Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Kite Realty Group Trust First Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to McCarthy. conference like speaker to now Bryan today, would hand over the your I ahead. go Please

Bryan McCarthy

Thank you, afternoon, quarter and good earnings Group's Kite call. first Realty everyone. Welcome to

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

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

Executive Officer, Kite; Chief John. now with Capital McGowan; Vice Accounting call Officer, Markets and Vice and call Executive Senior will John Tom Relations, today Buell; the Operating Henshaw. Chief and President, the Senior and Officer, Heath to Realty Fear; me Dave over I Officer, turn Chief and Tyler Chief Group, President Financial President Kite President On and from our Investor Chairman Vice

John Kite

delivering and in Bryan, We key and best-in-class morning, with Thanks, our operate to XXXX value our strengths strategy portfolio risk-adjusted a all sector sustainable high of maintain intend balance for the attractive space returns, our lease at stakeholders. platform. plan rock-solid on plan focuses straightforward quality everyone. is a margins ultimate This for at good anchored KRG's leading goal sheet.

$X.XX, estimates $X.XX period first representing our streak of increase year. generated the I'm and share FFO We quarter an exceed and beating by last over report plan, outperformance pleased results consensus to comparable share, XX% that of our per KRG's continues. XXXX per

quarter more around NOI to property X.X% period provide components in Our growth compared the XXXX. the details of same metric. will Heath each as for the same was

producing comparable new square cash and representing XXX XX% XXX,XXX feet, signed KRG leases. renewal leases, blended over spreads on

leases renewals, was our on blended XX%. of cash comparable spreads impact the option Excluding

of years. More importantly, was which on norms. retention X.X only ratio into return comparable KRG is XX%, nearly payback in historical quarter an well-above new capital earned for The a XX% leases, period which translates average the

Based produce surprise are retain demand Bath come we pricing, experiencing should drive and for ability on strong it & tenants, no that our existing strong as boxes. our Beyond to Bed returns

current will Our assumes not that all any that of Bath rent and guidance beyond we date. we paid Bed have we recapture be will what collected locations, to already our

exercise as been business And competitors. disruption re-letting these it and be tenant, or before. value temporary that for spaces and Bath Bed long-term air makes what retail adapt any traffic-generating our be we'll Darwinian, It's to creation slow struggling associated the relates Open will gladly vibrant trade tenants. so are with more by any and to tenants dynamic to interesting. always agile will nudged-decide We've this through

variety on good healthy The in prime is centers, strong and grocery, sporting goods categories, have and Bath discount, locations and our returns news spreads into attractively translate re-leasing a we Bed including which furnishing. in located our spots of expect that will boxes we capital. interest sized from significant are Currently, home within specialty

We've for serve We as of two feet X.X representing XX% use we're address great over existing risk-adjusted executed at and returns million the poised have maintained past anchors, capital, cash-leasing backfill to and the capital. half years offers persistently square and XX leasing space on comparable our best potential swiftly boxes. XX% that a spreads these example. The

permanency that, in say the is underlying only us often our land. business the You've heard

on the invest to Retailers answer to primary only center available in to same by type implemented are always, also not on retailers. are less convenience, healthy We're of and see tenants, we is invest by the in, the estate. along of that a open-air Everything increasing real it the we top by data but the on change. can more our underlying distribution format great This asked starting philosophy of likely of and which point our chain When are most body supported stores that estate. our the brick-and-mortar is requires supply real trend profit the speed growing quality margins. post-COVID realization focused

As across of types. the a on result, product quality the we of underlying estate focus real variety a

offering is wide portfolio the balanced to our thereby Our options retail categories, of a among open-air well array retailers.

increase these mentioned assumption by moving XX its reconfigure, new for to the per trends, the our X.XX%. KRG. $X.XX retail reconfigure FFO X.X% is supply NAREIT to to share, of of We're just These also the open-air different growth enough I've $X.XX same-property pliable culmination by The great points, midpoint increasing lack space, KRG dictates from the an of all is with $X.XX. the product have to allowing created favorable extremely the NOI midpoint in meaningful estate midpoint real to if real from our use. moving Furthermore, guidance things -- together a basis dynamic the supply-demand

I'll now turn additional to Heath the call over provide to details.

