Kimco Realty Corporation Price & Performance (KIM)

Reconciliations of these non GAAP financial measures can be found in our quarterly supplemental financial information on the Kimco Investor Relations website. Also, in the event our call will incur technical difficulties, we'll try to resolve 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 consumer and our strategic accomplishments and future goals. Ross will provide an update on the transaction market, and then Glen 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, [indiscernible] on behalf of our entire organization, I want to thank Milton for his leadership mentorship, [indiscernible] Milton will always be synonymous with Kimco Kimco. 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 is contagious and permeates through our entire organization. The great news is that in his new role as Chairman of 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 Melton, no one understands the company's history better. And Richard brings vast experience creativity and insight to help lead us into the future. Additionally, want to welcome Ross Cooper and Nancy Lechine to the Board. Ross needs no introduction. His leadership role at Kimco and his reputation in the industry make him a logical addition 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 moves forward.

Now on to the quarter. We continue to drive significant leasing momentum across the Kimco Kimco.

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. 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 twenty twenty five year strategic vision focused on repositioning our portfolio into first ring suburbs with natural barriers to entry. Making it difficult 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'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 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 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, [indiscernible] 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. 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 has enabled us to exceed our expectations in all facets. It is even clearer today that this was an incredibly opportunistic purchase equating to approximately $165 per square foot, at pricing that could not be replicated in today's market. Were able to improve cost synergies by approximately 13% to 36,000,000 Integral to our success was the swift disposition of 10 former RPT properties did not fit our strict investment criteria for $248,000,000 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 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 acquired Waterford Lakes Town Center in Orlando, Florida in October 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 given 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 has 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 and potential to grow this platform responsibly. Since the inception of this program in 2020, we have touted its benefits for Kimco Kimco. 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 twenty twenty five, we successfully converted our first structured investment into an equity ownership position. We accretively purchased the Market to Town Center in Jacksonville, Florida for $108,000,000 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 twenty twenty one, we underwrote this property with the premise that it would be a great core acquisition candidate and align well with our owned portfolio. While our borrower did a great job in the time they own 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 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. The competitive advantage we have is that the all in rents including common area pass throughs 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 Now for some details on our fourth quarter results and our 2025 outlook. FFO for the fourth quarter was $286,900,000.0 or $0.42 per diluted share. This compares favorably to last year's fourth quarter FFO of $239,400,000 or $0.39 per diluted share, representing a per share increase of 7.7%.

Instrumental to this was a $60,800,000 or 17.8% increase in total pro rata NOI to $403,400,000 over the same period in the prior year. Key drivers of the NOI growth include $38,100,000 from the acquisition, dollars 7,000,000 from other acquisitions and 15,700,000.0 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 $616,400,000.0 due to higher debt levels from the RPT acquisition and the prefunding of the $500,000,000 bond that matures in February 2025. Our operating portfolio fired on all cylinders to end the year. Our year end portfolio occupancy stood at 966.3%, 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 stores in the fourth quarter. Same site NOI growth was 4.5% for the fourth quarter. The primary driver continues to be higher minimum rents contributing 3.8%, mostly from contractual rent increases and faster rent commencements from the signed 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 consumption 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 of the growth. As a result of the faster pace of rent commencements, the spread between leased occupancy and economic A change of 40 basis points sequentially and represents three seventy four leases totaling $56,000,000 of future annual base rent. We anticipate approximately 80% of this to commence with a total of $25,000,000 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 outs outstanding of 5.6 times, maintaining our best levels for these metrics. $300,000 from the sale of 5,400,000.0 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 N cumulative convertible perpetual preferred stock. Successfully tendering for just over 22% of the shares and reducing the liquidation preference to 71,900,000.0 Our year end liquidity position remained very strong comprised of $690,000,000 of cash and the full availability of our $2,000,000,000 revolving credit facility. As a reminder, included in the cash balance is $500,000,000 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 percent $500,000,000 bond on February 3.

Subsequent to year end, Moody's affirmed our Baa1 unsecured debt rate [indiscernible] Our unsecured debt is rated A- with a stable outlook from Fitch and BBB plus with a positive outlook from S and P. Now to our 2025 outlook. Not with 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 [indiscernible] Our initial 2025 FFO per share outlook range is $1.7 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 Bank In addition, the 2025 same property outlook assumption takes into account the boxes vacated at the end of twenty twenty four 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 $6,000,000 and $9,000,000 as compared to $4,000,000 in 2024. Interest income from cash on hand is expected to range between $6,000,000 and 9,000,000 approximately $0.03 per common share less than the $26,000,000 reported in 2024 due to the significantly higher cash balances last year. Acquisitions, including structure investments, net of dispositions, of $100,000,000 to $125,000,000 This is inclusive of the Markets At Town Center completed in January. Corporate financing costs ranging from $354,000,000 to $363,000,000 comprised of consolidated interest expense and preferred stock dividends.

