Good day, and welcome to the Kimco Realty First Quarter 2021 Earnings Conference Call. Please note, this event is being recorded. I would like now to turn the conference over to David Bujnicki, Senior Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining Kimco's quarterly 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; Dave 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. As a reminder, statements made during the course of this call may be deemed forward-looking, and it is 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 our quarterly supplemental financial information on the Kimco Investor Relations website. Also, in the event our call encounters technical difficulties, we'll try to resolve it 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. I will lead off today with an update on the RPT integration, a summary of our significant first quarter leasing accomplishments, and a brief review of our strategic direction and goals. Ross will follow with an update on the transaction market, and Glenn will close with a summary of our financial results, major metrics, and the specifics behind our increase to guidance. After a seamless close on our acquisition of RPT on the first business day of the year, the integration is now complete. Most importantly, in almost all aspects related to RPT, we are ahead of our underwriting expectations in terms of timing, performance, and the select monetization of their assets. The new portfolio is performing well, producing over 3% same-site NOI for the quarter and revealing exciting growth opportunities that were either not previously underwritten or had overly conservative assumptions. This includes greater ancillary income, better-than-expected credit loss, and the lease-up of shop space. We are very excited about the prospects for the new combination going forward, and many thanks to our talented team, including our newest associates, for this smooth integration. From a cost synergies perspective, at this early point in the year, we are ahead of expectations and anticipate reaching the high end of the stated range of $34 million in 2024. The better-than-expected results are attributable to our execution of planned dispositions ahead of schedule as well as the implementation of lessons learned from Weingarten, including accurate underwriting of hiring needs and a more rapid approach to decommissioning office space and eliminating duplicative services. Kimco's operating platform is delivering efficiencies due to the clustering of additional assets in our core trade areas as well as the strategic investments we've made over the past 5 years: technology, talent, and other areas. Turning to our first quarter leasing results, the portfolio generated same-site NOI growth of 3.9%. The increase includes 2.8% growth from higher minimum rents and a combination of lower landlord expenses, lower credit loss, and higher net recoveries. Pro-rata occupancy came in at 96%, which represents a decrease of 20 basis points from last quarter but also an improvement of 20 basis points from a year ago. The change from last quarter was primarily due to the RPT merger and the vacating of 4 Rite Aid locations. Pro-rata occupancy was also up 20 basis points to 97.8% and flat from a year ago. Small shop occupancy was down 20 basis points from last quarter to 91.5% as a result of the RPT merger, while still up 80 basis points from a year ago. Excluding the impact of RPT, small shop occupancy would have actually increased 20 basis points sequentially and represents future upside. During the first quarter, we leased over 4 million square feet, including 143 new leases signed with positive leasing spreads of 35.5%. We continued our strong trend with over 400 renewals and options completed at an overall positive spread of 7.8%. Overall combined spreads were 10.2% on 583 deals. Our leased-to-economic occupancy spread now stands at 330 basis points, representing a 20 basis point compression from last quarter as leases commenced, representing $63.4 million of annual base rent with about $18 million expected to come online for the remainder of 2024. Our strong quarterly results give us confidence to raise our full year guidance for both FFO and same-site NOI, which Glenn will provide further color on. Acknowledging the importance of growing in a high inflation environment, we remain focused on trimming noncritical expenses. Further, we have strategically positioned our open-air grocery and mixed-use portfolio in first-ring suburbs of select vibrant major metropolitan areas. These high-barrier entry markets continue to represent the sweet spot of the retail landscape as new supply remains constrained and demand from our best-in-class tenants remains strong.

