Why don't I kick things off, and then we can dive into Q&A. First, thanks for having us. We really are excited to be here and continue to resonate with the Kimco story. I think since our second quarter earnings call, the biggest change is it's just gotten better. The operating environment is one that is very healthy. Lack of new supply, I think, is something that's pretty well articulated across the retail sector, specifically in our markets. 0.2% of existing stock under construction is the lowest of any commercial real estate sector. There's more office being constructed today than there is shopping centers. We sit at an all-time high occupancy rate for our small shops, but our anchor occupancy is still 110 basis points below our all-time high. That's meaningful upside for us because I think a lot of people are talking about, well, you're full.
You don't really have any more upside to go in terms of leasing momentum. We actually think that's the case. Our spread between our physical occupancy and our economic occupancy, some people reference that as the SNO pipeline, the signed but not open pipeline, is 400 basis points. That's $75 million of just Annual Base Rent that has not yet started cash flowing. So we are super excited about the future for Kimco because we think we are at the cross-section of a unique opportunity where we see margin enhancement, performance enhancement tied to the One Kimco platform where we're taking costs out of the business.
That's SNO pipeline delivering, so enhancing the cash flow, enhancing the margins, all while we trade at a meaningful discount to our net asset value from a multiple perspective and from a portfolio perspective and a balance sheet perspective, we think we offer a tremendous opportunity for investors. For the last three years, we've been running at near the top of the sector with over 5% FFO growth, over 3% same-site NOI growth, and with a balance sheet of an A-/A3 credit rating, all while our multiple is almost 3 turns lower than the next peer. We think that's a unique situation to take advantage of, and so we continue to articulate that there's a pretty wide disconnect between where the public and private pricing is today for our products.
We're highlighting that by showcasing. We just produced our updated transaction report, where we just sold an asset for a 5.1 cap rate and continue to showcase that our stock is trading at north of a 7% implied cap rate, north of an 8% FFO yield. We think it's a unique opportunity to again showcase that we can buy back our stock at this type of spread as a great use of capital. I think from an overall transformation of the portfolio, that's another thing that we continue to be excited about. Kimco, for the lion's share of its history, was about 50% power center, 50% grocery- anchored. We're up to 87% grocery- anchored today. We have 28 grocery stores under construction. Just for reference point, Regency is 85% grocery- anchored.
It is a unique transformation that we have seen, that we continue to see upside as that grocery anchor continues to create a flywheel of merchandising mix around that everyday shopper. That is, I think, a big thing that we deliver that I think is starting to become more valuable today with AI and all the technology. We offer a human experience. The U.S. consumer is a shopper. The U.S. consumer loves to treasure hunt, and that could be in our TJ Maxxes, our Marshalls, our HomeGoods, our Homesense, our Burlingtons, our Ross, our Nordstrom Racks, our grocery stores. People love to look and feel the product, the produce, and then the services, the medical, the health and wellness, the fitness.
The everyday goods and services we provide is in your everyday path of travel, meaning that if you value your time and you value convenience, Kimco is that intersection that you drive by on a regularly- scheduled basis. That is what continues to drive our traffic higher. Our traffic counts are over 3% higher than last year. Our leasing momentum continues across both small shop and anchor occupancy. We are constantly trying to improve the growth profile of our portfolio. That is a function of looking at the components of what the portfolio has. A unique attribute to Kimco is that 9% of our Annual Base Rent is in flat ground leases. That is from the history of Kimco. We were ground leasing to The Home Depots, ground leasing to Costcos, ground leasing to Walmarts to take the risk out of the development cycle.
You would do that because Milton and Marty would follow the utility trucks to where household formations were occurring. How could you take risk out of the development cycle? By ground leasing a big portion of the asset to the best credit tenants. That has created, in a lot of ways, some unvalued portion of Kimco's portfolio that we are starting to shine a light on. Ross can go through some of the initiatives we have to reinvest that opportunity where we can sell very low growth, low cap rate, flat ground leases at 5% cap rates and reinvest it at a meaningful spread, both on a cap rate perspective, but even more importantly, on a growth rate perspective. Every one of those trades, we are selling at like a 6% IRR into north of a 9% IRR.
Every one of those transactions into a grocery anchor center is helping the growth rate, and we continue to see more opportunity. Another differentiator for Kimco is our over 12,000 entitled apartments. This is an initiative we put in place over five years ago to showcase the highest and best use of our parking lots are just not being valued. There is no cash flow coming from those entitled apartments, but we just round-tripped two apartment towers, sold them for a 4.9% cap and a 5.1% cap, and it gives us tremendous opportunity to say that can happen year in and year out in perpetuity. Because in essence, we have active projects in the ground coming up, delivering year in and year out, and we can start to monetize those and reinvest, buy back stock, or reinvest in a growth grocery anchored shopping center.
Those are the type of attributes that we think differentiate Kimco and that put us in a unique position to take advantage of dislocation. Sometimes it's good to be public, sometimes it's not good to be public, but there's always going to be opportunities. At this point, we think we have the balance sheet, the platform, the team, and the liquidity to take advantage of this dislocation.
