Kite Realty Group Trust (KRG) 6 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Bryan McCarthy	Senior Vice President-Marketing and Communications
John Kite	Chairman and Chief Executive Officer
Tom McGowan	President and Chief Operating Officer
Heath Fear	Executive Vice President and Chief Financial Officer
Wade Achenbach	Executive Vice President, Portfolio Management
Dave Buell	Senior Vice President and Chief Accounting Officer
Jason Colton	Senior Vice President, Capital Markets and Investor Relations
Christy McElroy	Citi
Michael Bilerman	Citi
Todd Thomas	KeyBanc Capital Markets
Craig Schmidt	Bank of America
Collin Mings	Raymond James
Barry Oxford	DA Davidson
Chris Lucas	Capital One Securities
RJ Milligan	Baird
Tammy Fique	Wells Fargo Securities
Alexander Goldfarb	Sandler O'Neill
Linda Tsai	Barclays

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Q2 2019 Kite Realty Group Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]

I would now like to introduce your host for today's call Mr. President, Communications. Vice Senior McCarthy, Marketing and Bryan Mr. McCarthy, proceed. you may

Bryan McCarthy

good everyone. you the Kite Thank to call. Realty morning earnings Welcome and quarter Group second

on and uncertainties. comments that results may and today's forward-looking from Actual subject assumptions these materially based statements. are risks of events of inherent Some to differ future contain are statements

see the including our filings, about information adversely more SEC that can affect recent our XX-K. the For factors Company's results, please most

on certain include to earnings non-GAAP financial website refer of Please reconciliation yesterday's available results. our measures also measures. press to these release remarks our financial performance a for Today's non-GAAP GAAP

the Colton. Officer, On John Officer, Markets are Kite; Investor today Vice Fear; Portfolio President, Heath President Tom Achenbach; Kite Officer, Chairman Chief Senior President, and Capital Realty Vice Operating Officer, Executive Vice Accounting Vice call Group Chief me Wade President with and President McGowan; Jason Dave Management, Executive Financial and Senior and and Chief Chief Buell; Executive from and Relations,

the John. I now over turn will call to

John Kite

Bryan, Thanks, morning, good everyone.

the our while deleveraging to on our and execute to achievements operations. past on before operational highlight program a focus discussing maintaining continue disposition quarter, During I'd excellence. like we

for down end, we Year-to-date, additional The the for subsequent assets sold quarter proceeds these debt. XX quarter, sales $XXX sold combined from assets five proceeds of primarily have $XXX and pay -- we used million the During assets to eight for million. million. quarter we an to $XXX be non-core will sold

XXXX. $XXX We end our end million now of of guidance by disposition we'll the believe range of high meet the

pay-downs to at is Pro-forma quarter debt-to-EBITDA net sales was debt-to-EBITDA quarter's X.X As asset end, drop currently at subsequent to KRG's debt completed the net and times. anticipated, our and for X end. ratio continues ratio times

that capacity in current is high note have we be than our disposition of our to our NDE undrawn important mid our our the by and year-end. of we end revolver no continues Since is it's the to-high XXXX. reminder, light To hit maturity In our maturing ratio volatility, times borrowing to revolver ladder a under anticipate preferred through perspective, will macro our recent improve. in debt the X completely believe range, aggregate more outstanding. we'll put we shares As

operations. we $XX.X or $X.XX quarter, generated In the to share. Moving second of million FFO per

$XX.XX months million For property the XX, We first by same share. results, $X.XX NOI grew and ABR to rent six was our expense by to property last base feet, savings. compared an X.X% all-time June primarily for ended same driven high FFO grew with grew Combined $XX.X We year, per we increases June through quarter our square or XXth. NOI in X.X% by per KRG.

we've a and for feet, second We leases XXX year-to-date, for executed to X.X leases over XX renewal executed XX% XXXX. over new renewal And square increase as the quarter square and new million compared XXX,XXX feet.

XXXX. Not We feet. process. good continue year program, big the quarter beginning boxes, but to with we only vacant we've XX X representing this backfilled brings another XX,XXX our leases to This of our box second the and progress in total tenant the signing leases square approximately roster make the box since in very have upgraded successfully two

been program on box spreads Navy, name Skechers feet just Return of The leases XXXX, and tenants few. has Box and these over a signed Sprouts, square Old such XX%. over every huge cost signed metric, have RAI, approximately XXX,XXX the XX Surge has since cash been on XX%. We as a to success. Big we've In include leases comparable

in late XXXX. XXXX As the of to X we've today, with early the of remainder anticipated XX opened new leases, and open

efforts, leasing point XX.X%, lease year-over-year increase. stands XXX basis a result our retail rates of anchor significant a As our at

an also KRG. all-time a small Our leased -- increase, is XX%, and high shop basis for year-over-year rate retail XXX point

$X total months, economic Big This next to spread is NOI will leased our to which $X.X million XXX point percentage over to is with Surge. a of over the success portfolio attributable equates the the of online of Box spread XX.X%. XX over currently Our million occupancy XX.X%, basis that come