Thank you, and good morning. It was a busy quarter of execution for Kimco, and we're pleased with our current positioning and what we've accomplished year-to-date. Just three short months ago on the fourth quarter earnings call, I mentioned the optimism in the transaction environment coming off of a dip in the treasury rate and expectations for Fed rate cuts in 2024. The optimism was short-lived as inflation has remained sticky, dampening the prospect of interest rate cuts and transaction activity. Notwithstanding the macro challenges, we were able to successfully complete the RPT sales consistent with our underwriting expectations as Conor shared. We sold 10 former RPT centers in the first quarter with the level of sales and cap rates in line with the previously provided guidance ranges as well as a similar cap rate on the overall RPT company acquisition that was completed this January. In addition, we negotiated to retain a slice of the capital stack on 8 of the sold assets in the form of mezzanine financing which allows us to continue to earn a double-digit yield on a secure income stream. With these sales completed ahead of schedule, we have executed on the majority of our disposition targets for 2024. We can now focus our efforts on new investment activity throughout the balance of the year. Glenn will soon provide more details on this. Speaking of investment activity, we have also closed on a pair of structured investments, one during the first quarter and the second subsequent to quarter-end. Both properties align with our strategy of investing in high-quality real estate, supported by strong tenancy and demographics with seasoned operators. We also have a right of first offer or refusal embedded in our position. Total Kimco investment in the two properties was modest at $17 million, but the value of the two centers combined is upwards of $175 million, allowing us to get our foot in the door on a potential future acquisition opportunity. We expect there will be additional unique and attractive structured investment opportunities as our capital remains in high demand. On the core acquisition front, we have maintained our disciplined approach to investing at a spread to our cost of capital. Asset pricing remains strong as we have seen major market infill grocery and high-quality convenience centers still trading at plus or minus 6% cap rates, and in some cases, even below that. While this is a testament to the fundamental strength of the open-air retail platform, it has not been easy to find accretive opportunities through the first four months of the year. We remain confident in our ability to source and secure properties that align with our return thresholds, and given our selective approach, it will likely push more of our acquisition activity toward the late second half of the year. Now off to Glenn for the financial results and updates to our outlook.

Thanks, Ross, and good morning. 2024 was off to a strong and active start. As Conor mentioned, our first quarter results are highlighted by solid leasing activity, double-digit leasing spreads, and robust same-site NOI growth. These positive operating metrics drove our strong FFO per share growth, excluding merger costs. All our metrics are inclusive of the $2.3 billion RPT acquisition, which we completed on the first business day of 2024. While we are providing insight on the RPT contribution for the first quarter, we do not plan to continue breaking out that performance as operations are fully integrated. Now for some details on our first quarter results. FFO was $261.8 million or $0.39 per diluted share, which includes merger charges of $25.2 million or $0.04 per diluted share. Our strategic and timely acquisition of RPT resulted in several significant contributors to our improved performance, primarily on higher pro-rata NOI. Importantly, RPT is running ahead of all our underwriting expectations as Conor highlighted. Excluding the merger charges, FFO would have been $0.43 per diluted share for the first quarter as compared to $238.1 million or $0.39 per diluted share for the first quarter last year, representing a 10.3% per share increase. The primary driver of our improved performance was our higher pro-rata NOI of $53.7 million, of which $38 million was generated by the RPT sites. Pro-rata NOI also benefited from higher minimum rents coming from commencements from the signed-not-occupied pipeline and lower credit loss. Credit loss for the first quarter of 2024 was 62 basis points as compared to 92 basis points for the first quarter last year. Additionally, included in the NOI increase is GAAP income of $1.1 million from the RPT acquisition related to straight line and above-and-below market rent amortization. FFO also benefited from higher interest income of $7.4 million attributable to the higher cash balances during the quarter. We view this as a nonrecurring item and do not expect this to continue for the remainder of the year as we have significantly utilized most of our cash in the first quarter towards the closing of the RPT acquisition and debt reduction. These increases were offset by greater pro-rata interest expense of $14.6 million, resulting from the higher interest rate on the $646 million of bonds that were recently refinanced, lower fair market value amortization related to the form of Weingarten bonds, and higher rates on the floating rate debt in our joint ventures. Our FFO for the first quarter also includes about $0.01 per share of other nonrecurring income items, with a one-time benefit of $2.4 million in below-market rents from two tenants that vacated early and $2.5 million of other income. It was a very active quarter from a balance sheet perspective, primarily resulting from the RPT acquisition, much of which was already addressed on our last earnings call. Just to briefly summarize, we issued 53 million common shares and 953,000 OP units and replaced RPT's 7.25% convertible preferred stock with a liquidation value of $92.5 million, with a new Kimco convertible preferred issuance with similar terms. We also repaid RPT's $130 million revolving credit facility and their $514 million of private placement notes from cash on our balance sheet. Amended and assumed $310 million of RPT term loans, which have staggered maturities from 2026 to 2028 at a blended weighted average rate of 4.77%, and issued a new $200 million term loan with a final maturity in 2029 at a fixed rate of 4.57%. As previously mentioned, we monetized our remaining shares in Albertsons earlier in the quarter, receiving nearly $300 million in proceeds and recorded a $72 million tax provision on the gain. At the end of the first quarter, our liquidity position remained very strong with over $2 billion of immediate availability and no remaining debt maturities for the balance of the year. Our balance sheet further strengthened as the company's leverage metrics improved once again. We ended the first quarter with a consolidated net debt-to-EBITDA ratio of 5.3x and on a look-through basis, including the pro-rata share of joint venture debt and perpetual preferred stock outstanding of 5.6x. The look-through metric of 5.6x is the best level Kimco has ever achieved and an improvement from the 6.2x reported a year ago. Turning to our outlook, based on our strong first quarter results, the successful integration of the RPT acquisition, and our expectations for the balance of the year, we are raising our FFO per diluted share range from $1.54 to $1.58 to a new range of $1.56 to $1.60, inclusive of $0.04 per share for RPT merger costs. Excluding the merger costs, this represents a 3.2% annual FFO per share growth at the midpoint of the increased guidance range over last year's results. Our increased FFO per share guidance range incorporates the following updates to our full year assumptions: higher same-site NOI growth of 2.25% to 3% from the previous level of 1.5% to 2.5% and is inclusive of the RPT assets with a credit loss assumption of 75 basis points to 100 basis points; interest income of $10 million to $12 million based on the interest income earned during the first quarter and RPT-related noncash GAAP accounting income comprised of straight-line rents and above and below fair market value rent amortization of $4 million to $5 million. Our other full-year FFO guidance assumptions remain intact, including our disposition range of $350 million to $450 million inclusive of the $250 million completed during the first quarter and investment range of $300 million to $350 million weighted toward the late second half of the year. I want to thank all of our associates whose incredible effort efficiently completed the integration of the RPT transaction and contributed to our strong first quarter results. And with that, we are ready to take your questions.

