it was, which gets you to at the bottom end, 4% growth, the upper end at 184 is 4.5% growth. So we're approaching where we've been talking about trying to keep up with that 5% growth level. So you're starting to get to those levels. As I did point out, we do have a charge in the third quarter that we're aware of. So that's about 2/3 of a penny that has an impact on it. And you also have again, the timing of the transaction activity that Ross was talking about. So we have some of the dispos ahead of the acquisitions.

The good news is the cash that we're holding on earns about 4%. So it's not zero by any means. But again, the deployment of that capital and the timing of that kind of plays into the overall guidance activity that we have. So we feel really good about where we're headed, and we're going to continue to do everything we can to meet what's there and hopefully try to exceed it.

your next question comes from the line of Mike Mueller with JPMorgan. Please go ahead.

I guess just going back to the dispositions and resi. Should we think of anything that you develop in terms of resi or mixed use as being a higher priority sale at some point down the road? Or are there some projects that you would hold on to?

Yes, it's a good question. I think that the beauty of the program and the way that we've structured is that we have optimal optionality. So when we've developed these projects or we've structured them in a variety of different ways, you've seen us self-develop with a joint venture partner, contribute our land into a JV where our component is sort of structured as pref equity where we're able to achieve a return during the development phase as well as longer-term ground leases as well as selling off the dirt in the form of the entitlement predevelopment.

So we look at each and every of these projects through a very unique decision tree and make the determination as to how we activate it, what the exit strategy is, what the timing of that is. And we really do retain the right in each and every one of these instances to really control our exit, control our destiny. So when you're in a market like we're in today, where we're able to sell the Milton at a 4.9% cap as well as some of our other multifamily that we know would price in this market at very aggressive cap rates. It's likely portion of the market cycle where it makes sense for us to monetize and redeploy.

But to the extent that we have opportunities with higher yields where we think it makes sense, either in the medium or even long term to own it. We have the ability to do that at the appropriate time if our cost of capital allows for that. So we do view it as a form of currency that we can utilize and sort of pick and match when and if we look to monetize, but we're going to do that on a case-by-case basis.

Michael, I think the key, too, is the enhancement of the retail. So when we look at creating a mixed-use environment, we're seeing the thesis play out where the retail is driving premiums on the apartments, but the apartments are also driving premiums on the retail. -- you're creating that campus environment that enhances each other. And so the components that we see for the future of Kimco is really unlocking that and enhancing the retail component.

And then as Ross said, having total optionality on the apartment side. So we think that the program continues to bear fruit, 14,000 entitlements. We obviously have a laddered opportunity set that we continue to activate and we continue to see that there's a lot of untapped potential within the portfolio. And we're excited about the future.

Yes. I would just add that the other thing to keep in mind about the program is we're doing it in a capital-light manner, which is really, really helpful. We're not taking major drag on earnings to build these over a 3-year period, the preferred equity structure that we've created with the partners really has allowed us to build these without having a drag on earnings.

Your next question comes from the line of Andrew Reale with Bank of America.

Maybe just a follow-up on the recycling. These ground leases have basically near zero CapEx, whereas the acquired shopping centers are going to have some leasing and TI requirements. So I guess on this 100 basis point spread you lay out, what does your 1 accretion actually look like on an AFFO basis?

Yes. It's a good question, and that's why we also want to indicate what the IRR trajectory of these investments is because we look at it through a few different lenses. Clearly, year 1 from an AFFO standpoint is important. But that spread, while it's going to be anywhere from 50 to 100 basis points is just 1 factor. When we think about the CAGR, the trajectory and the IRR of a 10-year hold, that's where we're seeing selling of the ground leases. Costco is the example that we gave being sub-6% and recycling that, including and factoring in all costs associated with operating a multi-tenant shopping center where we're able to generate high 8s, low 9s for the recycling into the grocery-anchored shopping centers.

So you're seeing that 300 to 350 basis point spread on the IRR inclusive of costs associated with the multi-tenant shopping center. So it's definitely a good trade for us from the growth trajectory even factoring in the CapEx-light nature of the ground leases.

Your next question comes from the line of Jamie Feldman with Wells Fargo. .

Great. So traffic trends have been pretty solid. You highlighted 7 consecutive months of spending. Can you talk more about -- or spending improvement, can you talk more about the differences you're seeing in value-oriented versus higher-income consumers across the portfolio?

Sure. I'm happy to start, and then Dave can add some color. When you look at the growth of the traffic, clearly, it's still being led by the high income, highest demographics piece of it, but it's still positive 2% on the lowest income demographic as well. So I think people are retrenching if you're in the lower demographic. But when you look at Kimco's portfolio, we sit in that first in suburb of really the top major metropolitan areas. And so our consumer screens towards that middle to upper end on the income levels.

And so we continue to look and see how our tenants are performing because obviously, traffic is a leading indicator, but we don't necessarily have the visibility inside the store. But when you look at the credit card spending, when you look at where our retailers are performing and how they're presenting their store operating plans and their new growth plans, it's very clear the store base is producing meaningful growth for them. And we continue to think that, that's going to showcase with our portfolio reviews, platform deals and the relationships we have across the retail spectrum.

Just to add a couple of data points, too. On the middle income side, we're seeing spending up about 5.5% on the low income side, it's still about 3.5%. So you are seeing increases on the spend side. And complementing what Conor was saying, our shopping centers do cater to all needs on the income spectrum. And depending on where you are in terms of your discretionary income or the cycle of the market, our diversity of our tenant base helps service that. You're still going to the grocery store, you still need to eat. So it's just really dependent on what you buy within the store, may vary month-to-month year-over-year depending on your situation. But that's our intention. Our intention is to always be there for you when it's needed. .

I would just add, the consumer continues to be incredibly resilient, right? They've dealt with higher interest rate environment for the last few years. They've dealt with higher gas prices. They've dealt with higher egg prices throughout it. And I think the thing -- the same in grace of all of that really has been if you look at where unemployment is, unemployment has remained incredibly low. Job turnovers remains incredibly low. And again, when you're sitting and are feeling comfortable that your paychecks coming people continue to spend. So we continue to watch that. We're looking for that cracking it. But so far, so good. .

Your next question comes from the line of Michael Griffin with Evercore ISI.

Great -- on the leasing front, Dave, I'm curious, your snow spread this quarter came in about 10 bps from last quarter at 400 basis points. Just given all of the operational initiatives that Kim has been undertaking, getting these tenants open quicker, commencing rents quicker. Does it feel like we've hit sort of that widest spread between leased and economic occupancy and can you give us a sense of where you expect that to trend into the back half of the year and then as we kind of start to think about 2027?

Yes. No, I appreciate the question. So when you look at the snow pipeline, obviously, it's physical occupancy that as we continue to push leasing and we're able to continue growing physical occupancy, if your economic stays the same, that will widen the spread. But as opening tenants and getting them into the cash paying component and growing economic occupancy at should compress. So I think you're having both initiatives run extremely strong right now. So you could see a fairly steady state through the back half of the year.

And if our occupancy levels remain high and there's no bankruptcies or material issues in, say, '27, you could start to see that compression. But I think -- what's most important is the conversion to cash flow and the mark-to-market that we're seeing. So even on the widening of the spread that we've had elevated when we -- when you look at the mark-to-market on the new leases, obviously, this quarter was a record quarter when you look at the mark-to-markets on the anchors, in the 20%, 25% range historically that we're seeing. You're seeing the real cash flow growth come through.

So it being elevated is -- it's actually -- it's a good thing because it's showing the future cash flow, but it's the conversion of the old to the new that matters most to us. So we're continuing to push on all fronts and just grow that cash flow.

The only thing I'd add is I think we still have room to run on the occupancy side. When you look at our anchor occupancy, it's still below all-time high. So like the physical occupancy lift we still have to go is still there in the anchor component. And then obviously, small shops being at an all-time high, you would think we're sort of cresting that potential ceiling. But I don't think that's the case. I think we're we're continuing to see diversified demand come into small shops, as Dave outlined, from a number of different uses that continue to gravitate towards the convenience and the value proposition that our shopping centers offer and you're seeing it with the consumer continuing to show up with our traffic counts.

Your next call is from Greg McGinniss with Scotiabank.

I had a few follow-up questions on the new One Kimco operating model. Firstly, how does that impact conversations with retailers? And then what's the expected size of the investment on the tech side, the data, AI tools, collab tools? And then what's the expected long-term benefit to the margin?

Sure. I'll take the retail question, and I'll kick it over to Will on the other questions. As it relates to the retailer, the conversations have been extremely constructive. It's one unified message across the country. We have one accountable party as part of the One Kimco launch, we also have a national account team that's been launched as well focusing on those retailers that we have packaged deals working. Obviously, large anchors and nationals that are actively growing. So we're able to sit with them and address multiple sites, multiple leases, multiple opportunities at once and then have one clear concise message back to them and they're able to roll those leases up with one group managing the entire deal flow end-to-end. So you're seeing acceleration of the execution, which is huge on both sides.

And then even on the back end of it, too, though, we're seeing with construction and development working directly with their head of construction, which is you're seeing a pull forward on the snow pipeline with a number of retailers opening sooner. And that's really important for them because their pressure to hit their open to buy and get their stores open as quickly as possible. So there's this real complementary relationship that we've been developing over an extended period of time. And One Kimco sort of wraps it all together and is really putting our full resources to work.

And the only thing I'd add is the negotiating leverage that Kimco has today. is very different from what it's been in the past. And having One Kimco having that negotiating leverage is very different from the regional structure we had before. And I think that's a meaningful change that you should see in the margin enhancement going forward. And then, Will, do you want to take the AI question .

Sure. With respect to digital transformation and just a broader move to our new operating model, our office of innovation and transformation is taking the lead in coordinating these efforts. And -- in the second quarter, we were proud to be a part of helping the company to transition through these changes, which impacted our people, processes as well as system investments that we had to make. We're very focused right now on consolidating a pipeline of digital transformation initiatives, and we've made some significant progress in the first half of this year. including establishing a new data platform, as Dave mentioned in his prepared remarks as well as standing up key AI and Agentic infrastructure. .

We're really pleased with the progress. And from an upscaling perspective, are pleased to see now weekly AI utilization within our workforce above 80% among all of our associates. We have AI powered workflows that are now in place across asset management, leasing, underwriting, legal and other key functions. And we really see this as the early innings of a shift akin to the emergence of the Internet. As we think about what this will cost the business, our focus is on surfacing investments and incremental steps, which will pay back along the way. So I can't put a number to what we will invest over the next, say, decade around these transformation efforts.

But what I can tell you is that year-to-date, we've yielded approximately 5x return on the amount of money that we've spent and invested in our AI initiatives. So 5x in terms of expense savings offsetting the expenses that we've invested into these efforts.

Your next question comes from the line of Floris Van Dijkum with Landenberg.

Nice progress on capital recycling. My question is a little bit of a different topic, which I don't know gets a lot of attention. But the ancillary revenue line and maybe this is for Dave. I think ancillary revenues are about 1.8% of total revenues to date. You talked about the potential growth in that. How should we measure success? Where do you think this can go? And how should investors look at this? Should this be as a percentage of revenues, should it be as a percentage of per asset or per square foot. And what's the upside potential? Do you have a target 3 to 5 years, hence, in terms of what it could represent as a percentage of revenues?

Yes, it's a great question, Floris. So the way we're looking at it is obviously optimizing the value of each of our assets. I think it's a percent of revenues as we continue to grow it. We're focused a lot on building national programs as well that build a residual base into that revenue line that we can grow over time. And then on top of that, you have the specialty income side, which is really the backfilling of vacant space intermittently while you're looking at long-term replacements. Those are usually driven by, say, the Spirit Halloween deals. So as you're growing your occupancy and stabilizing your tenant base with that predictable residual cash flow with long-term leases, we're looking at alternatives of how do we build a sustained predictable cash flow within the ancillary income world.

And so we look at each of our assets is how to optimize it either through advertising, through energy utilization, obviously, EV charging, solar, et cetera. When we're looking at the specialty leasing side, how do you activate residual excess park gain in common area space that's underutilized at the time. So it's a real forensic approach, that is nuanced in nature, depending on the asset, but we have the team and the resources and really driving an enterprise initiative behind that.

I mean we've been really enhancing the solar program -- we have a couple of larger projects on some of our properties that are in the process. So we're looking at every avenue that we have from solar, EV charging stations, just full use of the property anywhere we can to drive additional revenue.

Your next question comes from the line of Rich Hightower with Barclays.

I just wanted to ask about the convert issuance and how you think about sizing that program relative to the overall balance sheet, I guess, in the near term, obviously, it's a great low-cost source of capital in the longer term. That market is a little more volatile than maybe traditional debt. you might be perceived to be sort of over-earning on the interest expense side of things for some period of time. So how do you think about balancing that relative to all the other sources of capital? .

Look, it's a good question. We're always looking at the capital structure that we have. We don't rely on any 1 specific part. You have a whole lot of options available between term loans. We have a commercial paper program on the short end that we haven't really accessed yet that's fully available to us. Obviously, you have the traditional bond market in multiple tenors and we've been a participant. We've issued paper that's been as short as 5 years. We have 4 issuances of 30-year paper. We have perpetual preferreds when it's been opportunistic to issue them. We have those outstanding as well.

So I think the way we really look at it is it's just another tool and another opportunity for us, and it really gives us another opportunity to expand investors in our company, right? The exchangeable investor is very different than -- and in a lot of cases, very different than the traditional bond investor. So it's just another access to capital that we think as a large company that's an A-rated credit. It's a good thing to use today in balance like anything else.

The only thing I'd add is the strategic goal of getting the A- A3 rating opens up all of these opportunities that Glenn has been talking about. I think when you look at positioning ourselves for the long term, we really do believe that we've checked the box in terms of balance sheet improvement and taking it from obviously where we were to where we are today allows us, I think, complete optionality across the spectrum of financing that we can see and again, be opportunistic when those windows open.

Your next question comes from the line of Caitlin Burrows with Goldman Sachs. -- ahead. .

Just on the Pompano Beach deal, could you remind us on the initial structured investment, maybe when that was and your take on why they initially decided with that structure followed by the sale now? And when you have a property like that going from a structured investment to a property acquisition, does that process end up being FFO dilutive?

Yes, it's a good question. And actually, I think Pompano is a great example of our program and how we really look to sort of cater our capital to a solution for a borrower and something that's unique to Kimco and the way we structure our deals -- the Pompano deal was done a few years ago where we actually came in as a senior lender at a slightly higher LTV than what a traditional lender would come in at. And while it's a really strong performing Walmart neighborhood grocery-anchored shopping center, there were a couple of moving pieces with that asset that we got very comfortable with and thought there was significant upside long term where I think a traditional lender may have struggled with some of the initial pieces and a few examples I can give you there, there was a former JOANN Box, that was a bit uncertain.

We had known through our tenant relationships and through dealing with the borrower there, that Burlington was looking to take that JOANN box, that hadn't been completed yet, but we had full faith in talking with the retailer that, that was going to come to fruition and ultimately did. In addition to that, there was a Steinmart box that previously went through bankruptcy. There were leases that were being negotiated with Marshalls and Five Below to replace that Steinmart. So again, we got very comfortable with the trajectory of where the cash flow and the tenancy of that asset was going, even though it may have been a little bit early in the transition of that asset. We came in at that senior lender at an 8% yield.

But again, that yield for Kimco was flat as a fixed interest rate. And then we had the opportunity as the borrower was looking to sell the asset to utilize our right to step in and acquire that asset at a price that we're very comfortable and excited about. To your point, clearly, the going in cap rate is going to be lower than the 8% yield that we were earning as a lender. But when you think about the growth trajectory of where that initial yield is going to go over time, we see 3.5% to 4% plus CAGR on that versus what was initially a flat income stream as a lender. So over time, we'll see the cash flow yield grow and catch up to that initial yield from the structured investment.

But it is important to take a slightly separate perspective when we're thinking about what our structured investment program yields and what the purpose of that program is versus our long-term hold portfolio that we're looking to enhance the growth over time. And obviously, being able to utilize that acquisition of the 1031 exchange for the Costco sales that were done at a flat 5% cap was a really good trade for us.

I mean, simply put it, you're being paid to ROFR.

Yes. The other thing, Caitlin, to keep an eye on is, obviously, that 8% that got paid back. The new structure investment book that you've seen us deploy this year is averaging over 10%. So obviously, we're net positive in terms of the capital going out versus the capital we're getting back. And that's our goal for that program is obviously have a bit of a positive spread as well as having been net positive.

Your next question comes from the line of Craig Mailman with Citigroup.

Conor, maybe I just want to go back to something you said in your prepared remarks that the growth potential here is higher than maybe the headline suggest and maybe dig into that a little bit, as Glenn was talking, clearly, you guys are targeting that 4.5% to 5%, you're doing a lot on the capital recycling side, kind of increasing the growth profile of the company overall.

I guess when you kind of highlight something like that, what's the time frame that we should be thinking about to get kind of the kind of acceleration above maybe 5%, given all that you're doing here? Is that even a possibility? And then just also as we think about you guys raised the dividend 12%. And I know we had talked about that dividend growth may exceed kind of earnings growth here. So just from a total return perspective, also since this is real estate. Just how do you think about that opportunity maybe versus peers?

Yes, it's a good question, Craig. I think when you look back the last 2 years, we've produced FFO growth of 5% and then 6% plus. So we clearly reset the trajectory of our earnings growth versus sort of prior cycles. And I think the continuation of that growth profile will obviously be contingent on where the consumer goes, where the retailer environment goes, where interest rate goes. But from a fundamental standpoint, if you think about the the structure we have, the platform we have, the investments we're making, that's why we're super excited about the future of Kimco.

We are investing in our people, we are investing in AI. We are investing in our platform at a point where we're coming at it from a position of strength. So we're reorganizing at all-time high occupancies to drive further occupancy growth we're refinancing, obviously, into a higher interest expense environment, but we have an A-, A3 credit rating. So the balance sheet is in the best shape it's ever been in. When you talk to our folks, when you tour our assets, the assets itself really are thriving because of the diversity of demand we're experiencing.

And then when you look at the future opportunity set of our entitlement program, we've got 14,000 entitlements. We've just completed our first round trip of monetizing a multifamily project. You look at all of these levers we have for growth and we got super excited about where we sit today, but also where we're going tomorrow. And I think that's why we're at a position of strength and look at the mark-to-market that we have across the entire portfolio. And you see that snow pipeline coming online. The snow pipeline is just base rent. It's not recoveries.

And so that enhances it even further as our margin, I think, is really at a point where it's going to enhance from here. So you put all those ingredients together, and I think it's very compelling to think that Kimco is still trading at a discount, yet our growth is at the top of the charts in terms of our peer group and our balance sheet is at the top of the charts in terms of the entire REIT industry. And so you put those components together, and I think it's a very compelling time to invest in Kimco.

So let me just clarify a little bit on the dividend, too, which I think will help. As we mentioned, we're at where payout today is 100% of our taxable income from the operations of the business. So if you think about percentage growth on FFO, our base of FFO from last year at $1.76, every penny we grow is about 56 basis points, where $0.01 of growth on the dividend is 4%. So just you got to keep that in mind because as we are growing our funds available for distribution, every $7 million that we grow or $0.01 of FFO per share is requiring us to add to the dividend. So the percentages are -- they're dramatically different because you're using just a much different base number of the dividend versus FFO.

Your next question comes from the line of Alexander Goldfarb with Piper Sandler.

Conor, you mentioned in the opening comments about revenue recognition, executing deals or doing things to get things that are open sooner. And you said, that you guys are ahead of schedule. From a material perspective, as you guys launch One Kimco, obviously, you're increasing leverage with the tenants to get them in sooner. Do you see this as a material impact to FFO growth, meaning as you go through and listen to your ops guys, your leasing team, everyone throughout the organization to get tenants to take space sooner. Do you see this as a material element that can boost FFO? Or you would say, hey, this is just 1 of the spices and the spice cabinet that adds to that 5% plus? .

No, I do think it drives FFO growth further. I mean, if you think about it, it's not only Alex, from a new deal perspective, it also is on a renewal perspective. So we would typically do renewals on a one-off basis and try and get the best intel you can from your local leasing reps to sort of drive that renewal. When you have the strength of One Kimco behind the renewal process, in essence, at the time we are at today, we have more negotiating leverage than we've had in the past. And so we can take that pipeline of renewals of, say, 10 to 20 or even 30-plus renewals that are happening in a year and really strengthen that renewal rate to a point where it's a driving force of FFO.

And as you know, renewals don't take any CapEx. And so that is really where I see a meaningful impact of the earnings growth, FFO trajectory going forward.

Your next question comes from the line of Omotayo Okusanya with Deutsche Bank.

I just wondered if you could talk a little bit about the expectations for same-store NOI growth acceleration in the back half of '26. I think your full year guidance is 3.2% or so. And you were 2.6% year-to-date. So just kind of walk us through the back half, the acceleration as expected on a year-over-year basis. Is it just easier comps? So kind of what's kind of driving that?

Yes. Again, the first half of the year, if you look at where we were, we had a first deal with lapping the bankruptcy activity that happened last year with Party cities, JOANN, Big Lots and others. So to your point, we are expecting continued acceleration of growth in the back half of the year. That gets us into the revised guidance range that we put out at 3% to 3.5%. So that will imply mid-3s to a little over 4%, third and fourth quarter as we go through the rest of the year. And again, if we're hitting those levels, we are going to get into the mid- to upper range of the revised guidance. .

Your next question comes from the line of Ronald Kamden with Morgan Stanley.

Great. Just 1 on -- just on anchored centers. I know some of your peers have sort of been going in that direction. Just sort of curious your thoughts, how you guys think about that expanding the aperture? Is that something that's interesting. And if I could just ask a quick follow-up to the discussion on the inline lease-line occupancy at record levels. I'm just curious if you're willing to think about what it would take to get to maybe $94 million, how you guys are thinking about that? .

Sure. On the first question, I think, strategically, we see the small strip center as part of our ecosystem. When you look at every single shopping center we own, it's a component of it. And so obviously, underwriting those assets, they're smaller check sizes -- but if they're in good real estate with below-market leases with the ability to use our platform to show growth, I think we've always been looking for those types of centers. And if you look at across Long Island, where we sit today, a lot of our centers are similar to that size and scale with significant growth profile. So we continue to see that as part of our ecosystem that we'll continue to look to underwrite. As you know, there's been a lot of capital formed for that structure and that asset class. It's been very competitive. But we continue to mine for those opportunities and have them across our portfolio.

And then on the second question, obviously, supply is muted. The demand side is high. So that's working in our favor to help continue to push occupancy north. The focus on grocery conversion, so continuing to add grocery stores to our shopping centers. either through backfill opportunities or a redevelopment pipeline is creating a halo effect that helps us absorb the balance of the in-line space as well. That's also a contributor to pushing our occupancy northward and helping on the growth side as well. So continue to heads down, focus blocking and tackling basic execution through the back half of the year. .

Your next question comes from the line of Paulina Rojas with Green Street.

I think we haven't touched on cap rates. Has anything shifted in terms of pricing recently? Or has it been noticed steady since last quarter?

Yes. I mean, I think cap rates continue to be very competitive. And what I would say is that we've seen change a bit is that there seems to be more compression and a tightening between different formats. I think Conor just mentioned all the capital that's chasing the unanchored strip format. Obviously, grocery continues to be extremely competitive, but we're also seeing the lowest cap rates for more traditional power and lifestyle than we've seen in quite some time. So you're seeing a bit of a convergence of cap rates for all formats.

And I would say that, that also holds true geographically whereas several years ago, I think you saw a pretty significant premium or spread between some of the gateway sort of primary markets versus secondary and even tertiary, you're seeing that spread really narrowing and more aggressive cap rates in some of the secondary markets that historically may not have been chased by a lot of institutions. So lots of capital chasing all formats, all geographies, and we'll continue to pick our spots and find the right opportunities for Kimco.

We have reached the end of the Q&A session. I will now turn the call back to David Bujnicki for closing remarks.

We just want to thank everybody that participated on the call. If you have a look for additional information, you can find in our financial supplement as well as our updated investor presentation on our website. Otherwise, have a wonderful week. Take care. .

This concludes today's call. Thank you for attending. You may now disconnect.

Okay. Good afternoon, everybody. Kind of as we get settled in here, I'm Rich Hightower, Senior REIT analyst on the Barclays team. Very delighted to have the Kimco management team here with me. I'll do some quick introductions get into some questions and then maybe we can open it up to audience participation after that. But immediately to my right, Conor Flynn, the CEO. Then we've got Glenn Cohen, Chief Financial Officer. We've got Ross Cooper, President and CIO. And then all the way at the end, Kathleen Thayer, Chief Accounting Officer.

So thank you again for being here, everybody. So Conor and I were sort of chatting a little bit about the state of the industry and really, frankly, how good the business is right now. And I think maybe it's a little bit underappreciated what's going on in shopping centers. And retail generally. So we'll just start there.

I think if I look at recent history, you're posting record new lease rents, blended leasing spreads, you're at near-peak occupancy, at this stage in the cycle, what really drives NOI from here?

Yes. Thanks for having me today. Look at Kimco, we're really well positioned, I think, to take advantage of the supply and demand dynamics that are playing out today. When you look at the, the lack of new supply coming online, that's really sort of unique, I think, to the shopping center sector, where there's only 0.2% of stock under construction, which is the lowest of any commercial real estate sector. That's unique just in a point in time, but that's been the point for the last 13 years.

So when you compound that year after year, it's pretty unique to be in a position where occupancies are at all-time high and yet rents have not escalated to a point where new construction and new development makes sense economically.

So we've done a market-by-market analysis to see when new supply might come back online and you see some new development come out of the ground. Rents in our estimates are need to rise between 30% to 60% in certain markets to justify putting a shovel on the ground. Kimco's strategy is uniquely focused on first-ring suburbs in major metro markets where you're starting to see a little bit of new development is in the third ring type of scenarios in Phoenix and Vegas and in parts of Texas where you've seen sprawl, you've seen new household formations and there's really a retail desert there.

And even in those situations, the only way the economics work is if tax incentives or unique situations with public private partnerships, justify the development returns. And so that's a unique situation that we really are excited to continue to have a pricing power advantage when spaces come available for rents. There is no better economic deal that a retailer has than the ones that they've signed over the past 5, 10, 15, 20 years.

Our mark-to-markets are significant across our portfolio. We look at the anchor spaces of anywhere between 30% to 40% plus mark-to-market. So as we recapture spaces, we're able to really show that rent growth. We have unique ability as well to continue the occupancy push higher, even though we're sitting near all-time highs right now. I really circle the small shop occupancy lift opportunity that we have, which is, I think, going to be the next leg of growth for us. Last two years, we produced 5% and 6% FFO growth rates. That's really on top of the sector. The balance sheet is in the best shape it's ever been. We're A-/A3 across all the 3 rating agencies.

But I still think we're actually in the very early innings of this new retail. And so coming back and being like an institutional quality category has taken a long time. But what was once capital curious, whether it's from large sovereign wealth, large PE funds has now become capital deployment. There has been very large privatizations. There has been very large transactions to showcase the value proposition that shopping centers present relative to other sectors and the growth profile is real.

And yet, Kimco is trading at a very compelling valuation when you look at it from a discount to NAV or net asset value, when you look at it at a multiple relative to the peer group, we produced some of the best FFO growth with one of the best balance sheets in all REIT world and yet our multiple is near the bottom. And so we see that this unique point in time as a pretty compelling opportunity for Kimco to be part of people's investment thesis because we have the largest signed but not open pipeline in history at $77 million. That's just annual base rent. That's leases that are signed that are not cash flowing yet. So if you want a crystal clear ball of where our earnings growth is coming from, it's that sitting right there as Milton Cooper likes to say frozen custered.

It's nice to look at, but we have to get those tenants open and operating to get that rent to commence. And that $77 million is really what's going to drive the earnings growth going forward. So it's a unique time where we are feeling good about the fundamentals. We are feeling good about the balance sheet. We are feeling good about the future. And yet the valuation does not reflect where the private market sits today, but we're closing the gap, obviously, and have been off to a good start this year.

There's a lot of potential offshoots to that answer. But ICSC was, I think, last week, one of the common themes is there's tremendous retailer demand for space, it cuts across categories, and there's just not enough supply. So can you talk about some takeaways from that conference? And how does that translate into what actually happens in Kimco's portfolio?

Yes. You're spot on. The retail demand is extremely robust across all different square footage categories. And so when you go into a conference like ICSC, you're really trying to continue to maintain and enhance those relationships with decision-makers on the retailer side. So Kimco is uniquely positioned to take advantage of gaining market share, specifically in the retailers that are doing very large new opening store plans. And that's where we've really focused on using the relationship and the platform and the technology tools that we have to take more and more of those new store opening plans and make them Kimco opening plans.

And so when you look across the spectrum of retailers that we do business with, it's healthy across the board. Even some of the watch list tenants that we've been talking about for a number of years have seemed to turn the corner. You look at like Michaels, you look at some of the recent results of Kohl's, they seem to have really been able to turn the corner even in a higher interest rate environment because the customer is really focused on essential goods and services and value.

And so that's where we think Kimco is the unique intersection point. And so retailers are super aggressive in terms of openings because they know if they don't sign the deal today, it's likely that the space is going to be even higher rent tomorrow. And so they know that there's no new supply.

And so the space is available, they have to jump over each other to get it. And you're even seeing it in some of the bankruptcy process where if a defunct retailer goes away, the retailers are actually buying those leases and putting their own capital to work to build out the space because they can't find those types of deals today. And so that conference is really sort of a microcosm of what's going on across the sector is a lot of capital being formed for the asset base, a lot of retailers expanding. And I think one of the biggest tools that we have is to help and reeducate people that brick-and-mortar -- it's not e-commerce versus brick-and-mortar. It is an omnichannel approach that's the winning strategy, full stop. There is no debate what's the winning strategy in retail.

You look at Walmart, you look at Amazon, you look at Costco, it is a combination of the two. And now that the working capital of these retailers is being focused on reinvesting in stores and opening new stores, you're seeing that flywheel continue to have earnings growth be a meaningful driver for these retailers because the e-commerce on top of a physical store, whether it's distributed from the store, whether it's pickup in store, whether they been returning from the store, that flywheel just continues to add the highest margin, which is in the store.

And so that's the beauty of where we sit today is what was once sort of a winner-take-all scenario where it was going to be all e-commerce. And then all of a sudden now, it's become very, very clear that the winning strategy is the combination of the two. And you're seeing that we're able to push rents because that halo from the e-commerce actually has more sales coming through the door of the store.

So I was having another conversation just before we started here. Truth Social is now part of my daily news feed as it has to be, but this is in the context of oil prices, consumer health. I know we touched on this a little bit just a second ago, but maybe help, help us understand the kind of natural defensiveness of the portfolio and maybe how -- what Kimco owns, how does it sort of screen from a relative risk and return perspective? How does consumer health factor into tenant sales and the ability to push rents and grow rents and grow NOI? I mean, maybe take us a little deeper into that.