Annual G and A expense ranging from $131,000,000 to $13,037,000,000 dollars 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. Kimco is a special place to be a part of and we look forward to a successful 2025 together. We are now ready to take your questions.

Our first question comes from Michael Goldsmith with UBS. Good morning. Thanks a lot for taking my question. You went with 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 plays out. I'm just trying to put to start up for 2025 into context with how it may have played out in the past. Yes, sure. I appreciate it. So in terms of the watch list that obviously is going through the bankruptcy process, Big Lots, Party City, Joanne's, starting beginning twenty twenty four, it's about 130 basis basis point impact. We already absorbed about 10 basis point impact from big lots in 2024. So that's already into the portfolio. And so the remainder is in flight 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. And then with Joanne, they're currently electing going concern bids next Wednesday. Of which case after the going concern depending on what's remaining they'd like to schedule an auction for late April.

As it relates to our plan, we went through the portfolio, we made the made what we felt were the appropriate adjustments to budget, which are baked into our our guidance for the year about what we assume we would either be able to backfill, we would get back or would be assumed or purchased at auction. In terms of the demand side, it's robust, dollars stores, footwear, books, grocery, beauty, across the board, there are a number of retailers are looking at a variety of package deals to help absorb some of these boxes on the Joanne side. You have a lot of the off price guys. Grocery as well, etcetera. So we're very encouraged by that opportunity. There are a number of locations where we don't have grocery we're able to actually backfill with groceries. So when you're looking at the credit upgrade, it's significant. These are really the opportunities Connor mentioned in his script the lack of new supply, these second generation boxes are the opportunity for retailers to grow market share, to grow store count, which they are very focused on doing. And so I'd say the relationship between landlord and retailers isn't couldn't be stronger today.

Because of the collective opportunities that we have and we want to grow the relationship together. So in terms of the watch list and how it's evolved, it's really been status quo. When you look at those that have filed, they're repeat offenders. Right? They filed in the last two years. They came out of bankruptcy. They closed very, very few stores if any. 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 new retailers on opportunities to better the terms and obviously secure better credit. So not much has really changed on our watch list and And from there, I'll pass it over to Michael. Sure. Let me just help frame it a little bit in terms of the numbers.

If you look at our expectation of revenues, it's around $2,200,000,000 So at 75 to 100 basis point range, you're looking at credit loss baked in of 17 a range of $17,000,000 to 20,000,000. We feel pretty comfortable with that based on bottoms up budget that we ran through and just the historic levels of where we've been. Pandemic aside, we feel pretty comfortable where this sits as a starting point.

And those $17,000,000 to $22,000,000 credit loss that [indiscernible] is inclusive of both just write offs as well as a potential loss rent you may have from some of those retailers that Dave Jamieson mentioned [indiscernible] bankrupt during the course of the year.

Thank you very much.

And the next question comes from Craig Mailman with Citi. Hey, good morning.

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 kind of curious it seems like in guidance you just have what you've done so far this year. Kind of dialed in. But could you talk a little bit about what the opportunity set looks like today? And then maybe put some thoughts around sources of funds. Ross, I know you talked about some of the ground leases, like what's the magnitude of of those sales kind of just talk through everything and also where cap rates and IRRs are trending?

Sure. Happy to.

Thanks for the question. As you mentioned, we really have already identified and sort of the net acquisition activity primarily with the markets acquisition. So as we look to the remainder of 2025, the intention is really to match fund through some of the initiatives that I mentioned As Glenn indicated, we don't have any additional equity in our plan. But as showcased in Q4 to the extent that we like where the stock is trading, we're not shy about tapping into that. So the intent for this year which is a little bit different than what we've seen in years past is to recycle capital accretively. So the dispositions of old at higher cap rates that were dilutive is not something that we're planning on undertaking. We don't need to. As I indicated, based upon how the portfolio is operating, So when we look at what are the opportunities in terms of source of funds, the ground leases, we have close to 10% of our income stream right now that comes from long term ground leases. Now that's a big pool. Obviously, not all of those are going to be considered for disposition. But when you break down that bucket, and you look at what is the use, what's the foot traffic that comes from that retailer, how much term do we have remaining, do we need to go back and look at blended extends, What is the location within that center?

There is a pool of those opportunities that we enter and that will somewhat be opportunity driven based upon what we see on the investment side in terms of the capital that we'll need to raise In addition on the entitlements, Conor mentioned it, we achieved our goal of the 12,000 units a year earlier than anticipated. So again, we have a tremendous pool of potential densification opportunities And when you prioritize that list, based upon what is compelling geographically, financially, otherwise, there are several opportunities that we think are better suited to potentially monetize and sell to a developer versus something that we may not activate ourselves for many years and utilize that capital to reinvest. So we feel very comfortable in terms of the sources and uses of where the capital will come from in terms of new opportunities. We continue to identify and look at wide range of acquisition opportunities We talked about in the past, we think that our both geographic and format diversification allows us to be active at all parts of the cycle.

