Heath Fear: I think John alluded to it, Craig. About half of it is really related to the same property outperformance we had in the first quarter. Some of that was bad debt related. And the rest of it is getting this lease signed up. So that penny is basically split half between what already happened and the improved outlook for the balance of the year.
John Kite: Craig, one thing I would point to, though, when you look at pace and when you look at where we are kind of sequentially. Like if you look at the sequential base rent growth, we’re talking like 4.6% sequentially. And even if you eliminate the term fee, it’s 3.5%. So, going back over the last four quarters, that was a little slow, and now it’s accelerating. So that’s all part of what’s going on here as this — as all this leasing, particularly on the anchor side, which takes time to deliver, delivers. That’s why you have to look at the business over two years, three years, not two quarters or three quarters. So, I think when we look at it, we feel very encouraged by that sequential base rent growth.
Craig Mailman: As you think about kind of comps, I know you guys are pushing fixed CAM and clearly inflation has — it’s still there, but not as maybe aggressive as it was in the last two years. Where are you guys resetting kind of the growth in that fixed CAM? Does that become — or is that becoming less of a — or somewhat of a tailwind as you think about comps going throughout the year? I’m just trying to think about potential levers, now that you’ve got the theater done of further improvements to same-store potentially guidance this year outside of just continue to lease up, which again, it takes time to open some of these new stores.
John Kite: Yes. Look, I mean, I think if you’re only looking at that one metric of same-store, then I think Heath already covered it in his prepared remarks, the three elements that impacted us the most. So, the back half of this year, particularly later in the year, then the same-store NOI begins to look a lot like it did last year. It’s just a timing thing in terms of that lease-up. And we were definitely disproportionately impacted by Bed Bath. We’ve already taken care of about 80% of our exposure there. And the rents are grade and the users are way better. So, I think — look, I think occupancy really matters there. As we talked about in Naples, you were there. I mean that’s potentially 500 basis points to 600 basis points to get that when you get that back on track. So, bottom line is, you can look at this as if you’re purely looking at same-store NOI, the profile hasn’t changed at all for us. It’s the timing.
Heath Fear: And Craig, I would say it’s your typical levers. We’re here after the first quarter. So, one of the things that we’re thinking about that we can control or not control and going forward into this year, can we get continued lower bad debt? Can we get people turned on faster for rent commencement dates? Can we retain more tenants? Can we sign up some spec deals and turn people on later in the year? Can we do better in overage reps? So, we’ve got a lot of levers to pull to improve us intrayear. And then as John mentioned, looking out into ’25 and ’26 and beyond, just the pure occupancy gains that we have, holding aside any other organic growth, and we said this in Naples, we’re looking at a 500 basis points to 600 basis point contribution from just getting ourselves back to pre-COVID plus over the next two years or three years.
So yes, we’ve got things that we’re going to be working on the entire year to beat that number we’re currently guiding at. And then beyond that, we’ve got a lot of levers to pull. So, we’re feeling really good at where we’re sitting right now.
Craig Mailman: And that’s helpful. And I guess the last question. Just as you guys have talked about kind of cost of capital coming down and the flywheel effect of better free cash flow, clearly, there’s still pipeline, some of that — some anchor lease in there, may be more CapEx intensive and then really the [indiscernible] left is more kind of small shop. So, as you think about, from a timing perspective here, as we get through the next 12 months to 18 months, is that the time frame you think of to think of CapEx kind of normalizing because more of the work you have to do would be kind of small shops? And then how do you view — and maybe it’s a relative from here, but you’ve gotten the benefit of the credit upgrades and your more seasoned issuer and so you’ve seen spreads compressed there, but just having that higher amount of free cash flow coming in at a lower cost.
What do you think — on top of kind of the higher rent you guys have talked about, but just that, that cost of capital advantage two years, three years out will be when you guys think about whether you go on certain developments or redevelopments or do acquisitions?
John Kite: Well, big picture, focusing on the CapEx. I’m looking — I’m going to find the question in there. But the big picture, Craig, no doubt when you’re spending over $100 million a year in two consecutive years on TI and LC, and a normal year for you as 60-ish, then you are absorbing a lot more of that cash into that TI/LC. But it’s also, as I pointed out in my prepared remarks, at like 30% returns on capital, right? So, the free cash flow that comes out of that exercise in late ’25, ’26, ’27, puts you in a position where there’s nothing better than cost of capital from significant free cash flow, right, that we can deploy in a very accretive manner. And back to Floris’ question, if it isn’t — if we don’t think the place to put it is external, then it’s internal, and you’re buying back stock with free cash flow, not with leverage, right, so that we can maintain this incredible balance sheet that we have.
