Kimco Realty Corporation (HC)

Hello, everyone. Thank you for joining us and welcome to Kimco Realty's third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Dave Bujnicki, Senior Vice President of Investor Relations and Strategy. Please go ahead.

Thank you all for joining Kimco's quarterly earnings conference call. With me today are Conor Flynn, CEO, Ross Cooper, President and Chief Investment Officer, Dave Jamieson, Executive Vice President and Chief Operating Officer, Glenn Cohen, Executive Vice President and CFO, as well as other members of the Kimco leadership team who are available for Q&A. Before we begin, some of our comments today may include forward-looking statements based on management's current beliefs and expectations. These are subject to risks and uncertainties described in our SEC filings, and actual results may differ materially. We assume no obligation to update any forward-looking statements. We will also reference non-GAAP financial measures. Reconciliations to GAAP are available in our earnings release and supplemental package, both posted to our IR website, along with an accompanying presentation. The same forward-looking caution applies to those materials. Following prepared remarks, we'll open the call to Q&A. To allow a smooth and efficient call, please limit yourself to one question and re-queue for follow-ups. And with that, I'll turn the call over to Conor.

Good morning, and thanks for joining us. I'll start with the quarter and our strategy, and then Dave, Ross, and Glenn will cover operations, transactions, and our financial results in Outlook. We delivered a strong third quarter and are raising our full year FFO and same property NOI outlook. FFO per share grew 6.8%, keeping us on track for a third consecutive year of FFO per share growth above 5%. At the start of the year, we said the first quarter would be the low point for same property NOI growth, and that it would accelerate from there. That is exactly what we delivered. 1.7% in the first quarter, 3.5% in the second, and 4.9% in the third. We are also seeing early benefits from One Chimco, our unified operating platform, and faster end commencements and greater cost efficiency. Traffic at our centers remains strong, despite higher rates and pressure on consumer sentiment, up nearly 3% year over year. Consumers continue to prioritize convenience and value, and our centers, anchored by grocery and everyday essentials, sit on their daily path of travel. New supply remains extremely limited, and higher construction and financing costs make new development even less likely. That has pushed portfolio occupancy to an all-time high, with small shop occupancy at its record, and we still have runway as newly signed anchors open and drive traffic to the shops around them. Retailers' own data shows how much their stores matter to their online business. Stores serve as last-mile fulfillment hubs, and ICSE research found that when a retailer closes a store, its online sales in that trade area fall by more than 11% on average. That is why retention remains near record levels, and retailers keep reinvesting in their fleets, which supports continued rent growth. That demand drives our operating results. How we allocate capital is what compounds them, and it works like a flywheel. It starts with our currency, flat growth assets like ground leases and single tenant properties, multifamily assets that we've built on our own parking lots, and the free cash flow that our portfolio generates. Private buyers pay full value for those flat and multifamily assets, with their dispositions this year averaging a cap rate of approximately 5%. And with approximately 14,000 multifamily units either built, active, or entitled, this provides a source of additional currency over time. We put it to work where it earns the most, acquiring grocery-anchored centers with higher yield and stronger growth, We believe our valuation does not reflect the quality and growth of the business. Private market pricing for open-air grocery anchored centers sits in the 5 to 6% range, consistent with where we bought and sold this year, while our share price implies a cap rate in the mid to high 7% range. We believe this disconnect creates a compelling opportunity Rates may drive the headlines, but over time, fundamentals drive value. And we are not done. As we look at 2027, a meaningful part of our growth is already signed. We have one of the largest signed but not open pipelines in the sector, and among the lowest debt maturities next year relative to our peer group. and many more.