Q&A. I've got a list of questions as well, I wanna make this as interactive as possible. With that, I'll turn it over to Ross. Thanks.
Thanks, RJ. Good morning, thank you to the Raymond James team for having us. It's great to be here with everyone joining us today, both in the room and via webcast. This is our first time participating in this conference, we're particularly focused on connecting with more generalist investors and bringing the Kimco story to a broader audience. Kimco today owns and operates one of the largest and highest quality portfolios of grocery-anchored, open-air shopping centers in the United States. Our properties are concentrated in dense Suburban and Infill markets and are anchored by leading supermarkets and essential retailers, the places consumers visit every week for food, health, value retail, and services. We've built the portfolio around two principles, resilience through economic cycles and steady, disciplined growth over time. Let me start with resilience. Our centers are necessity-based.
A meaningful portion of our rent comes from grocery anchors and daily needs retailers. These are locations tied to recurring consumer behavior, not discretionary trips, which supports consistent traffic and stable occupancy. At the same time, this segment of retail real estate has seen very little new supply over the past decade. In the infill markets where we operate, land is scarce, zoning approvals are difficult, and construction costs remain elevated. As a result, well-located grocery-anchored centers are increasingly difficult to replicate. That combination, essential tenant demand and limited new supply, supports high occupancy and durable rent growth. In 2025, portfolio occupancy finished at 96.4%, matching an all-time high, and small shop occupancy reached a record 92.7%. Financial strength reinforces that resilience.
We ended the year with more than $2.2 billion of liquidity, net debt to EBITDA of approximately 5.4 x, and an A-rated balance sheet across all three major rating agencies. That balance sheet gives us flexibility in both stable and more volatile environments. Turning to growth. In 2025, Nareit funds from operations, our primary earnings metric, increased 6.7% year-over-year, making us one of the only shopping center REITs to achieve over 5% FFO growth in 2024 and over 6% in 2025. Same property NOI grew 3% for the year, reflecting healthy underlying fundamentals in the portfolio. The majority of our earnings growth is internally generated, driven by leasing, contractual rent commencements, and operating execution, and complemented by disciplined capital allocation. One of the clearest sources of visibility is our signed-not-opened pipeline.
At year-end, we had $73 million of annual base rent under signed leases where stores are currently in build-out. As those stores open over the next several years, that rent begins paying and flows directly into earnings. That represents embedded contractual growth already in place. Leasing demand remains strong. In the fourth quarter alone, we signed 1.2 million sq ft of new leases, including record anchor volume, while experiencing historically low levels of anchor vacates. Retailers continue to prioritize well-located grocery-anchored centers in dense markets. In early 2024, we acquired RPT Realty, a complementary grocery-anchored open-air portfolio. Since closing, we've improved occupancy and integrated those assets into our operating platform, demonstrating the benefits of scale, national tenant relationships, and disciplined execution. Capital allocation is a key lever in enhancing long-term growth.
We actively recycle capital by selling lower growth assets at attractive private market valuations and reinvesting into higher yielding, higher growth opportunities. For 2026, we have identified $300 million-$500 million of potential dispositions, primarily long-term ground leases and lower growth multi-tenant centers. We expect to redeploy that capital into shopping centers at cap rates roughly 100 basis points higher at the midpoint while acquiring assets with stronger long-term growth characteristics. Our structured investment platform further differentiates us. We invest in preferred equity and loans tied to grocery-anchored real estate at yields around 9% while securing rights of first offer or refusal on the underlying properties. This provides attractive current income and creates a proprietary pipeline for future acquisitions when pricing is compelling.
In addition, we continue to unlock value within the existing portfolio through selective redevelopment and entitlement initiatives, including pad development, anchor repositioning, and mixed-use densification where economics justify the investment. These projects are targeted, risk-adjusted, and focused on enhancing long-term asset growth and asset quality, and growth. We also repurchase shares opportunistically when pricing implies a meaningful discount to underlying real estate value while maintaining disciplined leverage. For 2026, our initial FFO guidance range represents 2%-4% growth supported by same-property NOI growth, continued rent commencements from our signed pipeline, disciplined capital recycling, and selective investment across our redevelopment and structured platforms. When you step back, Kimco today combines necessity-based cash flows, limited new supply, visible embedded growth, disciplined capital allocation, embedded redevelopment optionality, and an A-minus rated balance sheet.
