Kimco Realty Corp Q4 FY2024 Earnings Call

Good day, and welcome to the Kimco Realty Corporation fourth quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. Please note this event is being recorded. I would now like to turn the conference over to David Bujnicki, Senior Investor Relations and Strategy. Please go ahead.

Good morning, and thank you for joining Kimco Realty Corporation's quarterly earnings call. The Kimco Realty Corporation management team participating on the call today includes Conor Flynn, Kimco Realty Corporation CEO, Ross Cooper, President and Chief Investment Officer, Glenn Cohen, our CFO, David Jamieson, Kimco Realty Corporation'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 Realty Corporation's operating results. Reconciliations of these non-GAAP financial measures can be found in our quarterly supplemental financial information on the Kimco Realty Corporation investor relations website. Also, in the event our call were to incur 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. With that, I'll turn the call over to Conor.

Good morning, everyone, and thanks for joining us. My remarks today will cover the favorable supply and demand dynamics that continue to drive leasing across our portfolio, our well-curated tenant mix that is servicing the healthy Kimco Realty Corporation consumer, and our strategic accomplishments and future goals. Ross will provide an update on the transaction market, and then Glenn will cap things off with our Q4 and year-end results, and our outlook ranges for 2025. I first want to speak to the recently announced changes to the board and our management team. With respect to Milton's retirement from his role as Executive Chairman and Director, on behalf of our entire organization, I want to thank Milton for his leadership, mentorship, and friendship. Milton will always be synonymous with Kimco Realty Corporation, and our ongoing success is a direct result of not only his stewardship but also the passion and optimism that he exudes every day. His enthusiasm for Kimco Realty Corporation is contagious and permeates through our entire organization. The great news is that in his new role as Chairman Emeritus, Milton will continue to challenge us every day and serve as an invaluable resource, making sure we can be the best we can be. Richard Saulsman's new role as Chairman comes at the perfect time. Other than Milton, no one understands the company's history better, and Richard brings vast experience, creativity, and insight to help lead us into the future. Additionally, I want to welcome Ross Cooper and Nancy Lechine to the board. Ross needs no introduction. His leadership role at Kimco Realty Corporation and his reputation in the industry make him a logical addition and will make for an easy transition to board member. As for Nancy, her capital markets and real estate background, along with her energetic and collaborative demeanor, makes for a compelling addition. I am truly excited about our evolving board and believe we are well-positioned as Kimco Realty Corporation moves forward. Now onto the quarter. We continue to drive significant leasing momentum across the Kimco Realty Corporation portfolio. The lack of new supply, now measured at just three-tenths of a percent of existing retail stock, combined with a near-record low national vacancy rate, continues to facilitate strong fundamental results and earnings growth. The only new shopping center development taking place is limited to third and fourth ring suburbs, where population growth has forced sprawl into new areas. Drilling down further, the favorable supply and demand dynamics we're benefiting from today is no accident. Part of our 2025-year strategic vision focused on repositioning our portfolio into first-ring suburbs with natural barriers to entry, making it difficult for new competition to out-position our assets, while at the same time producing natural pricing power advantages. Moreover, the population in these first-ring suburbs continues to grow as more and more people desire to be near central business districts while enjoying the suburban live-work-play experience. Kimco Realty Corporation's densification initiatives dovetail perfectly with the strong demand, pricing power advantages, and demographic trends enjoyed by our high-quality retail centers. More specifically, we reached our goal of entitling 12,000 apartment units a year ahead of schedule, providing the opportunity to further expand our mixed-use portfolio. We continue to believe our ongoing portfolio transformation to a grocery-anchored and mixed-use portfolio positions us to be in the sweet spot of the retail and multifamily sectors for the foreseeable future. At the property level, the Kimco Realty Corporation consumer continues to gravitate toward our merchandising mix of everyday goods and services. We continue to see positive year-over-year traffic increases, both on a quarterly and yearly basis. The average unemployment rate across our portfolio is 20 basis points lower than the national average. The strength in the employment market combined with robust traffic has led to increased sales at our retailers. Our grocery anchors, together with our off-price anchors, form the perfect blend of cross-shopping. This is further enhanced by our service-oriented retailers, including quick-service restaurants, that drive traffic at all points of the day. It's also worth noting that internet-resistant retailers, which include service providers, now make up more than 50% of our new lease volume. We have seen a surge in leasing to medical, health and wellness, fitness, medi-spas, hair, and nail salons that complement our traditional grocery-anchored tenants. In closing, we have built a portfolio in areas characterized by limited supply, high employment, and population growth, and curated our centers to meet the needs of consumers' tastes and preferences. Our portfolio is designed to generate growth and shareholder value. Our team is excited and ready to move the needle in 2025. Thank you for your ongoing support and interest in Kimco Realty Corporation. And now I will turn things over to Ross.

