Good day, and thank you for standing by. Welcome to the third quarter 2023 Kite Realty Group Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear a message advising your hand is raised. To withdraw the question, press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the call over to the Senior Vice President of Corporate Marketing and Communications, Mr. Bryan McCarthy. Thank you, and good afternoon, everyone. Welcome to Kite Realty Group's third quarter earnings call. Some of today's comments contain forward-looking statements that are based on assumptions of future events and are subject to inherent risks and uncertainties. Actual results may differ materially from these statements. For more information about the factors that can adversely affect the company's results, please see our SEC filings, including our most recent Form 10-K. Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's earnings press release, available on our website, for reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today from Kite Realty Group, our Chairman and Chief Executive Officer, John Kite, President and Chief Operating Officer, Tom McGowan, Executive Vice President and Chief Financial Officer, Heath Fear, Senior Vice President and Chief Accounting Officer, Dave Buell, and Senior Vice President, Capital Markets and Investor Relations, Tyler Henshaw. I will now turn the call over to John. Thanks, Brian, and thanks, everyone, for joining us today. KRG demonstrated another quarter of exceptional execution across our best-in-class operating platform. Since the outset of Project Focus in late 2018, we've strategically positioned our portfolio and balance sheet to thrive in any environment. As a result of our operational intensity, we've outpaced our peers in three key metrics: ABR growth, blended cash spreads, and FFO growth. Regardless of how the next few years unfold, KRG is in the enviable position of moving forward with confidence. Turning to our third quarter results, we generated FFO per share of $0.51. Our same property NOI grew by 4.7% as compared to the same period in 2022, primarily driven by minimum rent growth, lower levels of bad debt, and overage rent. Our outperformance year to date is allowing us to increase our NAREIT FFO guidance by $0.03 at the midpoint. We're also increasing our same property NOI growth assumption by 100 basis points, moving from 3.5%- 4.5% at the midpoint. Heath will give more details around the quarterly results and our updated guidance. During the third quarter, KRG signed 214 leases, representing approximately 1.4 million sq ft, producing 14.2% blended cash spreads on comparable new and renewal leases. Notably, our non-option renewal spreads for the quarter were 17.8%. This is an incredibly strong number for deals that require minimal capital. More importantly, KRG earned a 30% return on capital for all new leases for the trailing 12 month period. In addition to the strong leasing volume, spreads, and return on capital, we've been successful in achieving higher fixed rent bumps and CPI protection. Through the first three quarters of 2023, 82% of our new and non-option renewal leases have fixed annual rent bumps that are greater than or equal to 3%, and 41% of those leases include CPI protection. The average annual fixed rent increases for the new and non-option renewals year to date was 2.5% for both our small shop and anchor tenants, which is a hundred basis points higher than our portfolio average. Redefining our long-term embedded growth profile remains a top priority. Last quarter, we noted our plan to leverage our robust leasing demand by being more proactive in recapturing small shop space. The initiative has been very successful, as evidenced by the 80 basis points sequential increase in our small shop lease rate. Small shop demand has been very diverse, and in the past quarter, we signed deals with restaurants, medical users, health and beauty, and fitness concepts. On the anchor front, our lease rate took a predictable step backward due to the Bed Bath & Beyond situation. But we could not be more pleased with the flurry of activity on our empty boxes. This past quarter, we signed a total of five box deals at 53% comparable cash spreads. To date, we have addressed five of the Bed Bath boxes, with an additional eight leases in negotiation and seven in LOI negotiation. I'm confident we should have the vast majority of our Bed Bath exposure addressed by our next earnings call. What's even more impressive is the variety of anchor tenants we're partnering with, including grocery, big box wine and spirits, home furnishings, sporting goods, and discount retailers, among others. For the next 18-24 months, our best opportunity is to drive value is simple: lease space and commence rent. KRG has a significant organic growth opportunity at a time when open-air retail is experiencing favorable tailwinds. While our top priority is leasing, we've been