Heath Fear

us to you quarter XXXX thank report outperformance. of for KRG has pleased another and joining today. with afternoon, I'm off that Good kicked

first This driven first by same-property XX% NOI, higher the quarter. generated share, quarter, KRG was $X.XX increase the which of in For per X.X% higher primarily year-over-year than FFO comparable grew XXXX. the NAREIT period by which in was

a rent, a recoveries, point net basis basis of overage with was a and NOI basis XXX rent. increase same-property XXX growth our a primary in increase in occupancy in XX Increased increase point point driver minimum

a at to As lower-than-anticipated point earlier, the debt bad in XX growth John the overage same-property we to basis $X.XX and share, midpoint. assumption rent due higher-than-anticipated increase FFO raising and attributable our is alluded increase retention. guidance to NOI $X.XX are to the to representing per tenant NAREIT $X.XX $X.XX

theaters below final Los to intangibles. a market we into The in for certain of attributable MSA. is $X.XX of legal items Another is the a non-cash lease to location related a lease entered reversal the higher with Angeles $X.XX the result short-term

XX the range relies year an revised following Bed to assumptions transaction basis Our of X.XX%; & reserve same-property specific additional City growth NOI activity, points of at of point XXX Beyond. neutral debt year additional bad Bath full and revenues; guidance full the midpoint; on Party and basis

It the will near-term, appears not losing from will be in City we and that Party locations. bankruptcy any emerge

is liquidation that assumption that will additional mode Bed and forward. Our not in Bath going we is collect any rent

rent note as to XX important basis quarter the that the Bath five of vast on locations. in only total continued disruption, the It's of basis was majority first potential of experienced points its Bed paying points

caution reason this we against For annualizing others, first results. and quarter our

from budgeted Specifically, not that the items XXXX. themselves repeat are to quarter during benefited first

assuming of Bath Bed we debt lower for rent are NOI, in elevated from the a As overage year, no it additional relates to balance the same-property and bad rate the rent. run

very NOI, non-cash we quarter periods, that from Consistent and based lower with the the NOI to previously moderates last benefited debt contribution. interest course and of the of retired growth strong comparable same-property quarter on expense mortgage first Outside first related quarter same-property the over XXXX referenced anticipated year. the

a demonstrated and end As can we and of now between it's XXXX. year, the happen lot last early

control. We the are with we extremely respect things that confident remain we with that dictates respect to to we cannot Prudence can things the conservative control.

KRG credit million On mortgage and our the closed NOI unencumbered. of using of joint X.XX%. quarter, we mortgages Subsequent of fixed we front, a the secured balance Residential line is One our revolving share, $XXX of a project of venture retired $XX Over at now the Loudoun to cash million end by XX% sheet interest rate on hand. at first our

$X.X underwriting. XX% initial and owner One proceeds balance has The is continue our mortgage used revolving units billion Loudoun, credit, a the a multifamily currently XX% KRG of million. XXX to of to were which of outperform down $XX.X leased line the our at which pay are currently of

navigated well-staggered rate of net of the banking cycles, with We operational to attributes relationships, a focused deep debt-to-EBITDA organization confidence times; allow and multiple a $X and excellence. entire across intently balance never of maturity debt; huge a a this asset X.X debt pool, These coverage formidable but are of ratio a on capital management unencumbered sheet that remain over a calm battle-tested team billion floating caliber: sources. times; us inspire liquidity; X.X minimal schedule, of challenging service variety has

Thank questions. open line concludes you today. call the our prepared for for this joining Operator, the remarks. Please

Operator

Instructions] time, will Mailman Thank Citi. first you. from we At session. question Our Craig from conduct comes [Operator question-and-answer the this

line now is open. Your

Craig Mailman

assuming just the leases that guys curious in the are want you so all of in XQ, Heath, first zero reject end for Hey, paid balance assuming or to guys. from clarify, April? said I they you nothing balance kind of have but in current anything of quarter the Just you're during Bed why year? the first was of Did rent they motion, Bath year. the

Heath Fear

Yes, Craig.

