Before we get started, this is the Kite Realty Roundtable. Happy to have John Kite, CEO of the company. Heath Fear, CFO. Cooper Clark, new addition. With that, let me turn it over to John with his opening remarks. 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 two 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. five watchlist tenants have come off our top 25. Through all this process, we bought back about half a billion dollars 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. 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. The Project Elevate, you talked about the billion, 22 assets. Sort of mentioned them. Is there another in pricing, considering where pricing is today for that matter? 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- 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. I mean, it's three to four months out, right? Right. A lot can happen, obviously. Correct. With these asset sales, remind us how to think about the core growth of the company, right? As we sit here today, think about the next 12- 18 months, 2027, even into 2028. Same-store annual growth, not asking for guidance, but just trying to understand how much better growth can be. Yeah. We started out this year saying that we were, I think our midpoint of our same-store guidance was 2.75%, and we said we were going to be sort of moderate to the first half, accelerate into the back half, and then accelerate again into 2027 based on this Signed-Not-Open pipeline and increasing occupancy. Good news is we actually outperformed in the first half, so while there's a small suggestion of a deceleration, we're still strong same-store growth into the back half of 2026 and continuing strong into 2027. On the same-store line, feeling very, very good about next year. And then on the flip side of that is, CapEx as well, right? Correct. How are you feeling about CapEx? Yeah. CapEx will remain elevated. We said somewhere between $100 million and $125 million a year. That'll happen this year. That'll happen in 2027, and doesn't start to tail off until the end of 2028. But that's just lease-up capital. Correct. I mean, that's just to be clear. So it's actually producing a really strong return. Yeah. And similarly, we said that our Signed-Not-Open pipeline and that spread between our leased and occupied will remain elevated this year and probably into next year as well, before it starts to skinny down. Maybe back to the tenants. I mean, obviously you mentioned Project Elevate. One of the key results of that has been the improved watch list. But maybe talk about your watch list as it stands today. Are there any categories you're still watching? Any category you still call a problem? How are you thinking about that, I guess, through the end of this year and into next? Well, it's a watch list, so you're always watching, right? I think the watch list, if you will, that was obviously a big part of the exercise. And the fact that we've been able to take off five names out of this top 25 that were a concern. It was really more about potential future capital spend, right? I mean, you're talking about based on the fact that we eliminated 60 boxes in that category, you could be spending $100 million in capital in the future that we don't think we'll have to spend. In terms of how it sits today, it's just much stronger. If you look at the top 25 today versus the top 25 two years ago, it's tremendously different. Five of our top 15 are grocery stores. That's an improvement. In terms of the ones that you're worried about, that continues to be something that I think is, we're cautious with giving people's names, of course. But we all know who the people are out there. They're stronger than they were. We feel much better. But we obviously wouldn't have gone through this exercise if we didn't think there was risk out there down the road, and we think there is risk out there, and so we try to get in front of it. That being said, today we're in a much better place. Even with names like, I will mention one name, even like a Container Store that was an outsized risk for us, I think we're down to what? Four of- Three. three of them, and we had seven of them, right? Now it's very demin-- it's not de minimis, but it's very manageable. So yeah, we're just in a lot better place and feel much more confident than we did before we began the exercise. Just want to make sure you guys have any questions. And what are you hearing from retailers? I mean, clearly, you have the macro, you have the noise out there. I mean, anything on store opening plans for next year? I mean, are they-- Seems like there's been no pullback. Is that kind of what you're seeing, John? I mean, it's obviously early in this whole process of elevated interest rates and continuing sticky inflation. But the most important metric from my personal perspective is the unemployment rate is still very low. There are spendable dollars in the economy. Most of these retailers have right-sized their operations and have become much more profitable than they were pre-COVID. So there continues to be that backdrop against no new supply. So there's good pricing