consistent in our match funding transaction strategy to further improve the portfolio and minimize earnings dilution, while keeping our rock-solid balance sheet intact. Our transaction activity year-to-date has been a perfect example. We sold four assets, bought an asset, and used excess proceeds from the dispositions to pay down debt. We recently sold Reisterstown Plaza in the Baltimore MSA and Eastside in the Dallas MSA. We determined the downside risk at each asset eclipsed our ability to drive above-average returns. Conversely, we acquired Prestonwood Place in Addison, Texas, an affluent, highly desirable suburb of Dallas. The asset's existing tenancy shows demand for the property is strong, but we'll further upgrade the merchandising mix and drive operational efficiencies. Prestonwood Place instantly enhances the quality of our already dominant Dallas footprint. We will be showcasing several of our assets to the investment community next year with our Tour in 24 series. We look forward to seeing many of you at our first event in February in Naples, Florida. I started the call discussing the transformation KRG has made over the past five years. We've always been a team with unparalleled operational acumen and pride in ourselves being a real estate-first organization. Now, we've implemented a best-in-class operating platform onto an expanded high-quality portfolio, while possessing one of the best balance sheets in the sector. Thank you to our team for its continued dedication and commitment. I now turn the call to Heath. Good afternoon. In this industry, we are fond of saying, "Good things happen to good real estate." With that in mind, I'm pleased to report that KRG team has produced another spectacular quarter. For Q3, KRG earned $0.51 of NAREIT FFO per share, based on same property NOI growth of 4.7% on a year-over-year basis. The quarterly same property outperformance was driven by a 240 basis point increase in minimum rent, a 30 basis point increase in net recoveries, a 160 basis point increase due to lower bad debt, and a 40 basis point increase in overage rent and other revenue. Year-to-date, KRG has earned $1.54 of NAREIT FFO per share and increased same property NOI by 5.5% on a year-over-year basis. The components of our year-to-date outperformance closely track the quarterly themes. We are raising our NAREIT FFO guidance to a range of $1.99-$2.03 per share, representing a $0.03 increase at the midpoint. 2.5 pennies are attributable to Same Property NOI outperformance, while the other 0.5 penny is related to non-cash rent associated with the rejection of certain Bed Bath & Beyond leases. At the midpoint, our updated full year guidance assumes bad debt of 45 basis points of total revenues for the full year of 2023, no additional termination fees, and no further transactional activity. We continue to operate the business from a position of strength, in large part based on our balance sheet. I'm pleased to report that S&P has upgraded our rating outlook to positive from stable, and we are optimistic that this will result in a full upgrade to BBB rating in the next 12-18 months. We've come a long way in five years, and we are uncompromising in our commitment to maintaining a balance sheet that affords us a disproportionate amount of security and optionality. We continue to remain opportunistic as it relates to the unsecured bond market, while our abundance of liquidity affords a patient posture as we contemplate our 2024 maturities. KRG is a dedicated and committed organization, anchored in an efficient operating platform and a strong balance sheet. I'm proud of the progress we've made, and I'm excited for what the future holds. Thank you for joining the call today. Operator, this concludes our prepared remarks. Please open the line for questions. Thank you. As a reminder, to ask a question, simply press star one, one on your telephone. One moment while we compile our Q&A roster. Thank you so much. One moment for our first question, and it comes from the line of Craig Mailman with Citi. Please proceed. Hey, guys. John, I just want to go back. It sounds like Bed Bath's actually going to be done pretty quick here, and you'd always said, you know, you want the right opportunity versus kind of just the speed and backfilling them. Clearly, you obviously feel like you got the right tenant mix here. How did the rents kind of stack up versus what your original pro forma was on the backfill those boxes? And how many of them were you able to keep single tenant versus ultimately having to split up? Sure. I mean, overall, it's tracking as, as we've been talking about. I would say the, the, the rents are probably in the 20%-30%, you know, range in terms of a premium over past rents. We continue to get very strong returns on capital, just as important as the spread. And the timing is... You know, look, I think, I think it's probably been more robust than, than we thought in terms of