Our first question comes from Dori Kesten of Wells Fargo.

You left your credit loss guide unchanged, but had a relatively low Q1. Can you just remind us of your exposures that are built up to the annual assumption?

Overall, we look at just the entire portfolio when we're doing the assumptions. And again, the 75 to 100 basis point credit assumption is really back to more historic levels. And the first quarter is clearly lower at 62 basis points. But there are some potential bankruptcies that could occur during the year which could impact it. We think it's more prudent to just leave the current guidance assumption, even though we still have been able to increase the same-site NOI guidance significantly.

The next question comes from Michael Goldsmith of UBS.

On the integration of RPT, you said initial G&A synergies of $30 million to $34 million, you took it up to $34 million to $35 million. So in terms of realizing the synergies, what's driving them? What's driving the upside to your initial guidance? And where have there been positive surprises as you've started to put the plan into action?

Sure. Thanks, Michael. Obviously, we're off to a great start with the integration. Clearly, we have a great blueprint and the muscle memory from Weingarten certainly helps. I'll have Will Teichman comment a little bit about the G&A synergies and what's helped there. But on the revenue synergy side, we're obviously seeing a lot of deal flow earlier than anticipated. Just for the quarter, 10 deals were signed in the RPT portfolio at rents of $31 a foot, 36% new leasing spreads, and 10.8% renewals, so for a combined 14.1%. When you look at those numbers, it's obviously enhancing to the Kimco portfolio. The business plan was always set up where we would execute on a strategy where we could buy the portfolio at what we believe is an attractive cap rate and then selling off the lowest tranche at similar cap rates. This strategy allows us to retain a very high-quality, high-growth profile portfolio that, with our platform, could be enhanced over time. So Will, I'd love for you to comment quickly on the G&A synergies as well.

Sure. Thanks, Conor. As Conor said, we concluded the integration of portfolio operations, systems, and human capital within a matter of weeks, saving about 2 months off the timeline versus our prior transaction with Weingarten. The playbook we established post-Weingarten has really been key, developing an integration governance model, tools, and processes that are repeatable for future transactions. On the expense side, as with any M&A transaction in our sector, human capital is always the most significant driver of G&A. So speeding up the pace of integration activities avoids carrying unnecessary expenses during the transition period. A few drivers of note that I would call out. First, the quick execution of the 10 asset sales that Ross mentioned allows us to hold to a more conservative staffing plan as we don't need to staff positions necessary to operate these assets. Secondly, a more rapid pace of integration allowed us to minimize the need for transitional employees over the first few months of the year. Overall, our underwriting assumptions for permanent associates were on target, and we filled all of the incremental positions, solidifying our go-forward G&A expense levels to operate the portfolio. Finally, beyond staffing, one of the other noteworthy areas where we've exceeded underwriting is around professional services and subscriptions. Our IT and legal teams led an effort to quickly exit over 100 service agreements, resulting in faster accretion in this important area.

