Good morning. And welcome to Kimco's First Quarter 2021 Earnings Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to David Bujnicki. Please go ahead, sir.

Good morning, and thank you for joining Kimco's first quarter earnings call. The Kimco management team participating on the call today includes Conor Flynn, Kimco's CEO; Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; David Jamieson, Kimco's Chief Operating Officer; as well as other members of our executive team that are also available to answer questions during the call. It is important to note that we will need to keep this call focused on Kimco's first quarter earnings results and outlook as a standalone company, with more information forthcoming when the merger proxy statement is filed with the SEC. As a reminder, statements made during the course of this call may be deemed forward-looking. It's important to note that the company's actual results could differ materially from those projected in such forward-looking statements due to a variety of risks, uncertainties and other factors. Please refer to the company's SEC filings that address such factors. During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP financial measures can be found in the Investor Relations area of our website. Also, in the event our call encounters technical difficulties, we'll try to resolve them as quickly as possible. And if the need arises, we'll post additional information to our IR website. And with that, I'll turn the call over to Conor.

Good morning and thanks for joining us today. I will focus my remarks on our leasing results, the supply and demand dynamics surrounding those results, and the exciting strategic direction we are taking the organization. Ross will cover the transaction market and Glenn will cover the quarterly numbers and our updated guidance. 2021 is off to a refreshing and good start with robust demand for space in our last mile open-air, grocery-anchored portfolio coming from both well-capitalized omni-channel tenants seeking more market share as well as smaller businesses that have regrouped and are prepared to reinvest in their business model. The largest leasing demand categories include restaurants, personal care, fitness, and dollar stores. We also see healthy activity and have consummated multiple leases with grocery stores, off-price, and pet supply retailers. Our leasing volume continues to build from the record-setting trend last quarter. Our new lease count was 121, totaling 586,000 square feet. This exceeds both last quarter and the prior year quarters. Of particular note, the 586,000 square feet of volume surpassed our five-year first quarter average for new lease GLA of 506,000 square feet, and new lease spreads finished at a positive 8.2% pro-rata. We closed the quarter with 237 renewals and options totaling 2.2 million square feet, with GLA exceeding the quarter sequentially and the prior year quarter. Renewals and auction spreads finished at 6.4% pro-rata. These spreads continue to reflect the recovery underway and the pricing power inherent in the quality of our portfolio. Conversely, our ability to withstand the impact of the pandemic reflects the defensive nature and strength of our recurring cash flows. From a supply and demand perspective, the reality is that due to the speed of the recovery, pandemic-induced vacancies were short-lived. With limited new supply, market rents never adjusted down in any meaningful way. So when demand snapped back, we generated positive spreads. While our occupancy dips slightly from year-end to 93.5%, it strengthened as we moved through the quarter. It is our intent to continue expanding occupancy, and we are encouraged by multiple demand factors playing to the strengths of our last-mile locations. Our job is clear: focus on the blocking and tackling of leasing; work with best-in-class retailers; enhance the merchandising mix; and let the numbers speak for themselves as we've strengthened the resiliency of our cash flows. Our first, second, and third priorities are leasing, leasing, leasing, and we continue to believe we are in the early innings of this reopening and recovery. In addition to leasing, we are prioritizing our smaller redevelopments and average double-digit returns to create an additional organic growth drive. Long term, we believe our entitlement program will continue to create shareholder value as we unlock the highest and best use of our real estate. The pandemic has validated and strengthened our conviction in our strategic vision to concentrate our open-air, grocery-anchored, and mixed-use portfolio in the top MSAs across the country. Tenants no longer look at the last-mile stores simply as a retail destination. Rather, their value to retailers is now viewed holistically, providing distribution, fulfillment, and retail. In valuing a location, retailers assess their ability to integrate e-commerce and bricks-and-mortar to give the customer what they demand: convenience, value, and a fulfilling experience continue to point to the last-mile shopping center as mission-critical for both consumers and retailers. Our platform is well positioned for growth, and with that growth will come further debt reduction and other benefits of scale. We are enthused about the opportunities ahead, yet recognize the challenges involved. We remain committed to prioritizing ESG initiatives and supporting our tenants and local communities as we continue to navigate the pandemic and beyond. I'd also like to touch on the exciting recent news regarding our highly strategic merger with Weingarten, a transaction that we expect to unlock considerable value in some of the highest growth markets in the country. By coming together, we will be the nation's preeminent open-air, grocery-anchored shopping center and mixed-use real estate platform. With our focus on these last-mile locations and increased scale in our targeted high-growth Sunbelt markets, this transaction will significantly strengthen and enhance our portfolio quality, allow us to further gain market share, and make Kimco even more valuable to all of our tenants. In closing, Kimco's open-air and grocery-anchored portfolio, diverse tenant mix, targeted geographic presence in the strongest growth markets in the country and improving balance sheet provide us with a long runway for growth as we move ahead. Needless to say, the entire organization is clearly energized by our efforts to build shareholder value. With that, I'll turn the call over to Ross.

