Earnings Call Transcript
KIMCO REALTY CORP (KIM)
Earnings Call Transcript - KIM Q3 2021
Operator, Operator
Hello, and welcome to Kimco's Third Quarter 2021 Earnings Conference. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note today's event is being recorded. I now would like to turn the conference over to Dave Bujnicki, Senior Vice President of Investor Relations and Strategy. Please go ahead, sir.
Dave Bujnicki, Senior VP of Investor Relations and Strategy
Good morning, and thank you for joining Kimco's Third Quarter Earnings Call. The Kimco management team participating on the call today includes Conor Flynn, Kimco's CEO; Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; David Jamieson, Kimco's Chief Operating Officer, as well as other members of our executive team that are also available to answer questions during the call. As a reminder, statements made during this call may be deemed forward-looking, and it's important to note that the Company's actual results could differ materially from those projected in such forward-looking statements due to various risks, uncertainties, and other factors. Please refer to the Company's SEC filings that address such factors. During this presentation, management may reference certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP financial measures can be found in the Investor Relations area of our website. If technical difficulties arise, we'll resolve them as quickly as possible and post additional information to our IR website. With that, I'll turn the call over to Conor.
Conor Flynn, CEO
Good morning, and thanks for joining us. Today I will share the highlights of the quarter, provide a recap of our now-closed strategic merger with Weingarten, and give an update on the strong leasing environment. We're also giving an update on the transaction market, and Glenn will cover our operating metrics in detail, discuss our improved balance sheet, Albertsons valuation, and the proactive use of our ATM and how we can take advantage of opportunities in the market. He'll close with an updated outlook for the balance of the year. While we have only owned Weingarten for a partial quarter, our expanded portfolio of grocery-anchored and mixed-use properties is already validating our investment thesis. To date, we are exceeding our initial underwriting on all major metrics, including FFO, occupancy, spreads, and renewal rates. As for synergies, as outlined in our earnings release, we have achieved the upper end of both ranges and anticipate achieving the full benefit of synergies by the end of 2022. Our dedicated team has done a remarkable job closing another merger ahead of schedule and implementing an integration plan that included onboarding and training over 100 new employees, significant systems integration, and property management, all while staying focused on executing our strategy. To all my teammates, I just want to say thank you. On the operational front, leasing demand continues to be robust across the portfolio with the bright spot being the rebound in demand for small shops. This was illustrated by the portfolio delivering another quarter of improved results, including a sequential increase in occupancy and positive leasing spreads. Our pro-rata U.S. occupancy is up 20 basis points to 94.1%, while anchor occupancy remained flat at 96.9%. Small shop occupancy rose 180 basis points over prior quarter to 87.3%, an increase of 60 basis points year-over-year. New lease spreads were +5% with 141 new leases signed totaling 605 thousand square feet. Spreads for renewals and options finished at +4.9%. We closed the quarter with 270 renewals and options totaling 1.4 million square feet, exceeding the 5-year average number of renewals and options reported during the third quarter by 40%, and exceeded average GLA renewed by 38%. Combined spreads for third quarter 2021 were +4.9%, with total 3Q '21 deal volume reaching 411 deals totaling 2,050,321 square feet. 411 leases executed represent the most transactions reported during a quarter since the first quarter of 2018. Our same-site NOI growth was +12.1%, including a 30-basis point contribution from redevelopments. The same-site population does not include the Weingarten sites since we only had them for a partial quarter. With the continued strength in leasing, we have maintained our 300 basis points spread of leased versus economic occupancy, similar to last quarter. As of September 30, 2021, we had over 400 signed leases representing 44.8 million of pro-rata annualized base rents awaiting rent commencement. While the operating environment remains favorable, we cannot let down our guard. Inflation, supply-chain issues, and the labor market together or alone can impact our business. That is why we continue to look for the most resilient assets, improve operational efficiencies, and seek out ways to help our tenants succeed. We continue to grow our portfolio in the high-growth Sunbelt markets and are committed to being the last-mile solution for tenants. There is no question that our mission-critical last-mile brick-and-mortar locations are proving to be durable solutions for consumers, retailers, and many other businesses that want scale and reach to serve the end customer. In closing, we are pleased with the progress we have made and believe that we have positioned Kimco for sustainable growth over the long term with a combination of internal and external growth levers. Our talented and deep team is focused on execution, as we are in a unique position to take advantage of a wide range of opportunities. We continue to believe we're building something special, and the best is yet to come. Ross?
