Kimco Realty Corporation (HC)

Good morning and welcome to Kimco's first quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to David Brudnicki, Senior Vice President, Investor Relations and Strategy. Please go ahead.

Good morning, and thank you for joining KINCO's first quarter 2020 earnings call from wherever you find yourselves following social distancing guidelines. Obviously, hosting this call remotely from our homes is a new dynamic, and we hope to make the best of it, even with the occasional dog barking and kids yelling in the background. The Kimco management team participating on the call today include Connor Flynn, Kimco CEO, Ross Cooper, President and Chief Investment Officer, Glenn Cohen, our CFO, Dave Jameson, Kimco's Chief Operating Officer, as well as other members of our executive team that are available to answer questions during this call. As a reminder, statements made during the course of this call may be deemed forward-looking. It is important to note that the company's actual results could differ materially from those projecting such forward-looking statements due to a variety of risks, uncertainties, and other factors. Please refer to the company's SEC filings that address such factors. During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP financial measures can be found in the investor relations area of our website. And with that, I'll turn the call over to Conor.

Good morning, and thanks for joining us. Today, we will take a bit of a modified approach to our quarterly call. I will give you an overview of how we have confronted the challenges posed by COVID-19 and how we plan to move forward as the country begins to reemerge. Glenn will follow with a recap of the numbers for Q1 and our desirable liquidity position. First, on behalf of the entire Kimco team, I want to thank all the first responders, medical professionals, volunteers, grocery store workers, and essential retailers that risk their own personal safety to serve and help all of us. They are the true heroes, and their efforts should not be forgotten. And on a personal note, I also want to thank all of you for your support in my personal bout with the virus. Your emails, texts, and thoughts were as powerful as any vaccination and were a big part of my recovery. I would also like to recognize the entire Kimco team for their tireless efforts to ensure our centers continue to provide essential goods and services to our local community. All of our centers are open and operating, and we will continue to provide our shoppers, our vendors, our employees, and our extended Kinco family with a safe experience. Our best health and safety practices have been shared with companies, both small and large, so that we can help those with less resources and more critical needs. As an organization, we are battle tested, having successfully weathered both industry-specific cycles and macroeconomic downturns. That said, this current situation is unprecedented. and poses new challenges. We have been working seamlessly and remotely since mid-March, focusing all our efforts, as Milton reminds us, to survive so we can thrive. Our strategy is focused on exactly that, managing through the current environment with an eye to positioning ourselves to thrive when the economy opens back up. Our strategy for dealing with COVID-19 was one we implemented quickly to try and help those most in need. Time was of the essence on all fronts. and a wait-and-see approach was never considered. First, we prioritized liquidity. Glenn will give the details on how we bolstered our balance sheet, which included securing a well-timed term loan at very advantageous rates with extension rates. With a well-heeled balance sheet and cash position, Kempco will not only survive but is in a strong position to prosper. Moreover, we wanted to have available resources not only for our own use but to help our retailers. many of whom don't have the same access to capital. Next, we refocused our operations by shifting more resources to the front lines. Our team has worked tirelessly to develop new approaches and launch new programs that address the numerous tenant requests. Our significant investment in cloud-hosted technologies from companies like Salesforce, MRI, Microsoft, and Zoom have streamlined our operations and created efficiencies across the organizations. These investments have allowed us to roll out programs of size and scale rapidly across the country. In addition, we deployed custom-developed tools to help us manage and quickly address tenant communications related to COVID-19 concerns. All of this has provided us tremendous real-time data that allows us to react quickly and be proactive. We have led by example as a number of our peers are following our lead in technology, website architecture, and tenant assistance programs. Our Tenant Assistance Program, or TAP, is a multi-pronged approach to give our tenants the valuable resources in a time of need, free of charge. At the end of March, we encouraged our small shop mom and pops to embrace TAP, which provides them with a free legal advisor to navigate the numerous state and federal programs available for small businesses to help them weather this storm. We also engaged quickly to give these small businesses the opportunity to know that the rent for April was not hanging over their heads. so they can focus on the government assistance programs and try and keep as many employees as possible. In addition to legal advisors, we have helped identify lenders to work with our small shop tenants applying for the PPP loans. By our last count, just under 600 tenants have participated in the program. For the month of April, we have collected cash rent totaling 60% of our billed rent. We fielded rent deferral requests for 35% of scheduled rent from tenants and have worked out deferral plans that equal approximately 14% of the April rent. For the month of May, we are still in the grace period for a number of leases that allow our retailers to pay over the first few weeks of the month. To date, May rent collections are tracking near the same level as April through the first week of the month. Each of our deferral programs is confidential and cater directly to the needs of the tenant. We are in a very fluid environment, and we plan to proactively address the challenges ahead by quickly implementing any required changes while keeping an eye on the long term. As such, we don't want to speculate and instead focus on the facts and provide accurate information as the situation continues to unfold. We are working to maintain occupancy and bridge our tenants to the other side of the pandemic. We are also on the alert for dislocation opportunities. We have not seen any assets of quality trade in this environment yet, but we are ready if and when they present themselves. At the same time, until we get a clearer picture of the landscape, we have hit the pause button on assets we were considering adding to the portfolio before the COVID-19 crisis hit. Our development and redevelopment pipeline remains largely on track, and we're in the fortuitous position of having limited projects in the active phase. Our two main projects, Dania in Florida and Highland in Staten Island, are very close to completion and will be tremendous assets for Kimco long-term. After a temporary delay, we received approvals to continue construction at the boulevard at the former Highland Shopping Center, as it was determined to be essential due to the ShopRite grocery anchor. We are hopeful that this Signature Series asset will open later this year. At gaining a point, construction has been ongoing with urban outfitters and anthropology, beginning to build out their newly leased spaces. While we recognize that the pandemic may pose challenges surrounding the schedule of inspections and achieving final sign-offs, we remain optimistic that we're able to complete these two projects on schedule. As previously noted, we have postponed nearly $100 million of capital expenditures originally planned for this year as a way to further our already strong liquidity position. Our strategy of focusing on grocery-anchored centers and mixed-use assets continues to validate our approach as these assets are outperforming, especially in this current environment. Our first two Class A multifamily projects, Lincoln Square in the heart of Philadelphia and the Whitmer in Washington, D.C., are both operational, and despite the recent shelter-in-place orders, we've been able to continue leasing activity at both with virtual tours. Based on the success of both the Lincoln Square and the Whitmer, we are continuing to expand upon our existing 4,500 multifamily units that are currently entitled, and our new goal over the next five years is to have over 10,000 units entitled. Perhaps never before has the local grocery pharmacy and the central physical brick-and-mortar retail been more important. And while I anticipate e-commerce will continue to accelerate in this stay-at-home period of the pandemic, it is important to note that the lion's share of e-commerce deliveries are originating at the store base. We anticipate curbside pickup combined with click-and-collect to be another trend that will accelerate both during the current pandemic and on the other side. We have launched the Kimco curbside pickup program, and we are already working with our tenants to implement a proprietary system to provide for curbside pickup in our parking lot. We want to help our retailers embrace the new normal of retail and help them ramp back up sales upon reopening with a full suite of services that are now expected by our shoppers. We know the road ahead is not going to be easy, but with persistence and a laser focus on what we can control, we will be positioned to thrive over time. Glenn?