how quickly we've been able to assimilate the roster, but, you know, we- we're still maintaining the discipline around making smart decisions around which tenants we're doing business with. So no, no real change there, Craig. Tom, you want to add anything?... Yeah, I think a simple way of looking at it is right now we have 16 boxes that we're negotiating leases with and 14 negotiating LOIs, and inside that, we have nice numbers of Bed Bath, eight on negotiating leases and seven in negotiating LOIs. So you can see there's tremendous activity on that front, but in reality, we look at it, we have 35 vacant anchor boxes, and that's what we're really focused on, is making sure we get those, those all taken care of, and Bed Bath's simply a subset of that. So as you go through these numbers that we're talking about today, we're, we're gonna be down to just several, several boxes, and we're gonna continue to bang on those as we, as we work through the end of the year. We're very encouraged on our progress and what all we've accomplished. Great. Thanks for that. And then, Heath, you kind of touched quickly on, you know, evaluating opportunities in the debt market here. I believe you guys have some legacy RPI debt rolling. Could you kind of talk about what may be the, you know, the cash impact or GAAP impact of those, where you had some, you know, purchase accounting issues and what the ultimate impact could be? And I don't know if you have it handy, but just in 2024 and 2025, kind of what the GAAP coupon of those RPI maturities look like relative to, kind of maybe what's running through the P&L. Sure. Thanks, Craig. So we discussed last time in the call that the non-cash impact from retiring the RPI debt in next quarter, it's around $0.02 into 2024. And then in terms of the cash impact, and listen, you can make your own sort of assumptions here, and based on timing, you know, do we take out the $270 maturities early? Do we take it out late? You know, the debt that we're paying off is at 3.75%. And so currently, you know, indicative rates right now on a 10-year deal are somewhere around 7%. So obviously, there'll be some negative interest rate arbitrage into 2024. But again, it'll be very dependent on timing. You know, the earlier, obviously, the more impact into 2024. But yeah, so on the non-cash basis, it's $0.02. And then, you know, on the negative refinancing arbitrage, you know, call it somewhere between $0.02 and $0.04. Okay. Depending on timing. If I just like—okay, and if I just looked at, you know, looking at your total debt at the interest rate, I think you get to, like, $31 million or $32 million of annual interest expense run rate versus $25 million that's running through. That's $7 million dollar gap. Is that predominantly all just this RPI differential, or is there anything else running through that? Yes, predominantly, yes. Okay. And then just one last quick one. Did you guys have any below-market lease adjustments that impacted same-store FFO this quarter? Yeah, I think it was like... Oh, not same-store. Not same store. I thought you meant FFO, not same store. No. We had about $1 million impacted from Bed Bath & Beyond rejections in the quarter, on a FFO basis, but not on a same-store basis. Great. Thanks, guys. Thanks. Thank you. One moment for our next question, please. It comes from the line of Lizzy Doykan with the Bank of America. Lizzie, please go ahead. Hi, good morning. I was hoping to get some more color around the dispositions that closed during the quarter, particularly just, you know, on pricing. During the quarter? Yeah, I mean, look, I, I think we talked a little bit about the fact that the assets we were selling, we believe didn't meet, you know, kind of our long-term goals. So that being said, I mean, the, the pricing was pretty attractive. So I would say that assets that we dispose, if you look at the total of 2023 versus just the quarter, so the, all the assets we've disposed in 2023 would be, like, in the high 5 cap range. So we've done pretty well on the dispose. Again, a lot of that is, you know, not people aren't really necessarily pricing things at just going in cap rates. They're looking at what their potential IRR is. So some of these had some lease-up opportunity as well. Okay. And just there, one of the slides in your most recent deck details, you know, anchors like Adidas, Kendra Scott, Sephora opening in power centers, and we're definitely seeing tenants become increasingly agnostic to center format. So just curious on what the pricing power is like on tenants of this type, you know, wanting to open in spaces not so typical to their typical format, and how that might impact in terms of the lease. Well, let me, let me just start macro, and I'll, and Tom can kind of jump in, too. I mean, the pricing power that we believe we have is, is really a function of the real estate, and that carries through regardless of the tenant that we're working with. I