KRG - Earnings call transcript Q4 2017 | Kite Realty Group Trust

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Operator

Good day, ladies and gentlemen, and welcome to the Q4, 2017 Kite Realty Group Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to the turn conference over to your host, Ashley Underwood, Investor Relations. Ma'am, the floor is yours.

Ashley Underwood

morning, good and you, everyone. Thank Realty Welcome quarter call. fourth to Kite earnings Group's forward-looking today's are and subject and of comments statements future are uncertainties. risks inherent Much contain to events and that assumptions based on from materially differ may results these statements. Actual

for yesterday's For on certain affect company's reconciliation adversely to Please non-GAAP a filings, our financial results, that Today's our XX-K. to SEC the most our measures. more recent results. non-GAAP about earnings see remarks these information available performance factors GAAP including our can website press the release please also of refer include measures financial

On from Officer, call John. Executive Tom Chief with like Sink. the Operating Financial over Officer, to Chief I'd call the Dan Officer, me the company turn McGowan; Chief And today John Kite; now are to

John Kite

productive morning, our our long-term Good everyone. for we've diligently another plans. and was XXXX executing year been Ashley. strategic on as team Thanks, goals

release, fourth with solid ranges. out we generated results our line in we were the press in our that As in laid guidance quarter

Our increase end our An XX% points and the strong XX.X% basis lease third percentage the points end. to year our past drove XX lease at XXX the leasing prior goal basis over over year shop quarter. of of small effort

tenants long hit over XX% serve leasing portfolio we these while still services as we spreads. and our on are generating solid for the The focused will the that Now that with provided strong shops goal, foundation driving even higher term. experiential qualities

additional the small tenants to prospective the experience. continue value very We we space shop add to be ensure to as available selective incremental lease shopping

current are spaces. space, focused our on working vacant In addition to lease shop we on anchor our junior re-leasing small

under have and XXXX We currently lease four active intent being this box initiative with our three We of are letters negotiations calling negotiated. another search. boxes

meetings and on highly months, conversations York tenants' review tenants locations operating. remaining tenants interests XX had growth conduction at is high with new future New great focused leasing laser are on secure and XX portfolio. quality to focused team with spaces We been exciting we've open up actively the generating next portfolio meeting and These our to going to be and to our in select, in getting retailers. competitive our Over productive quality, ICSC plans

opened as We our to we'll opening tenant challenge XXXX and treating as are the box we highlight of search continue the I upgrade fourth a noteworthy want to succeed. base, Springs quarter in OX tenants in quality at drive quarter. XX additional square and several traffic Towne totaling Holly feet Commons. fourth new an We and Fitness the at Hobby Center to anchors included openings our XXX,XXX Town Lobby centers. tenants, These Parkside

supplemental. summary centers is operating We've retail these in of environment. grocery which square lease approximately convertible efforts challenging the also leasing Ross out Talbots, million added uses X.X% the grocers from XXXX opened base Athleta, rent the to at Trussville X.X These feet our average over our like at base vibrant Starbucks basis more North point $XX.XX, increased we average of is end assets from small highlighted retail majority component. Promenade and the a led and space tenants XXX,XXX built Making that leases is When was XXXX. XX% Kite shopping record I'd rent the to Mobile, of which derived XX% Temper less feet. Aldi bumps over to our base easily at Plaza, in of about of with we XXX a feet new into generated new Peter. shop or existing also retail our that an Italia Bolton square our including T- several for with the and prior leases, increase renewal rent for this our annualized XX,XXX and We the year. $X.XX of portfolio tenant And to alternative column rent to than combined square in in

for quarter, the showing Next only classification of each ICSC our properties. of we'll column to from summary our definitions, that on Based power also be a the ICSC XX% property the ABR adding comes centers. qualifies

in to property XXX to management quarter, year. prior CAM initiative ratio program conversion our Our fixed including drive a recovery further dividends over our the increase points basis upward continue help and pay retail fourth XX.X% the

annual assets X.X% projected quarters. excess efforts $XX non-core X-R XX%. In recycled the terms the to cap growth. accretive NAV in sold over returns of we proceeds with million These of drive recycling, blended And rate $XX last NOI in projects capital successfully million at allocation are five aggregate of a the and of capital

termination the the Marketplace work to Old it restaurants, facades its GAP stores entered Supermarkets fee Rack with do square Flower Fox Portofino, of Publix Burnt Kroger these sports Station, an Child. Athleta Fishers authority bankruptcy replacing and feet Commons, multi Sam Some lease and and XX adding into the early type we redevelopment highly phase shops. this we prior Conn's redevelopments of and Marsh Italia Navy, Store new small Maxx. and a feet included also we TJ which branded renovated where two At XXX,XXX Rampart square did we center. on after negotiated PGA to replaced and with from with at and redevelopment year with examples replacing sought Nordstrom of us comprehensive allowed At Superstore Appliances XX,XXX fully a North At three the by rightsizing