The one thing you mentioned was the ground lease, as you're selling those. How much of that have you sort of tapped at this point? What is that opportunity set, and do you expect to accelerate that going forward?
I'm happy to jump into that. As Conor indicated, part of our strategy is almost a bit of an addition by subtraction. We're able to sell really flat, low- growth, single- tenant assets at very attractive cap rates and redeploy that capital into higher yielding day one, but more importantly, about a 300- basis point CAGR spread between what those leases are producing and what the reinvestment is able to produce. This year, we'll do just about $150 million of ground lease dispositions. We think, to Conor's point, that we can continue to do that on a recurring basis as our baseline. While we have 9% of our ABR that's coming from these long-term ground leases, as we're selling, we're also signing new leases with these tenants that become a future pipeline for disposition that we can continue to recycle.
The other piece of the disposition pipeline that Conor alluded to was our multifamily entitlements and completed projects. We sold the first two multifamily projects. We own those in a joint venture, so we were 55% of the ownership of those. But the two projects that are Pentagon projects sold at a 4.9% and a 5.1% cap rate. With the structure that we've been undertaking to continue to create new multifamily projects, it's a CapEx-light approach where we've been contributing our land that's been entitled and shovel-ready into a joint venture. Our contribution sits in a preferred equity component of the capital stack. So we're actually earning while the construction is happening. At the same time, our partner, the developer, is responsible for the construction financing on their balance sheet.
It's a great structure that we can earn during the development phase, and then upon completion and stabilization, again, we'll crystallize that value, monetize it, get our percentage of the proceeds to then redeploy. We are utilizing, in most cases, 1031 exchanges to defer the taxable gains, which is something that we're very focused on. But again, able to continue to find that spread on the year one yield as well as the going forward growth so that we can continue to enhance the growth profile of the organization and the portfolio as the impact of all of this recycling compounds on itself year-over-year.
For that multifamily development, how do you decide between monetizing it at completion or holding the project long term?
It's a decision tree that we take and we look at on every single asset. So you've seen us undertake long-term ground leases with a developer where we're essentially just leasing them to dirt. That is the most CapEx-light approach possible, but also you're not really capturing that upside creation in the future, even though we do retain a right of first refusal in the event that gets sold, because they are selling a leasehold interest at some point in the future while we retain the fee. I mentioned the structure that we're undertaking now on a number of projects where we're contributing our land on a marked up basis once it's entitled. You have seen us, in particular the two that we just sold, are more of a traditional joint venture where we utilize more Kimco capital on balance sheet.
Realistically, you'll likely see us do less of that other than maybe some unique instances. But for the most part, our goal is to capture near- term returns and value while being able to take advantage of the crystallization on the exit. In certain instances, we're also looking at, and we'll concede some land sales where we've entitled the land, we've created that value, and made the determination that selling it prior to construction is our best course of action. Take those proceeds that are on non-income producing land and then redeploy that into our core multi-tenant shopping center business with growth. So I think you'll see all of those approaches, and then on a select basis, we'll decide at that point in time, based upon market feasibility, based upon cost of capital, where it makes sense to undertake which path.
We are doing everything we can to just drive FFO growth. Being able to take a piece of land that is not earning anything, turn it into something that is earning under construction, and then at the end, selling it at a low cap rate, take those proceeds, redeploy them into a higher cap rate, higher growth asset. We are going to do it all day long. We have gotten it now fully started where we have now round-tripped two of them, and we have two others that are in development and one that we just really completed at Coulter Place.
Maybe taking a step back, and I know Conor, you talked about the consumer. Maybe expand on what you are seeing. You guys are clearly a big platform in the shopping center space. What are you seeing consumer performance or consumer behavior across retail categories? What are you seeing across the board there?
We continue to be, I think, positively surprised by the resiliency of the consumer. The traffic is the leading indicator that we continue to focus on. Being up 3% year-over-year and showcasing that they continue to prioritize the grocery- anchored centers that we own in first- ring suburbs. We are in the top 50 major MSAs, and in that first- ring suburb, there is no pullback. Clearly with oil where it is and what could happen next, there is all sorts of questions on the macro noise getting louder. That being said, the employment market is still sort of the backbone, in my opinion. I think people are confident in their jobs and their paychecks and their ability n ow when they get to the shopping center. How they stretch their dollar, I think is still going to be a piece of it.
But when you look at the offering that we typically provide, it is the value, it is the off-price, it is the grocery store. It is the discount type of opportunity that I think most people gravitate towards, regardless of if it is a boom or bust cycle. It is a necessity-based item. We continue to look at the AR and see if there is any AR creep. Typically in past cycles, we have been very focused on what is a leading indicator of any type of pullback. Usually, it is an AR buildup and primarily tied to small shops, because usually they do not have a balance sheet to weather the type of storm that might be coming. We have actually seen AR go down, and so that typically does not make sense if you are going to see any type of pullback or tenant credit issues. Same with traffic. Traffic is usually a leading indicator.