would say that tenants, such as the ones you mentioned, generally speaking, are coming out of, of, of shopping centers or malls that have higher cost to operate in than, than they would in, in an open-air center. So, you know, it gives us plenty of opportunity to price it effectively, but certainly, we still see excellent opportunities to drive, you know, the spreads, as you can see from our results. So, but, Tom, you, if you want to give any color? Yeah, I mean, we have quite a few tenants in that category. If you think about it, REI, Athleta. ... Aritzia, Nike, and the list goes on and on. So we are able to drive rents without question. Sometimes when you deal with this type of tenant, the tenant allowance number may be elevated a little bit differently than what we would see typically inside our shopping centers. But what we're looking for ultimately is a strong return, and we've been successful on all counts, getting those type of tenants to pay what we need and generate strong leasing spreads. But they have, you know, they've been a welcome addition to our tenant lineup for sure. Okay. And to confirm on the bad debt reserve assumption for the full year, that's 45 basis points. Was that reaffirmed for the year or lowered? And how does that compare to what we should expect as a normal run rate? Yeah. So again, it's 45 basis points for the entire year, but it's 75 basis points of revenues for the fourth quarter. And I'd tell you that a typical run rate is somewhere between 75 and 100 basis points. So we are running below typical bad debt this year. And I believe last quarter, our total blended, for the first part of your question, was something like 85 basis points for the year. But, you know, based on the only 10 basis points of bad debt in the third quarter, so now our full year blended number is 45 basis points. But, you know, when you're looking into next year, think about 75-100 basis points of bad debt as a normalized number. All right. Thanks very much. Thank you. Thank you. One moment for our next question, please. It comes from the line of Connor Mitchell with Piper Sandler. Please proceed. Hey, thanks for taking my question. So just thinking about since COVID, the municipal approval process has been pretty slow. You know, some of the employees were still working from home for a while. So I guess first, has there been any change in that? Maybe it's sped up a little bit, or it's still, you guys really still have to push them along. And then just a few other follow-ups on that is, are there any markets or certain geographies that are slower than others, or you're kind of waiting on the process to speed up still? And, have you guys adjusted the timeline for opening locations for retailers, and how are those conversations going? Well, as far as the approval process, I mean, there hasn't been a lot of change in that really over the last several years. It's never easy, really, in any particular market to get the approvals on the kind of timeline that we'd like to, but that's our job, that's what we do, and we push that very hard, and I think we're quite successful at it. In terms of timing with tenants, I mean, if anything, they're trying to get us open as fast as possible in this environment. And so we try to do everything we can to create a situation where we can get tenants open. And you have to realize that it's not just getting open as fast as possible, you also have to deal with tenants who have certain restrictions on the time of year that they'll open, which I think people always underestimate the impact that that has. But overall, I mean, we, we're in an environment where the retailer recognizes that, opening a store a quarter early is a tremendous benefit to them, perhaps even more so than it is to us. So I think we're in, you know, we're gonna keep trying to push that as much as we possibly can. Yeah, and one other thing that we do to help expedite is, you know, we get to the tenant. Last week, we were at TJ Maxx. Tomorrow, we're taking off to get with Five Below, and that's another key point of being able to push deals along is get in front of the customer, which we're doing a lot of right now. Okay, appreciate the color. And then thinking about the competition for available space, and then the growing demand, in terms of that, thinking about the ability for you guys to, kind of backtrack some, tenant-friendly terms and maybe flip that around to landlord-friendly terms. You talked a little bit about the small shop piece of that, and then overall, is there a way to maybe accelerate the mark to market or just recapture some more upside with all of the competition for space? I mean, look, I mean, the competition for space is robust. So, you know, I think all you really have to do right now is look at our results and, you know, some of the other players' results in the sense of what we're able to drive. And, you know, certainly, you can see the economics of