We're FFO a share. of $X.XX for a what's Turning by happening now $X.XX of our at to projecting the is lowering quarter. midpoint us sign guidance. to say to this exactly that's XXXX outperformance, this got $X.XX range I've is rarely per first FFO

quality is a the program and disposition the the of Our investment depth teams. way of ahead the of the assets, testament is which market dedication schedule, to of our

the line readily with been process deep is been expectations. our and available, Fire and financing have has pricing diverse, smooth, diligence pools due in is right

can I the assure our about benefit view program of private in theoretical. sector all the you, markets, think can Having discounts our real significant disposition our in time is investors there I seeing in often is discount. unfold theoretical NAV nothing of NAV

same-property NOI increase growth to due able Given XXXX, occupancy. property we midpoint X%, the the half raising strong than the first to our we of NOI to of better were anticipated are same

importantly the and Our to had team and is in in year plan, XXXX staying focused a plan on continue success this great We more the operations. first both year. throughout our dispositions half of

for Thanks to we're everyone questions. ready Operator, today. for joining

Operator

Christy you. question with Thank Our Citi. McElroy Instructions] from [Operator first comes

Christy McElroy

$XXX and rate would more there there and under given a anything more is to earlier of the provide end that on do completed that cap of look you and could and range maybe transact million expected, the exceed dispositions than today? is Can high to able you've contract the possibility been average year-to-date, the you

John Kite

that the getting into until we're the you know, pretty Christy, going to introduced think much plan laid particularly as the to avoid with regards Hey, we the cap We program. so I the cap were out really rates, rate, at finished year. beginning of as we

think think I that's to and what you annualized the were put what impact what felt guidance I XXXX we impact, the can communicate the we as in and particularly earnings triangulate impact to impact. was particular would our like it we trying release, on relates out XXXX FFO to giving of the be this

that important do that's So that. we

it to expectations cap the to As relates what there our exactly we relative rate, budgeted.

budgeting will earnings that's to that. impact what we're how So we be, the think back

market. In terms of, more? bit than more than always we midpoint little obviously do We on to that more million million a increased do we that acceleration. were $X.X the we do told we due everyone guidance -- know, you to that We or more had of I our the $XXX the market. the -- on what have have going think

that So number, as net as we offensive were capital, $XXX that million it do view above anything the possibility that clear but going defensive we thing to more not what to make exists, to relates really the is disposition we're capital. of one trying

yes, So would accretive potential and redevelopment if a to mentioned were sort played the our own of now go but early, have existing because either we some stock then that would did, capital that number, on that it's have is we that components think that be I above or to we'd we I where in acquisitions also if redevelopment allocation. pipeline right depending probably to them haven't from fully, too we'd at and reinvesting dollars go then have think look out we there those we still

Michael Bilerman

lead portfolio, out $XXX sort weaken cap Bilerman Michael set which a speaking. the didn't Hey, Michael. is of sale market target would you rates asset it's of you million why It's I want substantial obviously that totally a negotiating your to John, with your when appreciate can amount power.

over well the it's this point, XX% bank, right, done in at You've done. it's

rate rates would what also do what assuming think I you're it with and you the the because on think done in that don't you I large be million be helpful, the a impact trailing provide to it proceeds forward should FFO $XXX is cap secret? especially part or driven date. back

John Kite

we're far of what from finishing I course, think think I that not that I appreciate Michael, -- and initial.

will these one implied think -- dispositions they're much know well is that notes I probably pretty and is going thing was more in the if where cap to were to much directionally would pretty impact two they we guidance then I with if had were or that you're clear than of I concise that projected, cap rates the that seeing the originally think XXXX, -- to get it Michael. speculated words, different and one we they're our where right -- those rate, are or they closer correct, mean were we our do inside trade relates with higher true to materially get line there end, as what you other and but wouldn't in I holding when these they and be

your I'm don't do. going coy, get impact be want trying to point. not it mean, I I really this through to to we're what and to I get but want So, I

Heath Fear

range that real before. best estate in decisions. best process know this what buying. you been a making Heath. try range at not and just on, up as really this is this we Michael, real of you to sometimes the communicate terms we're making I've I'd We communicated look end estate We're decision the add through

sometimes of ourselves. can you So box kind

until we're what bring do. would not yes, your discipline to cap and So, but that we and made a we done earlier that's far through, to ourselves to so we're pretty promise on disclose we're point, rates going

Michael Bilerman

weaker of but you're Right, selling represents portfolio, your cap arguably quality entirety rate likely implied your assets.

your what program dilution, where on in. or also what understanding trying just then because XX% you're at, will what the you're how new you're helpful, you understand right? terms between the redeploy are factors you where just So with money, quickly as would assets of, time of the have an big selling, of in be then the spread and factor, you transactions And redeploy impact that on also to but selling that then doing how the losing,

the give we're So we've but XX%, having it We've just sort terms have range, of cap goalpost rate. hey, doesn't done some repaid leaving X% think at of in about about. of, debt done cash the be in to us we've X.X%, to guidance, it some at averages, at or taken or X% we've to money, X.X% least just a some

John Kite

that we have right appreciate do get once that's what and Again, to those or you're we exceed, with to Yes. on impact I if -- we dilution now on, what's directionally further not for would that is mean, we mean little so exceed I I say Michael, a that. I going that proceeds we sure think right of Mike, is ending and mean, it. about can part I

really be we what what that's cautious why do think I to And is want pretty we we but your will statement about say beyond directionally, around that, so accurate

Heath Fear

gave listen drill. that we you add sort the the of is also math card And

we're our forth pay guidance. told debt the is you, that impact those We down told up to million. of activities we we set to and primary So in of use $XXX selling you net the that

out enough figure we going this again, means XXXX. tools So for what think given us to we've folks into

Operator

you. Thank

Todd Our next from Capital Markets. Thomas comes KeyBanc question with

Todd Thomas

Hi, Good thanks. morning.

