John Kite: Well, sorry. In terms of the — it’s probably going to be basically what our revenue is 50-50, right? 50% our revenue comes from shops, 50% from anchors. Timing-wise, Heath, do you want to?
Heath Fear: No, listen, we’re looking out to our model. I think I’ll stick with the two years to three years is the timing. Again, it’s getting us to sort of pre-COVID levels. But based on the velocity of the leasing activity that’s happening now, based on what we’re seeing in this quarter as well, feeling better about that being closer to the 2-year mark than the 3-year mark, but I’ll leave it at that in terms of the timing of that.
Lizzy Doykan: Okay. And just one more for me. It looks like you guys pulled down your interest in Glendale apartments. I think that was the only transaction made in the quarter. It seemed pretty quite other than that. But just seeing what the rationale was there and if there’s any other opportunities to make note of when it comes to dispositions?
John Kite: Yes. They’re pretty simple. We — that was a great — first of all, it was a fabulous deal where we took a parking lot, contributed the parking lot into a partnership, got a 12% interest and made a couple of million bucks. So, we’ll keep doing that as long as we can keep doing that. And I think the — our partner, who is obviously the primary partner, the multifamily developer thought that the timing was right to monetize, and we agreed. So, I think we will continue to look at those opportunities as we move forward. The multifamily side of our mix of NOI continues to grow. It’s small, but it’s growing. We haven’t improved the sale of this asset. We have a — we have an equity interest in around 1,700 units, and we’re obviously doing more.
And I like the way that we go about it in terms of trying to limit our capital into each deal. But yet thinking about IRR, obviously, this was a tremendous IRR, tremendous return. So, I think we’ll continue to do that. We have a couple of projects that we’re working on. And generally speaking, we’re going to probably max out around 50% ownership, but it will depend on each individual deal.
Heath Fear: Just to put some numbers, the IRR was 22%. The return on equity multiple is 1.8 times. And that’s before the benefit of a $7 million TIF, which Kite was a sole beneficiary of. So again, if we can find more of those, we’re ready to go. It was a grand slam is an understatement for that, that particular deal.
John Kite: Not to drone on about it, but it is another example that I want people to think about as it relates to our particular space and what you can do with retail real estate, which is very, very different than a lot of these other sectors that seem to be very crowded trades, where all this money goes, but yet the reuse of the real estate is extremely limited, right? It is a very specific piece of real estate, data, industrial, whatever. Our real estate is so — it’s so fungible, it’s got so much flexibility. And when you’re sitting on a piece of property that’s an unused parking lot, they can be a 22% IRR. That should tell you that the stuff that we own, probably in the sector, but particularly to Kite is really, really attractive. So good small example that I think people should think about.
Operator: And our next question comes from the line of [indiscernible] from JPMorgan.
Unidentified Analyst : I guess it looks like small shop occupancy declined slightly in the first quarter compared to the fourth quarter. Was there anything specific that drove that? Or is that just seasonal friction?
John Kite: It’s really seasonal. I mean same thing happened last year in the first quarter. It was almost the exact same as the 30 basis points or 40 basis points last year. So, it’s really timing. When we look at our pace, our pace is good. And look, I think we did make a — we’re trying to make a pretty significant statement around the type of shop leasing that we’re getting is a little different than everybody else, maybe. I don’t hear a lot of other people talking about 4% bumps. So, I think it’s timing.
Unidentified Analyst : Got it. And when you talk about occupancy going back to pre-COVID levels in the next two years, three years, is that on a lease basis or an economic basis?
John Kite: It’s a lease basis, but it would be both. I mean, ultimately, it flows through to economic occupancy as well. And from my personal perspective, three years is probably a long-time frame, but I would say within that. But yes, I mean, we’re very focused on maximizing the portfolio, but a little less focused on the timing of that.
Operator: And our next question comes from the line of Anthony Powell from Barclays Capital.
Anthony Powell : Just one for me, a question on some of the coastal gateway exposure you bought, an archive deal, Seattle, D.C., New York. I know there is a discussion about whether you keep those long-term. Maybe talk about how those have performed and where you see them kind of fitting our portfolio over the long run?
John Kite: Sure. Look, I think we’ve been clear that we think we have a unique kind of footprint, and we like the footprint. Obviously, the great majority of our revenue comes from the Sun Belt. But we think that the kind of the gateway markets that we’re operating in, particularly New York, D.C., Seattle are very attractive markets that our retailers want to grow and expand in. That being said, we’re always analyzing, does it make sense to operate in a particular market? And certainly, the coastal markets have their challenges as it relates to the things that we talked about around the tax status of each individual state and the business friendliness of each individual state, right? So, it is something that we’re monitoring and talking about, and I’m not — I would never take off the table that we would look to make changes.
