Kite Realty (KRG) Q2 2025 Earnings Transcript

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Thursday, July 31, 2025 astatine 11 a.m. ET

• Chief Executive Officer — John A. Kite

• Chief Financial Officer — Heath R. Fear

• President and Chief Operating Officer — Thomas K. McGowan

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John A. Kite: Thanks, Bryan, and thanks, everyone, for joining today. The KRG squad delivered different beardown quarter, highlighted by our dependable operational show and fantabulous execution connected the transactional front. Demand for abstraction successful our high-quality centers remains healthy, evidenced by our consistently coagulated leasing results. Blended currency leasing spreads successful the 2nd 4th were 17%, which is our highest quarterly blended dispersed successful the past 5 years. Our quality to turn rents organically demonstrates the mark-to-market imaginable embedded wrong our portfolio. Leasing spreads for non-option renewals were astir 20% successful the 2nd 4th and 16% implicit the past 12 months. New leasing measurement much than doubled sequentially, mostly driven by 11 caller anchor leases executed successful the 2nd quarter.

Our anchor leasing enactment included 2 caller market leases with Whole Foods and Trader Joe's, alongside caller leases with apparel, location furnishing and fittingness tenants. While our lease complaint declined sequentially owed to the interaction from caller bankruptcies, based connected the extent of request successful our leasing pipeline, we volition gladly commercialized the short-term net disruption for the accidental to upgrade our tenancy and bolster the durability of our currency flows. We proceed to marque large advancement successful backfilling abstraction with well-capitalized retailers, and to date, implicit 80% of the boxes that we recaptured arsenic a effect of the caller bankruptcies are leased oregon successful progressive negotiations.

Our tiny store lease complaint accrued 30 ground points sequentially and 80 ground points year-over-year. In summation to pushing occupancy, we proceed to person occurrence elevating our semipermanent maturation profile. Embedded escalators connected our caller and non-option renewal tiny store leases were 3.4% for the archetypal fractional of 2025. Activity this 4th included leases with Alo Yoga, Lilly Pulitzer, Buck Mason, Sweetgreen and Shake Shack. The accordant gains successful our tiny store lease complaint are a effect of our team's disciplined attack that prioritizes recognition quality, beardown starting rents and higher embedded escalators and astir importantly, a compelling merchandising mix.

At the midpoint, we are expanding our NAREIT and halfway FFO per stock guidance by $0.01 and our same-store NOI presumption by 25 ground points. Our halfway FFO per stock guidance present implies a 2.5% year-over-year maturation contempt the impermanent disruption from anchor bankruptcies. At the midpoint of our 2025 guidance, our post-merger halfway FFO CAGR since 2022 stands astatine 4.1%. Our concern is beardown and volition proceed to amended arsenic we lease abstraction astatine charismatic returns and heighten our semipermanent embedded maturation profile. In caller quarters, we've alluded to an uptick successful our superior recycling efforts to reshape the creation of our portfolio and trim vulnerability to at-risk tenants.