Ross Cooper, President and Chief Investment Officer
Thanks, Conor. And good morning. It's been quite an exciting quarter at Kimco, and the excitement has continued into the fourth quarter, as I will discuss shortly. There is no question that open-air shopping centers provide one of the best risk-adjusted returns of all asset classes. We continue to see additional capital sources, new and old, gaining conviction in quality open-air retail, leading to the compression of cap rates. We are fortunate to be in a position with multiple investment strategies that enable us to be active when opportunities arise but also patient when things become too frantic. With the finalization of the Weingarten merger, we've been able to execute on several accretive investments and new initiatives. With the addition of new joint venture partners inherited through Weingarten, we are excited about potential growth opportunities. Subsequent to quarter-end, we acquired the remaining 70% interest in a portfolio of six Publix-anchored, Sunbelt-region shopping centers from our existing joint venture partner, Jamestown, for a gross purchase price of $425.8 million. The Publix-anchored assets represent over 1.2 million square feet of gross leasable area in infill markets throughout the Southeast, with five located in the top-performing South Florida market and one in the high-growth Atlanta market. Subsequently, Kimco entered into a joint venture partnership with Blackstone Real Estate Income Trust, under which we will both own 50%, and Kimco will continue to manage the portfolio. It is rare to have the ability to buy a portfolio like this with short-term mark-to-market opportunities and exceptional tenant sales. We are thrilled to be partnering with Blackstone again on our new strategic venture. Also, post-quarter-end, and in line with our value creation strategy, we successfully bought out our partner's 85% interest in two grocery-anchored centers in California. Anaheim Plaza is one of the jewels of our Southern California portfolio, with extraordinary highway visibility and two grocery anchors at the same property, both performing exceptionally well. The second asset is Brookdale shopping center, located in Fremont, California, anchored by a lucky supermarket and CVS. The gross purchase price for the two assets was $134 million. Turning to our redevelopment program, it continues to move ahead, beginning with property-level entitlements and then selectively and creatively activating a few at a time. While the structure and exit strategy are determined on a case-by-case basis, we see the upside, knowing these infill locations are being built at a significant relative spread to the stabilized cap rate. Comps in multi-family, industrial, and other asset classes are regularly transacting with cap rates starting in the twos and threes. Additionally, we're continuing our structured investment program with a disciplined approach and emphasizing location, demographics, quality of tenancy, and operational strength of the sponsors. We view the base case of these investments as a true win-win, either generating an attractive return with a repayment down the road, or exercising our right of first refusal and owning the properties outright. On that front, we completed a $21.5 million mezzanine financing on a strong performing center in San Antonio called Alamo Ranch. In just a few short months, San Antonio has gone from a market that was on our target list at Kimco to a major contributor in our portfolio with the Weingarten merger and now our second structured investment there. We continue to pursue additional opportunities in San Antonio, one of the fastest-growing MSAs in the country. We also sold three small low-growth assets this quarter, two single-tenant boxes and an undeveloped parcel for a total of $23.5 million at a flat 5% cap. While these positions will remain a relatively small component of our investment strategy, we will be prudent in disposing of low-growth assets and undeveloped parcels from which we can redeploy the capital. To repeat Conor's statement, we are confident that the best is yet to come. Off to Glenn for the financials.
Glenn Cohen, CFO
Thanks, Ross, and good morning. We are pleased to report very strong third quarter results. Overall, the portfolio continues to produce improving results, including record quarterly revenue, increased occupancy, positive leasing spreads, strong same-site NOI growth, increased collections, and lower credit loss. Our balance sheet metrics are also at the strongest levels ever. As you might expect, the completion of the $5.9 billion Weingarten merger, which closed in early August, was a key contributor. While we did not have a full quarter of contribution from the addition of the Weingarten portfolio, the benefits are clearly apparent. Our team has put in enormous effort to accomplish the successful integration of Weingarten in a very short period of time. Many thanks to our highly motivated and skilled team; we couldn't be prouder. Now for some details on our third quarter results. NAREIT FFO was $173.7 million, or $0.32 per diluted share, and includes $47 million or $0.08 per diluted share of merger-related expenses. This compares to the third quarter 2020 NAREIT FFO of $106.7 million or $0.25 per diluted share, which includes aggregate charges of $16.1 million or $0.04 per diluted share related to severance for a voluntary early retirement program and early redemption of $485 million of unsecured bonds. The increase in FFO was primarily driven by higher NOI of $98.7 million, of which the Weingarten merger contributed $62.6 million. In addition, NOI benefited from lower credit loss of $30.7 million and higher straight-line rent of $14.5 million, including $2 million from the Weingarten portfolio. Improvements in collections and new leases commencing during the quarter were the major contributors. Specifically, during the third quarter, we collected approximately 98% of base rents. We also collected 80% of rents due from cash basis tenants, up from 77% last quarter. Furthermore, collections of prior period amounts from cash basis tenants totaled $8 million during the third quarter 2021. Our cash basis tenants comprised 9.1% of pro-rata annualized base rents. If we excluded the addition of the Weingarten cash basis tenants, this amount would have been 