what we're doing. But beyond the economics, certainly, we're very engaged, and that's what takes time in this process to try to get, you know, the best possible lease that we can, but recognizing that we're partners with our customers, the retailers, and, you know, both parties have to be successful. It's a process, but there's no question that supply and demand is quite favorable for us right now, and it continues to look that that's going to be the trend, for certainly at least the medium term. We will continue, you know, continue to lean into that and do what we do. Okay, appreciate it. Thank you. Thank you. One moment for our next question. It comes from the line of Dori Kesten with Wells Fargo Securities. Please proceed. ... Thanks. Good afternoon. It's a little bit of a follow-up. You've had a good success in getting your fixed rent bumps over 3% for new leases this year versus last. Are you seeing any resistance in any markets in that push? Did you, I'm sorry, Dori, did you say resistance from a market per, you know, from a particular market or just in general? Well, in general, and if there is any, is it just kind of in a certain market? No, I don't think it's necessarily market driven. It's again, certainly comes down to each individual shopping center has its own merits, and so each individual deal is different. You know, we don't really look at that in a broad way. But in terms of pushback, look, I think the retailers are aware that there's limited amount of high-quality space. They want that space. They want to partner with, you know, an owner like us that, you know, puts a lot back into these properties and is, you know, we try to be the best possible partner we can be to the customer. So I think that's helpful. In terms of market segments, I mean, really, again, if you just look at the math in terms of what we've been able to do this year and the amount of, in particular, on the small shop side of the business, you know, the great majority of the deals that we're seeing right now are, frankly, in excess of 3% bumps. So, I think it's more and more becoming the market. Obviously, you have to own good property, but I would say more and more that's becoming the market. And over time, this will begin to pay dividends. But when you only roll, you know, 10%-13% of your space per year, this is going to take time to really feed back through. But over the next five years, I think that for sure, the, you know, the game has changed. Okay, thanks. And then are there any updates that you can provide on some of your future development opportunities, Carillon, One Loudoun, just around their potential monetization or likelihood of you developing parts of that on balance sheet? Sure. First of all, we have a very limited active development pipeline, which is moving along very well on time and on budget. On the future opportunities, there are several here that we'll start with the first one, Hamilton Crossing in Carmel, a very strong suburb within Indianapolis. We're working on a plan with 400 apartments, and that is an ongoing process of underwriting and trying to understand the particulars of that. Another one is Carillon, which is a 50-acre parcel, just east of the city in Washington, and that's something that we're taking a very measured approach to in terms of trying to determine the best utilization of the land and the best timing in which to do that. The one that we have the most momentum on is One Loudoun, and One Loudoun's, you know, one of the great, great growth counties in the D.C. area. So we are working on a more particular plan of growth for that project, and that's something that we could probably offer more color as we move into 2024. But all of these, we're being extremely conservative and measured in terms of how we approach them. Dori, just let me add that to be specific to your, I think, to the question. In terms of the medical office building at Carillon, we're in the process of finishing that. And as we said in the past, our objective is to get it leased up and sold, and that's the path that we're on. So, you know, we don't intend on owning that long term, but we do want to maximize the value, so we're still going through some lease up there. And as Tom said, the residual land there is a different situation than it is at One Loudoun. And so over time, we would look to either monetize it outright or potentially partner with other developers vis-à-vis land contributions, but not looking to, you know, put significant capital into that, whereas the returns and the quality of One Loudoun merit us continuing to invest new capital into that. Okay, got it. Thank you. Thank you. Thank you. Our next question is from Wesley Golladay with Baird. Please proceed. Hey, everyone, you had a nice spike in the overage rents. Was this, you know, taking advantage of some vacant space you had, for some seasonal tenants, or is it just strong sales throughout the portfolio? No, Wes, it's