on guess wondering, asset quarter? first, same-store sales what also. dispositions NOI I questions, second the the the completed from the quarter in Just I in of talk a that about couple growth were can the you was was

John Kite

Todd, so them of contribute, some of detract. some listen, them Yes,

when net at you're on difference So sort you of of not the so those it to store virtue talking about XX material out, X this assets. basis same by point, points selling a different like all

Todd Thomas

the quarter were the for Okay. were there those that of And impact, same-store similar assets the to still quarter assets? subsequent suppose, exclude the those any and if end you five was sold I in the

John Kite

in those are detractor, some them were accretive, of yes, are And again, the They but generally accretive. are them same-store some pool. ones subsequent of

Todd Thomas

Okay. then, the on guess, disposition. I just more, And one

XXXX, of heard is disposition. of from I around XXXX think in the the John, I in some prepared comments know impact just sort So remarks, and impact you your the

intact the So FFO is I you've it transaction but result your earlier little bridge all that a XXXX activity timing of expectation overall? of a be the some as perhaps, provided, should that net uncertainty from impact the price in regarding guess, this

John Kite

our to expectation the way that I at think little would got obviously we bit, to specific that but be XXXX. occurring to annualized impact laid And only happening you Heath, in you it asset out other be in and a out, that press Yes, for to we guidance would those have sales. think that, that we've I move our look that if intact to the yes, you -- that's then make from be is you've that? assumptions want laid would what release the dilution do just way add

Heath Fear

$X.XX the we to to to bottom million disposition $XXX Yes, the impact the of for to $X.XX that to is guidance it Todd, from to took $XXX which from change, only million annualized -- $X.XX $X.XX raised XXXX.

change really there. So there's no

Todd Thomas

how bad should you year debt move-outs balance that's moving are unexpected and this how quarter or there any you Heath, throughout known fourth the in occurring the of And the Okay, then helpful. move-outs we and third over or just to same-store. budgeted remind the at can terms us about in for be much the point? thinking year of

Heath Fear

Sure.

in in the with total bad basis about we to So our same-store, points reserve, year XXX started NOI. that $X.X same-store and million of debt a of translates $X.X million

in NOI, For half any is points the have distress in balance million and $X.X we got reserve about which in XX same our of store, the billion the bad of year. same-store left reserve, budgeted year, basis back $X.X is not do of the we've

Todd Thomas

Okay.

Heath Fear

No specific that the half of for tenant that year. modeling we're that -- we're looking, we're back the

John Kite

Yes.

we've said looks way, the we've like half model the what look about another full I So pretty you in mean, if used it modeled if it. just I for of accurate. was mean, you year,

we'll next the a and what happens. get quarter The that balance know but I see. So assume wouldn't don't we'll quarter would is used, see big why we

Todd Thomas

All Thank That's Okay. helpful. right. you.

John Kite

Thank you.

Operator

Thank you.

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

Craig Schmidt

good morning. Yes,

level high terms the how re-tenanting? anchor wonder much you of do left I big of to Given have box occupancy, do in

John Kite

mean, Sure, through think I of leasing the Craig. original I bankruptcies. from we've the the majority moved

We between we're somewhere but guess, through to and probably those out six I all to working also are there get that some relative we that, aren't just handful have bankruptcies vacancy. still done a other need that ten,

-- of you're to the much of that's hyper So us leasing big two, normal starting result much come the so get nine we're of then where and the that in cadence this online. normal box into point a have million the NOI done, get years elevated been really three starting to plus why and it's -- seeing last that will leasing more

add So I in to more general, normalized, getting you don't there is -- we're anything. but want know, Tom,

Tom McGowan

that number Craig, working Hi actually clearly think the take on reduce further. to number deals of that various will down we that end and are the I year

to expect drive the continue Big to we end the it and of Surge year. So continue the Box through

Craig Schmidt

barns Okay. any year? that on the at pre-leasing do And end dress the then close just, to of are you the able will

John Kite

make We have on to Philadelphia were sure there. we -- and we out made to locations trip an immediate jumped opportunities that other out any

very think when being I tenants see we're space. vacant they opportunistic seeing

a that we're right three So now, two LOI. leases we are in negotiating position

on to five till fair have the it's So say we we to sorted eight out. the movement have very this of end the of and year good get

as by we is year-end. get us expectation it as the So far can

Operator

Thank you.

James. comes Raymond Our from next with question Collin Mings

Collin Mings

the mean, thinking it more to First just allocating question redevelopments from on forward. maybe about redevelopment like me, XR heard the about talk just think redevelopment kind the now? Christy's of but lot up Can future potentially active look right about you how and of I and you the now there efforts? to bit program, the just just is front, we've doesn't want use to question proceeds going about again, opportunities some that expand back the capital and go ramping a around little discussion last few I back the over years, maybe on how you're a right anything

John Kite

we know as we sense pretty I Collin, in returns, laser redevelopments in these cash, we you deals, remember, is obviously, we mentioned the that little you on and cash why view about, on focused returns think got strong. XX% boxes, on that capital is those of which filling around have which mini generating when been in talked we these expenditures Sure, themselves

and gone lot where emphasis our months. in took a a of focus So XX the of spend lot has that and last that's the

-- want begins where begin to we are spend our we out we will So look -- extremely to and pivot at we to else to capital. have been successful would as that play be we there,

suburbs in Indianapolis, are very of growth consistently some mixed and two we deals, best you gets supplemental, those in one our we future and Carmel, one -- you'll in redevelopment consider we at income so. at that in nature, the Indiana that highly the and appreciation, way look are deals that in have have, which of country the see redevelopments use just looking when more redevelopment if So of ranked

mixed-use. a Indianapolis one then have we is Glendale, which in And also at third a

