Kimco Realty Corporation (NYSE:KIM) Q4 2022 Earnings Call Transcript

Operator: Our next question comes from Anthony Powell from Barclays. Please go ahead.

Anthony Powell: Hi, good morning. Question on your 2025, I guess, goal of 2.5% same-site NOI growth, given minimum rent growth of 4% and higher given kind of the strong lease spreads and whatnot. What gets you from that 4 plus to 2.5%? It seems a bit conservative now given the strength of the business?

Conor Flynn: To your point, we’ve actually been running ahead of that goal. Traditionally, this business has run around a 2% growth profile and clearly, obviously, with the transformed portfolio and a lot of the last mile retail reinventing itself using online as a way to connect to more customers and getting more value out of the last mile store, I think, is the game changer. So your point is well put. I mean, we’ve been obviously running ahead of that. It’s one that we thought a 2.5% plus. That’s the target, not 2.5%, 2.5% plus. And so again, exceeding that is our goal and that’s what we’ve been doing so far. So cycles are constant in real estate. And so you’ve got to make sure that you recognize that over a longer term. We obviously experienced a COVID rebound at really generated outsized results.

And so, as we go through another cycle, it will be €“ in my opinion, we should probably reset the bar a little higher, but we’ll have to wait and see and see how things play out. But so far, so good on that.

Operator: Our next question comes from Mike Mueller from JPMorgan. Please go ahead.

Mike Mueller: Yes. I am curious, are you seeing any UPREIT opportunities at this point? Or was the €“ I guess, the change just some longer-term planning?

Conor Flynn: Yes, so in terms of the UPREIT conversion, it really is intended to be an additional tool in our toolbox. So it’s a bit early in terms of finding opportunities to utilize it as we just recently converted. But as you saw with the Long Island portfolio that we acquired last year, we have utilized tax strategy and tax deferred units as a way to differentiate ourselves in a competitive marketplace. So, we do anticipate that there will be opportunity to utilize it. We’ll be selective with it because it is still a form of capital that needs to be accretive when we utilize it. It is something that we’ve considered for quite some time now. It was previously a bit cost prohibitive, but things have changed in terms of some of the transferred taxes in certain states and so it was €“ we felt the appropriate time to do it now versus in years past.

Operator: Our next question comes from Paulina Rojas-Schmidt from Green Street. Please go ahead.

Paulina Rojas Schmidt: Good morning. Can you please remind us where the CapEx per square foot of tenant box stands today? I understand that every situation is different, but if you could provide some ranges, maybe framing it at either a single tenant replacement or a box split, it will be very helpful. Thank you.