7.3%, which compares favorably to the 8.8% level reported last quarter. In connection with the preliminary purchase price allocation for the Weingarten transaction, the debt we assumed was recorded at fair value, which was $107 million higher than the face amount. This resulted in $6.2 million of fair market value amortization for the third quarter, which reduces interest expense and is also part of the FFO improvement. We expect to finalize our purchase price allocation by year-end. During the third quarter, FFO also included approximately $6 million or $0.01 per diluted share related to one-time contributions from several joint ventures and higher lease termination fees. Turning to the balance sheet, we had an active quarter in the capital markets. We issued a new $500 million unsecured bond at a coupon of 2.25%, the lowest coupon for 10-year unsecured financing in the Company's history. Proceeds from this issuance were primarily used to fund the cash component of the merger consideration and the merger costs. We also opportunistically used our ATM equity program to issue $3.5 million shares of common stock, raising almost $77 million in net proceeds to fund some of the investment activity Ross just mentioned. This is in addition to the 179.9 million shares of common stock issued in connection with the Weingarten merger, valued at $3.7 billion. We also assumed $1.8 billion of debt, including the fair value adjustment as part of the Weingarten merger. Total common shares outstanding at quarter-end was $616.4 million. And we expect this should be a good guide for the fourth quarter. As anticipated, the Weingarten merger was a deleveraging event. As of September 30th, net debt to EBITDA on a look-through basis, including the pro-rata share of joint venture debt and preferred stock outstanding was seven times. This metric only includes two months of EBITDA from the Weingarten merger. But all the debt assumed on a pro forma basis, including a full quarter of EBITDA from Weingarten, look-through net debt to EBITDA would be 6.3 times, representing the lowest level since we began tracking this metric. Our liquidity position also remains very strong. We ended the third quarter with over $450 million of cash and full availability on our $2 billion revolving credit facility. In addition, during the third quarter, the value of our Albertsons marketable security investment climbed to more than $1.2 billion after increasing by $457 million, which is included in net income, but not FFO for the quarter. We continue to evaluate our opportunities to begin the Albertsons monetization process. As we look ahead during 2022, we will have a variety of potential uses for the capital, from the redemption of our preferred stock issuances that become callable, bonds that mature in October and November of 2022, and accretive investment opportunities. As our overall business continues to recover from the effects of the pandemic, and as we begin to benefit from the successful merger and integration of the Weingarten portfolio, we are raising our full-year 2021 NAREIT FFO per share guidance range to $1.36 to $1.37, which includes $0.10 per diluted share of merger-related costs, and the inclusion of the Weingarten portfolio for five months. This compares to previous NAREIT FFO per share guidance of $1.29 to $1.33, which did not include any impact from the Weingarten merger, except $0.01 related to merger costs. Our third-quarter FFO includes a total of $0.03 per share related to items that were one-time in nature and which were not budgeted for as recurring items. This includes $0.02 per diluted share from improvements in credit loss, and another penny from contributions from joint ventures and lease termination fees. We will provide initial 2022 guidance on our next earnings call. And with that, the operator will take your questions.
Dave Bujnicki, Senior VP of Investor Relations and Strategy
We want to make this an efficient process. So, you may ask one question with an additional follow-up. If you have additional questions, you're more than welcome to rejoin the queue. You may take the first caller.
Operator, Operator
Yes. Thank you. As mentioned, we will begin the question-and-answer session. At this hour, we pause momentarily to assemble the roster. The first question comes from Rich Hill with Morgan Stanley.
Rich Hill, Analyst
Hey, good morning, guys. First of all, congrats on a nice quarter. I wanted to start off with leasing spreads, maybe get some insights from you guys if this is what a normalized market feels like. I typically look at leasing spreads as a leading indicator for same-store revenue and same-store NOI. So, I'm curious, does this feel like a normal environment to you post-COVID?
Glenn Cohen, CFO
Yeah, thanks, Rich. Good question. So, leasing spread, I imagine each quarter, it's really dependent on the population that is rolling and gets executed quarter-over-quarter. So, you do see volatility in that number. Some quarters you could have significantly below market leases that roll and you execute, and obviously you'll get a real net benefit out of that. This quarter we had an outsized amount of small shop volume that came through, which is typically closer to market. So that's where you see that sub-5 range for this quarter, but it's not indicative necessarily of what could happen next quarter if you have some outsized anchor activity that has a significant below market value that you can recapture. So, when you look at what we've been doing over the last trailing eight quarters and maintaining that positive spread, there is some volatility in that number, and it's really just indicative of what's rolling.
Conor Flynn, CEO
Some pretty significant pricing power on escalating rents in the Sunbelt. I think that's where you're going to see the spreads continue to be quite strong as we're seeing really the market rent growth there outpace the rest of the country.
Rich Hill, Analyst
Yeah, that's helpful. And the reason I'm focusing on it is I go back to your 2020 to 2025 guide. If you can put up these leasing spreads, that might mean that's a conservative guide, but well taken. Conor, maybe this is for you. I noted that Albertsons is worth $1.2 billion at the end of the quarter. Have you given any thought to monetization, how you would use that in capital allocations? Any thoughts there?