We believe that combination is difficult to replicate and positions the company to deliver steady, durable earnings growth across economic environments. We appreciate the opportunity to share this story, and we look forward to your questions. Thank you.
Thanks, Ross. I'm gonna kick it off with a few questions, and then we'll open it up to everybody else. Ross, you talked a lot about grocery anchored, and that's certainly been a focus for Kimco over the years, is increasing their exposure to grocery anchored assets. Can you talk about the difference between, say, a grocery anchored center and a more power center-focused property? Why is grocery so important?
Yeah, absolutely. When you look at Kimco, I mean, we are diversified in terms of our platform. We own all sorts of open air retail environments, whether it be grocery anchored neighborhood centers, bigger box, power, as well as lifestyle and more specialty hybrid. The grocery anchored shopping center is clearly the most in demand today for investors. When you think about what that brings to the table, you have recurring trips. When you think about the valuation that investors are looking to pay for shopping centers, the cap rate compression that comes from a grocery component within the shopping center is clear and tangible.
We like to curate a shopping center that has a co-tenancy or a tenant mix that is going to bring traffic and consumers to the asset at all points of the day and into the evening. You have that morning, breakfast, fitness, into the grocery anchor that is an all-day, occurring trip for consumers, as well as restaurants, F&B, and service-oriented retailers. You've seen a lot of Medical, and other services that have continued to showcase in our centers, and then trying to get a little bit of that entertainment mixed in where appropriate so that, again, you have customers that are coming to the asset morning, afternoon, and into the evening.
Back in when I was covering the sector back in 2017, 2018, 2019, very difficult. A lot of negative headlines about retailers that were leaving bricks and mortar, moving to online. All of a sudden we have COVID. There's a huge spike in demand for your local grocery anchored shopping centers. We've seen a tremendous amount of retail leasing over the past several years since COVID, hence the big signed-not-opened pipeline. Can you talk about sort of what you saw during COVID and sort of the lessons learned in terms of, you know, what retailers are looking for and the need for a physical location?
Yeah, absolutely. What shopping centers that we own in the primarily first ring suburbs bring is that we are infill locations that are located within where the population exists. To your point, you know, pre-COVID, we had seen very strong, you know, shopping centers that had strong occupancy, was well visited and whatnot, but the headlines and the sentiment was that e-commerce was overtaking the physical bricks and mortar. What we actually have seen is that the omni-channel approach of having the optionality for the consumer to get their goods either in store or delivered is what the consumer is really looking for. Frankly, the retailer is doing everything in their power to bring you to the shopping center 'cause clearly the most valuable and profitable transaction for the retailer is in store.
When the pandemic hit, what ultimately happened was the whole narrative around the retail apocalypse really went away, and what became clear was the value proposition of physical bricks-and-mortar retailer, where the consumer can go to the store, whether they're buying the asset in the store, whether they're ordering it online and picking up in the store. We rolled out curbside pickup, which was a really touchless, convenient way for a customer to get their goods in a very uncertain time during the early stage of the pandemic. It showcased the power and the utility of our product. The retailers who, prior to the pandemic, when interest rates were really low and capital was freely flowing, were investing a lot of their, you know, incremental dollar into building up their e-commerce platform.
That really reversed, so that the retailers were putting a tremendous amount of investment back into their store, and they've seen the benefits of that. Our retailers are extremely healthy today. They continue to expand at rapid and record paces. As I mentioned in the prepared remarks, the amount of new supply in this environment is really muted. When you think about what type of rent levels you would need to achieve in order to justify new development for a developer, coupled with, you know, the increased cost of financing over the last several years, labor costs, construction costs, it is very challenging to make a new shopping center pencil from a ground up perspective, which has really put the supply demand fundamentals and dynamics very much in the favor of the landlord.
Ross, you just mentioned very healthy tenants, right? We've seen historically low levels of bad debt or tenant fallout over the past couple years, despite some of the headlines where, you know, all of a sudden you hear one or two retailers that's going out of business, which is really just the normal cost of doing business in retail. Can you talk about the types of tenants or specific tenants that you guys are signing leases with? Where's the bulk of the demand coming from?