Thank you, Conor, for the kind words. I'm honored and excited about being added to the board and cannot be more enthused about the future of our company. First, I'd like to highlight our capital allocation achievements during 2024, starting with the most notable transaction we undertook, which was the RPT Realty acquisition, as we recently celebrated the one-year anniversary of its closing. Reflecting back, the speed and efficiency of our integration have enabled us to exceed our expectations in all facets. It is even clearer today that this was an incredibly opportunistic purchase with an implied cap rate of 8.5%, equating to approximately $165 per square foot, at pricing that could not be replicated in today's market. Beyond our initial underwriting assumptions, we were able to improve cost synergies by approximately 13% to $36 million. Integral to our success was the swift disposition of ten former RPT properties, which did not fit our strict investment criteria, for $248 million for the same cap rate we bought RPT. During the year, our operations team did a remarkable job with this portfolio, signing 57 new leases with an average pro-rata cash rent spread of 52% and completed 98 renewals or option exercises at a blended 9.9% spread. Overall, we increased RPT's occupancy by 120 basis points, with anchors rising 140 basis points and small shops 50 basis points, which helped drive the RPT same-site NOI growth to 6.2%. As we put a bow on 2024, I wanted to quickly summarize our fourth-quarter activity. As previously announced, Kimco Realty Corporation acquired Waterford Lakes Town Center in October, and we have already started to benefit from the purchase. In our view, the timing of this acquisition was ideal, as larger assets and portfolios were priced at a discount compared to smaller, less complex properties. Since that time, that pricing dynamic has shifted. Throughout 2024, we talked about institutional retail capital curiosity and questioned at what point that would convert to action. The ROIC acquisition announcement by Blackstone in November seemed to be the turning point, giving the sector an aggressive stamp of approval that the shopping center sector is one of the top convictions for investment opportunities. This sentiment and excitement for our asset class have continued through year-end and into 2025. As capital has gotten more aggressive on open-air retail, and investors have greater comfort making bigger investments, Waterford Lakes would likely trade at a higher price today. On the structured investment side, we continue to see significant deal flow potential to grow this platform responsibly. Since the inception of this program in 2020, we have touted its benefits for Kimco Realty Corporation. It is a strategy that allows us to get our foot in the door on high-quality real estate, generating outsized returns on a very safe and comfortable basis, while retaining a right to acquire in the future if the borrower elects to sell. To those points, in January of 2025, we successfully converted our first structured investment into an equity ownership position. We accretively purchased the Markets and Town Center in Jacksonville, Florida, for $108 million at a low 7% cap rate using the proceeds we raised from our ATM program in December. Originally sourced as a mezzanine financing in late 2021, we underwrote this property with the premise that it would be a great core acquisition candidate and align well with our own portfolio. While our borrower did a great job in the time they owned the asset, we believe there remains a meaningful opportunity to create additional value. We see significant long-term upside as we continue to push rents and further enhance tenant quality, benefiting from the property's location, which is adjacent to the Simon-owned St. John's Town Center, and the bull's eye of the rapidly growing Jacksonville trade area. Including common area pass-throughs, the competitive advantage we have is that the all-in rents are at a fraction of what St. John's Town Center is able to command. We are confidently looking ahead to 2025 with our outlook establishing us as a net acquirer inclusive of structured investments. The Markets and Town Center acquisition has given us a strong start toward this objective. We will continue to be selective on core acquisitions and structured investments, selecting opportunities accordingly. From a disposition perspective, our portfolio is performing exceptionally well, and we don't see the need for any significant disposition activity. Instead, we will focus on the opportunity to further enhance our growth profile and accretively recycle capital with two new initiatives in 2025. The first initiative is the disposition of several long-term flat ground leases in the portfolio at aggressive cap rates. The second focuses on monetizing select development entitlements where we believe the most prudent approach is to mitigate risk and sell the rights to a developer and still benefit from the densification of our centers. We plan to redeploy the capital from these flat growth and non-income-producing assets into core investments that offer a growing recurring income stream and value-add opportunities. We will continue to provide updates on our progress as we move through the year. I will now pass it on to Glenn for the financial update and outlook.