Thank you, Conor, and good morning. What a difference a quarter makes. With continued recovery from the pandemic, vaccination rollout, and reduced capacity restrictions across the country, we have seen optimism building among retailers, consumers, and real estate investors at the highest level since the pandemic began almost 14 months ago. Specific to the transaction, industry volume, while still off nearly 40% in the first quarter of 2021 compared to 2020, has seen a meaningful uptick on the back half of 2020. The conviction and stability of property rent rolls, and by extension, cash flows have grown beyond only the essential retailers and now include other categories that were much less clear previously. There is no doubt the grocery-anchored shopping center is still the most in-demand category of retail and continues to command the most aggressive pricing and lowest cap rates. Furthermore, open-air is valued at an even higher premium. Recent transactions with more specialty and lifestyle components, in addition to traditional power centers, have given transparency to the value and stability that our approach provides. Multiple grocery anchor deals have transacted at sub 6% cap rates in Dallas, South Florida, California, Philadelphia, and Seattle, to name a few. There are also no signs of investor demand waning for that product type. We anticipate bidding to become even more aggressive as the spread of cap rates and interest rates remains wide for our asset class, particularly when compared to industrial, multifamily, self-storage, and others. More recently, aggressive bidding extending beyond the bread-and-butter neighborhood product is starting to emerge. Two recent deals that have a grocery store, but also a significant restaurant and entertainment component saw bidding wars with multiple rounds of offers and pricing well beyond initial expectations. These properties located in Dallas and Denver have the mix of grocery traffic, restaurants, entertainment, last-mile infill locations, and future densification opportunities that investors are excited about. On the financing side, an equally important observation is the reemergence of the traditional lender in the space. While the down-the-fairway grocery-anchored assets have been financeable throughout the pandemic, lenders were requiring significant holdbacks and structured deals with perceived risk. As positive trends continue to emerge, that is having a direct impact on the transaction market with more deals getting across the finish line at superior pricing and terms. With renewed optimism and conviction comes a vibrant transactions market in which we will remain a disciplined player, and we expect to see deal velocity continue to accelerate, which is a great sign for the continued recovery of our industry. Now on to Glenn for the financial results for the quarter.

Thanks, Ross, and good morning. The positive results we drove in the fourth quarter last year continued into the first quarter of 2021. With the backdrop of an improving economy and strong leasing velocity, our solid performance was highlighted by improved rent collections and lower credit loss relative to the fourth quarter last year. Our balance sheet metrics also strengthened; we continue to benefit from all the capital markets activity we undertook in the past 24 months to enhance our financial structure. After some details on first-quarter results, NAREIT FFO was $144.3 million, or $0.33 per diluted share for the first quarter of 2021, as compared to $160.5 million, or $0.37 per diluted share for the first quarter of the prior year. The reduction was mainly driven by lower pro-rata NOI of $13.6 million due to COVID-related renovation and credit loss, as well as the impact of lower occupancy on net recovery income, below-market rent recaptures, and straight-line rent. These NOI reductions were offset by a $5.5 million one-time benefit from lease terminations. NAREIT AFFO was impacted by $5.4 million of higher G&A and interest expense due to lower capitalization from development and redevelopment projects that have been placed in service. Our operating portfolio is continuing to perform effectively. All our shopping centers are open, and over 98% of tenants are operating, with strong leasing velocity as Conor discussed. Our lease economic spread has increased to 230 basis points, representing a total of $27 million of pro-rata ABR, which is an excellent indicator of future cash flow growth. As expected, same-site NOI decreased 5.7% for the first quarter, as it is comping against a largely pre-COVID first quarter in 2020. It also marked significant progress from the prior sequential quarter, which was down 10.5%. The improvement was mainly attributable to lower credit loss. We collected 94% of pro-rata base rents billed during the first quarter of 2021, up from 92% for the fourth quarter last year. Our cash-basis tenants represent 8.9% of ABR, and we collected 70% from these tenants during the first quarter. In addition, our deferred rent payments had been strong, as we collected 84% of deferred rents billed for the first quarter, with $34.1 million of deferred rent remaining to be billed. Turning to the balance sheet, our metrics continue to improve, and our liquidity position is in excellent shape. At the end of the first quarter, consolidated net debt to EBITDA was 6.7x, and on a look-through basis, including pro-rata share of JV debt and preferred stock outstanding, the level was 7.4x. This represents further progress from the year-end 2020 levels of 7.1x for consolidated net debt to EBITDA and 7.9x on a look-through basis. In addition, Moody's has affirmed our BAA1 unsecured debt rating with a stable outlook. From a liquidity standpoint, we ended the first quarter with over $250 million of cash and full availability on our $2 billion revolving credit facility. In addition, our Albertsons and marketable security investment is valued at over $760 million. Our debt maturities remain minimal, as we have only $125 million of consolidated mortgages maturing this year, which will be repaid in the second quarter. As a result, we will be unencumbered on an additional 23 properties. Our weighted average debt maturity profile stands at 10.7 years, one of the longest in the entire retail industry. Based on the first-quarter results and expectations for the remainder of the year, that includes same-site NOI turning positive in the second quarter, along with further improvement in credit loss during the second half of the year, we are raising our NAREIT FFO per share guidance range to $1.22 to $1.26, from $1.18 to $1.24 previously. As a reminder, our increased guidance ranges on a standalone basis and do not incorporate any impact from the pending merger with Weingarten. In addition, the guidance range assumes no transactional income or expense and no monetization of our Albertsons investments. And with that, we are ready to take your questions.

