Financial Data and Key Metrics Changes - Kite Realty Group Trust reported NAREIT FFO per share of $0.55 and core FFO per share of $0.53 for Q1 2025, benefiting from a $0.03 contribution from a large termination fee [15][16] - Same property NOI grew by 3.1%, driven by a 350 basis point increase from minimum rent and a 90 basis point increase in net recoveries [16][18] - The company raised its 2025 NAREIT and core FFO per share guidance by $0.02 each at the midpoints [10][18] Business Line Data and Key Metrics Changes - Blended cash leasing spreads in Q1 were just under 14%, with non-option renewal spreads at 20% [9][10] - Starting rents for comparable new shop leases were nearly $41 per square foot, approximately 20% higher than the current portfolio average [9] - New and non-option renewal shop leases signed in Q1 had weighted average rent bumps of 360 basis points, nearly 100 basis points higher than three years ago [10] Market Data and Key Metrics Changes - Demand for space in high-quality centers remains healthy, with strong interest from larger format tenants [8][10] - The office component of Legacy West is 98.7% leased, while retail is at 95% [25] Company Strategy and Development Direction - The acquisition of Legacy West in a joint venture with GIC is seen as a pivotal step forward, enhancing portfolio quality and solidifying the company's position in lifestyle and mixed-use assets [11][12] - The company aims to pivot its portfolio towards mixed-use properties while still maintaining a presence in grocery-anchored centers [63][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to produce strong results in 2025 and deliver long-term value for stakeholders [13] - The company is optimistic about the mark-to-market opportunities within the Legacy West acquisition, expecting significant rent growth over the next three years [24][47] Other Important Information - The company has increased its general bad debt reserve midpoint by 15 basis points to 100 basis points of total revenues, reflecting increased economic uncertainty [18] - The acquisition is expected to be immediately accretive to FFO per share while modestly increasing pro forma leverage by 0.2 times [12][20] Q&A Session Summary Question: Expected NOI growth rate for Legacy West and current occupancy rates - Management indicated that the embedded rent bumps for Legacy West are 2.6%, above the portfolio average of 1.7%, with office occupancy at 98.7% and retail at 95% [23][25] Question: Office demand and tenant turnover - The office product is described as extremely strong, with high tenant satisfaction and a submarket lease percentage of around 95% [26][27][29] Question: Relationship with GIC and future investments - Management confirmed interest in expanding the relationship with GIC for additional investments and joint ventures [31] Question: Shift in bad debt reserve and tenant conversations - The shift in reserves was attributed to better-than-expected outcomes for bankruptcies, with no significant increase in aged accounts receivable [38][40] Question: Transaction environment and asset sales - The market remains healthy for larger format deals, with competitive cap rates and active acquisition buyers [41] Question: Sales productivity comparison among Legacy properties - Legacy West is expected to have similar or slightly better sales productivity compared to Southlake, with a higher concentration of luxury retail [115][118]

Financial Data and Key Metrics Changes - Kite Realty Group reported NAREIT FFO per share of $0.55 and core FFO per share of $0.53 for Q1 2025, benefiting from a $0.03 contribution from a large termination fee [14][15] - Same property NOI grew by 3.1%, driven by a 350 basis point increase from minimum rent and a 90 basis point increase in net recoveries [15] - The company raised its 2025 NAREIT and core FFO per share guidance by $0.02 each at the midpoints [9][15] Business Line Data and Key Metrics Changes - Blended cash leasing spreads in Q1 were just under 14%, with non-option renewal spreads at 20% [7] - Starting rents for comparable new shop leases were nearly $41 per square foot, approximately 20% higher than the current portfolio average [7] - New and non-option renewal shop leases signed in Q1 had weighted average rent bumps of 360 basis points, nearly 100 basis points higher than three years ago [8] Market Data and Key Metrics Changes - Demand for anchor spaces remains strong, with significant interest from larger format tenants [8] - The office component of Legacy West is 98.7% leased, while the retail component is 95% leased [23] Company Strategy and Development Direction - The acquisition of Legacy West in a joint venture with GIC is seen as a pivotal step forward, enhancing portfolio quality and solidifying the company's position in the market [10][11] - The company aims to pivot towards mixed-use properties while still maintaining a diverse portfolio that includes grocery-anchored centers [60][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to produce strong results in 2025 and deliver long-term value for stakeholders [12] - The company is optimistic about the mark-to-market opportunities within the Legacy West acquisition, expecting significant rent growth over the next three years [22][44] Other Important Information - The company has increased its general bad debt reserve midpoint by 15 basis points to 100 basis points of total revenues, reflecting increased economic uncertainty [16] - The acquisition of Legacy West is expected to be immediately accretive to FFO per share while modestly increasing pro forma leverage [12][19] Q&A Session Summary Question: Expected NOI growth rate for Legacy West and current occupancy rates - The embedded rent bumps for Legacy West are 2.6%, above the portfolio average of 1.7%, with office occupancy at 98.7% and retail at 95% [22][23] Question: Office demand and recent leasing activity - The office product is strong, with high tenant satisfaction and a sub-market lease percentage of 95% [24][26] Question: Relationship with GIC and future investment opportunities - The company is actively working on a second joint venture with GIC and sees potential for further investments [30] Question: Changes in bad debt reserve and tenant conversations - The shift in reserves reflects general market uncertainty rather than specific tenant issues, with no increase in aged accounts receivable [35][38] Question: Transaction environment and pricing sensitivity - The market remains healthy with competitive cap rates, and there is good demand for larger format deals [39] Question: Sales productivity comparison among Legacy properties - Legacy West is expected to have similar or slightly better sales productivity compared to Southlake, with a higher concentration of luxury retail [110][113]