Conor Flynn, CEO
Yeah. As we noted in the remarks, we have a lot of optionality. I think that's the beauty of where we sit today, Rich. If you look at the business and where we sit, we've got obviously a lot of leasing momentum. Clearly, we're going to allocate a lot of capital to that. That's our first priority as that really fuels the earnings growth. Then we have redevelopment opportunities as well. You've seen the entitlement work we've done throughout the portfolio. The nice part is we're seeing a lot of external growth opportunities as well as Ross outlined. We do have some debt reduction opportunities as Glenn outlined in his script. We're going to look at the menu and see what's really the most accretive towards our FFO growth because that's really where we're focused and we have a lot of different levers to pull, so it's a nice bucket of capital to redeploy. It's not earning a tremendous amount right now, so we're going to be prudent with it and recognize that we have a great, great many to select from.
Rich Hill, Analyst
Great. Thanks guys. Congrats on a good quarter again. I'll jump back in the queue.
Operator, Operator
Thank you. And the next call comes from Alexander Goldfarb with Piper Sandler.
Alexander Goldfarb, Analyst
Good morning. I have two questions. First, regarding the sub-five CapEx you recently acquired, can you provide more details on what lies behind that sub-five? I expected to see a decrease in CapEx, but I'm curious about how your approach to underwriting acquisitions, whether as portfolios or individual assets, has evolved. The price you paid for Weingarten isn't something that can be matched today, so I'm interested in how you're assessing deals given the current pricing trends.
Glenn Cohen, CFO
Yeah, sure. Happy to address that, Alex. As it relates to the venture with Blackstone, these are clearly six assets that we felt very strongly about. Between the location, Publix being one of the best grocery anchors that you can possibly have with exceptional sales. As I mentioned in the script, having near-term mark-to-market opportunities in Publix-anchored centers is somewhat rare. So, when you look at the vintage of those assets, it gives us an opportunity to create some additional growth probably sooner than some other opportunities that we have in the portfolio with Publix. So, we're really excited about that. We're really excited about re-engaging our venture with Blackstone after a very successful one several years ago. Underwriting is still a very specific exercise. If you look at every single asset, every single space taken into consideration the growth in the market's demographics, where the population growth is coming from, and just making sure that we have very strong conviction in our ability to push rents. We're not looking to invest in assets that don't have outsized growth. So, the ones that you do see us pulling the trigger on, you can rest assured that we believe very strongly that we're going to be able to push that outsized growth beyond the average of our portfolio. So, I don't think that there's anything specifically changing in terms of our underwriting strategy, whether it's a single asset or portfolio. It's really just making sure that we look at every single asset, every single space, and feel pretty good that there are below market leases that we can push over time.
Alexander Goldfarb, Analyst
So, as far as the Blackstone, the sub stock, what would you say that cap rate will get to in a few years out when you have the ability to roll rents?
Glenn Cohen, CFO
Yeah, it's hard to predict. We have opportunities to discuss things sooner than later, hopefully with the grocery anchors. So, the timing is going to depend on where those negotiations go. But, like I said, we're very confident that the growth there is going to outpace the average of our portfolio, hopefully by a wide margin.
Alexander Goldfarb, Analyst
Are you observing that discussions around rent are becoming easier for retailers? Specifically, when you mention having multiple tenants interested in a particular space, are tenants more inclined to negotiate higher rent now compared to a few years ago when they were more resistant to such discussions? Do you perceive any shifts in the leasing dynamics regarding rent conversations?
Glenn Cohen, CFO
Great question. The dynamic is always changing, and currently there's significant pent-up demand from retailers looking to buy. Some retailers have expanded their offerings and are increasing their open-to-buy targets, making them more competitive for space as they seek growth. One positive outcome of COVID is the recognition that brick-and-mortar stores are essential to an omni-channel strategy, which has been valued by both retailers and customers. These stores provide a strong distribution channel with better margins. Additionally, there’s little new development supply entering the market, so the existing COVID inventory is being absorbed. This absorption allows for rents to be pushed higher. We’re noticing rent increases particularly in the Sunbelt and coastal markets, like Southern California, which has become very competitive and shows strong progress beyond pre-pandemic levels. Overall, the current environment is very favorable for landlords due to these factors.
Operator, Operator
Thank you. And the next question comes from Greg McGinniss with Scotiabank.
Greg McGinniss, Analyst
Hey, good morning. So, thinking about the synergies, which I guess I was pleasantly surprised by you guys, expectation at the top end of those synergies. But given the fairly quick achievement of those goals, is there any potential for additional cost savings through 2022 perhaps?
