Kite Realty Group Trust

Thank you for standing by and welcome to the Kite Realty Group Trust third quarter 2026 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'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Bryan McCarthy, Senior Vice President, Corporate Communications. Please go ahead, sir.

Thank you, and good morning, everyone. Welcome to Kite Realty Group's third quarter earnings call. Some of today's comments contain forward-looking statements that are based Thank you for joining us. On the call with me today from Kite Realty Group are Chairman and Chief Executive Officer John Kite, President and Chief Operating Officer Tom McGowan, President and Chief Financial Officer Heath Fear, Senior Vice President and Chief Accounting Officer Adam Jaworski, Senior Vice President Capital Markets and Investor Relations Tyler Henshaw, and Vice President Capital Markets and Investor Relations Cooper Clark. Given the number of participants on the call, we ask that you limit yourself to one question and one follow-up. If you have additional questions, we ask that you please rejoin the queue. I'll now turn the call to John.

All right. Thank you, Bryan. Good morning, everyone. Strong leasing this quarter underscored the earnings power of our core portfolio as Project Elevate nears completion. We signed more than 1.2 million square feet of leases further strengthened the credit quality of our tenant base, improved our rent escalators, maintained the strength of our balance sheet, and upgraded our credit rating. During the quarter, we executed 160 new and renewal leases with blended comparable cash spreads of 14.6%. New lease spreads were 33.7% and non-option renewal spreads were 18.3%. Our strongest result of the year on both measures. Our retail lease rate increased 50 basis points sequentially to 95.3%, up 140 basis points year over year, led by 190 basis point improvement in our anchor lease rate. Our lease to occupied spread widened 10 basis points in the third quarter and now stands at a record 360 basis points, which equates to $38.8 million of NOI Roughly a quarter of that NOI is expected to commence in the fourth quarter with approximately 24 million more coming online over the course of 2027. The quality of that leasing matters just as much as the volume. Over the past few years, our team has been highly selective in re-merchandising the space that we've recaptured. Since the start of 2024, we've executed 67 anchor leases with 38 different brands 91% of them national tenants for a total of approximately 1.6 million square feet at comparable cash spreads of 31% and a 29% return on capital. Two recent container store backfills tell the story. LL Bean at One Loudon and Our House at South Lake Town Square together at a combined cash spread of more than 50%. In each case, we added a best-in-class operator that drives traffic to the entire center, higher credit, stronger annual bumps, and concepts that bring shoppers back repeatedly. While anchors have been a key focus in our re-merchandising efforts, small shops continue to see strong demand and leasing momentum. And that's where we see the most upside from here. Shop lease rate in the third quarter increased 40 basis points sequentially and 90 basis points year over year to 92.7%. Our exposure to shop space has increased 700 basis points as a percentage of ABR since the fourth quarter of 2022, accelerating our internal growth and de-risking our tenant credit profile. Additionally, our shop exposure commands average rents of nearly $38 a square foot, more than twice our average acre, while requiring less capital spent. Continuing to increase our exposure to shop tenants through selective capital recycling and pushing our existing shop occupancy higher is a top priority for our team and a meaningful lever for growth. We continue to make incredible progress on Project Elevate. Since the start of 2025, we've sold 22 non-core assets for over a billion dollars and repurchased roughly 22 million shares for approximately 539 million dollars. at an average price of $24.46, well below consensus NAV. Through Project Elevate, we've exited more than 60 at-risk anchor locations and five watch list tenants have rolled off of our top 25 list, leaving us with a higher quality portfolio and a more durable and de-risked cash flow stream. That brings me to what matters the most, the core portfolio. and why we believe it positions KRG to deliver stronger organic growth with less risk over the long term. Compared with year-end 2022, power centers have gone from 19% of our ABR to 13%, while lifestyle and mixed use has grown from 21% to 28%. The centers we sold through Project Elevate averaged roughly $18.60 of base rent per square foot, That's about 20% below our portfolio today and carried embedded rent bumps more than 30 basis points below the retained portfolio. Our portfolio's cruising speed has reached 188 basis points, up 32 basis points since the start of 2024. And the vast majority of that improvement has come through leasing, not dispositions. We continue to see upside to current occupancy levels and expect our sign not open pipeline to remain elevated throughout 2026 and 2027. Our retail lease rate is still 80 basis points below our high watermark of 96.1%. And we see a clear path to push small shops towards the 94% and anchors towards 98%. With 18 anchor spaces, roughly 485,000 square feet left to lease and virtually no new supply, We believe there's plenty of runway left for occupancy gains. Finally, a word on the capital markets. We believe private real estate capital remains under-allocated to open-air retail, and that's beginning to change. But capital alone does not create value in this business. Leasing, merchandising, and operating execution do. Platforms with experienced leasing teams and deep tenant relationships are uniquely positioned to benefit. Our partnership with GIC is a clear evidence that sophisticated capital partners value what the KRG platform delivers. And that dynamic is creating real opportunities for operators who can execute. Simply put, the work of reshaping KRG is nearly complete. We have a higher quality portfolio, a stronger tenant base, a fortress balance sheet, and a platform built to grow. I want to thank the entire KRG team for their relentless effort in getting us here and continuing to push forward. I'd like to turn it to Heath.