Kimco Realty Corporation (HC)

Hello, and welcome to the Kimco's third quarter 2021 earnings conference. 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 touchtone phone. To withdraw your question, please press star, then two. Please note, today's event is being recorded. I now would like to turn the conference over to David Pujanicki, Senior Vice President of Investor Relations and Strategy. Please go ahead, sir.

Good morning, and thank you for joining Kimco's third quarter earnings call. The Kimco management team participating on the call today include 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. As a reminder, statements made during the course of this call may be deemed forward-looking and it is important to note that the company's actual results could differ materially from those projected in such forward-looking statements due to a variety of risks, uncertainties, and other factors. Please refer to the company's SEC filings that address such factors. During this presentation, Management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP financial measures can be found in the investor relations area of our website. Also, in the event our call was to incur technical difficulties, we'll try to resolve as quickly as possible, and if the need arises, we'll post additional information to our IR website. And with that, I'll turn the call over to Conor.

Good morning, and thanks for joining us. Today I will share the highlights of the quarter, provide a recap of our now closed strategic merger with Weingarten, and give an update on the strong leasing environment. Ross will give an update on the transaction market, and Glenn will cover our operating metrics in detail, discuss our improved balance sheet, Albertson's valuation, and the proactive use of our ATM, and how we can take advantage of opportunities in the market. He'll close with an updated outlook for the balance of the year. While we have only owned Weingarten for a partial quarter, our expanded portfolio of grocery-anchored and mixed-use properties is already validating our investment thesis. To date, we are exceeding our initial underwriting on all major metrics, including FFO, occupancy, spreads, and renewal rates. As for synergies, as outlined in our earnings release, we have achieved the upper end of both ranges and anticipate achieving the full benefit of synergies by the end of 2022. Our dedicated team has done a remarkable job closing on the merger ahead of schedule and implementing an integration plan that included onboarding and training over 100 new employees, significant systems integration, and property management, all while staying focused on executing our strategy. To all of my teammates, I just want to say thank you. On the operational front, leasing demand continues to be robust across the portfolio, with the bright spot being the rebound in demand for small shots. This was illustrated by the portfolio delivering another quarter of improved results, including a sequential increase in occupancy and positive leasing spreads. Our pro rata U.S. occupancy is up 20 basis points to 94.1%, while anchor occupancy remained flat at 96.9%. Small shop occupancy rose 180 basis points over prior quarter to 87.3%, an increase of 60 basis points year over year. New lease spreads were a positive 5%, with 141 new leases signed, totaling 605,000 square feet. Spreads for renewals and options finished at positive 4.9%. We closed the quarter with 270 renewals and options, totaling 1.4 million square feet, exceeding the five-year average number of renewals and options reported during the third quarter by 40%, and exceeded average GLA renewed by 38%. Combined spreads for third quarter 2021 were positive 4.9%. with total 3Q21 deal volume reaching 411 deals, totaling 2,050,321 square feet. 411 leases executed represents the most transactions reported during a quarter since the first quarter of 2018. Our same site NOI growth was positive 12.1%, including a 30 basis point contribution from redevelopments. The same site population does not include the Weingarten sites since we only had them for a partial quarter. With the continued strength in leasing, we have maintained our 300 basis point spread of leased versus economic occupancy, similar to last quarter. As of September 30th, 2021, we had over 400 signed leases representing $44.8 million of pro rata annualized base rents awaiting rent commencement. While the operating environment remains favorable, we cannot let down our guard. Inflation, supply chain issues, and the labor market together or alone can impact our business. And that is why we continue to look for the most resilient assets, improve operational efficiencies, and seek out ways to help our tenants succeed. We continue to grow our portfolio in the high growth Sunbelt markets and are committed to being the last mile solution for tenants. There is no question that our mission critical last mile brick and mortar locations are proving to be durable solutions for consumers, retailers, and many other businesses that want scale and reach to serve the end customer. In closing, we are pleased with the progress we have made and believe that we have positioned Kimco for sustainable growth over the long term with a combination of internal and external growth levers. Our talented and deep team is focused on execution as we're in a unique position to take advantage of a wide range of opportunities. We continue to believe we're building something special and the best is yet to come. Ross?