Andrew Reale

Andrew Reale asked about the expected growth inflection from leasing momentum in late 2026 and into 2027, and the overall health of the consumer, including any bifurcation across the portfolio.

Answer

Dan Swanstrom, Senior EVP and CFO, indicated the SNO pipeline's estimated $30 million contribution in 2026 is back-end weighted, with significant growth expected in 2027 ($40-$45 million) and 2028 ($45-$50 million). Jackson Hsieh, President and CEO, described a K-shaped consumer, noting flat traffic but 1.5% inline sales growth (5.5% for luxury) in the go-forward portfolio, with retailers being cautious but constructive.

Andrew Reale inquired about the key swing factors that could drive Kite Realty Group towards the higher or lower end of its guidance range. He also asked about the company's control over the timing of the signed-not-open (SNO) pipeline and potential levers to accelerate commencements. Additionally, he requested quantification of the recurring but unpredictable items, such as termination fees and land sale gains, baked into the guidance.

Answer

EVP and CFO Heath Fear outlined typical same-store NOI factors, recurring unpredictable items, and transactional activity timing as swing factors. President and COO Tom McGowan discussed strategies to control rent commencement dates (RCDs), including managing drawings, permitting, and consolidating permits. Heath Fear quantified recurring unpredictable items at just under $13 million for the year, spread across term fees, land sale gains, and development fees, noting it's a run rate.

Andrew Reale asked about the key swing factors that could drive Kite Realty Group towards the higher or lower end of its guidance range. He also inquired about the extent to which the timing of the signed-not-open (SNO) pipeline is controllable and what levers could be pulled to accelerate commencements. Additionally, he requested quantification of the recurring but unpredictable items, such as termination fees and land sale gains, baked into the guidance.

Answer

EVP and CFO Heath Fear explained that typical same-store factors (bad debt, RCDs, retention, overage), recurring unpredictable items (term fees, land sales), and transactional timing (dispositions, 1031 acquisitions) are the main swing factors. Chairman and CEO John Kite and President and COO Tom McGowan noted that controlling RCDs involves expediting drawings, permits, and consolidating multiple permits. Heath Fear quantified recurring unpredictable items at just under $13 million for the year, spread across term fees, land sale gains, and development fees, noting it's a run rate consistent with prior years.

Andrew Reale of Bank of America questioned the latest status of the City Center property sale. He also asked if the Humblewood sale proceeds would satisfy the funding for the Legacy West acquisition and what management views as a realistic ceiling for small shop occupancy.

Answer

CEO John Kite stated that KRG is still marketing City Center for sale after a previously identified buyer could not move forward. CFO Heath Fear clarified that while all cash is fungible, the Humblewood sale traded at a better cap rate than anticipated for City Center. Regarding occupancy, John Kite expressed confidence that they can exceed their 2019 peak of 92.5% for small shops, emphasizing a focus on the best, not fastest, outcome.

Andrew Reale of Bank of America questioned the status of the City Center asset sale, whether other dispositions would cover the Legacy West acquisition funding, and what the company views as a realistic long-term ceiling for small shop occupancy.

Answer

CEO John Kite confirmed that City Center is still being marketed after a buyer was unable to proceed. CFO Heath Fear noted that the Humblewood sale, which had a more attractive cap rate, could be used to fund the Legacy West acquisition. Regarding occupancy, Kite stated he is confident they can exceed their pre-pandemic peak of 92.5% for small shops.

Andrew Reale of Bank of America requested an update on the sale of the City Center property, asked if the Humblewood sale was sufficient to fund the Legacy West acquisition, and inquired about the potential long-term ceiling for small shop occupancy.

Answer

CEO John Kite confirmed City Center is still being marketed after a buyer fell through, with new leasing activity improving its prospects. CFO Heath Fear stated that the Humblewood sale, which achieved a better cap rate than City Center was expected to, contributes to the Legacy West funding. Mr. Kite noted that while they don't set a ceiling for small shop occupancy, he is confident they can exceed the 2019 peak of 92.5%.

Andrew Reale inquired about recent changes in leasing strategies, tenant negotiations, and the outlook for development yields amid macroeconomic uncertainty.