extending we and the enhancing Marshalls utilized We also space new our Williams to turn shop Pottery with guidance. are a with expanding now GLA I'll Bolton Plaza, And mix. and under Aldi, Barn and tenant at small leases our Sonoma. replaced And

defined $X.XX we as per NAREIT, guiding to by XXXX, For diluted of range FFO $X.XX a common share. are to

of and expense X.X% release debt X.X% same minimum earnings guidance. of of which NOI provision our cash for supplemental or include assumptions list Our million. growth And X% they the a major rent for property press bad to includes $X.X

below of tertiary market dispositions in with properties first operating from our assets are are of million and our incomes the and also secondary the low to well under they of portfolio anticipate approximately the base cap the These and portfolio, The non-core we cap proceeds leverage. average not rent be The that assuming XXXX. household contract in in range. quarter are balance and use rate reduce average $XX eight reflective our of blended of properties to We are we proceeds average.

current In recovery of in XXXX loss mentioned, the rent addition store assumed the the Us rent X-Rs. Toys made estimated assumptions Based a of for $X.X one debt with tenant, from already and bankruptcy. relative provision closure to we've I XXXX status at cash we on negotiations million the and to R bad adjustments

the XX of our shop Green Our and sheet $X.X Headquarters cash we successfully ABR on drive recent our initiative didn't assets also includes tours in are markets. tenant and was to free portfolio. representing analyst in Xx, with goal beyond. rent. of foot flow, of questions. occupancy Including overall stated expired the and strategic on XXXX our improve In tenant growing executing lease This building, office the guidance we our we things small in of million Further believe and of improvement office enhancing tenant and our now XX,XXX Operator, of improving square and term on to rate environment. renewal a manner liquidity they by disposing loss significant planned continuing search leverage low box demographics, allowance among for cash quality closing, and South other at balance communications primary requested focused our expanding driving and our current are with initiatives leasing communities XXXX several ready to recently investor

Operator

question Instructions] [Operator Thomas from Our comes Todd from first KeyBanc.

now Your line is open.

Todd Thomas

morning. Good thanks. Hi,

initiative. rental seven with, do that the First is junior vacancies standpoint? to there mentioned, those you in just any leasing are a of you in you question that have Are the that box of anchor for anchor XXXX up any spaces? the And dealing totality you model income the attributable have of from anchors what those leasing

John Kite

quarter, particularly it just as actively on the to are relates boxes boxes back we that fourth answer -- have including and But basically year, those of you activity most saying would with to I engaged on third deals to us -- that are of of come were discussing the not negotiations trying the we LOI heavily first as there. that we are available are is only and which that those have in if guess already what mean and it no. do. question we we people be all and Well, we in last in What the relates to have conservative that are I lease be has what have we negotiations said, saying the to to -- available

back going we are got also LOI We are are and negotiating. that saying actually we we forth got that leases and

pretty generally that penetration. So that's means high us for

Todd, That's we to As back quarters have look we stuff, our it what where point, strength I I mean in activity them. come other That's are of situation that small shop particularly last happened the got the relates be just unusual done the fill to portfolio job. highlighted a if amount the we and had do. of space, of make trying in we'll by to doing and we've couple you And to boxes at that we've what our in us. was the to

about good that. we where feel pretty with overall So are we

Todd Thomas

Okay.

John Kite

recently we've numbers, that one But opportunity of XXXX said be signed likely negotiation And basically XXXX. in it as we that to happen far what to is we one the that XXXX. it's more signed. did leases that all as was those has an That basically beyond

Todd Thomas

Okay, got it.

back right? are on like junior you though XX -- that in there total that are about you it anchors so got Okay sounds that working is

John Kite

That's as today. we here sit Yes. correct

Todd Thomas

Okay the been generally and what's -- then

John Kite

interrupt time the you, just that's look of spaces that's XXX for that's feet. us I On time. us are a at relative a XX,XXX of at a so it but it much about Todd, defined backdrop basis it am lot as mean frankly, issue came because at to not It's against -- huge that sorry me anchors I concentrated Let about one lot, a having related XX, to issue. when that that's not as of the period a you

Todd Thomas

rent understood. signing? to that in and changing all? been of timeline sort time the And Is what's Sure, from or a get paying lease lead at tenant

John Kite

right. people Well, talked about longer it I think this is, before. we've than It's think

get great to lease is us And line these for a averages to challenge. drop. actually months is so -- permit things, from get XX you possible, but the to And signing have and of lease within bottom design that XX sign open it to and have because still probably tenant you the generally entitle months a a

and lot is of there months. three take lease just a can time evolved itself the So negotiation

would XX quick that? months Tom, you from to of opening. time speaking to anything generally add signing So be lease want to

