Kimco Realty Corporation (HC)

Hello, everyone, and thank you for joining the Kimco Realty's fourth quarter earnings call. My name is Claire, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad. I will now hand over to David Buschnecki, Senior Vice President of Investor Relations and Strategy for Kimco Realty. 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 CEO, Ross Cooper, President and Chief Investment Officer, Glenn Cohen, our CFO, Dave Jamison, 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.

Good morning, and thanks for joining us today. We appreciate your interest in Kimco Realty. Today, I'll highlight what we delivered in 2025 and how we're positioned to drive value in 2026. Dave Jamison will provide additional color on our leasing activity. We'll also then discuss the transaction market, and Glenn will wrap up with a review of our key financial metrics and guidance. 2025 was another banner year for Kimco. We delivered NAREIT FFO per share growth of 6.7%, making us one of the only shopping center REITs to achieve over 5% FFO growth in 2024 and over 6% in 2025. We also earned a credit rating upgrade to A- for Moody's during the fourth quarter. reflecting our disciplined approach to the balance sheet. Kimco is now one of only 13 REITs in the entire REIT industry, with multiple A minus A3 ratings from the three rating agencies, a notable milestone in our transformation into one of the lower levered REITs while still accelerating earnings growth. This is a rare accomplishment in the REIT world, and it speaks to the strength of our team, our portfolio, and our execution. Operationally, our performance was equally strong, achieving a number of record milestones, including overall portfolio occupancy of 96.4%, matching our all-time high, our highest quarterly new leasing volume in more than a decade, with 1.2 million square feet leased, a 90 basis point sequential increase in anchor occupancy, our strongest quarterly gain on record, a new all-time high in small shop occupancy of 92.7%, A signed but not open pipeline reaching a record 390 basis points, representing 73 million of future annual base rent. Enhancing our portfolio quality by expanding our annual base rent from grocery anchored centers by converting nine non-grocery sites to new grocery anchored locations in 2025. In terms of same-site NOI growth, we delivered 3% for the full year. These achievements highlight one of Kimco's key advantages, our ability to create value through our platforms. not only through capital allocation, but through consistent, hands-on execution at the asset level. A great case study is the portfolio we acquired from RPC. At acquisition, the occupancy gap between RPC and Kimco Legacy portfolio was 120 basis points. Since then, we've increased RPC occupancy to 96.2% at the end of 2025, narrowing the gap to a mere 20 basis points, or approximately 30,000 additional square feet to match Kimco's occupancy levels. The key driver has been small shop leasing. Our RPT small shop occupancy improved 370 basis points since the merger to 92.1%. Further, our operating momentum translated into real cash generation. We produced over $165 million of free cash flow after the payment of all dividends and leasing costs in 2025, strengthening our ability to self-fund growth while supporting a well-covered and growing dividend. We also paired that performance with a disciplined capital allocation. repurchasing shares when our valuation reached a meaningful discount to net asset value. Our portfolio and balance sheet are cycle tested and we're positioned to keep executing through any environment. As we enter 2026, we're encouraged by the continued fundamental strength of the shopping center sector. Importantly, there is almost no supply coming online, which combined with a resilient consumer and a robust pipeline of deals driven by healthy tenant demand, it gives us confidence we could push occupancy and same-set NOI higher. This is why we believe Kimco offers investors a compelling opportunity, solid, robust operating fundamentals, a well-covered dividend, durable earnings growth, and one of the strongest balance sheets in the REIT sector with a very attractive valuation based on our current multiple. As Ross will touch on, our high-quality open-air retail continues to attract capital. While public REIT sentiment has been uneven, private market pricing remains constructive, and that disconnect is creating opportunities. In 2026, we are focused on closing the value gap between Kimco's public market valuation and private market prices. Our strategy for 2026 is built around the following priorities. First, we intend to be proactive and aggressive in recycling capital that is both accretive and enhances the overall long-term growth profile. We plan to take individual assets and portfolios to market and sell at attractive private market cap rates. redeploying the proceeds into our highest return opportunities, including further potential share repurchases that currently offer roughly a 9% FFO yield. Recent transactions show shopping center REITs go private at cap rates in the mid-5s to low-6s range, and demand for high-quality assets like ours remains strong. Based on what we're seeing, we believe we can sell assets across our portfolio at a blended cap rate in the 5% to 6% range, which compares favorably to our implied cap rate in the low to mid 7% range, representing a clear value creation opportunity. Where appropriate, we will continue to utilize 1031 exchanges to mitigate the tax impact from these sales. To the extent gains cannot be fully deferred, it's quite possible that we may have to distribute a special dividend at year end. Second, we are flattening our organization and modernizing our operating platform to move faster and operate more efficiently. driving higher cash flow, improving margins, and unlocking the full advantage of our scale through better coordination, clearer ownership, and faster execution. At the midpoint, our plan removes $3 million of G&A expense this year, while still investing in our people and platform to keep raising the level of execution. Our priorities position us well for 2026. We are entering the year with strong operating momentum, the largest signed but not opened pipeline in Kimco's history, providing clear visibility into future rent commencements and embedded NOI growth, and a balance sheet designed for flexibility. Our focus is on disciplined execution, and we are energized by the opportunity ahead. With the strength of our team, the quality of our portfolio, and the financial capacity to act decisively, we are confident in our ability to outperform and unlock even greater long-term value. Dave?