Thanks, Ross, and good morning. We finished 2024 with solid fourth-quarter results, highlighted by robust leasing activity, strong same-site NOI growth, and high single-digit FFO per share growth. In addition, our abundant liquidity position and modest upcoming debt maturities position us well as we start the new year. Now for some details on our fourth-quarter results and our 2025 outlook. FFO for the fourth quarter was $286.9 million or $0.42 per diluted share. This compares favorably to last year's fourth-quarter FFO of $239.4 million or $0.39 per diluted share, representing a per-share increase of 7.7%. Instrumental to this was a $60.8 million or 17.8% increase in total pro-rata NOI to $403.4 million over the same period in the prior year. Key drivers of the NOI growth include $38.1 million from the RPT acquisition, $7 million from other acquisitions, and $15.7 million from the balance of the operating portfolio, which benefited from higher minimum rents due to an acceleration of rent commencements. The NOI growth was offset by greater pro-rata interest expense of $16.4 million due to higher debt levels from the RPT acquisition and the prefunding of the $500 million bond that matures in February 2025. Our operating portfolio fired on all cylinders to end the year. Our year-end portfolio occupancy stood at 96.3%, reflecting a year-over-year increase of 10 basis points despite a 10 basis point sequential decline. This achievement underscores the strength of our leasing pipeline as we effectively managed to offset a nearly 40 basis point impact caused by the vacating of 16 leases associated with Lumber Liquidators, Big Lots, Conn's, and Bob's Stores in the fourth quarter. Same-site NOI growth was 4.5% for the fourth quarter. The primary driver continues to be higher minimum rent contributing 3.8%, mostly from contractual rent increases and faster rent commencements from the signed but not open pipeline. In addition, overall NOI continues to benefit from lower credit loss. For the fourth quarter and full year, credit loss was 82 basis points and 75 basis points, respectively, meeting the low end of our 2024 outlook assumption. For the full year 2024, same-site NOI growth was 3.5%, outperforming our previously raised outlook assumption of 3.25% plus. Higher minimum rent was the primary contributor to the growth. As a result of the faster pace of rent commencements, the spread between leased occupancy and economic occupancy compressed to 270 basis points, a change of 40 basis points sequentially, and represents 374 leases totaling $56 million of future annual base rent. We anticipate approximately 80% of this to commence with a total of $25 million in rent being received from the signed but not open pipeline in 2025. Turning to the balance sheet. We ended the fourth quarter with consolidated net debt to EBITDA of 5.3 times and on a look-through basis, including pro-rata share of JV debt and preferred stock outstanding of 5.6 times, maintaining our best levels for these metrics. During the fourth quarter, we raised $136.3 million from the sale of 5.4 million shares at an average price of $25.07 per share through our aftermarket common equity offering program. These proceeds were accretively invested toward the acquisition of the Market at Town Center in Jacksonville, Florida, that Ross mentioned. We also conducted a cash tender for the outstanding depository shares representing the 7.25% Class A cumulative convertible perpetual preferred stock, successfully tendering for just over 22% of the shares and reducing the liquidation preference to $71.9 million. Our year-end liquidity position remained very strong, comprised of $690 million of cash and the full availability of our $2 billion revolving credit facility. As a reminder, included in the cash balance is $500 million from the 4.85% long ten-year bond issued in September 2024, which proceeds were invested accretively in short-term interest-bearing instruments. We recently used the cash to pay off our 3.3% $500 million bond on February 3rd. Subsequent to year-end, Moody's affirmed our Baa1 unsecured debt rating and changed our outlook from stable to positive. Our unsecured debt is rated A- with a stable outlook from Fitch, and BBB+ with a positive outlook from S&P. Now to our 2025 outlook. Notwithstanding some of the uncertainty given the economic and political environment, and several recently announced bankruptcy filings by a few additional tenants, we remain confident about the growth prospects of our operating portfolio and balance sheet positioning. Our initial 2025 FFO per share outlook range is $1.70 to $1.72, representing an initial per-share growth range of 3% to 4.2%. Our outlook range is based on the following assumptions. Same property NOI growth of 2% plus, included in the same property NOI outlook is a credit loss assumption of 75 basis points to 100 basis points. This is a similar level to our credit loss experience in 2024 and considers the potential impact from the Party City and Joanne's bankruptcy filings. In addition, the 2025 same property outlook assumption takes into account the boxes vacated at the end of 2024 related to the bankruptcies of Big Lots, Conn's, Lumber Liquidators, and a few others. Given the strength of our leasing demand, we view the recapture of these spaces as an opportunity to further increase rents and enhance the credit profile of our tenant mix. Other 2025 outlook assumptions include lease termination income between $6 million and $9 million, as compared to $4 million in 2024. Interest income from cash on hand is expected to range between $6 million and $9 million, approximately three cents per common share less than the $26 million reported in 2024 due to the significantly higher cash balances last year. Acquisitions, including structured investments, net of dispositions of $100 million to $125 million. This is inclusive of the Markets at Town Center's structured investment acquisition completed in January. Corporate financing costs ranging from $354 million to $363 million, comprised of consolidated interest expense and preferred stock dividends. Annual G&A expense ranging from $131 million to $137 million as we expect to realize annual savings from the board leadership transition that was undertaken to start the year. Lastly, the outlook range assumes no redemption charges or prepayment charges associated with the callable preferred stock outstanding or early repayment of debt obligations and no planned issuance of additional common equity. I want to thank all our associates for their unwavering effort given each and every day a successful 2025 together. We are now ready to take your questions.