pressure from that perspective, and I think tenants continue to want to expand, and you also see relocations coming into play now. Maybe more so than a little bit in the past. So yeah, it's still very healthy. We study our AR very closely on a monthly basis. That is still healthy. Small shops, which is where you would think it would kind of come up first, is still very good. I mean, we still have very strong demand, and this is why when you look at our rent growth. If you look at our 185 basis points that we've talked about, that is our embedded rent growth. It's 156 basis points, what, two years ago? two years ago, yeah. 90% of that gain is actually through leasing, not through these sales. It's really coming from the fact that we can get 3%, 3.5%, 4% growth on our shop portfolio, when we do new leases, plus the fixed CAM is also a big component of that, which we're a leader in terms of the open air sector. It's been pretty good. When you say 90% of that gain from leasing, that is going from the 156 or whatever it was previously to 185. Correct. Okay. Now, I guess that the bulk of that disposition activity is over. I think you've said your long-term goal is 200. How long through leasing alone does it take to get to that? I think we've said- Two years, probably. Two to three years. Yeah. It's hard to say. It depends on fallout too, right? But I would say a couple of years. Two to three years is a good answer. And what's the ceiling on a small shop and at this point, how much more room is there? You've clearly done the asset sales there too. Yeah. Well, I would tell the people in the leasing department that it's 100%. But, look, we're at 92.3%. I don't see any reason why we can't push shops to 94%-ish. I really don't. I think we should be able to do that. Whether we will or not, we'll see, but that should be a goal. The anchors are at 96.3%, 98% is a goal. So I think we still have room to run. I think if you look at where we That's the benefit that we had, that we, in the sense that we took a bigger hit two years ago, but the growth rate still exists, just a straight up lease-up story. That's obviously why our capital's been elevated. So, it's kind of part and parcel. That's still, yeah, 200 basis points. But as you think about that, though, given, again, the environment and maybe the pressure that the consumer is facing, do you still continue to push rents, or do you kind of step back? That's a good question. Very good question in the sense that, is it more important to- Right. get, especially on the anchor side, I think that comes into play more so on the anchor side, where you're signing a 10-year lease with a reasonably credit-worthy tenant. So do you do that at a lower rent than you maybe would hold out for if you think that the consumer is going to turn? I think that's part of our business that we have to manage and be thoughtful around. We also have to think about the rents in the small shop portfolio have grown substantially. When you're growing those at 3.5%, 4% a year, you also have to think about what the end game is there. Is the retailer going to be healthy enough to pay that rent? So those are the nuances of the business that don't have a simple answer, but it's definitely something we consider. But as you are going through negotiations today, it does not sound like you are- No, today I feel like we continue to be in the position of strength. Yeah. It is always harder to get over that final line on the anchor side of the business than it is on the shop side of the business in terms of really deploying your strength. But if you just look at the numbers from where we are today in our embedded rent growth, in shops and even in anchors today versus four years ago, we are in a much better place. We have much better leverage. And again, there is very little new supply, and I do not see a scenario where the supply dynamic changes in a material way. Anything in terms of sort of geography mix, like performance-wise? Are you seeing coastal, Sun Belt, any differences in performance? I think it's pretty balanced. Look, our biggest market is Texas, and Dallas is our biggest city. It continues to be super strong, and you just have so much job growth and movement into those markets. Florida is the same. I'd say Texas maybe is a little more accelerated than Florida. But look, even the deals that we have in the Midwest, they're very strong. Each, again, it comes down to where you are. By the way, each of these states has different unemployment rates. That's a factor. But I haven't seen a tremendous difference geographically. I don't know if you want to. No, I agree. I think probably product type. I'd tell you our lifestyle stuff has been particularly constructive, especially our stuff in Texas, our acquisition of Legacy West. Some of the rents that we're being able to achieve over the last several months are way in excess of what we underwrote just a year and a half ago. Southlake is getting tremendous traction as well. Not so much necessarily geography, but product type-wise, we're really seeing the lifestyles part of our business really, really putting up numbers that are