Yes. The nice part about Kimco's portfolio is it's based in essential goods and services. So we're 86% grocery-anchored. And really, when you look at the combination of what we deliver to the consumer, it has changed over time. There are more uses coming into shopping centers today than ever before. Medical retailer, medtail, medi spas, all of these new categories of services have actually been the driving force of some of the small shop occupancy gains that we've seen. And actually, 80% of our new deal flow on the small shop side has been service-based. So if you still are in the e-commerce-resistant camp, that is obviously something that you can't do online. The consumer is actually healthy. When you look at our customer, and so Kimco is focused on really that first-ring suburb of major metro markets.

That's an affluent customer. And what we deliver is really essential goods and services. So typically, it's the grocery shop, combined with maybe a treasure hunt at T.J. Maxx and then you have all the small shops that surround those two anchors. And that's really where that flywheel continues to show the growth or you layer in different merchandising mix that drives traffic at all times of the day. And what you're trying to do is take the data and understand who your customer is, and prioritize what the customer needs, wants and is missing.

So avoid analysis of really what's missing in a market. Because if you can add what's missing in a market, all of a sudden, you expand your market and draw from a much wider trade area. And that's where the sales go up all across the board of your shopping center and you get to charge more rent. And so the NOI growth that we're experiencing today is really tied to a combination of demand from anchors, junior boxes and small shops and individual categories are really deep in terms of the demand pool. So it's a nice combination of seeing both the goods and services all work at the same time.

That's great. So you mentioned this earlier about where Kimco is trading relative to net asset value earlier before we got started here. We talked about just the, the volume of private capital that obviously is very interested in retail real estate. So maybe we can -- we can move Cooper, Ross on this one. How do you close that gap? I mean, you guys have a lot of tools at your disposal. You've got asset sales, you get structured investments. obviously, regular acquisitions, dispositions. Help us understand how all that fits together and what are you working on?

Sure. Thanks, Rich. And as Conor articulated before, all the reasons why that retail capital curiosity has converted into conversion and execution in terms of new deal flow and capital being put to work. It's extremely competitive. It's a frothy environment for retail for all the reasons described and we are trading at a discount, which makes it challenging to do new deals that are accretive to our cost of capital.

We're fortunate that we have a strategy in place where we could utilize what we already own and deploy that and recycle that capital accretively and what I mean by that is if you look at the composition of our portfolio, first and foremost, we have 9% of our annual rents that are coming from long term relatively flat in nature -- long-term ground leases with some of the best credit tenants in the industry. I think Home Depot, Lowe's, Costco, Walmart, et cetera, et cetera.

Those are bond-like instruments that are highly coveted in the private market today, extremely aggressive cap rates, but have a relatively low growth profile, plus or minus a 1% compound annual growth rate which is serving unintended as a bit of an anchor to our growth profile. So as we continue to look at ways to redeploy capital accretively and also enhance the growth profile of the organization, that is a great opportunity for us to divest some of those locations and those leases and then redeploy that capital into multi-tenant shopping centers that not only have a nice spread, call it, 50 to 75 basis points in terms of the going-in year one cap rate and yield, but arguably, more importantly, have a compound annual growth rate that's anywhere from 200 to 300 basis points higher than what we're selling.

So it's a really nice way for us to continue to enhance the growth profile of the organization. On top of that, we do have our structured investment program. So when you think about where we're recycling capital into. There's going to be 1031 exchanges in the multi-tenant shopping center acquisitions, as I talked about, as we're very mindful of being tax efficient with some of the gains from the sales. And we also have our structured investment program where we're putting out capital in the form typically of preferred equity or mezzanine financing, where we're able to generate very attractive yields in the near term, but also getting right of first offers and right of first refusals to acquire those assets and hopefully bring them into our long-term hold portfolio if given that opportunity.

So you've seen us exercise that right a bit in the past, and in an environment where you have a significant amount of competition like we talked about, having the inside track or our foot in the door on high-quality real estate that we like, where we can exercise that ROFO or that ROFR is a real differentiator for us in addition to looking at some of the joint venture opportunities where some of our partners might be looking for an exit.

We've been successful in the past in terms of buying out their interest in deals that we like where the price is right. So we're in a fortunate position that we don't necessarily have to win a bidding war, which, in many cases, is getting extremely aggressive, and we have opportunities to deploy capital accretively without the need for any issuance of equity or additional debt.

That's great. We're about halfway through. I'm happy to take any audience questions, if there are any. Otherwise, we just keep rolling. So there has been some consolidation in shopping centers and in retail. Kimco historically has been a consolidator at times. So tell us about the benefits of scale, what it means for spreading out investment efficiencies, things like that. What are you working on now? What should we -- what KPI should we be looking at from the outside as far as that goes?

Yes. I think the key at Kimco is to always focus on enhancing the growth profile as well as the quality spectrum. And so you never want to just get big to be bigger because then it's harder to grow. And so what we're focused on is understanding that the platform has to continue to evolve, and it has to continue to enhance the margins that we're delivering to our investors. And so I think the AI tools that are now injected into all of our workflows is something that we're seeing in the very early innings, a lot of productivity increasing. And so the nice part, I think, about platforms like Kimco is I think margin enhancement is still going to occur because of all these technology investments that we've been making.

I think when you look at the M&A landscape, I mean, as I mentioned earlier, our multiple is nowhere near where it needs to be or where it should be reflected in our opinion. And so it doesn't make any sense for us to be a consolidator today. We need to focus on organic growth as well as continuing to execute on the strategy to enhance the earnings growth to really have a meaningful cost of capital to allow us to go and do things accretively with our equity. That doesn't occur today.

So as Ross articulated, we've really focused on enhancing the growth profile reinvesting accretively, taking costs out of the business. As you've seen, we're taking $3 million of cost out of the business this year. We're taking assets to market showcasing the disconnect between public and private pricing and continuing to put up like really strong earnings growth. And so on the -- you have seen a number of privatizations, which again, I think will probably continue because of the amount of capital that's been raised for our product.

You've seen ROIC, Alexander & Baldwin, Whitestone, all become -- all privatized. So that, again, is probably going to continue, in my opinion, as long as there's a big disconnect between public and private pricing. I do think that platforms of scale will continue to have advantages going forward in the future, not just from technology but also from the ability to manage more without having to have any additional G&A. And that's where we've seen sort of our mergers continue to shine for us.

When you look at the amount of assets we've been able to acquire and drop onto our platform without having any incremental G&A really allows us to extract a lot of value, both on the synergy side, but also on the revenue side because then you're starting to see the leasing take hold and the occupancy left take hold. And that's what we were able to execute on RPT and actually, that occupancy gap has actually been completely closed, and we're actually now a little bit higher on the RPT legacy portfolio than we are at Kimco. So we were able to do that in a relatively expedited fashion. And there's still more juice to squeeze there. There's a lot of assets there that we're adding grocery anchors to, we're repositioning some of the assets as well. And there's a lot of leasing momentum that continues there.

That's great. Maybe one for Glenn. And I think you mentioned this in another comment, but obviously, the balance sheet is in a stronger position as it's ever been. So as you think about your sort of menu of the highest and best use of available funds for different purposes, how do we -- how does it rank order today? How do we think about that?

Yes. I mean we're really happy to sit here as an A-minus, A-/A3-rated company. We're the only retail REIT that has an A- rating across the board. We spent a lot of time and a lot of effort to really delever the company. We're sitting today with net debt to EBITDA on a consolidated basis at 5.2x and 5.5x on a look-through basis. And it gives us lots of capacity to do things. Best use of capital, I mean, we're always looking to see what that is. You saw us last year as the stock price was really trading at a very heavy discount. We bought back 6.1 million shares of stock last year. So the buyback is clearly part of the menu. Redevelopments are always really top of mind as well.

The yields on our redevelopment activity that we do run in the 10% to 12% range. So that's another avenue for us. And we also have to -- we have a -- we do have some interest expense headwind that we'll need to deal with. We have about $800 million of debt that matures this year. The weighted average rate on that debt is about 2.6%. So looking at the current rate environment that puts a little bit of a challenge. But we've put a lot of things in place that we think could help mitigate some of that interest rate expense.

We recently renewed our $2 billion revolver, which we borrow at SOFR plus 63.5%, which puts us at around 4.2% for that. We put together a $750 million commercial paper program, which has nothing drawn on it as well as another avenue of capital that we haven't tapped previously. There, we would probably borrow somewhere in the low 4% range. We have access to the term loan market, the traditional bond market, a new 5-year for us would probably be around 4.8%, a new 10-year would probably be around 5.25% with some of the lowest spreads that we've ever had.

We probably have a new 10-year deal done in the -- really in the low 70s today. And then we are exploring the convert market. That's another avenue where coupons are lower there, obviously, to start. And depending on where stock price is and volatility, that's another option for us. So we have the full gamut available to us to want to address maturities and to really deploy capital in a very, very accretive manner.

That's great. Thank you. So I'm going to try to bring it all together for a second here, but every security that I cover, I try to think about an earnings growth algorithm and a total return algorithm. And so maybe just for the sake of everyone in the room, what are the building blocks to FFO growth? What are the building blocks to total return as we think about a dividend yield plus the earnings growth? And obviously, you'd like to see the multiple rerate on top of that. So how do we think about that?

The earnings growth profile is something that, obviously, we're building to continue to enhance. And so when you look at the growth profile that's coming from the portfolio, the new leases that are being signed are getting better economics, better annual escalators, better economics in terms of bumps. And so that's really leading us to continue to enhance the profile growth. Glenn mentioned some of the refinancing headwinds. One of the things that we do point to is the dividend growth at Kimco. We've been touting our 5% and 6% FFO growth the last 2 years as being top of the charts in the sector. Do you -- the dividend growth for us will be meaningful going forward.

Our taxable income is pretty much right on top of our dividend. So everything the portfolio is producing, we're going to distribute out. And so that growth profile, plus the earnings growth is really sort of the combination that we've been pointing to as a total shareholder return that will make Kimco a unique investment.

Yes. When you think about some of the building blocks, so just straight out, simple contractual rent growth in the portfolio average is about 1.5% a year. So right out of the box, that's a lot better than it was probably 4 or 5 years ago where it was more in the 1%, 1.25% range. The redevelopment activity, as I mentioned, is another additive feature that we continue to really drive towards. We'll invest somewhere between $100 million and $150 million a year in redevelopments that are earning in that 10% to 12% range. And then you have our snow pipeline.

So the snow pipeline today are signed, but not open pipeline is $77 million just from the base rents. On top of that, that does not include the net, so the recoveries of CAM and tax and insurance, which generate about another $20 million. And behind that, we have a shadow pipeline of leases that are signed. We're tenants already in this space, and that amounts to about another $20 million.

So as that snow pipeline comes online, that is going to fuel both FFO and same-site NOI growth. So those are -- those are some of the really key things as well as we do have a structured investment program. Ross can probably talk about that a little bit more, but that's another driver of some of the growth that we have. Maybe you want to...

Yes, I mentioned we're issuing preferred equity as well as mezzanine financing, in some cases, stretch senior subordinate mortgages. It's really a capital solutions program where we've had the opportunity to invest in a more passive structure in real estate that we like with operators that are high quality on good real estate and having, again, as I mentioned, that right of first offer and that right of first refusal is a situation where we're earning a very attractive yield while sort of waiting to see if we get the opportunity to acquire the asset. So that has led to a couple of acquisitions that we put into the pipeline over the last couple of years and part of what we anticipate being in the pipeline going forward.

Yes. And just to reiterate, the other part is, again, as we're selling these ground leases that we've talked about with the very low CAGR that Ross mentioned, as we redeploy that capital, that's just another piece of the flywheel of investing accretively for us. So having an accretive disposition program is another piece to the puzzle. So when you put it all together, we think we can achieve the growth levels that we've talked about. And at the same time, the dividend yield -- the dividend rate itself is going to increase as that FFO continues to grow. And we're generating today about $160 million of free cash flow after TIs, leasing commissions, CapEx and our dividend payment. So cheapest form of capital to redeploy in the best way possible.

That's great. Thank you. Look, as we think about that, I guess, that sort of risk return, longer-term profile, I mean, at some level, a generalist investor base should become interested in that return stream. So talk about some of those conversations you might be having at this point. I feel like conference attendance this week is pretty good, not a record, but still pretty good. So what are those conversations? And what's the pitch to someone who's not sort of involved in REITs every day of their professional lives.

Yes. I think we have seen the generalists start to be curious and start to do some digging. We've had more reverse inbounds from the generalist community that we've seen in a while. And I think a lot of it has to do with the Blackstone second highest conviction is shopping centers. When you look at GIC, like putting a lot of capital out, and these big sovereigns that are coming into the space, it indicates sort of where the generalist is starting to see that and starting to take notice.

And so we've been trying to expand the tents to make sure that we go to more generalist conferences. NAREIT is great, but it also is a consistent Rolodex of very similar faces and names that we love, but we're trying to make sure that we go to conferences like Raymond James, conferences like Bernstein and others where it's more of a generalist population.

And we continue to see even some of our larger shareholders are now generalists as well. So we continue to think that the shopping center is one that resonates with the generalist because, in essence, everyone goes shopping. Everyone sort of can connect with their local grocery store. And I think it's surprising if you haven't followed retail in a while to see that occupancies are at all-time highs, to see what's happening at the shopping center to see how it's evolving. And they're all full. Like if you go and so people like to talk about the grocery store that they shop at, people like to talk about the retailer that's coming in or who's missing from their community.

And I think that all bodes well to have these tissues of connectivity to the investor to understand that, hey, this is something that's a living, breathing entity that's continuing to evolve and always getting stronger because it's in essence, evolving with the taste of the community and bringing in something new and fresh that people are excited to go and experience.

That's great. Last 90 seconds, what is the maybe 1 or 2 things that are just simply underappreciated about what Kimco is and what it can be?

I think when you think about Kimco's growth profile as being a very consistent earnings driver, there's going to be years where I think certain names outperform if they have a certain event to have one year be an outsized growth year. Kimco is going to be a consistent growth vehicle. And I think that's going to be our calling card that differentiates us is to make sure that we are in that top piece of the pie where we have earnings growth plus dividend, that total shareholder return be a very compelling opportunity, all at a compelling valuation right now.

And so we don't see anything on the horizon in terms of credit tenant risk or pull back from demand on the retailer side. Our shopping center traffic is up 3% year-to-date. I think everyone likes to try and find a crack in retail like there always seems to be sort of like a gravitational pull towards like a bankruptcy name or like a watch list tenant.

Right now, if you look at our growth the last three years and you look at the shopping center industry as a whole, it's hard press to find a better sector in terms of demand and supply setup and Kimco being the largest in our sector, if given the ability to actually go and acquire accretively using our equity. We would have an enhanced growth profile because all that earnings growth we did was when we were trading at a discount. And so all of that was done organically. And so imagine if we got a cost of capital advantage to go on offense, and so that's really a unique situation that we have today at Kimco is we're doing everything we can to enhance the growth profile going forward.

We feel really good about the runway. But also, we're super excited to hopefully have the sector come back into the sweet spot of the REIT flywheel of being able to actually issue accretively acquire and go on offense and have that external growth layered on top of all this organic growth we've been talking about.

That's great. We'll leave it there. Thank you, guys. Thanks, everybody.

All right. Welcome to our fireside chat with Kimco. My name is Zhihan Ma. I cover broadlines, hardlines retail here at Bernstein. I'm joined by my colleague, Aneesha, who covers softlines specialty retail here as well. It's a bit of an unusual setup. We've got 2 retail analysts talking about a real estate company.

Now Kimco is very much involved in the whole retail space, right? I'm butchering your company profile, but very much kind of in the open-air shopping center space, grocery-anchored shopping centers. Very honored to have Conor here joining us today from Kimco to talk about not only kind of Kimco as a company, but also broader read across this in terms of -- what are we seeing from a retail real estate trends perspective? Why is the supply-demand situation so tight recently? What does it mean in terms of the competitive landscape? So a lot to dive into there.

And I would encourage anybody in the audience if you have a question, you can submit them using the Pigeonhole link. We will do our best to incorporate those into the Q&A.

And with that, Connor, would you like to start with an introduction in terms of Kimco, what you guys do, the types of tenants you have? How do you differentiate between the anchor versus smaller ones? What type of use cases have been on the rise recently, and then we can start from there.

Sure. Happy to. Thanks for having me. Appreciate it being here. So Kimco Realty is the largest in the open-air shopping center sector. We're in the S&P 500. We have over 100 million square feet of GLA under management. That accounts to about 550-plus shopping centers across the United States. We focus on the first ring suburbs of the top major metro markets. So our strategy has always been to find the combination of value and convenience. And that's where we think that, that intersection really plays to the consumer today as well as the retailer.

And so we've been through, I would say, quite a roller coaster in the retail evolution over the past decade plus. Kimco has come out the other side of it, I think, stronger. When you think about the evolution of retail, you sort of start at the beginning where it was really all brick-and-mortar and really how softlines and hardlines were developed to be sold out of the store.

And then you think about the onset of e-commerce and sort of that black cloud that sort of came over brick-and-mortar was it Was going to be a winner take all. One, and most people were betting on e-commerce, including most of the retailers with their free cash flow and their working capital. And then you look at the next black swan, which for us was COVID, right? So when you think about how people were deemed essential versus nonessential retail, most people thought that would be the end of brick-and-mortar. And so when you combine all of those, in addition to the great financial crisis, you look at what sort of had the staying power. And I think Kimco Realty is exactly that. When you look at sort of how the consumer gravitates towards how they shop, when they shop, and it's that daily needs that routine. So when you go to work, when you go to the office, when you go to drop your kids off at school, what's the most convenient path of travel. And typically, our grocery-anchored shopping center is right in that path of travel.

And so typically, our shopping center is anchored by a grocery store. So we're typically the largest landlord for on the large scale, the Walmarts, the Costcos, the Targets. On the mid-scale sort of the traditional grocers, the Krogers, the Albertsons, Whole Foods. On the specialty side, Sprouts, Trader Joe's. That is an anchor we love because it drives repeat traffic more frequently throughout the week.

We also love the combination of grocery with what we call off-price, the treasure hunting category. And that's really sort of the TJX and all their concepts, T.J. Maxx, Marshalls, HomeGoods, HomeSense, [indiscernible], Ross and Burlington. We call them the treasure hunters because every time you go in, you're not going for a specific item, your treasure hunting and you typically have repeat traffic that way.

And then you fill in around those 2 anchors with really sort of quick service restaurants, daily needs, essential goods and services, medical retailer, med tail, which has become very popular and a lot of services. And so the big trend that we've seen change recently is the lack of new supply. So that has been the tailwind for about 13 years. So if you look at it from a high level, commercial real estate sectors, they have, in essence, an amount of new supply coming online each and every year. For the past 13 years, retail has had 0.3% of existing stock under construction, which is the lowest of any commercial real estate sector.

And then you look at the occupancy levels, and we're at all-time high occupancy levels. And then you look at, well, where is demand coming from? It's multiple drivers of demand across the retail spectrum from the anchor side to the mid shop to the small shops side. And then you wonder, well, if there's going to be a supply side shock anytime soon with new development come out of the ground.

On our map, and it's been sort of substantiated by a number of analysts. Rents would have to rise between 40% to 50% in order to see new supply come online to make the return on cost, in essence, the development cycle makes sense from a risk-adjusted return. And so that's why we're in this unique point in time for retail, where for, I would say, a number of years, it had been redlined because of those big dark clouds of uncertainty, and then you look at what's happened since and all of a sudden, the consumer is gravitating towards back towards the store.

Surprisingly, the younger cohort is actually preferring to shop in person versus online. You would think with all the screen time that all of our kids are having and the younger cohort is having, you would think they would be gravitating towards shopping online. It's the opposite.

And then you look at where the retailers have been expanding, e-commerce has not been profitable. Even Walmart had just turned a profit this past year on e-commerce after forever, investing in it. And so now what's happened with the rate increase is retailers are really fundamentally looking how to expand margins and their margins are at the store base. And so they're reinvesting back into their store fleet, they're expanding their store fleet, and they're finding new ways to service their customer from the store, meaning like they actually can distribute the goods, if you buy them online, you can ship them from the store. And that's really what's turned the profit wheel for Walmart and sort of the blueprint for the future, is because, in essence, you're closest to the consumer is the cheapest way to get the goods to the consumer. And that's usually the store fleet that's populated in those pockets of concentration where their shoppers live.

Okay. So this is all really good material and we want to go into each of these pockets. I'm going to ask a little bit about the consumer. And then Zhihan will talk a little bit more about kind of the retailer side and the tenants. So maybe on the consumer side, we've seen across the retail landscape a pullback in traffic to malls and to big shopping malls, right? And more of a mix shift towards outdoor centers like what you have, I cover the off-price retailers. They've been talking about it for more than a decade, that they're getting more of the traffic. Can you talk about -- I mean, you've been at Kimco a long time, more than 20 years. Can you talk about kind of what you've seen the consequences of that traffic shift being? Are you seeing a different type of consumer coming to your outdoor centers, different demographics, what are kind of the knock-on effects of that shift in traffic from malls towards more outdoor plazas?

Yes. It's an interesting dynamic. I think, so far this year, traffic is up 3% at Kimco shopping centers. So we feel obviously really good about the shopping habits and how they continue to gravitate towards our product. I always thought post COVID, there would be a pullback in traffic. And we've actually compounded up year-over-year. Because if you think about the work-from-home dynamic that was existing for a while, and a lot of people were posting up as like an office in Starbucks or their local coffee shop, you would think it would have a rebound in terms of like we wouldn't have a continually uptick in traffic. I think what the shopping center has become is really sort of a combination of a whole bunch of things that allow people to use it in more ways than one.

So traditionally, it was your grocery shop. And then all of a sudden, off-price became sort of that playground for everyone to come in and do that treasure hunt we talked about. And I think there's this fundamental difference in the U.S. consumer is that they're -- everyone is looking for a deal. It doesn't matter where you are in the K shape. Everyone is fundamentally looking for a deal. And I think the off-price category has captured that like spirit, that animal spirit of like finding consumerism and everyone.

And so I think when you look at what T.J. Maxx has done, what Ross has done, what Burlington has done and you in [ Nordstrom Rack ] and some of the others, it's you find that the shopper base continues to widen out, and it doesn't have to be a very small cohort of the demographic profile.

I remember talking to T.J. Maxx for a long period of time about HomeGoods. They had a very narrow demographic profile of who their HomeGoods shopper was. And then they started testing it in different demographic areas. It turns out they had a much wider demographic spectrum. It's almost the same when you go to -- we're doing deals with Sephora now. And so before Ultra Cosmetics was the category killer for us. They were the dominant beauty retailer that we would always try and you always try and look at your merchandising mix and having the best-in-class on everyone that you can possibly line up. So again, your gravitational pull is 1 that drives traffic at all times during the day.

Now Sephora has come into the shopping center space and realized you don't have to go to the mall. People -- your shopper is actually shopping at Whole Foods. It's actually shopping at Trader Joe's. And with gas prices being up, with people's time being more valuable than ever, a better way to cross shop than capturing those eyeballs when you're already at the shopping center. And so that's the dynamic that I think has really helped the shopping center evolve where it can be a little bit of everything to everyone because it ties back to people's most efficient use of time. And so once you get the shopper on the product, on the property, you have the ability then to have them cross shop. And we actually have really good data analytics now to showcase really the traffic drivers that we can add to a shopping center, that really enhance the cross-shopping ability because in essence, what you're trying to do is have every retailer succeed. So their sales go up significantly, so you can charge more rent and you get more cash flow that way.

And that's the sort of the evolution of the shopping center is there's been more uses than I've ever seen before make sense of the local grocery anchored shopping center. And it can be medical, it could be physical therapy, you name it in terms of the medical retail, the medi spa that's become sort of normal in every day people's uses...

It's services as well.

80% of our new small shop leases and services. And so what typically was more weighted towards goods has now been weighted toward services because I think that's really a post-COVID rebound where people are prioritizing services again.

Do you think that it could this pendulum could swing back towards malls because everything you're describing around convenience, one-stop shopping, right, everything 1 place, that was the appeal of the mall, right? Maybe not grocery, but kind of everything under 1 roof, including services, including apparel and footwear, essential goods, food, all of that was under 1 roof.

I mean the mall has rebounded nicely as well, especially the A mall category. So if you think about what's working today, it's really the luxury high-end lifestyle type of mall. And those A malls are at all-time high occupancies have significant pricing power there's usually, by everyone's count, somewhere in the range of 300 to 350 A malls in the U.S. And so I think that happened with Sephora was they're already in those 350 A malls. So where do you go? Do you go to a B mall that might become a C mall or a B mall that might become an A mall or do you go to a shopping center.

And so that's the dynamic that's playing out is most of the malls that are on the fence, you have to have a very well-capitalized owner and you have to have a visionary to be able to invest and reposition it. The challenge with malls that we found, we've done 1 mall repositioning over the last 7 years. And it was a former GDP owned mall and it took us a while because, in essence, the mall is almost like a 4 headed monster. Each of the mall anchors are typically owned by the retailer or owned by another party.

And so the challenge with repositioning them all is you have to own and control all the different components of it in order to tear it down in order to reposition it. So that's why it took that long to reposition that mall, and we did a Costco. We did a Lowes. We did a grocery anchor with T.J. Maxx concepts, 7 years is a long time in the public space. So like it's 1 of those situations where it probably makes more sense for the private side to take some of these malls and reposition them. And then that's why the A malls are doing well because of the lack of supply and that the luxury brands are doing quite well in terms of looking to service that customer. So I don't think it's a winner take all there.

You talked a bit about the K-shape. We obviously hear as consumer analyst. We hear a lot about that from our companies, from our investors. What are you seeing in terms -- I mean some of the retailers you talked about that your tenants span both sides of the can, right? So 4 on top, T.J. Maxx, especially HomeGoods, average income is 6 figures, Burlington towards the bottom, Dollar stores towards the bottom. So you're kind of spanning both sides of the K. What are you seeing in terms of traffic trends? Are you seeing any difference between the top half and bottom half, some more color on that?

Right now, the U.S. consumer is very strong. I mean if you think about the backbone being the employment market, I think most people are anchored where they feel comfortable or confident that their job is not way. And so therefore, that's what's leading to the uptick in traffic.

I think the -- we can see the traffic when they come into the shopping center. We don't see the ticket sales when they go and so where they're spending their wallet. So the wallet share is something that we don't see. I do think most of your retailers will tell you that people are trading down from the lower side of the K-shape, and they're trying to make their [indiscernible] further. And so a lot of those retailers that you named have the ability to service both the top and the bottom.

And so I think having relevance and having pricing power and having the ability to service both in a way that doesn't ostracize any single consumer, I think, is the sweet spot today. And I think when you look at like what Walmart has done in terms of grocery, it's apparent that they can be a consumer friendly environment for it doesn't matter where you sit on the k-shape.

And I think that's what retailers have really understood is that, again, going back to that point, your original demographic might be who you think your consumer is, but you might -- if you figure out how to service a much broader base, you can actually stretch that significantly and now is the time to do it because people are trying to either a trade up or trade down and make their dollar go further.

Okay. And then SP1 Last 1 for me. You mentioned fuel prices, and you mentioned kind of the trade down dynamic that's happening right now. Are you seeing any recent changes in trends like recent, I mean, within the last quarter, like year-to-date around as fuel prices have increased as people's wallets have been compressed, is there a shift from discretionary towards staples? Or is there a pullback in some of that discretionary traffic with some of your tenants?

So we haven't seen it. I would say that the the shopping centers that we own are really the ones that don't take a lot of gas, right? So in essence, they're part of your daily routine. The destination shop is not who Kimco is. And so I think, again, we might be benefiting from that. because people are maybe not going to that extra 10-plus miles to go shopping, they'd rather just do something convenient.

And then the one-stop shop with the grocery and the services everything...

Exactly. And so that might be a second derivative benefit of what we're getting. But I think when you look at the shopper and the habits today, I mean we just came from Las Vegas for the ICSC convention and I mean the animal spirits are real in terms of like retailers jumping over each other for space, recognizing how little supply there is, recognizing if they don't get a space today, they're probably not going to get that neighborhood that they want for the next 5 years. And so like when you are able to pre-lease space that you don't even have your arms around, so in essence, like a retailer hasn't given it back to you, but you get a chance that you might recapture it, you can pre-lease that space today at 30% to 40% above the rent than what the current retailers pay.

And so that's the dynamic. And I would say that retail for a number of years was red lined in terms of like an investment thesis because of all those overhangs. And I think we're at a very new chapter where it's being institutionalized again. When you think about the capital being formed, Blackstone's second highest conviction is open-air shopping centers. When you think about GIC, when you think about Norges, when you think about Colon and Steers when you think about these massive, massive capital deployers all having conviction on the space and yet that hasn't flown through to the publicly listed sector. It's on the private side. But usually, when you start to see [indiscernible] privatized by some of these conglomerates, that's usually what resets the actual share price to reflect the disconnect between public and private pricing and the REIT sector.

Interesting. That's a good segue because I then want to talk about the supply/demand dynamics as well as the retailer dynamics. Maybe we'll start on the supply side of things, of course, understanding in severe tight supply market right now. How do you expect that to evolve in the next 5 to 10 years?

Yes. So we get this question a lot where you see all this demand, why aren't you seeing more supply come online? Why aren't you seeing the development cycle pick up? I think a lot of it has to do with retail was oversupplied for a long period of time in United States. When you look at any metric on the retail per capita in the U.S. versus any other , this is a global audience, right? So when you think about U.S. versus Europe, you think about U.S. versus Canada, you think about U.S. anywhere. We have way more retail space than any of like a developed country.

And so we had an oversupply issue for a while that we had to work through. Now that's worked its way through that we're at all-time high occupancies. But the rents haven't picked up the pace to keep on pace with where construction costs, labor costs and land costs have gone. And so when you combine those major factors, the return on cost, which is really what your development pro forma is focused on, needs to be at a spread somewhere in the range of 200 basis points over your exit cap. So there's a risk-adjusted return that you feel comfortable going through the development cycle, that spread in order for it to be there, you need to have rents be 30% to 40%, sometimes 50% higher than where they are today.

And so what little development you do see coming out of the ground, it's in these new pockets of household formation, where there's a retail desert, where there isn't any service or a retail center servicing that new area. And so if you think about where there's sprawl like the third ring of Vegas, the third ring of Phoenix, and where there's a lot of population growth like in Texas. And so that's where local municipalities are incentivizing development in order to support the new household formation. And you can really count on 1 hand the amount of developments that are going on there, and it's usually done by tax subsidies that make the return on cost spread to your exit cap feasible to make some development makes sense. But again, that's a very, very small amount.

Interesting. I do want to dive into the lease terms and the rent side of things as well. But maybe a broader question on the demand side of things. Why are retailers willing to sign some of the longer-term leases given that there's still, of course, the overhang of which way e-commerce agentic AI is going to change how people shop in the next number of years.

It's interesting. I think from our investor base, we get the opposite question, why wouldn't we sign shorter-term leases in order to get the mark-to-market because in essence, there's no supply coming, whereas retailers want the longer-term lease because then they can understand what their cost is going to be because real estate is typically 1 of their #1 line items in terms of cost structure.

And so I mean, from a retailer perspective, they have a lot of investment, right, so that they have to look at in terms of like the investment horizon, how long they're going to invest in that space and how long the control is on that space, and so that's why they want to sign up for longer periods of time because in essence, all of that investment has to have a return on it for it to make sense.

