So, the optionality is quite significant, Craig. But yes, I mean, look, we’ve got to — we’re spending money organically, and we’re getting great returns on that organic spend. So, I don’t think people should be concerned about it. I think they should be happy about the fact that this is a simple business plan, right? And we just got to go execute it.
Craig Mailman: That’s helpful. Thanks.
Operator: And our next question comes from the line of Linda Tsai from Jefferies.
Linda Tsai : Yes. I know at the beginning of the call, you mentioned since 2022, you’ve executed 53 anchor leases to 36 different brands. Can you give us an update on your box inventory? How much is left? And are any of those getting leased to grocers?
Tom McGowan: Sure. At this point, we have 26 boxes in our inventory today. And we have done a great job, not only leasing these boxes, but putting in much better-quality tenants with strong spreads and great return on investments on the capital. So, we feel like that’s a manageable number. We’re looking very closely at how we continue to make progress on that anchor lease percentage. Right now, we’re running at 95.9% on the anchor side. So, if you look at our run rates and how we’ve been able to chip away at the inventory, I mean, sometimes it’s between five boxes, 10 boxes, 11 boxes as we’re moving through the year. So, we have a good run on it. We have quite a few properties that are in lease negotiation right now. Just on one segment, we have five or seven that are ongoing. So, I think the sentiment is very positive and now that’s being buoyed by the fact that we have a low demand scenario.
John Kite: But as it relates to the grocery side, Linda, I mean, definitely, if you just look at our investor presentation, I think we covered it like on Page 19, just in terms of the new deals that we’ve done recently, but Whole Foods, Trader Joe’s, Total Wine. We’ve done a couple of fresh market deals, grocery outlet out in the West Coast. So, there is real strong demand there, and there continues to be demand across each kind of segment of the grocery business. And I’m sure you’ve seen a lot of this recent data on, we’ve come to the point now where people are shopping multiple types of grocers per week. So, they’re not just going to one grocer, right? So, if you’ve got a Kroger, you’re going to the Kroger, but then you’re going to either Whole Foods or Sprouts or Fresh Market for something particular, and then maybe you’re going to Trader Joe’s in addition to that.
So, I think that’s why these guys are continuing to expand. And as we mentioned, now we’re — our exposure to grocery is getting up towards 80%. So, it’s a big part of our business. But again, it’s all about your merchandising mix, what’s the best thing to bring to that particular center. So yes, the market is strong as it relates to that, Linda. And that’s why I just said on the previous question that we’re very happy to be kind of self-deploying capital back into that.
Linda Tsai: Thanks. And then on the shop side, it seems like you have a little bit more leeway than some of your peers. Just as you head into ICSC, what are some of the things that you’re looking for or expect to hear?
John Kite: I’ll start and let Tom get to the more meat of it. But look, like we always do going into ICSC, Linda, we take it very seriously. And I think our leasing people know that we’re going in there and we have an agenda. And it’s not — we’re not going there to have fun. We’re going there to execute and I think as it relates to the shop side, the depth of the users has really changed in the last 18 months, 24 months. The optionality that we see right now and the tenants that are moving from one specific property type into another property type, we’re really benefiting from that. So, I think our objective is to continue to do what we’re doing, which is not only to sign leases, but to sign leases with embedded growth that reflects the profile that we want, right?
So maybe that’s why — maybe we’re taking a little bit longer to lease up space because we are getting, as we said, 70% of the deals, we did had 4% or greater bumps, that will pay dividends in the future. So that’s kind of the overall macro. Tom, do you want to talk about like the specifics?
Tom McGowan: Yes. I think we want to focus on what we call our bread-and-butter type tenants, and those being restaurants, service, health and beauty. But at the same time, we also want to pay particular attention to new concepts, and we recently signed some great restaurants that we’re basically generated out in the Scottsdale area, Culinary Dropout, Flower Child, and we’re dealing with what you may particularly see as some higher end Flower or mixed-use tenants, an [indiscernible], Nike, Warby Parker, et cetera. So, we’ve, as a company, really expanded our breadth and our reach to different types of tenants throughout the portfolio. And as that line grays and people find the attractiveness of pull in retail, we can — we really see that continuing to improve for our company. So, we have a very clear strategy, but it hits a lot of different points and does not ignore any as we move forward.
Operator: And our next question comes from the line of Connor Mitchell from Piper Sandler.
Connor Mitchell : Thanks for taking my question. So, you guys have talked a lot about like the strength of the hand on lease negotiations for the industry and focus on rent bumps and fixed CAM. Just wondering if maybe you could discuss any other levers that you guys haven’t touched on that you’re seeing to take advantage of the current environment and maybe increase the cash margin on leases that we haven’t talked about yet?
