Thank you, and good afternoon, everyone. Welcome to Kite Realty Group's first quarter earnings call.

Some of today's comments contain forward-looking statements that are based on assumptions of future events and are subject to inherent risks and uncertainties. Actual results may differ materially from these statements.

For more information about the factors that can adversely affect the company's results, please see our SEC filings, including our most recent Form 10-K. Today's remarks also include certain non-GAAP financial measures.

Please refer to today's earnings press release, available on our website, for reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today from Kite Realty Group are Chairman and Chief Executive Officer John Kite, President and Chief Operating Officer Tom McGowan, President and Chief Financial Officer Heath Fear, Senior Vice President and Chief Accounting Officer Adam Jaworski, and Senior Vice President, Capital Markets and Investor Relations Tyler Henshaw.

Given the number of participants on the call, we ask that you limit yourself to one question and one follow-up. If you have additional questions, we ask that you please rejoin the queue.

I'll now turn the call over to John.

Thanks, Bryan, and good morning, everyone. We entered 2026 with an ambitious set of operational and strategic goals, and through the first quarter, we are firmly on target.

Tenant demand remains healthy, our signed-not-open pipeline remains elevated, and the underlying fundamentals of our portfolio have never been stronger. This is a result of deliberate work over the past 2 years to reshape KRG into a higher-caliber, faster-growing, and more resilient company.

We've sold over $600 million of non-core assets, entered into strategic and transformational joint ventures, repurchased shares at pricing well below consensus NAV, and repositioned the portfolio squarely toward higher-growth and higher-quality grocery-anchored lifestyle and mixed-use assets. These actions are proactive, decisive, and disciplined, designed to capitalize on the disconnect between public and private market values while fundamentally elevating the company.

The KRG you see today is significantly improved from where it was 24 months ago. The first quarter was another clear example of that discipline in action.

We repurchased 6 million common shares for approximately $152 million and sold Quorum Plaza, a non-core, lower-growth asset. Together with the activity completed in 2025, we've now repurchased 16.9 million shares for $400 million at an average price of $23.67, representing a compelling arbitrage, buying our own stock at an FFO yield meaningfully wider than the yields at which we've sold lower-growth assets.

As we advance through 2026, we will continue to evaluate capital recycling opportunities that further optimize the portfolio and support our long-term strategic objectives. None of this is possible without the strength and versatility of our balance sheet.

Our ability to sell assets, repurchase stock, enter into strategic joint ventures, fund growth, and continue investing in the portfolio is a direct result of the disciplined financial posture we've maintained over multiple years. We remain committed to operating with conservative leverage, ample liquidity, and meaningful financial flexibility, which allows us to stay opportunistic while continuing to protect the long-term durability of the platform.

That discipline is translating directly into operating performance. Demand for space in our high-quality centers remains exceptionally healthy, and our first quarter results reflect both the strength of the portfolio and the quality of our execution.

Same-property NOI increased 3.6% in the first quarter, a strong start to the year. During the quarter, we executed 151 new and renewal leases, representing over 700,000 square feet.

Blended cash leasing spreads were 13.5%, including 31.3% on new leases. Our non-option renewal spreads were 12.3%, demonstrating the continued mark-to-market potential embedded within our portfolio.

Our leased rate stands at 94.7%, a 90 basis point increase year-over-year, reflecting the continued absorption of our inventory by high-quality, well-capitalized retailers. During the quarter, we signed new leases with a variety of sought-after concepts, including On Running, Reformation, Warby Parker, Total Wine, and Barnes & Noble.

ABR per square foot reached $22.89 at quarter end, a 6.5% increase year-over-year. Our signed-not-open pipeline remains elevated at approximately $36 million of NOI, representing a 350 basis point spread between our leased and occupied rates.

The average ABR for leases in our signed-not-open pipeline is $28 a square foot. Embedded rent escalators are the first stone in the foundation of long-term total return, contractual growth that compounds over time.

2 years ago, our embedded rent escalators were just 156 basis points. Today, they stand at 182 basis points.