Before we start the Q&A, I just want to offer a reminder that this call will focus on our first quarter results and request that you keep your questions and comments to these results and not the announced merger with Weingarten. To maintain an efficient Q&A session, you may ask a question with an additional follow-up. If you have additional questions, you're more than welcome to rejoin the queue. Operator, you may take our first caller.

First question comes from Rich Hill from Morgan Stanley.

Hey, Glenn, thanks for the disclosure in the prepared remarks. I just wanted to make sure I was clear on the percent of rent collections. So the cash base tenants I know it's 8.9% of ABR, and you collected 70% of those tenants. Is there any way you could tell us what same-store NOI would be excluding those collections, just so we can get a better sense of the core portfolio?

So just going back a little bit, the cash basis tenants, there was about $7 million collected that related to a prior period from last year. So those came in during the first quarter. So if you added - if you didn't have those that would have an impact on same site of about 320 basis points.

Got it. That's really helpful. I appreciate that. Just a quick, maybe nuanced question, but I think it's important. Could you maybe walk us through what percent of tenants are in bankruptcy? And then what percent of rent you collected on those bankruptcy tenants?

Hey, Richard, Kathleen, and I can actually help you out with that one. So if you recall, at the end of 2020, several of our tenants actually emerged from bankruptcy. So we ended the year at about 70 basis points of our ABR related to tenants. And actually, as of Q1, it's down to 20 basis points. So it's a small portion of what we have in our ABR at this point.

Got it. Hey, Dave, is that one question or two questions? Can I ask one more?

You got one more, as in like the follow-up.

Just a quick question on the 2025 outlook, in the same-store NOI. I guess the question I would have is why can't you grow faster than the plus 2% that you referenced? It would seem like given the tailwind to the retail sector, maybe some of the e-commerce trends that are emerging, seems like maybe you could grow above inflation. So any context there would be a little bit helpful.

Hey, Rich, it's Conor. We definitely think that that's an achievable goal in the near term. But again, this is a long-term goal. So the way we look at it is there's obviously going to be an uptick in terms of same-site NOI through this pandemic-fueled recovery. And as you noticed, we did put 2.5% plus. So our goal is to beat that metric. We clearly see a lot of levers for growth, as we outlined in the call in the remarks. And our job is to beat that number. Obviously, we think we were in a good spot to do that in the near term.

The next question comes from Katy McConnell from Citi.

Hey, this is Chris McCurry on with Katy. Just on the grocery leasing front, how sustainable do you view this elevated level of grocery demand if there's more pent-up consumer demand to return to, say, restaurants or other venues post-pandemic?

Yes, hey, this is Dave Jamieson. Right now we're seeing very strong demand. And we anticipate that some level of demand will sustain longer term. I think what you're seeing is people starting to adapt and innovate to what the consumer needs, and proximity to the end customer is critical. So that last-mile distribution element, we don't really see changing in the future. Yes, there will be a reversion of some sort of new normal where people will start to go back to restaurants, and some of those dollars spent will be diverted to that category. But when you listen to some of the grocery public companies that are observing how their customers are reacting and responding as a new normal starts to take hold, they are still seeing a net gain to market share and shopping at home. And I think people have adapted to not only going in store but obviously utilizing omni-channel vehicles for accessing those groceries. So when you throw that all together, we still see the demand drivers being very strong. Based on where we're located in those first-ring suburbs where there's been a lot of net migration during the pandemic, we still see the demand being strong in the future.