So So we've been more focused in the last couple of years on larger format grocery anchored, but with a lifestyle component. That's where we've found better yields over the last couple of years. Now as more capital is coming into the system and into the market, I think that that discount had dissipated. So we'll continue to evaluate if there are other formats or geographies where we think that we can get a little bit of a better yield or differentiation And of course, with our structured investment program, we continue to see opportunities to put out capital And the nice part about the structured program is the average check size for those deals are anywhere from $15,000,000 to $25,000,000 So they're not tremendous capital investments. But as showcased by the markets acquisition, it can be a small investment on our side on a larger asset that ultimately can become $100,000,000 plus acquisition. So we look at all of those different opportunities rolled together, we're going confident in what we're going to be able to do on the investment side. Yes. I would just add though, as I mentioned in my prepared remarks, in addition to the cash on the balance sheet, our availability of our line the company should generate around $140,000,000 of free cash flow after dividends, CapEx and TI.

So that's another pool of capital, obviously our lowest cost. So kind of keep that in mind.

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

Hey, good morning out there and first to Milton, I'll just have congrats on well earned retirement and Ross welcome to the Board. Just a question on small shop. Over the past year, it's sort of stagnated around 97.7%, 97.8%. And just sort of curious if this is sort of a frictional cap or if there are other issues going on would think given the comments about lack of supply and the robust demand that you outlined for backfilling a number of the troubled retailers would think that small shop would be where people would be looking, especially as retailers get more flexible on their prototypes? Yes. Great question, Alex. Appreciate it. And I know Ross appreciated your kind words. So I'll Thank you, everyone. As it relates to this small shops, the one thing to be mindful of too though is we absorbed RPT and the RPT small shop occupancy was significantly lower than Kimco's Kimco in 88 plus percent. So year over year, we actually grew the RPT small shop portfolio by 50 basis points. Chemical legacy is over 92%. So there was a way down and that ultimately contributed to the flat year over As it relates to the opportunity going forward though, you're absolutely right though.

In terms of flexibility format, people are looking, especially that mid to larger size small shop box something thinking like 6,000 to 9,000 square feet. Some of the retailers I mentioned earlier on the Park City locations are looking to optimize our footprint and could absorb some of those some of those units, which will help contribute. And for us this year, we're laser focused on how do we continue to grow the balance of the small shop portfolio. And the deal teams are incentivized to push the small shop leasing as far as we can. Our goal is to break through that sort of viewed as a ceiling right now is at 91.8% and we want to extend that further and we think there's opportunities to do that.

Thank you.

And the next question comes from Dori Kestan with Wells Fargo. Please go ahead.

Thanks. Good morning. On within your 2% same store NOI growth, how will you describe the growth for legacy RPT versus legacy Kimco?

I mean, it's we're all one company today. So it's all completely blended together.

Still as and you have a foot you have to remember you have now have a full year We had a full year of RPPs numbers last year. Actually have a full year of results of RPT in the Kimco numbers It's all in a complete blend and we would expect it to be in the same very similar range as what the core legacy would have been. But you have to view it as it's all one big company.

And we still see upside on the small space. I mean, if you look at the spread between the two, as Ross mentioned in his remarks, and Dave just mentioned, there's still a lot of upside that we plan to harvest there.

As Glenn Really said though, it's one combined company now. We've done a lot in the first year. Now the second year, we continue to think there's continued growth to harvest. But we're super excited about even in the fourth quarter some of the deals that we got we finished and converted to a grocery anchored center in Delray, Florida with BJ's. So we're pretty excited about continued small shop leasing we have momentum in that portfolio.

Thanks. Understood. Very helpful.

And the next question comes from with Mizuho.

Hey, guys. Good morning. Thanks for highlighting some of the one timers influencing guide like the lease termination fee and the interest income call out. But I was hoping maybe you could some color on the reduction in G and A. I think that's $4,000,000 curious what's driving that? Is that some capitalized interest? Then maybe some color on the one time some of the items that could be swing factors getting you to the upper lower end of the guide.

Sure. Great question. As far as the G and A actually, you can see, the G and A is actually down at the midpoint around $4,000,000 The bulk of it is related to the transition Milton coming off as executive Chair and also Board But the balance of it really, there's nothing related to capitalized interest. We don't have an enormous amount of development, redevelopment going on like the target for that range for this year is $100,000,000 to $125,000,000 So the cap interest component is actually very, very small for us.

We really just spend a lot of time focused on controlling costs and even with annual increases that went through, the overall G and A budget is flat and then last by the amount of the the management transition.