As we advance towards our 200 basis point target, that trajectory is driven by factors within our control: strong lease structures, disciplined merchandising, and the deliberate reshaping of our portfolio. Simply put, KRG is in an exceptional position.

We have a better portfolio, a rock-solid balance sheet, a more durable growth profile, and a team that continues to execute with urgency, discipline, and focus. I want to thank the entire KRG team for the hard work that got us here and for the continued energy, commitment, and conviction required to keep raising the bar.

I'll now turn it over to Heath.

Thank you, and good afternoon. After the first quarter, KRG is exactly where we want to be: on offense, on plan, and operating from a position of strength.

We are elevating the portfolio, sharpening the platform, and building momentum for another highly productive year. Turning to our results, KRG generated 52 cents of NAREIT FFO per share and 52 cents of Core FFO per share in the first quarter.

Same-property NOI increased 3.6% in the first quarter, driven primarily by a 250 basis point contribution from higher minimum rents, a 55 basis point improvement in net recoveries, and a 45 basis point improvement in overage rent. On our last call, I indicated our expectation for same-property NOI growth in 2026 to be lower in the first half of the year and accelerate the second half.

It's important to note that the 3.6% result in Q1 exceeded our expectations as a result of higher-than-anticipated overage rent, lower-than-anticipated bad debt, and the reversal of a large real estate tax reserve. As for the trajectory of same-property NOI for the balance of the year, we anticipate a moderation into the second quarter, followed by a reacceleration to the back half of the year as the rents from our large signed-not-open pipeline begin to commence.

Due to outperformance in Q1, we are increasing our 2026 same-property NOI range by 25 basis points at the midpoint. As illustrated on page 5 of our investor deck, the uptick in our same-store guidance is being offset by a corresponding reduction in our recurring but unpredictable items.

As a result, we are affirming our NAREIT FFO and Core FFO guidance of $2.06 to $2.12 per share, based on a same-property NOI growth range of 2.5% to 3.5%, a bad debt reserve of 95 basis points of total revenues at the midpoint, reflecting our actual first quarter results blended with a continuing assumption of 100 basis points for the balance of the year, and interest expense, net of interest income, excluding unconsolidated joint ventures, of $121.2 million at the midpoint, up from $121 million. This guidance fully incorporates the incremental $100 million of stock we've repurchased since our last earnings call, and further contemplates $170 million of 1031 acquisitions scheduled to close in the second quarter.

This represents a $60 million increase as compared to original guidance. And $145 million of non-core and/or tax-loss-driven dispositions, with $12.5 million closed in the first quarter, and the balance closing in the back half of the year.

This represents a $30 million increase in the disposition pool as compared to original guidance. As a reminder, to the extent the aforementioned 1031 acquisitions or non-core sales are not completed, it could result in a special dividend for 2026.

The changes in our transaction assumptions are opportunistic and a continuation of our disciplined focus on matching sources and uses in an earnings-friendly manner. John alluded to, moving to the back half of the year, we will continue to evaluate opportunities to further refine our portfolio, provided that we're able to prudently deploy the proceeds.

Our balance sheet remains one of the strongest in the sector. As of March 31st, our net debt to EBITDA was 5.2 times, consistent with our long-term range of low to mid-5s.

It is worth taking a step back to appreciate the level of transaction activity we've executed over the past 18 months, while still maintaining one of the lowest leverage profiles in the sector. We have access to over $1 billion of total liquidity, providing us with significant flexibility to pursue value-enhancing opportunities.

Thank you to the KRG team for their relentless efforts in driving our results and creating long-term value for our stakeholders. Operator, this concludes our prepared remarks.

Please open the line for questions.

Great. Thanks for taking my question.

As we think about the share buyback program moving from $300 to $600 million, just curious about the willingness to potentially upsize disposition volumes even higher in the back half of the year as we think about the $145 million of non-core assets contemplated in the back half, given the demand for product in the market today and the ability to improve portfolio quality with potentially minimum dilution as we think about buybacks coupled with 1031 acquisitions?

