Kimco Realty Corporation (HC)

be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. 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 F. Buznicki, Senior Vice President, Investor Relations and Strategy. 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 Connor Flynn, Kimco's 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 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. With that, I'll turn the call over to Connor.

Good morning, and thanks for joining us. I will lead off today with a summary of our stellar Q4 leasing results, and then provide some strategic updates on our completed RPT acquisition. Ross will follow with an update on the transaction market, recent activity, and plans for 2024. Glenn will then cover our financial metrics and provide 2024 guidance. We concluded 2023 on a high note with record-setting leasing activity and a deeper, broader, and more resilient tenant base for our grocery-anchored and mixed-use portfolio. We've built on this positive momentum, kicking off 2024 by closing our acquisition of RPT on the first business day of the year. I will provide additional perspective on RPT shortly. Let's start with our leasing accomplishments. For the quarter, overall occupancy finished up 70 basis points on a sequential basis to 96.2% on a pro-rata basis. Importantly, the 70 basis point gain is our highest quarter-over-quarter uptick in occupancy going back more than 15 years. Our year-over-year overall occupancy increased 50 basis points. Anchor occupancy grew a record 80 basis points sequentially to 98% and finished flat year-over-year. Small shop occupancy was up 60 basis points to 91.7%. surpassing our previous record high of 91.1% and ended up 170 basis points year over year. We signed over 1 million square feet of new lease GLA in the fourth quarter, the highest quarterly level in over 10 years. We also maintained our strong pricing power as the spread on new leases was 24%, marking our ninth consecutive quarter of double digit leasing spreads. Our retention levels were equally strong as we signed 321 renewals and options totaling 1.7 million square feet surpassing our five-year fourth quarter historical average. The fourth quarter renewal and option combined spread was 7.8%, with renewals ending at 8.5% and options at 7%. Overall, fourth quarter leasing volume totaled 480 deals for 2.7 million square feet with a combined spread of 11.2%. A phenomenal effort and a tremendous team accomplishment. I'd be remiss to mention that what makes our leasing efforts in 2023 more impressive is that we've absorbed the vast majority of our Bed, Bath & Beyond spaces at spreads that far exceeded our initial expectations. Just to recap, we started 2023 with 29 Bed, Bath & Beyond locations representing approximately 70 basis points of pro rata ABR exposure. During the year, we resolved 21 leases with a combined pro rata spread of 43%. Of those 21 leases, four were signed in the fourth quarter at a combined spread of 57%. demonstrating the strong demand that remains for these high-quality locations. This includes our remaining eight boxes, which we're confident that we'll resolve as we move through the year and believe that our strong overall leasing success in 2023 will continue into 2024. Looking ahead, with the RPT deal closed, we are excited about our new team members who are fully engaged and seeking to add further value to the Kimco platform. Integration of the new portfolio is well underway, and we expect it to have a positive impact on our overall strategic plan throughout the year. Over time, we expect to benefit from the upside in the RPT portfolio, as we mark-to-market leases and take advantage of the supply-constrained environment using our best-in-class platform to raise occupancy levels. Glenn will provide additional color on the financing of the transaction and how it has positively impacted our balance sheets. We also see redevelopment and mixed-use opportunities in the RBT portfolio that will complement our existing pipeline and further contribute to our long-term growth. One particular example of incremental value that can be created through redevelopment is Mary Brico Village, a one-of-a-kind mixed-use property located in Miami. As we look to the future on an asset such as this, we believe there's a lot of upside and opportunity to use our platform to unlock meaningful long-term value and expand Kimco's Signature Series portfolio. Ross will discuss our 2024 transaction strategy in more detail, but I did want to highlight our plans to recycle lower growth centers, especially those with high CapEx loads and lower than acceptable returns. These anticipated dispositions have already been incorporated into our model and strategic plan, which is further supported by improvements in both the transaction and financing markets since we first announced the RPT transaction in the third quarter of 2023. We believe we are well positioned for 2024 with significant opportunities for both organic and targeted external growth. Our pipeline of leases that have been signed but not yet open shows strength in the quality of our portfolio and visible cash flow growth. Additionally, history has shown that our platform is ideally suited to take advantage of market dislocations and generate growth. In the end, we pride ourselves as being one of the most efficient operators and are laser focused on driving total shareholder return. That said, Despite improved conditions, the macroeconomic environment remains temperamental. Inflation, interest rates, employment, credit card delinquencies, and the election cycle all have the potential to impact our sector over the course of the year and beyond. And that is why underlying our overall strategy is an emphasis on building a portfolio that is both resilient and able to generate steady and reliable growth. Ross?