The paragraph is a transcript from the beginning of the Kimco Realty Third Quarter 2024 Earnings Conference Call. The operator welcomes participants and introduces David Bujnicki, Senior Vice President of Investor Relations and Strategy, who then introduces the Kimco management team present on the call, including the CEO, President and Chief Investment Officer, and CFO. Bujnicki reminds listeners that the call may include forward-looking statements with potential risks and uncertainties, and directs them to the company's SEC filings for more information. He also mentions that non-GAAP financial measures may be discussed, with reconciliations available on the company's Investor Relations website, and outlines a plan in case of technical difficulties. Conor Flynn, the CEO, takes over to provide updates on the company's 2024 progress and RPT integration.

The paragraph discusses the company's positive supply and demand dynamics, highlighting key achievements such as securing 12,000 multifamily unit entitlements ahead of schedule, which offers flexibility for future growth. The company is proud of its net acquisition status for the year, enhancing both internal and external growth. It also highlights the successful integration of the RPT acquisition, noting progress in operational synergies and increased occupancy rates. The current favorable supply and demand conditions in high-quality retail further bolster the company's confidence in its portfolio.

The paragraph discusses the current state of the retail leasing market, highlighting low vacancy rates and limited new shopping center construction, which restricts options for tenants seeking prime locations. Retailers are securing leases even during bankruptcy, demonstrating strong demand across various sectors, including grocery, beauty, health, and fitness. The company's portfolio has benefited, achieving a high occupancy rate of 96.4%, with significant new lease activity and strong rent increases. Key new leases include notable brands like Target, Lidl, and Tesla. The company completed 119 new lease deals and 332 renewals in the third quarter.

The paragraph discusses the performance and strategies of Kimco in the third quarter of 2024. It highlights a 6.8% spread in renewals and options, with a combined lease volume of 451 deals totaling 2.4 million square feet and a spread of 12.3%. The company added four grocery anchors to its portfolio, increasing its rent base from grocery-anchored assets to 84%. Kimco emphasizes a strong operating platform and team, and expresses optimism due to favorable economic conditions such as employment, consumer spending, and reduced inflation. The company focuses on strategic goals for growth, disciplined capital allocation, and is shifting its investment strategy to focus on owned assets, particularly larger properties, taking advantage of favorable capital costs to evaluate acquisition opportunities.

The paragraph discusses the strategic benefits of acquiring Waterford Lakes Town Center in Orlando, highlighting its market dominance, high traffic and sales performance, and a diverse tenant mix that caters to local demographics. The acquisition offers advantageous pricing and strong yield prospects due to less competition for high-value assets. The property, built in 1999, presents significant growth opportunities, particularly with leases expiring soon, allowing for potential rent adjustments. The acquisition aligns with the company's goal for growth and is expected to significantly contribute to its portfolio. Additionally, the company is preparing to focus on its Structured Investment program by 2025.

The paragraph discusses a real estate program launched in 2020, highlighting its potential to transition from mezzanine financing to full ownership. The transaction market is optimistic about retail investments, expecting an increase in high-quality products and narrowing bid-ask spreads by 2025. Glenn Cohen then reports strong third-quarter financial results, with record-high leased occupancy, positive leasing spreads, and significant same-site NOI growth. Additionally, the company's liquidity and leverage metrics position them well for growth, with FFO reaching $287.4 million ($0.43 per diluted share), a 7.5% increase from last year, and total pro rata NOI of $394.1 million, marking a 15% increase.

The paragraph discusses the financial performance and growth drivers of a company in the third quarter. The growth was significantly influenced by a $39 million contribution from the RPT acquisition and $12 million from higher minimum rents due to quicker rent commencements. However, this growth was partly offset by a $16.3 million increase in interest expenses from higher debt levels. The same site net operating income (NOI) grew by 3.3%, primarily driven by minimum rent increases and improved occupancy. Additionally, recoveries and low credit losses positively affected NOI growth. The company's "signed but not open" pipeline comprises 399 leases worth $61.2 million in annual base rent, with most expected to commence by 2025, generating $40 million that year. The company ended the quarter with a consolidated net debt to EBITDA of 5.3 times, improving to 5.6 times when including JV debt and preferred stock, marking the best level since 2009.

During the third quarter of 2024, the company increased its term loan from $200 million to $550 million, involving five additional lenders, with a blended all-in rate of 4.61% maturing in 2029. They also issued a 10-year unsecured bond maturing in 2035 with a 4.85% coupon, using proceeds to invest in short-term instruments until a 3.3% $500 million bond matures on February 1, 2025. The company received an A minus unsecured debt rating from Fitch, improving its debt costs, and S&P upgraded their outlook to positive. These changes, along with greenhouse gas emission target achievements, reduced costs on $860 million in term loans and a $2 billion revolver. Due to strong results, the company raised its FFO per diluted share outlook to $1.64-$1.65. They updated full-year assumptions, increasing same-site NOI growth to over 3.25%, and expect interest income of $20-$22 million. Investment guidance increased to $565-$625 million, including the acquisition of Waterford Lakes for $322 million, while the disposition outlook decreased by $50 million to $250-$300 million.