We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time, your question has been addressed and you would like to withdraw your question, please press star and then two. Please limit yourself to one question and rejoin the queue for follow-ups. Our first question comes from Michael Goldsmith with UBS. Good morning. Thanks a lot for taking my question.

You mentioned the credit loss reserve of 75 to 100 basis points kind of in line with your historical average. Can you talk about what you have visibility to start the year where your watch list is? And then maybe try to put some context into how much exposure you have to potential trouble tenants to start the year, maybe to pre-pandemic levels, and how that might play out for 2025.

Sure. In terms of the watch list that is going through the bankruptcy process—Big Lots, Party City, Joanne's—starting at the beginning of 2024 that represented about a 130 basis point impact. We already absorbed about a 10 basis point impact from Big Lots in 2024, so that's already in the portfolio. The remainder is in play and they're currently going through the bankruptcy process. For Big Lots, the remaining 10 basis points that we have, bids are being collected next week for the remaining five locations that we have. Party City, I believe the lease auction is actually running today, and then concurrently after that auction, there's still going to be an opportunity for retailers to bid for a period of time. With Joanne's, they're currently collecting going-concern bids next Wednesday. After the going-concern process, depending on what's remaining, they'd like to schedule an auction for late April. We went through the portfolio and made what we felt were the appropriate adjustments to budget, which are baked into our guidance for the year—what we assume we would either be able to backfill, recover, or would be assumed or purchased at auction. On the demand side, it's robust. Dollar stores, footwear, books, grocery, and beauty, across the board, there are a number of retailers looking at a variety of package deals to help absorb some of these boxes. On the Joanne's side, you have a lot of the off-price guys and grocery interest as well. We're very encouraged by that opportunity. There are a number of locations where we don't have grocery and we're able to backfill with groceries. When we're looking at the credit upgrade, it's significant. These second-generation boxes are opportunities for retailers to grow market share and store count. The relationship between landlord and retailers is strong because of the collective opportunities that we have. So in terms of the watch list and how it's evolved, it's really been status quo. Those that have filed are repeat offenders; they filed in the last two years and came out of bankruptcy. During the first bankruptcy, we were able to modify terms to our benefit, so in coming into this bankruptcy route, we're able to work with the new retailers on opportunities to improve the terms and secure better credit. Not much has really changed on our watch list. To frame it in dollars, if you look at our expectation of revenues—around $2.2 billion—at a 75 to 100 basis point range, you're looking at credit loss baked in of a range of $17 million to $22 million. We feel pretty comfortable with that based on the bottoms-up budget that we ran through and just historic levels of where we've been, pandemic aside. This feels like a reasonable starting point.

Those $17 to $22 million of credit loss that Glenn mentioned is inclusive of both write-offs, as well as potential lost rent you may have from some of those retailers that go bankrupt during the course of the year.