really just continued strong sales. As we've talked about in the past, in the last year, overage rent has been materially higher than it has been in previous years. So we just continue to see that growth. I'm sure in, you know, in the current quarter, we'll probably see a little additional rent from, short-term tenants like Halloween stores, et cetera, but it's not material. Okay, and then a follow-up question on the balance sheet. Was that $0.02 non-cash impact, is that an annual number? Should we put-- rather, we do that through next year? And then can you talk about what a potential rating upgrade can do for you on the debt, you know, for spreads? Yeah, I'll answer in reverse. So, you know, on the debt, I think just the outlook change is probably a 5-10 basis point proposition. You know, again, we said we're hopeful in 12-18 months, the debt gets upgraded to a full BBB. Obviously, trying to make progress with Moody's as well, and have had some good discussions with them. So we're again optimistic that we'll see a change from them. And if we get a full ratings upgrade, that's maybe a 25-30 basis point. ... you know, deduction in spread as well. And then in terms of that non-cash, that's happening in June of 2024, and so I wouldn't roll that forward to the following years. So it's just a $0.02 hit into next year. Okay, thanks a lot. I believe it's twice a year, right, guys? Isn't that in two quarters? No? No, no. That, that, that's the different one. Yeah, the different one. I got the wrong one. So sticking with that, though, the swap, though, I think you're talking about the swap, John. And so you do get a bit- Yeah. Of a swap next year, right? Yeah, that- I thought that was your question. No, that'll keep running through for another nine years. So, but what's odd about that, and we talked about it before, is that that benefit, until we actually do a transaction to attach that swap to, it happens twice a year. So you see that benefit in the second... I'm sorry, in the first quarter, and you see that benefit in the third quarter. Got it. Okay. That's all for me. Thanks, John, for getting my follow-up. Thank you. Thanks, Wes. Thank you. One moment for our next question, and it comes from the line of Michael Mueller. Please proceed. Oh, Michael, we lost you. Can you press star one one again? One moment. Mr. Mueller from J.P. Morgan, please proceed. Yeah. Oh, hi. So two quick ones. One, I know leasing is going very well and sounds like the demand picture is good, but what do you think the macro item would be that would cause retailers to, you know, slow down the decision making? That's the first question. And then just a second quick numbers one, any color on fee income trends over the next few quarters? Let me, let me start with... I'll take the first one first, but what did you mean by any color on the income trend? Oh, fee income. Fee income. Oh, fee. Oh, fee income. Fee. Sorry, I missed the first part of that. In here. We'll hit... I'll, let's go backwards. Look, I think in terms of... What was the first part of that question? Now I'm lost. Yeah, it was, it was basically, I know the environment, the demand picture has been pretty good, but what do you, what do you think the macro trigger is that retailers- Oh, sorry, sorry. would look at to slow? Sure. Yeah, slow decision making. Yeah. You know, look, I think it's we're certainly in a good environment right now. I think the supply and demand, you know, kind of picture that we have today, because there has been such a lack of supply over so many years, you know, puts us in a position where the run rate on this is probably a little longer than normal cycles. And as we've talked about in the past, Michael, you know, that the retailers, when they're making these decisions, these are longer decisions than, you know, an 18-month out, you know, look out forward in terms of the economy. So I think it would have to be a pretty material turn negatively to get people to slow down significantly, especially in the backdrop of a 3.5% unemployment rate, because as we've all seen, the consumer continues to be pretty buoyant. So I believe that, you know, we're in a pretty good spot, and it would have to be a very negative kind of economic backdrop or something else, geopolitically, whatever, it would be a surprise. But when you look at the amount of supply that's out there of high-quality retail and the amount of retailers that are investing in their platforms, I think it puts us in a good spot and should continue for a bit. And then, Mike, on the fee income question, you know, the fee incomes from this year are basically from the Hamilton Crossing project, and that one's going to be winding down as we head into 2024. However, there are potential for some other projects to commence, so we don't have perfect visibility into what our fee income will be for 2024, and we'll talk more about that on our February call. Got it. Okay. Thank