So pipeline. are that the those in are the current most three

yet, we're -- still in numbers We haven't because still the it's evolving. put there

I think want these doesn't It attributes that current we're there get them -- process our we're deals. that's the going that's we on all our like thought three right particular in to look at, focused the to and what is that mixed-use but mean get returns and we done.

to and that, sales. continue going Beyond do too have to to we in I have lot asset mean, is we early say. it's that, do terms deploy for these a beyond things I capital exceed of always look we with to if to the how much goal will think

Collin Mings

it. Got

to the So think million the more on these getting willingness into clarity some capital is maybe about go thinking mark, the as dispositions should XXXX might mean, year-to-date to traction you're pursue as there given maybe extent beyond or forward? $XXX on going the roll these you getting of little some a looking redevelopments what at that bit more of -- as well success some maybe or we just we I

John Kite

to think the take back to things particularly, bit got through, mixed use these you've I generally take deals of a quite in timing development through of timing combination -- processes. go and of of it's time, a be will them of sort all looking of variance municipalities for rezoning as involved. three actually three some processes the partnering packages incentive them with -- it of relates the or Two

that takes time. So

we but we reminder, don't without appropriate shares. So succeed prudent extremely obviously times, know the we've mean, as balance -- that's in We're going into want getting leverage also being allocate that to sheet. have -- will X which mid-to-high our capital a hard. to have worked and part I be preferred allocator, we want we that, a of capital be that to our impacting

in we're and or sheets it still we That our us relates as balance So that. that to going to said, put in top space will to protect six grow. want five

find and we out will balance figure that. So that to do how

Collin Mings

on very point you want if earlier point, that leverage future you've -- highlighted, acquisitions acquisitions capital, in look pursue. keep -- the again, the then a And transaction there year. where were to some Maybe at around made a maybe keeping this to your in were tilt John, you of in point be you been mind might obviously, just last redevelopment of market with kind that you terms of active

is potentially acquisitions sheet potential seeing you'd Just many be pursuing? where balance be the -- are that you to it you very want where

John Kite

definitely we have other acquisitions. the of is equation, as going XXXXs monitoring side which of to we mentioned, the couple do part Yes, are of disposition And as plan. our overall are we a to

And been we've looking to that some on could found under-opportunistic things, hard or that think we've we way of like opportunities at are we feel as a process, under-managed part have, execute that also seeing that. we dynamic. are I lot very been looking we geography. in then that of And So have and change we some both

And it of and relates to and where markets isn't are those and as and we critical inventory, would to know, think about that's want frankly as characteristics XX as portfolio, that's to relates it our we've be we of end our to that markets and going to quality that business. excellent live improving you people that we happen to this growth, lot markets the deleveraging, spend what's going mentioned to XX part it's analyzing time of just all a about of eventually up and

and will find we think things, So we it's definitely of those all can I opportunities. think those

things we've our You and with and missed proven you that generated. see and deals set time one is assets that we we've time know, it returns that done have of skill we set look, skill have, others the our again and many

able we're that that the relates understand our the we're thing that with only doing very, road, rate, hitting know cap cap held you us and right understand going very going to these and this going implied when is now are be redeployment is everybody and eventually to else, and overall back selling assets, capital square us. that company smart people's to it to do deals good past as everything of these but we're to balance well we're on desire the our for be we're sheet, deals I to inside The rates, that help down

Collin Mings

John. all appreciate there the Okay. detail I

Tom. Just for one quick one

up have Just Is negotiations, how into table that's entered at right as just far negotiating trade curious as the tenants. leasing is the tensions much now? that lease with discussions I'm something coming

Tom McGowan

when the the we visits of to it's You our retailers, know we hot discuss. one topics make that

do buying as right not across their and So retailers that seeing think all seeing region. Vietnam movement now, is of really it entered and I it. you're into base diversify of you're

but all etc. specifically do of think not hedge in feel healthy on So the for this, will greater of them rates, talked long-term, a event to about the like be provide date, I situations we tariff this industry it lease much to have TI,

Operator

comes Thank Instruction] Barry question DA Davidson. next you. [Operator with Oxford Our from

Barry Oxford

guys. Thanks Great.

are as Just than kind as far less seeing they there? little in of a months bit. give you bit Are little retailers a to the more us color what or they building on were John, ago, of six space? your maybe concepts coming new

John Kite

high I at say the if Barry. would of Well, signed open-air terms again flexible our we of entertainment you world of open -- level, say typical I last right. type service, XX% and just I'd benefits grocery, the so in deals one restaurant, were space, about look it's that of space quarter, Sure, the users, fairly just and extremely the the of mean, is

specific changes think maybe pliable, are newer So much more we much retailers. to it to I adaptable as relates use more

a that have in so I this space you that When out away think years, is fading kind there. are reinvesting I of that business healthy once really retailers, last mean, are slowly I in -- thoughts are the shied natural are reinvesting their I physical process. to is about. ones see say it's ones their retailers the ones what that starting you're over new interested hear think several in most from and and expand that

cost now for that in historically much that radiuses seen probably be it example, of mall-based that some tenants successful we're I both just of types we've occupancy venues terms our guys that can definitely mean, can have, significantly could only because and they they different thought they that think previously of the in tenants less. think fact is about, the closer in I been than of do consumer, excited

else maybe can still So they us a with bit their get allows that be too give and somewhere that them and little sales profitable up means, more of spaces. creative to with

lot So without a years getting specific into there, because want be we ago, did we're retailers Barry. done more names, definitely we interest that we from a have not careful two year of today seeing to business with than ago,

feel I proposition of scratch we're cost surface, for that So that I is pretty the the flexibility want only are flexible, centers. is beginning probably locations to the good really primary just visible they the just about reason reasonable. to They're and our and but and emphasize