As far as the other things that are in the budget, candidly, there are not a whole lot of one time things that are forecast It is a really, really clean forward looking year for us. We called out the items that we think that people will focus on. But it's real straightforward. It is a very much blocking, tackling, run the business, keep costs, maintained, acquire, accretively where it makes sense and lease and lease and lease.

Yes, I think the spread on the earnings guidance is reflective of really sort of what may or may not happen in the market with with the bankruptcy proceedings. So that is sort of what gets you to the low end.

And that's what gets you to the high end in terms of starting off the year.

And the next question comes from Greg McGinnis with Scotiabank. Please go ahead. Hey, good morning.

I just want to touch [indiscernible] [indiscernible] Appreciate the clarity on what that expectation is for this year. Is this just less of a focus now and you be looking more at on the acquisition front and letting all the kind of redevelopment opportunity, mixed use stuff, is this going to be kind of sold off and joint venture or ground leased out? And then also can you also touch on Coulter Place where we saw the stabilized yield drop from last quarter?

Yes. Just touching on Colter, it didn't drop from us. Quarter. All we did was we because we only have one project posted right now on the mix use, we just tightened the range to what it always was there was actually no change on yield. It's just how it was guided to for this. As we activate more projects, the range of that guide may be modified as well. As it relates to the focus redevelopment, it's always a focus. It's really retail driven. There's opportunities as you've seen through the robust leasing program that we have that there's opportunities to backfill the existing space. We went through a very extensive redevelopment program over the years to repurpose build better build better mouse traps for retailers and all of our portfolio is such that we're opportunistic in nature, if it's the best use of cash focus on. But again, it's retail driven. So if we're able to backfill space, with less investment and less disruption to get cash flow coming sooner, that's That's a great option and most likely a better opportunity So we'll continue to focus on that. And as it relates to the multifamily program, obviously, as you saw that we've exceeded our 12,000 units, that was a corporate goal.

We did it a year ahead of time. We have a number of projects that we are actively looking at right now to potentially activate and I mean, year or two, whether or not we develop joint venture monetizing entitlements, all those options are you need to be on the table and we'll just look at the market cycle what makes the most sense for our use of funds and proceed as such.

Yes, we still think there's a lot of upside as we outlined earlier in the call. That mixed use When you add those residential units to your retail center, you do get a significant benefit both from the retail side and on the residential side. The challenge for us is the cost of capital and those were returns for apartment developments are lower than what we're seeing in the open market for other uses of our capital. So what we're trying to do is make sure we prioritize the highest returns on our capital and then look to get creative on structuring those entitlements that we get the benefit of the density around our shopping centers without potentially having a lower yielding investment versus what we're seeing in the open market.

Thank you.

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

Good morning. Thanks for taking my question. Just of the bankruptcy boxes you've already gotten back, and may get back this year, what's the average square footage on those And how many would you have to really reposition, maybe split up versus what proportion do you think you could just fill as is? The majority right now we're looking at are to backfill the single use tenants. I mean with Bed Bath and Beyond, we were very we were very aggressive in terms of finding single use operators to [indiscernible] majority were similar. When you look at the Party City boxes, the average is 13,000 square feet It does range though in size to sort of the eight plus thousand square feet to slightly higher. So as a result of that, that gives us that opportunity to hit a much larger canvassing retailers because of the variety of square footage. On the Joanne side, you're looking at a slightly larger box around 32,000 square feet with that, you have groceries, you have off price, you have fitness, and a variety of others that are interested in those. And those also range in size of dramatically.

So think in general, we'll be fairly successful in backfilling with single use operators.

The only thing I would mention is to think about the lack of new supply for our sector And then if you think of this as shadow supply or potential opportunities, for growing retailers, If you took it that subset and add it to the new shopping center, supply that's under construction, it's still extremely modest. And it's one of the lowest, if not the lowest of the entire commercial real estate sector. So we feel very confident that because of the range of sizes, of these tenants that are giving back space, we're going to be uniquely positioned to backfill with single tenant users at significant mark And the next question comes from Juan, Sanabria with BMO Capital Markets. Please go ahead.

Hi, good morning. Just hoping for a little bit more color on the assumptions on the credit loss reserves If I just look at Party City and Joanne, it's about 1.1% of the ABR. So just hoping you could help us square that with the 75 to 100 basis points in guidance and kind of a Part B of to the question, is there any skew in the timing of bad debt? Is it more front half loaded given the upcoming options you referenced and the recent headline BKs we've seen? Thank you.

Yes. Again, as I mentioned, we do feel pretty comfortable with the range.

With the dollars that we're talking about of potential credit loss. Party City is working through their auction. We'll see what happens with their GOBs when they end.

Joanne's although they filed for bankruptcy hasn't actually started their GOB sales yet.

So you're going to have rent that runs for a minimum for the first quarter probably well into the second quarter.

And then it's going to come down to is there a going concern buyer for some of the boxes? So there's a lot of variability. And again, that's why we feel comfortable with the range that we have.