Sure. Hey, Cooper.

I think as we said in the prepared remarks, we're going to continue to evaluate the market and evaluate the opportunities. We want to execute what we have in front of us in terms of the 1031 opportunities to try to close on in the next quarter.

As it's always going to be a function of where cost of capital is, what the opportunities are to reposition the capital. I think we're trying to make it clear that we're reviewing that.

That's a potential opportunity. If you go and look at what we've done in the last year and you include in what Heath had said is in the guidance, you're talking about, if we execute on that, that's $750 million approximately of sales.

This is significant. We continue to try to do that in a very meaningful way in the sense of how we manage the total portfolio, manage the balance sheet, and manage protecting earnings as good as we can.

That's a long-winded answer of saying, yeah, that's a possibility, but a lot of factors involved in that. Heath, you want to add to that?

No, that was great.

Okay.

Great. Thanks.

Then moving towards the economic occupancy side, I believe current economic occupancy sits about 260 basis points below your historical highs, as many of your peers are near or above historical high economic occupancy. Curious if you could just talk about the opportunity set there longer term, and how much the SNO pipeline may contribute to higher absolute economic occupancy levels in the back half of '26 and '27, as we also contemplate some more regular-way churn?

Sure. We think we're bullish on our ability to continue to push occupancy higher, both economic and leased rate.

Year-over-year, we're up. Obviously, sequentially slightly down, which is not unusual in the first quarter.

If you look back over the past 4 or 5 years, I think 5 years, probably 3 of those first quarters are slightly down sequentially. What we're focused on is the year-over-year growth.

We do think there's real opportunity based on lack of supply and continued strong demand. As we've tried to point out, we're very focused in on proper merchandising and we're very focused in on getting the right retailers in the right spaces and trying to pursue this embedded rent growth that is going to pay dividends in the future.

We're not in a super hurry to hit any particular number, but we do feel like there is really strong demand. That's part of what we're doing in terms of repositioning the portfolio is in the sense that this stronger portfolio will be able to maintain higher occupancy over longer periods of time.

Again, yes, we believe we have plenty of room to run.

I would add, a lot of attention, questions, and comments have been around the transaction activity and refining the portfolio. At the end of the day, one of the biggest opportunities in front of us is that core opportunity of leasing.

If you look across the peer set, as you said in your question, Cooper, we've got the most room to run in terms of just growing organically. While all this other stuff is certainly moving us along, let's not lose focus of the fact that we've got the most occupancy rung left.

Great. Thank you.

Thanks.

Good afternoon, everybody. I guess John or Heath, maybe expand on your comments on capital recycling, maybe broadly kind of what you're seeing in the transaction market, the interest level that you've gotten for your assets that you could potentially sell down the road.

Thanks.

Sure. I'll start with that, Sameer.

There is a strong demand for open-air retail. It's coming from really many, many avenues.

I would say in the last 6 months, 9 months, but even 6 weeks, you see a lot more institutional capital positioning to want to be in the space, a rotation, if you will. That obviously puts pressure on cap rates to move down over time.

We really still haven't seen a movement in interest rates. If that happens in addition, that would be additional fuel.

Really, even without that, the demand is strong. I think when people look at their portfolio and they look at how they balance it and they look at risk-adjusted returns, our product screens well.

You have seen that. We still have this ability, we hope, to continue to do what we're doing, which is if we're going to recycle capital, we want to recycle it into higher-growth assets.

Honestly, if you look at page 6 of our investor deck, it kind of shows you what we're doing. Then I think a couple pages later, which is the page 6 shows the increase and decrease that we've had in various product types, and then a couple pages later, you see the embedded rent growth and you can chart that that's going up.

As long as we're able to sell these lower-growth assets at yields well inside the stock yield, that's attractive. Now how we deploy that capital comes down to a complex set of items based on taxable income and 1031 opportunities and stock price, etc.

It's really a real estate exercise. I want to remind everybody of that.

We are very focused on the real estate exercise. Obviously, the equation relates in the sum of what do we do with the capital.

