Kimco Realty Corporation (HC)

Good day and welcome to the Kimco Realty first quarter 2024 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 touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like now to turn the conference over to David Bushnicki, Senior Vice President of Investor Relations. 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 an update on the RPT integration, a summary of our significant first quarter leasing accomplishments, and a brief review of our strategic directions and goals. Ross will follow with an update on the transaction market, and Glenn will close with a summary of our financial results, major metrics, and the specifics behind our increase to guidance. After a seamless close on our acquisition of RPT on the first business day of the year, the integration is now complete. Most important is that in almost all aspects as it relates to RPC, we are ahead of our underwriting expectations in terms of timing, performance, and the select monetization of their assets. The new portfolio is performing well, producing over 3% same-site NOI for the quarter and revealing exciting growth opportunities that were either not previously underwritten or at overly conservative assumptions. This includes greater ancillary income, better than expected credit loss, and the lease up of shop space. We are very excited about the prospects for the new combination going forward, and many thanks to our talented team, including our newest associates, on this smooth integration. From a cost synergies perspective, at this early point in the year, we're ahead of expectations and anticipate reaching the high end of the stated range of $34 million in 2024. The better than expected results are attributable to our execution of planned dispositions ahead of schedule, as well as the implementation of lessons learned from wine gardens, including accurate underwriting of hiring needs and a more rapid approach to decommissioning office space and eliminating duplicative services. Kimco's operating platform is delivering efficiencies due to the clustering of additional assets in our core trade areas, as well as the strategic investments we've made over the past five years in technology, talent, and other areas. Turning to our first quarter leasing results, the portfolio generated same-site NOI growth of 3.9%. The increase includes 2.8% growth from higher minimum rents and a combination of lower landlord expenses, lower credit loss, and higher net recoveries. Pro rata occupancy came in at 96%, which represents a decrease of 20 basis points from last quarter, but also an improvement of 20 basis points from a year ago. The change from last quarter was primarily due to the RPT merger and the vacating of four Rite Aid locations. Peretta occupancy was also up 20 basis points to 97.8% and flat from a year ago. Small shop occupancy was down 20 basis points from last quarter to 91.5% as a result of the RPT merger, while still up 80 basis points from a year ago. Excluding the impact of RPT, small shop occupancy actually would have increased 20 basis points sequentially and represents future upside. During the first quarter, we leased over 4 million square feet, including 143 new leases. signed with positive leasing spreads of 35.5%. We continued our strong trend with over 400 renewals and options, completed at an overall positive spread of 7.8%. Overall combined spreads were 10.2% on 583 deals. Our lease to economic occupancy spread now stands at 330 basis points, representing a 20 basis point compression from last quarter as leases commenced and represents $63.4 million of annual base rent, with about 18 million expected to come online during the remainder of 2024. Our strong quarterly results give us confidence to raise our full year guidance for both FFO and same-site NOI, which Glenn will provide further color on. Recognizing the importance of growing in a high inflation environment, we remain focused on trimming non-critical expenses. Further, we have strategically positioned our open-air grocery and mixed-use portfolio and first-ring suburbs of select vibrant major metropolitan areas. These high barrier to entry markets continue to represent the sweet spot of the retail landscape, as new supply remains constrained and demand from our best-in-class tenants remains strong. Ross?