If it's a 3-year lease, they have to make that investment back quicker, obviously. If it's a 10-year lease, they have a lot more time I think the interesting dynamic that's occurred is you continue to see sort of the demand cycle pick up and the retailer is trying to figure out how to go and activate space within their store footprint to be able to service more online orders.

And so like the digital map of your store is going to be something that comes very quickly and some of our largest retail partners are already doing it in order to maximize sort of back of house to be able to understand how to go about servicing those online orders because the dynamic right now that you're seeing is -- and you see this with a number of retailers is the experience of going into a shop, maybe hurting the consumer because there's more online pickers and servicers going through the store right now that is hurting the customer experience.

And so that's the big dynamic that is yet to play out, is people trying to figure out how to optimize the store as a distribution point without hurting the customer experience. And I would say of all your retailers, there's probably only 1 or 2 that have figured it out. And so like that's the big dynamic that people are trying to solve for. They don't want to pay us more, right? They want to try and keep their cost controlled on their store, all while trying to reinvent how you go about reenvisioning the front and back of house to make it more profitable.

And as aside, does that involve some stores turning into dark stores. If they no longer have the traffic to justify the consumer-facing side and then you just have a really efficient fulfillment hub.

Yes. So usually, the lease has an operating covenant where they have to have the doors open to the consumer, you are starting to see more hybrid stores where I would say it's like, in essence, what would you call it Costco right? It's pretty much like a hybrid.

Like warehouse right?

So like if you think about what's probably going to continue to evolve is, I think the back of house becomes more of like a robotic warehouse where they can essence, service the online consumer in a way that doesn't impact the front of house. I don't think there's going to be a dark stores just because the demand side is so strong, where like there's going to be e-commerce fulfillment sites where you have dedicated hubs of e-comm that they're going to service from and they won't have any real customer interfacing and that's more of an industrial play, whereas the retailer, I think, themselves recognize that the consumer has to have a good experience coming through the door or they're not going to come back. There's too much choice. There's too much optionality.

No, that makes sense. You also mentioned that rent probably has to go up 30%, 40%, 50%. Can you talk about how much they're going up now based on how the lease terms are structured? And is there room for the upside from your guys perspective?

Yes. So we report spreads on new leases and then on renewals and options. And so spread -- that's running around 10% to 12% or so. So the issue is that leases are long in nature. Our weighted average lease term is over 7 years, whereas like you think of like a multifamily apartment leases like 1 year, right? So they get the mark-to-market up and down every year depending on where supply and demand is. Ours is more insulated in terms of waves of either shock.

And so we never even in the depths of COVID or even in the depths of the GFC, we never dropped below 92% occupancy. And that's, again, primarily because our tenant base is typically credit rated and typically a long-term nature in terms of lease. Now the downside of that is minimizing the upside, right? So you only get a very small slice, usually between 5% and 10% a year, that you get to mark-to-market on those new lease spreads. And so that's the dynamic as retailers today recognize they will never get a better deal than what they currently have.

And so that's why you're seeing renewal rates or retention rates be at all time. So that's running at over 90%. So in essence, the retailer recognizes they've got to keep the store that they have because they won't find a better economic deal either in the corridor that they earn.

Right. And are some retailers getting better deals than others if they're more of a traffic driver or more of an ideal anchor tenant?

For sure. I mean, every negotiation is a knife fight, right? I mean most knife fights in my career, the retailer has won because of that supply-demand dynamic being more favorable to the retailer. When you look at today's environment, it's different. And so when you look at who has pricing power for negotiating leverage, there is very clear a subset of retailers that still drive the most value for a shopping center. So in essence, a cap rate compression. So if you have the best grocer, they will drive meaningful value creation to the asset. And so they are typically able to drive very strong economic deals for themselves.

Now you try and make up for that by having the halo effect or the surrounding retail be able to pay for that loss leader, that anchor that's driving more traffic than others. And you know who those retailers are. They're very strong in terms of their offering. And many times, they're able to generate a, call it, an economic plus deal that they have the advantage. I will say that though that those are few and far between today because there are more and more competitive retailers that I would say are very, very close to those -- that elite group that drives incremental traffic, maybe not to the same level, but pretty close.

Got it. And last 1 from me before turning over to Aneesha. Are there more demand for certain types of boxes in terms of size, what capabilities they have, e-commerce fulfillment versus others?

Yes. So if you think about like range of square footage, you have like the big box category. So if you think about Costco, Walmart, Target, you've got Dick's House sports, you've got a number of these big-box retailers, Home Depot, Lowe's, you go category by category, and it's very healthy right now.

In my career, you have had lulls in terms of different demand drivers for different square footage sizes. The big box is very strong right now, there's a lineup of tenants that would love to try and find those opportunities because, again, no new development, landing an aircraft carrier is super hard.

So when you find a big box that spits the needs of a handful of those, they will bid that up to try and control that real estate. The junior box or the mid-box size is always a little bit in terms of a funky tweaker. So like if you think about 50,000 to 65,000 square feet, that's where like a Dick's and then it sort of drops off from there. There's -- sometimes the larger format grocers like a Kroger marketplace, you get a handful of other users that like that sort of larger size. But there's not a very deep bench in terms of users for that category.

Then you drop into sort of the more traditional grocery size, which again can range from 25 to 40, and that's inclusive of all the major brands that are growing from the small side, Trader Joe's, Sprouts, you've got all the lead on the discount side. You've got Kroger, you've got Albertsons, you've got AlhoDelis. So you've got a whole food. You've got a number of folks that are in that square footage size that are doing new deals, and that's on top of all the off-price sector that we've talked about. Each 1 of those is doing 100-plus new deals a year.

And so when you think about the demand drivers for that sector, that's probably the deepest bench of demand. You get to the smaller sort of midsized boxes, what we call it, that 10,000 to 12,000. That's where you've got the [ Ultas ] you've got the Dollar stores. You've got a number of folks that are very active in that category. The small shop side, I would say, is the most upside for Kimco.

We're at -- we're over 96% occupied, but our small shops are just over 92% occupied, and if you think about our anchors are 98% plus occupied, the small shop lift is where we see the future growth coming from Kimco, and that's where all those services are coming in. And that's where we're super excited to see a diversity of demand coming in. And so it's not a 1 size fits all. You can come up with a 1,000 square foot user, a 2,000 square foot user, a 5,000 square foot user, and it sort of ranges from all the different use cases. The nice part is that depth of demand is about as good as it gets.

Okay. I want to ask a bit about capital allocation. And maybe start with this point you ended on, which is the occupancy rate if you are 98% occupied for those anchor boxes, and as you say, you're already selling these pre-leases, so you're kind of selling the lease before the current leases do. Why aren't you moving to more short term, maybe more flex term leases? Like if you look at Europe, for example, right, the European retailers, H&M and so on, they do 3- to 5-year leases that are flex term and linked to revenue and so on, and we're still doing these 10-year fixed-term leases. Why not?

Yes. I think it has to do with maybe legacy, right, where like that's sort of the industry norm is on the shopping center side. The anchor is typically like these 10 years of firm term with options on top, and there's bumps every 5 years. And that was sort of the way that they could control the space and control their cost side of the business. When you look at the mall sector in the U.S., that is very much linked to a percentage of sales. So similar to the European model, where there's a lot more volatility, both up and down, depending on the success of the retailer.

But SP1 But to push back on that point, I mean, with 98% occupancy, surely, you call the shots rather than the tenant, right?

No doubt. I mean you still have the ability to reprice the new leases, the problem is your base is set from 7-plus years. In the past where those economics are not changing anytime soon. So you are seeing a repricing of economics on new leases going forward. You're seeing it both in the small shops and on the anchor side. Typically, there was a lot of covenants and controls that anchors had co-tenancy provisions, sales kickout rights.

All of these provisions that are retailer-friendly, that allow them, again, to have more control over their destiny, most of those are long gone. And then the economics are improving in terms of both the going-in rent that you're able to mark-to-market on as well as the economic lift in terms of the annual or the 5-year type of growth and the reduction of options controls as well. And then moving to fair market value options versus sort of a fixed market option.

So those are -- that's all happening real time. No doubt about it. It's just, again, that sliver that you're able to reprice [indiscernible].

Every 10 years as you're rolling over there.

Correct.

What about new capital allocation opportunities? You've talked about ground lease parcels. You've talked about mixed use developments with residential as well. Can you tell us a little bit about what you're doing there?

Sure. So Kimco Realty owns, as I said, over 550 shopping centers. If you think about it as like a -- from the high level, like as a commercial real estate sector, it's about 20% single-story buildings, 80% parking lot. And so when you think about the underutilization of that real estate, we are probably the most underutilized form of commercial real estate.

And so we set out to understand how to unlock value for our shareholders by identifying the highest and best use of a lot of this parking that I think is going to be future upside for our shareholders. And so if you think about driverless cars, the robotaxis, all the things that are here already, we've been talking about this for 5 years, is parking ratios, the reason why we have those 20%, 80% ratio is because it's mandated from the municipality. You need to have 400 or 500 per 1,000 parking stalls, and that's the ratio, and that's why you've created these huge fields of parking.

We're already starting to see parking ratios come down, and that's where you're able to then add density to your parking lot. And that density can be in all forms and shapes and sizes. What we've identified is we've entitled 14,000 apartment units across the portfolio as future upside to unlock from the parking lots. And that's already in place. So that's already the work we've done over the past 3 or 4 years. And so when we look at the long term, again, we're trying to look at the long term and focus on that we see these shopping centers evolving into mixed-use communities, mixed-use campuses where multifamily is really where we've been focusing, the apartments enhance the retail, the retail enhances the apartments.

If you think about how an apartment prices on a relative basis, it's usually the location and the amenity base. It's servicing. We have typically our shopping center as close to 50 to 100 retailers in each location, name 1 apartment building that has 50 to 100 amenities in it. Like maybe they'll have a gym. Maybe they'll have a coffee shop, maybe they'll have a grocery store. Then you get to the next 50, and there's no chance, right? So that's why all of our apartments that we've activated we've built over 4,000 now are pricing at a premium to market.

And so that's sort of the long-term vision of the evolution of the shopping centers to create these mixed-use environments. And again, we like to think that that's like the untapped upside to Kimco all while we're hitting all-time high occupancies on the retail with the pricing power and the earnings growth that we have.

And so we've got an opportunity to deploy capital in a number of different areas. We do have a number of ground leases that you mentioned. That's really sort of the Costcos, the Walmarts, the Targets, the Lowe's, the Home Depots that are sitting, we like to call them flat pancakes. They have close to, call it, 50 to 100 years of control, paying little or nothing with no economic sort of increases along the way, but they would price pretty much on top of where their bonds price.

And so that's accretive recycling we're looking at activating going forward where we can sell these ground leases at close to a 5%, 5.5% cap and then redeploy that into a growing shopping center at a 6%, 6.5% cap. So not only going in is the FFO accretive, but the same-site NOI growth is usually 200 to 300 basis points higher because, in essence, you're getting a very, very little growth from one, and there's usually a significant growth from the other. And so that's sort of the accretive recycling in terms of capital allocation we're doing.

Interesting. Okay. So we want to ask some retailer-specific questions as well. Maybe I'll start with off-price and then Zhihan can ask a little bit about the big box stores, within off-price, you have this dynamic of TJX, Ross and Burlington, your top 3 tenants in that order, right, where, as you say, they're all adding minimum of 100 units net boxes per year. And Burlington is going to closer to 120, what are the dynamics between the 3? And do you often get them bidding for the same box? And talk a little bit about the colocation dynamics as well? Do you like to have them co-located in the same center? Or do you try to avoid that and spread them out?

We think they enhance each other. They are not so keen on each other coming into the same shopping center. It is a dynamic where it's evolved over the years. I would say that the shopping experience is 1 where each of them have a little bit of a differentiated strategy, as you know. I think Burlington has been the most aggressive in the bankruptcy market, which I mean by their buying leases out of the bankruptcy market, to be more competitive to get stores in a hypercompetitive market. T.J. Maxx has been very successful in sort of expanding the demographic profile that we talked about going to new markets, with all of their flags, finding new areas, new white space to go and launch.

I would say Ross has had an interesting one. They have what they call the double-down strategy where if you have a really strong Ross store they have found that they can put a second Ross store within very close proximity and have no cannibalization in terms of 1 store hurting the other because, in essence, the merchandising mix is so different in each one.

I'm really fascinated to how they can turn merchandise so quickly and make it so different each time you go into a store and each store is differentiated from...

They have store-by-store allocation it's a mix.

Their buyers, I think, are the secret sauce, right? They're buyers are the ones, and they have a very loyal customer base, like you get text when there's a new truck coming to a store if you're a loyal customer, knowing that when that truck unloads there might be that 1 handbag that is the in handbag, it might not be the color, but it is a color of the handbag and people are going to jump over each other to get that.

So you talked about earlier like the market shift away from department stores. We had a slide for a long period of time to showcase that. It's remarkable. If you look back 10 years and just look at market share from like market cap weighted of like where the departments were -- department stores were and where the off-price sector was and where it is today. I mean, it is a monumental shift in terms of market share shift.

And I think, again, they have become what the U.S. consumer is looking for. They want the brands, but they don't want to pay full price. They want the handbag, but they don't mind if it's the off-color and they have the ability to push product there like you know each time you go in, it's not scale.

Do they have co-tenancy you mentioned they don't love being right next to each other. In the past, they have said that being next to each other helps them because it's sort of the auto dealership idea, right? It makes the pie bigger. Do they have cotenancy limitations or veto against 1 another when they sign new leases?

So each lease is different depending on the vintage and when it was signed. And if you acquired it, somebody else signed it. So there are co-tenancies in older leases when the retailer had negotiating leverage. And so many times, it's tied to the number of anchors in a location and if a number of those anchors go vacant, then a co-tenancy clause kicks in and there are a percentage of rent versus a fixed rent. So that's the way the co-tenancy clauses typically work.

The exclusive cause is what you're talking about is more of can you block another competitive retailer coming in. And again, depending on the vintage when the lease was signed, some of them do have exclusive clauses.

Now being the largest landlord for T.J. Maxx, Ross and Burlington does have its benefits, we can do package deals with all 3, and we have. And so the same goes for negotiating out some of these clauses to allow some of the others into these shopping centers where if we already have a TJX or if we have a Ross or we have a Burlington we can do some horse trading to allow them to come in if they allow them to come in some of our other shopping centers.

And so they will say that they like to keep each other out when they have the negotiating leverage, but they also enhance each other when they're in the same shopping. So it's a little bit of a cat and mouse game. And understanding that dynamic is important, but we're at a point where they are okay with living with each other, but they'd much rather be the dominant force in the shopping center by themselves, getting all those sales.

Okay. And then last 1 on off-price. Where do you kind of see the end game here? If they're adding -- you're talking about net 300-plus boxes per year. and they're all highly profitable, highly productive sales per square foot, it's soaking up market share. At some point, that starts to stagnate. Do you think we're close to that point. And TJX has had some new strategies like opening more rural stores, in second, third tier markets. Is that the natural evolution as some of the high-demand shopping centers are filled to capacity?

I'd like to hear your perspective on this. I feel like you've probably done some modeling on this on where it's going. I mean I've always been surprised at the growth engine of off-price. And it doesn't seem to be anywhere near even plateauing. It seems like it continues to grow and it continues to take share. There's not many department stores left, if you think about who they've been really taking a lot of market share from? And then where does that continued growth come from? I think it's new markets, right? I think it's those markets where they continue to bend the demographic servicing.

Well, let me ask -- so to answer your question, I think from a demand perspective, there's absolutely more share to gain. Departments [indiscernible] plenty of revenue. There's still a lot of mainstream stores, mainline stores, even online retail. From a real estate perspective, do you think they're reaching saturation because they have so many stores now. They have about 6,000 between 6,000 and 7,000 stores total in the U.S.

I think as long as the product is differentiated, there's still more runway to go. I think when you look at sort of [indiscernible] of T.J. Maxx and how differentiated they are I think when you look at Ross and DDs and how differentiated those 2 are, and then you think of like Burlington as the [ Inger Brother ] trying to catch up to the other 2, I think they have a lot more white space to go in terms of new markets. Ross just coming into the Northeast. Like that's a massive market, but they're not even really penetrated yet.

So clearly, there will be a time, and they are global in a lot of ways and so TJX like there's more areas for them to grow, but I think there's still a lot of pockets for them to continue to go on the pace they're on.

Right. And on the flip side of the fast-growing of pricers, the Dollar stores I cover, a lot of them have slowed down store growth in recent years. Why do you think that's the case? I think they're citing the higher cost and lower ROI on new stores than before? And do you see a world where they're going to reaccelerate store openings?

Yes. That 1 is always a tough 1 to try and wrap your head around. I think at 1 point, there was like a Dollar store opening every day, right? It was 1 of those situations where like the growth profile was just -- it was unsustainable, right, in terms of like how fast they were trying to grow the fleet.

And then the combination and divorce right between at the Family Dollar and all so I think there was a combination that was ill advised. And then when they put it back up, they're probably on better footing separately. I think Family Dollar is a little bit more rural focused.

They tried to be rural but unsuccessful.

Yes. So like, again, where Kimco focuses is on the first-ring suburb. And so I actually think dollar stores have a little bit of advantage because there's really no more toy stores left, right? If you think about the offering that they have, they have the combination of -- they have a little bit of grocery. They have a little bit of toys and they have a very wide demographic that they service because the grab-and-go stuff is services everyone. So they're probably saturated in a lot of markets just because of that growth profile, which was, I think, unsustainable. I mean they were better than I do. I think their new growth plans were crazy for a while, right? It was thousands of stores. So it's -- I think it was again, like grow, grow, grow for growth's sake. And then when the comp store started to flatten out or go negative, that's when it becomes very difficult.

I think the 1 exception is [indiscernible] growing really nicely. There's still sub 2,000 stores, kind of a younger retail chain, do you see them becoming more of an aggressive grower again?

They definitely are my top choice when you think about -- they have really filled that niche of like the toy store, the new generation. So like in essence, they have really latched on to that. They just entered Pacific Northwest long ago. They have a pretty big expansion plan there. They have a lot of white space. And so I think when you look at their growth plans and how successful they have been in our shopping centers, it gives me a lot of conviction to want to do more of those.

Yes. I have another couple of questions on the ground lease side of things -- knowing that you don't -- Yes. Yes, absolutely. I was going to ask about Walmart and Costco as well given that you don't directly lease to them, but some of them are doing interesting real estate strategies, on their side to Walmart is getting into a shopping center, Costco is doing, I think, a mixed-used property with apartments on top of a Costco. What do you make of those moves? What are they trying to achieve?

So we do do leases with Walmart and Costco. So just so you know. So we -- typically, those are our ground leases. Typically, they like to build with their own capital. It's the cheaper cost for them. So that fixes their rent to much lower rent. So we do have a lot of Walmarts. We do have a lot of Costco. I think the Walmart deal that you're talking about is really more of a rehabilitation of a mall into more of a distribution type hybrid center, where they can control sort of the back of house and create sort of a new model for distribution into that hub. That might be a solution for some of these malls that probably need to be reconfigured as make it more of a distribution hub, because in essence, they're not super close, but they're close enough to the population.

Costco has always tinkered with trying to get into markets that are -- that they don't service. And so many times, that makes them creative in terms of format. And so in order sometimes to get into these higher dense population pockets, you have to do a density play in terms of multifamily over retail.

We've done a lot of those with grocers, Costco being a supercharged grocer is not surprising to me. Those are pretty nuanced though, think you need a pretty large parcel for a Costco and then you need a developer to feel comfortable doing the multifamily over that Costco. So again, that, I think, is more of a penetration of a certain market to get into. You have to get creative, you're not going to land your aircraft carrier in a market where there's just no open land for that to happen. And so many times, you have to be part of a mixed-use environment, and I think that's what justifies.

Final question from my end. Similar to Aneesha's kind of anchor tenant restriction question. I'd be hearing something like the anchor tenant being a grocer or mass club retailer, maybe putting restrictions on what some of the smaller boxes can or cannot do. in their format. Is that kind of in line with your understanding? I seem like Dollar Tree is trying to expand into the multi-price point ranges? Are they facing some restrictions from anchor tenants?

For sure, like it depends on like when, again, the lease was signed in the vintage of the lease. So typically, if the retailer has negotiating leverage, they will try and restrict as many uses as I can, maybe not to force them out but maybe to use that to extract leverage from a landlord. And so in essence, when Dollar Tree wants to add a layer of groceries, the grocer typically says a shop cannot have more than maybe it's 10% or 20% of their floor play dedicated to groceries. And so usually, those nuances occur when the lease is signed in a different vintage because they have like the ability to sort of form it in a way that gives them more control over the surrounding retail.

I will say that it's interesting to see the store within a store concept continue to evolve. You've seen Target do it a number of times. You've seen Kohl's do it with Sephora. You've seen a number of them do different combinations. And you're seeing, obviously, the brands that really drive a lot of traffic.

So we have about a minute left. Maybe you could give us closing view kind of on your outlook for the sector in general and why you think there is structural growth rather than cyclicality ahead?

Yes. I mean the structural growth, I think, for Kimco specifically, is really tied to that lack of new supply. I think that is something that I think is going to continue to be a tailwind for at least the next 5 years because in essence, if you put a shovel in the ground today, it's going to take all of 3 to 4 years to bring that product online and stabilize. So when you look at that backdrop and where demand has gone, again, think about the black swan events that have occurred that were going to be the nail in the coffin to brick-and-mortar retail. And now what's interesting is like e-commerce is actually a tailwind to brick-and-mortar retail.

So like if you think of Amazon, Whole Foods has massive expansion plans. Amazon is going to keep throwing things against the wall to see what technology they can put in retailer boxes, and you probably just saw the Amazon announcement of trying to use their AI for other retailers. And that's going to continue. That's exactly what they're supposed to do. They're like a test kitchen for all types of technology for retail.

And so if it's the grab-and-go technology that didn't really work for the consumer, but you know what that technology may work in other forms. And so it's exciting to be in a part of the retail cycle where it's evolving but it's very clear that the store and the consumer is gravitating toward our product.

Okay. Well, we can end it there. Thank you for joining us. Thank you, Conor. This is a really interesting conversation.

Pleasure. Thanks for having me.

Thank you.

Hello, everyone. Thank you for joining us, and welcome to Kimco Realty's First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to David Bujnicki, Senior Vice President of Investor Relations and Strategy. David, please go ahead.

Good morning, and thank you for joining Kimco's quarterly 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; and Dave 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 our quarterly supplemental financial information on the Kimco Investor Relations website. Also in the event our call was incurred 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.

And with that, I'll turn the call over to Conor.

Good morning, and thanks for joining us today. When we spoke in February, I laid out a clear set of priorities for 2026. Convert a record signed but not open pipeline into cash flow, recycled capital aggressively to close the gap between our public and private market valuations and modernize the operating platform to drive speed and efficiency while continuing to push occupancy and same-site NOI growth, all underpinned by the structural strength of our grocery-anchored portfolio. Three months in, I'm pleased to report we are executing on each of these fronts.

Let me walk you through the highlights. Dave Jamieson will provide additional detail on leasing. Ross will cover the transaction market, and Glenn will take you through our financial results and outlook. The momentum we built in 2025 has carried into 2026. For the first quarter, we outperformed as we delivered FFO of $0.46 per diluted share, a 4.5% increase over the prior year. driven by higher minimum rents, strong tenant retention and favorable credit loss. Same property NOI grew 1.7%, which is consistent with the cadence we outlined in February that the first quarter would mark the low point of the year as we lap prior year rents related to JOANN's, Party City, Big Lots and Rite Aid. Our tenant credit profile is also as strong as I can ever remember. Customarily, credit loss tends to be higher during the first quarter as challenged retailers look to get through the holiday season.

This year, we didn't experience any meaningful bankruptcy activity and don't foresee that materially changing over the course of the year. As we look ahead, we anticipate accelerating same-site NOI growth through the balance of the year as rents commence from our signed but not open pipeline. Speaking of leasing our team delivered 576 deals totaling 4.4 million square feet with new lease out of 23.8% and combined spreads of 11.3%. That volume reflects the deep broad-based demand that characterizes our markets. Most importantly, our signed but not open pipeline grew to $77 million of annual base rent, a new all-time record for Kimco, representing 410 basis points of leased versus economic occupancy spread. That is contracted visible cash flow sitting in the pipeline waiting to convert, and it's a single clearest indicator of where our earnings are headed.

Occupancy came in at 96.3% pro rata. 50 basis points higher than a year ago and down just 10 basis points from our all-time high at the end of last year. I'll let Dave provide more detail on leasing in a moment, but I want to highlight a milestone that speaks directly to the power of our platform. When we closed the RPT transaction just 2 years ago, that portfolio carried an occupancy gap of 130 basis points lower than Kimco's legacy assets. At the end of the first quarter, we not only closed the gap, we surpassed it. As the RPT portfolio occupancy is slightly higher than Kimco. Importantly, even at these occupancy levels, the portfolio continues to have a meaningful runway of below-market rents providing a significant mark-to-market opportunity as leases roll.

Now allow me to touch on the macro environment. Geopolitical uncertainty has injected some volatility into the broader economy in near-term retail sentiment including the rise of fuel prices and its impact on the consumer. We are not [indiscernible] but it is also where the durability of Kimco's portfolio becomes more apparent. Our tenant base is angle to discount in necessity-driven retail, grocers, off-price, fitness and everyday services. The categories that have historically demonstrated resilience precisely when discretionary spending comes under pressure. The first quarter validated that thesis as our traffic at our centers was more than 2% year-over-year. Retailers are looking beyond near-term macro issues and remain focused on the long term as demand for quality space remains strong, supported by the scarcity of high-quality vacant space and virtually no new supply entering markets.

The structural backdrop remains squarely in Kimco's paper, and our leasing performance reflects that. Demand across the portfolio is strong, spreads are healthy, and we see no signs of that changing. In closing, Kimco entered 2026 with the strongest operational foundation in our company's history, and the first quarter reinforced financial power of our platform. Strong demand a record sign but not open pipeline, disciplined capital recycling, the strongest balance sheet we've ever had and one of the most resilient tenant bases in the sector give us building blocks to continue delivering at the top of the shopping center space.

I'll now turn it over to Dave for an update on leasing activity in the operating portfolio.

Thank you, Conor. I'll cover our first quarter results, the snow pipeline and the progress we're making on our operating transformation. All of which point to a compelling growth trajectory as we move through the year, then I'll hand it over to Ross. The first quarter demonstrated that the embedded growth in this portfolio is real and accelerating. We closed 576 deals totaling 4.4 million square feet with new leases delivering spreads of 23.8%, a clear reflection of the mark-to-market opportunity ahead of us. Renewals and options came in at 12% and 7.9%, respectively, and overall blended spreads across new leases, renewals and options or 11.3%. That extends our street to 15 consecutive years of positive leasing spreads, a track record that speaks to the enduring pricing power of our real estate. .

New leasing activity remains strong in both deal count and GLA, reinforcing that retailer demand for our centers is deepening, not plateauing, Packaged leasing continued to build momentum as we secured 4 leases with Dollar Tree, signing several of those in under 30 days. And in our lifestyle portfolio, we signed 2 leases with Anthropologie and executed our first deal with Patagonia. This activity validates the strategy behind our dedicated lifestyle operating team and signals growing institutional interest in this segment of the portfolio. Average new lease rents for the quarter came in near $29 per square foot. The highest we've ever reported. This is a significant data point. It tells us that the mark-to-market opportunity in this portfolio is not narrowing, it is expanding. As below-market leases continue to roll, we are capturing that embedded upside at record rent levels.

Overall, retailer demand is broad-based and diversified across anchors, junior anchors and small shops, spanning grocery, off-price, fitness and general merchandise. The pace of new deal execution through Q1 surpassed the comparable period last year, and the pipeline heading into Q2 remains robust. Crucially, retailers are not pulling back. They are committing the long-term store opening programs, which is the strongest possible signal of confidence in the open-air format and specifically in Kimco centers. Retention reinforces the growth story. Excluding bankruptcy-related activity, we had 47 fewer vacates, a direct reflection of strong store level performance and the scarcity of viable alternatives for tenants in our markets.

They are staying because they are growing in our centers. Small shop occupancy rose 80 basis points year-over-year to 92.5% near historic highs in that trajectory has room to continue. Looking ahead, we are positioned to unlock meaningful incremental growth in occupancy and rent through our active repositioning and redevelopment pipeline. The grocery-anchored redevelopment program is a particularly powerful catalyst with approximately 15 anchored grocery projects. The snow pipeline is where the near-term growth story comes into sharpest focus. As Conor mentioned, the pipeline stands at a record $77 million in annual base rent with occupancy up from 390 to 410 basis points since year-end. Over 60% of the current snow is projected to commence in 2026. With commencements weighted toward the second half, meaning the earnings contribution ramps into a period where visibility is high.

Our singular operational focus is velocity, converting signed leases to cash paying rent as efficiently as possible. We are already tracking ahead of plan. Projected cash flow rent from 2026 commencements has increased to $31 million up from an original budget of $28.5 million, a $2.5 million improvement that reflects both the strength of the pipeline and the operational progress we've made in accelerating commencements. Q1 actual commencements will contribute approximately $13 million in 2026, with over $18 million projected from leases commencing in Q2 through Q4. The growth ramp is in front of us, and it is well defined. This acceleration is directly attributable to the structural changes we put in place.

Although we officially go live in Q3, we are already seeing the benefits of the new structural changes via earlier contractor engagement and tighter coordination across leasing, construction and asset management under this new operating model. the organizational transformation we outlined last quarter is not a future benefit. It is already showing up in the numbers. To sum up, the fundamentals of this business are strong, and the growth vectors are clear consecutive years of positive leasing spreads, a record snow pipeline with $31 million in projected '26 commencements already tracking $2.5 million ahead of plan, improving tenant retention record new lease rents in a grocery-anchored redevelopment program, enhancing merchandising, traffic and long-term growth and an organizational structure and technology platform that are making us faster and more efficient. The investments we outlined last quarter are already showing up in execution. We are now waiting for growth. We are building it quarter by quarter.

With that, I'll turn it over to Ross for an update on the transaction market.

Thank you, Dave, and good morning. As we anticipated, the first quarter was relatively quiet from a transaction volume standpoint. While activity was intentionally measured, we used this period productively advancing our disposition pipeline, continuing to underwrite and analyze acquisition and structured investment opportunities and maintaining the discipline that defines our capital allocation approach. This measured start to the year was consistent with our 2026 plan, and we remain confident in achieving our full year transaction guidance with activity weighted towards the second half.

Open-air retail has firmly established itself as one of the most sought-after asset classes in commercial real estate with investor demand supported by strong sector fundamentals record occupancy, limited new supply and durable necessity-based cash flows. As a result, cap rates have remained low and resilient with best-in-class grocery anchor centers in top markets trading in the low to 5% mid-percent range. The recently announced acquisition of Whitestone REIT by Ares Management and all cash transaction valued at approximately $1.7 billion is the latest evidence of how aggressively private capital is pursuing our sector and highlights the persistent disconnect between private market valuations for high-quality open-air retail and where our sector trades publicly.

Closing the gap remains a key focus for us. In the first quarter, we maintained a disciplined approach to capital recycling, completing the sale of 2 flat, low-growth ground leases at cap rates blending to a mid-5% level. We are actively marketing a handful of additional assets, including other ground lease parcels and select residential properties, and we continue to be prudent in structuring these dispositions to shelter gains where possible, through 1031 exchanges. This tax efficient approach is consistent with the strategy we executed last year and is an important lever in maximizing after-tax returns as we recycle capital from lower growth assets into higher quality investments.