It's complex, but right now we think there's opportunities. Heath, you want to—

I would just say, Sameer, there isn't a pocket of historical retail capital that hasn't been reignited. The breadth of the demand is just incredible.

Frankly, it's better to be a seller right now than it is to be a buyer. With that said, we do have some traction on some of these 1031 acquisitions that we've been talking about.

The market is very, very constructive right now.

Got it. Then I guess my second question, Heath, is on the guidance, right?

Aside, you raised same-store low end, high end, but we didn't see a follow-through on FFO. Maybe you can unpack that.

I think that would be helpful. Thanks.

Sure. On page 5, you'll see that the same-store did boost us up half a penny on a full-year basis, but then that was offset by a corresponding reduction in a recurring but unpredictable item.

Basically, that item is still there, it's just being pushed into 2027. Timing-wise, we thought it was '26 and it's being pushed into early '27.

Nothing happening there. That's why the same-store bump didn't flow through to FFO.

Other thing I would add to that, Sameer, is obviously we held Q2, Q3, Q4 bad debt at 100 basis points. I think the first quarter was closer to 75, but I think we view it as very early in the year.

I think we're always reticent in the first quarter to really jump on to too much. You've still got 75% of the year to unfold.

I think you can look at that as prudent, in my opinion, to not jump on a lot of these things that may or may not happen. I think bad debt and then this recurring but unpredictable are two big categories.

Especially on recurring unpredictable, I think if you look at last year, we were $21 million. I think our guidance is closer to 10.

We'll see [laughter] how the year plays out. A lot of things left to happen, but the core business is very strong.

Got it. Thanks a lot, guys.

Your line is open. Hi.

Thanks. Good afternoon.

Beyond the capital recycling that you have lined up right now and with what's under contract, would you move forward with dispositions without new investment opportunities lined up? Or is the plan really only to activate incremental dispositions, if that you have something on the buy side?

Hey, Todd. As our goal is always to kind of pair these things.

We've got this saying where we like to do stuff in pods, buying and selling. Of course, we're also opportunistic.

If we think that there's a really excellent opportunity to recycle out of a lower-growth asset at an attractive yield versus other yields, then that is possible that we would do that in front of knowing exactly where that capital would go. Again, this is what a really strong balance sheet affords you, that opportunity to be forward-thinking.

The goal is to always try to couple these things. We'll see how that plays out, Todd.

Okay. Then does the current disposition pool, the, I guess $145 million, although I think that you mentioned that $12.5 was included in that in the first quarter, does that pool include City Center?

Can you provide an update on progress for that asset disposition?

It does include City Center, Todd. Listen, we've hoped to transact it on City Center by now, but as we said in the past, it's a complicated vertical asset, and the plan is still to transact before the end of the year.

Okay. All right.

Thank you.

Thank you.

Good morning. Thanks a lot for taking my question.

First question is just on the same-store NOI growth for the quarter. Sounds like you were pleasantly surprised with the upside to that number driven in part by maybe upside to the overage rent and then net recoveries.

Is there anything in the backdrop that is driving those numbers maybe higher than you were expecting? Maybe what would you kind of see as kind of the run rate number for the second quarter before it reaccelerates as the SNO starts to kick in?

Thanks.

The outperformance was rattleable between three things. Was it the bad debt, overage, and also that real estate tax reversal.

As I said in my opening remarks, you'll see it moderate into the second quarter and then reaccelerate to the back half of the year. To your earlier point, it was higher than we'd anticipated.

Moving into the back three quarters, we still have opportunity to outperform on bad debt. We had 80 basis points, I'm sorry, 75 basis points of bad debt in the quarter.

We're still assuming 100. There's still some things that we hope to be able to outperform in the same-store line as we move throughout the year.

For the record, I'm not complaining that the number is higher. I just want to communicate that.

We weren't complaining either. We were happy, Michael.

Then

you highlight a significant arbitrage between asset sale yields and your equity buyback yield. Stock has been doing well.