Tom McGowan

to And ingress/egress that generate location to one. ease we're secure trips, additional it ultimately just of able because shopper a allows of the and -- mall

it to would the be components try think to the a new keeping increased seems could customer. and do peripheral serve then strategy with mall types two work where A be to to together trips I the the strategy logical

John Kite

that, both and I say. I pretty of also entertainment mean, Outside are growing would service substantially,

Barry Oxford

feeling they're you lifestyle guys of center to older may you have finding you speak? it's going, centers, pressure be the very the aren't guys discriminate be competitive, but very that would newer about an be so still Are retailers because the to where some

John Kite

but just One year shopping adaptable at to we've seeing that I you think more younger things. people at got peer had based is much why if if than look and I of we've than price forget. throughout a yes, lower per remember I of which on ability centers, our the average age you couple for the most, much majority age us this think, portfolio the always this, Barry, group, thing, of you're a of probably just also capex I efficient mean, all our be had Yes, think more to portfolio,

to sure initially has there there incredibly for where do previous overcapacity, are see what which is years, growth. kind our no need mean, out and of there our and in over which environment the beyond now like see don't environment well. thought in up hey, we they that's a definitely. us We was would moderate people you inventory and XX, was is buildup XX for to you why an I build way retail spreads say, I robust But our space why moderating NOI been need that's

and you unprecedented kind through on end the coming going of a we be space went it's change And because of the period it back of, in it's know other better, we're now anchor and to better spend those and that that partners businesses want on pretty with damn avoided think money to their hooked a clear. going partners I just be up it's And that that, dying to was mistake.

complements to to entire physical it got real You pay distribution because estate, your attention your channel.

Operator

Thank you.

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

Chris Lucas

Hey, good morning guys.

what's the on I not -- you're paid cost a of paying with this down kind occurred? debt quarter, third quarter you the could. at sense extinguishment to as will the what you quarter for Just a for debt. down third Heath from just based proceeds that if Do of already quick follow-ups additional on have couple be what point

Heath Fear

$X of, will program again, more the process are the sort as obviously cost $XX due costs cost and two, is rates And $X paid our makes have that's which confident $XX million in because buyers. by $X actually hedged what's on improving better diligence smooth our fairly I fact that program, debt by about diligence we getting fairly happening that of gotten million million the pricing is total we we think been quarter, One, steady the during process. first rates And because the we of think thought Yes, dispo cheaper expensive, said for in that we're that. million, prepayment cheaper, it part million people's with probably to penalties. been debt the that's really to but call penalties. year-to-date, Basically, think we

our on the So we're think go it to I going $X by overall, to well, -- the bucks, $X costs -- the seeing million seasons on up selling. million are

Chris Lucas

same-store beat. do as on quarter, about NOI, sort relates we guys of a think then quarter sort cadence Okay. quarter, relative quarter it here? Great, looks of lease provided fourth to second the it was ramp you last to in third How guidance And thanks. like the from

Heath Fear

of expenses and part into third quarter. the timing really expenses the second of sort beat was bleeds quarter Yes, will that of those the for

fourth. So second then and moderating third the originally the accelerating the into we described into and

So fourth. now be will to the the into I think and to then severely we're see, it's going flattish accelerate third going into

a good lot changed has a of to expenses. a timing trajectory the news our of The bit is are again, that, of leases little third So CAM. fixed the with over has do

So the still during actually the pay collecting don't you same tenants. from the quarter, when you're expenses

mostly So expenses. it's of the again, timing just

Chris Lucas

Okay. two. year require mentioned at to a way and the of or that your to before year something it words, guess, is that, does given be under of next relates you get lot to of so need is dividend? that the execute drift how do, that the you could in that the done special other And then done more the you still or have In as end is, work. will still question on to something timing that something have need when flexibility to you the I I probably more potentially to would program XXXX need is

John Kite

may you're net-net at look don't so we're we asset. pay yes, be based that a The end So, portion in paying But is if capital we now, the that we've try which portfolio at what's around an you one asset There the on dividend. whole even where to it's $XX to significant trick of gain and special to match XXXX of losses XXXX the when current opportunity you to have make know one it. return done process and want don't you dividend gains, the day, that the selling, you covers total and million. this this

full on the So do other of another part, for but you side may again, you the because transaction, net the that year. worried a XXXX, about covered we're basis, most for

Chris Lucas

much move there I for a higher comfortable great. you've that what or XX% as which Okay, ceiling shop is just you, the you're Thanks. point that that chance the one this space, sort was And at of at can business? pretty high do for end. that John, pretty think the on feel described you that Is

John Kite

No, it the is the to I higher, that's -- our space, I do. we're thing our number want we it higher definitely to we one lease make mean, move going will it's move think job and job.

