Heath Fear: Listen, hi, Mike, we don’t guide to occupancy. But as you can imagine, you’re going to see our lease and our occupied rates rise. We did describe it in our opening remarks that you’re going to continue to see an elevated snow pipeline and an elevated gap between our leased and are occupied because we do have quite a way to go until we’re back at our sort of pre-COVID occupancy levels. But yes, you’re going to see a start to climb towards in 2024 and through 2025 climb back towards pre-COVID plus in terms of both our leased and occupied rates.
Michael Mueller: Okay. And then, I guess, separately, I know you have a couple of redevelopment or expansion developments that you’re wrapping up. I mean, what do you think the soonest could be that we would see potentially activate something new on that front?
John Kite: I think as I just kind of said on that when I was answering Jeff’s question, which was, Mike, do we want to be very focused on the lease-up platform, and we’ve got a good enough sense of what’s already in the hopper that what’s already been signed and what’s already being negotiated, that gives us – that’s why we’re basically saying we think we’re going to spend $200 million-ish over the next two years. So as that kind of wanes then we lean into the next phase of growth, which is this embedded land value and we’ve talked a lot about of all of the projects that we have available to us, One Loudoun in Virginia is the one that we’re probably the furthest along in terms of the design process and working on implementation and understanding what tenancy is available to us.
And there’s great opportunities there and it’s an incredible piece of real estate, which is, of course, why we will also highlight it on our foreign 2024 tour. But I just want to emphasize that the returns on capital that we’re getting in the lease-up. And if you look at our occupancy versus the peer group, fortunately, we have more upside there. So that’s why you’re going to hear us talking about leasing and the returns versus, hey, I got to go buy something or I got to develop something. That’s the point we’re trying to get across.
Heath Fear: Yeah. Yeah. Sorry, Mike, this is Heath. I would also add, listen, maybe sounds less exciting not to describe to you this massive development pipeline that we have over the next five years. But honestly, given $200 million over the next – I can’t think of a better way to want to spend your money right now than to lease up your existing space. It’s such an advantage, especially in this volatile environment that we have a home at 25% to 30% returns to put our money to work. So again, it doesn’t sound – it’s the same thing we’re doing last year. We’ll be doing it into 2024 and into 2025, but it’s a great place right now to be investing within your own space.
Michael Mueller: Got it.
John Kite: Yes. I don’t know that we touched on this part yet either. But Mike, the other issue there is while we’re doing this, while we’re spending this $200 million, we’re still cash flowing and the cash flow is growing. And our leverage is one of the lowest in the space and will go lower during this period of time. So if we wanted to, could we go out and do $300 million, $400 million of projects and go from 5% to 5.5%. We could, but we don’t think that’s prudent right now in this environment, especially based on the returns. If things change and opportunities come to us we have a lot of firepower, and it’s only growing. So that’s kind of the other thing that you should think about macro for us.
Michael Mueller: Got it. Okay. Makes sense. Thank you.
John Kite: Thank you.
Operator: Thank you. Our next question comes from Wes Golladay with Baird. Your line is open.
Wes Golladay: Hey everyone. Maybe just a quick question on the non-same-store pool. You did have some redevelopments and some recent developments in there. Should we expect that to grow much this year?
Heath Fear: I don’t think you’ll see much changes in our non-same-store pool, Wes.
Wes Golladay: I mean from an NOI perspective and any, I guess, outsized growth there?
Heath Fear: Some of our developments are starting to lease up. So you’ll see some NOI contribution from some non-same-store property pool, but nothing major in that pool.
Wes Golladay: Okay. And then I believe your base case has about 80% retention. In your investor presentation, what was retention last year? I believe it was running a little higher than that?
Heath Fear: In mid 80s. Higher 80s? Like 85, 86. That’s Wes I mean it’s been running at 85 plus now for a bit. So it’s another – the reason we called it out is its conservative. And so again, when you’re looking at an NAV page and we take a conservative 80% retention ratio, we don’t include land and we don’t include future lease-up. That should show you there – those numbers are very conservative.
Wes Golladay: Got it. Thank you.
Heath Fear: Thanks.
Operator: Thank you. [Operator Instructions] Our next question comes from Linda Tsai with Jefferies. Your line is open.
Linda Tsai: Hi. You mentioned the $200 million in leasing and TI spending through 2025. How does this number compare for just 2024 versus 2023?
John Kite: Much higher. I mean, when you look back in 2023, we spent a little over $90 million, which was high, but the year before we spent $60 million. These are round numbers. I would tell you a typical year is going to be between $40 million and $60 million, depending on our lease percentage. So these numbers are well above, which is why we’re pointing it out, Linda. And again, I mean it’s there – we can get into the details of how we got to that lease percentage, which was really driven by a couple of the anchor tenants. And we’re already quickly making progress, because when you look at Q4 over Q3 sequentially, you see that we’re growing in each category. So anchors and shops. So definitely it’s elevated. That’s why we’re pointing it out. And then as we get into 2026, it gets back to normal levels and even better after that. And again, this is assuming we maintain our traditional occupancy levels.