Thank you very much.

And the next question comes from Craig Mailman with Citi. Please go ahead.

You guys have been a little bit more acquisitive as have some of your peers. You took the opportunity to raise a little bit of equity. Just curious—guidance seems to only have what you've done so far this year dialed in. Could you talk a bit about what the opportunity set looks like today? And maybe put some thoughts around sources of funds. Ross, I know you talked about some of the ground leases. What's the magnitude of those sales? Also, where are cap rates and IRRs?

Happy to. As you mentioned, we have already identified and closed on the net acquisition activity primarily with the Markets acquisition. Looking to the remainder of 2025, the intention is to match fund through some of the initiatives I mentioned. As Glenn indicated, we don't have any additional equity in our plan. To the extent that we like where the stock is trading, we're not shy about tapping into that. The intent for this year is to recycle capital accretively. Dispositions of older high cap-rate assets that were dilutive is not something we're planning on undertaking because we don't need to. Based upon how the portfolio is operating, there are two primary sources we highlighted: ground leases and monetizing select entitlements. We have close to 10% of our income stream from long-term ground leases. Not all of those will be disposition candidates, but when you break down that bucket and look at use, foot traffic, remaining term, blended rollover, and location within a center, there is a pool of opportunities that will be opportunistic. On entitlements, we achieved our goal of 12,000 units a year early, so we have a tremendous pool of potential densification opportunities. When prioritizing, some will be better suited to monetize and sell to a developer versus something we activate ourselves for many years. We'll redeploy capital from these flat-growth and non-income-producing assets into core investments. We continue to identify acquisitions across formats and geographies. With structured investments, most checks are $15 to $25 million, so they're not huge capital investments but can lead to larger acquisitions, as we demonstrated with Markets. When you combine all these opportunities, we're confident in what we can do on the investment side.

I would add that in addition to the cash on the balance sheet and availability under our credit lines, the company should generate around $140 million of free cash flow after dividends, CapEx, and TI. So that's another pool of low-cost capital to consider.

And the next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

First, congrats to Milton and welcome to Ross. A question on small shop occupancy, which is around 97.7 to 97.8. Is that a frictional cap, or are there other issues? Given the lack of supply and robust demand, I would think small shop would be where people would look, especially as retailers get more flexible on prototypes.

Great question. When we absorbed RPT, the RPT small shop occupancy was significantly lower than Kimco's legacy small shop occupancy. RPT's small shop occupancy was in the high 80s, while Kimco legacy is over 92%. So year over year, we actually grew RPT's small shop portfolio by 50 basis points, and that contributed to the flat year-over-year figure combined with the high Kimco legacy level. Going forward, flexibility of format is a major factor; retailers are looking especially at mid-to-larger small shop boxes in the 6,000 to 9,000 square foot range. Many of the retailers we mentioned are looking to optimize footprints and can absorb some of those units. Our deal teams are incentivized to push small shop leasing. Our goal is to break through what's being viewed as a ceiling right now around 91.8% and extend that further; we think there's opportunity to do so.

Thank you.

And the next question comes from Haendel St. Juste with Mizuho. Please go ahead.

Thanks for highlighting some one-timers influencing guidance like lease termination fee and interest. The $4 million—what's driving that? Is that some capitalized interest? And which items could be the swing factors getting you to the upper or lower end of guidance?

Great question. On G&A, the midpoint is actually down by about $4 million, and the bulk of the savings is related to the board and management transition with Milton coming off as Executive Chairman. There's nothing material related to capitalized interest; we don't have an enormous amount of development or redevelopment going on. Our 2025 development and redevelopment target is $100 to $125 million, so the capitalized interest component is very small. We focus on controlling costs, and the overall G&A budget is flat aside from the management transition savings. Regarding swing factors in the budget, there are not a lot of one-time items forecasted; this is a very clean, forward-looking year. We called out the items people would focus on, but it's straightforward: run the business, maintain performance, acquire accretively where it makes sense, and lease.

I would add the spread in earnings guidance primarily reflects variability around what may or may not happen in the market with the bankruptcy proceedings. That is what gets you to the low end and the high end of the range.

And the next question comes from Greg McGinniss with Scotiabank. Please go ahead.