So it takes into account what could happen both good and bad. Both Party City and Joanne's. And the next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead. Hi, good morning.

Maybe two quick ones on guidance related. First on the acquisitions and FFO it seems like somebody else already mentioned, you've already met the net acquisition guidance. So are you just saying that from here, property acquisition volume would be offset by dispositions of ground leases and development entitlements, which would suggest like a meaningful spread.

And then just on the FFO side, it seems like the range of $0.02 is quite tight. So wondering kind of how you're thinking about that and if it's more of what you might otherwise think of as like a bottom end of the range with upside potential?

Yes. As I mentioned, I'll take the second part first and I'll let Ross deal with the acquisition piece. But on the guidance, if you think about the range the range really is about $20,000,000 in So if you go again, we're pretty large company, it takes $7,000,000 of FFO for a penny So that range, although narrow in terms of pennies, it is a $20,000,000 range to start with. And as I mentioned, we feel like we have pretty good visibility about what we're seeing in front of us. There's not a whole bunch of one timers either way, good or bad.

But we feel very comfortable about where the portfolio is going. We know what we've done already in terms of this initial acquisition. And what's baked in. So it requires a little bit more of an hour range. Yes.

And the first part of your question, I think the short answer is yes.

The expectation is a recycling of capital from some of the initiatives that I mentioned. Into new opportunities. So we have the ability to be patient see what comes our way on the new deal side, new investment side. And then utilize those opportunities to source those appropriately. Obviously, to the extent that they're is more opportunity at accretive yields, in excess. We have other capital sources as Glenn outlined earlier. And we'll certainly update it as the year progresses with our activity.

Thanks.

And the next question comes from Ki Bin Kim with [indiscernible] Please go ahead.

Thank you. Good morning. I just want to go back to some of the bad debt guidance. If you can frame Party City and Joanne some of these other couple of retailers to your experience with Bad Bath. And I was curious about kind of when do you actually refer to really ramp up the marketing for these spaces? At what point during the bankruptcy process or before and what the potential rent upside looks like compared to what you experienced at Bed Bath?

Thank you.

Yes. I mean, you're marketing these boxes well in front of any sort of filing. When you're looking at your watch list tenants, you're constantly looking to upgrade the tenants and prepare for what can I believe be as bankruptcy? Obviously, with Joanne's and Carney City, they're both repeat offenders. So when the first time happened, we're already out marketing those boxes example, we already have a handful of leases executed for Party City boxes before they even filed and was just contingent on recapture.

We felt confident in those recaptures because we reduced the term of those leases. So we knew an absolute end date there. And then we're constantly looking at upgrading the tendencies to that. No different. When you look at the blend between Big Lots Party City Joanne's, you're seeing double digit yield, 10% over the blend of all of these, Obviously, there's higher ones and lower ones. And when you look at the Bed Bath the bed bath activity that we had over the years, it was it was significant. The mark to market on those was higher just because there are more vintage leases bigger boxes signed long time ago. But again, most of those were backfilled with single tenant users and and the interest was Riffel.

And the next question comes from [indiscernible] Good morning, everyone. Thanks for taking my question.

Capital allocation question. Maybe Ross, is best suited for this. But in terms of your apartment entitlements, I think you've got 8,900 currently entitled and other similar amounts in the process of being entitled. A couple of those are more than 1,000 units. I think there are four of them out there. Are those the ones that are most likely to be JV ed or sold off because of exposure? And then maybe [indiscernible] by the end of the decade, what percentage of NOI do you think Kimco is going to get from apartments contribution? Is it 10%, 15% in that range? I'll start and then Connor can jump in. When we're looking at the prioritization of the entitlements and where we want identify. It's a pretty detailed and involved analysis that includes market feasibility studies. We're working with all of our different regions to understand where trends are happening geographically So it's not necessarily based upon size. We're looking at what is the timing, what is the supply and demand dynamic in that particular market, what are the yields that we're looking at for creating this project and then ultimately making a decision given all of the information that we've gathered and the market intel given our cost of capital and other uses that we have for that capital, where do we want to put that?

And which projects are best suited for HIMCO to invest a substantial amount of our own capital, which you've seen us do on certain projects. Where is it best suited to ground lease and to retain that ROFR allow somebody else to put their capital work We've gotten creative in terms of structuring as you've seen on Coulter and some others we're considering in terms of joint venturing and putting our entitled land into that that venture at a marked up basis and our component being preferred equity or different pieces of capital And then of course, we have the option to potentially sell. So we're evaluating all of those alternatives on each one of these projects and the beauty of the program is that based upon our geographic diversification and all the entitlements that we've had, we can be very selective in where and when we want to activate and how we want to do so. I just just to touch base on the two projects you mentioned that have over 1,000 units in title. Those are both large master plans, one's in Kettlen's, the other Kettlen's markets were in Pentagon. And so when you go in for entitlements, there's opportunity sometimes to really to secure a large allocation of residential.