Conor Flynn, CEO
Yeah, there are, yes. So, we're really proud of the team and how we're able to integrate both companies so quickly that the majority of those initial synergies were really related to staffing and G&A, which is something that you could anticipate and plan for pre-merger. What we're really seeing now as an opportunity, once we merge these companies and really looked at professional services, information technology, and the longer-term contracts at Weingarten had where we can now merge them and or dissolve at some in time will create some additional synergies that will help us push that number further northward. From the outset, we felt very good. We invested a tremendous amount of time upfront with the integration management office, kicking off 60 days prior to the merger. We really did a deep dive on how the combined Company will look and operate, which enabled us obviously to achieve the numbers we did today and feel very good about what's going to happen in 2022. One thing I would add is that Kimco is highly focused on efficiency. We have always prioritized this, as it is part of our core values. We are satisfied with the integration and its current status, but as a combined entity moving forward, we will ensure that this focus remains.
Ross Cooper, President and Chief Investment Officer
Okay, thanks. Going back to the shop leasing really quick. Is there anything you can tell us in terms of the trends you're seeing in that space? How much of that demand may have been in that demand which tend to categories and generating most inquiries and demand for space? Any color there would be appreciated.
Conor Flynn, CEO
There's demand across nearly all categories currently, with grocery being the most obvious beneficiary of the pandemic. They have surplus cash that they're looking to reinvest in their operations, expand their inventory, gain market share, and strengthen connections with customers. This will be crucial for them and all sectors. Off-price retailers, like Burlington and Old Navy, are actively expanding their presence as they see an opportunity to enhance their portfolios and capture market share in areas where inventory was previously unavailable. The ongoing surplus inventory from COVID is creating a unique chance for these retailers. Interestingly, in the last quarter, 35% of our new deal activity was related to restaurants and fast-casual dining, signaling a resurgence in that sector. As COVID anxiety decreases, people are eager to return to socializing, which is opening up opportunities in the food service industry. Value-oriented fitness centers, such as Planet Fitness, are also looking to expand, recapturing market share and extending into boutique fitness categories, appealing to small shops. Various retailers are experimenting with different formats, which provides them with options to offer diverse services to customers in different locations. It's important for them to have this flexibility.
Greg McGinniss, Analyst
Thanks. And this all seems like sustainable demand in your view? Like if you look at the forward pipeline still just as strong as it has been?
Glenn Cohen, CFO
I do. I think it goes back to the validation of open-air, and the validation that brick-and-mortar is an essential part of any retailer strategy. We've obviously gone through a very volatile evolution over the last six years about people's views and opinions, and now the market's responded to different ideas related to e-commerce and whether or not what's essential. But let's go all the way back to the core basics. People like to engage; people like to touch and feel product; retailers need multiple forms of distribution to reach that customer. And so, brick-and-mortar we see it very much as being essential to them.
Conor Flynn, CEO
We're more convinced than ever that last mile retail is where we want to be and where we want to continue to focus strategy. If you look back five years ago, that's exactly where we're focused. And so, we feel like we're in a really good spot to benefit from that increased demand.
Greg McGinniss, Analyst
Great. Thank you.
Operator, Operator
Thank you. And the next question comes from Michael Goldsmith with UBS.
Michael Goldsmith, Analyst
Good morning and thank you for taking my question. I would like to ask about the leasing aspect. We have observed changes in occupancy rates. Considering the ongoing supply chain and labor challenges, as well as a possible slowdown from lease signing to the start of rent payments, how do you see this metric evolving, especially since the duration from lease signing to the start of rent payments seems to be increasing while leasing remains robust? How do these factors influence your outlook moving forward?
Glenn Cohen, CFO
Sure, the question is whether or not least economic will expand or contract as we look out into the future. And I think what we could see is 300 basis points is more or less at our high watermark on a historic basis. And you could see some additional expansion as we approach the first part of '22, but as these tenants start to come online and open, you are going to start to see that compression set in through the back half of '22 and into '23. And then I believe our normalizer is on 170 basis points on spread. I don't think you see that for a period of time, but you are right. To your points about supply and opening to something that we watch it very, very closely. We worked hand-in-hand with our tenants. We have a very substantial tenant coordination program, which really is designed to shepherd tenants through the permitting and build-out process. Those that don't have the resources available to them to address all of these issues that are coming out to the market. Obviously, that's been really helpful. In addition to that, we're trying to get well ahead on pre-ordering supplies and materials when we can, when it makes sense. We all lived through the backlog. It doesn't matter who you are and no one's immune to it. So, we're just eyes wide open about that process. We will manage it as best we can and apply the resources that we need to do to get it done.
Conor Flynn, CEO
I would just add that one big benefit that Kimco has is our scale and our efficiencies of scale. So, we were not buying small amounts of HVAC units or roofing materials or anything that's needed for a fit-out for a specific tenant. We usually buy in bulk and we usually get premier pricing as well as relationship pricing. So, we feel like we have the ability to, as Dave mentioned, to utilize our network and to utilize our efficiencies as best we can to try and mitigate supply chain issues.
Michael Goldsmith, Analyst
Scale is a good segue to my next question. Now that you've integrated Weingarten into your business for about three months, how has your scale influenced your discussions with national tenants? Is there an inclination to collaborate more with you because of your scale, enabling you to present more leasing opportunities than smaller landlords can?