Shares are up 8% this year, up 10% in the last month. At what point would you seem to slow or pause your repurchases and start to look at some other ways to reallocate capital from here?

Obviously, as we alluded to, that is one of the variables as we move through the year. As we sit here today, we're still in a pretty good position as it relates to discount to NAV and Core FFO yield relative to where we think we can sell assets that we would want to sell.

That's a moving target, and we'll see how that goes. It's just kind of one of those things, it is what it is.

We'll address it as it comes. I think right now, our strategy is, again, it's really real estate based and future growth based.

We want to figure out how to best do that. If this isn't part of the plan, there are other things we can do.

Obviously, last year we did pay a special dividend. We'll see how that goes in the future.

It's just too many variables to really say, Michael, where that's going to be tomorrow or a month from now. Heath, you want to add to that?

No, that's great. Okay.

Thank you.

Thank you very much. Good luck in the second quarter.

Thank you.

Hey, guys. Thanks.

Just curious, the $36 million SNO pipeline, not all of it is same-store. I think only 84% of it is in the same-store pool.

Is that Legacy West that's not part of the same-store pool? Maybe talk about the upside there and when that will get recognized in same-store?

There's

really two elements there, Floris. One of it's Legacy West, and we have an annual same-store concept, Legacy West won't be in the same-store bucket till we've owned it for a full calendar year.

You will see it in 2027 as part of the same-store pool. The other piece that's not included in same-store are the leases that were executed at Loudoun.

Those are the two major components outside of same-store that comprise the signed-not-open pipeline.

Got it. Maybe as my follow-up question, I know you put a little thing out there about you've obviously done a lot of anchor repositioning, you've added a number of new grocer concepts to your portfolio, a number of Trader Joe's and a couple of Whole Foods.

You talk about the returns on capital there. Presumably, that's direct return on invested capital.

Maybe talk about, and I'm curious, this Centennial, we were out in Vegas with you guys on your 4x4 or I can't remember what it was, maybe it was NAREIT or maybe ICSC. Obviously, you repositioned one of those boxes into a Whole Foods.

What has that done? What do you typically see in terms of the knock-on effect to shop leasing and rents in your portfolio when you add one of those grocers to your property?

What would you say would be your fully adjusted return on capital if you were to include those things in there?

Floris, there's no doubt that if we bring in a Trader Joe's, we bring in a Whole Foods, there's tremendous impact, and it's just that continual shop that occurs through the day. Both of those are tremendous drivers for us.

Without question, when you have a new retailer, a new grocer like that, when new deals are going into committee, it helps tremendously. Plus that consistent shop helps drive additional sales throughout.

You have the cap rate compression component, and then in addition, you have the lease-up through new committee deals, and you're driving sales inside your existing tenant base. We always find a way to generate strong returns on these boxes.

If you carry that in, that factor grows incrementally to a number probably 2 to 3 times more than what that would start off with in terms of 200, 300 basis points. It's wildly attractive for us to reposition like that.

Floris, the returns we're generating on capital are in the 30% range, depends on the deal, could be 20, could be 40. Generally speaking, that's just return on capital spent for that retailer.

We don't look at that relative to how that might impact the adjacent space other than the ability, as Tom said, to drive a cap rate down by adding a grocer. Again, it's not all about that, it's about merchandising, too.

When you look at adding how much we've done in terms of adding Trader Joe's and adding Whole Foods, then the next thing the quality of the surrounding shop grows. Maybe that's why our ABR and our signed-not-open is $28, right, versus the portfolio average of $23.50, I guess, somewhere close to that.

I think it's definitely moving us in the right direction.

Thanks. By the way, your ABR growth even year-over-year is 6.5%, which is, I think, pretty juicy.

Is that one of the highest growths that you've experienced?

It's been a pretty good growth rate over the last 5 years, actually. I don't have it in front of me, but 6.5% is pretty strong.

When you look at our ABR and you add into that our embedded rent growth and you compare that to the peer group, it doesn't reflect where we trade.

Thanks, John.

You bet.