That does not mean that you have to build it all at once. And so you take 1,000 units and break it into five different phases of 200 units apiece over an extended period of time. So you're managing new supply coming on, market absorption, etcetera, and then Ross' point, you can activate each of those phases. And whatever is most appropriate given the market cycle time and use of funds. So just for clarity there.

And then Flor, so I think for the long term, we continue to push towards structure it accretively to our cost of capital Putting a target, the dream scenario would get to ninetyten where 10% is come from apartments. And then build it from there. Again, where our cost of capital is today and where we can accretively deploy it it, it's limiting how much we can activate on the multifamily side. So So we'll continue to use the structure like we have before, whether it's ground lease with the ROFR or it's a contribution to a joint venture with the Rofer upon stabilization as well. So those are ways that again we can take a CapEx light approach hit our return hurdles and still activate apartments As you know, we've activated over 3,000 and continue to take that approach to see how we can go about adding value, creating value for our shareholders over the long term.

Thanks.

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

Yes. Thanks. Good morning. I guess given the tightness in the whole industry and retailers still looking to grow and their, I guess, inability maybe to hit store opening plans. I guess, what's Kimco's appetite to take on actual ground up development in retail and what discussions have you had with some of the bigger retailers to kind of jump start that development process? Thanks. Yes. I mean, you're seeing ground up right now in more in like the second and third ring as urban or suburban sprawlics out in some of the markets and say like Arizona and Texas, you're not really seeing ground up development in first ring suburb opportunities. Rent still have to reach a higher premium to justify the underwriting for a development yield that's accretive or cost of capital. So in those more tertiary market development projects or you're doing like a large format target or whatnot? Are necessarily in the core markets that we're looking to expand. For us, that opportunity is really working with these retailers on the backfill of second generation space further identifying for markets, how do they expand market share, They are starting to look at their the tightness of their radius between individual stores and those are starting to narrow realizing that they can operate more locations within a tighter trade area than they did historically.

So there's real opportunities there for them as well. And that's where we continue to see it. But we do talk to them If there's an opportunity that comes about, we would consider Yes, it's a good question, Steve. And I think that's what gives us a lot of confidence about our credit loss reserve of $75,000,000 to 100 Because if you think about the lack of options for retailers today, we don't see a huge ground up opportunity on the horizon that either we or others will take advantage of. And so the opportunity set is really on these bankrupt tenants, these second generation boxes that are going through the auction process. As you saw from last year, there was a tremendous amount of activity from retailers in the bankruptcy process even outbidding us on a few ones that we tried to acquire and bring back under control. So we feel like there's a similar backdrop today with supply and demand. And that's what gives us a lot of confidence in our 75 to 100 basis point credit loss reserve.

And the next question comes from Wes Golladay with Baird, Hey, good morning, everyone. A quick clarification.

The savings from the management changes, would that start in January or at the time of the annual meeting?

And then Conor, on that point you just made about bidding on box do you plan on doing a lot of that?

I'll take the first one because it's straightforward. It started at the time of the announcement, January.

And then on the auction process, I think again, we look at every box, we look at every opportunity set. We're talking to a lot of retailers both pre bankruptcy auction and during the bankruptcy auction we know a lot of these retailers will be in the auction tent. But they're also looking at doing package deals with us across multiple locations. So really just depends on the returns that we can generate from the capital and what tenant we have to backfill that location. Where we've been unsuccessful in the auction process where others have outbid us, we were running with the grocery anchor to backfill a location that we were excited about and another retailer that was not grocery was super aggressive for the location. And so again, not necessarily a lose lose situation, because obviously the tenant that wins that bankruptcy auction has to fulfill all the back rent as well as to go forward lease obligations. So we're in a good spot where we can be selective really get aggressive where we think we can dramatically improve the valuation of the asset, not only on that box, but on the surrounding retail that we own as well.

All right. Thanks for the time.

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

Good morning. Recent bankruptcies have been significant, right? Do you believe these bankruptcies will materially impact the rents that you can achieve for New Ancre? [indiscernible] [indiscernible] I understand that the mark to market of rents will likely be still very significant.

I'm more focused on how the market dynamics will shift and how rents might change compared to a scenario where these bankruptcies had not occurred.

Yes, it's a good question Paulina. It's one that I think you have to think about a little bit from the amount of supply that comes available in a certain submarket. And if that will change the supply and demand dynamic of of pricing power that we've experienced over the past few years. And if you look at the the amount of locations that overlap between the that are in these submarkets it's very few that will have multiple boxes coming available in the same submarket. So in our opinion, it really doesn't change the pricing power because if it's a good location in a tight trade area, that is usually the only box available in that trade area. As you can see, our occupancies are at all time highs, vacancy rates for the entire sector is at all time lows, It's a very tight market right now for good quality retail. And so when these boxes are available, there's usually not a second option for retailers to fall back into. And so that's what's driving the competitive set to take advantage of these unique opportunities And we feel confident that again because of that tightness in the market, you're going to see activity both in the auction tents, but as well post auction with retailers wanting to do packaged deals a number of these locations that are spread across multiple subsectors.