Tom McGowan

doing up are not site lot in we we you is Todd, municipality or do permit concurrent so situation say, processes can to would once have building particularly a the a allow I you to will is everything open time county permit, permit thing only it's second once underway, one underway. The No. permitting where a single of

of trying lot So a these pool time. save to we are which

do So we that actual of space are drawings, the the up tighten to to negotiation talking about. lease can to that production trying from everything we permit the to is John

Todd Thomas

on lastly, the dispositions, contingent over just increase on impact any just private not then increase $XX risk anyway? to given is the all? you there had guidance, that And in then pricing of or borrowing Okay. that And million XX at is those cost in them the dispositions to the deals have any of market yield in are in evidence an seen switching years closing financing

John Kite

mean, there aren't closes. is so until closed I is risk I like feel the it deals look, Well, that always

to to so mean is risk it believe that feel happen telling we which not think why they I guidance close. I do but that we they good expect till do will But we there -- are are always will that are it closed closed relative you what So we is we they happen. we

XXX is on to are not the that is right to relates we to generally obviously gone XX it whatever very, impact impact but are are second As I about that's mean that very hyped that speaking financing, to mean the it XXX people making from the the talking about. fact deals going again I the years

Operator

Thank you.

Bank Our of next Craig question with Smith comes America. from

Your line open. now is

Craig Smith

if well? are you. on apartment are of for finally, look targeting company thank you Or developers? assets just are question you then I guess you from you I the what an to projects my reverse Okay, in getting apartment partner wonder suit focuses that think certain with? inquires densification pursuing. some you And

John Kite

Craig, for of part question, both. the first the it's

laid also we've that on multifamily was assets a kind and We a have out very some of gotten beginning knew deal specific of reverse component. of our from plan our the certain inquiries there we on

multifamily we we we has assets, become relates in were multifamily range. we it's a Parkside, XXX-XXX But are operating logical. and it pretty had opportunities become is already now more have at are are existing out, that that they operating. perspective, interested up ground that that's up executed and assets it's But I easy we deal are knew unit greenfield and of where good example, a on we for as of that a located where harder think from very that laying developers that well as is for when find For for -- then it our seeing terms us to to on component properties very development

Street, what are have when is opportunity definitively we release Eddy we doing multifamily. five there four, as to where situations So have at press in for we said announced it the we us

really are experienced So and who access these in as we generally participating we we are capital are sometimes generally deals, looking just of selling. what combination to we have terms in a are sometimes operators we look for, both of it's for and

add on really the want you just depends it's that. Tom, to So deal. to

Tom McGowan

office is creates I corridor The think especially but multifamily of property at you talk that is would about lot a that begin where thing we situations on piece look a visibility. unique Yes. in also we'll one a good have to something I

as now XXX looking far the of opportunities the we over successful those moving So accomplished phase apartments very phase. we XXX Nordstrom first We've are of But into densification at in what priority in we are been the of as as is well. huge with ours. second several apartments

with really try So asset. the opportunities this is something people the we right are find and best for hooked to focused. get We the

Operator

Thank you.

comes Our McElroy from Christy Citi. with next question

line is Your open. now

Christy McElroy

morning, guys. good Hey,

specifically? through the rejection buffer from know in of lease what forecast lot of for the you million sort But building for bad the are and fallout terms a are a you about from of one, that has Toys building post debt Toys getting in Toys range are Presumably the on. terms potential sense posted the this I reduced then you given one But that talked working maybe for other in that in talked flow you other. fallout the about boxes -- better rent So you the just year. last the -- on addition. doesn't $X.X the

John Kite

we I No. an in happen which forecast I to reasonably saying million, basically is think at is debt Christi $X.X the that bad Toys. substantial mean obviously is were addition to going what

we So we what feel it's And above XXXX. slightly today, it severe a here year like as pretty we sit appropriate. as was in that's know today

$X.X now a out. that's that that prudent kind be we'll feel right $X.X But thing we of that. are lay end plus here. sit year. in the towards to all a million, seems I'd you to And So -- hopefully as tell of we use mean place about the won't we We the reasonable talking we $X.X get like the better be you I combined. as that's million And million

Tom McGowan

one the square already that's our you be R to those the that the one like -- of XX anchor there Depot, have the Us those and is dent as be out and square would be also are is that big also four XX,XXX land forecast. of one boxes renewing then retail is foot end year. That's OfficeMaxs anchor Toys four boxes anther those lease that feet at expiration, tenants know to and we've not are XX,XXX going won't are got tradition And and And we not couple that we to expiring. look retail reach there we Office renewing of

are that itself. factored to going of we've the be that's in renewing, know in So already tenants we budget not and

John Kite

and reserves. the Over above

Christy McElroy

a are question mentioned just now it, of could give dispositions what sort about you if how you about differences in on thinking the year this Maybe okay. approach sort you dispositions sense forecasting us to are then the then QX year? -- are stuff. now at I low but or talk much? but And Got that the market other you has you just any in Todd's you are And right of maybe upon were following know only you dispositions about selling disposition. only your your is talking moved X.X% you last of are on QX

John Kite

Sure.