Against that backdrop, our ability to source opportunities through proprietary channels continues to be a critical differentiator. On the structured investment side, we were active in the quarter, committing capital to new opportunities at attractive yields, each carrying future acquisition rights under a ROFO or ROFR. As a result, we're slightly ahead of plan on structured investments and continue to build a deep pipeline of potential future acquisition opportunities that is largely insulated from open market competition. These investments continue to demonstrate the value of our proprietary deal flow.

Looking to the balance of the year, we are actively evaluating additional assets to acquire and properties on which to provide structured investment financing. We expect transaction volume to build meaningfully through the second half, and we remain confident in achieving our full year targets at spreads consistent with our guidance. We are not in a rush our proprietary sourcing advantage allows us to be selective, and we will continue to prioritize quality of execution over pace. In summary, with a fortress balance sheet, $2.2 billion in total liquidity and a robust proprietary pipeline, we are well positioned as we move through 2026.

With that, I'll pass the call to Glenn.

Thanks, Ross, and good morning. As the team has outlined, Kimco delivered a strong start to 2026 with 4.5% FFO per share growth, favorable credit trends and continued balance sheet improvement. I'll focus on the key drivers behind the quarter followed by the balance sheet and our outlook. The key driver of our FFO result of $0.46 per diluted share was higher pro rata NOI led by $8.3 million of higher minimum rents, a direct reflection of the contractual escalators and mark-to-market activity embedded in our rent roll. I do want to call out a few items that affected comparability this quarter.

First, the quarter benefited from approximately $7 million from accelerated below-market rent associated with early lease termination related recaptures. This is not as in nature and is reflected in our GAAP revenue. It is also important to note that first quarter results benefited from the timing of percentage rent that is seasonally weighted towards the first quarter. As a result, we do not expect the percentage rent income collected in the first quarter to be indicative of the remaining quarters as this dynamic is fully reflected in our full year outlook. Also, G&A expense of $37 million was elevated due to the timing shift of our annual equity award grant into the first quarter.

Last year, this expense was recognized in the second quarter. The biggest driver of the expense is related to retirement-eligible employees, which the full grant value is immediately charged resulting in approximately $6 million of higher incremental expense in the quarter. As is a timing issue, there is no material impact for the full year and is also fully reflected in our outlook. Turning to the balance sheet. We ended the quarter with consolidated net debt to EBITDA of 5.2x or 5.5x on a look-through basis, including pro rata JV debt and preferred stock. These are the best levels we have reported since we began tracking this metric and reflect the cumulative benefit of our deleveraging efforts over the past several years. Liquidity remains strong at approximately $2.2 billion including $170 million of cash on hand and full availability on our $2 billion unsecured revolving credit facility with no borrowings outstanding.

During the quarter, we further improved our capital position by renewing our revolving credit facility, reducing borrowing spread over [indiscernible] by 5 basis points and extending the initial maturity of March 2030, with 2 6-month extension options. We also reduced spreads on $860 million of outstanding term loans, generating roughly $600,000 of annual interest savings while adding extension options on certain tranches. Looking ahead, our 2026 refinancing activity is already a known headwind and fully reflected in our current outlook. The majority of maturities fall in the second half providing flexibility of when we choose to address. We have a broad set of financing alternatives available to us, including the unsecured bond market, our recently launched commercial paper program the term loan market as well as the convertible market, and we will be opportunistic with execution.

Now for an update on our 2026 outlook. Given the positive start to the year, we are tightening our full year 2026 FFO outlook to a new range of $1.81 to $1.84 per diluted share from the previous range of $1.80 to $1.84 per diluted share. We are updating our outlook based on improved visibility across key drivers, including the following: First, we raised the full year outlook range for same-site NOI growth to a new range of 2.8% to 3.5% driven by improved visibility into the timing of new rent managements from our SNO pipeline and better-than-expected credit loss. As a result, we are tightening our full year credit loss assumption to a new range of 65 to 90 basis points compared to the previous range of 75 to 100 basis points. As we previously noted, we expect our same-site NOI growth to continue to accelerate each quarter going forward for the rest of the year.

Finally, our outlook remains dependent on timing of capital activity including debt financing, acquisitions, dispositions and redevelopment spending. All other outlook assumptions remain substantially unchanged at this time. In closing, it was a solid quarter of operating growth, better-than-expected credit performance and continued balance sheet strengthening, which positions us well for continued growth.

And with that, we'll open the call for questions.

[Operator Instructions] Your first question comes from the line of Michael Goldsmith from UBS.

On the capital allocation front, you sold a couple of the black ground leases in the quarter. It sounds like you've been marketing more as well as maybe some of the apartment opportunities. So how has the market been for these crown leases on apartments and [indiscernible]? Do you think you can accelerate some of this capital recycling?

Yes. Thanks, Michael. It's been a really strong market, as evidenced by some of the execution that we've taken so far and what we're seeing in the pipeline. So we feel really good about the strategy, the guidance, our ability to execute. We do have a fairly substantial pipeline on the disposition side as well as on the acquisition and structured side, a couple of hundred million of additional dispositions that are at various stages as well as a similar amount on the reinvestment side. So feeling really good about the execution and what we're going to be able to accomplish as the year progresses.

Your next question comes from the line of Ronald Kamden from Morgan Stanley.

This is Caroline on for Ron. As you mentioned, leased occupancy was up year-over-year, but slightly down quarter-over-quarter. I was just wondering if we could hear a little bit more on what you're seeing in terms of occupancy upside in '26 and what plans do you have to capture that?

Sure. Yes. On Q1, it was primarily driven by the American Signature bankruptcy. So without that, we would have been flat to slightly positive. So when you look at the momentum that we're seeing at the start of 2026. Obviously, 155 new leases with retention rates for the first half of the year, we're seeing it over 95%, which is near our all-time highs as well. The cadence of tenants that are wanting to stay in place, exercise renewals or exercise options, negotiate renewals and then the new lease activity due to the lack of really any new supply all driven by these demand factors is boding really well for the balance of the year.

When we look at Q2 in terms of our pipeline right now, we're on cadence of what we saw last year, and we have great momentum on those 2 boxes that we got back in the beginning of this year. And for example, with American Signature, our mark-to-market on those is over 25%. So not only going to be backfilling with higher credit tenants, but the opportunity to drive rents further north.

Yes. The only thing I would add is the real upside for Kimco and our investors is the growth in economic occupancy. We have a very wide spread in the side but not open pipeline but when you see that meaningful uptick in economic occupancy as we progress through the year, that's really what will be a differentiator for us versus the peers.

Your next question comes from the line of Michael Griffin from Evercore ISI.

I know, Conor, you just talked there about the economic to leased occupancy delta narrowing. If we're at 410 bps, call it this quarter, do you expect that to narrow to 200 bps by the end of the year? I know you're still about 200 bps below your all-time record high economic occupancy. So maybe talk a bit about the cadence and expectation of that delta progressing throughout the year?

Yes. I first want to take a step back and talk about what comprise what creates the snow pipeline in this 410 basis points. Obviously, the top line is your lease occupancy and the bottom line is your economic occupancy. So starting first with leased occupancy, we're at [ 96.3 ]. Our all-time high as [ 96.4 ], but we see that there's room to run north of that. For example, we're about 110 basis points below our all-time high in anchor occupancy. So if we continue to reach at that level and continue to push small shops, you should see lease occupancy grow. .

As a result of that, that future cash flow benefits that we would be getting that we have not yet realized, but that would continue to further expand your snow pipeline. So that's a good thing because we want to continue to see that cadence. On the bottom side, there's the economic occupancy. As Conor just mentioned, we want to continue to see that grow. And right now, we're still below our all-time high at 94%, about 94.5%. So we have room to run there, and we continue to see that to accelerate through the back half of the year. So not only are tenants now open and operating, but they are also paying higher rents in the previous rents. So that also demonstrates future cash flow growth.

So it's not to say that you necessarily want to see it compress as a good thing as much as you want to see the cash flow growth come online and you want to continue to rebuild that cadence in that pipeline to demonstrate even further cash flow growth over the coming years. So we see both trending upward as our goal and objective for 2026.

Yes. I think the nicest part about where we sit today is retention rates are at all-time highs and actually ticked up in the first quarter. So again, that churn that has been relatively constant in retail has actually slowed down meaningfully. And the demand side is still there, and we're seeing it being continuing on the robust path that's on. So that's why I mentioned that the upside that Kimco has versus our peers is that economic occupancy lift as we move through the year and going forward past that.

Your next question comes from the line of Samir Khanal from Bank of America.

I guess my question is around the noncash GAAP revenue. I mean it sounds like you did around $21 million in the first quarter and your guide is like $45 to $55 million. Talk about kind of how to think about the cadence for future quarters? And what kind of drove that for the first quarter?

Sure. So in the first quarter, we actually had some larger below-market rents that came back. We had a couple of leases where we early recapture those boxes and that generated an extra $7 million in the first quarter. So again, it is weighted towards the first quarter. When we look to the back half of the year, second quarter to fourth quarter, Again, we're expecting right now normal cadence of it. So again, you'll probably look at somewhere in the $8 million to $10 million a quarter of transactions that relate around this non-GAAP revenue. So it really is more of this onetime event in the first quarter lifted by these 2 large low-market rents we got back.

Your next question comes from the line of Juan Sanabria from BMO Capital Markets.

I was just wondering or hoping you could talk to a little bit about how you think about the importance of size and liquidity and being more relevant, I guess, in investors and their mind share, particularly the nondedicated REIT guys, the generalists in the environment today and kind of going forward and the need for scale.

It's a great question. I think when you look at Kimco today, we are a compelling investment to the generalists. I mean I think when you look at our relative discount on any different level. You look at our multiple relative to the peer set in our sector, which is at about a 15% discount. You look at our net asset value discount, which is really the sum of all the parts of our assets. We're trading at a discount there as well. And then you look at the private capital formation and look at the example just at Blackstone alone, their second highest conviction is an open-air grocery-anchored shopping centers behind data centers. .

And you look at the transactions of privatizations of public REITs, you look at ROIC, you look at Alexander and [indiscernible] you look at Whitestone and you look at the compelling factors of the cash flow growth that we're seeing, and you look at the relative multiple against other sectors as well versus Kimco with an A- A3 balance sheet, top of the charts earnings growth, one of the lowest G&A loads, I think we actually have a very compelling offering to the generalist community. And REITs today obviously are dealing with higher interest rates and higher fuel prices. But we feel like we have the supply and demand dynamic that really shines relative to other sectors and relative to other peers in our sector.

So we actually feel like the size and the relative strength of the balance sheet, the growth profile and the team gives us the opportunity to capture mind share when we go out to generalists, and we do that consistently outside of just the normal REIT sector and REIT conferences, we feel like we have a compelling offering as Kimco really shines on all those metrics and the offering opportunity we present today.

Your next question comes from the line of Alexander Goldfarb from Piper Sandler.

Just a question from the tenant perspective. Given this environment where space is quickly sort of managing, if you will, and basically, nothing is being built. Are you seeing a difference in how the tenants approach leasing, meaning are you seeing either the CEOs more involved or the tenants rethinking how they go out to landlords to lease space or have they think about their leasing or they pretty much have their set game and they're doing not what they've always done, but I'm just trying to understand from the tenant's perspective, it's got to be different, I would think, just given you're close to 98% anchor lease, 92% small shop like I got to think that their game is different than years ago when there was a lot more availability.

Yes, Alex. Great. Great question. I'll sort of break it down to a handful of things. One, that you're absolutely right, and the tenant is changing their approach. They're becoming much more flexible in terms of how they've either prototype. They're becoming much more aggressive in wanting to get out in front of new opportunities and/or potential future opportunities and a willingness to sign leases much sooner. As a result of that, as you've seen with us doing the package deals, most notably, obviously, in Q1, we did a bunch of Dollar Tree deals. It's not so much that we do, Dollar Tree deals, but it's more important about the pace and the cadence in which we got those done.

There were a few examples in that package in which they got their committee to approve it in, I'd say, early to mid-March, and then we had the deal signed by the end of March. So there's a huge motivation on their part to move much quicker, much faster and work with us as a landlord partner to find a way and a means to do that. Second of that is on the economic structure. Obviously, when you have a competitive set, you can start to negotiate more through terms and the idea of value engineering boxes, lowering CapEx cost to deliver the space sooner is really, really important, not only for them, but also for us. So we found other ways in which to work with our retail partners to get the leases signed.

But on the back end, leveraging our relationships and our skills to obviously value engineer to lower CapEx cost and then to get the tenants open sooner is of huge value to the retailers. So for example, with our Sprouts package, our construction team has been working tirelessly with their team to try to pull forward those open dates through the course of this year, which is a real value to them to help them hit their open to buy. So it's really becoming this healthy dynamic between the both parties, and we're working very constructively together which was also part of the impetus of when we went through this reorg to make sure that we're functionally aligned on the leasing side to unlock the full potential of our scale.

Your next question comes from the line of Cooper Clark from Wells Fargo.

On the 3,700 multifamily units entitled for development that you cited as a near-term opportunity over the next 3 years. Could you walk through where yields are today, if you were to start those projects? And then also where you think some of the multifamily dispositions in the pipeline you mentioned earlier may trade on a cap rate basis?

Yes, sure. So on the near-term projects, you're usually seeing gross yields in the 5s, mid-5s or so, low 5s, depending on where you are in the market, maybe in some secondary markets you go slightly higher than that. As a reminder for us, we do a capital-light strategy with the pref program. So our yield on invested capital for Kimco is much higher than that. Recently, we completed [indiscernible] on a gross basis. It was in the 5s, our invested capital was in the 8s. So we're seeing meaningful value in the approach and want to be extremely selective on when we activate these projects. So that's a pipeline that we're monitoring over the next 3 years as you articulated, and we'll look to activate it. As it relates the sales side, I'll pass it over to Ross.

Yes. I mean on the disposition side, we continue to see really strong pricing on multifamily in some cases, high 4s, low 5s. If you look at the multifamily that we've activated that we own in our portfolio, you have to keep in mind that those projects were very targeted for the best locations, some of the best mixed-use projects within our portfolio and having the amenity of the retail that we provide in those assets really helps fuel the demand from investors for that product. So as we are very measured and disciplined in what we look at from within our portfolio, we can be extremely selective in which of our projects, we look to crystallize that value. And then again, going back to our strategy, taking that really low cap rate capital that we can then reinvest in higher-yielding multi-tenant shopping centers that is very much a part of our go-forward strategy. .

Your next question comes from the line of Greg McGinniss from Scotiabank.

According to some Q1 broker reports, it looks like market rent growth might be slowing despite limited new supply and low vacancy. And then we saw that your naked anchor leasing is assuming 30% mark-to-market this year, which implies, I think, $1 per square foot rents, which is kind of below where you signed acres over the last few years. So a couple of questions. One, are you experiencing any of this kind of slowdown in market rent growth? And 2 of those 34 anchors I guess how many are released? And is that lower rent per square foot assumption of location specific? Or is there some sort of pullback that you're seeing?

No, there's no pullback. So I mean, just in this quarter alone, our new leases on anchor leases was over $20 a foot, which is in the supplemental as well. you're seeing meaningful mark-to-market adjustments, obviously, at $13 on existing base rents, there's real upside there, as you alluded to and what I just reinforced. As it relates to the 34 over -- almost 100% of them are resolved, 96 to be more specific at this point with the balance sort of trailing towards the end of the year, which is sort of natural cadence for negotiating. So no meaningful slowdown there.

Really for us, it's always looking at that embedded value on the mark-to-market and how we can push those rents further north. And obviously, on the demand side, it's continuing to prove out in a positive way. Again, on our new lease side, we just posted $29 a foot on new lease rents, which is the highest we've ever had in Kimco. I think one thing to watch too is the retention rates being so high. That existing pets are unlikely to give up a space today because they know the economics across the street or down the road are going to be much, much more challenging for them to meet than what they currently have. And if you have a proven store, you have less risk in terms of projecting sales going forward. So what we've seen is retailers really lean in to their assets that they currently have, reinvest in those stores and make the compelling argument that what they have is really the best economic deal they're going to find in that market.

Your next question comes from the line of Rich Hightower from Barclays.

Just to go back to the downward revision in expected credit loss for the year. Can you just break that out between sort of known situations. Obviously, you had some known situations in the first quarter, but known versus theoretical sort of based on the economic environment and what the potential flex in that number could be as we go throughout the year?

Thanks for the question, Rich. So we're really encouraged by the 52 basis points that we experienced for the first quarter. We're not really seeing any slowdown when it comes to our small shop tenants. There's no creep that we're really seeing. On the bankruptcy front, we know that paint a tree just filed. It's a small impact for us. There's only 5 leases there, so we don't anticipate anything significant in the credit loss line for that. But obviously, it's early innings of the first quarter and there's a lot of uncertainty out there in the macro environment. So we feel comfortable with that revised 65 to 90 basis points on an annual basis at this point. But nothing really specific that we're seeing again on many tenants for the rest of the year.

Your next question comes from the line of Craig Mailman from Citi.

I just want to go back to the conversation about kind of being your peak lease rate and the snow pipeline. I'm just kind of curious, the trajectory looks very good into '27. But is there anything that you guys are doing internally on sort of operating the portfolio as you get to this peak level? Does it give you more flexibility to I guess, negotiate tougher or remerchandise at a more aggressive pace to where it could kind of slow the trajectory of breaking through that peak because you guys are intentionally trying to maximize revenues rather than optimize kind of for leased rate. Just kind of curious if there's anything on that side of the equation we should think about from just a growth perspective here in '27 to maybe even '28?

Yes. I mean our #1 objective is maximizing cash flow growth. So I'd say you start with that and then the occupancy side is a secondary benefit to that. So when we're looking at the opportunities to backfill vacant space, we're exploring sort of what's the highest and best value for the box and for the center. So if we're able to backfill a space at a mark-to-market adjustment and see a meaningful spread from prior rents at lower cost, that's a great opportunity, assuming everything else is relatively stable within the center or it's the best mousetrap within the market. Secondarily, if we see an opportunity where we can add grocery, as you know, that's a major priority of ours.

We're over 86% grocery anchored within the portfolio at this point. And we want to continue to push that as far as we can. We may create vacancy to support that initiative because what we're seeing on our active grocery projects, currently, we have active projects under construction right now. We're seeing meaningful mark-to-market adjustments and premiums on the small shop space and upwards of 25%. So that ties back to driving cash flow growth for the future. Obviously, in that case, you may take some occupancy off-line for that benefit, but the future long-term benefits of stable, higher rents with higher growth is much more valuable. So we always look at the available options on the table and are driven solely by the fact of what will be best to drive future cash flow growth for the company.

The only thing I would add and going back is, again, the economic occupancy is relatively low. So that as that continues to improve, we'll get triple nets as well as the base rent and that the margins will improve. And then if you bring down the CapEx load, which we're starting to see as well, on the go-forward asset management of the portfolio, your free cash flow will continue to improve, which allows you to invest accretively across all of our different levers for growth. And so that early flywheel, I would say we're in the very early innings of that. So we're really excited because we see this as a trajectory to really enhance and improve the growth profile, all over the last 2 years, we've been at the very top of the sector in terms of earnings growth.

Your next question comes from the line of Floris Van Dijkum from Ladenburg.

So the ethanol pipeline obviously very, very attractive, I think, 36% higher rents than your in-place rents. I guess the question I had for you are also going down to the bottom line, as you think about your portfolio occupancy getting higher, your retention rates being higher. How do you forecast your leasing costs and your AFFO going forward? Obviously, you've had a number of anchor bankruptcies in the past, and you're still working on getting those anchor spaces filled and presumably recognizing the leasing costs. How should investors think about your AFFO trajectory or your FAD trajectory going forward?

Yes, Floris, great question. So as we continue to construct and open the signed leases and get the tenants operating in our shopping centers. That CapEx load just start to taper over time as your economic occupancy starts to grow to Conor's point earlier. So that should be the natural trend that you ultimately see on the back end. And then just overall, with the continued negotiations that we mentioned earlier in the call about value engineering and finding improvements in our use of capital and lowering those costs to get deals done and is a continuation of just good prudent leasing discipline that we continue to exercise. .

Yes. The only thing I would add, Floris, is that AFFO growth, that inflection point is what's driving the best and brightest in the private capital markets to lean into grocery acre shopping centers. We're in the very early innings of that inflection point and when you look at other sectors, nobody has the supply and demand dynamics that we have. The new supply under construction actually ticked down 0.2%. That's the lowest in and commercial real estate sector. And then you look at the occupancy levels and the demand side, it really is going to be, I think, a significant inflection point where you have a lot of pricing power, not a lot of supply, and the existing tenants are trying to grow and are going to be trying to jump in front of one another to push rents. So it's an exciting point in sort of Kimco's history to be where we can point to that spread and sign, but not open, also while driving really strong earnings growth at the same time.

Your next question comes from the line of Haendel St. Juste from Mizuho.

This is Ravi Vaidya on the line for Handel. I hope you guys are doing well. I wanted to ask about the guidance here regarding the bad debt, how much of that was driving the uptick in the guide, was bad debt change by the number of outperformance was done in the first quarter? And what was embedded regarding buybacks initially and post guidance range?

Sure. So credit loss was certainly better in the first quarter. We came in at, as Kathleen mentioned, that 52 basis points. Overall, if you think about every 10 basis points is about $1 million in change. So a little bit of help certainly coming from the credit loss side of things. Again, the impact and the beat for the quarter really is operationally. Minimum rents were higher by about $8 million, and that's the primary driver overall for why FFO was $0.01 higher during the quarter.

With regards to share buybacks and things like that, again, we are always watching daily looking at what our cost of capital is. In the very beginning of the quarter, we bought back a little bit of stock when the stock was under 20%. So we took advantage of that in a very small amount. Obviously, during the first quarter, we've seen good improvement. But again, we're still trading at a pretty significant discount when you look at where the overall trading is at. I mean we're we have probably an implied cap rate in the 6.8 levels. Our FFO yield where we're sitting today is around 7.7%. So we're always keeping a constant eye on the opportunity. But for right now, there's really not a lot baked into the guidance in terms of share buybacks.

Your next question comes from the line of Wes Golladay from Baird.

Can you talk about your overall apartment NOI exposure from ground leases and I assume it's all through ground leases, but maybe you can clarify that as well.

Yes. It's relatively small in terms of our impact right now. So the evolution of the apartment activation projects, really restarted with ground leases, really as a no cost to Kimco, where we entitlement ourselves and then looked at the parking lots where we could activate where we wouldn't have to take in retail offline. And that's really where we started the journey. And that clearly, we have a ROFR on that as well.

So the thought process being, as the apartment is developed, and if that developer ever wants to sell it, they're selling a leasehold while we can potentially match and acquire it from a fee position. So there should be a nice spread that we can compress there. After that, we decided to contribute the land into joint ventures and add some preferred into the structure, as Dave mentioned, is what we did at Suburban Square with Coulter which allows us a higher return on invested capital than what the actual gross returns look like.

And that usually lines up with about a 50-50 joint venture, where we can ride the upside of the NOI growth. And so we continue to manage the pipeline of activation to see where it makes sense. Obviously, there was a lot of supply delivered in the apartment sector on this last year. A lot of it is being absorbed in certain markets are showing sort of a turn and a relatively strength here in the spring. So as we look forward, we'll continue to look for CapEx-light activation opportunities where, again, we can contribute our land, which really has a 0 basis because it's parking lots in our shopping centers. I often talk about this, that like we have, I think, one of the most underutilized forms of commercial real estate. We have a single-story building that comprises about 20% of the FAR of the asset and the rest of it that 0% is just parking lot.

That's not generating any revenues. And with driverless cars here, there's a lot of opportunities for us to continue to see partner ratios get lowered, which allows us to activate more of the parking lot for highest and best use. And that's why we've been leaning into this entitlement program that, again, allows us to unlock that future value for our shareholders, and we have a number of different ways to do it, but does not put a lot of capital at risk.

Your next question comes from the line of Paulina Rojas from Green Street.

In your investor presentation, you highlight that Kimco trades at a discounted amount relative to peers? And I have 2 related questions. So first one is, what do you attribute that disconnect to? And second, what do you think the market needs to see to change that assessment?

I was going to ask that question. That's a good one. I think there's a combination of things that obviously being large and liquid sometimes is in your favor. But when a sector is out of favor, it sometimes works against you. So I think that may be part of it. Consistency of earnings growth, I think, is a calling card for Kimco. For a while, we wanted the balance sheet to improve dramatically. So that will be a pillar of strength for Kimco. We now feel like we've checked that box with an A- A3 credit rating.

When you look at the components of our growth, we continue to see us transforming the portfolio into more of a grocery-anchored shopping center portfolio. Historically, Kimco has been a little bit of a mix of portfolio assets. We're obviously now at 86% grocery-anchored, with a number of assets under construction to add grocery. So again, I think as the sector becomes more in vogue, hopefully now that tide is changing, where you see the opportunity set changing for Kimco because we've been able to drive significant earnings growth without any real cost of capital advantage. So I don't know any other sector or any other peer that had north of 5% and then north of 6% earnings growth with no cost of capital advantage. So in essence, no external growth. Everything we're driving is from organic internal growth. And so now that we're at a point where we feel like the organic growth is accelerating, and we're looking at potentially external growth on top of that. We feel really good about the trajectory changing and hopefully our multiple rerating.

Your next question comes from the line of Caitlin Burrows from Goldman Sachs.

Maybe just on the transaction side. I think you guys said you're confident you can meet your goals for the year, but wondering if you can discuss that a bit more, especially on the acquisition side since it seems like it's a pretty competitive market. So how do you expect to source those deals? Are there certain characteristics of the type of properties you're underwriting to make Kimco more likely to come off the winner? And is there anything in particular that you have lined up at this point?

Caitlyn, it's a great question. Yes, to your point, it does continue to be very competitive, but I do want to reiterate our conviction in the guidance and the strategy and our confidence in our ability to execute I think if you go back and look at the last 5 years, we've acquired close to $10 billion in assets. So I have the utmost faith and confidence in our team. We're really good at acquiring assets, integrating it into our portfolio, creating value. But we're going to continue to stay disciplined. We have to be very strategic about what we buy and making sure that it's accretive as opposed to putting up a mark for a particular earnings call. .

So we're excited about the pipeline, the activity, the opportunities. I do think that we have some differentiators as it relates to our inside trap on certain deal flow, whether it be from the joint venture platform where we have certain assets that are going to be recycled where we have both the first and the last look with our JV partners. We've been very successful over the last several years acquiring our partner's interest in several select joint venture opportunities. And then again, when you look at the structured investment pipeline that we have, we've been very active in putting out capital. So this first quarter was a good start to the year. We had about $38 million that was net funded but that's over $70 million of net committed because there are some future fundings with some of the deals that we've done.

So with those deals and the ROFO and the ROFR, we continue to see additional deal flow oftentimes before it hits the market or we get the last look on it. So we'll be selective, but we're seeing a lot of opportunity. And as I mentioned at the beginning of the call, we have a couple of hundred million in the pipeline right now that we're excited about that checks all the boxes for us in terms of quality growth demographics. So we're very confident that we're going to get our fair share and absolutely hit our guidance targets.

Your final question comes from the line of Mike Mueller from JPMorgan.

I apologize if I missed this, and I know you gave some color on the snow ramp. But about how many years out do you think it is until you're back to a normalized lease economic spread?

I mean when we look at -- when we go through '26 and '27 right now, again, we're at 92% on the economic. Our high watermark is around [ 94.5% ]. We have room to run there. When you look at -- as I mentioned in my earlier comments, the leased occupancy, we're at [ 96.3% ], our all-time high as [ 96.4% ]. But what I look at is like our anchor occupancy is actually down about 110 basis points, and we're continuing to see meaningful growth in the small shop occupancy. So I still think there's room to run there. I do anticipate as economic occupancy comes online and that cash flow growth starts to get realized in our earnings, you'll start to see economic compress towards as we start to move into 2027.

But preserving it if your economic is growing, your lease is growing, it's not a bad thing to continue to see a healthy spread there because that's just continuing to fuel the future pipeline for cash flow growth.

We have reached the end of the Q&A session. At this time, I will now turn the call back to David Bujnicki for closing remarks.

Great. Thanks to everybody for joining the call today. We look forward to meeting up with a number of you at some of the upcoming investor events that we have. Otherwise, if you have any follow-up questions, please reach out. Have a wonderful day. .

This concludes today's call. Thank you for attending. You may now disconnect.

2026 Global Property CEO Conference. I'm Nick Joseph, here with Craig Mailman with Citi Research. Pleased to have with us Kimco and CEO, Conor Flynn. This session is for Citi clients only and disclosures have been made available at the corporate access desk. [Operator Instructions]

Conor, will turn it over to you to introduce your company and team providing the opening remarks, tell the audience the top reasons investors should buy your stock today, and then we'll get into Q&A.

Thanks very much for having us. With me today is Glenn Cohen, our CFO; and Dave Bujnicki, our Head of IR and Strategy.

Thank you for having us. We really appreciate your time. 2025 was a breakout year for Kimco and a clear validation of our strategy. We delivered record operating performance, strengthened by the durability of our earnings profile and further enhanced by our balance sheet and financial flexibility, all while navigating a period of elevated market volatility and uneven REIT sentiment.

At a high level, our results reflect the combination of strong fundamentals, disciplined capital allocation and a portfolio positioned in the right locations for long-term growth. From an operating standpoint, performance across the portfolio is exceptional. Leasing demand stayed strong all year with over 12 million square feet leased. The fourth quarter alone saw the highest new leasing volume in more than 10 years. We achieved all-time highs in portfolio occupancy, finishing the year at 96.4%, while small shop occupancy also reached a record of 92.7%.

Anchor occupancy finished at 97.9%, up 90 basis points and marking our best quarterly increase ever. That leasing activity translated directly into embedded future growth. Our signed, but not open pipeline expanded to a record level, representing approximately $73 million of future annual base rent. This gives us clear visibility in NOI and earnings growth through 2026 and beyond and even with portfolio occupancy already near peak levels.

Financially, we delivered strong earnings growth. FFO per share increased nearly 7%, marking our second consecutive year of growth exceeding 5%, and same-site NOI grew 3%, supported by accelerating rent commencements, limited new supply and sustained tenant demand.

Importantly, tenant credit quality across the portfolio remains solid. Exposure to challenged retailers is limited and retention continues to hover at all-time highs around 90%. All of this reinforces a key point. While public market sentiment around REITs fluctuated throughout the year, the underlying fundamentals of our business remained extraordinarily strong.

Capital allocation was another important driver for value for us in 2025. We are active and opportunistic across multiple fronts. During periods of multiple market dislocation, we repurchased shares near 52-week lows at an implied FFO yield of approximately 9%, reflecting our confidence in the durability of our cash flows and the disconnect we saw between public and private market valuations. At the same time, we advanced our capital recycling initiative, monetizing low-growth assets at attractive private market pricing and redeploying that capital into higher growth opportunities at a positive spread.

A meaningful component of this strategy is our portfolio of long-term ground leases, which represent roughly 9% of pro rata base rent and are highly valued by private buyers given their credit quality and stability. Recycling that capital into grocery-anchored centers with stronger growth profiles enhances both our current yields and our long-term earnings power.