Glenn Cohen, CFO
I think your scale has changed your conversations with national tenants. Is there a willingness to partner and have you used tenants to go further with you because of your scale and your ability to offer more opportunities for leasing than smaller landlords?
Michael Goldsmith, Analyst
I'm trying to understand the revenue synergy. I'm trying to understand like if there are revenue synergies associated with the transaction. Thanks.
Glenn Cohen, CFO
Sure. Well, on the retailer side, I mean, prior to the transaction, we're typically the largest landlord for a lot of these retail partners. So that's just compounded as a result of the merger. That conversation obviously always has its benefits. They can pull both ways, depending on what's being discussed. But in general, it does afford us the opportunity to be out in front of those retail partners. They have a very aggressive opening buy strategy. We now have over 560 sites that we can show them to help accommodate and still fill that void. Obviously, you can do that at scale. That's a good thing for both parties. But also helps us progress the conversation beyond that. Retailers are trying to figure out and innovate and change to become and stay more relevant to the customer. We want to work with them to be part of that solution and understand from a landlord perspective, what do we need to do? So, it creates a very, very constructive dialogue to help drive our business forward and to your point, revenue and top-line growth.
Operator, Operator
Thank you. And the next question comes from Haendel St. Juste with Mizuho.
Haendel St. Juste, Analyst
Hey, good morning.
Conor Flynn, CEO
Morning.
Glenn Cohen, CFO
Morning.
Haendel St. Juste, Analyst
So, the recent JV, the transaction with Blackstone, I found very interesting, a case study of capitalizing on the market moves in cap rates. And then you bought the two JV assets out in California, further spotlighting the embedded acquisition opportunities. So, I guess my question is, what's your interest level in pursuing further deals like this? And can you discuss the funding sources if that would involve Albertsons stock at all? Thanks.
Glenn Cohen, CFO
Sure, happy to address that. So, for us, we really view it as a significant level of optionality. We've said, even as we've been skinning down our joint venture exposure over the last 7 or 8 years, on the Kimco side, we've had three very strong long-term partners that we continue to do business with. And as we've said from the start that we like having the ability to potentially grow opportunistically if there is the reason to bring in a new partner, like you felt here on this particular transaction. But for those that are potentially looking for a monetization event, we are willing and able to be able to have that discussion with them, hopefully on a negotiated basis, if not having that right of first refusal to be ready to take advantage of that if the partners are looking to exit. So one of the nice benefits that we see in the Weingarten merger is after getting down to really just three major partners on a Kimco side, there are now about 14 new joint venture partners from that transaction, some of which are looking to do long-term business with Kimco, and we welcome that. Others that are potentially looking to take some chips off the table or monetize their retail investments, and we're also prepared to have those discussions as well. And we are having those conversations as we speak. So, for us, given all the levers that we have, Conor mentioned and Glenn both mentioned in their prepared remarks. Between the significant amount of cash availability on our credit facility and ultimately the Albertsons monetization opportunity, we'll just be very prudent and selective with where we want to utilize that capital, but having a lot of different ways to take advantage of opportunities as they present themselves.
Haendel St. Juste, Analyst
Great. Appreciate the thoughts. One follow-up on the side but not least ABR, I think you mentioned $44.8 million. How much of that should we expect to hit in 2022? Thanks.
Glenn Cohen, CFO
Right now, we're tracking around $25 million to about $30 million potentially that could flow in '22. And that would be obviously back-loaded.
Haendel St. Juste, Analyst
That remainder in '23?
Glenn Cohen, CFO
Yeah. Yeah.
Operator, Operator
Thank you. And the next question comes from Craig Schmidt with Bank of America.
Craig Schmidt, Analyst
Great. Thank you. I want to talk bigger about the current operating environment, which seems to have real strength from the consumer. And then, just the aggressive leasing from retailers. This looks like an environment that's much better than 2019 when you go back to look at people's earnings results. So, beyond revenge spending and then retailers looking to take advantage of opportunities, what's beneath this impressive growth that's happening in the operating environment?
Glenn Cohen, CFO
I believe, regarding retailer demand, many of the points I mentioned earlier still apply. It's important to recognize that brick-and-mortar stores genuinely hold value. Operators notice this reflected in their margins, and consumers appreciate the convenience and efficiency in last-mile distribution. This contributes to a complex network for distributing goods from retailers to customers. Interestingly, COVID helped confirm the necessity of open-air spaces, as they bring retailers closer to customers. We also now have a hybrid work environment, the long-term implications of which remain uncertain. However, one thing is clear: it will vary for each individual. Consequently, many are choosing to stay in first-ring suburban markets, beginning to recognize their value too. This creates opportunities for open-air engagement in those suburbs, where most of our portfolio is located. We're benefiting from this trend, and I believe it will contribute positively in the long term. We're witnessing all these evolving factors come together and shape the current environment. Moving forward, I expect the open-to-buys to remain aggressive as we work through COVID-related inventory. Overall, consumers are currently well-positioned to take advantage of these circumstances. Yeah. I mean, again, we want to try and keep it in that 6 to 6.5 times range on a total look-through basis. So, we're on a pro forma basis. We're right in that sweet spot right now. And again, we continue to focus on just bringing leverage down over time. I think as you continue to see EBITDA grow, again, we're being very cautious about how much debt comes on. We've been doing a lot to reduce debt levels, absolute debt levels over time. Again, the Weingarten merger added $8 billion in total, doing $7 billion on a face value, $8 billion on a fair market value adjustment. But again, on an absolute basis, you'll continue to see us reduce debt, and we continue to try and reduce as much secured debt as we can as well. So, we did assume about $300 million of mortgages. But over time, we'll just continue to pay those off with unsecured debt or cash flows from the Company.