Our only better, getting portfolio Chris. is

have by in by sometimes subtraction So you that, subtraction things. or addition those

anticipate what So about blow to I if originally, you blew get are where we I and by right and now had and we when I we to by we've XX%, think, no, a do. but have this remember, definitely. that long we great for a time goal they'll goal talked that's we team mean,

So this I'm not a vacancy. big believer that is permanent idea in there

do we think got go can we I to and it. everything lease

the think can balance growth we only of thing is drive. kind would I rent I And against that what

fact spreads that the spreads, think of due you to spreads for is you in annual that things lease above the push particularly. shop pretty lease our our GAAP our when One I -- know at even we world, growth that lease small our we cash our notice hard look significantly are

So that's continue want want OK. growth, you balance balance, to to that. you know I push to the

they some approve to yes, have been So we're when to leasing those that -- close occupancy, to that get friction great be but that's have get against that. a to deal and team we a paying come phenomenal in going attention we

Operator

you. Thank

next RJ with comes question Baird. Milligan from Our

RJ Milligan

XXXX? to into Heath, morning back you follow-up guys. half want on good to the the do capex just in How Hey, trend and of expect TI/LC discussion. I capex 'XX

John Kite

of at sub, pretty when and but across descriptive. we're you it know progression the you if what consistent we're capex that's in you as -- looking is our descriptive the think universe, I our our I think don't very Well, and very look of

-- couple last continued to quarters of know have up, you from move new terms the capex. obviously the in So of lease

I pretty associated the leasing think that's that level doing. been of clearly box big with we've

And of pretty is per remember, our small deals universe quarter.

box per even footage box or looking the deals last at quarters, quarter, box or think deals. two Half example, for the had you're trail when so square three of few quarter in this kind universe, the you I and can, four we of was new deals. And out XX one though deals, over it three

was a So return. and good one expensive, them of particularly but --

can really So skew. that

in historical down said unusual. always likely would around to very upper deal done. leasing the a that's do we coming anchor commissions going involved, is landlord with and where that always -- on We've foot of we're the the and occupancy doing $XX you're and not begin see scope what we've as been, say, when but tenant that, I'd back deals are the end more turnkey these a work a involved, of work boxes, I little to get stabilized to So in bit, I could

to? hasn't overall, costs, in it's pretty want So pretty been construction Tom, there stable. -- I but it's some think you has say and I'd stable movement

Tom McGowan

Yes, state on costs almost the the It I so we had the to location There the turnkey store it's much would increased saw was tax you say and out talked build we higher that was have X.X%, about on one a costs situation. a that grocery up ultimately the adds higher deal. a somewhere one where to but turnkey, about. was

extremely we as run I general think being steady. rate, a are

TI box we'll low very deals. Sometimes, have

So move pace and it's going areas now. the but we're the that to comfortable with around, right in we're

RJ Milligan

resulting and I helpful. what would I AFFO ratio expectations dispositions selling in are up $XXX for capex, in with payout the of level? comfortable XXXX you press TI/LC for that's terms that you an release, and XXXX for give get guys the I'm guess, the be good pretty trying the your million as dividend Okay, end guess than for you more dilution current the I guidance you what to expected think based on and number how

John Kite

that to for raising will time last our the pretty years were is relative we and period of this right very we're of were our that be. low dividend that on payouts Yes, I mean, understand be and I top where the our were it estimates we elevated sure payouts we've And on we're but cash focused then. -- think during several we making clear of about historical I flow I what our the will payouts think talked reasonably historical

So have our By period I which me think -- to I sheet this in the in we're earlier, to get our very cross the comfortable very with a been of the fast deleveraging dividend has payout right obviously now, with successful and as plan, not time. we our plan purposes said, was heard to first top be you in year, step balance mean, say to that's And end be happened. of I notch, the may tier. the top of it's think

won't that dividend do invest those at do in of and clearly things. lot years It's that figure we're the there. through going we of paying next that the So to we've awesome invested balance able years phase of past, next last in that it out, capital the with the think can but program. we is be and We this we're to point, sheet is the tighter of couple was that, that going to than have growing to over the a box couple business

be about pretty feel begins So those we say it flow into grow investments pretty good deploy We'll in we returning XXXX, we we're pivot that there like XXXX, substantially good years we'll pretty positive do. continue always we But to be looking monitor and going XXXX, where actually of understanding as it. to into, cash I'd . have to to and already

Operator

Thank you.

with Fique Tammy Fargo from Wells comes Securities. question next Our

Tammy Fique

impact from year-to-date then minimal. leasing It growth the of good compare sounds you recently, long-term outside tailwinds dispositions upon just give companies same-store the post kind fairly top where should us from the the can on anchor growth on guess, is morning. range? how based the for profile XXXX with longer-term I an like that update Hi, and dispositions

John Kite

second repeat please? Can the you part

Tammy Fique

should NOI Sure. kind that are guys from with recently. based -- range tailwind upon basis? you for I'm just that of that Company the compare XXXX how longer-term on the growth just I you leasing have the was the outside saying expecting same-store anchor guys wondering a

John Kite

Yes. Got it.

as be a range stronger in you that the I XXXX, -- beginning grow I But look doing when where So business is you set when really particularly, the historically, quarter it of and as ago, we XXXX it. begin to our investments, mean, you a fourth big Tammy, about we've leasing out I of into to just to the that our grow tenants. NOI have what competing been that want the want better, relates than been of the see XXXX, the our would of second is think to we growth go to said impact Heath leasing push think that in terms we think at think about box against growth. that able you're at look being when how will continuing we've tailwind look, thinking plus NOI you assume continue I last be also so NOI in have pushing more to mentioned, up to in X% you we I we've and obviously had growth to the how our XXXX rent mean, I growth And how into to capital X% two want with when would that's that's that strength get years. we and throughout I would you our think that mean, in

to is So longer-term historically get a our basis be goal that to would in back been. where we've

growth, couple of healthy not and they pretty improve as for clear what remain that think to everybody ours you basis, we outset, way stay can the to look have are very, that, we're on years. dynamics unfortunately next very it? today. couple giving the have Heath, in NOI static exogenous the next But we'd you, Obviously, And a risk to you but as they the mean, like things yes, recessions I we the impact math of -- everybody from is same business want I whereas not that can long the as it. again, is years calculating on add