The paragraph discusses the company's plans and past performance. They will share their 2025 outlook with the fourth-quarter results and note that they do not expect the same level of interest income in 2025 due to maintaining around $100 million in cash. They plan to use existing cash to pay off a $500 million bond due in February 2025. They express gratitude to their associates for the company's strong performance and readiness for future growth. In the Q&A session, Alexander Goldfarb of Piper Sandler asks about the performance of recent transactions, specifically RPT and Weingarten, and Conor Flynn responds by stating that RPT has exceeded expectations both in synergy and NOI, with a strong same-site NOI of 10.3%, emphasizing that the goal is to enhance the organization's growth profile, not just expand for the sake of size.

The paragraph discusses Kimco's successful integration of Weingarten and RPT, which has improved its growth profile. The company is focused on leveraging its platform to unlock value for shareholders by enhancing asset integration. Michael Goldsmith from UBS asks about Kimco's progress in RPT small shop leasing and opportunities to align it more closely with Kimco's core portfolio. Ross Cooper responds positively, highlighting that after three quarters of integrating RPT, the operational team is excelling, and the retained core portfolio, especially in the Sun Belt and Midwest, is performing well. He emphasizes the strong demand drivers, limited supply, and the positive impact of their small shop initiative, with increasing rent revenue being a significant contributor.

The paragraph discusses the company's recent success in optimizing operations following a transaction, contributing to their strong performance in Q3. It highlights the acquisition of skilled personnel who have been beneficial to the organization. Additionally, Ross Cooper talks about their structured investments program, expressing enthusiasm for the opportunities it presents. He notes that while they anticipate favorable returns, they are also seeing possibilities for direct acquisitions as certain deals approach the end of their life cycles. Specifically, they are working on a potential acquisition expected to materialize by early 2025.

The paragraph discusses the company's strategy for managing entitled projects. They have around $470 million outstanding in a program involving several assets, which could become a significant pipeline if projects materialize. They've successfully entitled 12,000 units over 8 to 9 years and are now focusing on activation, with projects like Suburban Square already under construction. The company is maintaining financial discipline, waiting for costs to rebalance, and considering various options, including ground leases and potential project monetization with third-party developers. Potential activations may happen in 2025, ensuring any actions are beneficial to the organization.

The paragraph discusses Kimco's strategic approach towards investing in lifestyle centers across different markets. The company values geographic and format diversification, allowing them to create value in various markets. Their investment decisions are driven by opportunities in specific markets and the performance of their teams. Kimco sees more competitive opportunities in larger format, higher price point assets, as opposed to neighborhood grocery-anchored shopping centers, which have more capital competition. Their diversification and approach help them differentiate and optimize their investments.

In the paragraph, Conor Flynn from Kimco discusses the company's growth outlook for the upcoming year, although no specific guidance is provided. He emphasizes the positive operational year for Kimco, noting a low impact from bankruptcies, as leases from bankrupt firms have been acquired by creditworthy retailers. Flynn highlights factors like the upcoming election, resilient consumers, and strong retailer demand for high-quality shopping centers as supportive of growth. He also mentions that Kimco is actively working on strategies to enhance growth, including improving same-site NOI (Net Operating Income) and FFO (Funds From Operations) while managing their development pipeline efficiently.

The paragraph discusses Kimco's strategy for enhancing their growth profile by potentially monetizing certain assets such as entitled apartment units and high-quality assets to reinvest in higher growth shopping centers. Conor Flynn, in response to Floris van Dijkum's question, explains that they are focusing on achieving maximum price and value through individualized transactions. These can include selling entitled properties ready for development to developers or long-term ground leases to specific buyers like 1031 or triple net investors. Each asset presents unique circumstances and requires tailored approaches for monetization.

The paragraph discusses the company's focus on accretive asset recycling, moving away from high cap rate dilutive asset sales to more profitable strategies like ground leases and monetizing entitlements. Ross Cooper emphasizes the importance of continuing to outpace inflation, which remains a key focus due to its potential impact on real estate pricing. Despite inflation concerns, the retail sector benefits as consumers continue to visit shopping centers, aided by a strong employment market and increased traffic. The discussion takes place during a Q&A, with Craig Mailman inquiring about the company's view on inflation and its effects on real estate pricing.