Thanks, Will. I also just want to comment that with the execution of the 10 dispositions, the grocery percentage of the RPT portfolio is up to 85.5%. It's obviously enhancing to the Kimco portfolio as well. We even have activity on a few of the 9 remaining sites that don't have grocery anchors to potentially convert those to grocery anchors. So Will, do you want to comment a little bit on ancillary income as well?

Sure. With respect to ancillary income, it's one of the areas where, as a company, we've been working to build out a national specialty leasing team that's exclusively dedicated to this important area. That's not the case with all of our peers, and it wasn't the case with RPT, where they had only recently established a focus on ancillary revenues. We have a 10-year track record in this area, and as Conor referenced in his remarks, we started off the year with double-digit growth relative to the first quarter of 2023 in terms of RPT's performance in this area. It really comes through a variety of different strategies. We track probably over a dozen different ancillary revenue income streams. It's a combination of strategies we've employed across our portfolio to monetize common areas, as well as tactics to monetize and lease up temporarily vacant inline space. Knowing that the vacancy is a little bit higher in the RPT portfolio provides some near-term upside for us in terms of temporary leasing.

The next question comes from Alexander Goldfarb of Piper Sandler.

So Connor, it seems that RPT has taken a cautious approach in its underwriting, whether that's due to being conservative or sandbagging. There's potential for significant operational synergies on the cost side, but could you provide more details on the NOI side? What kind of upside do you anticipate? It sounds like the yield might be improved by either 50 or 100 basis points, so could you give us an idea of the magnitude of the NOI performance you're observing alongside the cost savings and synergies?

Sure. Happy to, Alex. And again, I gave you some stats there on the RPT portfolio. We gave ourselves a nice runway to execute, and we've been ahead of that assumption. So for the first year, we had a ramp-up in terms of leasing, and we thought there might be a transition period where we wouldn't have similar Kimco velocity on the RPT portfolio. That just hasn't been the case. We've been able to transition very quickly, lease up a lot of space relatively quickly, and retain tenants at higher rents as well. The original underwriting had a 6- to 12-month ramp transition to Kimco, and we've exceeded the leasing velocity on that. There are some hidden gems we didn’t originally anticipate uncovering. So a lot of those deals that we're working on—like I mentioned on transitioning some of these assets to grocery-anchored assets—take time, but we're ahead of anticipation on that as well.

Yes. I'd also mention when we took over the portfolio, there is always a risk in transition, especially on the construction side, when you hand off projects from one company to another. Despite the handoff period, these projects still need to get done. There are still targets that need to be met, and there are still lease obligations to fulfill. As a result of that, from day one, and really prior to the transaction, we were preparing for that, and that enabled us to meet and exceed some of this new pipeline compression with RPT and get some key tenants open very early in the year that will now benefit from through the balance of the year. So obviously, in our SNO (same-site NOI), we saw some good compression about 20 basis points, but we saw more compression on the RPT side just because a few big anchors opened in the beginning part of the year. So again, hats off to everyone. It's not easy sometimes. We never want to take it for granted on the integration side. The team is laser-focused not only on doing that but also executing the fundamentals in the core business with Kimco to ensure we had an outstanding quarter.

The next question comes from Floris Van Dijkum of Compass Point.

Nice positive results, I guess. A couple of questions, but I guess I'm going to focus my question on Ross. I know you mentioned, Ross, that the cap rates for grocery-anchored are pretty tight in particular. As you think about deploying capital going forward, can you maybe talk a bit about your views on lifestyle centers? And why wouldn't you pivot more—why not pivot more towards lifestyle acquisitions, or are you wedded to acquiring and increasing your percentage of grocery-anchored in your holdings?

Thanks, Floris. It's a good question. I think one of the benefits when you look at Kimco is that we do own and have operational expertise in all formats of open-air retail. We do love the grocery-anchored, and with lifestyle as well. Many of those assets have a grocery component that you get the benefit from. When you look at the acquisition that we made last year with Stonebridge, that's a prime example of a dominant Wegmans-anchored center that has had a lifestyle component, and based upon the size, we were able to buy that at a high cap rate north of 7% because the deal size was a bit larger, and the operational expertise required to manage and operate those assets is a more limited buyer pool that we think gives us a differentiation. We're absolutely looking at those types of assets in this environment because of how tight cap rates are on neighborhood grocery anchors. You have heard a lot about the unanchored strip center segment, with capital flowing into that. You've seen cap rates continue to compress in that product type. We believe that our differentiation is utilizing our platform for more complex, and sometimes more difficult operational assets that we can create value from that we don't believe others can. That doesn't mean that we're not going to continue to pursue more neighborhood grocery-anchored opportunities when the pricing aligns with our cost of capital. But where we are today in the cycle is just what we're focusing on.