In terms try to pretty we quarters a which of this question, I are saying what the the couple going what sell we way. last be think to programmatic I've really we much about strategic first the particularly similar part going over are of of is how doing we to out and is in and are said

loading already road, assets personal look, wouldn't not we be for some if get year, fair were don't selling front doing that think ones very said is the as we over we of Christie we sell be. been said getting that might going doesn't I've clearly And wherever value got obviously that mean the assets of to we that to but working -- around One are fair value on. down concerns that more we It selling this my assets are we believe going we've value. we we fair are I to kind be are assets before,

to it's huge sell of put when situation. peculiar a a in amount that -- might you out push you that it bit is and of everyone think you I a kind need tracking

are we accelerate plan, getting be not. am and there. not getting would we opportunity opportunistic we there more. do are value clearly I us would to good for we saying we some we a But that would our value, business felt to we fair So If going is are like fair if overall

about I that. how feel that's So

over obviously year five and move were bigger and market in quarters. two around are These selling properties. stories. some sold we have all are what of as weren’t this individual And the would -- secondary. said, frankly sold These what we year tertiary we it smaller as rates last and As assets that we assets the cap the last rates versus to that That last weren't they were relate assets there properties. sold we view cap year

some these But they asset we generally are think locations. their terms more is smaller it the deals but get not in comparable little I into can of of where of of just the so love et liquid in what those from particularly things sizes buyers terms and you cetera, focused deals, difference. but they density And the how on it properties a portfolio we terms in our the the more at fits look little yield when that growth are that's have, and

Michael Bilerman

It's company leasing leases the prices am you selling the But and recognize where strategically if is and fall. talking running the Yes, have all assets Bilerman share I I you and about Michael much think I some seen of is curious how guess can and time -- important. just business you lot here. spent know I boxes, time spend their retail

and Yours well significantly. pretty fallen as

of and potential think with the WPG. transaction back all summer I the about news to XXXX

time n other size and had over now emulate I do that last thoughts with company things So know clearly or doing waiting different don't over year value. halved about value in you just halved some I are there of can your you how positions. you strategically that's you is it to sort moving stocks in and sorted what the guess the

John Kite

look by where to gone a couple correct of I saying we This disconnection years. reaction surprised we've when particularly how value, where is at be. the last in And far the today. much are bit is evolution think that value we are want Michael, how are of Well, not we over you this you obviously there look, frankly,

fear things are of my would are there obviously going. elevated is be in many to where this unwarranted as looking in money now. And is many, fear is that's -- the opinion putting a space to there and personal work, right people into think a going that it and this a There journalist rates relates I that space. retail massive there at interest

to were the them a are that good incredibly right longer we we operating NAV either available it's point meet to focused these to to way. But it back no react. the some a within strategic clear that in will to opportunities have. from outside thoughtful we think you to we time the as if do. as very, And this once goals have it got were tone relates side, we over it that And recognize meet very on will the And we through that and that relevant. that. And be we execute. that the majority out, relates are thing perspective that's great have go Look, I people things close be of then There laid have that But we this have think we strategic to stock But to focused. with around be got tenants that where will by will out. is do. time we look, are not. and And fighting forces And enough faced are make And through reacting, to boxes very we And not tremendous. I begin to So, it's that frustrated. discount, you I become that would not the the one do it's is that those may control mean that objectives know or see will we we process. objectives, things

now, well, this at its when why logic. there can't comment market does it to can understand you that beyond So the because I that well apply you does. part look But I where are there part I mean is cap trading know rate basis is we and can't on, what right or

Operator

Thank you.

with comes Fargo. Donnelly Our Jeff question from Wells next

now line is open. Your

Jeff Donnelly

that. Good John. on following Maybe morning,

available imperfect kind grocery A is productivity, and of within time power center I centers. difficult think same you the will, from differentiating if even for market. the Where of investment nearly center, metric in community isn't B has a there have metric the mall sales an maybe

where and centers guess and to the universe in thousands separate you metrics between really companies. gaps just these quality hard is that the I difference, pricing in using you better there United to so of States, understand understand kind of do begin community be we investment seeing should more. tens I between are think of to assets am kind think of what curious those I