Yes, the only thing I would add to that is it's great to have a diversity of demand that's not sort of pigeonholed into one square footage category. So grocers right now spread from the bigger boxes, to the junior boxes, to even the mid-sized boxes of like 10,000 to 12,000 square feet with Trader Joe's and others. So it's really remarkable to have a growth driver that spans all the major categories in terms of square footage needs, which is really why we're so confident that we can continue to drive that driver for us.

Yes, got it. Helpful color. And a quick follow-up. Could you comment on your strategy around some of the Albertsons investments, just comment on some of the locker provisions and maybe your intentions to monetize that investment?

Sure, it's Glenn. As it relates to Albertsons, the lockup burns off 25% every six months. So the first 25% did burn off at the end of December, and the next 25% will happen at the end of June. There are still other requirements related to our partners around it. As I mentioned in my prepared remarks, we're not anticipating monetizing anything in Albertsons this year. As we've talked about, we do see real opportunity in 2022 to start monetizing it and using it towards debt reduction or redemption of our perpetual preferred that becomes callable in 2022. Got it?

The next question comes from Derek Johnston from Deutsche Bank.

Hi, everybody. Good morning and thanks. On private markets, Ross, can you discuss how pricing and cap rates are holding up in the northeast versus the Sunbelt, or the markets you mentioned in Dallas and Denver, or South Florida? And look, guys, I'm not asking for updated disposition guidance, right. But given the merger, there are likely some non-core disposals that you may be able to take advantage of. So any enhanced color by geography would be helpful.

Sure, happy to respond to that. We are seeing robust demand across the country. I mean, there's no doubt that there's significant demand in the Sunbelt. Other parts of the country have been more open than others throughout this pandemic. But when you look at the essential base retailers throughout the country, they have been operating and doing well throughout. We are still seeing significant demand in the northeast, whether it be the New York suburbs, Boston, Philadelphia, etc. And when you think about the migration and demographics, there are a lot of headlines about the Sunbelt in Florida and the Carolinas and Texas. So you're also seeing it here in the New York metro area, where we're based, that a lot of people that are leaving the cities are moving to the suburbs in Long Island, Westchester, Connecticut, etc. So there is an uptick still happening in those suburbs. We think that there's something to take advantage of there, and investors are certainly doing that. As it relates to future dispositions for us, we'll continue to look at our portfolio. We think that we're in great shape; we do have some non-income producing land parcels that you'll continue to see us chip away at. But again, when we think about the lift that we've done over the last five to seven years and where the portfolio stands today, we feel very good about those markets, those opportunities that we have, and the go-forward portfolio that we will be operating.

Okay, great. So given the pandemic washed out a lot of weaker retailers. How does your watch list stand today as we hopefully move past the pandemic? And are elevated bankruptcies possibly in the rearview mirror, at least for a while?

Yes, this is Dave. In terms of a watch list, the categories that were most greatly affected by the pandemic, the theaters, fitness, etc. We continue to watch, and they stay there; there hasn't been much change beyond that. Obviously, Q1 was always a muted bankruptcy season historically; that's usually where it's a bit elevated. When you look at those that went into bankruptcy in 2020, a lot of those reemerged with better balance sheets. They were able to recapitalize, come out, trim their portfolios, and start to take advantage of some of this reopening trade. We'll continue to closely watch and monitor the health of all of our tenants, really looking two years out, as we start to get to a new normal and stabilize. This surplus cash that some received throughout the pandemic; it's more a matter of where they made those investments. The operators that really started to innovate through this and stay ahead of the curve will likely be the winners downstream, more so than they are today.

The only thing I would add to that is, clearly, some of the tenants that reorganized have not necessarily gotten their footing underneath them quite yet. They are still maybe in those categories that have capacity constraints. So we're watching that closely, as they obviously have done a debt-for-equity swap, but there are still some opportunities for us to upgrade tenancy in the long term, and we're monitoring those tenants closely.

The next question comes from Alexander Goldfarb - Piper Sandler.