Floris, the only thing I would add to that is you've seen for a while the lines are blurring across all different retail formats. What I mean by that is really the merchandising mix. You've seen sort of the best-in-class mall tenants gravitate toward open-air shopping centers. You've seen certain lifestyle-centered retailers gravitate toward all formats of open-air centers. With our operating team, we really focus on enhancing the Rolodex we have. Looking across all the different formats, they are starting to look similar to one another and making sure that we have the Rolodex across all those formats has been critical to our success.

Our next question comes from Juan Sanabria of BMO Capital Markets.

Just wanted to switch tack here. In terms of the Q&A, just wanted to get your strategic views or sense of the pharmacy and kind of health and wellness business trends and credit there, just we’ve had Rite Aid, BK, Walgreens is shrinking and Walmart is now pulling out. So just curious on how you see the space evolving and how you're positioning the company to deal with the changing landscape.

Sure. I think each of those has their own story. With Rite Aid having to settle a lawsuit, that was a big disruptor for them. It's no secret there is disruption, and I think a shifting landscape in the pharmacy business and how it services the customer. That said, health and wellness is more at the forefront now than it ever has been with consumers, both in how they maintain themselves with fitness, mind and body really being a focus. Food, what they're eating, how they're eating, what they're consuming. You're seeing a lot of innovation and creativity in the F&B world; new concepts like Cava just went public. You're seeing good growth and expansion there. You're seeing some more traditional format F&B QSR concepts evolve their menus to accommodate the new consumer case. You're also seeing continued opportunity with the Med Spa concepts, urgent care, and the services business related to the customer and how those fit well in the open-air sector. That said, individual businesses have different business models, and opportunities while others see disruption. You have to look at it more holistically where the macro trend is going. I think it still very much supports it. However, trends are cyclical, and there's always moments of disruption that create opportunities for newcomers and other entrants to evolve their businesses to capitalize on that.

Juan, I think from a merchandising mix standpoint, the pharmacy has evolved to become a mini mart, in many ways. When you walk into a pharmacy, the script business is always in the back, and then you walk through aisles of higher-margin items. What happened there is the script business got disrupted and their pricing on traditional grocery items were elevated compared to other consumer options. They are going through a transition as a result, particularly with Amazon coming into the prescription business and the front of the house being restructured. The good news from the real estate point of view is that those deals were typically done on ground leases, which were positioned up in front of the shopping center that are highly valuable. We have the ability to recapture some of those spaces with drive-throughs, repurpose them, and get a significant mark-to-market. It's unlikely we will see a lot of them returning to us because they are the most valuable pieces of real estate in the shopping centers, but we do have the opportunity to reset if we do get our hands on a few of them.

The next question comes from Samir Khanal of Evercore ISI.

Conor, just looking at the shop occupancy for the RPT portfolio, I think sequentially, was down 40 basis points here. Is there something to read into that, considering that we've seen sort of sequential increases for a while now? Or is that sort of you being more proactive as you sort of de-lease space for greater opportunities?

That was the upside of the deal for us. We think that's really the juice to be squeezed because we see the small shop momentum continuing. If you look at the Kimco portfolio and the sequential gain we had there, the leasing we had on the RPT portfolio out of the gates was way ahead of our anticipation. When we look at the upside of the deal, there's going to be a lot of momentum on the leasing side for the small shops because some of those shopping centers that have lower small shop occupancy are precisely where we're building out anchor spaces. We know that the momentum from having those types of grocers open will significantly impact leasing activity. It gives us cautious optimism that we're in the right spot. The business model is working well, and we can continue to focus on executing and building out those spaces efficiently.

Yes. I would just add that when we acquired RPT, their small shop occupancy was over 200 basis points lower than ours. When you blended it all together, again, because it's obviously a much smaller portfolio, the impact at the end is only about 40 basis points.

The next question comes from Haendel St. Juste of Mizuho.

