Kite Realty Group Trust Q1 FY2026 earnings call

Entered 2026 with ambitious operational and strategic goals. Sold over $600 million of non-core assets, repurchased shares, repositioned portfolio toward higher growth and quality grocery-anchored lifestyle and mixed-use assets. First quarter same property NOI increased 3.6%. Executed 151 new and renewal leases, over 700,000 square feet. Blended cash leasing spreads were 13.5%, including 31.3% on new leases. Non-option renewal spreads were 12.3%. Lease rate at 94.7%, a 90 basis point increase year-over-year. Signed new leases with various sought-after concepts. Embedded rent escalators at 182 basis points, moving towards 200 basis point target.

Same property NOI increased 3.6% in the first quarter. ABR per square foot reached $22.89 at quarter end, a 6.5% increase year over year. Our sign-not-open pipeline remains elevated at approximately $36 million of NOI, representing a 350 basis point spread between our leased and occupied rates. The average ABR for leases in our signed not open pipeline is $28 a square foot. Embedded rent escalators stand at 182 basis points today, up from 156 basis points two years ago.

Anticipate same property NOI growth to moderate into the second quarter, then reaccelerate to the back half of the year. Increased 2026 same property NOI range by 25 basis points at the midpoint. Affirm NAREIT FFO and core FFO guidance of $2.06 to $2.12 per share. Contemplates $170 million of 1031 acquisitions scheduled to close in the second quarter, a $60 million increase from original guidance. $145 million of non-core and or tax loss driven dispositions, with $12.5 million closed in the first quarter and balance closing in the back half of the year, a $30 million increase from original guidance. Reminder that 1031 acquisitions or non-core sales not completed could result in a special dividend for 2026.

Actual results may differ materially from forward-looking statements based on inherent risks and uncertainties. Factors that can adversely affect the company's results include those in SEC filings. Transactional activity related risks, such as ability to execute on 1031 acquisitions and non-core sales as planned.

Q: As we think about the shared buyback program moving from 300 to 600 million, just curious about the willingness to potentially upsize disposition volumes even higher in the back half of the year as we think about the 145 million of non-core assets contemplated.

A: Yeah, I think as we said in the prepared remarks, we're going to continue to evaluate the market and evaluate the opportunities...

Q: Moving towards the economic occupancy side, I believe current economic occupancy sits about 260 basis points below your historical highs, as many of your peers are near or above historical high economic occupancy. So curious if you could just talk about the opportunity set there longer term.

A: I mean, we think we're bullish on our ability to continue to push occupancy higher...

Q: Good afternoon, everybody. I guess, John or Heath, maybe expand on your comments on capital recycling, maybe broadly what you're seeing in the transaction market, the interest level that you've gotten for your assets that you could potentially sell down the road.

A: There is a strong demand for open-air retail...

Q: Good afternoon, everybody. I guess, John or Heath, maybe expand on your comments on capital recycling, maybe broadly what you're seeing in the transaction market, the interest level that you've gotten for your assets that you could potentially sell down the road.

A: There is a strong demand for open-air retail...

Q: Beyond the capital recycling that you have lined up right now and with what's under contract, would you move forward with the dispositions without new investment opportunities lined up? Or is the plan really only to activate incremental dispositions if you have something on the buy side?

A: Hey, Todd, I mean, as you know, our goal is always to kind of pair these things...

Q: Good morning. Thanks a lot for taking my question. First question is just on the same Toronto Eye Growth Recorder. It sounds like it was pleasantly, you were pleasantly surprised with the upside to that number driven in part by maybe upsides to the over trend and then that recovery. Is there anything in the backdrop that is driving those numbers maybe higher than you were expected? And maybe what would you kind of see as kind of the run rate number for the second quarter before it reaccelerates as the snow starts to kick in?

A: Yeah, it was basically the outperformance was ratable between three things, was the bad debt overage and also that real estate tax reversal...

Q: Hey, guys. Thanks. Just curious, the 36 million S&O pipeline, not all of it is same store. I think only 84% of it is in the same store pool. Could you maybe, is that Legacy West that's not part of the same store pool? And maybe talk about the upside there and when that will get recognized in same store?

A: It's really two elements there, Floris. One of it is Legacy West and We have an annual same store concept...

Q: Hey, good afternoon out there. John, as we look at the S&O pipeline, pretty good ramp from now through 28. But just sort of curious, is there a way to accelerate this? Or is a lot of this just dependent on there are people already in that space and you have to wait for those leases to expire and then just the time it takes to move, you know, for the tenants to build out the space move-in, just trying to understand any way to accelerate this timing versus it's structural and there's really not much you can do because of all the moving pieces and perhaps existing leases that are already there.

A: Yeah, Alex, it's obviously we're always trying to accelerate the build-outs of these spaces in the S&O pipeline...

Q: Yeah, hi. Maybe somewhat of a follow-up, but aside from general portfolio leasing capital, is there any visibility as to how much your annual development or major redevelopment investment could grow to over the next, say, three to five years?

A: We don't generally, as you know, we don't throw out a number at the beginning of the year and say we're going to spend X million on development, redevelopment...

Q: Hey, good afternoon out there. John, as we look at the S&O pipeline, pretty good ramp from now through 28. But just sort of curious, is there a way to accelerate this? Or is a lot of this just dependent on there are people already in that space and you have to wait for those leases to expire and then just the time it takes to move, you know, for the tenants to build out the space move-in, just trying to understand any way to accelerate this timing versus it's structural and there's really not much you can do because of all the moving pieces and perhaps existing leases that are already there.

A: Yeah, Alex, it's obviously we're always trying to accelerate the build-outs of these spaces in the S&O pipeline...

Q: Hey, guys. Heath, maybe I should go back to your comment about, you know, the strength of the operating portfolio to maybe step away from cap per cycle for a minute. Just looking at kind of the percent least here over the last, you know, several quarters here, Anchor obviously has been doing well, but small shop, you briefly got over 92 and it's back down slightly below it. I mean, what's the timeframe or the outlook internally to get this maybe to 93 plus? And what's been kind of the obstacle to ramp it as quickly as you ramped Anchor?

A: You know, we don't guide to occupancy, Craig, but we have said publicly before that, you know, we think by the end of this year, you know, we should be at occupancy levels that are approximating our historical highs...