Our structured investment program continues to differentiate Kimco. By providing mezzanine capital while securing rights of first refusal or offer, we generate attractive current returns and gain proprietary access to high-quality assets. Investments realized to date have generated an average unlevered IRR of nearly 12%, and the platform continues to serve as a recurring source of off-market acquisition opportunities.

Overlaying all of this is a balance sheet that we believe is a true competitive advantage. In 2025, we received an A-level credit rating upgrade from both S&P and Moody's, placing Kimco among a small group of REITs with an A- or A3-level credit ratings from all 3 major agencies. We ended the year with more than $2 billion of immediate liquidity, net debt to EBITDA of approximately 5.4% and strong and growing free cash flow, around $165 million in 2025 after dividends and leasing costs. This financial flexibility allows us to invest through multiple cycles, while maintaining discipline and protecting our downside risk.

We're also continuing to evolve how we operate the business. In 2025, we established the Office of Innovation and Transformation to enhance enterprise integration and improve execution. This group is focused on increasing data visibility, streamlining processes and leveraging technology, including artificial intelligence and advanced analytics, to improve leasing insights, capital allocation decisions and overall operating efficiencies. These tools are already helping our teams move faster, allocate capital more effectively and reinforce margin durability over time.

We continue to strive for ways to become more efficient and remove costs. In early 2026, we announced the transition to a more functionally aligned asset-centric operating model. This evolution is designed to flatten the organization, clarify accountability at the asset level and enable faster decision-making across leasing, asset management and capital deployment, while still maintaining strong local market expertise.

As we look ahead, we believe Kimco is exceptionally well positioned. We're entering 2026 with strong momentum, clear visibility into embedded growth, limited new supply in our core markets and multiple internal and external growth levers to drive earnings and value creation. Our portfolio remains anchored by essential grocery-anchored retail [ in ] first-ring suburban locations, markets characterized by dense populations, strong household incomes and significant barriers to new supply. Supported by a strong balance sheet and disciplined capital allocation, we believe Kimco is designed to perform across multiple cycles while compounding value over time.

With that, we're happy to take a deeper dive into the opportunity and further answer any questions you might have.

I think the top 3 reasons for buying Kimco stock today. Number 1 would be valuation. We've been a top performer in terms of earnings growth for the last 2 years, and we sit at the very bottom of our sector in terms of multiple. Number 2 would be multiple levers for growth. Our earnings growth is compounding year-over-year. We did, as I mentioned, 5% in 2024, over 6% in 2025. And we have multiple drivers of growth for this year and beyond, as I told you about our recycling of flat ground leases, the entitlement program that's starting to bear fruit as well as a huge SNO pipeline that we plan to bring online fast to drive earnings growth.

And then third is the capital allocation differentiators that I outlined. We have a showcase that we will buy back stock when we think it's the best risk-adjusted return of our capital. We have $160 million of free cash flow that we can use to focus on where we can accretively invest that in addition to the $300 million to $500 million of dispositions that we plan to take to market this year to showcase the disconnect between public and private valuation and use it the best way possible to make the best risk-adjusted returns.

With that, I'll turn it back to you.

Great. Thank you. In your opening remarks, you touched on AI and Kimco's deployment of it and some of the opportunities that you've seen thus far. Where is the opportunity from here? How are you thinking about either on the top line or expense savings? And how do you actually go about finding those solutions? Is it building it internally? Is it buying? Is it partnering? How are you thinking about that?

Yes. So it is a good question. I think when we saw the opportunity set, that's why we transitioned and really put a leader in place that understands the Kimco workflows, and so when you have a leader of operations in that position, you can make capital allocation decisions and buy both off-the-shelf and self-developed tools that are really going to automate and create major efficiencies in the organization going forward. That's why we thought we really had to make that change early to really start identifying where there's a real case study and a return on investment that we can justify.

So thus far, what we found the clear wins for us have been on the marketing side, when you use the AI tools to really self-generate. We do a lot of entitlement work as we've talked about, we now have 14,000 units entitled. When you go into municipalities, you can really deliver a wonderful marketing package by using AI to showcase what the shopping center can look like in the future. It also use AI agents to procure new leasing opportunities, specifically with small shops using social media. It's generated a lot of leads for us, and that's what's really, I think, helping us drive all-time highs in small shops.

We also use it in legal for documentation and really sort of using it to expedite the construction approval process. There are tools that you can use now to really sort of condense how long it takes to get construction approvals. As you know, we have a lot in our SNO pipeline that we have to build out. And as soon as we can get that done faster, the sooner we can have better earnings. And so those are really sort of the wins on the operating side. Glenn, do you want to talk a little bit about the accounting side?

Sure. So we've been using side, we've been using for the last several years, a tool where we actually leases into this RPA process where it's actually reading 150 different fields from the lease without any human touching it, and it's automatically getting entered into our ERP system. So really super efficient. It's cut down on thousands of hours of lease abstraction and then we just have checks and balances around it, but it's been very, very efficient, and it's just a fast way to get the leasing done in a much more efficient manner.

So I think it's both. I think it's operational efficiencies. I think it's output. I think it's condensing the leasing timeline because all of those things are real KPIs for us. and that we can use to really drive the business. I think everyone has probably experienced some level of chatbot already. They're going to get better, and they're going to get better in terms of interfacing with retailers that are already tenants in our shopping centers that we -- have all of our data now organized, and we can utilize in a way where we can share whatever the data -- once it's protected on what we need from that data, so in essence, if you're a retailer in a shopping center, at some point in the near future, I could see a chatbot being able to interface with every single tenant we have and answer their questions without really any time on the Kimco side.

The other piece of it is probably going to -- you'll see the chat box really sort of focus on leasing as well. As I mentioned, they're very good at finding lead generations and using sort of the tools and giving them directions of what we're looking for. But when you think about the CAD drawings we have for every single space in our 550-plus shopping centers and the thousands of leases we have, we have a lot of data. And once we get that data organized in a position where we can utilize it, I think scale is going to be a massive advantage, especially when you think about the leasing side of it because in essence, once we have it correctly identified and organized that chat bot, we'll be able to answer any leasing question you could possibly have on any space across the entire portfolio.

And what are you hearing from your tenants and retailers broadly about the -- either the potential disruption or the opportunity that they are seeing from it?

Yes. They're taking an approach very similar to ours. When we talk to Walmart and we talked to Target and Costco and Home Depot and others is it's very in terms of like system automation, that's really sort of the low-hanging fruit that everyone is very focused on. The accounting side obviously has some opportunities and I think the operations side as well. you're seeing it sort of ripple through maybe the commercial -- the services side of the business as more of that gets automated.

So I think there's a lot to see how effective it is. I think you still need a fact checker. I still -- you still need someone to screen and make sure your data is proprietary. But there's a lot of use cases that we have been testing and a lot of them have shown early wins.

Yes. I would just add, we use copilot pretty well through the entire organization, everyone has access to it, which has been really, really helpful. And we're also developing some things for -- that are really internal. So it's a combination of looking at bolt-on tools that exist as well as developing certain tools internally, which really helped the work -- do the workflow, especially as we have all the data that we have is being spread across the organization, it's just being able to read all of that. I mean, you're able to look at like co-tenancy closes amongst leases, tenant by tenant. There's so much application for it.

To stay on the topic a little bit, I don't want to overstay our welcome on AI. But from the products that you've seen and the database that you're building internally and the structure that you've changed outright, with more regional kind of pushing it higher. Do you ever see a scenario where like all your CAD drawings are in there and a tenant could just go in and take their prototype and have AI decide, well, we can actually shoehorn into this and, right, almost cutting out the relationship piece of this? Or is that really giving AI too much credit, which is kind of -- it feels like where the headlines are going, it's going to be there tomorrow. I'm just kind of curious from your standpoint, realistically, having kind of the back-end side of it, what tenants have? Like how hard is it to replace going to ICSC and sitting down with Walmart or Costco or Home Depot and walking through different site plans?

So the way we're thinking about it, and again, self-serving. So full disclosure, like we think about that the relationship is the most valuable piece. So owning the hard assets is going to be critical because in essence, the margin expansion, if you're able to cut out these enhances your margin, right? So if you have the relationship direct with that retailer, and you've seen us do package deals as really a focus of ours to go out, sit with that retailer, sit with that partner, which we know has new store opening plans for '27 and '28 and showcase that we can -- at Kimco, we can deliver what they need faster, cost-effective and with a partner that they trust.

And so in essence, showcasing that do the lion's share, allow Kimco to take market share by doing the most of your new leasing with us and using our tools and our effective platform to allow you to hit those new store opening plans. Sprouts is one that we've done a lot of package deals with, and we think they're a great operator. And you've seen our redevelopment really focus on grocery because we think, as we've gotten to 86% grocery-anchored, A lot of what we can do is use those relationships to create a grocery-anchored shopping center versus going out and outbidding someone for a grocery-anchored shopping center.

So you have to thread the needle between cost savings but not disintermediating your most valuable asset, which is a relationship.

Retail has always been a relationship business. You're relationship with these retailers are super important. The trust factor is super important. I think their data is going to get better. Their capital allocation decisions are going to get better. They're going to decide where they need to fill in the white space and where their customer lives. But I do think that there's a relationship trust factor that goes into their decision-making on who, in essence, who they're going to partner with to launch this new store. Many of them have been burned through different cycles with aligning themselves with undercapitalized partners that can't deliver on their promises.

Just circling back to sort of the fundamental piece. You mentioned you guys are doing more packaged deals with tenants, but at the same time, you're hitting record lease rates, right? And so as you try to upgrade tenancy with some of these national retailers, get to the mark-to-market. How much of an opportunity is there to do some of those deals that can really kind of hit at it quickly versus the reality of your long-term leases can't get tenants out, right, and the usual obstacles?

Yes, it's a combination. I think, for the benefit and the negative, we have a weighted average lease term of around 7 years. And so we don't have as much volatility in sort of our rental streams as maybe other sectors do. So when you think about the mark-to-market on the Kimco portfolio, the anchors are somewhere between 30% to 50% below market. That's a lot different in other sectors or maybe they're at or even above market rents when leases roll.

And so the beauty of having no new supply is there's virtually nowhere for them to go. And so if there's nothing being built that they can relocate to, and there's no better economic deal in the store that's profitable and proven, when you get that mark-to-market opportunity on a lease that's at the end of its life, the likelihood as the retailer wants to stay because it's the best bet they can make. And so that's where you're seeing those incremental lease spreads of 30% to 40%, where we're really starting to be able to push pricing power.

And if you remember, most of my career has been when the retailer has had the negotiating leverage. And so the vintage of most of these leases are when the retailer has dominated the conversation. And so it's changed. And so we're showcasing that in our numbers, and we're taking advantage of that where we can. Because in essence, these stores are extremely profitable. When you layer on the e-commerce sales that are coming in and out of the store, the stores continue to generate the best risk-adjusted return for these retailers. And that's why you're seeing everyone, including Amazon, reinvest in their store fleet with Whole Foods and others being launched as new store formats.

And on that, with the success you guys have had and where the lease rate has gone, I'm curious, I know, Glenn, you've talked about it a bit, but, right, when do we peak out and the SNO pipeline peaks and then you start to actually get the tailwind from commencements? And what is an ideal spread between lease and occupancy once you hit that sort of frictional level of vacancy?

Yes. I mean we obviously have been doing an enormous amount of leasing coming off of the vacates of whether it be Party City, Joann's, Big Lots from last year. So a lot -- almost all of that space has been released. It's brought our SNO pipeline to $73 million. It's the largest it's ever been. At the same time, our occupancy level is at an all-time high. So it represents 390 basis points. We actually see it growing a little further through the year, and I think it will peak towards the end of '26 and then you'll start to see it compress as we go into 2027. We're 180 basis points from our all-time high economic occupancy, so there's real room to continue to push. And as that comes online, we feel pretty good.

60% of the SNO pipeline is anchors. So as those anchors come online, we feel really good and confident about being able to continue to push the small shop occupancy as those anchor boxes get filled up. So we think there's really room to grow. Anchor occupancy today is at 97.9%. Our peak was 99%. So we know there's room there, and although the small shop occupancy is at 92.7%, we don't see why that can't continue to grow. And again, there's been a lot of activity on that side. So I think that you'll see it again. The SNO pipeline will expand a little bit further. And then in '27, it will start to compress. Historically, we've been under 200 basis points, so having it at 390, you can see that there's a lot of compression still to come.

And when you think about sort of the FFO growth that people want, but really the underlying cash flow growth is the most powerful piece. And so as that SNO pipeline peaks and compresses and you have 69% of that pipeline is anchors. How do you guys think about the CapEx spend and how that trends and how that -- should we expect AFFO to really start to accelerate in '27, '28, assuming we don't have a another wave of bankruptcies. And then that gives you that flywheel with cheaper retained capital, that either you have to raise the dividend or you can do other things with it.

So like as we -- assuming the cycle stays as it is, [ no -- more ] new supply, good demand, the way that you guys have [ re-trending ] with commencements, like how powerful is that savings and cash flow growth and then the reinvestment.

Yes. I mean it is very powerful to your point. I mean today, it's around 20%, 21% as we go through this year and get everything online, from the SNO pipeline. I think as you go into '27, '28, you're going to see that number come down into the upper teens towards the mid-teens over time. So it will definitely come down. We're pretty focused on that. But again, if there's no major issue, you're going to see record level highs of occupancy and compressing CapEx cost as we go through time.

And I'm curious, I've asked some of your peers about this, and I know that and we've been part of this too, the whole industry has pushed lower leverage, safety post-GFC. But one of the pushbacks for retail has always been well, it's very stable, but you don't get the excess growth because it's stable, right? And so you guys are running at low leverage, you had investment-grade balance sheet, but you do have this tail of improving cash flow, lower CapEx.

So from your standpoint, to the extent, I know you guys are recycling capital as well, so you're not capital constrained by any means. But just a thought of running towards the higher end of your leverage level to juice FFO growth to kind of get out of the basement of the multiple towards the top again, knowing that you're going to have that cash flow to start paying it down over time as EBITDA hits. I'm just kind of curious internally just the thought process on leverage and the benefits of being so strict to be within the rating agencies highest level and the pricing there versus you guys have the size and scale. And so if you're a serial issuer, maybe going down a notch doesn't matter as much from a pricing perspective versus the earnings growth you can get from the deployment of that.

Yes. I mean, look, we spent a lot of time deleveraging the balance sheet. We used the bulk of our Albertsons gains that we had. We had a $150 million investment that we turned into $1.2 billion and used a large portion of that to delever the balance sheet to where it is. We don't need to delever any further. We're operating in the mid-5s net debt-to-EBITDA level. We think that's the appropriate level for us to operate. We did get upgraded this year by both S&P and Moody's to A-, A3.

We're one of the only retail REITs that has an A- rating from all 3 rating agencies. We do think that gives us some advantage. We just put in a commercial paper program, which allows us to borrow at a pretty attractive level. We just renewed our $2 billion revolver, which you are part of. Thank you. And again, at a lower rate. So there are a lot of advantages, we think, to having that A- level rating. And we're operating the business that way.

Yes. I think when you look at the earnings growth that we've driven over the past 2 years, we haven't levered up, right? And so we've been at the top of the sector for the past 2 years in terms of FFO growth. And we've gotten the balance sheet upgrade, which was sort of amazing to think about like every KPI was hitting like a historic like high and yet our stock was hitting a 52-week low. All while cash cap rate compression was going on in the private market for our asset base. And so there was this major disconnect between public and private pricing, and that's where you saw us really lean into the share buyback and buying below $20 a share.

So when you look at like the opportunity to lever up and really juice earnings, that probably would have happened when rates were 0. And so at Kimco when rates were 0, we did 30-year bonds. We didn't do short-term floating rate. And so because this is a cyclical business because we think longer term, because we know that this balance sheet is going to be tested in different parts of the cycle, we often try and think what's the best long-term play that's going to make us the most durable. And Kimco was one of the highest levered REITs for a moment in time. And so we had to make it a strategic priority, in my opinion, to get to the ISA because that's a differentiator. That's one that you can point to and say, if you think we're over levered, the rating agencies don't.

And so in my opinion, this business is capital intensive, it's cyclical, and you need to have a really strong balance sheet in order to weather all the storms and we've been, so we've seen many black swans. And we potentially might be in another one. So like we're in a situation where the business is really firing on all cylinders, and I think the balance sheet is a strength that we plan to keep.

Any questions from the audience, by the way? Okay. Going back to the disposition program, Ross isn't here to get the credit for it. But you guys have done a nice job of identifying sort of nonincome-producing assets, selling them off. What's been the buyer appetite for that? Where are you seeing kind of bidding pools how deep are they? And then just where cap rates trended on some of the assets you're selling? Or maybe a better way to ask, where do you think IRRs have trended if you back into kind of underwriting?

Yes. So for the 2026 year, we've outlined a disposition program of $300 million to $500 million. The low end of that guidance range of $300 million is really earmarked for flat ground leases. Those are the ones that in essence, have a compound annual growth rate of 1 or below. And we see that as opportunity to accretively recycle because these are the Targets, the Walmarts, the Costcos, the Lowe's, the Home Depots that trade at very low cap rates. And we've sold a number of them in the mid- to low 5s. And we think there's a real nice accretive trade there where we can take that capital, go and buy a shopping center at 6%, 6.5%, but the compound annual growth rate spread is significant. The sub-1% versus 3%-plus is a pretty meaningful compounding effect if you're able to do it year in and year out.

And so we've identified that 9% is really something we can go after year in and year out. There's some operational things we need to do to get it ready for the market. Sometimes you have to separately tax parcel it. Sometimes you have to get the right length of the lease term to get over 10 years to really have a compressed in terms of pricing. So in essence, it prices like a bond of that credit. And we feel like that's a real nice flywheel for us to jump on because we can do it again year in and year out and really start to showcase the embedded growth that we can generate from that trade.

The other piece of the dispositions is we've taken some assets to market from the mixed-use portfolio. Some of the pricing appears that might be very aggressive for some of the multifamily we've built. We have yet to crystallize it, but we've never, in our opinion, gotten credit for the 14,000 units we've entitled and we've built 3,000. So there is some units that are cash flowing. But what we plan to do is really start to crystallize that value creation, that IRR and take [ that ] -- those proceeds and invest it back in the business the most risk-adjusted accretive way possible. So it could be buying back stock. It could be our structured investment program. It could be our redevelopments that are earning about 10% to 12% on invested capital. And these are multifamily units that we continue to think we can generate about $100 million of proceeds each year going forward and take those 14,000 units and really drive them through a program that activates, about 2 per year, so that it will generate about $100 million of proceeds to Kimco over the next 3 years per year, and we can rinse and recycle that again and again and again. And that would be on top of our $165 million of free cash flow, because we're contributing the land with the entitlements as our markup basis.

So as our capital, so in essence, it's not earning anything today, and then the multifamily partner will come and develop it, lease it, stabilize it, sell it and then we'll get that cash flow to go back and do whatever is the most accretive thing to do with that capital. So it's a nice opportunity for us to start crystallizing it, showcasing it to investors and saying this is going to be something that's recurring, and so you should start to give us value for it.

And of those kind of 14,000 entitled units, where does it make sense to build given some of the supply issues in resi right now?

Yes, it's a good point. I mean we definitely lean on multifamily experts to identify where there's a market and understand that there's a lot of supply that's been built over the last few years, and [ there ] are still being absorbed in certain markets that are still pretty challenged. For us, we've done a number of deals in South Florida. We've done a number in Virginia. And so -- and we've done -- we now have active ones in San Francisco as well as one in Suburban Square in Ardmore, Pennsylvania, because it's -- the complementary use, in essence, our thesis was always the multifamily will be priced at a premium because of the amenity base that our shopping center provides.

So if you live in an apartment tower, the best amenity package you can possibly dream of is nowhere close to what a shopping center can offer because we have, in essence, 50-plus tenants that they would never be able to offer the same level of amenities. And we've seen that in all 3,000-plus units that we've built, we're charging premiums to market. And so we are generating this flywheel of a mixed-use community that we see resonating. And so identifying where there is oversupply and making sure we don't greenlight a project into a very tough market is super important to us. We also know that we are not the experts there and we rely on really the local partner to determine really what the supply side looks like over the next 2, 3 years? Because you remember, if you're greenlighting something today, you're looking at supply in '28.

And then on the acquisition side, you guys have had success recently either coming out of the structured finance program or -- right, a marketed deal. What does the pipeline look like today in terms of competition and quality that fits the buy box?

Yes. It's very competitive, as you know. Shopping centers have become sort of the private equity capital strategy of choice for a number of folks. If you think about Blackstone, their #2 priority is open air shopping center. If you think about [ Being ], if you think about GIC, if you think about even some of the other big sovereigns that are looking at the space as well as Cohen & Steers doing direct JVs, GIC doing direct JVs. Like there's a lot of capital on the private side chasing shopping centers. And it has been like that for the past 2 years. Most of the publics have been sidelined because of the cost of capital was impacted.

So it is competitive. The last 2 years, you've seen us really focus on where we have a little bit of an advantage. And usually that comes from a right of first refusal or an opportunity of right of first offer. And so in essence, we've been very selective on not winning any bidding wars. And what we like to do is really use those ROFRs and ROFOs to identify where we can match fund and make an accretive acquisition. And the disposition program is going to be match funded because our dividend is on top of taxable income. And so we have to 1031 exchange those or we'll have to issue a special dividend.

So we're right at taxable income. And so there is going to be a lot of opportunities for us to match fund into acquisitions. And use that -- those proceeds to go and find acquisitions. You've seen us do like the grocery-anchoreds, you've seen us do sites where we can add a grocery anchor. You've seen us do sites where we can entitle for multifamily. So I think our strike zone is much bigger than others that need sort of the perfect trophy in the perfect market. we've seen where we can acquire things and use our platform to create value, whether it's vacancy, whether it's redevelopment, we like the opportunity to use our platform to create value when we have the chance.

Rapid fire questions to end the session. What will same-store NOI growth be for the shopping center sector overall next year in 2027?

3.5.

And then will there be more or fewer of the same number of shopping center REITs a year from now?

Fewer privatizations.

One or more than one?

More than one.

More than one. Okay. All right. Thank you very much.

Thanks, guys.

Good morning, everybody. Thank you for coming. We're very happy to have Kimco here. We're going to start with Ross Cooper, President and CIO. We're going to do a quick overview, maybe not so quick, about 10 minutes. And then we're going to open it up to Q&A. I've got a list of questions as well. So I want to make this as interactive as possible.

And so with that, I'll turn it over to Ross. Thanks.

Thanks, R.J. Good morning, and thank you to the Raymond James team for having us. It's great to be here with everyone joining us today, both in the room and via webcast. This is our first time participating in this conference, and we're particularly focused on connecting with more generalist investors and bringing the Kimco story to a broader audience.

Kimco today owns and operates one of the largest and highest quality portfolios of grocery-anchored open-air shopping centers in the United States. Our properties are concentrated in dense suburban and infill markets and are anchored by leading supermarkets and essential retailers, the places consumers visit every week for food, health, value retail and services. We've built the portfolio around 2 principles: resilience through economic cycles and steady disciplined growth over time.

Let me start with resilience. Our centers are necessity-based. A meaningful portion of our rent comes from grocery-anchoreds and daily needs retailers. These are locations tied to recurring consumer behavior, not discretionary trips, which supports consistent traffic and stable occupancy. At the same time, this segment of retail real estate has seen very little new supply over the past decade.

In the infill markets where we operate, land is scarce, zoning approvals are difficult and construction costs remain elevated. As a result, well-located grocery-anchored centers are increasingly difficult to replicate. That combination, essential tenant demand and limited new supply supports high occupancy and durable rent growth.

In 2025, portfolio occupancy finished at 96.4%, matching an all-time high and small shop occupancy reached a record 92.7%. Financial strength reinforces that resilience. We ended the year with more than $2.2 billion of liquidity net debt-to-EBITDA of approximately 5.4x and an A-rated balance sheet across all 3 major rating agencies. That balance sheet gives us flexibility in both stable and more volatile environments.

Now turning to growth. In 2025, NAREIT funds from operations, our primary earnings metric, increased 6.7% year-over-year making us one of the only shopping center REITs to achieve over 5% FFO growth in 2024 and over 6% in 2025. Same-property NOI grew 3% for the year reflecting healthy underlying fundamentals in the portfolio. The majority of our earnings growth is internally generated, driven by leasing, contractual rent commencements and operating execution and complemented by disciplined capital allocation.

One of the clearest sources of visibility is our signed not opened pipeline. At year-end, we had $73 million of annual base rent under signed leases where stores are currently in build out. As those stores open over the next several years, that rent begins paying and flows directly into earnings. That represents embedded contractual growth already in place.

Leasing demand remains strong. In the fourth quarter alone, we signed 1.2 million square feet of new leases, including record anchor volume, while experiencing historically low levels of anchor vacates. Retailers continue to prioritize well-located grocery-anchored centers in dense markets.

In early 2024, we acquired RPT Realty, a complementary grocery-anchored open-air portfolio. Since closing, we've improved occupancy and integrated those assets into our operating platform, demonstrating the benefits of scale, national tenant relationships and disciplined execution.

Capital allocation is a key lever in enhancing long-term growth. We actively recycle capital by selling lower growth assets at attractive private market valuations and reinvesting into higher-yielding, higher-growth opportunities. For 2026, we have identified $300 million to $500 million of potential dispositions, primarily long-term ground leases and lower growth multi-tenant centers. We expect to redeploy that capital into shopping centers at cap rates roughly 100 basis points higher at the midpoint while acquiring assets with stronger long-term growth characteristics.

Our structured investment platform further differentiates us. We invest in preferred equity and loans tied to grocery-anchored real estate at yields around 9% while securing rights of first offer or refusal on the underlying properties. This provides attractive current income and creates a proprietary pipeline for future acquisitions when pricing is compelling.

In addition, we continue to unlock value within the existing portfolio through selective redevelopment and entitlement initiatives, including pad development, anchor repositioning and mixed-use densification where economics justify the investment. These projects are targeted, risk-adjusted and focused on enhancing long-term asset growth -- asset quality and growth. We also repurchased shares opportunistically when pricing implies a meaningful discount to underlying real estate value while maintaining disciplined leverage.

For 2026, our initial FFO guidance range represents 2% to 4% growth, supported by same-property NOI growth, continued rent commencements from our signed pipeline, disciplined capital recycling and selective investment across our redevelopment and structured platforms.

When you step back, Kimco today combines necessity-based cash flows, limited new supply, visible, embedded growth, disciplined capital allocation, embedded redevelopment optionality and an A- rated balance sheet. We believe that combination is difficult to replicate and positions the company to deliver steady, durable earnings growth across economic environments.

We appreciate the opportunity to share the story, and we look forward to your questions. Thank you.

Thanks, Ross. So I'm going to kick it off with a few questions, and then we'll open it up to everybody else. But Ross, you talked a lot about grocery anchored and that's certainly been a focus for Kimco over the years is increasing their exposure to grocery-anchored assets. Can you talk about the difference between, say, a grocery-anchored center and a more power center focused property? And why is grocery so important?

Yes, absolutely. And when you look at Kimco, I mean we are diversified in terms of our platform. So we open -- we own all sorts of open-air retail environments, whether it be grocery-anchored neighborhood centers, bigger box power as well as lifestyle and more specialty hybrid. But the grocery-anchored shopping center is clearly the most in demand today for investors. And when you think about what that brings to the table, you have recurring trips. When you think about the valuation that investors are looking to pay for shopping centers, the cap rate compression that comes from a grocery component within the shopping center is clear and tangible.

So we like to curate a shopping center that has a co-tenancy or a tenant mix that is going to bring traffic and consumers to the asset at all points of the day and into the evening. So you have that morning, breakfast, fitness into the grocery anchor that is an all-day occurring trip for consumers as well as restaurants, F&B and service-oriented retailers. You've seen a lot of medical and other services that have continued to showcase in our centers and then trying to get a little bit of that entertainment mixed in where appropriate so that again, you have customers that are coming to the asset morning, afternoon and into the evening.

So back in -- when we were -- when I was covering the sector back in 2017, 2018, 2019, very difficult, a lot of negative headlines about retailers that were leaving bricks-and-mortar, moving to online then all of a sudden, we have COVID, there's a huge spike in demand for your local grocery-anchored shopping centers. And then we've seen a tremendous amount of retail leasing over the past several years since COVID, hence the big signed but not open pipeline. Can you talk about sort of what you saw during COVID and sort of the lessons learned in terms of what retailers are looking for and the need for a physical location?

Yes, absolutely. So what shopping centers that we own in the primarily first ring suburbs bring is that we are infill locations that are located within where the population exists. And to your point, pre-COVID, we had seen very strong shopping centers that had strong occupancy was well visited and whatnot.

But the headlines and the sentiment was that e-commerce was overtaking the physical bricks-and-mortar. What we actually have seen is that the omnichannel approach of having the optionality for the consumer to get their goods either in store or delivered is what the consumer is really looking for. And frankly, the retailer is doing everything in their power to bring you to the shopping center because clearly, the most valuable and profitable transaction for the retailer is in store.

So when the pandemic hit, what ultimately happened was the whole narrative around the retail apocalypse really went away. And what became clear was the value proposition of physical bricks-and-mortar retailer where the consumer can go to the store, whether they're buying the asset in the store, whether they're ordering it online and picking up in the store, we rolled out curbside pickup which was a really touchless, convenient way for a customer to get their goods in a very uncertain time during the early stage of the pandemic.

It showcased the power and the utility of our product. And so the retailers who prior to the pandemic when interest rates were really low and capital was freely flowing, we're investing a lot of their incremental dollar into building up their e-commerce platform, and that really reversed so that the retailers were putting a tremendous amount of investment back into their store, and they've seen the benefits of that. Our retailers are extremely healthy today. They continue to expand at rapid and record paces.

And as I mentioned in the prepared remarks, the amount of new supply in this environment is really muted. When you think about what type of rent levels you would need to achieve in order to justify new development for a developer, coupled with the increased cost of financing over the last several years, labor costs, construction costs, it is very challenging to make a new shopping center pencil from a ground-up perspective which has really put the supply-demand fundamentals and dynamics very much in the favor of the landlord.

And so Ross, you just mentioned very healthy tenants, right? We've seen historically low levels of bad debt or tenant fallout over the past couple of years. Despite some of the headlines where all of a sudden, you hear 1 or 2 retailers that's going out of business, which is really just the normal cost of doing business in retail. Can you talk about the types of tenants or specific tenants that you guys are signing leases with, where is the bulk of the demand coming from?

Yes, it's exactly to your point. I mean, there's a constant evolution in retail. So to have a little bit of churn is actually normal and extremely healthy. We have a portfolio that has a very high occupancy level. And what happens is, in any given year, and particularly now, we're seeing all-time high retention rates. So 90% of the tenants that roll when their lease is coming due, either exercising a tenant option that they have at their disposal or they're renewing their lease in the current space.