The paragraph discusses the competitive dynamics in the acquisition market, specifically focusing on cap rates and transactions. Cap rates are reflecting a blend of various investments, including higher-yielding ones and those like Waterford in the low seven range. There's significant competition, particularly for neighborhood grocery-anchored shopping centers, with increased interest from large institutions and investors. Examples include a grocery-anchored shopping center in Las Vegas trading in the mid-fives and a deal in suburban Detroit being awarded at a sub-six cap, indicating that cap rates are stable and may continue to compress.

The paragraph discusses how recent interest rate cuts have not led to expected lower interest rates; instead, the longer end of the yield curve has expanded. As long-term investors, the focus is on long-term asset growth rather than solely on cap rates. Greg McGinniss from Scotiabank questions Ross Cooper about factors driving sellers to the market despite rising interest rates. Cooper explains that sellers have varied reasons, such as liquidity needs or portfolio rebalancing, and that open-air, grocery-anchored shopping centers are in high demand. This demand allows sellers to achieve favorable pricing, and buyers, like Ross's group, benefit from these market conditions.

In the paragraph, the speaker discusses a deal involving a property in Waterford, highlighting that it had a prolonged life cycle, taking from the first to the fourth quarter of the year to close. This delay was partly due to assuming a CMBS loan with a 4.86% interest rate, coincidentally matching a bond they issued. Despite market fluctuations affecting pricing, the speaker emphasizes a long-term investment perspective, expressing excitement about the asset within their portfolio. Following this, a question from Caitlin Burrows of Goldman Sachs shifts the focus to the leasing environment, which is depicted as strong due to muted supply and high demand, though it is sometimes overlooked.

The paragraph discusses the company's progress with its lease rollover schedule for 2025, noting that over 70% of its first-half rollover schedule is either resolved or in the process of being resolved, ahead of last year's pace. Particularly strong categories are off-price retailers and grocers, with grocers accounting for nearly 20% of new anchor deals. The company is also planning for 2026 and 2027, aligning its strategy with retail partners' growth goals. Despite challenges, the company maintains strong rent growth, particularly in new and renewal deals, with most activity in the small shop category. Overall, the market environment remains favorable.

The paragraph is a transcript from a discussion during an investor call. Ross Cooper addresses a question about mezzanine investments, explaining that the properties in question are geographically diverse and align with the larger portfolio, including neighborhood grocery-anchored shopping centers and larger lifestyle assets. Conor Flynn responds to a question about residential opportunities at an Orlando asset, emphasizing the company's focus on enhancing retail quality and near-term upside rather than pursuing residential development immediately. The conversation includes forward-looking considerations for asset opportunities in 2025.

The paragraph discusses a company's approach to acquisitions, highlighting their conservative initial underwriting without including potential growth opportunities, which they later discover exist as additional upside. This is similar to a previous acquisition of the Stonebridge asset, which has future multifamily opportunities. The company is also exploring larger assets and structured investments as potential investments for the future. The discussion then shifts to a question from Paulina Rojas about Kimco's NOI growth, noting the recent positive shift in retail fundamentals and strong retailer demand, and questioning how sustainable this growth is compared to historical rates. Conor Flynn responds, suggesting this retail revival is in its early stages and driven by a lack of new supply and rebounding demand.

The article discusses how CapEx on an NOI basis is expected to reach an inflection point next year if current trends of low turnover, few bankruptcies, and high retention rates continue. The lack of new developments due to insufficient returns on cost is keeping the supply side unchanged, leading to strong growth opportunities for renewals without tenant improvement costs. This positive outlook for growth is exciting for Kimco. When asked by Mike Mueller about the decision to lower disposition guidance, Ross Cooper explains that it results from a combination of different factors, including varying strategies among joint venture partners and clearer market clarity, especially concerning some west coast assets. This understanding contributed to the adjustment in guidance.

The paragraph features a discussion on a portfolio's performance and future expectations. It mentions some assets in the portfolio that outperformed expectations, prompting a decision to hold those assets longer. Ronald Kamdem of Morgan Stanley poses a question about the focus for the upcoming year, particularly regarding same-store occupancy and releasing spreads. Glenn Cohen responds that while the portfolio and rent commencements are strong, they remain focused on managing credit loss, which is currently at a low point. An operator mentions a follow-up question from Alexander Goldfarb regarding bond maturities in 2025, highlighting a specific $250 million bond from Weingarten with a notably low interest rate.

Glenn Cohen discusses their strategy for managing upcoming debt maturities in 2025, which include a $240 million Weingarten bond with an effective interest rate of 1.48% and three mortgages due in March with a 3.5% interest rate. They have $2 billion available on their revolver, providing flexibility for addressing these maturities. The company aims to stay ahead by maintaining a well-staggered maturity profile, which is beneficial during inflationary periods. David Bujnicki thanks participants and looks forward to future events, wishing everyone a safe Halloween. The conference concludes.

This summary was generated with AI and may contain some inaccuracies.