you. Thanks. Thank you. One moment for our next question, please. All right, and comes from the line of Linda Tsai with Jefferies. Please proceed. Hi. Just going back to bad debt on the 75-100 basis points, does that reflect higher than average conservatism, or is it based on a bottoms-up forecasting process? Just wondering if you had some specific tenants in mind. Well, listen, I think the 75-100 basis points is just history. So when we look back and say, where does bad debt typically land? That's where it typically lands. In terms of forecasting for it, of course, we do a bottoms-up analysis every year when we go into our budgeting season. And then when we go into our earnings season in February and give guidance for the full year, you know, we'll give a number that we think, based off both our, you know, sort of our, our specific assumptions and then some general assumptions, we'll give you sort of a blended bad debt number that we think we're going to experience. I will tell you that going into next year, you can be assured that we're not going to start at 45 basis points like we're experiencing this year, and that we'll probably start with something more conservative than that. But yeah, that's how we basically do our bad debt assumptions. So, again, we'll talk more in February, but assume that we're going to be at a more normalized number on our assumption. I mean, we, obviously, Linda, we do go through every month, we go through the receivables monthly and, and when we're doing our reserves, we do, we do do a bottoms-up analysis of that. But when we're looking out in the future and we're trying to look at normalization, that's what this is really about. It's really just at some point, you've got to normalize or not have to, but at some point, it's likely that we would normalize, and that's why we're saying that 75-100, and that's why the beginning of that would be the fourth quarter at 75 basis points. But, you know, that, that as we sit here at this very second, that seems conservative. Yes, because were you surprised that bad debt kind of came in as low as it has year-to-date? And just given the strength in the overall environment, would you expect, you know, just that number, that historical number to be a bit conservative because, you know, the environment is stronger? Yeah, I don't know, Linda. I think, yes. Were we surprised? Clearly, we were surprised because we started out the year at 1.25, you know, 125 basis points. So we were surprised. And I think even if you look at this quarter, I mean, it was, as we said, it was essentially almost nothing in terms of bad debt, and then we had prior period collections that continue to happen. So when you add the prior period collections to the current environment, I mean, that's what's creating that bad debt line item. And then, you know, certainly from a same store perspective. But looking out, it's really going to depend on, you know, how next year unfolds and what the economy brings. And, you know, I think it—who knows? I think we're just assuming at this point in time, that we're going to reach that normalization or that, you know, return to the mean, so to speak. But who knows? It's just hard to say right now. Could continue the way it is, which would be great, but we're assuming that, you know, for purposes of numbers, that it kind of normalizes. Thanks for that color. And then just one follow-up. What do you think leasing capital will look like in 2024 versus in 2023? I think if you look at where we've been over the last couple of quarters and you track, you know, as we put our trailing numbers in the sup, you can see that numbers have gone up, costs have gone up, and that's really more of a reflection of the type of leases that we're doing in a particular quarter, i.e., you know, if we have a handful of anchored tenants that, you know, there's a significant amount of work done on the space, that's going to bring that number up. And, you know, in a following quarter, if we do a ton of renewals and less new deals, that number is coming down. So the number is a little volatile in that respect, but certainly, when you kind of think about it on a macro basis, it's a little more expensive today than it was, say, six months ago. However, the returns on capital are even higher, because of the demand. So as long as we're getting the return on capital, that's the game. It's, it's not really whether, whether our, you know, number is $90 a foot or $75 a foot. It's what's the returns that we're getting, and we're extremely happy with those returns, and we're really happy with the quality of the retailers, as Tom pointed out. You know, the different type of people that we're dealing with that are backfilling these boxes are just great. So, you know, it's a, it's a pretty, pretty darn good situation right now. And Lynn, I'll just put those specific numbers to that. So this year and next year, we, we said we, we're going to spend around $200 million, and we're on track. So think about $100 million total in leasing capital for next year. Thank you. Yeah. So if you run rate this quarter's TI and LC, it's pretty, pretty good run rate. Great. Thank you. Thank you. One moment for our next question. It comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed. Hi, thanks. Good afternoon. First, I heard, I heard your comment on the disposition pricing in general in the quarter, but can you share the cap rate or the initial yield on the acquisition of Prestonwood Place and what the growth opportunity is for that asset? And then, just stepping back, I mean, it seems like there's been a little bit of an uptick in activity more recently. You know, we've seen a bit of activity reported by a number of REITs this quarter. Are you seeing additional assets you know surface for investment purposes, where you could be able to maybe accelerate efforts to put some of the company's dry powder to work in the near term? Sure. I mean, in terms of cap rates, I mean, as you said, we did talk about what the dispositions were in 2023. In terms of the acquisition of the Dallas deal, I would think of it as a, you know, kind of a higher six going in, but really, we looked at that on an IRR basis, and we think the IRR is kind of more like 8.5 to maybe even nine, depending on the rollover and the rents that we can generate. I don't think a lot of people are looking at this right now at going in cap rates. I really think they're looking at IRRs, Todd. So now, that being said, you know, it kind of segues into your conversation around, you know, other activity, and, you know, certainly in terms—haven't had a lot of time to study, for example, the spin transaction, Curb side or whatever, that transaction. But I will tell you that what I did notice is, you know, it looked like there was $650 million of asset sales in a quarter, you know, at cap rates, kind of like a mid-6% or 6.5% cap. I think that's a pretty good indication that the market is strong, and that there's not a lot of product. And when product comes up, you know, that looks like a pretty good mark to me. Based on where, you know, certainly we are trading, that just goes to show you the disconnection between kind of the stock and, and private market cap rates. But I, but I think that, yeah, I mean, it looks like things are starting to happen, which is probably not a surprise as we go into a new year and into the, you know, finishing out the last year. But I, I do think that was a nice mark. So I guess following up on that, are there opportunities for you to take advantage of, you know, that private market bid? Are there additional disposition opportunities for you where you could, you know, maybe prune the portfolio a little bit further? I mean, I think as we, you know, as we said in the call, we're not anticipating any further activity in 2023. But as we look at 2024, certainly that is one of the things that we will be looking at in terms of capital. Like, you know, we can, should we be recycling capital, when we see the disconnection in the NAV versus the stock price, and we can look at that in various forms. And one of the other things Heath said is, with our balance sheet, you know, we have this very, very strong balance sheet with very low leverage, lots of optionality. So if things present themselves that we believe have, you know, great opportunity associated with it, we can, we can act because that's what we've worked, we've worked for over the past five years to be in that position of being offensive if the time comes or to continue to kind of wait for that opportunity. Okay. And then, just last question, I guess a quick follow-up on, on overage rents and the commentary there. You know, three Q was above three Q last year by about $500,000. Should we assume that four Q is likely to be higher than four Q last year? And, then maybe assuming a relatively flattish sales environment, you know, you mentioned retail sales have been, you know, better than that, but should we assume a similar amount of overage rent, perhaps, trending into 2024? Yeah, Todd, we're modeling the fourth quarter as flattish to last fourth quarter. But like John said, you know, the overage rent has been an incredible boon for us this year. It's the highest overage rent we've ever experienced, so... And it's also incredibly broad-based. So when you're looking to say, what are the themes around the overage rent? Diversity. It's just diversity is the main theme. So, really, really pleased with those results, and, hopefully, that's an area for us to outperform in the fourth quarter. All right. Thank you. Thanks. Thank you. This concludes our Q&A session. I would like to turn the call back to Mr. John Kite with his closing comments. Well, again, thank you for everyone for joining us today, and look forward to hopefully seeing many of you at NAREIT. Thanks. Thank you all for participating. You may now disconnect.