Heath Fear

think I Yes, Tammy.

what same-store be pool profile would into the impact we're your question what's their looking growth dispose disposition of, longer-term our rather of their we at assets The really thinking these to really is what of first look but on on would impact part same-store. When focusing 'XX, this like. weren't

it the but day, at we're the assets looking a the store these we pool the for at, 'XX, of modestly accretive same sell five-year end will So be to CAGR basis, on backward on looking is that X.X%.

our grow, some do was up we future. slower that addition how sort rid it us, about can how the of set growers we of get can so we ourselves by for again for subtraction, -- better So

Tammy Fique

or maybe that redevelopment is that it. taking that opportunities is I growth I guess Got then, of excluding like portfolio X% future And kind you. pure plus into the just Thank in that? organic guess, growth. consideration

John Kite

just we No at look where bumps, points bumps are contractual basis consideration, or points. basis in if it think I because are rent you XXX our XXX contractual takes Tammy, around rent into probably

for good initiative As as some Heath said, there well. been a us, has our growth there fixed CAM in is

get you X%. So those things to two don't -- but

arrows other quiver So you think other I have to have -- to in you your get got you've to things few X%. your few to -- in a to do

And very things include again, is are lease this define that -- that. straightforward is NOI growth like term the doesn't we as this and fees

out So get I not we and think there it's go I to done. it a layup, got mean,

a that happen So push team us I this and layup. out We there said an an fortunate has excited hard, XX% a is about organization full. going we're that it Nothing things is that and it. to get edge that and is making are to not relates around and have as know

it's but I layup but think doable. not -- a So

Tammy Fique

is you see will or that your XXXX we end should that pretty sort this toward considerably, rate? growth year going quickly, think -- how the redevelopment in of XXXX to you in of, guys XXXX growth do like, ramp to more this program So a in XXXX support

John Kite

with what get XXXX. we've out significant think in what already we've growth already going associated to XXXX We're of I is done Yes, more done.

pipeline So three in generating deals talking that I we use for those wouldn't mentioned our we're be redevelopment really the part in currently earlier, the past most XXXX. XXXX. much The that deals, have mixed

execute is and to very mean, to past to plans to talking like have our that important that XXXX I yes great. relates we're objectives and and it's as almost going sheet already looking it this strategies business XXXX soon that going is we're fortress and why we're we're our plan. on balance XXXX which into So

Tammy Fique

right. All you I occupancy? us can guess, And just Got it. year-end economic -- give then, for expectations your

Heath Fear

it We But just to to higher. occupancy. will guide typically say, year-end don't be

Tammy Fique

Right.

Heath Fear

leased occupied. comes said we represents is spread in between $X by online our NOI of point -- there the million about of that XXX that About end that said and comments basis We 'XX. of half

the to XXXX. half starting in comes shrink, will you see and So that spread other on

to -- XXX again, of basis seeing XXXX. XXX So spread between the we and start to it should head a back points points basis normalized as half should more occupied you lease

John Kite

position that. than it. to Yes, you the I a continually clearly companies Tammy to these at that occupied think but great very, add as some think very between our spreads spreads majority such a when that look spreads, these an big really like type thing specific deeper think talking at have What I I'd to what least, it's interesting you thing, these because -- vacancy run of but little dig of box about, you're leases, I not all, they

to And XXX basis that's XXX basis points, so, XXX and points, it basis points. want it's as be he really said We what that XXX -- as we to a points, basis want be historically don't that been. normalizes,

wanted of And and we what's -- happened in be. pushing there, big of see world we're so you the know things that any that's now to but couple is from box to the and through years for last half other out pretty unknown it's in easy where directionally that,

Operator

Thank you.

question from Our Alexander Sandler Goldfarb comes with O'Neill. next

Alexander Goldfarb

is morning. nice it Hey, a

questions. two So

forma is is. that as we of it to on guys free maintain to the million that's you down past $XX quick now the free flow. cash But the sort return basis, John, were at you would zero go fair been for back looks of First if you million like that it and bring cash amount to tax of the you if flow, generating were your math, sort cut to capital, of few look and amount years composition just mantra if would look to the it at looking and of a $XX million $XX pro dividend, dividend

about means done flow part provides, which wouldn't think portfolio the redevelopment to pruning resize value you that free dividend as you've of free So flow for the that you the exercise historically? consider inexpensive as the cash the cash why that this business and redevelopment in

John Kite

appreciate question. Sure, I the

you're is begin the cash is then even. it to the close I that cash mentioned, probably again relates to think 'XX in it grow And XXXX, break -- being must think to I as cash and as that flow to we flow I flow, you XXXX the 'XX. referring

So of be would to. don't will as not two I it project years out we that to of next couple flow I over I begin the the ago cash next albeit the was out mean, project years you're couple referring where flat. over years grow,

reasons we capital of are everything, today. the -- have question. simple would are overall it and to constituencies investors in to own we lot got at think I we I where said that was different of it constituency as investors We've was the as a allocation, Those that's a look, those make relates look that if as different and why So shares. comfortable scheme there one

think we're begins program, I business just other when now we and not we're to the significantly through -- the we pivoted in to through direction pivot going have So to grow as -- yet. the as we get this which

comfortable of today. are always and everyone our well Board what it and over aware So we we conversation Board is this, constantly don't that, we level analyze is Alex, something we're where all to that, that's constantly we the can I I about is comfortable aware and of talk are that's beyond it, but plan, a couple that at that the like looks say well we beyond today, where project look next really of today, years

