Kite Realty Group Trust BofA NY Global Real Estate Conference 2026

Okay. Thank you, buddy. Good morning, everybody. Good afternoon. I'll be quick on the remarks. We've been very busy at Kite for the last 2 years. Most of you are familiar with our Project Elevate, which is the disposition of what we'd considered lower growth, larger format shopping centers. We've sold about $1 billion in the last few years, 22 properties. One of the main goals was to eliminate potential future credit risk. We eliminated 61 anchor tenants that we deemed at risk. 5 watchlist tenants have come off our top 25. Through all this process, we bought back about $0.5 billion of stock during this period. Meanwhile, our operating platform is performing better than we expected. Same-store NOI growth is just under 4%, 3.7% in the first half of this year.

Our Signed-Not-Open pipeline is still very elevated at, I think, $37 million currently. The leasing environment is still strong. If you look at our last quarter, our leasing spreads still remain very good, particularly the one that we look at the most, which is our non-option renewals, which was at about 18% spread in the past quarter. All the while, we've maintained a very healthy balance sheet, which is always part of our strategy relative to this, is that we did not want to be levering up to buy back stock. So our balance sheet is still very strong. In fact, we just recently were upgraded to BBB+ by Fitch Ratings. Working on the others, actually this week. When you look at everything that's happening, I think we're very happy with the progress.

The heavy lifting, I would say, of most of the asset sales we believe is near the end. Not complete, but near the end. We just have a much better portfolio in every respect than we did when we started Project Elevate. With that, I'll turn it over to you guys.

Why don't you hit that?

Yeah. We've been pretty consistent saying that we're not going to enter into 2027 and say, "Hey, guess what? Kite's got another half a billion to sell." Right now, the portfolio's where we want it to be. Of course, on a go-forward basis, we'll be cycling out of two to three assets a year, which is just prudent portfolio management. But for now, we've de-emphasized sort of the boxier, larger format assets, lower growth. As John said, did tremendous amount of progress on getting our watchlist to be sort of lower to mid-pack in terms of total watchlist exposure. We've done a lot of work on getting our escalators up from 156 basis points to 185 basis points. So we feel that we're at a very good starting point. And again, no plans right now to further There's no Project Elevate Two, so to speak.

Yeah. We have signaled, though, that we still have some tax loss sales that we need to harvest. And then we have some 1031s still yet to execute. So there's another, I think, $225 million of tax loss potential sales that we have. And another $110 million of 1031 acquisition though.

Correct. That's an important variable that is still yet to execute, but is in process.

Frankly, depending on the outcome of that would potentially inure a special dividend would be a potential if we weren't able to execute on the harvesting of the tax losses and the 1031s. But the goal is to not be in a position to have to do that.

After those two variables, the tax loss sales, the 1031s, you expect around $240 million of excess funds to work. I guess, what is your latest thinking on highest and best use? What are your options? How should we think about where that $240 million might go?

Yeah. I think it's all about the timing of where we are at that point in time. But assuming that we're at that $240 million-ish at the end of the year, we obviously have a couple different avenues we could go down. If we wanted to look at it from a pretty conservative stance, as we indicated kind of where we were on our last earnings call, then you would think about potentially just retiring debt. That would be a very conservative stance. There's potential if the market changes and better acquisitions make themselves available, so to speak, that's out there. Stock buyback is always out there. Why don't you jump in in terms of- Yeah rankings.

On our call, we said that the stock price was over $29, and we said that our current bias was towards balance sheet conservatism. Fast-forward, obviously the stock is at a place where the math works better in terms of there being a positive arbitrage to redeploying those assets. But the world feels incrementally a little less better. So I'd probably say at this point in time, if we had to spend it today, probably balance sheet conservatism would be the bias. But again, let's get through midterms, let's get these- Yeah extra $225 million sold.

Let's get towards the end of the year. The greatest thing is that got a great balance sheet, and we'll have the flexibility to make the best decision at that time.