Hey, good morning. So, hey, sorry about that. So two questions here. First, on the ESG front, and I'm not just talking about solar panels on roofs. But it would seem like shopping centers are really well positioned on the ESG front, not only are they supporting local economies, small businesses, etc., but also just from the benefit of centralized procurement, right, people drive to the shopping center; they can return items rather than throwing them out. You don't have individual boxes; you don't have individual trucks driving in neighborhoods. What are you guys thinking around this, either individually or collectively as an industry, to really showcase the benefits that physical retail has in promoting ESG?

Yes, so it's a great question. An idea to take into consideration all the different constituents that make up the shopping center: the end shopper, the customer, the retailers, and ourselves as landlord. For us, as a landlord, we've always looked at ourselves as the conduit to bring all these retailers to the customer and vice versa, and try to find ways to service everyone collectively. When you think of curbside, what we did in 2020, the intent was to build a program and infrastructure that was agnostic to the retail so that everyone could take advantage of it, avoiding a separate approach for each individual retailer. That said, every retailer has their own defined strategy and what they're trying to solve for their own unique problems. There are challenges when you try to consolidate them all into a central vision. It's our job to continue working with each of these retail partners to find the best way forward. As we look to innovate within our common areas and how we work with our retailers, our goal is to find those uniform strategies that work for all, or at least offer that 80%. The closest we are to homes, as you mentioned, it provides opportunities for customers to return or to revisit and cut down travel time and shipping costs. This is a clear advantage for retailers with buy online pick-up in-store, and more and more retailers are taking advantage of that today. This is going to be an evolving process. The pandemic did accelerate some of those trends, i.e., with curbside, that helped pull it forward a couple of years, something we've been discussing for a while. But it's our job to continue to stay on top of that and innovate where we can to provide those two services.

Yes, it seems you have an advantage, particularly as more investor funds have ESG mandates, to effectively demonstrate the genuine impact rather than just mentioning superficial aspects like solar panels. There is a wealth of untapped data you can offer to the investment community to truly emphasize the benefits.

We agree. I think we're going to coordinate with ICSC and others; I think the voice is louder when we can combine all of our efforts. A lot of public and private landlords can come together, and we can help facilitate that to really make that point because I agree with you, Alex. The other piece of it I was just going to mention is ESG is clearly a benefit to our entitlement program. Kimco has been so focused on this for decades; when we come into a community and showcase that we're in for the long term, and that we want to work alongside the community to ensure that the asset or downtown we provide evolves alongside the community, we can showcase our ESG initiatives and all the accomplishments that we've made to give ourselves the opportunity to partner with those folks. It really does help when we look to focus on entitlements and how to unlock the highest and best use for real estate.

Okay, the second question is just on rent collections. Almost all your categories are really rebounded. But fitness, personal services, and restaurants are still lagging. Your restaurants are doing quite well actually. But still, it looks like there's some more room to go. Is your view by the end of summer that really fitness and personal services will have fully rebounded to be something north of call it 85%? Or are there some issues that you can see that are going to hinder the recovery of those two categories?

I think the biggest holdback is the capacity. Despite there having been some great success stories in parts of the country where capacity levels have increased substantially, there are other parts of the country that are still a little behind. They're just trying to manage through the spikes of Coronavirus at a local level. We envision that as those capacity constraints continue to get lifted more broadly across the country, it will be a big boost and a tailwind for those other service categories that have been hindered by that. The summer should show quite well for that hopefully. There have also been fitness operators who haven't reopened or don't plan to reopen. When you think of the supply levels coming down a little bit, we do anticipate the demand side to build, with people wanting to get out of their at-home gym or the garage, wherever they've been working out for the year, and wanting to return to some sort of facility where there is social engagement and community. So that should help as well.

The next question comes from Craig Schmidt from Bank of America.

Thank you. I'm wondering, and this may be for Ross. Where do you see Class A grocery-anchored shopping center cap rates? And how does that compare to the pre-COVID level?

Yes, I mean, they continue to be extremely aggressive. Compared to pre-COVID, in many cases, the cap rates are even lower and more aggressive. We've seen lots of examples in the low fives, in some cases, sub 5%. A lot of that just has to do with some of the other dynamics of demographics, obviously, which tenant is the anchor grocer, what the lease looks like, where the rents are compared to market, and frankly, how much term is left where you can recast that lease and push rents a little bit. From our collections, there's more conviction in the rent roll outside of just the grocer; the small shops and other ancillary tenants are coming back in a big way. The stability in the rent rolls and cash flow, still a very healthy spread from interest rates to cap rates; more conviction in our space today than what we've seen in a very long time.

Yes, my sense is just the resiliency the format showed during COVID increased its appetite to investors, and with so much capital on the sidelines, it seems like cap rates could indeed be lower.