April just see rejected rent. mean rent. just to-date. from on, they So get four we're that locations million of a this we've a pay that had not did for any of total handful a reality, they conservatism, as of to did in going And we're $XXX have locations dip. been a But point I assuming matter

form likely not some forward. dollar we're a So another again, assume going point to we're of just petition. purposes the see rent guidance, of our of for post in see But from that terms we to this

Craig Mailman

the of And the guys where Okay. are you back? have guys of give How where many some you are you backfill process? sense gotten just you in in of kind could then And process?

John Kite

else. Tom these can is mean, it no we bit, lease to I I'll mean, than spaces. and everyone desire chance about have line to retailers There's a by strong have I Sure. difference talk a little chip bottom into. a

make right now really good retailers. So which around to our is objective decisions

was on of in. the how uniquenesses of honest was the So business. fast Bath we're the you, be on tenant less the to -- tenants time, premier and at of we quality in focused we're that tenants the is, one a this focused happens But it one that more Bed with one put

to there is great the a at are this XX of we of great this space. XX in have, them right? for a So XXX% shot -- opportunity So the locations have tenant anchors, leased a

and one of another Baby. other Bed them two think Buy and a both have the ground Buy Bath I is actually lease,

my the in and discussions. it? great macro is add want -- matter Tom, time, were taking of is fact with to we're that actively retailers. So you decisions focused I to great all spaces our But every our of mean, the in capital But making getting

Tom McGowan

Yes.

been utilizing keys of our for lack the company that the and an all that for that we're benefit. of to of we And supply, be one is this. have fact there's keys environment we'd the of our a is in ready one of think I

our development have teams. we So

understanding we It's in rooftop about for Our great construction possible. getting ultimately the -- drawings, the construction as quickly returns. through a estimating opportunity. is it's strong But and and et as teams long said, cetera, tenancy pushing spreads so term as right through John units, going panels, move the process can and

Craig Mailman

have don't have kind think assume visibility. guys the just you given the non-rent of paying do backfill, But what if all XXX% is going you on on So timing demand? you -- commencement visibility forward, a from I know they're just you the

John Kite

think it's these Sure. remember and -- I actually is, not kind that that by get mean, anchor leases these when to way, also what different mean back I may speaking, deals, of generally the of I we're actually got get it from possession you Craig. some usually bought.

our outside And There then a lease rent quickly. of course, control. are the if bought, was commences certain very of things

think guidance. what making just assumptions is we're we're within I very So doing conservative our

So there. let's start

on don't the months. And on way not been to space XX XX value-creation as always take speaking, back, Tom we assuming leasing. well, We secondly, way. it's it's the We're generally clock. the said that anchor the we're think very in clock. That's But

going that's really how matter. have et say you're why get LOIs, to me we That cetera. exact many not negotiations, deals doesn't to So lease

opportunity particular is And have in to bring to have we multiple really parties going matters multiple on a a are property. be will to we tenants this to once-in-a-long-time the make -- spaces. What is interest difference that able

the is, rent. But line it time starts depends It's building lines. someone's So changed. paying lease the just bought that we're again, bottom on normal his out probably whether or a space just hasn't and

Craig Mailman

you. Thank Great.

John Kite

you. Thank

Operator

the next question. you. prepare One as moment, I Thank

Our from KeyBanc. of Todd Thomas comes next question

Your line open. is now

Todd Thomas

that on line afternoon. thanks. questioning. just I Good of guess up Hi, following

between you with of now. you just a between rent the years Stein rents anticipate you the also, and be single-tenant on did can will quality sort about balance growth that John, couple as Bath talk you the abating over that you it Bed opportunity. last there – of characterized XX splits that You Does of Mart as the and And backfills? talk versus sort well once-in-a-lifetime very box the credit mean backfills vacancy and within maybe move the forward? Can And about locations have? you spreads backfills outcome some

John Kite

I mean, couple I don't what Todd. been we've over experiencing think it's years. Yes, last too than different of the

our anchor XX% look if rent years, in I did remarks, XX% XX spreads said return you prepared we the at and mean, X.X on we last As deals, capital.

to you one-dimensional make think want that, understand I sure we a it's not exercise.