Hi. Maybe somewhat of a follow-up, but aside from general portfolio leasing capital, is there any visibility as to how much your annual development or major redevelopment investment could grow to over the next, say, 3 to 5 years?

Hey, Michael. We don't generally throw out a number at the beginning of the year and say we're going to spend $X million on development, redevelopment because we don't like people to chase a target versus chasing great opportunities.

We've been pretty moderated on that in the last couple years because of the significant spend that we've had in just the lease-up portfolio, which is obviously on a risk-adjusted basis a much higher return. As we look out over the next 3 years, that begins to slow down in terms of the internal lease-up capital because we're spending about a little over $100 million a year right now over the next 2.5 years.

When that moderates through this lease-up, as Heath said earlier, then all of a sudden you have a lot more choices to deploy free cash flow. We have a very long history in development and redevelopment, and we know how to do it, and we know how to judge risk.

I would say we will pivot more to that over the next couple years, and you're going to see us do some smaller projects over the next couple years. I think our view is we'd rather have more projects of smaller size than a couple huge ones.

Right now we have a large one at our development at One Loudoun. Frankly, that's very manageable against a $7 billion balance sheet.

Long-winded way of saying I think we can lean into that as the lease-up firms up over the next 2 years.

I would add, we shouldn't construe that the lower development spend now with the development opportunity in the portfolio. Lowest-hanging fruit's Loudoun.

We still have 35 acres of land after we're done with this expansion. I think it includes another 1,100 multifamily units, another 1.7 million square feet of commercial.

We've got lots of opportunity in the portfolio. As John said, the current priority right now is leasing, and when that spend starts to decline, that pipeline will pick up.

No doubt, and Loudoun's moving along very nicely in terms of lease-up as well.

Got it. Okay.

Thanks. Second, apologize if I missed this someplace, but what's the range of cap rates for the 1031 and non-core sales?

We didn't give an exact cap rate range, Michael, but I think in terms of the 1031s, we continue to see opportunities for stuff that we want to own, very high-quality assets, kind of in the 8% to 9% unlevered IRR range, that's kind of what we're pursuing. As we've said before, the type of stuff that we're selling is kind of in the 7 range depending on what it is.

That's where the trade is currently.

Got it. Okay.

Thank you.

Thank you.

Hey, good afternoon out there. John, as we look at the SNO pipeline, pretty good ramp from now through '28.

Just sort of curious, is there a way to accelerate this, or is a lot of this just dependent on there people already in that space, and you have to wait for those leases to expire, and then just the time it takes to move for the tenants to build out the space, move in? Just trying to understand any way to accelerate this timing versus it's structural, and there's really not much you can do because of all the moving pieces, and perhaps existing leases that are already there?

Alex, obviously we're always trying to accelerate the buildouts of these spaces in the SNO pipeline. A lot of this space was former anchor space, right?

That's going to have a longer gestation period. As those generally on average between lease signing and rent commencement could be 15 to 18 months, depends on what it is, depends on the level of construction.

Also, don't forget that we have to deal with municipalities in multiple markets that slow you down despite the narrative that that's changed. I don't think it's changed that much.

We would like to accelerate that. We absolutely would.

In one regard, you're just pulling forward something you know you're going to get, but NPV-wise, it makes sense. We're pushing hard to accelerate, but I think it is what it is.

The good news is the demand is there, the SNO is strong, and as I said earlier, if you look at the rents, it really reflects where we're going as a company. That's a very positive thing to take out of that.

Be assured, Alex, we're doing everything we can, whether it's permit expeditors, starting drawings right out of Real Estate Committee. We try to pull every lever, and it's a huge objective around here to move those up.

Between you and John, Tom, I never have to worry about not moving quickly. The second question is, on the heels of the Quorum sale, and you talked about more dispositions, have you sort of outlined how much more of your portfolio you think I don't want to say as Quorum-like, but how much more doesn't fit as you think about where you want to take the portfolio?