So when 7% or 8% of your rent roll actually rolls in any given year, but 90% are staying in place, you really only have the opportunity to mark-to-market anywhere from 2% to 3% of that particular rent roll and bring it to the current market rent. So we have a very stable portfolio, very stable environment that we're in today as it relates to retail. And the retailers themselves based upon the dynamic that I just mentioned with virtually no new supply, their only real opportunity to find growth is a little bit of churn. If you get a bankruptcy or a tenant that's struggling that you can roll out and bring in a new tenant, better credit, better traffic generation. So that is a very healthy dynamic that we have today. And we're seeing it across the board in terms of all tenant categories.

Grocery continues to expand. And when you think about the grocery environment in particular, there's different categories that are all expanding at different paces. But we're seeing that growth across the board, whether it be the traditional grocer, like a Publix here in Florida, you think about the discount grocer like the Aldis and the Lidls that are growing pretty significantly, not to mention, of course, the Walmarts that have a very large share of grocery. You have the organics whether it be a Whole Foods that continues to expand, Trader Joe's, Sprouts Farmers Market, and then the ethnic grocers are really coming on strong. All different demographics, whether it's the Asian Hispanic, we're seeing the Indian grocers continuing to expand.

So grocery is a really important growth retailer in our industry, but then you have fitness, health and wellness and beauty, which is really important to the consumer today. And certainly, the upcoming demographic and the younger crowd, very focused on appearance and health. Sporting goods, DICK's is coming out with their House of Sport that you're seeing pop up in a variety of locations as well as all different categories of furniture off price, of course, TJ Maxx and TJX in their 5 banners, Ross in their multiple banners, Burlington, we're seeing a tremendous amount of growth from that.

And then the services especially when you think about the small shops, which we categorize as anything that's 10,000 square feet or below, you're seeing over 70% of our new leases in small shops from service-oriented retailers, whether it be food and beverage, F&B, more of the boutique fitness as well as fast casual restaurants and whatnot. There's a really strong pipeline and growth trajectory really across the board.

And so you just touched on it on the small shop side and maybe to slice it a different way. Obviously, we can read the headlines for some of these publicly traded retailers. But can you talk about the tenant health of some of your smaller business operators, the real mom-and-pop tenants, the nail salons, the small restaurants and what trends you're seeing there?

Yes. The really interesting change, I would say, over the last 5 to 10 years in our industry is you mentioned mom-and-pop. And mom-and-pop has become somewhat of a misnomer or even an obsolete category because what we've seen is that on the small shops, it's actually a lot of the national credit tenants that are opening in those smaller locations. So we actually have a slide that we've put into our investor presentation, which I think is a really powerful indication of who's expanding. 100% of our top 50 small shop tenants. So again, any retailer that's smaller than 10,000 square feet, are national in nature. So even that traditional mom-and-pop pizzeria, it's now a national franchise chain that is expanding.

When you think about the bank branches that continue to grow in the ATMs and whatnot, the Starbucks, the fast casual restaurants, it really is very much national recognized names as opposed to the traditional mom-and-pop 1 or 2 location type operators. So it's a very healthy dynamic. And that's why we've seen our small shop occupancy achieving all-time highs at the end of 2025, and we believe that there's still some room to run there.

Great. This is a good time to pause and see if we have questions.

Sure. Let me just repeat the question. What's the outlook for new rents, i.e., leasing spreads? And then how do you balance that between the outlook for capital investment CapEx that you're going to be putting into the new leases?

Yes. Any -- it's a great question. Any deal that we look at on the leasing front, we're looking at it from a net effective rent perspective. So we're very much factoring in the costs associated with doing those deals. Again, based upon the supply/demand dynamics that I outlined, we have a lot of leverage and pricing power within -- the retailers that we're negotiating leases with. So when you look at the leasing spreads, which we post every quarter as part of our earnings, we continue to see really strong positive leasing spreads double-digit in nature, whether it be new leases, renewals as well as options.

Across the board, we've had a really strong run of positive leasing spreads, particularly when factoring in the net effective rents. And again, we don't see that dynamic changing just based upon the retention rates that we're seeing, the lack of new supply and the demand that our retailers have for our space.

Additional questions?

And so to repeat the question, how do you think about the capital allocation decision between going out and acquiring new assets versus redeveloping assets. And I'd also throw a third in there about stock buybacks. And so how do you make that decision? Talk us -- walk us through the decision tree there?

Yes. Capital allocation is a very important part of our strategy and our everyday decision-making. Our job as an organization is clearly to invest our capital at the widest spread to our cost as possible. So when you think about our investment strategy, we do look at it on a blended basis of all the different pillars of investment that we have, whether it be acquisition of new shopping centers, redevelopments, our structured investment program, which I mentioned, where we're putting out preferred equity and mezzanine financing as well as stock buybacks. So they are all a part of that allocation strategy.

Today, the highest return on our capital that we can achieve is one, just straight leasing. That is the best return on our capital that we can make. But when you look at the redevelopments that we've been able to achieve those are blending in the sort of low double-digit incremental returns, stock buybacks, the stock price fluctuates and the return that we can achieve on buying back our own stock is a bit of a moving target. But when we do see significant dislocation as we saw in the fourth quarter just of 2025 and even the very early stages of 2026, we will take advantage of that when we believe that the dislocation is significantly wider than it should be.

Acquisitions are always going to be a part of our strategy. It is extremely competitive in the environment today. There's a tremendous amount of capital and new capital formations institutions that are really excited about owning Open Air, primarily grocery-anchored shopping centers. which have really pushed cap rates to significant lows. And therefore, it's been a bit more challenging to acquire assets in the open market. But we have had a lot of success, particularly when you think about the last 5 years, we've acquired 2 public companies using our stock as currency on a relative valuation, Weingarten Realty was a Texas-based company that we were able to acquire sort of early in the pandemic when there was a significant amount of dislocation.

And then RPT Realty, which I mentioned that we acquired at the beginning of 2024 during a bit of an uncertain time in the market. We have a strong level of conviction in open-air retail, and we were able to take advantage of that.

So with our strategy this year that I mentioned the $300 million to $500 million of dispositions, there will be a healthy amount of taxable gain associated from those dispositions. And so we know that acquisitions will be a part of our strategy as we'll have to utilize some 1031 exchanges to defer some of the tax gains that we're going to achieve.

So we're -- long-winded way of answering question, there is going to be a bit of each of those different segments in our capital allocation strategy. But when you blend it all together, there's a pretty healthy spread between where we're investing capital versus where the cost of that capital is.

Additional questions?

Ross, before I think we wrap up, obviously, for a more generalist focused conference, it's important to talk about the dividend. How does the Board management think about the dividends? Maybe put it in the context of the large signed but not open pipeline and how that comes online over the next couple of years? And what kind of payout ratios does the Board and the company target?

Yes, absolutely. I mean the dividend is clearly a critical part of the investor and the rationale for why you buy Kimco. We have an extremely healthy and well-protected dividend both from an AFFO and an FFO payout ratio. We're very focused on those metrics, as is the Board and making sure that we have a tremendous amount of cushion.

Now as a REIT, we are required to distribute over 90% of our taxable income to the investors. And when you think about where we're at right now, we're more or less at very close to 100% of taxable income that gets dividend out to the investors. So you've seen a very healthy and consistent growth in that dividend year-over-year. And that is expected and anticipated to continue as taxable income continues to grow as will the dividend will grow in lockstep.

You asked about the SNO pipeline. And one thing that I want to mention is while I talked about the $73 million of the snow pipeline, which is the signed but not open, that will be coming online throughout 2026 and into 2027. The important factor is when we quote $73 million, that is just base rents. What you're also not including in that that's factored on or layered on top of that is all of the pass-throughs, the triple nets the common area and maintenance that's being reimbursed, the real estate taxes, the insurance.

So you really do have a pretty significant effect of not just that $73 million of rent, but then the pass-throughs that come on top of it. So it's really a significant needle mover. And when we budget and we put out our guidance for the year, that's indicating what we anticipate coming online in that particular year. we are generally taking a pretty conservative approach of what is indicated within the lease that is signed from a timing perspective. But our job and there are multiple people throughout the organization that are focused on how do we compress that time frame. Because every day that we get a tenant open and paying rent and paying those pass-throughs sooner goes directly to the bottom line.

So in 2025, we were actually able to achieve 15% higher in terms of what we actually were able to achieve from that snow pipeline versus the guidance. And that's what we're anticipating or at least hoping to achieve for 2026. So you put out a number that is very achievable, and then our job is to go out and beat that.

Excellent. And before we conclude any additional questions?

Yes. Sure. So the question is, which geographic markets are you seeing the most growth and demand and whether or not you think that's sustainable?

Yes. It's another good question.

And I'm sorry, Ross, but you probably put that in context with the lack of new supply, right?

Absolutely. I think another nice part about the Kimco portfolio and strategy that is a bit of a differentiator from some of the peer group is that we are geographically diversified. So we own assets in the top 20, 25 major MSAs around the country, that's coast to coast. And so from our perspective, there's different moments in time and opportunities where it makes sense to invest in certain geographic locations over others.

So just going back even over the last 5 years, when we acquired Weingarten Realty, which I mentioned early in the pandemic in 2021 that was a portfolio that was heavily based in the Sunbelt. And if you recall, during the early stage of the pandemic, I know we're all want to put that in our rearview and not necessarily think back to it.

But what was happening at that point in time was that the Sunbelt was clearly recovering and growing at a pace that was significantly faster than other parts of the country. So when we acquired Weingarten while we were so convicted in that portfolio and that company was because of the assets that they own throughout Texas and Phoenix and the Southeast Florida, big presence here in Orlando and Tampa. And that was a really strong trade for us. what we started to see was then every company in every asset class, not just open air retail was buying anything that they could in the Sunbelt. And it got really frothy and overheated. And then we went and we bought a high-quality portfolio on Long Island in New York, where I think a lot of the investor sentiment was a little bit frozen for the time when there was some uncertainty during the pandemic.

When you think about the RPT portfolio, that had a very strong geographic concentration in Florida and Boston, but there were also some really strong assets in the Midwest Columbus, Ohio, suburban Detroit, St. Louis, Minneapolis, that were performing exceptionally well. And so we felt really good about buying a portfolio of assets that were located in that geographic part of the country when I think investors were still maybe not as focused on the Midwest. And now what you've seen in the last couple of years is a lot of our peers have gone pretty aggressively back into the Midwest.

So long-winded way of answering your question, but I would say that there is growth opportunities in all these pockets, and we try to just use our national operating platform to pick our spots when maybe there's a little bit of dislocation or pricing arbitrage. Just to add on to that example, when you think about the acquisitions that Kimco made in 2025.

One of the acquisitions was a buyout of one of our JV partners in Hillsboro, Oregon, which is the first ring suburb of Portland. Now I think a lot of institutional investors looked at Portland and parts of the Pacific Northwest and had some concerns based upon headlines and maybe not as strong a recovery from the pandemic in that part of the country versus others. But when you actually take a step back and think about what's happening in those markets, Portland, in particular, while the downtown urban core might not have recovered as swiftly as some of the other downtowns throughout the country.

The first ring suburbs, in many cases, has been the main beneficiary of that. So to acquire an asset like we did that has a strong performing Safeway and a strong performing Trader Joe's, dual grocery-anchored shopping center at what we felt was a real discount to where a similar asset would trade in other major markets throughout the U.S., that was a pretty attractive acquisition opportunity for us.

And then just in December of this past year, we acquired an asset that was a right of first refusal that we had on one of our pref equity investments. Our borrower was going to sell the asset in Queens, New York, very dense infill, grocery anchored with the who's who of small shop retailers Chick-fil-A, Chipotle, Starbucks, Medical, and they marketed that asset at a point in time where there was a lot of uncertainty in New York City, particularly with the Mayoral election that was going on. And we felt that we were able to buy that asset at a moment in time where there was some real price dislocation. So we see a tremendous amount of growth opportunity throughout the country. It's a matter of picking our spots at the right point in time.

That was great. Thanks, Ross, and thanks to Kimco for joining the conference. And we have a breakout session immediately following this. Thank you, everybody.

Hello, everyone, and thank you for joining the Kimco Realty's Fourth Quarter Earnings Call. My name is Claire, and I will be coordinating your call today. [Operator Instructions]

I will now hand over to David Bujnicki, Senior Vice President of Investor Relations and Strategy for Kimco Realty. Please go ahead.

Good morning, and thank you for joining Kimco's quarterly 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; Dave 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 our quarterly supplemental financial information on the Kimco Investor Relations website. Also in the event our call was to incur technical difficulties, we'll try to resolve as quickly as possible, and if the need arises, we'll post additional information to our IR website.

Good morning, and thanks for joining us today. We appreciate your interest in Kimco Realty. Today, I'll highlight what we delivered in 2025 and how we're positioned to drive value in 2026. Dave Jamieson will provide additional color on our leasing activity. Ross will then discuss the transaction market, and Glenn will wrap up with a review of our key financial metrics and guidance.

2025 was another banner year for Kimco. We delivered NAREIT FFO per share growth of 6.7%, making us one of the only shopping center REITs to achieve over 5% FFO growth in 2024 and over 6% in 2025. We also earned a credit rating upgrade to A- from Moody's during the fourth quarter, reflecting our disciplined approach to the balance sheet.

Kimco is now one of only 13 REITs in the entire REIT industry with multiple A- A3 ratings from the 3 rating agencies, a notable milestone in our transformation into one of the lower levered REITs while still accelerating earnings growth. This is a rare accomplishment in the REIT world, and it speaks to the strength of our team, our portfolio and our execution.

Operationally, our performance was equally strong, achieving a number of record milestones, including overall portfolio occupancy of 96.4% matching our all-time high. Our highest quarterly new leasing volume in more than a decade with 1.2 million square feet used, a 90 basis point sequential increase in anchor occupancy, our strongest quarterly gain on record, a new all-time high in small shop occupancy of 92.7%, a signed but not open pipeline reaching a record 390 basis points, representing $73 million of future annual base rent. Enhancing our portfolio quality by expanding our annual base rent from grocery-anchored centers by converting 9 non-grocery sites to new grocery-anchored locations in 2025.

In terms of same-site NOI growth, we delivered 3% for the full year. These achievements highlight one of Kimco's key advantages. Our ability to create value through our platform, not only through capital allocation but through consistent hands-on execution at the asset level. A great case study is the portfolio we acquired from RPC. At acquisition, the occupancy gap between RPC and Kimco legacy portfolio was 120 basis points. Since then, we've increased [ RPT ] occupancy to 96.2% at the end of 2020 file, narrowing the gap to a mere 20 basis points, or approximately 30,000 additional square feet to match Kimco's occupancy level.

The key driver has been small shop leasing. Our [ RPT ] small shop occupancy improved 370 basis points since the merger to 92.1%. Further, our operating momentum translated into real cash generation. We produced over $165 million of free cash flow after the payment of all dividends and leasing costs in 2025, strengthening our ability to self-fund growth while supporting a well-covered and growing dividend. We also paired that performance with a disciplined capital allocation, repurchasing shares when our valuation reached a meaningful discount to net asset value. Our portfolio and balance sheet are cycle tested and we're positioned to keep executing through any environment.

As we enter 2026, we're encouraged by the continued fundamental strength of the shopping center sector. Importantly, there is almost no supply coming online, which combined with a resilient consumer and a robust pipeline of deals, driven by healthy tenant demand, it gives us confidence we can push occupancy and same [ step ] NOI higher. This is why we believe Kimco offers investors a compelling opportunity, solid, robust operating fundamentals, a well-covered dividend, durable earnings growth and one of the strongest balance sheets in the REIT sector with a very attractive valuation based on our current multiple.

As Ross will touch on, our high-quality open-air retail continues to attract capital. While public REIT sentiment has been uneven, private market pricing remains constructive, and that disconnect is creating opportunities. In 2026, we are focused on closing the value gap between Kimco's public market valuations and private market prices.

Our strategy for 2026 is built around the following priorities. First, we intend to be proactive and aggressive in recycling capital that is both accretive and enhances the overall long-term growth profile. We plan to take individual assets and portfolios to market and sell at attractive private market cap rates, redeploying the proceeds into our highest return opportunities, including further potential share repurchases that currently offer roughly a 9% FFO yield.

Recent transactions show shopping center REITs go private at cap rates in the mid-5s to low 6s range, and demand for high-quality assets like ours remain strong. Based on what we're seeing, we believe we can sell assets across our portfolio at a blended cap rate in the 5% to 6% range, which compares favorably to our implied cap rate in the low to mid-7% range, representing a clear value creation opportunity. Where appropriate, we will continue to utilize 1031 exchanges to mitigate the tax impact from these sales. To the extent gains cannot be fully deferred, it's quite possible that we may have to distribute a special dividend at year-end.

Second, we are flattening our organization and modernizing our operating platform to move faster and operate more efficiently, driving higher cash flow, improving margins and unlocking the full advantage of our scale through better coordination, clear ownership and faster execution. At the midpoint, our plan removes $3 million of G&A expense this year, while still investing in our people and platform to keep raising the level of execution.

Our priorities position us well for 2026. We are entering the year with strong operating momentum, the largest signed but not open pipeline in Kimco's history, providing clear visibility into future rent commencements and embedded NOI growth, and a balance sheet designed for flexibility. Our focus is on disciplined execution, and we are energized by the opportunity ahead. With the strength of our team, the quality of our portfolio and the financial capacity to act decisively, we are confident in our ability to outperform and unlock even greater long-term value.

Dave?

Thank you, Conor. I'll start by touching on our fourth quarter leasing highlights, followed by sharing some additional perspective on 2026.

In the fourth quarter, as Conor shared, we achieved a number of record leasing milestones punctuated by 1.2 million square feet of new leasing volume. Other notable accomplishments included the signing of 30 anchor leases, which are the most we've ever completed. We also saw the lowest volume of vacates in over 6 years, which included only 3 anchor leases vacating. This performance reflects the robust and deep demand that exists with activity spanning grocery, off-price retailers, fitness, furniture, in general merchandise sectors and also showcasing that retailers when given the chance to relocate, are choosing to remain at well located, high-traffic, open-air centers at market rents to further support their business strategies.

The impressive deal volume has helped grow the [ snow ] pipeline to a record 390 basis points, representing $73 million of annual base rent. This is an increase of $17 million, or 30%, higher than the prior year's level. Our [ construction antenna ] coordination teams prioritize cash flow growth and are committed to accelerating rent commencements by working closely with retail partners and municipalities to streamline workflows, and address challenges early ensuring timely openings. This effort enabled us to recognize $31 million in rent commencements during 2025, a figure that exceeded our initial budget by 15%.

Our success in 2025 was also driven by new approaches to our targeted leasing strategy, which is best exemplified by the package deals. During the year, we completed 10 packaged deals totaling nearly 60 leases and representing over 20% of the total GLA for all new leases signed in 2025. The most recent example of this is in the fourth quarter package deal with [indiscernible] in which we signed 6 leases that were completed within 30 days from approval to execution. Both sides motivated by a shared goal to efficiently expand the partnership work collaboratively, with a residual benefit that would expedite the store opening strategy for [ Ross ] while allowing us to increase our economic occupancy over time.

A key initiative in 2026 is to further expand these efforts and fully optimize our advantages of scale. This includes shifting away from the regional organizational framework to a functionally aligned operating model, enabling us to drive further operating efficiencies. Most importantly, this change will not result in any incremental cost and is expected to drive additional savings over time. Nearly 6 weeks into 2026, we continue to see last year's momentum carry forward, supported by steady demand and limited new supply. Our tenant credit profile is as strong as it's been in several years, and while we budget for the usual first quarter seasonal softness, we do not anticipate it will materially impact performance in 2026.

In terms of our expiring annual base rent we have resolved, or have a deal on the work, for 87% of expiring ABR in the first half of 2026, which gives us confidence that our retention rate should remain around that 90% level. In addition of the 47 naked anchor leases, which are those that are expiring without any renewal options in 2026, 98% of our budgeted assumptions are resolved with mark-to-market spreads around 30%. Importantly, most of our budgeted minimum rent for 2026 is in place with 90% already cash flowing, and another 8% driven by rent commencements from the SNO pipeline and budgeted renewals and options.

All told, this leaves only 2% of the budget as speculative, which is inclusive of new leases, additional renewals and options. Provided there is no major bankruptcy activity in early '26, and no significant macro disruptions, we're confident in our budget and see the potential to outperform based on our historical success with the snow deliveries and retention levels. And while we do not provide a guidance for occupancy, we're optimistic that we can drive it higher than the 2025 year-end level. The same holds true for our SNO pipeline. Given the elevated pace of leasing, we project it to grow further before beginning to compress through the end of the year and into 2027. This bodes well for the cash flow growth over the coming years.

Now I'll turn it over to Ross.

Thank you, Dave. I'll begin with a brief recap of fourth quarter capital allocation, then turn to our 2026 expectations.

The fourth quarter was active as we continued to execute on our strategy and capital plan. This was highlighted by the conversion of another structured investment with the acquisition of a common member's interest in shops at 82nd Street in Jackson Heights, Queens, New York. Shops at 82nd is located in an exceptionally dense infill market and is a grocery-anchored center with a strong tenant roster, including Target, Chick-fil-A, Chipotle, Starbucks and Northwell Medical. Having initially invested preferred equity in this asset in 2021, we exercised our right of first offer/refusal, which culminated in buying our partner's interest and retaining the property in Kimco's long-term portfolio. We utilized this property to complete a 1031 exchange deferring tax gains from the continued sale of long-term flat ground leases from the portfolio.

This dovetailed well with our capital recycling strategy that we laid out last year. Selling lower-growth assets at compelling private market cap rates, and reinvesting into higher growth, better yielding investments. We made meaningful progress on that initiative during 2025. As we enter 2026, competition for open-air retail has become increasingly intense, making our ability to source acquisition opportunities from our existing JV platform and structured investment program, a meaningful differentiator for Kimco. This is critically important as we continue to see new entrants into this asset class, with investors and operators trying to find ways to position themselves to win marketed deals. This is leading to tighter return hurdles and forcing us to be more selective to achieve acceptable yields.

Our strategy and having our foot in the door on deal flow allows us to avoid a crowded bidding tent and find unique opportunities where we can invest at a more favorable spread. We are excited by our ability to continue recycling capital accretively, and build on the momentum that started to ramp in 2025. To that point, we have identified a disposition pipeline of $300 million to $500 million, primarily consisting of flat ground leases, lower growth multi-tenant centers and nonincome-producing land and entitlements.

We're also further evaluating components of our multifamily program as potential opportunities to further monetize assets at low cap rates and crystallize value. We expect the blended cap rates from sales to be between 5% to 6%. Utilizing this low-cost source of capital, we anticipate acquiring a similar amount of shopping centers at cap rates roughly a 100 basis points higher at the midpoint. Importantly, these acquisitions not only provide higher going in yields, but we also expect, on average, approximately 200 basis points of incremental compounded annual growth, creating a higher growing portfolio that should enhance same-site NOI and FFO growth as we recycle capital over time.

As we did last year, we plan to utilize 1031 exchanges and other tax strategies to help defer gains from asset sales. The other component of our investment strategy is a modest expansion of the structured investment book with net growth of approximately $100 million at the midpoint with a blended average yield around 9%. This is a capital allocation strategy that we are confident we can achieve in 2026, and importantly build out in the recurring strategy to enhance the composition of the portfolio while reinvesting in higher growth and quality. We are off to a great start to the year with several dispositions already closed, as well as a few structured investment deals funded in January. The pipeline is active in building and the team is excited and motivated.

Now I'll pass it off to Glenn for the full year results and our 2026 financial outlook and expectations.

Thanks, Ross, and good morning. As the team has shared, Kimco delivered a strong finish to 2025, driven by continued cash flow growth, disciplined capital allocation and the strength of our open-air grocery-anchored portfolio in a supply-constrained environment.

Starting with the fourth quarter, funds from operations, or FFO, was $294.3 million or $0.44 per diluted share, representing a 4.8% increase versus the prior year period. This performance was driven by higher pro rata NOI, primarily reflecting greater minimum rents. For the full year, FFO was approximately $1.2 billion or $1.76 per diluted share, representing a 6.7% per share increase compared to 2024, driven by the embedded growth characteristics of our portfolio, highlighted by an increase of 4.9% from pro rata NOI.

We also delivered same-property NOI growth of 3% for both the quarter and the full year, supported by sustained demand for our space and consistent rent growth. Credit loss was 74 basis points for the full year at the low end of our range, underscoring the solid tenant credit profile across the portfolio.

Turning to the balance sheet. We ended the year with strong liquidity and significant financial flexibility. This is demonstrated by over $2.2 billion of immediate liquidity, including $213 million of cash and full availability on our $2 billion unsecured revolving credit facility. We also maintained our solid balance sheet with consolidated net debt to EBITDA of 5.4x, and on a look-through basis, including pro rata JV debt and preferred stock outstanding at 5.7x.

During the quarter, as Conor mentioned, we received an A3 unsecured debt rating from Moody's, which places Kimco in a select group of REITs with A- level ratings across the 3 major rating agencies. This milestone reflects the strength of our portfolio, a conservative leverage profile, consistent execution, and a significant financial capacity and flexibility. We also added another option to our funding tool kit by establishing a commercial paper program, which we expect to use opportunistically as part of our overall financing strategy.

In terms of capital allocation, we repurchased 3.1 million common shares during the fourth quarter at a weighted average price of $19.96 per share. For the full year 2025, we repurchased 6.1 million common shares at an average price of $19.79. We view buybacks as an important lever when our valuation reflects a meaningful discount for the value of our real estate and our internal growth profile.

Looking ahead, Kimco enters 2026 with considerable momentum and a foundation for continued strong performance. Our 2026 outlook reflects another year of healthy earnings progression. Our initial 2026 FFO per share range is $1.80 to $1.84, representing a 2.3% to 4.5% growth over 2025. This outlook reflects our expectation for continued demand across the portfolio, supported by same-property NOI growth of 2.5% to 3.5%. With respect to same-property NOI growth, we expect the first quarter to mark the low point in 2026 as we lap prior year rental income from tenants such as [ Joann's, Party City ], Rite Aid and Big Lots.

Importantly, we see a clear and accelerating growth profile emerging thereafter with each successive quarter benefiting from a rising pace of rent commencement from our SNO pipeline, providing strong visibility through the balance of the year. As Dave Jamieson noted, our tenant credit profile is as strong as it's been in many years, and we don't expect that to change materially in 2026. That said, we believe it's prudent to begin the year with a credit loss assumption of 75 to 100 basis points, which is consistent with historic norms and aligned with our approach over the last several years.

Other financial assumptions in the outlook include lease termination income between $7 million to $15 million; noncash GAAP revenue, inclusive of straight-line rent and above and below market rent amortization of $45 million to $50 million; and net mortgage and financing income, which continues to be an important contributor to our earnings profile of $45 million to $55 million.

On the expense side, we are projecting consolidated G&A between $128 million to $132 million, reflecting ongoing cost discipline and consolidated interest expense plus preferred dividends of $370 million to $377 million. With respect to capital deployment, we will continue to prioritize high return opportunities that enhance long-term growth. For 2026, we anticipate total development and redevelopment investment between $100 million to $150 million, capitalized lease related and maintenance spending of $275 million to $300 million to support strong occupancy growth and tenancy momentum, net new structure investment activity between $75 million to $125 million, with going in yields in the 8% to 10% range, a net neutral acquisition and disposition activity with a positive spread on reinvestment of proceeds.

In terms of the balance sheet, we have over $800 million of consolidated maturities at an average effective rate of approximately 2.65% in 2026. While these low coupon maturities represent a known headwind, we view them as manageable, and we are confident in our ability to address them proactively and opportunistically, supported by our A- level ratings and balance sheet strength.

In summary, Kimco enters 2026 with confidence and a positive outlook. Our portfolio continues to generate growing cash flow, supported by embedded rent commencements, ongoing occupancy upside and robust leasing activity. Coupled with a fortified balance sheet, prudent capital allocation and multiple levers for value creation, we believe we are well positioned to deliver another year of sustainable growth and profitability, while continuing to provide an attractive dividend yield.

Before we move on to Q&A, I want to recognize Paul [ Westberg ], Kimco's Chief Accounting Officer, who plans to retire at the end of March. For the past 23 years, Paul has been a tremendous partner and leader, and we're deeply grateful for his many years of service and contributions to the organization.

At the same time, Kathleen Thayer will step into the role of Executive Vice President, Treasurer and Chief Accounting Officer on April 1. With nearly 2 decades at Kimco, and deep institutional and technical expertise, Kathleen's appointment reflects the depth of our team and makes for a seamless transition.

And with that, we'll open the call for questions.

[Operator Instructions] Our first question comes from Alexander Goldfarb from Piper Sandler.

I guess I'd say I'm here with Greg McGinniss, but -- so question for you. You spoke about the potential for a special dividend depending on the level of dispositions and recycling potential. But also, Conor, you've been pretty clear that you want the company to be a top quartile earnings grower and certainly, I would think, a special dividend would imply that you're losing earnings relative to investing. So can you just walk more through that and how you're balancing the desire to have Kimco be a top earners grower versus the clear disconnect between where the stock is and the underlying asset value?

We're happy to. It's a good question, Alex. I think when you look at where our taxable income is and where our dividend level is, we need to be mindful of the fact that as we really work to close the gap between where our public valuation is currently versus where the private valuation is, we think there's multi steps we can do to do that. And one of the biggest ones is to really take assets to market, as I mentioned earlier, and really showcase the disconnect between our implied cap rate and where those assets are trading in the market today.

As you probably are aware, we do not really have assets that have embedded losses. And when we look across the portfolio, most of our basis is quite low on our assets. So that will trigger a quite sizable taxable gain on any assets we sell. So we are very focused on 1031 exchanges to shield that taxable gain. We have been successful in doing that thus far.

That being said, with the sizable disposition program that Ross outlined we do wanted -- we do thought it was important to showcase that if we are not able to shield those gains, it will trigger a special dividend. But our mission and our focus is obviously is to do 1031 exchanges to shield those taxable gains.

Our next question comes from Michael Goldsmith from UBS.

My question is on capital allocation. You clearly have no shortage of options on [indiscernible] to allocate capital. You repurchase shares. You're acquiring assets. You have the preferred lending book [indiscernible]. At the same time, you've identified a pipeline of funding sources such as ground leases and multifamily.

So, I guess, how should we think about what are the most accretive opportunities? Where is the greatest upside or accretion? And then, I guess, why not accelerate some of these actions and take advantage of those things?

Sure. It's a good question, Michael. So the final point of why not accelerate it? We are accelerating it year-over-year. I think Ross made that point that we're actually taking more to market this year than we did last year.

A number of items restrict in terms of how big of a program we can take to market at any given time. Some of the ground leases need to be separately parceled and make sure that they're on a separate tax parcel so we can sell them into the triple net, or 1031 exchange market to get the best pricing. The other piece of it is, I think when you look at where our capital allocation priorities are, we still start with leasing as number one. That's, really obviously, where you see the best returns. We're continuing to showcase that there is accelerating demand for our product. We're taking market share as we're reaching out and using our platform as well as our relationships to really take, I would say, the majority of deals that are being done in the open market, and making sure that the retailer thinks of Kimco first as really the partner of choice when they look to roll out new store opening plans.

Second to that, we look at the redevelopment opportunity set that we have. We did grow it year-over-year. So again, we're scaling it. We continue to see that those return on cost blend to double digits. And we continue to think that's a great use of capital because typically, not only are you getting a double-digit return on that redevelopment, but you're getting also a halo effect on the rest of the shopping center. Because, in essence, you're bringing something new and vibrant to an asset that has a halo effect on the residual shops that may be vacant, or may have opportunity for mark-to-market.

