Conor C. Flynn
Chief Executive Officer at Kimco Realty
Good morning, and thanks for joining us today. I will begin with an update on the great progress we have made in 2024 and provide an update on our RPT integration, which has gone extremely well. Then I'll highlight the favorable supply and demand dynamics for our sector and our company and conclude with brief insights on some key leasing metrics. Ross will follow with an update on the transaction market and our exciting new acquisition, and Glenn will close with our financial metrics and the full year guidance range we again have raised. We believe it is important to call out some of the great progress we made on building on past year's success, both with enhanced internal growth as well as being a net acquirer for the year, which will benefit external growth. We're also proud to highlight another accomplishment this quarter, achieving our goal of securing 12,000 multifamily unit entitlements a year ahead of schedule. These entitlements valued at an estimated $175 million to $325 million offer us significant flexibility, whether we choose to self develop, contribute to a joint venture, ground lease or even sell them outright, these entitlements enhance our long-term growth potential. Turning to our RPT acquisition. I want to thank our integration and operating teams for their extraordinary efforts. We continue to exceed expectations with respect to the pace of integration and performance of this portfolio and are ahead on both operational synergies and NOI projections for the year, and we continue to close the gap on the spread between RPT's small shop occupancy and Kimco's occupancy. Specifically, RPT occupancy increased 40 basis points quarter-over-quarter, driven by a 50 basis point increase in small shop occupancy and a 30 basis point increase in anchor occupancy. Another key attribute providing us with additional confidence in our portfolio platform is the current supply and demand dynamic for high quality retail, which continues to favor Kimco. According to several large national brokers, vacancy levels and new shopping center construction remains at historic lows, leaving prospective tenants limited options in obtaining space for high-quality locations, particularly in the most sought after markets. To underscore this limited availability, retailers are proactively reaffirming or assigning leases during the bankruptcy process to secure prime locations. In 2024, 50 out of our 56 leases with tenants who declared and emerged from bankruptcy were either assumed or acquired by creditworthy tenants. Even more encouraging for our portfolio is that leasing demand continues to be broad based and diverse. Off price, grocery, beauty, health and wellness, fitness, medical and services all continue to compete for space in our centers. All of this affords our team the ability to push economics, enhance our merchandising mix and further increase the value of our best in class portfolio. Turning to our leasing metrics. We are proud to report that our team achieved another milestone this quarter, with occupancy up 20 basis points sequentially and 90 basis points year-over-year to 96.4%, matching our all time high achieved in the fourth quarter of 2019. Anchor occupancy was up 10 basis points to 98.2%, which was 100 basis points higher year-over-year. Small shop occupancy was up 10 basis points to 91.8%, which is also a record high and up 70 basis points year-over-year. New lease volume totaled 119 deals totaling 543,000 square feet for the third quarter. The rent spread for new leases was an impressive 41.9% and our 12th consecutive quarter of double digit rent spreads. Positive drivers include a new target lease in Fort Lauderdale, Florida, a new legal grocery conversion in Staten Island, New York, as well as a new Tesla dealership in Miami, Florida. Renewals and options volume was 332 deals totaling 1.9 million square feet for the quarter. The renewals and options spread was 6.8% with renewals increasing by 6.9% and options growing at 6.6%. Combined, third quarter 2024 lease volume was 451 deals totaling 2.4 million square feet with a combined spread of 12.3%. We also added four grocery anchors to the portfolio this quarter, improving our percentage of annual base rent from grocery anchored assets to 84%. These results continue to distinguish our solid and unique operating platform supported by a highly engaged and aligned team, which we believe provides meaningful relative differentiation. In closing, we are encouraged by the momentum that our team and platform have built and are excited about where we go from here. And while we have built a business designed to withstand any economic cycle, we look to benefit from the continued strength of the employment market, healthy consumer spending and the dampening of inflation. We have been executing on our strategic goals to improve organic growth and add accretive external growth when the stars align. We remain disciplined on capital allocation and balance sheet management, giving us the ability to weather any storm and pounce when the opportunity presents itself. I want to thank our dedicated colleagues for continuing to raise the bar at Kimco. Ross?