And the next question comes from Mike Mueller with JPMorgan.

Hi. You talked about the demand for medical and wellness I'm curious like how do you size up the credits versus other national and local options? And in the past, have you had any meaningful bad debts from that category?

I can take it if you want. I mean, the nice thing about medical is they put a lot of money in themselves, the build outs that they have with the equipment. They are very, very sticky tenants. They stay for a long time and I would say the bad debt on those is really de minimis. I mean, it really doesn't even come up very often. They're really, really solid tenants.

Yes, a lot of the push recently have been from urgent care, pediatric urgent care, some off-site facilities from hospitals, because we've always had dentistry, we've always had physical therapy is becoming a bigger piece as well. But we continue to like that use It's a service use it's Internet resistant, It does drive traffic. It does bring people that want convenience to the shopping center. And usually it does drive the right shopper as well because of cross shopping opportunities. So always look at credit quality, And to Glen's point, we've been very successful in underwriting the medical uses that have come into shopping centers and haven't had really dramatic issues in any shape or form.

Got it.

Thanks.

And the next question comes from Michael Gorman with BTIG.

Yes, thanks. Good morning. Maybe just circling back to the transactions for a minute here. Just a question on the match funding and apologies if I missed it. But when we think about the match funding with the sales of either ground lease or entitlements, in 2025. Would those proceeds also apply to future structured investments? And I guess if so, can you talk about maybe the scale of opportunity and the strategy of selling out of understandably slower growing, but but fee positions into a more structured investment for the long term strategy? Thank you.

Sure. Yes, it does include structured investments So we look at sort of our blended investments between the core acquisition strategy as well as the structured. When we think about the structured program, as I mentioned, [indiscernible] So you're looking at $15,000,000 $20,000,000 $25,000,000 check sizes. So it really does expand and diversify the risk profile We feel very comfortable about our underwriting strategy and the basis at which we enter these properties. But your point, we really acknowledge that there is a differential between fee acquisitions of existing shopping centers and a structured investment that has a variable timeline, So as part of that program, we're constantly looking at the rollover schedule, where we might get redeemed or repaid on any of the structured [indiscernible] a pipeline to consistently backfill and recycle that capital as well. So one component that I didn't mention in addition to the ground leases and the entitlements is there is always the opportunity to get capital back from prior structured investments. So as we see new investment opportunities on the structured there is a recycling that occurs within that program as well. We feel very confident and comfortable with the size of that program right now being right around 2% of enterprise value.

So we think that we can sort of responsibly gradually grow that over time. As we continue to see more opportunity, but it's going to be at a slow methodical pace. Thank you. Refi and the interest cost impacts Sure. So we just paid off a bond as I mentioned, so that's done. The only debt that remains outstanding or maturing in 2025 is about $290,000,000 There's about $50,000,000 of mortgage debt that's going to get paid off on March 10. Then we have a bond that matures June 1, so it's about $240,000,000 We have a whole variety of ways to deal with it, whether it be from free cash flow Again, some of the it could be come from some of the disposition activity, Our line is fully available to us and quite candidly the borrowings on our line today are priced better than where we would do something even longer range. So we have a whole bunch of opportunities. As far as 2026 goes, there's about $750,000,000 in 2026. But it doesn't really start maturing until August. We have plenty of time to address the upcoming maturities.

The only thing I would add is it's nice to be on positive watch from S and P and Moody's because if you think about the timing of when they may make a move to improve our credit rating, it lines up nicely with some of our refinancing opportunities to take advantage of that tighter Yes. I mean just in terms of pricing, like if we were to go to the bond market today, we're probably somewhere around 95 over on a ten year. So it'd be somewhere in the 5.5% range today. And the next question comes from Ronald Kamden with Morgan Stanley. Please go ahead. Hey, just a couple of quick ones, just some themes I've touched before. Back to the same store NOI, so sort of the 2% plus guidance think in the opening comments, you mentioned that there was some sort of end of 'twenty four closures and stuff that impacted Any chance we could sort of quantify what that hit was to 25% and does that create an opportunity as you sort of backfill those into 2026 and 2027? Thanks. Yes.

I mean, again, the vacancies that I mentioned, they're out now of the same sign NOI number. So that's all baked into the overall 2% plus starting point. So it will vary as we go through the quarters again because we do same site NOI. The most part on it's on cash basis, right. The tenants have to be paying rent. That's what goes into the number. We don't include straight line rents. We don't include these termination fees in it. [indiscernible] it's all baked into that 2% plus starting point.