Is it still 10% more, 20% more, or do you think that most of the lower-performing assets are gone, and now it's really sort of fine-tuning based on opportunity? I'm just trying to figure out how much are sort of definitely we got to sell versus, okay, these are potentials if we have opportunity for something accretive on the other side.

I think obviously we do a robust analysis of the portfolio all the time. There definitely are assets that we believe don't fit the future in KRG.

As we talked about in the prepared remarks, we still have a goal of pushing our embedded rent growth to 2 versus where we are today. There's work to do there.

Some of these assets that we're selling, Alex, are high quality, but lower growth, and there are a few like you mentioned Quorum that just didn't fit at all. There are a handful of properties like that.

Probably the bigger number would be the properties that just don't have the growth profile that we're looking for, and that we also think are potentially a little more tethered to at-risk future tenant issues, right? There is a portion there, but it's not a huge portion, and this is more methodical around the underlying future growth and real estate quality.

I'm sorry, Alex. Go ahead.

No, you go, and then I'll follow up.

I was going to say, when we started this disposition program, we did the best we could to ensure folks this is not a multiyear program that's going to result in FFO dilution over 3, 4, 5 years. This was trying to get this done in '25 and '26.

As John said, there's a handful left, and we can get it done, if we deploy the proceeds in a prudent manner, we will. If we don't, that's okay, too.

We're always sort of cycling out of 1, 2, 3 assets a year, and that's sort of the expectation. If we get it done this year, we will.

That's helpful. Listen, thank you.

Thank you.

Hey, thanks for taking my question. One for me is about Legacy West.

Curious how it's performed versus initial expectations, and if there's been any incremental opportunities with new tenants expanding from Legacy West to other assets in the portfolio?

Thank you for that. Legacy West has performed marvelously.

It's been a great asset for us and our partner. We've made really significant progress in a short period of time on increasing rents, particularly on the retail front.

As you've followed, I'm sure, we've announced lots of new leases that we've signed since we bought it, and the mark-to-market on the rents has been exactly what we thought it would be when we acquired the center. The ABR in the retail component was 65 bucks a foot, and we're doing deals north of $100 a foot routinely.

That's spectacular. The multifamily side has picked up a lot in the last quarter quite well.

The office is really strong. This is really high-quality office in a very sought-after little slice of a fabulous submarket in Plano.

Obviously, AT&T has recently announced their global headquarters there, which is just one of a few major announcements that they've had in Plano. We feel really good about that.

In terms of transferring of opportunities to other parts of the portfolio, it was another reason that we wanted to add it to our portfolio. When you now look at, for example, our top three lifestyle assets, Southlake, Legacy West, and One Loudoun, and you look at the NOI it's generating versus I think it's about 15% of our ABR now, just those three assets, but it's 5% or 10% of our total GLA.

It shows you the strength of that. Now we're doing deals across the portfolio with these high-quality tenants that now are very aware of KRG.

It's been a massive win for us, a massive win for our partner, and we're looking forward to trying to find more of those opportunities.

Awesome. That's it for me.

Thanks, guys.

Thank you.

Thank you.

Hey, guys. Heath, maybe I'll just go back to your comment about the strength of the operating portfolio to maybe step away from cap recycling for a minute.

Just looking at kind of the percent leased here over the last several quarters, anchor obviously has been doing well, but small shop, you briefly got over 92% and backed down slightly below it. What's the timeframe or the outlook internally to get this, maybe to 93% plus?

What's been kind of the obstacle to ramp it as quickly as you've ramped anchor?

Listen, we don't guide to occupancy, Craig, but we have said publicly before that we think by the end of this year, we should be at occupancy levels that are approximating our historical highs, right before COVID. The good news is that we don't think that that's the ceiling at all.

We've seen a lot of our peers sort of bust through their historical high watermarks, and we intend to as well. At the end of last quarter, we were at 92.1%, I think, in the small shop space, which was 40 basis points away from where we were at historical high, took a seasonal step back.

We can lease way through 92.5% to maybe 93% or 94% on the small shop space. On the anchor side, the step back at this quarter on a sequential basis was related to Value City.