Yeah, it's exactly to your point. I mean, there's a constant evolution in retail. To have a little bit of churn is actually normal and extremely healthy. You know, we have a portfolio that has a very high occupancy level, and what happens is, in any given year, particularly now, we're seeing all-time high retention rates. 90% of the tenants that roll when their lease is coming due are either exercising a tenant option that they have at their disposal, or they're renewing their lease in the current space.
When 7% or 8% of your rent roll actually rolls in any given year, but 90% are staying in place, you really only have the opportunity to mark to market, you know, anywhere from 2%-3% of that particular rent roll and bring it to the current market rent. We have a very stable portfolio, very stable, environment that we're in today as it relates to retail. The retailers themselves, based upon the dynamic that I just mentioned with virtually no new supply, their only real opportunity to find growth is a little bit of churn if you get a bankruptcy or a tenant that's struggling that you can roll out and bring in a new tenant, better credit, better traffic generation.
That is a very healthy dynamic that we have today, and we're seeing it across the board in terms of all tenant categories. You know, grocery continues to expand, and when you think about the grocery environment in particular, there's different categories that are all expanding at different paces, but we're seeing that growth across the board, whether it be the traditional grocer, like a Publix here in Florida. You think about the discount grocer, like the Aldis and the Lidls that are growing pretty significantly. Not to mention, of course, you know, the Walmarts that have a very large share of grocery. You have the organics, whether it be a Whole Foods that continues to expand, Trader Joe's, Sprouts Farmers Market, and then the ethnic grocers are really coming on strong. All different demographics, whether it's the Asian, Hispanic.
We're seeing the Indian grocers continuing to expand. Grocery is a really important growth retailer in our industry. You have fitness, health and wellness, and beauty, which is really important to the consumer today, and certainly the upcoming demographic and the younger crowd, very focused on appearance and health. Sporting goods. Dick's is coming out with their House of Sports that you're seeing pop up in a variety of locations, as well as all different categories of furniture. Off-Price, of course. You know, TJ Maxx and TJX and their five banners. Ross and their multiple banners. Burlington. We're seeing a tremendous amount of growth from that. The services, especially when you think about the small shops which we categorize as anything that's 10,000 sq ft or below.
You're seeing over 70% of our new leases in small shops from service-oriented retailers, whether it be, food and beverage, F&B, more of the boutique fitness, as well as, you know, fast casual restaurants and whatnot. There's a really strong pipeline and growth trajectory really across the board.
You just touched on it on the small shop side, and maybe to slice it a different way, obviously, we can read the headlines for some of these publicly traded retailers. Can you talk about the tenant health of some of your smaller business operators, the real mom-and-pop tenants, the nail salons, the small restaurants, and, you know, what trends you're seeing there?
Yeah. The really interesting change, I would say, over the last five to 10 years in our industry is you mentioned mom and pop, and mom and pop has become somewhat of a misnomer or even an obsolete category because what we've seen is that on the small shops, it's actually a lot of the national credit tenants that are opening in those smaller locations. We actually have a slide that we've put into our investor presentation, which I think is a really powerful indication of who is expanding. 100% of our top 50 small shop tenants, again, any retailer that's smaller than 10,000 sq ft, are national in nature. Even that traditional mom-and-pop pizzeria, it's now a national franchise chain that is expanding.
When you think about the bank branches that continue to grow and the ATMs and whatnot, the Starbucks, the fast casual restaurants, it's, it really is very much national recognized names as opposed to, you know, the traditional mom-and-pop one or two location type operator. It's a very healthy dynamic, and that's why we've seen our small shop occupancy achieving all-time highs at the end of 2025, and we believe that there's still some room to run there.
Great. This is a good time to pause and see if we have questions. Yes. Sure. Let me just repeat the question. What's the outlook for new rents, i.e. leasing spreads, and then how do you balance that between the outlook for capital investment, CapEx, that you're gonna be putting into the new leases?
Yeah. It's a great question. Any deal that we look at on the leasing front, we're looking at it from a net effective rent perspective. We're very much factoring in the costs associated with doing those deals. Again, based upon the supply-demand dynamics that I outlined, we have a lot of leverage and pricing power within the retailers that we're negotiating leases with. When you look at the leasing spreads, which we post every quarter as part of our earnings, we continue to see really strong positive leasing spreads, double-digit nature, whether it be new leases, renewals, as well as options. Across the board, we've had a really strong run of positive leasing spreads, particularly when factoring in the net effective rents.