Alexander Goldfarb

and to Okay. Xs Pier earlier tenants this Out the and the there all your number store on. Mart's, Bath, of Bed And then then year, a bankruptcies, the mentioned, fund second closings, of going goes were is, Stein stuff. tenant question and ICSC that list

like materializing. it look far is really doesn't much So

names have a on of So the that within like is your years and office the ICSC that have will next, within linger sears the or and go names about what expect actually months? through for like number or other press and XX think view names X materialize that it, these us in the you been at talked the that names over restructurings call -- these you to to several will you Are decade. next just are these things the like past before

John Kite

Alex. to lot tough say in of short can A periods it's time. happen Well,

is the a time, quite assumption today, under one not some we where the a is, of tenants as don't the here people and those businesses. -- we don't As of really lot of run for again about that forget static we landlord, on these it's and hang sit things economy weaker can

tenants to mentioned in in that to tenant we is certain those we doing to that we're as in long actively and to in to subject work like are involved spaces their they're tenants in you not discussions continue and we're what So There their lease, invest would the space. trying regard, because businesses. in in the spaces as and recapture, we they prefer want -- that default in would have be

to but I it's place don't prepared that you look in said, the this there today but will actively be and There that be we're hallway exposure happen up -- We're the is worked again, toward it to over. but we're respect, accomplished. it's restructurings. it. of demure we've more names. we I more There next things and beginning says you to reduce year certainly get That -- down, mission year we it are work the I'm some and I in hanging certainly more said, of anybody, know do. it's tenants that need for -- in end to banner fire We the significantly some slowed get will not as to definitely into think to better not a a sure got and think arrows have,

Operator

[Operator Barclays. you. with question comes Instruction] next Our Thank from Tsai Linda

Linda Tsai

where If cash down was so, basis to quarter spreads X% releasing the assume recovered I will a leasing up weakness prior it that normalize of sale. last is the of fair the was for the On ready to it quarter Hi. quarters? due the in assets spreads assume, some to X%. upcoming from releasing

John Kite

it more on selling. Yes, as you I think that out some do Linda, assets normalized, we feels know, -- we there it have more is intend but

of way some leased may since be of those we to we XX% thing know smaller But the again, caution as sale. the that, the two one more get say would did based can we're you the us. I on just you there or it. that then on majority is law really space a where part NOI we through assume of these numbers, of of is the everybody skew behind But something our can size, So

we And point feels back renewed we something it, track this I -- renewal out think were certainly this that that a kind the of sign interestingly as on -- had but seven options quarter, like the good I and we more had it spreads as but there were and would more relates skewing if that unusual, that's have really think anchors X% of actually. the generally we So in for the that that's even was even to little anchor health non-option, that a spreads. of it though quarter market deals we're didn't the there normalcy so,

Linda Tsai

the you've then those And the that done, the anchor taken you who release of over of are examples leasing you whole the whether give new some can and terms spaces in heavy just have Thanks. space -- in us or boxes? split the tenants

Tom McGowan

Burlington, some size recently but Old have Navy, terms just that here few. very been to done name Total in to 'XX HomeGoods, Wine, back do sheer just We've there mean, of situations split are the that great had we've ties we've just are the box, with having and boxes. of avoiding I actually to over well some There of the names a Sprouts, category-wise worked the Ross, RAI, and 'XX, tenants that

very their So markets are it's listed importantly. fuel aggressively to of that of and it's at are growing a tenants group tenants new groups I more and a diverse growth. Everyone group healthy looking

So as good in of drivers the coming terms position well tenancy we're of like we a feel as quality in up. demand

Linda Tsai

dispositions done the last in those was the than Thanks. Were center portfolio? GLA the larger year-to-date, average one. look And you've they size your you at When of what then assets? average

John Kite

of know, our in of of front I the have think couple they is There average don't were centers pretty -- size I but think bigger size. normal me, a don't our overall, I ones, average right down. Linda. down, I that were going going

above. you think can they I So slightly were assume

our average square XXX,XXX feet. think around is I

head they were off I that's top sold. of more a So on like what my think based the XXX,XXX, we

to can more a can I particular of hurt is much significant So word, another that that's a three another be a size manageable, we pliable. way. like really -- feel not important of that the have be you we -- of much used was times plan guess, can, like It's element I've more these know one And to us today. just it's that it's asset -- in you know to as

talked in. our that we asset that on a that is supposedly center in company. box being a box we've power a center want not portfolio large into Now said, average this, be square But of power good still much a we -- XXX,XXX but we one XXX,XXX couple be range actually. community really going word always company, if feet, to to get of get a that of we into our well, square We the misnomers is that size that's we get that's that big love, own company about feet, center, the more that's boxed

on where that's be. want plan So right we to

Operator

further showing to over to for at I'm time. questions like I'd Speakers, management queue any back closing the this the in turn no call remarks.

Bryan McCarthy

All for I then. Thank thank of Company the Have to great look we the seeing and you some joining right. the Again, call day. wanted next to and us. everybody before in interest a you you for in forward updating

Operator

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

disconnect a day. wonderful all may You and have

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