Again, we are busy backfilling those boxes and making great progress. We're very, very bullish on our occupancy opportunity.

Again, it is the largest and most meaningful opportunity in the peer set, right? We've got, as I said before in the past, everyone's going to peak on their occupancy gains in terms of their same-store.

Ours is coming at a different time, and we're going to start seeing that in the back half of this year into 2027.

One other thing that we've been doing, Craig, is we've been very proactive in terms of trying to improve the mix. If somebody's coming off of a non-option scenario, what we'll do right away is we'll just say, 'Hey, if we can do better, we're going to move them out and end up with a better-quality tenant.'

We've been doing a lot of that inside these numbers, and we'll continue to do it, but we're absolutely ending up with great decisions and great tenants.

Craig, I think you remember me talking a couple years ago about the fact that we're never going to lease space quickly. We're going to lease space in a very, very diligent way, and that's part of what Tom means is that can we take deals maybe faster by accepting a tenant that we don't love or a rent structure that we don't love, particularly rent growth?

We could. If you look at our statistics relative to the peers, there's no doubt we were, in my opinion, a market leader in rent growth in the small shop space, right?

If you look at where we were in 2019 versus where we are today in 4% a year small shop growth, it's incredible in terms of the number of tenants we've been able to convert to 4% or north of 3%, right? If you do a bunch of deals at 2% rent growth, you're going to do them faster.

If you're diligent about this and you end up with the right tenants that are growing at 3.5% to 4% in the shops, you're going to thank me for that in a couple years.

No, that makes sense. I appreciate the detail there.

Then maybe actually shifting back to the capital recycling. John, I think you said $750 million of kind of sales is what you guys have left.

Is that right?

No, what I said was, if you look at what we sold last year and then you combine what Heath pointed out that we are targeting to sell this year, combined, that's I think close to $750 million. That's what I said there.

We'll see if we hit that. We still have to do another $130 million, I think, this year to get to that number.

That's just what we have identified, Craig.

Gotcha. I guess the gist of my question was going to be, if you could snap your fingers today, kind of where would the mix of kind of neighborhood, regional power, lifestyle ultimately be to where you feel like the risk-adjusted returns are maximized, and maybe as you look at what you would have to sell to get there, kind of how much of it is in the more difficult bucket versus there's definitely pockets of capital that would want it, and it would be sort of easy to medium difficulty?

Obviously, everybody kind of classifies what's power versus what's a community center maybe a little differently, but if you look at how we have identified it in our investor presentation, our power is down 500 basis points and we're at about 19% of our portfolio relative to ABR is in power. We've said we'd like to get that down to I don't know, 12%, 13%, 14%.

There's some really high-quality assets in there. Then if you look at our regional community versus our neighborhood community and shop and grocer, we'd like to pivot that more to the neighborhood side as well, maybe the same amount, maybe another 5% to 10%.

Really in the end, it's not going to be about 'Oh, we've got this perfect composition on a percentage basis.' It's going to be more about the embedded rent growth in the quality of the real estate, Craig.

Again, I would challenge you to look at where we trade, where our ABR is, what our embedded rent growth is, and what the higher multiple guys are at. It is what it is, and as long as it's there, we'll continue to try to take advantage of that in the way that we can.

Certainly, the private institutional investors are well aware of that and well aware of what's going on in our space. It's odd to me, but it is what it is, [laughter] which I keep saying.

It's odd to me, but that we wouldn't actually, as a group, trade at a premium for the liquidity, but it's actually vice versa, that you're trading at a discount for the liquidity, which is quite odd. At any rate, I do think there's real opportunity there to improve that, Craig.

We're going to have to take it one step at a time. We've identified what we have, and we'll see.

We've still got three quarters of the year left. As Heath said, if those opportunities avail themselves, we'll try to take advantage of that, and then after the end of this year, then we would think, man, the portfolio composition is really good.

Then, again, as Heath said, we're just back to the normal paired trades, a couple deals here, a couple deals there.

Great. Thanks.

Thank you.

I just again want to thank everyone for joining us today, and have a great day.