Operator, Operator
Thank you. And the next question comes from Katy McConnell with Citi.
Katy McConnell, Analyst
Thanks. Good morning, everyone. With another quarter of leasing in progress, could you provide an update on your expectations for market improvements in March, particularly regarding the anchor side of your portfolio in Europe? Also, are you anticipating any longer-term developments?
Glenn Cohen, CFO
Sure Katie. We're in the process of going through our '22 budgets now. So, when you look at our '22 rollover schedule and for anchors, it is below market and it's below our anchor baggage trends as well, so we do see nice mark-to-market opportunities. As we either start to renew those leases, avoids where we're well underway there and or sign new leases. So, we do see a net benefit as we go into '22, but we're in the process of finalizing our budgets right now and we'll have a better perspective in that call.
Katy McConnell, Analyst
Thanks. And then on the retailer side, how do you expect the supply chain disruptions in labor shortages to play out through your tenants around the holidays this year? And are you concerned about any potential rent collection fallout, or impact to a new leasing momentum?
Conor Flynn, CEO
On the rent collection side, we don't have any significant concerns. Regarding the supply chain, each retailer has approached it in their own way. Some have taken proactive measures to find alternatives for their supply chains, and throughout the year they have recognized that this could be an issue. Many have increased their inventory levels in preparation for the holiday season. However, it is clear that there are challenges ahead. I encourage everyone to purchase gifts early to avoid disappointing loved ones during the holidays. Consequently, this situation may allow retailers to run fewer promotions, leading to a shorter promotional period, which can boost their top-line revenues. It's a fascinating dynamic unfolding. On the labor shortage front, there are numerous job openings, indicating a strong job market. Yes, that's very encouraging, but there is clearly a need for more workers at the retailers and restaurants. I think that will continue to be a trend in the first part of 2022.
Glenn Cohen, CFO
The only thing I would add is, our traffic levels are at 105% of 2019 levels, and we see that in this environment where there is supply chain disruption, we're watching closely as what we think may occur is people will probably buy at the store more often than buying something online and potentially having to wait where it might not arrive in time. So that's the dynamic we're watching closely that we think might play out.
Katy McConnell, Analyst
Thanks for the color.
Operator, Operator
Thank you. And the next question comes from Caitlin Burrows with Goldman Sachs.
Caitlin Burrows, Analyst
Hi, good morning, everyone. Given that you issued $77 million of equity in the quarter and your share price is now above the highs of 2019, can you just go through the thinking on issuing equity in the quarter and going forward and does it suggest you could equity fund the acquisitions going forward?
Glenn Cohen, CFO
We utilized the ATM a bit during the quarter primarily to align with the investment opportunities we identified, while also continuing to focus on maintaining a healthy capital structure to enhance our leverage metrics. We're consistently assessing our cost of capital and exploring the upcoming opportunities. Thus, we made a modest equity supplement during the quarter to support some very accretive investments we have planned.
Conor Flynn, CEO
We're very fortunate position to have a number of different pools of capital sources. So, we're trying to make sure that we look at everything. And again, our cost of capital and use it effectively to continue to grow in an accretive manner.
Glenn Cohen, CFO
We ended the quarter with over $480 million on the balance sheet. We have had some activities since the quarter ended, leaving us with $330 million in cash, no significant near-term debt maturities, and full access to our revolver. Additionally, we have the Albertsons investment, which puts us in a very strong liquidity position to address upcoming needs.
Caitlin Burrows, Analyst
Okay. Great. That's all for me. Thanks.
Operator, Operator
Thank you, and the next question comes from Kevin Kim with Truist.
Kevin Kim, Analyst
Thanks. Good morning. Can you hear me?
Glenn Cohen, CFO
Yeah.
Conor Flynn, CEO
We hear you.
Kevin Kim, Analyst
So just going back to that demand question. Obviously, things are great. I'm just curious about where you're seeing the hottest pockets of demand, and conversely where it's a little bit weaker. And I know you mentioned Sunbelt versus not, but maybe you can go a little bit deeper. Does it matter like what type of center, Power Center, grocery incurred? Is that just location demographic phase where you're seeing more customers or more population growth? I'm just trying to understand just a little more granularity on where demand is.