You've both. get got to

I that we're spread, also we mean, is healthy want probably putting capital these that a more are a the credit deals on we're and getting making significant but return focused we quality. much sure the into

But things that So together. strong likely publicly put get it's more capital. get to it's we want all XX% already rent to these we're to XX% we've -- to on those spreads. But importantly, continue double-digit returns said

it going happen and what's in say to before. reason wouldn't. to think to this you've heard a I no on this terms for mean, This going retail. happen, is -- I good was me open-air think of we So in there's is -- time that very it If

Tom McGowan

just other throughout strong, is bit sure that the things. Todd, One just instead making about We've of diversification couple very tenant a universe inbound And our reach calls. diversification. then, quite taking talking in a is been the first

that's priority. So a

Then is, split did we only you mean, the XX the one in box potential one I last splits. about years of also at of two-and-a-half way look those. probability and to it deals asked

a Now, think where deals, terms very list the ratio. a of again splits. possibility looking really to see we going avoiding and ratio that's we these I process in at There's all in a pretty -- positive are splits, our of at have but prospect once we're looking remarkable that

John Kite

in for we'll put might we it. bring add someone to them. of and center. other because thing think be mean, a thing we want there center, the for let's And in, do with the split opportunity another to that Todd, do that, smaller to that is to grocer say, just the pursue right to conjunction that's specialty do may -- the Only we benefit thing I

supply/demand the that be determinations, few a probably we -- we'd these characteristics but because really leverage there of users, where will I side kind it. in will the our believe deals to on certainly, outlined. be of prefer we But that may individual it the is split making of terms of most say think with

Todd Thomas

in in likely not to in the is big of Bed then terms some you And beginning flow? owners centers, do vacancy is here maybe or your not have Okay. capital deal from investments, appetite with to how might opportunities surface space? Bath Maybe find private much reinvest their other result new see And that that to to investment opportunities?

John Kite

in investment Well, disruption pretty Obviously, volatile market I think is the right now. capital markets. the there's

would opportunities. right So or in would of second more fourth of maybe towards kind this lot that. still you're probably not of a the that I that there half I the more be perhaps see say now, going year, believe quarter to even

But again, we're be very going to selective.

make real when investments, That and is we in investments the We fact permanent. have make mention best portfolio, we own I land. continue very, a that very made the of to strong we to estate. want the

estate making And think pretty real at we're decisions. good we

opportunities But a in slow right the it's arise. little some disruption front, will with that on just Todd, probably, obviously market. the now, So,

Todd Thomas

the that Okay. $X.XX The fully theater continue both the And, to that throughout Heath, $X.XX that's of on in quarter is the guidance. negotiation, revision, the year? first balance were included that recognized related in to so the partially -- real those quick in the going the quarter, non-cash in and realized rent. of rate run Were was something or first the of $X.XX

Heath Fear

But Todd. event realized first non-cash the quarter, the was Yes. in

the that's the year. Regal happen. non-cash course those other closures of to rent, over Bath may we'll related the something that You then And of realize Bed see some the some as

they're -- just short-term that's on paying a deal. So

Todd Thomas

is short-term end that or there deal, the to And prior end the expected term? of Okay. XXXX, to at/or deal is additional

Tom McGowan

well an actually of land. on set situation XXXX. to up but It have we then the maximizing January optionality, as potentially as their terminate the that will to give back standard both And in value would they of it deal, to go option us

Todd Thomas

right. Thank All you. Okay.

Tom McGowan

Thanks.

Operator

moment One please.

Van question Point. comes Floris Dijkum next from Our from Compass

now Your open. line is

Floris Van Dijkum

Hey my Great. taking question. guys. for Thanks

Tom McGowan

morning. Good

Floris Van Dijkum

up. -- your small could it little on at peak? you Hey. Obviously, I XX.X%, you're double should a your would talk was to your couple And ticked touch elements regarding think occupancy. shop think. as today your more And actually one getting I your if What something into and delve in your fixed a portfolio. on of wanted It's maybe things is on what I higher. small happen can over because the next more there of anchor? rent than bit your you upside well your rents be of you going how anchor do years, bumps -- of what your to rents, shop think touch that -- rents, you that as are if do the typically see Maybe where the small small have shop is much those rent shop but particularly, anchor couple in

John Kite

clear, just XX%. a the was Hey, on the just little is -- it Floris, percentage but lease small to over shops, be

I XX.X%. think it's

I -- So got those just you you think just backwards.

Floris Van Dijkum

XX.X%?