I want to touch on the development and redevelopment spend. Is it less of a focus now while you look more at acquisitions, or will you be selling or joint venturing entitlements and ground leases more? Also, can you touch on Coulter Place where the stabilized yield dropped from last quarter?

Regarding Coulter Place, there was no change in the yield—we tightened the guided range to what it always was because we currently have only one project posted in the mixed-use pipeline. As we activate more projects, that range could be modified. Redevelopment remains a focus, but it is retail-driven. Given robust leasing, there are opportunities to backfill existing space rather than redevelop, which can get cash flow sooner and be more attractive. We've undertaken extensive redevelopment over the years to repurpose and build better opportunities for retailers, and we'll continue to be opportunistic. On the multifamily program, we've exceeded our corporate goal of 12,000 units a year early. We have projects under consideration and will evaluate whether to develop, joint venture, or monetize entitlements. All options will be considered based on market cycle and capital use.

We still think there's a lot of upside in mixed-use. Adding residential units to retail centers benefits both retail and residential sides. The challenge is cost of capital—returns for apartment developments are lower than other uses of our capital in the open market. We prioritize the highest returns and seek creative structures to capture benefits of density without taking on lower-yielding investments. We'll continue to use structures such as ground leases, joint ventures, and rights of first refusal to activate apartments in a capital-efficient way.

And the next question comes from Andrew Reel with Bank of America. Please go ahead.

Of the bankruptcy boxes you've already gotten back and may get back this year, what's the average square footage? How many would you have to reposition or split up versus how many could you fill as-is?

The majority we're discussing are single-use tenant boxes. For Party City boxes, the average is about 13,000 square feet, ranging from around 8,000 square feet to higher sizes. On the Joanne's side, boxes are larger, around 32,000 square feet, but there is interest from grocery, off-price, fitness, and others which can handle a variety of sizes. Given the range of sizes, we expect to be fairly successful backfilling with single-tenant operators.

I would emphasize the lack of new supply in the sector. Even if you consider these shadow supply boxes, when added to the new shopping center supply under construction, total new supply remains extremely modest—one of the lowest across commercial real estate sectors. Because of the range of sizes of these returning boxes and the tight market, we feel well-positioned to backfill with single-tenant users at significant mark-to-market rents.

And the next question comes from Juan Sanabria with BMO Capital Markets. Please go ahead.

Can you provide more color on the assumptions for the credit loss reserves? Party City and Joanne are about 1.1% of ABR. How does that square with the 75 to 100 basis points in guidance? Also, is the timing skewed more toward the front half of the year with upcoming auctions?

We feel comfortable with the 75 to 100 basis point range equating to $17 million to $22 million in credit loss. Party City's auction is underway and Joanne's hasn't started going-concern sales yet, so there will be rent running into the first and likely second quarter. The variability around outcomes is why we used a range; we considered both positive and negative possible outcomes for Party City and Joanne's in that range.

And the next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

On guidance: Acquisitions and FFO—since you've already met the net acquisition guidance, are you saying future property acquisition volume would be offset by dispositions of ground leases and entitlements, suggesting a meaningful spread? And on the FFO range, the two-cent spread seems tight—how should we think about that?

The range represents about $20 million in total, and for a company our size, it takes about $7 million of FFO for a penny; so that $20 million range is meaningful. We have good visibility on items in front of us and not a lot of one-timers; the year is relatively clean and straightforward, which is why the range is narrower.

Yes—the short answer on match funding is yes. The expectation is recycling capital from initiatives into new opportunities. If there are more accretive opportunities, we have other capital sources and will update the market as the year progresses.

And the next question comes from Ki Bin Kim with Truist. Please go ahead.

Can you frame Party City and Joanne relative to your experience with Bed Bath? When do you ramp up marketing for these spaces—during bankruptcy process or before—and what does potential rent upside look like compared to Bed Bath?

We market these boxes well before filings based on our watch list. For Party City and Joanne's, being repeat offenders, we were already marketing those boxes after their first bankruptcy. We already had a handful of leases executed for Party City boxes before they filed due to reduced-term arrangements and clear end dates. The blend across Big Lots, Party City, Joanne's yields double-digit mark-to-market upside—10% plus on average. Bed Bath was higher mark-to-market because leases were older and signed a long time ago, but most of those were backfilled with single-tenant users and produced significant uplift.

And the next question comes from Floris van Dijkum with Compass. Please go ahead.