beyond what we had anticipated. What about on the retailer side? Do they have a preference of where they want to go? Is it coastal, Sun Belt? Are they not Look, I think that's on the margin. If you talk to a national retailer right now, they're not excluding any part of the country right now. Yeah. There doesn't seem to be that at all. It's really where can they get opportunities. Right. The opportunities are limited. When we sit down with, especially in a national meeting, and we have conversations with these guys, it's very, okay, let's talk about each region that we're operating in. It's not like, "Hey, let's only talk about Texas. It's pretty well spread right now. Even those retailers today who may have looked at just primary markets are going into secondary and even sort of the tertiary markets at this point, you think? Or- Yeah, we don't have a lot- Not- that I would consider tertiary, but certainly, if you go back in time when people said they were only looking at coastal. Yeah. That's absolutely not the case. If anything, retailers are thinking hard about markets that they view as very business unfriendly. That would be the only area that I think retailers are thoughtful around. Yeah. But even there, a good opportunity comes up in California, they're going to do that deal. Again, it's really more about the lack of supply, in my opinion, Samir, than it is anything else. There's just not a lot. So when they have opportunities, they got to take action. Maybe switching gears to the development side of things. Last quarter you started the second phase of some multi-family development at One Loudoun. Maybe you could talk a bit about that project and expected returns. Then maybe just broadly within the development side of things, what the opportunity set is and how that contributes to the growth algorithm. Why don't you start? Sure. The multi-family development at Loudoun, really great project. As a reminder, you saw this when we had a deconsolidation of one of our JVs last quarter. We currently own 90% of a project at One Loudoun called Vine One, that's about 346 multi-family units. We're selling that down to 55%, and we're taking those proceeds in addition to the contributing land, and we're using that as our equity to fund the next phase of the multi-family. Again, we'll own 55% of that. The great thing about that deal is, number one, we did that in a tax efficient manner, so we didn't generate any gains by keeping it sort of in a closed system. As you can imagine, the cap rate at which we sold the stabilized deal at is much tighter than the cap rate or the yield at which we're building the apartments, which is called 6% on a range. In terms of the other development there, making unbelievable progress on the office and the retail. I think the retail now is it, John, is it 77% leased? I think it's about right, yeah. 77% leased. Great tenants. Alo Tate, Arhaus. The lineup has just been incredible. We are very close to finishing up a joint venture agreement for 146 hotel rooms there as well. We'll own only 25% of that. What we did there was we contributed. It's going to be on an air parcel, so the value of that air parcel equals our equity. The great thing about that is that we're not hotel operators, but when you have a multi-use project like that, it's important to us what's happening there, right? We want to have a seat at the table if they want to change the flag on the rates, et cetera. We feel like it's a good thing for us to own a piece of that hotel to keep control and to make sure that the tenancy of that hotel is complementary to the project in general. Beyond that, we've got another 35 acres of land at Loudoun. Listen, we're never a shop that's going to solve to a particular required development yield. We're never going to tell you we want to have, at any particular point in time, I'll make a number up, $300 million of development in play. We develop when the need is there. The good news is that we've got plenty of opportunities in the future, not only at Loudoun, but at other parts of our portfolio. Maybe sticking to the development side. How should we think about development going forward? Does that become sort of bigger share of the capital plan going forward? Yeah. I think when our leasing capital normalizes and we start kicking off free cash flow, and that inflects call it late 2028 to 2029. I think we have a propensity to want to use free cash flow for development dollars, right? I think you will see us get more active. But again, we don't want to force it, especially when you're doing mixed use. It's really easy to get mixed use wrong. So it's always going to be what does the real estate want to do first, and then we'll bang into it. But yeah, I think development ultimately, once we get this heavy leasing spend, will obviously move up the priority list on the capital allocation menu. Yeah. It's also opportunity driven, right? Right. If an excellent opportunity comes up in a market that we like a lot, then we're willing to engage. As he was saying, we're not just going to go out there and just, oh my God, we have to find something. We'd rather it found us in