Yes, and it's not just your typical investors that we've seen in years past. We're seeing a lot of buyers and bidders today who have historically been buying in other asset classes; they're just sick of getting priced out or getting the cap rates compressed so low that there's not enough spread and they see the risk-adjusted return in our space.

Great. And then just maybe for David, I know you've been touching on this a bit, but which tenants are not participating in this reopening period?

Well, regarding those not participating, industry sectors are reopening at some capacity. Even some of the big flags are focused on trying to get as many stores open as possible, such as fitness or theater locations. AMC is effectively all open. Where there are constraints, it's either on a one-off basis, or municipalities are inhibiting that or rolling back restrictions again. Generally speaking, I think the reopening trade is accelerating as vaccine distribution picks up.

The only one that I can think of that might be tied to going back to work is the dry cleaners. They obviously got hit very hard as people were working from home, and they might benefit from going back to work in the summer when offices reopen.

The next question comes from Juan Sanabria from BMO Capital Markets.

Hi. This is Lily on behalf of Juan Sanabria. Good morning. I have a question about inflation. Are you focusing on leasing discussions to improve the company's position if inflation rises? Do you plan to adjust the lease structure, specifically the fixed versus CPI-based components?

We continue to work on a percentage increase basis versus a fixed dollar amount increase. Typically, those percent increases in base rent tend to trend well with inflation.

Thank you. Just a quick follow-up. I think you mentioned payments this quarter were partially offset by some changes in reserves. Could you please recall these pieces? What's the amount reserved in a period?

Sure. During the quarter, we recognized $8.9 million in abatements, and about half of that was related to prior periods for which there was a significant reserve on those abatements.

The next question comes from Caitlin Burrows from Goldman Sachs.

Hi, good morning. Sorry if I missed this. But I was wondering if you could give some color on your outlook for occupancy over the course of the year, on the anchor and small shop side? I guess, given the leasing that you've done, the current watch list, and upcoming lease maturities, do you think occupancy may have dropped? Or do you think there's still more downside risk?

Yes, that's a great question. We anticipate Q2 most likely to be the trough of occupancy for '21. We continue to make great progress with our lease philosophy, obviously, in Q1, and we started to see a net benefit of regaining some of the dip towards the end of Q1, which was encouraging. We do have Dania that's going to be placed into service and occupancy in Q2, so that will also impact. However, it will start to expand our leased economic occupancy. We are encouraged by the momentum on the lease side, and hope to see it start to level out shortly.

Okay, and then separately, but kind of related, Dania Pointe and the Boulevard are obviously two large developments that you guys were working on for a while, and they should be ramping up NOI. So just wondering if you could give some detail on the amount of NOI currently being recognized by these properties versus what's still to come and kind of over what timeframe we should expect that to happen.

The NOI will start to ramp up towards the second half of 2021. For the Boulevard, it should stabilize towards the end of '22. For Dania, I would say it should also stabilize towards the end of '22. You'll have stabilization of phases two and three.

The next question comes from Ki Bin Kim from Truist.

Thank you. Good morning. Can you just talk a little bit more about the 2.8 million square feet of leases that you signed this quarter? I am curious how much of this is truly additive versus some shuffling of tenants around spaces or simply releasing space that might be currently occupied but set to expire. And if you can help us understand what types of tenants are actually driving this activity and credit quality compared to the pre-COVID environment?

Sure, yes. We did 121 new lease deals, totaling about 570,000 square feet of GLA. So that's all the net new add on the leasing side. When you think of the type of credit or tenants, the off-price guys are obviously very aggressive. We did sign a few grocery deals as well. Byblos has been very active; Ulta, on the small shops side; and restaurant operators are coming back, franchisees, for example, seeing the opportunity of restaurants that are closed throughout the pandemic, which are fully fixed-rate units ready to go with a bit of capital and love to get them back open, you can do so relatively quickly. We see a lot of people anticipating the reopening trade, with the stimulus funding flowing through the economy and wanting to be prepared to take advantage of that. That's where we're seeing the great demand through our leasing.

Hi, it's still tough to recap that. Is there much reshuffling of tenant spaces that makes its way into leasing activities in general?

There's always some movement; it depends on the situation. The prototype of retail tenants does change; some are expanding their footprint, and others are contracting. If there's another opportunity within the center to create a better setup for them, and subsequently, you have the chance to backfill that space at higher rents, there's a positive to the cash flows for the center. You want to ensure that the merchandising mix is fresh and relevant to the market. But I wouldn't say that's anything new or different from the normal course of business.