NAV help just of sort am how people? the think I narrow for trying to of discount. NAV sort So about discounts you maybe illuminate

John Kite

look I think that's people right, doing occurred which Because It's at I you -- that we They particularly or stuff dangerous. that's incomes. Jeff. is see little at just sales can from are the weighted at throw -- become you they some number large I that things ABR demographics look population ABR. street tough. all focus retail the out don't and on a mean are generally, they look towards of

We to see track local paper. X% you very and way. the I We looking be We liquidity got it's just than Like people on piece and to centers quality able that hard XXX,XXX And best look, the owning you can't almost asset. why website $XXX which from mean I to -- do see at that that's even that quality part. you and properties, our a have mean think got without store on five people our a to mentioned kind better frankly But going years we income hard million. of of estate. seeing actually but we a there of wouldn't the to cash pick are I very huge mean job our XXX,XXX air the shopping to is NOI the even so center do in you intersection. real of million people a it's third last Open through last with flow a years I grew So much could right. averaged getting I less difficult do demographics. doing of and could shopping at out can one our is very, over thing $XXX growth. market, Over grew we same over do. things be five time,

without So, do whole get look, about wouldn't able the you them, as are think be is I frankly estate. know, that do you well to us, are they think all community on and owning fact vibrant. to these the time are real places things. happening. we is what we onus aren't They I literally But ghost busy. see quality And the and out talked of are at when yourselves to the They taken that they ghost towns narrative this upon these I towns, often you look but over that

So a space time up because own that if do you think good this real and execute be and will I great year quality we lease will you we people didn't will to over will realize track couldn't that estate.

Jeff Donnelly

something I is to metric but you not peers really maybe datacenters many you And another I think about your of because is can -- think to consider provided is traffic. mean into coming

John Kite

tell to you perspective. got Jeff, our from And, I

we I and We really customers we investment community out job a ourselves figure our and invest for can are data analytic for how business shoppers, where ignored our side The to they our metric better where mean are what not at not that. do to to customers they there, and ignore been going staying of are has only are really they long buying. look coming from, from, how going are but coming

So, cue the going over are we invest take pay term. and going it's off say, to long look, a and from to Amazon I'll

Jeff Donnelly

just a guess And I question pricing. asset on

am believe driving CapEx equity Is Is data, last that or sentiment sort or widening months or mean about XX sustainability in been giving a something you it portfolio. power what centers, out of I the definitely cap I concern is ICSC market? replacing XX to the or occupancy private levels that around sector? there, is debt market? it You segment an out trend much There spoke market? rate your using in curious mean is equity it so? so just Is how tenant? GAAP rent I

John Kite

to a think I these part in to they about bankruptcies it is just the media happened retailers world hang finally reasons XX news. bash when on real And for today look, rollover, lot tend really and Well, physical for in that's its last thing as the And of where underperforming live whatever months Jeff the relates then it I there is as they huge estate. we to long a time. loves

fill And the associated so happened in last spaces. the six quarters. not -- retailers to lot a People couple okay there enough are are CapEx is five, with cost There you combined last fearful is back that that it. with there in these

our whatever stores, but for is we So the in closed now reasons stores. our people XX That we fixated fourth look XX very quarter business. business are always what is been opened today. That

are component, focused time. The the So That's filling and I I take bigger, we But that own. that's struggles And what decide and we we multiple, are what underestimated and mean time. you it the when service, we they have on it of Then are then -- Jeff execute. takes take but maybe it's a the is trade entertainment. that's we now owned community majority why It knows that to has -- are power happen to to they going when at and own. can time at begin more power bankruptcy the a look they got how working. just will is that them. of make retailer problem. we I just centers investment and believe think And what you stores will when that fear process when people look controls we you And you. boxes there takes very sure process restaurants, have really I And the big right type, think just those am grocery that minority huge of the own long has back multiple a exposed. and what has has

Jeff Donnelly

this in wide are how underwrite rent pace; just similar you industry mean I You what lease not improving store do was you duster What one pace, apologize takeaway if York. the maybe just meetings, of had last question. of for And ICSC I given yourself you closings that? for to your in already in attended versus terms terms pace or feel curious of your mentioned but New maybe kind in them maybe XXXX? going was it

John Kite

of think do mentioned a lots a okay. ago, in of clouded invigorated I it lots was to York buy, retailers. guard mean, Lots we New dying it perspective of while successful ICSC December. people of slowing came old But by to look, I the of from And feeling it but physical off, deals. was we already looking that open out