John Kite

yeah. Yeah,

deals have -- majority you were going -- deals. shop But to actually, at just look So XXX I'm the but right? deals, And if comparable at dive them we we of had, did look deals. small just those you XXX into were our shop of if quarter Tom it. that

a little is business I'll shop more. have Tom into extremely the So but active, dig it

Tom McGowan

So to XX.X%. was mark the to get point, high your shops level for

So right we're now, XX.X%. at

basis spread XXX a about there. there's So point

there's our pursue of to we question. of that XXXX. particularly that basis of number. scenario, the there's we will And that of growth know And we of kind and more was that can line ahead XX really We have, all points. on to continue we But expect bottom us. but path back through So time. seasonal a back fall a amount is growth did that It no take get tremendous

mentioned, point are mentioned, there's of basis buoy John is you well should XXX question points. we that, through growth spread work that no the that Floris, other one better. differential spreads as that So And as

John Kite

The the other much box side. important lot. this is But than on obviously, on rent part be it a quicker there, Floris, shop the and the I've commencement side, said would

is to buffer Bath that So help loss, the we we continue project the NOI can then pattern assuming way extent the our situation some Bed of that of it. leasing, the

Heath Fear

a more that that the was XXXX. of XX.X%, to didn't And achieved ceiling. that thing, end at we as one something It's important Floris, note, we view

That was growing history, yes, XX.X%. beyond. XXXX the was So at planning we in and that highest that were on the but company's in

Floris Van Dijkum

And fixed assume basis points? on are closer correct to of basis average on is somewhere to XXX it like shop that XXX space bumps neighborhood your your space rent in probably your anchor points the versus

John Kite

correct we generally our in think, the in range, now, extremely actually, business higher to it's XXX. important maybe particular And because assume it's that in Floris. of annual part that Well, I it take time probably very we that this in cycle than focused on we're most, more are to that but focused bumps right this point than generate on opportunity

relates on more the to especially the side. think So, this this quite doing shop primary to one and it's the I when understand And well. we year that and is deal year, focused it point of in supply-demand we're that major environment they're a characteristics, that discussion. pay each the legs we're I to going retailers think on a X.X% And small of than do now, we're that have

Floris Van Dijkum

CAM new probably fair is around somewhere be So range? to done are X%, leases would that points in and that, it basis say Fixed XXX

John Kite

we got on now. your that, make give you -- Floris, You've your exact right to own but assumptions can't

Floris Van Dijkum

it. Got

Okay.

got theater. negotiations the Regal -- more apartments or and more local in And of Where authorities speculated else written, getting rents do they're my I that valuable the have government. but is think lease. besides do your had to other favorably imagine by the looked you that rezoned apartments with In we've people -- in Let particular, other me I know at to terms paying be something that stand -- and industrial? more the either as for would I -- land with the question obviously,

pricing the If in update sort you for of what area. maybe can apartment give us is land and some that

Tom McGowan

much timing our that Ontario. standpoint, has this they from like the out perspective, been two to would redeveloped. three there to a see with Floris, plan already team meeting very from positives is And a times property comp

for is working this So great a land, a the I that group as this opportunity community for a think whole. we're with piece only not understands of but

to land well open approach, best eyes the be keeping assess at but appears So the ourselves. as take it and looks we're for suitors our will various property apartment likely the as

planning frame. things was we And the us really in XXXX out to we're a right this time opportunity deal accomplished nicely. why gives for and site with to perfect Kite. get that that's scenario now, are staff within So moving phase these That the

Floris Van Dijkum

Great. Thanks, guys.

John Kite

Thanks, Floris.

Operator

Thank for you. next One our moment question.

comes of question from next Sandler. Our Alex Goldfarb Piper

now is open. line Your

Alex Goldfarb

there sorry, out good morning, Good morning. Okay. –

Just great earnings.

John Kite

Good morning.