that it was a great opportunity, and then it's worth working on. It needs to complement what we're doing, complement the portfolio, increase our exposure to different tenants that we want to grow our relationships with. It's all of those things. Bottom line is, when you're spending $100 million-$120 million a year on TILC, and that's normally $50 million- $60 million, that has to play out and get back to normal before we would really heavily engage in that. I would say one of the benefits of buying an asset like Legacy West, and as people are realizing that we've got things like Southlake and Loudoun. We're seeing more reverse inquiry for development opportunities where people are saying, hey, we've got this multi-family site. We think it's great. Will you help us with the retail? Right. To John Kite's point. We're seeing a lot more of those opportunities. Yeah. Again, once the free cash flow inflex, you'll see us likely start to look at some of those. On your lever, you're at the low end of kind of your range, right? Yep. Would you lean into sort of that balance sheet capacity at all to kind of fund growth? Yeah. Listen, we always said run between 5% and 5.5%. We would not run at 5.5% just to run at 5.5%. But if we had an opportunity and it would bring us to 5.5%, we would certainly do it. We would do an opportunity that would bring us above 5.5% so long as we can articulate clearly a pathway to get back below it. Just like sometimes we run under 5%, right? We were at 4.9% a couple quarters ago. But generally speaking, yeah, we will run in that range. What about in terms of maybe in the topic of balance sheet, looking into next year, what is coming due? Do you think about higher rates here? Yeah. What is to that? We have $280 million coming due next year. $175 million of it is at 75 basis point convert. Looking at, unfortunately, a negative interest rate arbitrage. Part of what we're thinking about next year in terms of refinancing is, what are we doing with that $240 million that we were asked earlier on? Are we going to Obviously, if the world doesn't feel great for wanting to invest otherwise, we would then just use those proceeds to pay down that debt and wait, and then re-lever when the time was right. Or if not, currently, we're just modeling doing a regular rate bond. If we're going to do a bond, we probably would end up doing either a long five or a 10. Anything else you think we haven't covered here as you kind of were in meetings with different investors doing the one-on-ones today? No, I just think the general theme is we're sort of stepping back, and I think this Fitch upgrade sort of puts a little bit of a cherry on top. This idea that we've sold a billion dollars of assets. We've bought back a half a billion dollars of stock. We did it in a way that had very minimal impact on our earnings, very minimal impact on our rating agencies, and we're still able to get an upgrade. For us, it feels like that's a pretty successful project. By contrast, in 2018- 2019 I'm sorry, 2019, we sold a half a billion dollars worth of assets. We lost $0.20- $0.25 in earnings. Now, it was a really great project. We de-levered and obviously put us in a tremendous position going to COVID with a balance sheet that allowed us to pay attention to things like collections. As you all know, we out-collected everybody during COVID. Just looking at this whole Project Elevate from soup to nuts the past two years, we feel really, really good at what we got accomplished. Just to think about the durability of the cash flow now versus where it was. We talk about it in terms of 61 different watch list tenants being gone. That's all just another way of saying durability has improved. Yeah. From this point forward, our pivot is, okay, we have got the portfolio set. We have talked a lot about what we have gotten rid of. In Nareit, we are going to invite everyone to come visit with us, and we are going to talk about what we have kept. Talk about how great the portfolio is now. Then really this intense focus from the go forward is we need to grow earnings, right? This was all a prelude to putting ourselves in a position to reliably produce an 8%-10% total return. That is giving your FFO growth somewhere on either side of a five together with your dividend growth, and that is the ultimate goal. I think really now the message is we are almost done, got some more work to do, and then it is just pivot, and earnings growth is the premier focus of the organization. There is a couple rapid-fire questions. All right. We will go through this. Number one, if long-term rates stay higher for longer, which has the biggest impact on your sector? Higher refinancing costs, lower transaction activity, or less new supply? Probably financing cost, I would guess. Yeah. I think that is an easy one. Number two, over the next three years, will third-party capital become a more important source of growth for public REITs than balance sheet capital? Yes or no. Yes. Number three, same-store NOI growth for the sector next year, higher, the same, or lower? Than this year? Than this year. Higher. Great. Thank you. Thanks, everybody.