Got you. And then just to follow up on the Dania Point question, the leasing stats didn't change much. I know it's just one quarter, and I don't want to be so myopic in this question, but just curious if you can talk about the demand you're seeing and expectations for lease-up.

Sure, yes, no. The demand is really starting to build back as we look through '21. We had Urban Air that opened in March and exceeded their plan on opening, which was excellent. We also have the hotel operators, the two Marriott flags, that will be opening in the summer of this year. We see active construction on a handful of new tenants as well. Regal starting to open this fall and take advantage of the blockbusters scheduled for release in theaters for the holiday season this year. We anticipate that to be a big draw. The new lease activity is really starting to ramp, so that's encouraging. We did sign American Eagle Outfitters to take one of the other anchor spaces along Main Street, which will complement what Urban and Ulta are currently doing.

The next question comes from Floris van Dijkum from Compass Point.

Thanks for taking my question, guys. If you could, I'm interested in, obviously, you can't talk about the Weingarten thing. So I'm going to ask you some questions on the leasing. I noticed you had $5.3 million of lease terminations, which is approximately $5 million more than it was last year. Maybe if you can give some color on that, what that represents, and then maybe also talk about some of the regional differences.

Just wanted to clarify the first question; the $5.3 million. Can you just sort of restate that? I'm trying to understand.

Yes, so you recognized $5.3 million of lease terminations this past quarter. Last year I think it was $400,000. So you had basically a $5 million increase in lease terminations. If you can give more color on that, what that represents or is that not a sustainable number?

Sure. Yes. The lease termination agreements, the LTA, portion of those were related to tenants wanting to vacate early, so we're able to structure arrangements to free them of their liabilities while getting the net benefit from LTA. We had the opportunity to backfill with other grocers for those spaces. It made a lot of sense to proceed with those deal structures to take advantage of the situation. They are one-time events, which is why we want to ensure to call them out. Those do happen periodically, throughout our business; we just happened to have a few opportunities that hit all at once in Q1. In terms of regional, it's situational; it varies from center to center.

Yes, Floris, just to give a little more color on that, we did have a Lucky's grocery store which was a ground base backed by Kroger credit. Kroger decided not to move forward with the Lucky's banner. We had a lease termination agreement with Kroger to terminate the ground lease with us, which was included in that number. We were able to backfill that space with the Sprouts grocery store at Dania, actually, so it was a net win for us there.

Floris, this is Nikki, I'd also remind you that as you pointed out, the LTAs are purely transactional. By no means would this first quarter be reflective of a trend, just as you saw that the prior period was much less.

Thanks, guys. I guess my follow-up question here is regarding leasing costs. Leasing costs appear to be pretty stable. Maybe if you can comment on what you're seeing and what you expect is going to happen to leasing costs going forward, as leasing demand potentially builds, are those going to trend up or down in your view?

As you mentioned, leasing costs were relatively stable. The scope and demand from tenants really hasn't changed. It's more about material pricing that could impact costs going forward, as we are still working through supply constraints from the pandemic. Some increases in pricing for material costs, such as lumber and HVAC, could occur. That could be short-term as distribution channels start to release some of those bottlenecks. We just have to monitor those closely; it could dip moderately in the near term, but we anticipate that to be a short period, and then hopefully it would subside. In general, we haven't seen much change in terms of demand and the requirements from the retailer side. If you consider the potential short-term increases in the market, you would assume it to carry on as is depending on the type of deals done each quarter. However, if you're doing split-box creation opportunities, we had a couple of those this quarter that had elevated costs, while others are straightforward backfills or from grocery to grocery conversions.

So in summary, I guess one of the fears that investors had is during the downturn, heightened vacancies, less pricing power for tenants, and greater ability to drive favorable lease terms. That's not actually occurring based on what you're seeing right now.

No, I mean, what we've seen, it starts without the quality of the real estate; that drives demand. Different than what we saw in the Great Recession, the impact of the pandemic was extraordinary and extreme so fast; recovery has been almost just as quick. The V-shaped recovery means we haven't seen a reset on market rents. Especially on the anchor side, there is a short window of opportunity for retailers to upgrade their portfolios, and they want to take advantage of that now. If you have more than one person at the table negotiating a space, it helps level set the supply-demand side, and that's what we're seeing as a lot of people want to upgrade and get closer to the customer.

Yes, Floris. The lack of supply has been significant. It's been decades since we've seen any uptick in new supply benefiting us when we're focused on these last-mile locations. The density surrounding our assets really inhibits a lot of new supply coming online; we're seriously experiencing that as the demand has been robust.