Alex Goldfarb

Thanks John.

here. questions few a So

apartments First, property season. of a insurance, topic favorite this

in You seeing tenants, stomach guys exposure. insurance increases? hearing increase those meaningful all Have sub-belt seen amount of what property premiums mom-and-pops, for tenants of to especially the we're the of guys are you pass-through smaller -- the have about? you that thinking really your And can

Heath Fear

it's Alex, Heath. Hi

all, it's your mean, of recoverable very item. to increased. have a is yes, But news point, First premiums I good

Our is XX/X. renewal date

went So, we through last already year. that

hurricane we Good did do news have significant But season in insurance. year, property in insurance is you especially Florida, program. as we increases that a see can last the some based imagine, captive on

to able the our were with increase kind risk and minimize to really that to of creative tenants. we diversify try to the So, get

do to meet We But can. we the We meet we them that a our with best a travel. time it's that lot ensuring with. with like it's Kite. investors we sure, give some deal real And spend issue, of conviction providers. and them around We something with we insurance

them one we was of this Category properties hurricane out. -- a right there hurricane a was, X to our took Naples, that in made of One year lot thing that a difference wiped listen, and

soften December. So, year, the But increases renewal were there some very, next coming it's for this site-specific exercise. some very our market a in see and we yes, to hope

John Kite

I real our very open-air Hey of Yes, insurance. this very, the to our total operate strengths one the actually is Alex, that of look let and quick affordable right? that is you simplicity the think buildings, CAM add cost of at when platform, in taxes just me because

So, around the I they look-through mentioned, at use. a to as look estate we it's even better retailers, particular kind real -- think less the look else. and is see they that real be another cost that's operate really right to just well our to it our and enduring become in And when now. estate going creating a what This is actually somewhere advantage it's might thing of below as agnostic they're

Alex Goldfarb

So, is what you I haven't seen hey, tenants said, stomach you're guys John, who can't of saying, that. smaller any impact

John Kite

Not at No. at Not Alex. No. all, all.

Alex Goldfarb

Okay.

in Next healthy the versus a is these how sounds on XX%, XX% rent question the it sounds some we time many Baths bought for there's Bed It REITs back. know get collectively of like type Bath, Bed are like won't marks. auction

years want don't -- in into remaining centers, on that just what's ones certain really than rather only try if these rather that that and They'd get Bath the they tenants they assuming lease general, space term But average the for hope I'm Bed care two renew the to And left. can by. on the in boxes? pass there's

I how term if sort leases of be that of, buy So, auction game one, you the of would so go. want -- I'll on Two, average theory much -- to some the popular best collectively, day types even your auction? that is left the that at just -- let maybe

John Kite

me you have now, probably. I primary there's they're primary of -- more the But than if years six But whether front term. the bottom-line now, lease, options, more buying they or in five had to right? that Alex. to -- have term, if have don't guess I right buys So, someone the importantly, is, right Yes, the Sorry.

we So is that the made year that will but were earnings. of lot possibility, the terms viewed the goes the into in term, So, conservative lease. of would buying just think also be Is that. that and also the the a certainly, wanted a way And in not? that, ability in at remember, it rent that's underwriting control this primary be we protect being felt market, we of balance have options, below-market right? or of But a rent looking tenants that. as we were to the a we length that If like rent? there's why I mention we process to Is

So there's do way guidance did which a think was I right it. lot is out, why the to play the way we to

off it see happens. take let's and the what table, Just

Tom McGowan

I talking And They, you'll about, think us that's hybrid occurred directly, course, enter all out a and a hey, of we go also a lease. situation will retailer into these, we're which purchase see say, then, improvement Alex, look, new has what rather we'd and could a dollars. contact where tenant would of and pursue

to So lot seeing a different begins of scenarios be we'll as this unfold.

John Kite

a reason game can can said, deal Which not do. fast is that good a we It's this about is another how how you get there. a you about game

Tom McGowan

Yes.

Alex Goldfarb

you. Thank Okay.

John Kite

Thanks, Alex.

Operator

the prepare I moment, question. you. Thank next One as

is JPMorgan. Michael of Mueller question from next Our

now line Your is open.