So the day ULTA of which our what came reality that at is mean plan rolling. an that example. I plan of a of out how We we And came now and with do. review yesterday we always that. we portfolio is were as out

and XXXX right a in move XXXX that like It's the retailers associated negative when growth moves to want out country take feel market locations definitely see the yes going we you growth that And fact these eight hasn't can That an and continues. turnover and look years. personal you at at grow we Jeff, think of going inventory at after of of this side the are you levels, one income the NOI XX are see of if that like stock that. pain are bottom mean to for you we that. this become GDP, rollover balancing in going who beyond improvement to when retailers, that of and the look look more opinion the grow to it's to with transition years doesn't that be demand to you X% my the it good XXXX what perspective there and of look year I is going there from it, fact when but that. with in process. Median in won't is And But year. that's and along hopefully advantage some we feel available. so So lock to and that the And are grown above are rate

are So I a is not thinking just where long really are the like feel term about year short about they the right this term, just people now. thinking

Tom McGowan

along York, question sure New were it's tremendously out categories doing different But just with bright at for is you if have for the think players, TJ of that us grocery. spots I that our one value was Fitness we extremely are ROSS of there, always the course well. year-over-year just lot options. of a look there, very better out is entertainment without moving strong But and the

We are foot. and seeing sprout attack with starting whole different Florida activity to lot of

more to So square of footage us a diversity in we different which terms and a our options at helps lot. ability little fill seeing are our space allotment

Operator

you. Thank

comes question next Our Hilliard from Carol Lyons. Kemple with

Your now open line is

Carol Kemple

morning. Good

Looking out to estate taxes XXXX, grow? how you much real do the expect

Dan Sink

anything have staying we look And top good a couple assets, our run the fourth extent from Hey, Dan. do coming significant the to those. job of -- online. look XXXX, of quarter properties is obviously you pretty our at it's Carroll, on additional at disclose you when And of is this rate we some not there

look appeal relative at, the mean appeal, taxes, option where felt we we I when been done like can so. process to what are when at do I you an we reduce to think it's we So we've the

the pretty it's fourth going forward. you think look I So when at steady quarter

Carol Kemple

Do have Okay. And have given they your conversations at share where a this right just buyback how prices changed? doing point? now, about

John Kite

relates are it balance long basis there. a we we've think it that, to as going and we we closer the run are some particularly been the we we again on to as be I closer how getting been to that we relates it in And be Carroll, now feel and our we've sheet closer year, as next to to are right doing leverage. about wanted pretty within like about as things that business relates where today being we feel to think I get transparent

there board feel And is Its we going mentioned. - way. So in we get serious not If that. our something. we we've we It as be that leverage we want looking announce we consider to throw level are we point people as with But past and it. execution comfortable to be order are we that that increasing are clearly us a track to to to the long in if do conversation. that, seen to time the that really at and this when It's talking thing that obvious something continues an in and that committed about. out for wouldn't to be committed on

so evolving. And that's

tuned. I'd So stay

Operator

you. Thank

comes with Sandler Daniel question O'Neill. Santos from Our next

now Your line open. is

Daniel Santos

Hi, good morning.

Just CapEx. on one question for me

boxes, have this of more generally more t CapEx expect we elevated CapEx, remain of say debt would so expense should sort elevated increase the guys anomaly? any and of it's or re-tenanting the you generally sort then expensive is speaking business of you an As given just the

John Kite

No.

deals. been again I boxes very specific that two are look size, was years, the the you as CapEx to quarter, level. couple it our it's when can pretty when deals was to last But the And move it think CapEx if our up relates at look fourth you you over but two a needle. on at

we think pretty that stay would So level. would

to have them did -- more ago. we of we We years than are available going two have

So an more But our the of underwriting just basis we are absolute plan in on get spend have there. capital very returns are that appropriate. that out to we

are we with your you And of part second can So repeat good it. the question?

Daniel Santos

just expensive sort moment say guys so run bad time. CapEx to speaking just or debt and this are you is your of rate more spending more in And generally then of a run that would quarterly on if spending sort you expense,

John Kite

year. trying beginning is time -- moment sense we I think are the the this as in we that very the in be a of to view it

$XXX XXXX again years. $XX two and next of one of having very are in trying updated benefits free going that cash liquidity plan CapEx is the And be we covered benefits it million but to everyday. And having maturing perspective that to one as to flow CapEx XXXX conservative need that plan. relates -- literally from the the we of everything debt have year gets is of So of of is a evolve we we how to over for we have. and it million that cover It's detailed it the a very,

are in place like as been cost, business it we feel has I a rate a we the good the for to cost And run the that. is relates very So it think same while.

