Kite Realty Group Trust Q2 FY2025 earnings call

• Strong operational performance with healthy demand for space in high-quality centers, including 17% blended cash leasing spreads and over 80% of recaptured boxes from bankruptcies leased or in active negotiations. • Capital recycling efforts: joint venture with GIC to acquire Legacy West and contribute 3 assets to a second JV, sold 3 noncore assets year-to-date. • Increased midpoint of NAREIT and core FFO per share guidance by $0.01 and same-store NOI assumption by 25 basis points; core FFO per share implies 2.5% year-over-year growth despite anchor bankruptcies. • Post-merger core FFO CAGR since 2022 at 4.1%.

No detailed product segment financials provided. Overall, KRG had strong Q2 performance with blended cash leasing spreads in the second quarter at 17%, the highest quarterly blended spread in the past 5 years. New leasing volume more than doubled sequentially, largely driven by 11 new anchor leases. Small shop lease rate increased 30 basis points sequentially and 80 basis points year-over-year.

• Midpoint of NAREIT and core FFO per share guidance increased by $0.01. • Same-store NOI assumption increased by 25 basis points. • Core FFO per share guidance implies 2.5% year-over-year growth. • Post-merger core FFO CAGR since 2022 stands at 4.1%.

• Temporary earnings disruption from anchor bankruptcies. • Uncertainties in asset sales, such as the ongoing marketing of City Center with a buyer backout. • Potential impact of tariffs on retailers, though leasing activity hasn't shown significant disruption yet.

Q: On leasing side, have you seen meaningful changes in lease gestation periods? Has there been an increase in willingness from tenants to sign leases as tariffs become clearer?

A: John Kite said no significant change, activity picked up substantially in Q2 with strong demand across the board; Tom McGowan added more cooperation between sides to improve scheduling.

Q: On forward leasing pipeline, comment on July activity and visibility to get additional anchor lease deals?

A: John Kite said activity picked up in last couple months and continuing to accelerate; Tom McGowan mentioned 11 anchor leases executed in Q2 with cash spreads of 36.6% and returns close to 25%.

Q: Latest on sale of City Center?

A: John Kite said still marketing, had a buyer identified but no longer moving forward, but property has good new leasing activity.

Q: Realistic ceiling for small shop occupancy?

A: John Kite said occupancy in 2019 was 92.5% and they could exceed that, goal is to continue pushing it.

Q: On tariffs impact on leasing?

A: John Kite said retailers look over longer periods, supply-demand still in favor, moving to stability.

Q: RPAI noncash burn off for '26?

A: Heath Fear said about $0.025, split between marks on debt and leases.

Q: Buyers' interest in retail real estate, cap rates?

A: John Kite said strong institutional demand for open-air retail, Heath Fear mentioned core grocery demand steady, larger format and lifestyle mixed-use in demand.

Q: Remaining 20% of recaptured boxes?

A: John Kite said not about location, not a race to fill space, focused on long-term value.

Q: JV equity and JV line trend?

A: Heath Fear said unconsolidated subsidiaries, NOI, depreciation, interest expense netted out in income statement.

Q: Noncash rents and bankruptcies?

A: Heath Fear said no onetime items related to bankruptcies in current quarter, just lumpiness.

Q: Appetite for share buybacks?

A: John Kite said have buyback and ATM plans, opportunistic, looking at opportunities as cash flow improves.

Q: Anchor lease spreads?

A: Heath Fear said new anchor leases composition, shop-heavy mix causing higher numbers.

Q: Strategic gateway market exposure?

A: John Kite said portfolio composition strong across markets, happy with current positions, 40% revenue from Texas and Florida.