Michael Mueller

we know total XQ, recoveries moving a about us ballpark out in assume Yes. I in heading should -- is that some boxes. that the Bath was of revenue, including what Hi. first? XQ, parts But of talked of what Heath, in can you with XQ Bed tell couple the you was

is, are question what some some of some second the the of looking you then future redevelopment at And projects? opportunities, start the look triggers of to for that those to activate

Heath Fear

the second which turn are looking going over we're to think of is it to actuals part in I'll redevelopment, what terms the first, I for of of that Tom. question some answer we're the

Tom McGowan

be going And decades been this and doing different a quite looking from a to factors. few we're a decades. redevelopment we've So at long time, standpoint,

this. of forward. the sky go be of part as And to and course, that back with the the to we're this we fact really, do get we the is configurations and that So going best things the make one of limit as But in end the it of sure optionality. we key we that up takes study time, once terms again, right that will,

Heath Fear

first And quarter, around Bed collected last of $X over about what FFO, which disruption little then part is so why is quarters for was is answer on the of the first Mike, three $X.XX the from the Bath million, the $X.XX. a we in the question, it

John Kite

an actually largest And a million. with one they're what last for John. raised stop it our about is of opportunity eighth a you what talking was even it's that It last quarter. that Mike, for over X.X% assuming $X did year, saying to couple that, Bath out just We're if what we're And cents think so hit, got for year. Bed a me paid about, minute, quarters. say tenant, gives little right? over three it revenue, guidance So we you're and was we of we

it think of open, shows in and ability way sign, not online business et kind leases that with things I of along the of now coming right other cetera. the resiliency of up make So kind to terms are the the

So the a strength opportunity to of business. it's the good highlight

Michael Mueller

it. the color. for Got you. Thank Thanks

John Kite

you. Thank

Operator

next Thank the moment, you. as One I prepare question.

comes question next Powell Our from Anthony Barclays. of

is open. line now Your

Anthony Powell

and next but tightness Question to regional small year, expand of access and afternoon. on maybe given from And shop good either this kind regional later all or given on to small anticipated lending regional Everyone's ability banks. shops standards of the the tenants you today about not year worried credit recently Hi, failures. the now, banks concerned about the are or banks?

John Kite

there lot our large hard obviously, think, expansion slowdown deals date, national in I this now, creditworthy franchises. of companies. and indication any no to has with goes to deals of it's shop Anthony. right Remember, small But formation mean know been where are I business a of

So piece of is the pretty it small. actual mom-and-pop

it's maybe the of shops. XX% around I think

it. aren't just we seeing So

out. good. try look, I so But seeing banks, think to have we conclusions we'll it we much said on so how far, shops, and I that to As volume there. long-term there's we're right earlier, And the is see in to probably as mean, so fools now going opportunity now. draw relates that regional right plays tremendous

actually pretty we So about feel it. good

Anthony Powell

more. One Thanks.

Sorry, & kind if I you discussions assumption missed debt of bad the And this, guidance? of the but either in what beyond and from basis decline points XX City? drove Bath bad terms Beyond what are in tenants or debt Party seeing Bed

Heath Fear

same first XXX year. of XX basis I'm that And Anthony, feature is points a taking experienced the of the debt the the Well, for actual basis point balance in the the really we assuming quarter. bad decline

debt that at So XXX bad you points go-forward when basis. together, those a of basis on applying puts

Anthony Powell

it. Got just tenant other commentary any watch the list, great. have be retailers And would into popped on any health or

John Kite

mean, talking a Anthony. and for think for a I Bed what City We've out. long a generally time. about much it's been pretty been take Bath list to time play No. the Party while, long things I is These

environment think healthy have post-COVID. kind very, have these shifts and very of still of for our And mention retail. post there's is fundamentally for that happened the COVID current centers of are future. the even we in that All come that open-air been busy, the retail. happened very good And made have I very to things So more

mentioned, in and the going there. thing we're be find to We're we're operating strong to tremendous can. those to a property not innovate and don't now, put sales right And by seeing need they going moved running also they Darwinian platform, landlord. that aren't retailers the we ones we But enough, that and best do. do There's change So be that we'll aside business. a retailers great is it's the running or the our will ones We're businesses.

Anthony Powell

Great. you. Thank

John Kite

Thank you.

Operator

Instructions] Thank One I [Operator question. next prepare the you. moment, as

of Lizzie America. question Bank next from of comes [ph] Doykin Our

Your now line is open.