Again, we don't see that dynamic changing just based upon the retention rates that we're seeing, the lack of new supply, and the demand that our retailers have for our space.
Additional questions? Yes. To repeat the question, how do you think about the capital allocation decision between going out and acquiring new assets versus redeveloping assets? I'd also throw a third in there about stock buybacks.
Yeah.
How do you make that decision, to talk us, walk us through the decision tree there?
Yeah. Capital allocation is a very important part of our strategy and our everyday decision-making. Our job as an organization is clearly to invest our capital at the widest spread to our cost as possible. When you think about our investment strategy, we do look at it on a blended basis of all the different pillars of investment that we have, whether it be acquisition of new shopping centers, redevelopments, our structured investment program which I mentioned, where we're putting out preferred equity and mezzanine financing, as well as stock buybacks. They are all a part of that allocation strategy. Today, the highest return on our capital that we can achieve is one, just straight leasing. That is the best return on our capital that we can make.
When you look at the redevelopments that we've been able to achieve, those are blending in the sort of low double-digit incremental returns. Stock buybacks, you know, the stock price fluctuates, and the return that we can achieve on buying back our own stock is a bit of a moving target. When we do see significant dislocation, as we saw in the fourth quarter of 2025 and even the very early stages of 2026, we will take advantage of that when we believe that the dislocation is significantly wider than it should be. Acquisitions are always going to be a part of our strategy. It is extremely competitive in the environment today.
There's a tremendous amount of capital and new capital formations, institutions that are really excited about owning open air, primarily grocery anchored shopping centers, which have really pushed cap rates to significant lows, therefore it's been a bit more challenging to acquire assets in the open market. We have had a lot of success, particularly when you think about the last five years. We've acquired two public companies using our stock as currency on a relative valuation. Weingarten Realty was a Texas-based company that we were able to acquire sort of early in the pandemic when there was a significant amount of dislocation. Then RPT Realty, which I mentioned, that we acquired at the beginning of 2024 during a bit of an uncertain time in the, in the market.
We have a strong level of conviction in open air retail, we were able to take advantage of that. With our strategy this year that I mentioned, the $300 million-$500 million of dispositions, there will be a healthy amount of taxable gain associated from those dispositions. We know that acquisitions will be a part of our strategy, as we'll have to utilize some 1031 exchanges to defer some of the tax gains that we're going to achieve. Long-winded way of answering your question. There is going to be a bit of each of those different segments in our capital allocation strategy, when you blend it all together, there's a pretty healthy spread between where we're investing capital versus where the cost of that capital is.
Additional questions? Ross, before I think, we wrap up, obviously for a more generalist-focused conference, it's important to talk about the dividend. How does the board, management think about the dividend? Maybe put it in the context of the large signed-not-opened pipeline and how that comes online over the next couple of years and, you know, what kind of payout ratios does the board and the company target?
Yeah. Absolutely. I mean, the dividend is clearly a critical part of the investor, and the rationale for why you buy Kimco. We have an extremely healthy and well protected dividend, both from an AFFO and an FFO payout ratio. We're very focused on those metrics, as is the board, in making sure that we have a tremendous amount of cushion. Now, as a REIT, we are required to distribute, you know, over 90% of our taxable income to the investors. When you think about where we're at right now, we're more or less at very close to 100% of taxable income that gets dividend out to the investors.
You've seen a very healthy and consistent growth in that dividend year-over-year, and that is expected and anticipated to continue as taxable income continues to grow, as will the dividend will grow in lockstep. You asked about the SNO pipeline, and one thing that I want to mention is while I talked about the $73 million of the SNO pipeline, which is the signed but not open, that will be coming online throughout 2026 and into 2027. The important factor is when we quote $73 million, that is just base rents. What you're also not including in that's factored on or layered on top of that, is all of the pass-throughs, the triple nets, the common area maintenance that's being reimbursed, the real estate taxes, the insurance.
You really do have a pretty significant effect of not just that $73 million of rent, but then, the pass-throughs that come on top of it. It's really a significant needle mover, and when we put out our guidance for the year that's indicating, you know, what we anticipate coming online in that particular year. We are generally taking a pretty conservative approach of what is indicated within the lease that is signed from a timing perspective. Our job, and there are multiple people throughout the organization that are focused on, how do we compress that timeframe. 'Cause every day that we get a tenant open and paying rent, and paying those pass-throughs sooner, goes directly to the bottom line.