Answer

CEO John Kite reported it is 'business as usual' in leasing, with the scarcity of quality space maintaining KRG's strong negotiating position. COO Tom McGowan added that major tenants are actively engaging in portfolio reviews for expansion. Regarding development, Kite noted that yields have not yet been impacted by macro factors, though it is too early to rule out future effects.

Andrew Reale asked about the Parkside West Cobb acquisition, requesting the cap rate, the degree of market compression since the deal was locked up, and whether this transaction signals a shift toward more external growth. He also inquired about the percentage of 2025 leasing needs that have been addressed and how far into the future leases are being signed.

Answer

CEO John Kite disclosed that the Parkside acquisition was accretive to a prior sale and was secured at a cap rate estimated to be 50-75 basis points higher than today's market. He reiterated that high-return internal deployment remains the priority, but the strong balance sheet provides external growth optionality. CFO Heath Fear added that about 50% of 2025 leasing needs have been addressed, which is comparable to the same time last year. John Kite noted that the company is already working on leases with 2026 delivery dates.

Andrew Reale asked about InvenTrust's funding sources for its $300 million net acquisition activity, inquiring about the type of debt, expected pricing, and the allocation of interest expense between swaps rolling over and incremental debt. He also questioned the company's new leverage target range and its comfort level with aggregate leverage.

Answer

CFO Mike Phillips stated that InvenTrust has ample balance sheet capacity, planning to use its line of credit and opportunistically access private placement or bank debt markets, with private placement pricing estimated at 125-150 basis point spreads. He noted that swaps burning off in September would create a 1-1.5 penny headwind in 2026. Phillips added that the company could fund the $300 million without exceeding leverage targets, aiming for 5x net debt to adjusted EBITDA and comfortable not exceeding 5.5x on a quarterly basis. President and CEO DJ Busch emphasized protecting the balance sheet while being opportunistic.

Andrew Reale asked about InvenTrust's funding sources for the $300 million net acquisition activity, including the type of debt they would issue, expected pricing, and the portion of interest expense attributable to swaps rolling over versus incremental debt. He also inquired about the company's new leverage target range and the maximum leverage they would be willing to take.

Answer

CFO Mike Phillips explained that InvenTrust has ample balance sheet capacity to fund acquisitions, planning to use their line of credit and opportunistically access the private placement market with expected spreads of 125-150 basis points. He noted that swaps rolling over in September 2026 would create a 1-1.5 penny FFO headwind. Regarding leverage, Mike Phillips stated they could fund the $300 million without exceeding targets, aiming for 5x net debt to adjusted EBITDA and comfortable not exceeding 5.5x on a quarterly basis. President and CEO DJ Busch emphasized protecting the balance sheet and leveraging incremental debt for growth.

Andrew Reale asked about the performance of discretionary categories, specifically restaurants, within InvenTrust's Sun Belt portfolio, given mixed national headlines and potential pullbacks in consumer spending. He also inquired about the acquisition pipeline's composition (grocery vs. power/lifestyle), its size, and current pricing trends.

Answer

DJ Busch, President and CEO, stated that InvenTrust continues to see strong demand from quick-service and sit-down dining, with most struggles being operator-specific rather than an overarching theme. He noted that the acquisition pipeline remains robust, often exceeding $1 billion, with a mix similar to the current portfolio, predominantly grocery-anchored but also including power and smaller lifestyle centers.

Andrew Reale asked about the performance of tenants in discretionary categories, particularly restaurants, within the Sunbelt portfolio, and how InvenTrust Properties Corp. is approaching renewals given recent negative headlines and potential pullbacks in discretionary spending. He also inquired about the composition and size of the acquisition pipeline, specifically the percentage of core grocery versus power and lifestyle properties, and current pricing trends.

Answer

DJ Busch, President and CEO, explained that demand from quick-service, fast-casual, and sit-down dining remains strong, with tenant struggles primarily being operator-specific rather than an overarching trend. He noted solid demand for turnover spaces, with some already re-leased to other food uses. Regarding acquisitions, Mr. Busch stated the pipeline is robust, exceeding $1 billion, and the mix will mirror the current portfolio, with over 70% having a core grocery component. He confirmed that recently awarded properties are also grocery-anchored.