I wanted to follow up, Ross, on some comments you made about the transaction market, the challenge of redeploying capital into dispositions from the dispositions here. Can you talk a bit about the range of cap rates you're seeing out there for the quality you want to buy versus what you need to see to be more active? And maybe why do you think cap rates will move higher in the back half of the year or perhaps see more opportunities? I'm trying to get a better understanding of why you're not getting more active now, and if the JV capital could play a role as well.

Yes. The JV capital can certainly play a role. But to answer your question, we’re fortunate that we have a variety of ways to deploy capital. The core acquisitions, we continue to be very disciplined. You saw last year a modest amount of traditional core acquisitions because when the market does not align with our cost of capital, we remain patient. We lean into structured investments, leasing opportunities, and redevelopment. Today, the core neighborhood grocery-anchored shopping centers are in that plus or minus 6 cap range. To us, that does not fit our objectives. We hope that changes, either with our cost of capital being more aggressive as the year progresses or a little softening in pricing depending on macro conditions. We see capital flowing into commodity retail; those are still trading in the 7% to 7.5% upper cap range. So, there is clearly capital chasing those assets. We are focusing on assets with profiles that align with our objectives. We can find opportunities, especially larger check sizes that eliminate a significant amount of the bidder pool. We can utilize our platform to be more aggressive on those transactions while maintaining attractive returns. So our overall approach is to ensure we can identify and move cash flow effectively, which is a key focus for us.

The next question comes from Craig Mailman of Scotiabank.

I just want to go back to kind of the small shop commentary, maybe ask a quick two-parter here. But you clearly have some good commentary around the progress at the RPT assets. I'm just curious, as you mentioned some grocery anchors coming on and timing-wise, is that helping. But how much is just your broader tenant relationship an asset there versus just the overall pace of the market? And also, just in general, has there been any change in kind of the mix of activity among small shop tenants that are looking to take space?

Yes, great question. With the broader market performing well, we have launched various programs to activate our small shop efforts and drive demand into our portfolio. A national account management program targets fast-expanding retailers, F&B operators entering the open-air space. We regularly meet with these retail tenants, showcasing opportunities within our portfolio, which is a considered effort to grow market share with individual retailers. We conduct seminars with franchisors to help introduce Kimco to their franchisees. We also develop form leases to make the experience seamless when engaging with Kimco, allowing operators to focus on their business. We saw through COVID that the interview with the landlord was as important as the interview with the tenant, especially when the market is shifting. You need to invest critically to ensure you are attracting the best tenants while evolving with the local community. We see good activity from various verticals including F&B growth, personal care services, and dollar store concepts.

The next question comes from Caitlin Burrows of Goldman Sachs.

Occupancy's on the rise and the SNO pipeline is still pretty wide. But looking forward, you leased 4 million square feet of space in the first quarter, but that's down from Q1 '23 and Q1 '22 despite now having a larger portfolio. Could you talk about what’s driving that leasing volume lower? Realize it could be for several reasons.

Yes. Our occupancy is at 96% or an all-time high at 96.4%. The opportunity set does change as well with that. Regarding leasing volume, it's still pretty much in line with prior years, and it’s Q1. Timing of deal execution can vary quarter-to-quarter. I wouldn’t say there's a slowdown in deal velocity or interest in space. We’re seeing interest in longer-term vacancies, which is encouraging. Retailers continue to seek out inventory to meet market share targets. We are considering multi-year rollover schedules and remain encouraged by interest across various geographies; it's not isolated to any particular market.

The next question comes from Greg McGinniss of Scotiabank.

Sorry, a little thrown by the bank there. Looking at the guidance update, it's just under $0.02 from interest income, non-GAAP income, and around $0.015 from higher same-store NOI growth, at least based on our math. What are the offsetting factors on the $0.02 guidance range? Is that just earlier dispositions than initially planned? Any color would be appreciated.

Yes. It was a very strong quarter. There is just under $0.01 of nonrecurring or one-time items included. However, the balance of the year is shaping up very well. We increased the guidance by $0.02 based on current performance, and we feel good that we are in good shape to reach the upper end of that range.

Okay. And then on the 10 RPT dispositions, how important was providing the seller mortgage financing on those transactions to getting them done at the 8.5% cap rate? If the buyer had to seek alternate financing, where do you think those cap rates might have trended?

