Kite Realty Group Trust (NYSE:KRG) Q4 2022 Earnings Call Transcript

Tom McGowan: Yes. Particularly on small shops, you have what we call our go-to tenants which are fast casual, beauty, cellular groups, all these are of strong credit. But then in terms of new and evolving tenants, we are starting to see with the expanded platform names that you may have originally seen in malls, etc. – Aerie, Aritzia, Nike, LoveSac, Yeti and the list goes on and on. So, we really, as the company, over the last year, expanded that pool to not only be the bread and butter of the key tenants that we operate with on an annual basis, but really bringing in new and exciting names. So, we feel very good about it as we begin to push our 90% small shop leased rate as we start moving to our high watermark at 92.5%.

Paulina Rojas: Thank you.

John Kite: Thanks.

Operator: Thank you. And our next question comes from the line of Linda Tsai from Jefferies. Your question please.

Linda Tsai: Hi. What kind of rent upside do you expect for the Bed Bath & Beyond boxes? And what was the rent upside on Party City being released to pOpshelf?

Tom McGowan: So, on the Bed Bath & Beyonds, we have 22 right now, and it’s a nice square footage. It’s about 27,000 square feet on average. So, if you start taking down on what that average ABR is, we feel like we have strong double-digit potential spread opportunities through there. And then on Party City, those numbers that are at 15,000, which also gives us quite a bit of flexibility. Those numbers are a little bit below $16 on an ABR basis. And we also feel that’s a prime example to get into the double digit, if not higher spreads. And Tuesday Morning, 12,000 square feet, same situation, a lower number at $13.58 with plenty of room to grow. So, on the Party City deals that you talked about, one was very positive. I don’t recall specifically the second one, it was a bit of a mixed bag.

John Kite: So, Linda, on the €“ but specifically regarding Bed Bath, Tom was talking about the total exposure to Bed Bath & Beyond, which includes buybuy Baby. So, I just want to make sure you remember that on the Bed Bath side, we only have 13 and we view the buybuy Baby and Bed Bath as two very different situations. And so in terms of Bed Bath, we have got one large store in West Berry and on €“ in Long Island, it’s a large store, big rent as you €“ as everything else is around there. So, if you exclude that store, the rest of the Bed Baths are actually below $12 a foot. And as you know, our anchor average is $15 plus. So, there is real upside there. I mean we are going to €“ we obviously take one deal at a time. And it’s more than just rent. It’s also the user, but there is true upside there if that were to come to fruition.