Andrew Reale of Bank of America inquired about the level of competition for core grocery-anchored centers, whether the company might pivot to unanchored or shadow-anchored opportunities, and the realistic occupancy ceiling for its small shop portfolio.

Answer

CEO Daniel Busch acknowledged that institutional competition for grocery-anchored centers is strong but noted that proceeds from their California asset sale provide a competitive cost of capital. He emphasized that this allows them to be competitive for high-quality assets with compelling growth profiles. Regarding small shop occupancy, Busch stated there is direct visibility for another 100 basis points of growth from the current pipeline of letters of intent and leases in legal review, with potential for more if economic conditions remain favorable.

Andrew Reale from Bank of America asked about the market reception and potential pricing for the California assets InvenTrust is selling. He also questioned if there have been any recent changes in leasing conversations or behavior from shop tenants given the macroeconomic uncertainty.

Answer

CEO Daniel Busch revealed that all California assets for sale have been awarded and are in due diligence, indicating a very positive reception from various capital sources, though he refrained from giving specific pricing. COO Christy David addressed the leasing environment, stating that demand remains healthy and conversations with tenants have not changed, as tenants are focused on long-term plans. Busch added that retailers can't risk going to the sidelines and missing opportunities due to the strong demand and limited supply.

Andrew Reale of BMO Capital Markets asked about the acquisition market, specifically how recent interest rate changes and election uncertainty are affecting opportunities. He also inquired about the performance and renewal outlook for tenants in discretionary categories.

Answer

President and CEO DJ Busch stated that the acquisition pipeline was established before recent interest rate shifts and remains unaffected. He noted that while the election may cause a temporary slowdown, the market for their target assets is healthy. Regarding tenant health, Busch explained that discretionary categories are holding up well, with sales stabilizing after a period of high growth, and highlighted that second-generation restaurant space is in high demand.

Andrew Reale inquired about the diversity of opportunities within Phillips Edison & Company's acquisition pipeline, particularly given the intensified competition for high-quality grocery-anchored assets, and sought an update on the Ocala development parcel.

Answer

Chairman and CEO Jeff Edison and President Bob Myers detailed the increased volume of potential opportunities, noting a 200% rise in 2025 compared to 2024, and reaffirmed the company's disciplined approach to unlevered return targets of 9% for grocery-anchored and 10% for everyday retail centers. Myers also provided an update on the Ocala development, expecting a grocer spin-off mid-year and targeting unlevered returns above 9.5%-10%.

Andrew Reale asked about the diversity of opportunities within Phillips Edison & Company's acquisition pipeline, considering intensified competition for high-quality grocery-anchored assets, and requested an update on the Ocala development parcel and other large-scale strategic land acquisitions.

Answer

Chairman and CEO Jeff Edison and President Bob Myers explained that despite increased competition, a high volume of product on the market balances opportunities, giving confidence in meeting acquisition targets. Bob Myers detailed a significant increase in potential opportunities and underwritten deals compared to previous years, emphasizing discipline on unlevered return targets (9% for grocery-anchored, 10% for everyday retail). Regarding Ocala, Bob Myers noted the acquisition of land for a grocer (expected to spin off mid-year) and marketing seven outparcels, projecting unlevered returns above 9.5%-10%. He also mentioned a pipeline of new larger grocery-scale development projects under discussion but nothing imminent for the current year.

Andrew Reale asked about the pipeline for large-scale investment management deals and inquired about the performance of Acadia's suburban assets, including any changes to the tenant watchlist.

Answer

EVP & CIO Reginald Livingston confirmed they are underwriting several large deals for the investment management platform. President & CEO Kenneth Bernstein and SVP Alexander Levine stated that high-quality suburban retail is holding up due to a lack of new development, though growth is not as strong as in street retail and CapEx for re-tenanting is higher.

Andrew Reale asked about recent changes in buyer or seller behavior in the street retail transaction market and sought color on the volatility of leasing spreads and their expected trend for the year.