Ross has outlined, obviously, the potential growth of the structured investment book. Again, we really like that opportunity set. We think it's a nice tool in the toolbox to get our foot in the door with [ ROFO ] and [ ROFR ] on assets we want to acquire. As we showcased in 2025, that's really the mission of that book is getting paid to wait. And those are averaging double digits.

And then you look at, obviously, on the core acquisition piece. That's where we're match funding accretively, our flat ground leases that we can sell in the mid- to low 5s. We're looking at the multifamily opportunity set that we have as well, which would trade in the mid- to low 5s. And grocery-anchored shopping centers with good growth. We think we can find our fair share of those with, as Ross outlined, potentially with the 6 cap handle with some really strong compound in annual growth.

So that's really the capital allocation menu that we have and where we're prioritizing. We're coming into 2026 in really good shape. I think we've got a lot of momentum, and we're very, very focused on showcasing what a compelling investment can go is today.

Yes, I think that was a great overview. I would just quickly add. I mean there is a bit of a push and pull to every component of the capital allocation strategy. So we really do look at our investment strategy somewhat holistically as a blend, and we feel really good about the guide and the baseline that we put out to start the year in terms of blending together the amount of acquisitions, dispositions, redevelopments structured. And so at its core, at the end of the day, when we blend it together, we feel good about the accretion that we can obtain.

And again, we're thinking about multiple different objectives through every one of these strategies. Enhancing growth, both same-site and FFO, enhancing our grocery component of exposure, looking at the impact on watchlist tenancies. So we're taking into consideration all of these factors in addition to, of course, the tax considerations, which Conor allocated or identified earlier.

And the final piece is obviously the share buyback opportunity. I think we've showcased in 2025 that we can make it a meaningful piece of our capital allocation strategy and use it opportunistically. And when Kimco is selling at values that we think are extraordinarily compelling we have the balance sheet, the free cash flow, the opportunity set to take advantage of that. And we continue to focus and think 2026 is going to be a year where we'll continue to focus on that opportunity.

Our next question comes from Cooper Clark from Wells Fargo.

On the acquisitions guidance, I know you mentioned earlier about opportunities coming from your JVs and structured investments. But historically, you've also had success buying larger portfolios and integrating them into your platform. Just curious how the opportunity set looks like today in terms of larger portfolio deals rather than one-off transactions? And any considerations we should be thinking about with respect to pricing between portfolio sales and one-off deals?

Sure. And that's always going to be part of our acquisition strategy. As we indicated earlier, it is a bit challenging given where our cost of capital is compared to the private markets. And with financing readily available at pretty attractive rates, it has brought in a whole host of private investors and competition.

That being said, we do believe that we've thrived on some larger M&A and portfolio acquisitions in the past, and that will always be part of the playbook and the consideration. For the moment. We feel really good about, as I mentioned, some of the foot in the door that we have within the structured program and within our joint venture program. Actually, when you look at 2025 all of our acquisitions for the year were made within investments where we already had a piece or -- and/or a right of first offer, or right of first refusal. So we'll continue to lean into that while we keep the door open for other larger transactions, should the opportunity arise.

Our next question comes from Ronald Kamdem from Morgan Stanley.

This is Caroline on for Ron. I was wondering if you could speak a little bit on what you're seeing in terms of tenant health so far and just how it's trending? And are there any names that we need to look out for, or categories that are doing better or worse than last year?

Yes. Thanks for the question. It's -- so as I mentioned in my prepared remarks, the credit quality, I think, of our portfolio today is better than it's been in a number of years, especially coming out of COVID. A few notable retailers that were on the watch list previously, one of which is now off is [ Michaels ], where they've really been opportunistic in trying to restructure their capital stack. They had a great year last year in terms of repositioning their -- the value proposition to their customer base, leveraging the brick-and-mortar fleet to really drive sales. So we continue to see that as an encouraging move forward.

[ 24-Hour Fitness ], obviously, has their CEO from the past has now come in, wanting to retake the reins to reposition that portfolio. Although our exposure is low to them, it's another good indication that retailers are really taking bold and important steps to reposition their value proposition, to ensure that they're offering the customer what's in demand today.

When you look at our -- the tenant strength of our existing fleet, I sort of look at 2026, and how much we've already resolved that I mentioned in my prepared remarks. And again another indication when you have 47 anchor leases that are coming due with no options, and we've resolved 98% of them. Again, it's an indication either through renewals, new lease opportunities that the demand is high and people are continuing to see opportunities within our sector, and more specifically within our portfolio, which again is also reflective of the retention levels that we're already seeing in the first half of 2026.

So we haven't seen anything concerning. We continue to see consumer growth being strong on the discretionary side within our sector, within our shopping centers. Retailers are really looking at 2027 now, even into 2028, to ensure that they're continuing their momentum to hit their open-to-buy mandates and make sure that they continue to grab the market share when it becomes available.

Our next question comes from Greg McGinniss from Scotiabank.

Glenn, could you just help us better understand the underlying components of the same-store NOI guidance of around 3%, especially considering the significant [indiscernible] pipeline and comping versus last year's bankruptcies?

Sure. Again, we put out 2.5% to 3.5% as the range. We know, as I mentioned in my prepared remarks that the beginning of the first quarter is going to be the most challenging in terms of where we are based on the comp and us lapping the bankrupt tenants. But overall, we see the snow pipeline coming online the way Dave Jamieson talked about. And we feel comfortable that the range is the right level, and it's tied into the entire guidance to get us to the $1.80, $1.84, but as a major component of it.

Our next question comes from Juan Sanabria from BMO Capital.

Hoping you could talk a little bit about the realignment to national leadership in terms of the asset management and kind of what drove that? What changes day-to-day in terms of leasing decisions and streamlining of those procedures, and kind of the savings as well? Seems like the G&A is coming down a bit.

Sure, Juan. Yes, thanks for the question. It was a -- as you may know, Kimco for decades had operated as a regional structure where we had multiple regions overseen by regional presidents. And it served the company very well for decades. And when we look forward in terms of what we're looking to achieve in terms of our efficiency of scale, wanted to move quickly, wanting to adapt and evolve as a market, and the environment continues to change very quickly as well. We came to appreciate that if we streamlined our operating model, so replace the regional structure with two functional teams, one for national leasing and one for asset management, that will ensure alignment and consistency across our platform, end-to-end, coast to coast, and that will enable us to accelerate all the workflows that we have in process to ensure that we are fully taking advantage of our scale and be able to grow with that as the market environment comes, as well as be able to better utilize all the technology and the investing that we're doing on that side, both from a new investment as well as just streamlining our business workflows.

And so we felt it is prudent that we took that step now. We started to test it. When you really -- looked back in the last year, as I was mentioning in these packaged deals, that was a good example of how we started to consolidate our efforts, streamline it, and have one accountable party go and execute. We can do this much, much quicker. The fact that we got [ Ross ] deals done in 30 days from approved REC to lease execution was phenomenal, and that was really a direct reflection of streamlining that process.

On the asset management side, it's ensuring consistency and continuity across the portfolio. [ Tom Simmons ], previously running the Southern region as President has a depth of experience in mixed-use activity, repositionings, redevelopments, as a great strategist, and so we'll be able to expand that expertise across the entire country with consistency. So we felt that it was prudent at this time to take that step forward.

And then as it relates to savings, we're early days on the restructuring strategy. We've obviously made the announcement and we intend similar to what we've done with the [ Weingarten ] integration, and the [ RPT ] integration, we view this very much as a similar effort and that we'll be very thoughtful in terms of using the first several months to go through the restructuring, rebuild the team, identify and introduce new operating rules with a full rollout towards the back half of Q3. And within that exercise, we'll start to identify more of the savings that will come through the organization.

And just to add to that, this is Will Teichman. Just to add a bit more about how we're approaching this project as a whole. Conor mentioned on our last earnings call, that we have formed an office of innovation and transformation to guide a lot of these operational improvement efforts for the company. And in conjunction with this operational restructuring, our office of innovation and transformation is helping Dave and his team to quarter back and coordinate this overall planning process.

In addition to that, in the past quarter since launching the new office, we've really been focusing in on a number of digital transformation efforts that we believe will help us to unlock additional efficiencies within the business. I want to just quickly touch on three of those.

The first is around automation, where we're bringing together many of our early pilots around robotic process automation and agentic AI under a single governance structure that will allow us to more rapidly build, deploy and drive adoption of these tools. The second is the proprietary data visualization tool that we've constructed and launched last quarter, which is allowing us to gain better visibility into market and property-specific insights through some interactive maps and site plans and other tools that we've created. And then finally, we completed work on an internal natural language chatbot, which pairs our property and lease data with the power of Open AI's latest GPT models and put that into the hands of our associates.

I think we're really excited overall about how things are coming together and about the opportunity to leverage a lot of these digital transformation efforts together with organizational changes to drive further efficiencies in the business.

Our next question comes from Craig Mailman from Citi.

Maybe just circle back on capital recycling here a bit. I know you guys had mentioned 100 basis points of redeployment accretion here. But I'm just kind of curious that seems to be on a nominal basis. As you guys look on sort of an economic cap rate basis, which more directly impacts AFFO, like selling ground leases with zero CapEx to redeploy into high-quality shopping centers, like what ends up being the AFFO contribution relative to the 100 basis points as kind of the CapEx differential plays into it?

Yes, it's a good question. The way that we think about it is on a number of levels. As mentioned, first of all, it's the going-in spread on the cap rate that is sort of your day one. But more importantly, when we're looking at the CAGR of that plus or minus 200 basis point spread, that does factor in sort of the net effective rent impact of the new deals that we're signing at elevated rents, as well as the cost -- or the capital that's being incurred both on the CapEx and on the leasing side.

So we're looking at it both from an FFO and an AFFO standpoint, understanding that some of the investments that we make on multi-tenant shopping centers compared to flat ground leases are going to have additional capital needs, but the rent increases and what we're able to achieve from a growth standpoint, and a leasing spread standpoint, far outweighs that. So the AFFO should continue to be positive and growing in addition to the FFO level on its surface.

Our next question comes from Samir Khanal from Bank of America.

Glenn, just sticking the guidance maybe a little bit here. The term fees at the midpoint, maybe expand on that. I know you're kind of assuming $11 million for the year. I've just got some questions this morning and kind of how much of this is sort of speculative versus known at this point? Anything you can talk around that would be great.

Sure. Look, lease terminations are just a part of the business generally. If you look at what we did last year, we had about $10 million in total. Again, they're episodic. It depends on which leases you get back and what you're working on.

I would say today, we have visibility into about $5 million to $7 million of it. But again, it's early in the year, and it's fluid. So we baked into the full guidance range, again, the $72 million range. To your point, at the midpoint, you're around $11 million. It's around the same level as we had last year. So it's not a driver of growth, but it's another component of just operating the business day to day.

Our next question comes from Haendel St. Juste from Mizuho.

This is [indiscernible] on the line for Haendel. I hope you guys are doing well. I wanted to ask about the ground lease portfolio. How large is this segment within the overall portfolio? And what is the appetite cadence and forecast for dispositions within this category going forward?

Yes. So we're still right around 9% of our ABR that comes from these long-term flat ground leases. So last year, we were able to dispose just over $100 million, which was in line with our expectations for last year. We do intend to accelerate that pace for this year. So part of that $300 million to $500 million that we've outlined, is -- a big component of that is going to be the ground leases.

We'll continue to be very opportunistic about where and when we sell those assets. We've gotten off to a good start so far this year. We've seen a really increased demand from private investors for this, in addition to the retailers themselves that I think have gotten more active and aggressive in buying back some of their own real estate. So we have a high level of conviction in our ability to hit the targets from a cap rate perspective. And that will be somewhat ratable over the course of the year, but we very much believe that we will see a number of dispositions that is substantially higher than what we achieved in '25.

I think the nice part about the program is that it's recurring and we're able to backfill that pipeline going forward? Because when you think about the 9% that Ross outlined, we're actually still doing deals with Walmart, with [indiscernible], with Lowe's, with Target across the portfolio in similar structures where we set it up as a long-term ground lease and are separately parceling that off. So in essence, the shopping center has many different components to it. Some are growthier pieces than others. And this is a component that we see in the market today as being one that's priced very aggressively, but doesn't really drive any enhancement to our same-site NOI. And if we recycle it correctly, we think it can enhance FFO as well as same-site NOI.

So it's a nice recurring program. We've got our development team working on separately parceling all of them out. We have the whole pipeline of opportunities. And as I mentioned earlier, the cadence is really of when they're ripe for disposition, meaning like we have built the right tenor in terms of link the lease term, as well as separately parceled so that it hits the sweet spot of where the investors are looking for that credit investment.

Our next question comes from Floris Van Dijkum from Ladenburg.

I appreciate the color on your capital recycling from your ground rent. Let me ask you a question sort of following up on that. I think you have 3,700 apartment units that are entitled, or essentially shovel-ready almost. What is your appetite in pursuing those yourself versus monetizing them, selling them completely versus [ JV-ing ]? How should we think about how those units will get built and whose capital will be used for that?

Yes, it's a great question, Floris. And it's another important component of the overall opportunity set. As you pointed out, we have a number of open operating and stabilized multifamily projects. We continue to have a tremendous amount of entitlement opportunity and additional land development in the future. So with the continued sort of disparity between our public market pricing and where the private market is still valuing these really strong multifamily projects, it is another opportunity for us to consider crystallizing value monetizing and recycling. So within those different components, we're evaluating our existing fleet of multifamily as well as some of the future.

We look at each and every opportunity on sort of a one-off basis and identify what is the best way to monetize and/or activate that project. So even as we're considering monetization of some of the existing and future projects via the entitlements, we're also continuing to activate new projects that will be the future opportunity to continue to recycle and so on and so forth. So we're getting closer later this year to stabilizing our [ Colter Avenue ], which is our Suburban Square asset. We'll consider at that point in time what the best strategy is for monetization and recycling of that capital.

At the same time, we've recently broken ground up in Daily City in Westlake in California, which is sort of bringing one project online, stabilizing it, and then looking at the next. We've been, I think, very selective in how we activate these projects, some of which will continue to be long-term ground leases that are the most CapEx-light way for us to activate, as well as the joint venture structure where we have contributed our land into a joint venture with a multifamily developer where our land contribution sits in sort of a preferred equity component of the capital stack.

So we're extremely focused on recycling capital, crystallizing value. And then when we're activating new projects, how do we do it in the most efficient way, whether it be the CapEx-light ground leases, or in our contribution into a joint venture where we're able to generate FFO during the development stage and then figure and determine the exit strategy upon completion.

Yes Floris, the only thing I would add is this is a big differentiator between Kimco and our peers. We are focused on our strategy of [ first string suburbs ]. We believe is sort of the unique retail plus opportunity set that Kimco brings and others don't. We entitled over 650 units just this past quarter. We've activated as you've said, a number of projects. But the retail plus the apartments, we think, is really the opportunity set that differentiates Kimco. Because, in a way, we have a number of different ways to unlock that embedded value. And again, that [ first string suburb ] strategy is where we think that opportunity set is robust to unlock future value from the asset because, in essence, like the retail is underutilizing the FAR of the asset. And the parking lots that we have today, driverless cars are being utilized across the country. Parking ratio requirements are coming down across the country.

We believe that this strategy of unlocking value for our shareholders is really in the early innings because of the opportunity set that we see across the entire portfolio that again sits in these first-ring suburbs where density continues to go up around us. And the Kimco asset in a lot of ways, is the hole in the donut, where everything has gone vertical around us and gives us the opportunity set to really add density in the future.

Our next question comes from Michael Griffin from Evercore ISI.

Dave, I want to go back to your comments just on leasing and particularly as it relates to leased occupancy. I think you might have mentioned that you're optimistic to get that number up year-over-year at the end of '26 relative to '25. But -- maybe can you give us a sense, are we almost reaching sort of structural vacancy within the portfolio at the mid-96% range. Like could this really get into 97%, 97.5%. And I imagine that would be driven more by the small shop leasing.

Do you think we could be in a world where small shop occupancy gets to 94%, 95%? And then as you kind of think about that SNO delta over the longer term, what's a good spread for that, that we should think about?

Yes. Thanks for the question. So I'll never say never. Obviously, the goal would love to get it to 94%, 95% on the small shop side. But I tend to look at the history to try to forecast the future a little bit.

So when I look at the overall occupancy at 96.4%, obviously comprised of anchors and small shops. As you know, small shops were at a record high at [indiscernible] and on anchors, we're just about 110 basis points off our all-time high, which actually happened in, I believe, Q4, 2019 pre-COVID. And so when you think about that extra 110 basis points, that's still left to be occupied, there's still room to run in terms of total occupancy, which is a great contributor. And tying that to SNO that net setup could represent another $12 million to $15 million of value that could be contributed to [ SNO ] over time.

When I think of the small shops, we continue to see momentum, not only through just straight organic leasing activity. But as you've seen, we've expanded our repositioning, redevelopment activity significantly over the last couple of years. And as Conor mentioned, the halo effect, you'll start to see that benefit as we've already seen in terms of occupying the residual small shop space and driving rent increases for those locations. And so that is a big contributor. And as these anchor space repositioning start to come online, we'll continue to see that forward momentum, which I think could help propel small shop occupancy.

In addition to that, we look at the retailer strategies, and they do vary in terms of expanding or contracting square footage, and there's a number of opportunities where we can actually expand into a small shop space and give that retailer the optimized footprint, so building them a better bounce trap within the market, and staying within our center. So that could be an opportunity as well.

And then the repositioning of what we view as sort of a chronic vacancies. So we put an initiative in place just over a year ago, spaces that had not been leased in over 3 years and just that renewed focus of really targeting those areas, looking at opportunities to start repositioning those individual units have yielded great outcomes, and that's helped drive [indiscernible] activity. So I think when you roll it all together, there's definitely room to run there, and that will continue to be a contributor to the SNO in the near term and then occupancy growth over time.

When we look at our normalized SNO levels way back when, it's around 180 basis points of spread in this SNO. So as we mentioned in our prepared remarks, you could see a further expansion primarily because you're growing the physical occupancy as economic occupancy continues to come online through the balance of the year. If we continue to grow physical occupancy at the top side, you'll see some snow expansion, continued contribution of cash flow potential for the future. But as those spaces start to come online, you'll start to see that compression through '27, but that bodes well for our cash flow growth, '27 into '28.

Our next question comes from Rich Hightower from Barclays.

Obviously covered a lot of ground so far. But I want to go back to maybe some action you're seeing in the private market. And I guess, on some other calls, even not necessarily in retail. We're hearing that new buyers are sort of coming to the market in various property types, maybe in reaction to the new tax laws and accelerated depreciation and some elements like that.

So maybe dig into, if you don't mind, dig into some of the motivations you're seeing behind some of that activity, especially as cap rates potentially continue to compress from here? And just give us a sense of what that looks like.

Yes. No, it's absolutely a very compelling time to be an investor in open-air retail. I think you've heard from us and from other peers in the group, the fundamentals that are at, or approaching all-time highs in multiple different metrics. Investors, generalists, investors, real estate investors are taking notice. And even with cap rates continuing to compress, the financing has gotten much improved in terms of available liquidity and spreads. And so you can still see in many instances, situations where there's positive leverage, which is a bit of a differentiator for retail versus some other asset classes.

So we really have gone [indiscernible] charge from what we were talking about 12 months ago and the [ retail curious ] to investors that are retail active. And while that makes it more competitive in the open market when we're trying to acquire assets and bidding tents are getting more and more full, it is a very healthy indication of the interest level and the fundamentals that we see in our business. And with the supply-demand dynamics, not realistically going to change anytime in the near to medium term, we think that this is going to continue to be a compelling opportunity for investors to put capital to work while the fundamentals are going to continue to be extremely strong for the foreseeable future.

Our next question comes from Caitlin Burrows from Goldman Sachs.

Maybe a quick question on the structured investments. I see the guidance is a net number. Can you give some more details on what visibility you have to existing investments being repaid in '26, and then your confidence in being able to backfill those?

Sure. As you saw in 2025, we did a number of new deals, but we did have several very large repayments. In particular, we had our largest individual relationship and our largest individual asset that sort of achieved its business plan, everything was successfully repaid. So it was a positive outcome for everybody involved.

As we look into 2026, we do not anticipate any significant or meaningful sort of single repayments. There will always be some churn within this program. But what we've seen thus far with closing a couple of deals that we funded here in the early stages of January and a pipeline that has some additional assets and investments that are already lined up. We're very confident in our ability to go back to growth for this book in 2026 and beyond. So there'll be a little bit of repayment activity throughout 2026. But on the net, as we put in our guide, we're highly confident that we'll see some growth here.

Our next question comes from Wes Golladay from Baird.

I just want to go back to the 47 anchors that have the large mark-to-market. Those are some nice spreads, but are you looking to replace any of those tenants, bringing a better tenant that drives more traffic? And do any of these unlock any redevelopments?

Yes. That's a great question. So when I do say in terms of resolve, that is either continuing to renew the tenant in place or reposition the box itself for either redevelopment, or a higher quality credit tenants. So in one example, we're actually replacing one of the boxes with [ Sprouts ] in South Miami and repositioning the entirety of the asset. So that is a redevelopment that's underway that's going to create significant upside for the remainder of the small shop activity and completely transform the site, which we're extremely excited about.

And then in terms of repositioning, we took what was a watchlist tenant at natural exploration and backfill that with [ total wine ] which is another great example, which there's huge mark-to-market opportunity there, and repositioning more complementary to what the remainder of that asset was really showcasing in terms of its direction. So we look at all of the available options and then make sure that we're making the best obviously economic deal, one, but two, choosing the best quality credit that will have the greatest impact long term for the asset. In several of these cases, it's really transitioning transforming the assets from what it was to what it could be going forward.

Our next question comes from Mike Mueller from JPMorgan.

Just a quick one. You're guiding to higher acquisition and disposition volumes. And while get it that they're net neutral. Each of the components is higher than what you've guided to recently. Is this more of a function of the specific near-term pipelines you're seeing today? Or is it just kind of a broader confidence that the transaction markets have opened up more?

Yes. It's really an intentional strategy of accretive capital recycling that we're undertaking, acknowledging that we have some components within the portfolio that are very valuable and attractive to the private markets that we're not necessarily getting credit for in our public market valuation. On top of that, pun intended, what we're selling are truly anchors to the growth profile of the organization and of our portfolio.

So when you think about the impact of selling off some of these long-term ground leases in the 5% cap rate range that have a CAGR of sub-1%, and being able to recycle that into acquisitions that are higher year 1, but also compounding at a significantly higher growth rate of, on average, 200 basis points, this is an active strategy that we're employing to generate additional growth and to improve the portfolio and the long-term perspective of the growth opportunity within the organization.

So the market is clearly open and conducive to it. We're fortunate that we have a lot of opportunity to recycle that capital from -- even within the portfolio, as we mentioned, from -- within our joint venture program, where there's going to be some recycling opportunities as well as our structured program where we've proven the ability to exercise on these rights that we have to acquire. We closed on two of those opportunities in 2025 and are hopeful that there'll be more in 2026. So we just think that the landscape really shapes up really well for the strategy that we've outlined, and that's just our baseline. And hopefully, we can even outperform that. And anything that we do will just be incremental to that.

Our next question comes from Linda Tsai from Jefferies.

In terms of driving further efficiencies in the business with digital transformation, where do you expect the immediate beneficial impact to flow through soonest? Would it be in boosting the top line? Reducing operating expenses or G&A?

Thanks for the question. I think really on the expense side is where we're seeing impact initially. And I think that's consistent as you look outside the real estate industry as well with what you're seeing in other large corporates. There was a study that was published by MIT last year about the relative lack of success that many large companies are having in deploying AI. And one of the big takeaways from that was the degree to which companies are overly prioritizing top line opportunities over back office and expense reduction opportunities. So it's not to say that there are not opportunities in both areas. But as we look at our strategy and where we've already been able to take costs out of the business, I would say it has largely been around G&A to start with.

To drill down on that just a little bit further. I think obviously, there's a lot of conversation around the cost of human capital, but I think it cannot be underestimated that there are other G&A efficiencies to be taken out of of the operations. So as you think about our announcement to [ Forum ], for example, our office of innovation and transformation, one of the areas of that team is already having a significant impact out of the gate is in reducing our need for professional services vendors to bring those vendors today, and to perform software and other kind of organizational transformation work.

We're also having quite a bit of success around vendor consolidation, which is part of the playbook that we've developed through our successful M&A transactions over the past couple of years. So those are just a couple of examples of what we're seeing. We are optimistic about some of the early efforts that we're seeing around automation and agentic AI.

And I think one of the things that I would just say about Kimco's approach and how it differentiates us from other companies is that many other companies seem today to be stuck in the pilot phase, buying off-the-shelf products and testing one-off use cases within individual functional areas. Our approach is different in that we're really building an engine to integrate technology and talent across the enterprise.

Thank you. We currently have no further questions. And I would like to hand back to David Bujnicki for any closing remarks.

Thanks so much. We're really excited about our opportunities after 2026 to continue to build on the momentum from 2025. Thanks everybody who joined the call today. If you have any follow-up questions, please contact us. Thank you so much.

This now concludes today's call. Thank you all for joining. You may now disconnect your lines.

Hello, everyone, and thank you for joining the Kimco Realty's Third Quarter 2025 Earnings Conference Call. My name is Claire and I will be coordinating your call today. [Operator Instructions] I will now hand over to the Kimco Realty team to begin. Please go ahead.

Good morning, and thank you for joining Kimco's quarterly earnings call. The Kimco management team participating on the call today include Conor Flynn, Kimco's CEO; and Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; Dave 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 our quarterly supplemental financial information on the Kimco Investor Relations website. Also, in the event our call was to incur technical difficulties, we'll try to resolve as quickly as possible and if the need arises, we'll post additional information to our IR website. And with that, I'll turn the call over to Conor.

Good morning, everyone, and thank you for joining us today. I'm pleased to report another quarter of consistent high-quality execution, one that reflects the strength of our portfolio, the durability of our strategy and the exceptional efforts of the Kimco team.

For the third quarter, we delivered funds from operations of $0.44 per diluted share, reflecting another quarter of performance ahead of expectations. Based on our strong year-to-date results and continued visibility into rent commencements, we are raising our full year FFO outlook, underscoring our focus on delivering top quartile earnings growth within the sector.

This outperformance was driven by continued strength across our grocery-anchored portfolio, healthy leasing spreads and disciplined execution across every region. Our results demonstrate the resilience of the open air model and the sustained demand we're seeing from retailers across all categories, which I'll further elaborate on shortly.

In terms of our same-site NOI, it increased 1.9% for the quarter and 3% year-to-date, which is aligned with our expectations given we had anticipated an impact from the early recapture of several large anchor boxes as well as those spaces related to Party City, Jo-Ann and Rite Aid. Notwithstanding, our base rent growth and recoveries remained healthy.

And when the related loss rents are isolated, it amounted to about 130 basis points of drag in the quarter. The good news is that the team has moved quickly to retenant all those spaces, often at meaningfully higher rents with stronger operators. The re-leasing of those spaces has been a meaningful contributor to the expansion of our pipeline of leases signed but not yet open, up 360 basis points, totaling $71 million of future incremental rent growth.

Both of these amounts are all-time high records for Kimco. Notably, credit loss did not materially affect our same-site NOI growth. In fact, credit loss overall has been better than expected, and we do not anticipate any near-term disruptions that would alter this. Importantly, leasing momentum accelerated across anchors and small shops alike, resulting in increased occupancy, making the second quarter the occupancy trough for the year, a clear inflection point driven by steady demand and disciplined execution.

Specifically, pro rata occupancy increased 30 basis points sequentially to 95.7%. Anchor occupancy rose to 97% and small shop occupancy reached a new all-time high of 92.5%, up 70 basis points year-over-year. It's worth noting that the small shop occupancy from the former [indiscernible] portfolio saw a 90 basis point sequential increase and an overall 280 basis point increase since we acquired the portfolio in January of just last year.

And we still see plenty of room for further growth of our small shop occupancy. I want to spend a few moments further highlighting the most critical part of our business, leasing. Leasing activity this quarter was exceptionally strong, underscoring the depth and the quality of retailer demand across our portfolio.

During the quarter, we completed 427 leases totaling 2.3 million square feet, including 144 new deals for 822,000 square feet at a 21% spread and 283 renewals and options at an 8% spread for a blended leasing spread of 11%. Year-to-date, lease GLA is up 8% over the same period in 2024. This leasing momentum remains robust given the limited available supply and is translating directly into future growth.

This is a proven Kimco model in action, turning dislocation into opportunity, enhancing the quality of our income stream and converting leasing strength into sustained earnings growth. In short, the leasing success we're achieving today is already building tomorrow's FFO growth. Redevelopment also continues to be a key pillar of long-term value creation strategy and one we intend to increasingly capitalize on moving forward.

During the quarter, we elevated approximately $250 million of projects to active or near-term status, bringing our total development, redevelopment and mixed-use pipeline to roughly $600 million. With our value-creation pipeline, we currently have 25 grocery-anchored projects, reflecting our focus on categories with proven traffic and rent durability.

The pipeline is generating 10% to 12% unlevered returns reinforcing the attractive risk-adjusted yields we can achieve by reinvesting in our own centers. Year-to-date, we've completed redevelopment projects with a blended yield of 13.7%. We also activated our next mixed-use project, the Chester, located in the fast-growing daily City, California market in partnership with Bizuda.

This project is another example of how we aim to continue unlocking the value embedded in our entitlement program. To this point, we now have about $260 million of gross cost for multifamily projects under construction, including the 130-unit Colter Avenue project at Suburban Square that will be completed early next year.

Moving ahead, we expect to activate additional multifamily opportunities in our core markets over the next 12 to 24 months. With respect to our capital allocation priorities, they remain unchanged, focus on further portfolio lease-up and expanding the number of high-return redevelopment projects, continue recycling capital accretively from lower-growth ground leases into higher-yielding acquisitions and structured investments, maintain a strong and flexible balance sheet and allocate capital towards initiatives that drive sustainable cash flow growth and long-term net asset value creation.

Finally, as we look ahead, Innovation continues to be a defining aspect of our culture and strategy. We formalized that commitment through the creation of the office of innovation and transformation led by Will Teichman as Chief Innovation and Transformation Officer. This new enterprise function unites our operational improvement, digital transformation, data and AI efforts under one leader allowing Kimco to align and better coordinate resources and investments to accelerate innovation.

The overall focus of our office of innovation and technology will be to drive strategic enterprise initiatives geared towards building new capabilities, harnessing the power of emerging technologies, including artificial intelligence, unlocking operational synergies and driving new avenues for growth. Will has a proven track record leading our successful M&A integrations, partnering with information technology to develop and deploy digital leasing tools and developing key functions such as ancillary income, leasing operations, marketing and corporate responsibility, positioning him well to lead our new office of innovation and transformation.

To sum up, this was a solid quarter of progress that underscores the strength of our operating platform and the advantages of our grocery-anchored strategy, while building a pipeline of high-return projects that will support growth for years to come. At Kimco, we are capitalizing on strong retailer demand and translating leasing success in the sustained earnings growth with limited new supply, record small shop occupancy and a disciplined redevelopment engine, we're well positioned to continue delivering at the top of the sector.