On apartment entitlements: You have about 8,900 currently entitled and similar amounts in process, with several over a thousand units. Are the largest ones most likely to be joint-ventured or sold because of exposure? Conor, by the end of the decade, what percentage of NOI do you expect to come from apartments—10% to 15%?

When prioritizing entitlements, we run detailed analyses including market feasibility, timing, supply-demand dynamics, and expected yields. It's not strictly size-based. We decide which projects are best for Kimco to invest in directly, which are best for ground lease and third-party developers, and where joint ventures or creative structures make sense. We evaluate each project's timing and financial profile and can be selective about activation and structure.

The two projects above 1,000 units are large master plans. Entitling a thousand units doesn't mean you build them all at once; you phase them—perhaps five phases of two hundred units over time—managing supply and absorption. Each phase can be activated or monetized depending on market cycle and capital priorities.

Long term, we aim to activate more multifamily when structured accretively to our cost of capital. A target like 90/10, where 10% of NOI is from apartments, would be a favorable outcome. Current cost of capital limits how much we activate directly, so we'll continue using ground leases, joint ventures, and rights of first refusal to take a capital-light approach and still add value.

And the next question comes from Steve Sakwa with Evercore ISI. Please go ahead.

Given tightness in the industry and retailers still looking to grow, what's Kimco's appetite to take on actual ground-up retail development? What discussions have you had with bigger retailers to jump-start development?

You're seeing ground-up development more in second- and third-ring markets where urban and suburban sprawl is occurring, not typically in first-ring suburbs. Rents have to reach a higher premium to justify ground-up development in core markets, and our cost of capital also matters. Ground-up development is more likely in tertiary markets where the economics work, rather than in our primary core markets.

Our opportunity is largely working with retailers on backfilling second-generation space and identifying how they can expand market share within tighter trade areas. We continue to engage with retailers and would consider development if returns and tenant partnership made sense. The current backdrop gives us confidence in our credit loss reserve because we don't see a wave of new ground-up supply coming that would materially change the dynamics—most opportunity is on these second-generation boxes going through auctions.

And the next question comes from Wes Golladay with Baird. Please go ahead.

Clarify: The savings from management changes—do they start in January or at the time of the annual meeting? And Conor, given your comments about bidding on boxes, do you plan on doing a lot of that?

The savings started at the time of the announcement at the end of January.

We evaluate every box and opportunity set. We're talking to many retailers pre-bankruptcy and during auctions. We will be selective—getting aggressive where we can dramatically improve valuation not only on an individual box but on surrounding retail we own. When others outbid us in auctions, it can still be positive because the winning tenant must fulfill back rent and ongoing lease obligations. We can be selective and strategic in bidding.

And the next question comes from Paulina Rojas with Green Street. Please go ahead.

Do you believe recent bankruptcies will materially impact the rents you can achieve for new occupancies? I'm focused on whether market dynamics will shift rents compared to a scenario where these bankruptcies hadn't occurred.

You need to look at the amount of supply that comes available in a submarket and whether that changes pricing power. In most cases, there will not be multiple boxes available in the same trade area. For good locations in tight trade areas, usually only one box becomes available. Our occupancies are at all-time highs and sector vacancy rates are at all-time lows. This is a very tight market for quality retail; when boxes are available, there is usually no second option for retailers. That competitive dynamic supports pricing power. Expect activity both in auction tents and post-auction with retailers doing package deals across locations.

And the next question comes from Mike Mueller with JPMorgan. Please go ahead.

You talked about demand for medical and wellness. How do you size up their credits versus national and local options? Have you had any meaningful bad debts from that category historically?

Medical tenants typically invest a lot of capital for build-outs and equipment, making them very sticky tenants who stay a long time. Bad debt from that category is de minimis historically; they are solid credits.

We've seen growth in urgent care, pediatric urgent care, and off-site hospital facilities complementing traditional categories like dentistry and physical therapy. These are service uses, internet-resistant, drive traffic, and offer cross-shopping opportunities. We underwrite these uses for credit quality and have been successful with them historically.

And the next question comes from Michael Gorman with BTIG. Please go ahead.

On transactions and match funding: When you sell ground leases or entitlements in 2025, would proceeds also apply to future structured investments? Can you talk about the scale opportunity and strategy of selling slower-growing fee positions into structured investments?