Answer

President & CEO Kenneth Bernstein noted that while it's early, market volatility may temper aggressive bidding from 'tourist' buyers, potentially reducing competition. He described sellers as generally realistic. CFO John Gottfried explained that leasing spreads will inevitably vary quarter-to-quarter due to the non-homogeneous nature of the portfolio and smaller sample sizes, making it impractical to project a specific trend, but affirmed that current leases are well-positioned relative to market rents.

Andrew Reale asked for details on the swing factors within the 2025 guidance range, excluding external growth, and questioned how competition for street retail M&A is evolving.

Answer

Executive John Gottfried identified variability in promote income as a key factor, while noting that the guidance is conservative on bad debt and does not factor in any new leasing, which both represent potential upside. President and CEO Kenneth Bernstein added that the high end of the guidance could include some external growth. Regarding competition, Bernstein acknowledged increased institutional interest in open-air retail, viewing it as a net positive that brings more sellers to the market. CIO Reginald Livingston added that in a competitive environment, Acadia's reputation and speed of execution are key advantages.

Andrew Reale asked about the potential impact of macroeconomic uncertainty on temporary occupancy and inquired about retailer inventory expectations for the second half of the year.

Answer

President and CEO Stephen Yalof explained that temporary occupancy is a core strategy for Tanger, often serving as a trial for brands like UGG and Vineyard Vines before they commit to long-term leases. He also noted that based on retailer conversations, inventory is not a major concern, and Tanger is proactively launching a 'summer of savings' campaign in June to encourage early back-to-school shopping.

Andrew Reale asked about current consumer spending patterns and any signs of a pullback, and requested quantification of the potential growth upside beyond the initial 8% yields for the newly acquired Pinecrest and Promenade centers.

Answer

President & CEO Stephen Yalof stated that the consumer remains strong, citing retailers' continued plans for portfolio growth as a key positive indicator. CFO & CIO Michael Bilerman added that while they don't provide multi-year forecasts for specific assets, the new acquisitions have vacancy and remerchandising opportunities that will drive growth over time as they are integrated into the portfolio.

Andrew Reale asked for details on the Q4 billed occupancy loss, specifically how much was due to bankruptcy disruption, and what portion of recently returned boxes are already re-signed or under a letter of intent (LOI).

Answer

President and COO Brian Finnegan clarified that bankruptcies had a 60 basis point impact in the quarter. He highlighted strong re-leasing progress, particularly on the Big Lots boxes, stating that 13 of the 19 controlled boxes are already resolved with tenants like ALDI and Planet Fitness at rent spreads exceeding 50%.

Andrew Reale from Bank of America inquired about the portion of the Q4 billed occupancy loss attributable to bankruptcies and the re-leasing status of recently recaptured boxes.

Answer

President and COO Brian Finnegan clarified that bankruptcies had a 60 basis point impact during the quarter. He expressed enthusiasm about the re-leasing progress, particularly for the Big Lots boxes, stating that 13 of the 19 recaptured spaces are already resolved with tenants like ALDI and Ross at rent spreads exceeding 50%.

Andrew Reale inquired about the specifics of the planned $250 million in development and redevelopment starts for 2025, asking what project types are expected to add the most value. He also questioned if the 9% blended yield on in-process projects is a sustainable long-term target or if there are opportunities to increase it.

Answer

Nicholas Wibbenmeyer, West Region President and Chief Investment Officer, confirmed the $250 million spend forecast for ongoing projects and an additional target of $250 million in new starts for 2025. He stated that yields are expected to remain steady, with ground-up developments targeting 7% or more and redevelopments in the low double-digits, resulting in a blended high single-digit return.

Andrew Reale of Bank of America inquired about the average square footage of spaces from recent and potential tenant bankruptcies and what proportion might require repositioning versus being filled by a single user.

Answer

COO David Jamieson stated that the majority of boxes are being targeted for single-use tenants. He noted the average Party City box is 13,000 sq. ft. and the average Jo-Ann's is 32,000 sq. ft., with a wide range of sizes creating opportunities for various retailers. CEO Conor Flynn emphasized that the lack of new supply in the sector gives Kimco confidence in its ability to backfill these spaces with single-tenant users at significant mark-to-market rents.