Tom McGowan

model And five cash and through look spend flow, important look and the Board as there down sit year relative walk the what's as too plans. management that corporate the at and we accumulation we we CapEx I group, a run at Daniel of have and When year is to with and a we five down incorporated. sit a That's our debt. always spend think team

We year were shopping those include like lots on parking to five up particular relative centers. plan also

models. So all incorporated at going when look to we that's our

Operator

you. Thank

Our comes question from Collin James. Mings next with Raymond

is now Your open. line

Collin Mings

me. for questions of couple Hey,

of context about you're just if you and of then back how point, cash year? expect thinking this flow you put in the you this free going redevelopment on spending just maybe First, to focus Can king incremental in context leverage. can that that put at

John Kite

we so, relative I free to track -- are to in flow, significant still can cash million. cash little to what the And clear likely on incremental mean in $XX we cash over as that. budgeted spent still we redevelopment And terms we range plan the two going to it and that And we pretty capital mean that you generating we to are more obviously going it spend. free free continue going that's and after going of most it for between today relates flow we spend next to spend, generate have it's flow you will backfilling can is are the XXXX to and see relatively I million XXXX course in but boxes of and the $XX we got that be we spend. years allotted

Collin Mings

CapEx $XX right? Okay, flow cash basically planned and that redevelopment, $XX before of so million is free million after but

John Kite

Correct.

Collin Mings

Okay, that's for space. as going office the as re-leasing apologize, just the back this helpful. timeline just then far -- And to missed but if I I the

John Kite

large which XX,XXX were just we I give feet on a think. just square the made million we We didn't re-leasing. comment timeline was tenant, $X.X -- We had

actively business. it's not, and that's did So a could And market, below at our taken which the by engaged below blocks value like in we have the real is we It's one contiguous and one and few large a we downtown a located are of conversations building what number on renewal A of we was best in we Class below believe space. far. of part felt the

will do So it. we are confident we

to are in ready conversations. but engaged We timeline, actively not a are we give

Collin Mings

me, from last one John. and all Okay, one just then right

million can of terms in think you leverage the want you run kind rate one You or it still questions $XX what earlier where kind of aggressive act that just forward? I guys beyond and the about kind as of sense at well of between of management build team going to the want the slate back maybe make just of leverage more think it in get additional dispositions does outlined growth resetting of going just balancing the off kind FFO of and again aggressive context options it FFO you that get and is more where getting more having about that how you of you've as point mean, getting having in number, FFO to

John Kite

the not That's question. And looking good -- asset we that the net to of to not course our balance grow only as value. desire relates appreciate have we are only to we it

making year. are asset get think or value advantage We to don't portion worse on in-values. I taking Again, our we that equity. grow a have And we portion that business that, very treat we are always step earnings. our but back diligent And as portion is equity looking not sure an for we this better the a look, realized of XXXX taking of XXX% that we around very, as in of this earnings

said, a to it So do process. that opportunity of wouldn't our accelerate deal that's we mean take a at caution doesn't as clearly I advantage an smart lot around But and doing that once.

we a And second this are how tough to the balance are it year. be So And it. this of over going seen candid. we is to have in month evolves

make as this value well best to sure are we community going going relate investment we are But we protect we it as grow value do So see how the community, We are and that trying it to we balance. And to investment that understands as their the want to we that it. equity. it can evolves.

right I can that's that what now. say think about So I

Operator

Thank you.

Securities. from comes question Lucas Chris with Capital next Our One

Your line is now open.

Chris Lucas

morning, Good guys.

to me I of just $X.X NOI whether could. guidance included same asset understand number? is for Just store in make you in sure a of couple your want points clarification million I or office out. if the Is

Dan Sink

has to out. guidance footnote the store and XX in It laid is that the we South it pool providing central In out footnote same assets see describe of that is listed. will page since started one store not guidance. not been you are same We store same Meridian in

Chris Lucas

so contractual it to can Dan. the sort In thanks the relates sort as of guidance. And to just on little contributors sort then maybe relates you if understand as then of other to better, the deposits me you words, give of a the guidance, I bit And better Okay. to sort can commencement negative the it tenant trying fallout just to rent debt I probably to add non run renewals the bad and X% of you got strategic how together some know you understand the that is will but leasing, have which also I to get you am components X.X%.

Dan Sink

just is was for that quarter And look quarter into in look occupancy X.X% and out into when top third and R you then bankruptcy boxes comparative relative fourth year, guiding of of and range obviously our the fourth X.X% get being to Toys when consider that your both look the quarter. you at basically middle economic are we were be first second disruption you going Us once quarter of quarter, when we are year-over-year after to I when the out out think end and next sending the for then the decelerating that right year. filed guidance you had to Chris, fourth and the kind the you

then are lower against. that you the difficult comps with slightly leasing level aren't couple some quarters and come see So a as at year-over-year I as going and first think out additional we to of

will up. to lift John we grow get into grow leased And as a build that will we as bump number search continue this us the hope addition with economic this we box to initiative, XXXX as the see then mentioned into that give You percentage occupancy that rent leases. box in