Glenn Cohen, CFO
Sure.
Kevin Kim, Analyst
I don't mean today. I mean, over the next couple of years.
Glenn Cohen, CFO
Yeah, I think the next couple of years could be somewhat reflected today as well. So, just thinking of geographic first, could you mention that the Sunbelt, out of the 141 leases that we signed this quarter, over 52% came from Sunbelt markets. And then within that, the substantial majority were actually coastal Sunbelt. So, I think you will continue to see that trend progress over the next couple of years. That is where population growth is continuing to rise greater than the rest of the country. Second to that though, on the coastal markets, for that remaining, say 48% of leases signed, it was heavily weighted towards the coastal markets. I think you still see that high demand there. So between the coastal Sunbelt, that's where we have seen the majority of activity. Beyond that too, like Southern California, as I mentioned earlier, is extremely aggressive. It's a very, very tight market to penetrate. So this COVID inventory created opportunities, multiple demand factors that helped push rents further north. In the northeast, it's typically been a relatively mature portfolio, usually having higher occupancy levels. And so, there are just their natural constraints there to actually add any new supply as well, and people wanting to penetrate Long Island, for example. I think it will continue to be difficult. So, when there is that opportunity, you see multiple bidders at the table wanting to enter the market? And then I think that's what you continue to see play out over the next couple of years.
Kevin Kim, Analyst
And thinking about the Weingarten portfolio, how has that performed relative to your own portfolio? And I guess looking forward, how much more accretive can Weingarten contribution be to the overall enterprise?
Glenn Cohen, CFO
When we first entered into the contract for the transaction, their occupancy levels were lower than ours. However, by the time we closed, their levels were very close to ours. We are now benefiting from the signed leases that are still in progress. Our original belief was that this was a complementary and additive portfolio. The gains from small shops showed about a 180 basis point increase, with 120 basis points coming from the Weingarten portfolio, of which 60 was attributed to Kimco gains, marking one of our highest quarter-over-quarter performances. We are seeing real benefits from Weingarten, and now as a combined entity, we are both growing together.
Conor Flynn, CEO
The other part of it is the three mixed-use projects that they have; their concessions are rolling off, so the mark-to-market on those renewals is pretty far strong on those three projects. And then when we look at the future entitlement opportunities within that portfolio, that gets us really excited. Because that's obviously where we've been focusing a lot of our time and effort for future value creation. And we feel like there's going to be some incremental opportunities embedded throughout their portfolio. Specifically, Miami, Houston, and Silicon Valley that we're digging our teeth into right now.
Kevin Kim, Analyst
Okay. Thank you.
Operator, Operator
Thank you. And the next question comes from Wes Golladay with Baird.
Wes Golladay, Analyst
Hey, good morning, everyone. When looking at the balance sheet, it looks like you're in a good spot right now, especially with the Albertsons look-through. So, I'm just wondering why you look to do a joint venture on the Jamestown portfolio when there's so much upside in the assets?
Glenn Cohen, CFO
It's a good question. We thought long and hard about the best approach here. We have a huge, tremendous amount of respect for Blackstone. We've continued conversations with them since the success of our early venture. Ultimately, we felt that it was a perfect opportunity for us to reengage the venture that we had with them. We think that there could be some future opportunities here and this could be the beginning. There's no guarantees one way or the other. But we thought this was a great jumping point given all the activities that we have in the market, all the things that we see. to engage that adventure and see where it takes us. So that's really what the conversation was, and we're excited about it.
Wes Golladay, Analyst
Got it. And then when we look at Albertsons, how should we think about the monetization of that asset, maybe on a, I guess a max dollar per year, if you wanted to maximize your retained cash flow and not payout a special dividend?
Glenn Cohen, CFO
It's a great question. There are several components to consider regarding Albertsons, especially given the significant increase in its value. Our basis is quite low; it remains just over $100 million. The primary factor for us is compliance. According to the rules, 75% of our gross revenues must come from real estate-related items. This leaves us with a 5% net income bucket and an additional 20% that can be from interest, dividends, and capital gains. Therefore, the key issue will be our gross revenues. Looking ahead with the merger, our gross revenues are projected to be around $1.8 billion. In terms of monetization, we could potentially absorb gains between $350 million and $400 million per year. The higher our gross revenues, the more we can manage. However, as it stands, we are looking at an annual capacity of about $400 million.
Wes Golladay, Analyst
Got it. Thanks for the time.
Operator, Operator
Thank you. And that concludes the question-and-answer session. I would like to turn the floor to Dave Bujnicki for any closing comments.
Dave Bujnicki, Senior VP of Investor Relations and Strategy
Just I want to thank everybody that participated on the call today. We look forward to connecting with a number of you at next week's upcoming NAREIT conference. Until then, have a great weekend.
Operator, Operator
Thank you. The conference has now concluded. Thank you for attending today's presentation.