Thank you to our entire team for their continued execution and to our shareholders for their support. With that, I'll turn the call over to Ross for an update on the transaction market followed by Glenn to take you through the financial results and updated outlook.

Thank you, Conor. It was an active third quarter on the transactions front, and it is shaping up to be a busy year-end as well. The competition for quality open-air retail has continued to strengthen, and Kimco has proven its ability to invest capital in an accretive manner.

Even in an environment with a substantial amount of capital chasing our product type, our ability to recycle capital at higher yields and with a higher growth profile is a strong differentiator. During the quarter, we funded 3 sizable investments, all with a slightly different profile. First, we provided a senior loan under the structured investment program on a high-quality Sprouts-anchored center in Maryland for $97 million.

Next, we funded $25.6 million for a structured investment on a Cubs food-anchored center in an affluent submarket of Minneapolis with a value-add component. As with all of our structured investments, we will receive a right of first offer on both assets if they are ultimately sold. The third investment this quarter was a participation of $75 million in a loan to Family Dollar. The value of the collateral is well in excess of the loan, providing an attractive risk-adjusted return.

This participation loan is the most recent example of Kimco's long-standing history of creating value and participating in investments associated with retailers that are real estate rich. While the most recent success stories with the Albertsons supermarket chain, this strategy and track record goes back decades. These 3 investments made this quarter are expected to generate unlevered returns in the low double digits and substantially offset the approximately $240 million repayment from one of our existing structured program borrowers we anticipated and subsequently received in October.

Turning to acquisitions. We were also successful this quarter, adding a dual grocery-anchored asset in the affluent suburb of Hillsboro, Oregon. With very productive Safeway and Trader Joe's anchors, this provided a rare opportunity to acquire a dominant neighborhood grocery center with upside. The acquisition has a going-in yield that is 50 basis points higher than the single tenant asset sales that funded the transaction with over 200 basis points of higher compounded annual growth.

We utilized 1031 exchange proceeds to offset gains from the Home Depot sale in California during the second quarter as well as the sale of a Lowe's Home Improvement parcel in Owings Mills, Maryland this quarter at a 5.8% cap rate. Additionally, this asset was a JV buyout from an institutional partner looking for liquidity further showcasing the value of the right of first refusals in both the structured program as well as the institutional joint venture program.

The total gross asset value of our JV portfolio and structured investments is approximately $7.5 billion, offering us ample future acquisition opportunities. We anticipate further opportunities to recycle capital in the fourth quarter and into 2026 and at compelling year 1 yield spreads as well as higher long-term growth profiles ahead.

While we don't anticipate any pullback in the fierce competition and investor appetite in our product, we are confident in our ability to continue generating attractive investment spreads given the strategic differentiators available to us. Now to Glenn for an update on the financial results for the quarter.

Thanks, Ross, and good morning. Our third quarter results once again highlight the consistency and resilience of Kimco's platform, which delivered solid operational and financial performance that exceeded expectations.

For the quarter, FFO grew to $300.3 million or $0.44 per diluted share, 2.3% above last year. The improvement was primarily driven by $21 million of higher pro rata NOI led by increases in minimum rent, notwithstanding lost rents from the earlier recapture of spaces mentioned previously.

Other rental property income also contributed to this growth. These increases were partially offset by $8 million of higher interest expense, mainly tied to our refinancing activity in 2024 and 2025. Importantly, as Conor shared, credit loss continues to track at the low end of our assumption range at 75 basis points for the third quarter and 73 basis points for the first 9 months, underscoring the durability of our rent roll.

This quarter's FFO also included a modest onetime benefit of $3.2 million, roughly $0.05 per share related to the recapture of below-market rents from 2 vacated Rite Aid spaces. Turning to the balance sheet, we ended the quarter with consolidated net debt to EBITDA of 5.3x and 5.6x on a look-through basis. Liquidity remained strong at over $2.1 billion, including over $160 million of cash on hand. Our credit profile continues to strengthen as well.

During the quarter, S&P upgraded Kimco to A- with a stable outlook. Fitch affirmed its A- rating and Moody's maintains its BAA1 rating with a positive outlook. This combination of balance sheet strength, together with approximately $150 million of annual free cash flow generated after the payment of dividends and all leasing costs, provide ample flexibility to fund additional redevelopment activities and pursue new opportunities, such as those Ross just discussed.

Based on our year-to-date performance and visibility into rent commencements, we are again raising our full year FFO guidance range to $1.75 to $1.76 per diluted share up from $1.73 to $1.75 previously. This represents FFO per share growth of over 6% compared to 2024. We are also maintaining our full year same-site NOI growth outlook of 3% or better, which already incorporates the known bankruptcy impacts absorbed this year.

Additionally, we have revised our credit loss assumption to a more favorable range of 75 to 85 basis points compared to the prior range of 75 to 100 basis points. This adjustment reflects the lower credit risk observed and projected for the remainder of the year. Our sign not open pipeline has reached a record level of 360 basis points totaling $71 million. We anticipate that approximately 20% of these leases will commence in the fourth quarter contributing $2 million to $3 million in incremental rent.

Given the continued strength of our leasing activity, there is potential for further growth in the snow pipeline by year-end. This expansion will create a favorable tailwind as 60% of the current snow pipeline is projected to commence next year. As a result of our strong performance and continued growth expectations, our Board approved a quarterly common stock cash dividend increase of 4% to $0.26 per quarter.

In closing, our third quarter results reflected steady progress and continued momentum across the business. We expect the benefits related to the retenanting of those spaces recaptured earlier this year, many at double-digit spreads to be realized over the next several quarters. These embedded rent commencements, along with our disciplined capital allocation and a strong balance sheet, well positioned Kimco to deliver sustainable long-term growth.

A special thanks to our team for another quarter of excellent execution and to our shareholders for your continued support. We'll now be happy to take your questions.

[Operator Instructions] We have our first question from Ronald Kanden from Morgan Stanley.

This is Caroline on for Ross. I was just curious about the transaction environment and what you're seeing from an opportunity perspective. Will you generally say that there are more deals coming to market? And what are you seeing on the cap rate side?

Sure. Happy to answer that question. As I mentioned, it continues to be extremely competitive. I think one of the advantages that we have is the geographic diversification and the diversification of our strategy. So we're able to see a tremendous amount of deal flow all across the country. We look at it for acquisition opportunities.

We look at it for opportunities to invest in the capital stack through our structured program. And as I mentioned, we have a tremendous amount of right of first offers and right of first refusals between our joint venture programs as well as some of the structured deals that we're in.

So we do think that there's plenty of opportunity for Tim. As it relates to assets on the market, there has been a healthy amount that has been out there, but it's extremely competitive. A lot of different capital sources, particularly on the private side, that's been formed chasing these deals and with that has created some really aggressive cap rates.

So for us, it's just really a matter of looking at our cost of capital, finding ways to recycle accretively, which we've been able to do in the third quarter and so far this year. And that's what we anticipate doing in the fourth quarter and as we look into 2026.

I think I'd just add that I think it's fair to say that our market intelligence has never been higher. If you think about how we underwrite acquisition opportunities from a fee position, but now we're seeing a lot of transactions in the private market that don't necessarily hit the open market with our structured investment program. So I think our funnel has been opened up even further to get even more market intelligence.

Our next question comes from Michael Goldsmith from UBS.

Looking to the future, Glenn, you mentioned the fact that open pipeline has reached record levels and could continue to grow, the implied fourth quarter guidance suggests a return to same property NOI growth of 3% plus but then you also have some debt refinancing next year.

So can you walk through some of the puts and takes or early look at what we should be focused on in 2026 in broad strokes that don't reflect guidance?

Sure, Michael. As you know, we're not obviously going to issue guidance now. We will issue guidance with our fourth quarter results in February. But touching on some of the things, again, very focused on the snow pipeline and that coming online.

As I mentioned, about 60% of the current sell pipeline should start to produce results during 2026. And that 60% should represent somewhere in the $24 million range in addition to the snow that will come on during the fourth quarter of this year, which is probably in '26 to be about another $12 million or so.

So we're watching that, obviously, very closely. That's a key to the NOI growth. Again, we're not seeing a lot of bankruptcies at this point, the bankruptcy period we think we have a lot of that behind us. There's not a lot of visibility to a lot of tenants that we expect to file for bankruptcy. So again, it's really about getting the rents flowing from the snow pipeline. It's getting our redevelopments flowing as well.

There's a fair amount of NOI that will come from redevelopments as they come online during the year. And then separately, as you asked about on the debt side, again, we don't have any real maturities until August of next year. We do know that interest expense will be a headwind similar to what it was this year. We have about $825 million of debt that's returning next year. It has an average rate yield of about 0.8%.

So with that, we're going to do everything that we can to minimize that headwind. So we're going to look at all of our refinancing all of our refinancing options that we have available to us as we go through the year. So those are really the major points to watch, but we feel good about heading into the year.

Our next question comes from Alexander Goldfarb from Pipe Sandler.

There. So the Family Dollar, certainly, you guys have a long track record, Frank's Conover, obviously Albertsons long track record. But it's been a few years since you last made outside of Albertsons made a retailer investment. So can you just give an overview of the retailer environment? Are there just very few deals out there or the deals that you've seen over the past few years, just -- you couldn't get the terms that you want?

Just want to understand if we could see a return to a steady pace of these? Or if these are back -- or if these are really just every few years to expect one of these? Just again, given the success that you have had over the past few decades.

Yes, it's a great question, and thank you for pointing out the track record in the history. As you alluded to, this is something that really is part of our DNA for many different -- for many decades at this point. The Family Dollar deal itself, and while it was a private loan that we're not quite at liberty to discuss all the details.

We did see an opportunity with group acquiring that chain for a heavy discount from where it was previously acquired. And with all of these deals, that particular retailer owns a tremendous amount of its own real estate. And really, that's what we're looking for in most of these deals.

We want to see an opportunity that is collateralized by a tremendous amount of real estate owned by a tremendous amount of real estate where we could potentially participate in the future or at a minimum, at an attractive return through the financing side of the equation by investing in that deal.

There are other retailers that we're talking to regularly that own a fair amount of their own real estate. It needs to be at a point in time where they're ready to do something either by need or desire. So as the largest landlord for a vast majority of these retailers, we know that we're in that conversation all of the time.

We're having active portfolio reviews with every single one of our retailers, particularly those that own a tremendous amount of their own real estate. So it is sort of opportunity driven. It's hard to predict when these may come about, but we're staying front and center with all of these retailers and know that we're going to be absolutely one of their first calls if there's a capital need on their end.

And it may seem like a long time ago, but we sold our last piece of Albertsons in early 2024. So we do stay active, and we do think we have the track record, as you said, we continue to mine for those opportunities.

Our next question comes from Samir Khanal from Bank of America.

I guess, Glenn, maybe just expanding on that on the '26 kind of outlook here. Can you remind us -- you talked about the onetime benefits in the quarter. I think you said it was $0.005 impact from Rite Aid. Just remind us kind of what the onetime benefits are worth throughout the year as we sort of sharpen our pencils on '26?

Sure. Again, throughout the whole year, you've heard us through the first 3 quarters, talk about some of these, call them onetime items, whether they be extra lease termination agreements that we received or some certain below-market rents that we've received.

In total for the year, they've amounted to about $0.03. So kind of keep that in mind as you go through. Now having said that, they are onetime, they are part of the fabric of the business, and there's always -- there's a lumpy part. So we don't know exactly when we're going to get LTAs. We don't know exactly when we're going to get some of these recaptures below market rents. So we point them out because they're very difficult to forecast. And we don't put them in our initial guidance when we put out our guidance each year.

And Samir, one other thing I'll point out to when you're thinking about run rates and looking ahead, we did have substantial prepayment in our structured finance that Ross touched on. It's in the earnings release. It was about $240 million. So just keep that in consideration when you're looking at our mortgage financing receivables line at the end of September.

Our next question comes from Floris Van Dijkum from Ladenburg Salmon.

Question on the capital recycling. Encouraging news that you've sold a ground parcel and I think, a ground lease as well. Could you maybe talk about other assets that you have in the market today? Or what can we expect later on this year? I know you talked about annual dispositions of $100 million to $150 million going forward.

How much of that will be the -- do you think you could achieve in terms of 0 yielding lands versus ground rent versus some other noncore assets?

Yes. Thanks, Floris. As you know, that's a pretty significant part of our strategy is to continue to recycle from the low growth, low cap rate, flat single-tenant asset ground leases that we have as well as some of the nonincome-producing assets. So it will continue to be a combination of those 2 factors.

We really started ramping up that program earlier this year, and I think that we're pleased with the start and the progress that we've made thus far. We do anticipate as we look into the 2026 pipeline that we think we could do a bit more of that next year. So we're really focused on what that population looks like, how quickly we can start to ramp that up.

We continue to go through certain negotiations with retailers where we believe that we need additional term to maximize value because at the end of the day, this is extremely opportunistic, and it's intended to be. So we want to make sure that we're selling assets where we feel that we've really squeezed all the juice out of them before we look to monetize.

And as part of that, our team is going through some processes with certain municipalities where we have to separately parcel in order to transfer the deed. So we have a pretty significant universe with close to 9% of our ABR coming from these long-term ground leases. And we just want to make sure that we maximize value on each and every one before we look to exit them. So a good start in 2025, and we think that we'll be able to use a little bit more out of that in '26.

Yes. The only thing I would add, Floris, is we do see this as a recurring program. I think that's the key because we're actually backfilling that ground lease pipeline as well as we've got leases going with Home Depot, Target, Lowe's, you name it Walmart, Costco, they're all in active expansion mode.

So even though we've been selling a few we're backfilling a few with some new leases as well. So it's a nice recurring program that we think will just continue to enhance both the same-site NOI of the organization as well as the FFO growth of the organization.

Our next question is from Michael Griffin from Evercore ISI.

Wondering if you can give us a sense of how your conversations with retailers have been recently as they look toward their real estate needs for '26, '27 and even beyond. It seems like this point of tariffs probably underwritten into their business plan somewhat.

So would you say there's more confidence on the retailer side that they need to execute on their growth objectives or is there still this sense of maybe wait and see where things might finally shake out from a tariff perspective?

Yes. Sure. I appreciate the question. Well, I'd say the confidence hasn't changed. Throughout the course of this year, our retailer conversations are not about let's wait and see and see how the tariffs play out. There was very much an understanding that you always have to deal with short-term disruptions in the macro markets, but you have to have a long-term view on your growth strategy.

And what we saw consistency through -- consistently throughout the course of this year, was a continued push to find new opportunities, to grow market share, to expand into new markets, and to continue filling a pipeline into '26 and really, we're talking about '27 now as well.

So when I look back on sort of where we're tracking today just in this quarter alone, quarter-to-date, we're about 30% higher in our GLA executed deals versus where we are last year. The continuation of the momentum that we've seen through the first 3 quarters.

Conor had mentioned a handful of large anchor spaces that naturally expired this last quarter, which reduced our economic occupancy a little bit as expected, but it's also helped contribute to the growth of our snow pipeline. And in those deals, 2 of those 3 deals we actually executed within the same quarter we lost that space.

And this is about 300,000 square feet, inclusive of a deal that we actually pre-leased in Q2 for one of those natural expirations. Pull those together, that's about a 40% spread on previous rents to new rents going forward. So there is tremendous demand, and that's on the big box side. When you look at the grocery side, we also -- I've alluded to that we have over 25 active or near-term activations on the grocery redevelopment, anchor repositioning side. It's extremely robust. It's well diversified in terms of the names that are growing on the grocery side.

So we feel fairly good about where the sentiment is. On the small shops, we're at 92.5%, right? We continue to exceed our high watermarks. And we see that there's room to run. As we complete these projects, these redevelopment projects, it tends to create a meaningful halo to lease up the balance of the small shop space at those locations.

So we'll continue to push that. So obviously, we're going into New York ICSC in December. Hand card is pretty full at this point, and we are going to be talking more about not only filling the void of the '26 pipeline, but really focused on '27 as well.

Our next question comes from Richard Hightower from Barclays.

I guess One question on capital allocation with 2 parts, if you don't mind. But just as far as back to the SIP pipeline and program and some of the sort of flows in and out of that bucket, help us understand maybe the level of predictability in those flows. Obviously, they were quite sizable last quarter.

And just what does it correlate with? How should we think about it from the outside? And then the second part is you repurchased shares in the second quarter, didn't repurchase any shares in the third quarter. So where does that fit into the overall capital allocation framework?

Sure. I'll take the first part. So yes, the structured investment program, I mean, we're really focused on maintaining strong levels of communication with all of our borrowers maintaining a well-laddered maturity profile. So we have a very good sense as to when the maturities are, when we anticipate getting repaid. This particular reinvestment or repayment of the $240 million was well notified in advanced.

So we've been planning for it, we anticipated it. For that one, one particular asset was $200 million of the $240 million of the repayment. It was a wonderful investment. I don't think we would change anything or do anything differently, but I think what we have determined on a go-forward basis is that we want to make sure that we're spreading that capital out over multiple deals.

So as you saw on the reinvestment, that $240 million was essentially spread out over 3 different investments. So we're going to make sure that we continue to have good visibility into the repayment, have a tremendous amount of real estate and these are spread out over. As mentioned, it's about $1.5 billion just in the structured investment program that we have right of first offers or right of first refusals. So it is well telegraphed planned for it, we account for it, and we think that it's a tremendous differentiator for us.

Sure. On the second question about the share buybacks, again, the stock, we obviously watch the stock price performance. That -- it's a key indicator of whether or not we would buy back shares or for that matter, whether we'll use our ATM program or other types of equity issuance. The stock performed better during the third quarter.

When we bought back the shares, the average price on the share buyback was $19.61. We're happy that we're above that and looking for further performance forward. But we keep all the tools available to us to find the highest yield where it makes the most sense and obviously, keeping the balance sheet metrics in consideration as well. So we'll watch it closely and use it where it's opportunistic.

Our next question comes from Cooper Clark from Wells Fargo.

Great. You highlighted in your investor presentation, the strong execution on larger deals in recent years. Hoping you could provide color on any portfolio deals in the private transaction market today and pricing along with thoughts on your appetite for potentially larger deals in 2026.

Sure. Yes. I mean we're extremely focused on cost of capital. And as mentioned, it's very competitive out there. That's on the single asset side. That's on the portfolio side. So we keep a wide range of opportunities. We've acquired multiple portfolios in the last 5 years, 2 large M&A transactions, a large portfolio acquisition on Long Island several years ago.

So that's certainly part of the playbook but it needs to be accretive and it needs to be the quality that we'll be looking for that's additive to our existing portfolio. Right now, it's a very competitive environment that makes it difficult to acquire large portfolios. So we've been able to generate opportunities from within where we already have investments in assets, whether it's from our institutional joint venture program or our structured investment program. And for us right now, that's sort of been the best risk-adjusted return that we're able to generate.

I think the interesting dynamic in the transaction market today is because of the -- really the all-time high occupancies for the sector. There's really the value-add buyer is actually looking to acquire assets that have watch list tenants in the tenant rent roll, so that, in essence, they have an opportunity to re-tenant and get that mark-to-market that we've been able to showcase when we take our below market, watch list tenants and replace them with best credit and a mark-to-market that a sizable spread. .

Our next question comes from Haendel St. Juste from Mizuho.

St. Juste, I love it. I wanted to talk about the big jump in the readout pipeline you mentioned going up to about $600 million. Can you discuss some of the -- not only the projects being added in the yields you're underwriting and how they compare to the prior pipeline, but how you plan to fund? It seems like it will require more than just free cash flow. I'm curious how maybe selling some apartment entitlements may play a role.

Yes, sure. When you look at the spend itself, as we forecasted this year, we're around $90 million to $110 million of spend. And so when you look at the free cash flow after payout of deal costs, leasing commissions, property CapEx. We have sufficient funding there to address near-term funding commitments on an annualized basis. It's also important to note that the gross pipeline, there are pro rata components to that.

Obviously, we have ventures as part of some of these locations and some of these investments. In addition, obviously, the multifamily pipeline is a gross investment of $250 million. But the way we've structured it is a capital-light version where we're contributing the land, our entitlement costs and then partnering with a partner, in this case, Luzuto for both where the majority of the funding is coming from that side of the relationship.

So we have ways and means in which to fund it internally right now, and we'll continue to keep an eye on it. As it relates to the expansion itself, we've always been focused on what's best for the site. As you can see, we're heavily grocery focused. We believe that, that creates the best additive contribution to the site long term, not only for the stickiness of the grocery themselves, but the halo effect, as I mentioned earlier, to drive shop rent growth around it. So we'll continue.

And as we always have, continuing to explore and mine for value within the real estate and it's time and right now, it's a great opportunity to take advantage of that. And we'll continue to push forward as much as we can in conjunction with our traditional leasing activity, which is very, very robust, as you know.

Our next question comes from Juan Sanabria from BMO Capital Markets.

Just hoping to talk a little bit more about the small shop and the potential upside above and beyond kind of the already record levels, you talked about the halo effect of readouts. I'm not sure if there's any stats you can quote on what readouts have done to the small shop lease rates and how that may translate into further upside from already robust levels?

Yes. In terms of the completed projects, you're continuing to see lift if the small shops are typically closer to the market. But when you add the grocery and you could see upwards in the teens, the low 20s and it left dependent on what the liquidity is at the time. But again, it's very much a case-by-case basis.

And so when we look at a handful of our projects, where there's a demolition of reconstruction of a majority of the site, we're going through that leasing activity now from where the market was to where it is today. There are significant gains to be made there, and we're executing those leases as we start to activate those projects. So it's -- again, generally speaking, we've seen it as a clear upside benefit.

I think the demand drivers for small shop leasing continues to evolve. I think we have more uses today for small shops than we ever have before. And we're, again, continuing to see that momentum continue. There's no real reason to think that we've hit our cap in terms of occupancy on small shops because again, of that demand driver and the lack of new supply. You got to remember, we're in a sector. There's not many commercial real estate sectors out there that have the limited supply growth like open-air shopping centers.

And then when you look at the finite amount of space that's available today, especially in high-quality real estate, it really narrows down the opportunity set for good quality credits, small shop tenants to grow. And we're seeing a lot of services. I think that really continues to be a major driver of the small shop occupancy lift that we continue to see going forward.

Our next question comes from Caitlin Burrows from Goldman Sachs.

Just on the ground-up development side, and Conor, you mentioned in passing in that last question, but you have those 2 projects listed in the supplement, I think they're relatively small. Can you talk about what you're seeing in the industry in terms of new development, what's popping up? And could there be further opportunity for Kimco there?

Yes. In both the cases with the ground-up with the ground-up projects that were listed Northbound and Gordon Plaza. North Town is a legacy site that we acquired via one of the M&A deals. And it was -- we had the legacy land there. There's a single large anchor on the asset preexisting with some shop space, and there's a lot of parcels that are yet to be developed.

So I was waiting for the market to come to us. And we found this opportunity to execute on that plan, again, tied to grocery of Sprouts. So Sprouts could be a catalyst for future growth. But what we're doing is really approaching it in a very thoughtful and derisked strategy and we're executing these leases prior to us actually putting a shovel on the ground.

So very different than decades past of the large development pipeline. This is a very select in nature. It's opportunistic driven by leasing demand at which you're pre-executing those leases prior to putting a shovel of ground and they're not large at scale. And this is a land that we've had in-house for an extended period of time.

Gordon Plaza Back to the previous question, too, about repositioning an asset and mining for value, dealing with sort of obsolete shop space and vacancy. We're able to demolish the entire site and build it from the ground up with a Chase at Home Depot and an Aldi. So very controlled in nature, extremely high credit, again, pre-executed all those leases before a shovel on the ground. So I think what you'd see from us is the activation of that legacy land when it makes sense based on the leasing demand.

There's really not a lot of active ground up development in the market today. If you look at like sort of the whole sector, I think we're at 0.3% of existing stock under construction, which is the lowest of any commercial real estate sector.

So we've done a lot of work to identify how much rents have to rise in our markets to really see any wave of new supply. And it's in the range of 50% to 60% of rent growth that needs to occur. So I think it's a pretty sizable time frame before we see any real ground-up development come back to the space. And then where our position for our strategy, our first drink suburb strategy, again, it's really hard to make the economics worth if the area is being densified, it's very rare to find a parcel that can justify a ground-up economic deal where 80% of the shopping center is parking lots, that's not generating any revenue.

So usually, those parcels have to be much more dense a lot of different uses. And it's rare to find those that make economic sense with the cost of land, cost of labor, everything going up. And so we feel really good about that level of safety we have of being disrupted from a new wave of supply being very, very minimal.

Our next question comes from Craig Mailman from Citi.

I just want to circle back, Conor, your commentary about the promotion of will and the formalization of that initiative there. I'm just kind of curious, beyond just the formalization of the kind of the org chart there. What kind of resources do you guys plan to put into this initiative? Like are you guys putting a lot of money behind AI behind the scenes to increase productivity?

And what do you think the return on those type of initiatives could be long term from an NOI margin or head count perspective? And are there any other big tech initiatives like an overhaul of the accounting system or anything else there that we should be thinking about from a capital use perspective over the next couple of years?

Yes, it's a great question, Craig. So as you know, we're big believers in making the Kimco platform best-in-class. We believe we've taken a lot of initiatives to integrate the business organization with the best technology tools available. And we've been doing it now for a number of years, and now we formally fuse the 2 together with Will running that organization.

And I'm a big believer that scale is an advantage when you have the ability to use the technology tools to allow you to increase margins to allow you to get more efficient, to allow you to increase productivity. And when you look at our G&A line and you look at how much we've been able to do over the last 3 years without really moving the G&A line, we bought a public company, we bought big portfolios, big assets. And we're still at, I think, the first inning, our productivity increasing from what we see in the dawn of sort of the platform and where we're investing.

So I'll hand it over to Will to give you a little bit of it of what to anticipate, but we're really excited about the future, and we're investing in our people, we're investing in our platform to, again, take advantages of the scale that we currently have and that we anticipate to have in the future.

Yes, just to add a little bit of additional color. This really does align our strategic planning, operational improvement, digital technology and change management resources, all under one coordinated structure. And it's important to focus on how we organize ourselves as you think about the opportunity set that is emerging in front of us.

One of the things that we've learned over the last couple of years of doing this type of work through our M&A integration projects, through technology implementations and other organizational transformation projects is the importance of a multidisciplinary approach to being successful in delivering.

A lot of these projects can be complex that can be costly in terms of the investment and success is not guaranteed. And so thinking and being very intentional about how we approach these things, we've been able to develop some playbooks and some successful tactics and a track record that I think we'll be able to continue as we look to formalize this OIT structure going forward.

As it pertains to level of investment, well, I don't -- we don't want to get into specifics today. I will just say that from an approach perspective, as we think about innovation and transformation, it's the same type of ROI-type calculus that we utilize in all of the other parts of the business. So as we think about making investments in digital technology, we're looking for a return on that investment.

Sometimes those returns come in the form of expense efficiencies. Sometimes those returns come in the form of growing our pipeline of opportunities with our retailers or the transaction opportunity set that Ross mentioned earlier. So we're staying diligent, I do think that we are focused on continuing to invest in the technology stack.

And as Conor said, I feel confident that the investments that we've already made over the last 10 years really position us well and give us a head start. And if this new structure will help us to accelerate that over the decade to come.

Our next question comes from Mike Mueller from JPMorgan.

Just a quick one following up on development. What's the total expected development dollars that you could see yourself investing in '26 and '27? And I know you had -- you talked about retail opportunity, but should we basically think of this as being largely resi going forward?

So separating into 2 parts, to ground up retail development, as I mentioned before, is relatively small and controlled. And it's going to be opportunistic based on lease activity and signing and executing those leases before we put a shovel in the ground.

So we -- again, we have some legacy land. We are looking at another project that's in the near-term pipeline that could be activated relatively soon because we're near completing the execution of those leases. But we don't see a whole lot of meaningful growth out of that category versus our really reinvestment and repositioning of the redevelopment pipeline and repositioning and strengthening our existing asset base.

On the multifamily side, obviously, we activated the Westlake project this last quarter, the Chester. And we do have some near-term opportunities in the next 12 to 24 months that we will continue to look to activate as well following our proven strategy on the structured side that we've done with a preferred partner. And so we'll continue to look in mind for those opportunities in the select core markets that makes sense for us.

Yes, Mike, I think the easy way to think about it is continuation of what we have today, priority on the high double -- high single, low double-digit retail expansions, redevelopments that we showcased in the grocery portfolio that we can unlock, very limited like Phase II type activation of ground-up development.

And then the preferred equity structure we have for activating our multifamily entitlements where we take our land plus the entitlement costs and use that as our capital to activate those projects. So again, using a CapEx-light approach where we can activate those projects with a multifamily partner. So that, again, we can focus on the highest level of return for our capital that's going out the door.

Our next question comes from Alex Fagan from Bard.

Most of my questions have been asked. But kind of going back maybe to the Family Dollar investment. How many Family Dollars does Kim have currently in the portfolio? And for the real estate side, what are you targeting? What kind of locations if they manifest some sort of deal?

We only have a handful of Family Dollar locations. It's less related to doing more deals necessarily with Family Dollar is looking at the structure program and what they have within the real estate holdings that backstop the loan that we're issuing as part of this consortium.

So when we're looking at the risk-adjusted basis, to what we're investing and what we potentially get back, it's fairly well measured and asset-backed is which we like, and they also have an ample distribution centers anything associated with that as well.

We have 5 Family Dollar locations currently. The loan was -- the way we look at this is with -- if the operations are dark, how much is the real estate work that's owned and that's how we underwrite it. So the loan is in essence and in fact, by the owned real estate, which we're very, very comfortable with.

Our next question comes from Greg McGinniss from Scotiabank.

Curious on the structured investment program, does this repayment from the RAM remove any existing ROFRs there? And how do you generally think about the likelihood of repayments in the structured investment program versus and converting into a potential acquisition opportunity?

Yes, it's a good question. And I think that's the beauty of the program for us is that we are very comfortable with any of the potential outcomes the ROFOs and the ROFRs have a tremendous amount of value and potential future acquisition opportunity. We did acquire one asset earlier this year in Jacksonville that came directly from this program.

We think that there's probably another one in the, call it, near to medium term that we're discussing with the existing borrower today. It's never certain whether the ultimate outcome is an acquisition. But at our basis, the way that we underwrite it, we really view these and underwrite them as an operator and a manager. So at our basis, we're very happy if we have the opportunity to buy it.

We're very happy if we ultimately get repaid after generating a very attractive return. And in the unlikely event that we have to take over at our basis, we're very comfortable with that outcome as well. So we view it essentially as a win-win-win regardless of how it ultimately plays out in the end.

Our next question comes from Linda Tsai from Jefferies.

With 60% of your pipeline coming online in '26, what does the cadence look like in terms of when it comes on? And how would it impact the weighting of same-store NOI next year between the first half and the second half?

Yes. I mean it's weighted more towards the second half of the year. You'll get some in the first half, but it's more heavily weighted towards the second half of the year.

Thank you. We currently have no further questions. So I'll hand back to David Bujnicki for closing remarks.

Just like to thank everybody that participated in our call today. So thank you so much. We appreciate it.

This conclude today's call. Thank you for joining. You may now disconnect your lines.