Kite Realty Group Trust

Good day, and thank you for standing by. Welcome to the Kite Realty Group Trust first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian McCarthy. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to Kite Realty Group's first quarter earnings call. Some of today's comments contain forward-looking statements that are based on assumptions of future events and are subject to inherent risks and uncertainties. Actual results may differ materially from these statements. For more information about the factors that can adversely affect the company's results, please see our SEC filings, including our most recent Form 10-K. Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's earnings press release available on our website for reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today from Tite Realty Group, our Chairman and Chief Executive Officer, John Kites, President and Chief Operating Officer, Tom McGowan, Executive Vice President and Chief Financial Officer, Keith Feer, Senior Vice President and Chief Accounting Officer, Dave Buell, and Senior Vice President, Capital Markets and Investor Relations, Tyler Henshaw. I will now turn the call over to John.

Thanks, Brian, and good morning, everyone. KRG's strategy for 2023 is a straightforward plan anchored in our best-in-class platform. We intend to lease space at attractive, risk-adjusted returns, operate our high-quality portfolio at sector-leading margins, and maintain a rock-solid balance sheet. This plan focuses on our key strengths with the ultimate goal of delivering sustainable value for all stakeholders. I'm pleased to report that KRG's first quarter results exceed our 2023 plan and our streak of outperformance continues. We generated FFO per share of 51 cents, beating consensus estimates by 4 cents per share and representing an 11% increase over the comparable period last year. Our same property NOI growth for the quarter was 6.5% as compared to the same period in 2022. HEATH will provide more details around the components of each metric. KRG signed 144 leases representing over 830,000 square feet producing 13% blended cash spreads on comparable new and renewal leases. Excluding the impact of option renewals, our blended cash spreads on comparable leases was 21%. More importantly, KRG earned a 42% return on capital for comparable new leases, which translates into an average payback period of only 2.4 years. The retention ratio in the quarter was nearly 90%, which is well above historical norms. Based on our ability to drive pricing, produce strong returns, and retain existing tenants, it should come as no surprise that we are experiencing strong demand for our Bed Bath & Beyond boxes. Our current guidance assumes that we will recapture all of our Bed Bath locations and that we will not be paid any rent beyond what we have already collected to date. Open air retail will always be Darwinian. And tenants that are slow to adapt will be nudged aside by more agile competitors. It's what makes our business so dynamic and interesting. We've been through this exercise before, and as it relates to Bed Bath or any struggling tenant, we'll gladly trade any temporary disruption for the long-term value creation associated with re-letting these spaces to vibrant and traffic-generating tenants. The good news is that Bed Bath Boxes are attractively sized and located in prime spots within our centers, which we expect will translate into healthy releasing spreads and strong returns on capital. Currently, we have significant interest in our locations from a variety of categories, including specialty grocery, discount, sporting goods, and home furnishing. We have persistently maintained that leasing existing space offers the best risk adjusted use of our capital, and we're poised to swiftly address the backfill potential for these boxes. The past two and a half years serve as a great example. We've executed 58 anchors representing over 1.4 million square feet at 18% comparable cash leasing spreads and 20% returns on capital. You've often heard us say that the only permanency in our business is the underlying land. Everything on top of it can change. When asked which open-air format we are most likely to invest in, our answer is always, we invest in great real estate. We're starting to see the same philosophy implemented by our retailers. Retailers are focused less on the type of center and more on the underlying quality of the real estate. This growing trend is supported not only by the increasing body of data available to our tenants, but also by the post-COVID realization that brick and mortar stores are the primary distribution point along a supply chain that requires convenience, speed, and healthy profit margins. As a result, we focus on the underlying quality of the real estate across a variety of product types. Our portfolio is well balanced among the open-air retail categories, thereby offering a wide array of options to our retailers. Furthermore, our product is pliable enough to reconfigure if the real estate dictates a different use. These trends, together with the lack of meaningful new supply in the open-air retail space, have created an extremely favorable supply-demand dynamic for KRG. The culmination of all these great things I've just mentioned is allowing KRG to increase its NAREIT FFO guidance by $0.03 per share, moving the midpoint from $1.92 to $1.95. We're also increasing the midpoint of our same property NOI growth assumption by 25 basis points, moving the midpoint from 2.5% to 2.75%. I'll now turn the call over to Heath to provide additional details.