I don't believe that providing mortgage financing impacted the pricing or the execution at all, to be completely transparent. That was a structure we were excited about pushing on to the buyer because we wanted to retain a slice of those assets at yields that are attractive for us. We tried to telegraph early on what our strategy was on the company and the acquisition. We bought into a great portfolio at mid-8 cap, acknowledging the tail in the portfolio. We’re excited that we could sell that portfolio at similar cap rates as the original acquisition. So with what we're left with in markets like Miami and Nashville, we feel really good about the execution on that deal. We see it as a win-win for us and the buyer on those 10 assets.

The next question comes from Mike Mueller of JPMorgan.

Looking at the full year planned dispositions, it looks like another $100 million to $200 million, and those, I guess, the guided-to cap rates look to still be in the mid-8s. Just curious what's making up that remaining disposition bucket?

Sure. We frankly don't have anything specifically identified for that. We've executed on the 10 dispositions we wanted to get done, and we did that quickly. Going forward, our goal is to improve the quality portfolio and growth profile. It doesn't matter if that's a Kimco legacy asset, RPT, Weingarten joint venture, or wholly owned. Our job is to identify assets that are not aligned with our portfolio’s direction and remove them before they do so. Assets are dynamic, changing over time. The vast majority continue to improve, and we're able to add value. Occasionally, there are assets that don’t fit the profile that we look to prune. So it’s just normal course pruning of the portfolio, regardless of when we bought it or where it came from. We expect to be on the lower end of the range for dispositions moving forward as anything we sell should be at or below that range.

The next question comes from Anthony Powell from Barclays.

You mentioned you saw lower landlord expenses than you expected, and we noticed that too. Maybe talk about what drove those lower and your opportunity to continue controlling expenses going forward.

Our team has done an exceptional job just really looking at every expense line item and finding opportunities to either manage it more efficiently or find ways to save and adjust our operating strategy. I commend the team for digging deep line by line and finding a better way to manage the business and sites locally. Some seasonality contributed due to timing of expenses, but overall, it was a broad effort that occurred.

The next question comes from Wesley Golladay of Baird.

I'm just looking at the presentation, and you have about 6,500 multifamily units entitled. Do you have any interest in starting developments this year to address the low supply market a few years from now?

It's a good question, Wes. We've always looked at optionality as a benefit on the entitlement program. We believe future value creation is embedded in our portfolio. Unlocking that is a good way to set up different levers for growth when supply and demand and cost of capital is in your favor. It’s hard to see putting a shovel in the ground today makes sense with our cost of capital. We’ve chosen to contribute entitled land into a joint venture as our capital and put in preferred equity that offers a higher yielding return on it. We do like the ground lease approach where we have no capital outlay and a multifamily developer can develop the entitlements while we retain ownership. We can look at it in many different ways, and each asset requires its own analysis. We try to evaluate each individually to identify the best path forward for that asset.

The next question comes from Linda Tsai of Jefferies.

As you look at the SNO pipeline, you have good lease-up opportunity still. Do you expect the SNO pipeline to be higher or lower by year-end versus now?

Yes. Good question. This quarter, we did compress by 20 basis points. We also absorbed the RPT portfolio, which significantly affected that pipeline. Several big deals started to cash flow in Q1, driving that benefit. We continue to see upside in lease-up. I mentioned we’re seeing opportunities on some long-term vacancies and the Tier 1 inventory continues to be absorbed. Therefore, I believe our SNO pipeline will remain slightly elevated due to our continued lease-up activity. We contributed just over $2 million in Q1 from new openings, with about 150-plus leases that commenced. That contributes around $15 million total for the balance of the year. We’re targeting around $25 million to $30 million of contributors for the entire year. We are seeing those benefits, as noted in our Q1 results, contributing positively to the bottom line, and we continue to see opportunities in the lease-up side.

Linda, a lot of this is event-driven as well. So when you get a number of spaces back at once and have many leasing activities backfill those, the SNO pipeline can increase. However, if you don’t have an event that gives you back many spaces to release quickly, it should compress. So as we see the JOANN bankruptcy conclude with no leases rejected, it highlights the supply and demand dynamic currently. Given the limited new development in our sector and robust demand, existing leases are worth more than they have been in a very long time. Therefore, it is unlikely we will see a slew of boxes returning at the same time, which would spike the SNO pipeline. Our focus will be on filling small shops and remaining vacancies on the anchor side, which we are seeing good activity.

Our next question comes from Ronald Kamdem of Morgan Stanley.

Just a quick two-parter for you guys. So on the same-store NOI guide raise, is it fair to say that it’s primarily earlier commencements driving the upside? And what is causing the expected deceleration in the rest of the year? Part 2, on the acquisition guidance, just how much of that is already identified versus being speculative?