Unidentified Analyst

leasing XXX Good looks function XXX last to a activity quarter, seemed ask from It bit was it lower fewer I renewals. was this quarter, Hi. hoping volumes and about that of afternoon. feet. a leases, the and like which square

from outsized of normal maybe And be as expected? recorded if really activity or I what seeing more forward? going you see what if you just if levels would wanted characterize to -- just assumed demand, could the you're that moderation versus

Heath Fear

the you're to. that's small Heath. Tom strong. of tenants The still is we're volume shop sort that renewals, of This extremely talking really Yes. type I'll really demand And right, of is a about talk and function let timing. lower the is

noticed, As retention still have ratio. you we XX%

renewals So loaded. are the the of way out the they're over just with shaking year, sort of course that more the back-end

in volume wouldn't it to too what footage for tenant actual square of terms means demand. I read So far the

don't us to who's So, about you Tom, been why us? tell talking

Tom McGowan

component a at tremendous And up did of of back as that another XX at number we -- of high now we boxes Yes. available, were still I level boxes before XX. last we're as a a From that of another think amount is kind year.

it's lease places. down, also our and we forward in brought really being a that the of So and right have function moving percentages

perspective, come about we're an those is a overall John and at specialty from lot on a component. mentioned in focusing different really And That grocery. But huge sizes it. different of layouts.

well. The HomeGoods, as we've you we all-powerful all But active are fresh deals that. from. store on sports really relationships. the furniture, these industry, Wine, category home very if And have as of at you some business close you've Total discount and look into few that kind are of a we very that then, users of been that quite the as the seen course, have to late, that productive have we've the people us, there's done of draw of ability tenants falls it DICK's, The market,

are and So these constant interactions ongoing.

about good course, factor -- and those has what fact that the the ebb our down previously. we're to inventory we level do the similar very So But drawn And big timing of upon. I drawing is, from and that the we volumes feel pool think renewals said. high box of flow, a will the Heath

Unidentified Analyst

guidance sense. your Thanks. Makes even of costs I'm saw much same-store could initiatives easier we RPAI And of from or how of to XQ? the was synergies I that's Thanks. you've coming just wondering that improvement in in we an cost growth how reduce the have if better the the attributed function wondering to if NOI year-over-year. taken been expense merger? much saw the Or that Okay. cost

Heath Fear

a base the an guidance same-store in of the think, your increase increase overage. it's obviously, of really rent, function is I -- in your an increase

why the drivers up. those of are same-store main is going So the

that we And improves, originally cetera, is, obviously, higher our its as retention lot than occupancy ratio a et of budgeted.

So assumption NOI it's all points. to are quality up XX really items by basis these go good that that high causing same-store

Unidentified Analyst

expenses items? Thanks. with confirm, comment on there to specific regards flat. And year-to-year, anything guess, line almost that was just guess to on Is to I I Okay.

Heath Fear

No, I don't think there's anything specific in the line items to comment on the expenses.

Unidentified Analyst

just one that might just recovery on like properties, up function & a know this touched last one great. it but bit on recovery a Okay, on a I noticed, little looks for earlier. ratio ticked me. the recovery bit But I And expense be but for of quarter. retail driving from Bath portfolio? a Beyond? mostly a better Bed last whole the And the reserves low what Is seems for then still insurance,

Heath Fear

drive initiative, new think to our benefits the and recovery flowing we're fixed that's I our we're also with going That's again, of And right? as well. higher -- a through great seeing occupancy, doing really CAM leases, job of expense ratios.

to recovery we as for and get tenants leases, more high. going come to continue more and very very, CAM, CAM ratio signed online fixed So the more their be up you're tenants see the with fixed more and

John Kite

I NOI you is point at mean, margin mean, our would when also XX%. out, I NOI the look I margin,

peer average. I think the group high is on XXs

obviously, do. where area cost about get the more differentiate your CAM But that's -- NOI to about lease-up you which margin, that's So have an we you too. control, platform the have do you where more fixed and on as opportunity have that's itself,

Unidentified Analyst

Great. you. Thank

John Kite

you. Thank

Operator

turn closing I it would this remarks. back to now At like John Kite time, for you. Thank to

John Kite

joining and look to I Bye. thank us seeing forward soon. just you for want to say you today

Operator

participation program. does your conference. today's for the you This conclude in Thank

You may disconnect. now

Kite Realty Group Trust (KRG) 2 May 232023 Q1 Earnings call transcript