Yes. And then as we backfill, you're right. I mean, it's going to be contributor [indiscernible] If I could ask the question just a different way is like what's the bridge from 3.5% to 2%? Same store NOI? Like what are the deltas there in the big pieces? Well, I mean, again, we have to take into a account all the different the bankruptcies. We have to really see what we get back, what we don't get back. If we don't get a lot of the boxes back from whether it be Joanne's or Party City, there's more upside in that number, which is the plus point of it. So we're just trying to use we feel very comfortable that percent is the floor and that we'll see how the rest of the year goes and as we go through the year, we'll make adjustments to that guidance.

Ron, I'll also say we start the year out with a little more ambiguity, right, because we last year, even when we started out assuming how much we would get from the snow pipeline, it was between $15,000,000 and $20,000,000 We ended the year close to $35,000,000 somewhere between $33,000,000 and 35,000,000 Same thing, we're starting the year up, making an assumption of the snow pipeline. We're going to have about $25,000,000 So that's sometime an estimate you make And as we go through the course of the year, that can change and that can move you from where you start the year out in your same site guide. So is a number of different levers, but to Glenn's point, we feel confident where the floor is. It's just a question how high the ceiling can be. That makes a ton of sense. If I could just sneak my second one in, it's just on the net acquisition guidance. Obviously, the opening comments about selling sort of flat leases and so forth.

Just a sense of the quantum of dispositions because it's hard to tell from the guidance. What could that look like this year? Like is it a $50,000,000 $100,000,000 Could it be $300,000,000 just how big is that opportunity on the sell side? Thanks. Yes. As I mentioned, I mean, it's having close to 10% of of our income from ground leases. There is a large pool but it really is intended to be a match funding mechanism So it's going to be very much dependent upon what we see on the new investment side as to how much we want to push into the market to potentially sell. But we'll be relatively measured to start the year and then as we progress and we see opportunities [indiscernible] and the market on what we're seeing and how much we anticipate doing there.

Great. Thanks so much.

And the next question comes from Omotayo Okusanya with Deutsche Bank. Yes. Good morning, everyone. You guys historically have been well known to come up with creative ways to create shareholder value.

As you look at the landscape for retailers and as well as retail real estate over next twelve to eighteen months, Could you just talk about probability that you guys could do something of that nature as well, whether it's something Albertsons like, whether it's more of the SIP loan to own program maybe something totally new and out of the box?

Yes, I think we always look to for opportunities. I think as you've seen us do in the past, our best deals typically occur when there's dislocation in the market or mispricing that we can take advantage of. We're excited that our balance sheet continues to improve and put us in a position the next cycle occurs, the balance sheet strength usually is rewarded. I [indiscernible] at a time where when the tide goes out, usually balance sheet strength, it becomes an advantage. So So where we sit today, obviously with employment and where the the economy is today, there's not a tremendous amount of mispriced or dislocation occurring our sector because of the health of the cash flow growth that's occurring across portfolios. When you look at some of the individual retailers that are in trouble that we've talked about, not a tremendous amount of owned real estate in those portfolios. We really look for real estate rich retailers, not where we can take advantage of owning or repurposing of the properties But that being said, we always take a look for unique opportunities. Albertsons obviously complete home run. That we were able to achieve We continue to look across the relationship spectrum that we have And every deal is a little different a little different shape or size.

But our team is always looking for those unique opportunities to take advantage of to create shareholder value.

Okay. Thank you. And then a quick modeling question if I may ask. On the Waterford acquisition, the interest rate on the assumed debt The interest rate on the loan was 4.86%. Thank you.

All right. Thank you.

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

Hi, quick one. I know over time CapEx has been big topic for a certain property types including retail. So it looks like the midpoint of your CapEx guidance for $25,000,000 is lower than $24,000,000 actual was. So wondering what's driving that and is it more timing related or run rate improvement or any other details?

Yes. I mean as the tenants come online, obviously, obviously, that funding has been processed and now you're getting the compression of the snow pipeline. So that's what we're seeing in 2025. Obviously, with these bankruptcies, right now, we'd anticipate, obviously, investment would have to occur, but that would be more And the final question comes from Ki Bin Kim with Truist.

Thanks for logging back in. Just a quick question on DaniaPoint.

I remember one of your office tenants was Spirit. Can you just remind us the structure of the deal? I can't remember if you sold that building to them. But just overall curious about potential impacts from their bankruptcy?

Yes. So Spirit does own their own headquarters. They purchased it from us early on in the project and then they built it and opened it. We do have a ground lease with them on the multifamily which they're current on. They are anticipating to come out of bankruptcy If you may have read the headlines that Frontier is now going back and looking at Spirit as well.

Currently though, it's open and operating. There's 900 or so employees there that [indiscernible] Okay.

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

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 and at the same time, have a wonderful weekend. Thanks so much.