Chris Lucas

of of share that curious taxable you growth Is last your in sort I return trying guys X% XXXX was flow you but to of per thinking you something are capital. moment there forward it or -- so are my that guys bumped conservative XXXX then drives be approximately is in it what or policy underlying your capital Okay. on the noticed whether that return that? is think about that also you flow, component as policy, know know I out just had trying to cash to dividend more XX% driven sort the drove FFO But dividend pay towards if get by issue don't November. just is growth? more toward income in meeting that taxable more I on cash you your to And going dividend question. specific of

John Kite

are return all assets most your significantly the earlier at are the at for it plan. you XXXX, When significant was you available position appropriate covered, dividend. reason you a feel cash business when between shareholders and for Michael's of the when the I'd us covered within then are the five you capital think Chris, last business to a like by of taking we And we particularly importantly to your your have is historically, we've above. price. all years, few flow. we I years fairly and into last value, of are looked well where back over it plan public the in increased dividend And about say dividend when as is our And through you raise well that first if to knew the you continue in consideration over look little where talked there. to to time, to free X%. are everything our And question, looking in we continue we at disconnect us it value

coming things the the the out of control business it of flow returning One that to shareholders. and cash is do we

we longer we flow. price we return to business, vacuum. a analysis people that a the stock dividend that be in comfortable our will feel the cash look in and hopefully not want a operate also growing overall we that's over time of place that at but grow total period dividend, of But So a can are while part that effectively pay

all on taken as had a But you that. of of kind it's quarter-by-quarter you analyze mixture again that. basis So

Operator

from with Barclays. Linda Tsai question next Our

now open. Your line is

Linda Tsai

light In of for anchor of you do movement, good morning. Hi, some have your the anchor at end? your view occupancy

Dan Sink

Yes.

and And yearend between when as leased are is spread, couple we points. -- is going work to a hundred released. end look greater of we be XXX our basis some to to about that probably have little economies boxes percentage to get going to them be it through you at basis XX.X. projected to of That's have -- lease be a is and about I occupied points the right the spread XX.X that now look and we think these as year we we projected going out

going definitely into will the some from So filter that be there XXXX. is activity leasing to

Linda Tsai

on over And four rate Okay. view XQ X% What's then and in your spread X% trailing was XXXX? your renewal the quarters. renewal in

John Kite

renewals the sorry of the renewals, that am would the option the it driven difference last. between specifically non option that fixed I anchor are QX is quarter in at lower spread, anchor As and -- we get spread relates to of kind by would than QX that much a the

anchors example, For and was the we quarter fourth X%. fourth I renew. we in at Actually look if XXXX, you X back quarter quarter third in think about had the the anchors XX renew had spread

spreads So over been its this good again extremely But renewal bumps of issue. business look we side spreads cash on, unusual long the in is have GAAP our our at versus quarter-by-quarter. But it an particular because term look of not generally annually. the I run rent in at are shop spread rate kind and if or pretty when producing renewal you mean focused we you small getting significant

the quarter tremendously think that a last year, the particular future, it's feels anchor. in and So don't particular very but looking out subject to in it has I different

fact, As one renewal have even would I a move of X% in matter quarter X%. excluding mean, to the fourth anchor from

in that number sensitive regard. it's So

Linda Tsai

And one. Any them Thanks. these days? and the CIs general are trending just color how discussions with on final what are then like

John Kite

a see little there. on CIs flow -- and it don't ebb been in don't based earlier, like as think doesn't does generally we that maybe stable are we CIs multifamily tremendous We incentives. mentioned change and I

tenants put pretty Our cost in. steady relates as to business it these the to is

internal IRRs, are what cost relates is. relates it what know what hurdles we significant you And that to it and want. hurdles, returns. all as think XX. Linda, And This -- go are XX return As we This to we than others yields is give generally bucks on need cost well, Certain credit quality. on I mean tenants return willing x deeper looking you on great our NPVs get just oh, and I about that us more credit have those it to saying, they us is we to than this and that that. quality, much cost at isn't and

have around We it. a intense pretty system

to So don't we few boxes did well last we have it we We done is happened to that's think more if change because year this than just wise year going there. to fill. a

Operator

for further I'd showing now further am John Kite remarks. like any I no Mr. the back call to hand questions. to

John Kite

to forward time talking going I are the and to you laid in the their you and your I And just we for we thank look company. that all also for want to to say out want everyone say soon. goals on we to execute interest you to thank

Operator

today's gentlemen, and for program. thank your Ladies participation the in you concludes conference. This

disconnect. may great have Everyone You day. all a

Kite Realty Group Trust (KRG) 2 Feb 182017 Q4 Earnings call transcript