Yes—proceeds can fund structured investments. The structured program has average check sizes of $15 to $25 million, expanding our ability to invest responsibly. We expect recycling within the structured program as investments get repaid or converted, and we see this program as a complement to fee acquisitions. The program is currently around 2% of enterprise value and can grow methodically as opportunities arise. It's a measured approach.

And the next question comes from Linda Tsai with Jefferies. Please go ahead.

Could you provide color on upcoming refinancings in 2025 and 2026? How should we think about timing and interest rate impacts?

We just paid off a bond in early February. Remaining 2025 maturities total about $290 million: roughly $50 million of mortgage debt paid on March 10 and a $140 million bond maturing June 1. We have various ways to address those obligations—free cash flow, dispositions, or revolver availability. Our revolver borrowings are currently priced better than doing longer-term issuance in some cases. For 2026, about $750 million matures but starts in August, so we have time to address it. If we went to the bond market today, we'd be in the mid-5% range on a ten-year issuance, approximately 5.45% to 5.5%. Our strong liquidity and improving ratings outlook give us flexibility.

And the next question comes from Ronald Kamdem with Morgan Stanley. Please go ahead.

On same-site NOI guidance of roughly 2% plus: Any chance you can quantify the hit to 2025 from the end-of-2024 closures and whether that creates an opportunity as you backfill into 2026 and 2027? Also, on net acquisition guidance—what could the magnitude of dispositions be this year? Is it $50 million, $100 million, $300 million?

The vacancies related to recent tenant departures are already excluded from the same-site NOI number; they're baked into our 2% plus starting point. Same-site NOI is cash-based—tenants paying rent are included, straight-line rent and lease termination fees are excluded. The exact outcome will vary by quarter depending on recapture timing. We feel 2% is a reasonable floor and will update guidance as the year progresses.

When we started last year, our signed but not open pipeline estimates were conservative and we ended up with more rent commencing than anticipated. We started 2025 with a signed-but-not-open pipeline expectation of around $25 million. Those pipeline dynamics are one of several levers that can change same-site results throughout the year. The recapture of vacated spaces should contribute positively as we backfill.

Regarding disposition magnitude for match funding, the ground-lease bucket is meaningful given close to 10% of income is from long-term ground leases. Not all are disposition candidates. We'll be measured early in the year and opportunistic—selling only to the extent it aligns with capital needs and accretive redeployment opportunities. We'll update the market as we proceed.

And the next question comes from Omotayo Okusanya with Deutsche Bank. Please go ahead.

Kimco has been creative in creating shareholder value. Given the landscape for retailers and retail real estate over the next 12 to 18 months, what is the probability you pursue creative, larger-scale transactions like Albertsons, structured loan-to-own conversions, or something new?

We always look for unique opportunities, particularly where there's market dislocation or mispricing. Our balance sheet strength positions us well for future cycles when dislocations are more pronounced. Today, the environment doesn't present widespread mispricing—our sector is healthy and cash flow growth is strong. We continue to monitor for real-estate-rich retailers and other creative opportunities; every deal is different. Our team is constantly evaluating potential unique transactions to create shareholder value.

Quick modeling question: On the Waterford acquisition, what was the interest rate on the assumed debt?

The interest rate on the loan was 4.86%.

And the next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

CapEx: The midpoint of your CapEx guidance for 2025 is lower than 2024 actuals. What's driving that? Is it timing-related or run-rate improvement?

As tenants come online, funding has been processed and the signed-but-not-open pipeline compresses. That's what you're seeing for 2025. With the bankruptcies this year, there may be some investment required to re-tenant boxes, but that would likely show up more in 2026 than in 2025.

And the final question comes from Ki Bin Kim with Truist. Please go ahead.

Quick question on Doral Pointe—one of your office tenants was Spirit. Remind us of the structure: did they purchase the building from you? Any potential impacts from their bankruptcy?

Spirit did purchase their headquarters from us early in the project and they built and opened it. We have a ground lease with them on the multifamily portion and they are current on their obligations. They are operating and have roughly nine hundred employees onsite. There is news about Frontier potentially engaging with Spirit, but currently the property is open and operating.

This concludes our question-and-answer session. I would like to turn the conference back over to David Bujnicki.

Just like to thank everybody who joined our call today. We look forward to getting together with a number of you in the upcoming several weeks. Have a wonderful weekend. Thanks so much.

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