The next question comes from Tammi Fique from Wells Fargo.

Hello, good morning. Conor, you mentioned in your opening remarks about enhancing merchandising as an objective. I'm wondering, longer term, where you see areas for improvement in your portfolio. Once occupancy stabilizes, what types of retailers would you like to target and what categories could you see lightening exposure?

Sure, I can start and Dave and others can add some color. It starts with our grocery initiative; we believe it creates a halo effect, driving cross-shopping of surrounding retail. From there, we continue to pick out the best-in-class in each category to ensure an exciting merchandising mix. We've benefited from curbside pickup through the pandemic; now our mission is to ensure that the merchandising mix is so alluring that regardless of why you came to the shopping center, your eye catches something that makes you want to return. Our mission is to create a vibrant community center that drives traffic throughout the day. When you look at demand in expanding categories, it's a nice spot to be because it's diverse, and we can pick and choose and understand voids and trade areas to backfill some of our vacancies with.

You mentioned repaying upcoming mortgage maturities. Is that a function of your balance sheet and ratings upgrade goals, or more of a function of leverage on those particular assets and maybe lender caution on certain segments within retail? We have historically paid off any mortgage that we can as soon as possible, as long as there are no significant prepayment penalties. We bought a portfolio of properties, you might recall the Boston portfolio years back. This portfolio had two large cross-collateralized pools, and they're pre-payable without penalty in June. We're going to repay those. Prior to the Weingarten transaction, we'll have very little mortgage debt remaining on the balance sheet. We focus much more on being a good borrower; it is a more efficient way for us to operate.

The next question comes from Linda Tsai from Jefferies.

Hi, sorry if I missed this earlier, when looking at leasing demand, what percentage is coming from retailers looking to relocate and what percentage is coming from retailers looking to expand store growth?

It really is a combination. There is clear net new demand for some of our best-in-class retailers across major categories looking to capitalize on the pandemic-induced shopping they've experienced and expand. There is also the playbook from retailers typically in downturns to take advantage of the increased vacancy, look to upgrade their fleet, and focus on entering the best centers. The lion's share is coming from net new stores, which is exciting because it's a nice spot to have limited supply and numerous different demand drivers.

Thanks. Just a follow-on; the tenants looking to terminate early, you gave one example involving Sprouts. Was that the bulk of the $5.3 million? Do you expect elevated lease term fees for the remainder of 2021?

So it wasn't the termination with Sprouts; it was Lucky that had terminated. The replacement tenant will be Sprouts. We anticipate maybe another $1 million to $2 million for the balance of the year.

The last question for today's call comes from Greg McGinniss from Scotiabank.

Hey, good morning. Glenn, the $7 million of repaid rent, what's the status? Are those tenants now fully current on rent, or is more owed from those tenants? Just trying to get a sense for additional one-time or nonrecurring benefits that we may see this year.

No, there's still more owed from them; as I mentioned, we collected about 84% of the deferred billings we sent out. More is still due from those tenants; they're not fully current yet. For the first quarter, we collected about 70% from them, but they are not fully current.

I was more specifically talking about tenants that did pay back some of the rent. I'm just curious if those $7 million tenants that did pay back rent are fully current or not.

The bulk of those are fully current, yes.

Okay, great. And then from an accounting standpoint, when might tenants start moving back to accrual accounting?

We go through a pretty in-depth process. There are certain parameters that we've worked out; we want to see tenants are current for a specific period of time and that they have no outstanding balances that are 30 days old. We evaluate continuously, but it will take time for some to move back to accrual basis. Even some of the tenants that emerged from bankruptcy still remain on cash-based until they regain their footing.

Okay, and final question for me. Guidance is up $0.03 at the midpoint, which largely seems to capture the nonrecurring payments in Q1. You mentioned improvement in credit loss for the second half of the year, same-site NOI turning positive, and becoming more positive in general. Plus, as the leasing activity is happening, can we view the guidance increase as more of a conservative increase based on what's happened so far? Or do you really think it captures the potential backup benefit we might see?

Yes, I would say it's still early in the year. We do expect credit loss in the second half to improve significantly compared to the first half. The guidance includes elevated credit loss for the second quarter, but we feel good about the revised guidance, being biased towards the upper end of that range based on current circumstances. We will take a quarter-by-quarter approach.

Okay, thank you very much. We appreciate everybody for joining our call today. If there are any follow-up questions, you can visit our website and the investor relations area for more information. Thank you very much. Have a nice day.

This concludes our conference call for today. Thank you for attending. And you may now disconnect. Goodbye.