Kimco Realty Corporation (HC)

And welcome to CHIMCO's first quarter 2021 ERNICS conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing 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 and 1 on your telephone keypad. To withdraw your question, please press star and 2. Please note that this event is being recorded. I would now like to turn the conference over to David Bojnicki. Please go ahead, sir.

Good morning, and thank you for joining Kimco's first quarter earnings call. The Kimco management team participating on the call today include Connor Flynn, Kimco's CEO, Ross Cooper, President and Chief Investment Officer, Glenn Cohen, our CFO, David Jameson, Kimco's Chief Operating Officer, as well as other members of our executive team that are also available to answer questions during the call. It is important to note that we will need to keep this call focused on Kimco's first quarter earnings results and outlook as a standalone company, with more information forthcoming when the merger proxy statement is filed with the SEC. As a reminder, statements made during the course of this call may be deemed forward-looking, and it is important to note that the company's actual results could differ materially from those projected in such forward-looking statements due to a variety of risks, uncertainties, and other factors. Please refer to the company's SEC filings that address such factors. During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP financial measures can be found in the investor relations area of our website. Also, in the event our call was to incur technical difficulties, we will 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 Connor.

Good morning, and thanks for joining us today. Today I will focus my remarks on our leasing results, the supply and demand dynamics surrounding those results, and the exciting strategic direction we are taking the organization. Ross will cover the transaction market, and Glenn will cover the quarterly numbers and our updated guidance. 2021 is off to a refreshing and good start with robust demand for space in our last mile open-air grocery-anchored portfolio coming from both well-capitalized omni-channel tenants seeking more market share, as well as from smaller businesses that have regrouped and are prepared to reinvest in their business models. The largest leasing demand categories include restaurants, personal care, fitness, and dollar stores. We also see healthy activity and have consummated multiple leases with grocery stores, off-price and pet supply retailers. Our leasing volume continued to build from the record-setting trend last quarter. Our new lease count was 121, totaling 586,000 square feet. This exceeds both last quarter and the prior year quarters Of particular note, the 586,000 square feet of volume surpassed our five-year first quarter average for new lease GLA of 506,000 square feet, and new lease spreads finished at a positive 8.2% pro rata. We closed the quarter with 237 renewals and auctions, totaling 2.2 million square feet, with GLA exceeding the quarter sequentially and the prior year quarter. Renewals and auction spreads finished at 6.4% pro rata. These spreads continue to reflect the recovery underway and the pricing power inherent in the quality of our portfolio. Conversely, our ability to have withstood the impact of the pandemic reflects the defensive nature and strength of our recurring cash flows. From a supply and demand perspective, the reality is that due to the speed of the recovery, pandemic-induced vacancies were short-lived. With limited new supply, market rents never adjusted down in any meaningful way. So when the demand snapped back, we generated positive spreads. While our occupancy dipped slightly from year-end to 93.5%, it strengthened as we moved through the quarter. It is our intent to continue expanding occupancy, and we are encouraged by multiple demand factors playing to the strengths of our last-mile locations. Our job is clear. Focus on the blocking and tackling of leasing, work with best-in-class retailers, enhance the merchandising mix, and let the numbers speak for themselves as we strengthen the resiliency of our cash flows. Our first, second, and third priorities are leasing, leasing, leasing, and we continue to believe we are in the early innings of this reopening and recovery. In addition to leasing, we are prioritizing our smaller redevelopments that average double-digit returns to create an additional organic growth driver. Long-term, we believe our entitlement program will continue to create shareholder value as we unlock the highest and best use of our real estate. The pandemic has both validated and strengthened our conviction in our strategic vision to concentrate our open-air grocery-anchored and mixed-use portfolio in the top MSAs across the country. Tenants no longer look at the last-mile store as simply a retail destination. Rather, its value to retailers is now viewed holistically, providing distribution, fulfillment, and retail. In valuing a location, retailers assess their ability to integrate e-commerce and bricks-and-mortar. to give the customer what they demand. Convenience, value, and a fulfilling experience continues to point to the Last Mile Shopping Center as mission critical for both consumers and retailers. Our platform is well positioned for growth, and with that growth will come further debt reduction and other benefits of scale. We are enthused about the opportunities ahead, yet recognize the challenges involved. We remain committed to prioritizing ESG initiatives and supporting our tenants and local communities as we continue to navigate the pandemic and beyond. I'd also like to touch on the exciting recent news regarding our highly strategic merger with Weingarten, a transaction that we expect to unlock considerable value in some of the highest growth markets in the country. By coming together, we will be the nation's preeminent open-air grocery-anchored shopping center and mixed-use real estate platform. With our focus on these last-mile locations, and increased scale in our targeted high-growth Sunbelt markets, this transaction will significantly strengthen and enhance our portfolio quality to further gain market share and to make Kimco even more valuable to all of our tenants. In closing, Kimco's open-air and grocery-anchored portfolio, diverse tenant mix, targeted geographic presence in the strongest growth markets in the country, and improving balance sheet provide us with a long runway for growth as we move ahead. Needless to say, the entire organization is generally energized by our efforts to build shareholder value. With that, I'll turn the call over to Ross.