Certainly. Regarding the rest of the year, we are still comping against Bed, Bath situations in the second quarter that will impact us. The guide increase is due to further commencements that came online more quickly, as Dave mentioned. The credit loss has been performing very well so far, leading us to be more comfortable towards the lower end of the range. As for acquisitions, we don’t have anything firmed up. We’re pursuing a few opportunities that we hope will materialize; stay tuned on that. For structured investments, those deals are driven by other parties, making them fluid until closer to closure. However, we are seeing significant demand for our capital, and we are having several dynamic conversations with owners and buyers seeking our assistance.

The next question comes from Tayo Okusanya of Deutsche Bank.

I wanted to go back to Wes' question. Rather than talk about multifamily, talk a bit more about retail redevelopment. You have in your supplemental about a fairly expansive list of potential new retailers you could start. I'm curious about potentially starting those up just given the overall development pipeline, which is probably not as large as some of your peers, but everyone is seeing really good yields on that.

Yes. We always look at it opportunistically. Those are entitlements we have in our back pocket that we can pull off when timing is right. When assessing all of our use-of-fund opportunities, we look for the best use of capital. Our approach has always been to activate them selectively. We see great returns right now on retail repositioning and redevelopment. We’re experiencing double-digit yields on those investments. Given the elevated activity in leasing, that’s the best use of our capital right now. If we can continue to drive high returns for our investors, we will pursue that aggressively. For us, it’s just another tool in our toolkit, and we’ll activate it when the timing is appropriate, making sense within the market cycle.

The next question comes from Paulina Rojas of Green Street.

You talked about tight pricing in the transaction market for certain assets. I’m thinking more about geographies. Are there any markets or regions standing out for being less crowded, but that, in your opinion, could offer some opportunities? I'm thinking regions such as the Southeast are so competitive; could that open opportunities elsewhere, even in traditionally under-sought markets like the Midwest?

It's a good question. We always look for new markets that might make sense for us. San Antonio is a relatively new market for us that we continue to lean into. Nashville is another market we weren’t in before the RPT acquisition. We are open-minded regarding new markets. Even the Midwest, where you’ve seen institutional capital outflow over the last decade, is now seeing more demand and tighter pricing compared to some other markets. We benefit from our geographic diversity, allowing us to seek opportunities anywhere we have boots on the ground and conviction. We’ll continue to be vigilant for new markets.

The next question comes from Jeff Spector of Bank of America.

Maybe let's turn back to the transaction market. Ross, you said at the top of the call that, given what's happening with the Fed’s view on rates, there’s a dampening in the transaction market. Has anything changed in the last couple of weeks? Could you touch on the structured investment pipeline?

I wouldn't identify any change in the last few weeks. The volatility we’ve experienced in the first four months of the year just continues. There was a lot of hope for stability going into the year. A market can function efficiently in a higher interest rate environment, but there needs to be some stability. With the current uncertainty, it complicates financing for investors, as there’s a lag between handshake and closing. Hope is that stability will help facilitate increased transactions in the latter half of the year.

Our next question comes from Alexander Goldfarb of Piper Sandler.

Just a quick follow-up on the heels of Linda Tsai's question. Do you think that we’re being lulled into complacency regarding the strength of the retail market? The fact that JOANN basically had no downtime; Bed, Bath was nearly a nonissue. Just curious if you think we’re becoming complacent or whether you see this low-credit, high-demand environment enduring—it certainly contrasts greatly to pre-pandemic.

A lot of this ties back to supply and demand. If you examine the lack of new supply for the last decade plus, combined with the evolution of the omnichannel approach by retailers and the significance of the last mile regarding store proximity to consumers, I believe this model has triumphed. You’ve seen many pure-play e-commerce players, especially in grocery, exit, while many larger e-commerce players have leaned on their stores for distribution fulfillment and in-store experiences. I think this combination leads to our current environment. I wouldn't describe it as complacency; we’re experiencing higher rates that have impacted all of commercial real estate. Once we move beyond this noise and stabilization period for rates, I believe there will be differentiation between sectors based on pricing power and the ability to outgrow interest expenses. Some categories will manage to do that, and I believe we are in that favorable position.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Bujnicki for any closing remarks.

I'd just like to thank everybody for joining today's call. We look forward to seeing a number of you at the upcoming NAREIT conference in June. Please enjoy the rest of your week. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.