In 2025, we were actually able to achieve 15% higher in terms of what we actually were able to achieve from that SNO pipeline versus the guidance, and that's what we're anticipating or at least hoping to achieve for 2026. You put out a number that is very achievable, and then our job is to go out and beat that.
Excellent. Before we conclude, any additional questions? Yes. Sure. The question is, which geographic markets are you seeing the most growth and demand, and whether or not you think that's sustainable.
Yeah. It's another good question.
I'm sorry, Ross-
It's okay.
... but you could probably put that in context with the lack of new supply.
Yeah.
Right?
Absolutely. Yeah, I think another nice part about the Kimco portfolio and strategy that is a bit of a differentiator from some of the peer group is that we are geographically diversified. We own assets in the top 20, 25 major MSAs around the country, that's coast to coast. From our perspective, there's different moments in time and opportunities where it makes sense to invest in certain geographic locations over others. Just going back even over the last five years, when we acquired Weingarten Realty, which I mentioned, early in the pandemic in 2021, that was a portfolio that was heavily based in the Sun Belt. If you recall, during the early stage of the pandemic, I know we're trying...
all wanna put that in our rear view and not necessarily think back to it. What was happening at that point in time was that the Sun Belt was clearly recovering and growing at a pace that was significantly faster than other parts of the country. When we acquired Weingarten, while we were so convicted in that portfolio and that company, it was because of the assets that they owned throughout Texas and Phoenix and the Southeast, Florida, big presence here in Orlando and Tampa. That was a really strong trade for us. What we started to see was every company and every asset class, not just open-air retail, was buying anything that they could in the Sun Belt, it got really frothy and overheated.
We went and we bought a high quality portfolio on Long Island in New York, where I think a lot of the investor sentiment was a little bit, you know, frozen for the time when there was some uncertainty during the pandemic. When you think about the RPT portfolio, you know, that had a very strong geographic concentration in Florida and Boston, but there were also some really strong assets in the Midwest, Columbus, Ohio, Suburban Detroit, St. Louis, Minneapolis, that were performing exceptionally well. We felt really good about buying a portfolio of assets that were located in that geographic part of the country when I think investors were still maybe not as focused on the Midwest.
And now what you've seen in the last couple of years is a lot of our peers have gone pretty aggressively back into the Midwest. Long-winded way of answering your question, but I would say that there's growth opportunities in all these pockets, and we try to just use our national operating platform to pick our spots when maybe there's a little bit of dislocation or pricing arbitrage. Just to add on to that example, when you think about the acquisitions that Kimco made in 2025, one of the acquisitions was a buyout of one of our JV partners in Hillsboro, Oregon, which is a first-ring Suburb of Portland.
I think a lot of institutional investors looked at Portland and parts of the Pacific Northwest and had some concerns based upon headlines and maybe not as strong a recovery from the pandemic in that part of the country versus others. When you actually take a step back and think about what's happening in those markets, Portland in particular, while the downtown urban core, you know, might not have recovered as swiftly as some of the other downtowns throughout the country, the first-ring suburbs, in many cases, has been the main beneficiary of that.
To acquire an asset like we did that has a strong performing Safeway and a strong performing Trader Joe's dual grocery anchored shopping center at what we felt was a real discount to where a similar asset would trade in other major markets throughout the U.S., that was a pretty attractive acquisition opportunity for us. Just in December of this past year, we acquired an asset that was a right of first refusal that we had on one of our pref equity investments. Our borrower was going to sell the asset in Queens, New York. Very dense infill, grocery anchored with the who's who of small shop retailers, Chick-fil-A, Chipotle, Starbucks, Medical. They marketed that asset at a point in time where there was a lot of uncertainty in New York City, particularly with the mayoral election that was going on.
We felt that we were able to buy that asset at a moment in time where there was some real price dislocation. We see a tremendous amount of growth opportunity throughout the country. It's a matter of picking our spots at the right point in time.
That was great. Thanks, Ross, and thanks to Kimco for joining the conference. We have a breakout session immediately following this. Thank you, everybody.
Thank you.