The same goes for the leasing. In terms of renewals, new deals, are people keeping out of their spaces? Are people signing new deals? The velocity just continues to improve. Good retail is hard to find. There's virtually no new supply, as I mentioned. Occupancies are near all-time highs or at all-time highs. Yet what's changed is the dawn of e-commerce and all the working capital that went to go build these e-commerce platforms. Rate environment has changed meaningful since then. Now, it's all about margin. Where is the margin enhancement? Where is the margin continuing to head? The store base. That's where the retailers are reinvesting in their stores, and that's why you're seeing retention rates at all-time high.
Most of our anchor spaces, we've done an analysis that are 65% below market, and so the deal that they have currently is the best deal they're ever going to have. That's why I think you're going to continue to see this retention rate be high. Retailers leaning into their store base because in all their earnings calls, the physical store fleet is the differentiator. When you buy online, you're going to be incentivized to pick up in store. That's where, again, the margin enhancement and the add-on things continue to add to the experience. I think there's a lot of upside still to come, because of the gap in physical and economic occupancy. Retail has never really hit that trajectory or that glide path where the CapEx load starts to meaningfully come down because of the lack of churn.
I think we're very close when that SNO pipeline compresses to seeing that meaningful free cash flow enhancement, which creates more of a flywheel where you can go and invest it freely. Almost every other cycle you can point to was when our physical occupancy hit an all-time high. The economic occupancy was very low, and then something happened to disrupt it. We're at a point where with no new supply and the watch list tenants to be as small as it's ever been, I feel really good about the credit quality and the upside going forward.
It doesn't sound like if you think about retailers talk to you about store opening plans for 2027 and even 2028, it doesn't feel like they pull back or any of that. It feels like they're just continuing to open.
Correct. They're still leaning into that. I think they recognize that if they don't be aggressive today, the space is going to be gone tomorrow. This is a small sample size, but you're starting to see the economics of the anchor deal significantly improve for the landlord. That's been historically the issue with our sector, that the lack of growth coming from anchors has been the weight that's holding you down in terms of same-site NOI or other, and the CapEx load. You're starting to see now that change in landlord's favor, where again, the amount of fitness players, off-price players, grocery stores, all bidding for the same space has created an opportunity to say, who's going to pay annual escalators? See who steps up. We're starting to see certain players step up to get the space.
Has that translated into shop tenants into either a change in co-tenancy clauses, percentage or overage rents or anything else in security?
Yeah, the carve outs are very much landlord friendly now. Instead of getting co-tenancy clauses, we're getting percentage rent. In essence, they're bear traps that they want you to step in are no longer there, and we're getting all the upside of the performance of the store. You're continuing to look at other things as well. For us, because our platform is very focused on highest and best use, our team is laser focused on parking ratio requirements, what we can do to maximize the value of the asset longer term. That's where you'll continue to see the lease evolve to have more landlord-friendly items for us to capture that upside longer term.
I'm sorry if you mentioned this, but you hit a record in small shop occupancy. What's the path there? What's the target you're trying to achieve?
We did just crest 93% on the small shop, which is an all-time high occupancy, but at the same time, that shouldn't be a ceiling, in my opinion. When you think about the 28 grocery stores that are under construction, when you think about all the anchors that have yet to open, typically the hardest space to lease is the small shop that's next to a dark anchor. If you think about all that activity that's about to come online, that to me continues to point to further upside in small shop leasing. You combine that with the diversity of uses that we see today, it's something that is sort of remarkable when you look at the diversity of demand for small shop spaces.
We've sort of become the one-stop shop for medical, health and wellness, fitness, you name it, in terms of urgent care, pediatric urgent care, veterinarians, outpatient physical therapy, you name it. It's become sort of this widespread of what's the best location that's convenient to where their customer lives. The shopping center continues to capture that type of demand. We're being thoughtful about merchandising mix. Grocery stores usually create multiple trips per week, so you're able to merchandise off that and get more sales coming from the asset that way. We continue to lean into that.
I think our One Kimco approach allows us to leverage our scale to have portfolio reviews with tenants that are doing 50+ , 100+ new stores a year. They could do that with a one-stop shop like Kimco and have a trusted partner that they know is going to deliver on time, h opefully on budget, and give them the store opening plans that they so desperately need. Because their growth is fueled by those new store opening plans. That's where, again, our priorities and our focus continues, I think to resonate with the retailers as well, we're meeting with them consistently.
To Conor's point, we hit the small shop all-time high occupancy while we're still 110 basis points shy of our all-time anchor occupancy. As those 28 grocery stores that are under construction are open and operating, as we get back to the all-time high on anchor, we believe that we will continue to see high watermarks hit on the small shop occupancy as we go.
What is that? Because one of the questions that I get is, you get to kind of peak occupancy, then what are the other levers of growth you can pull? You talked about maybe unlocking some of the anchor rents there. Talk about what are the other kind of positives or levers you can pull here to generate more than the growth you are achieving today even.
Well, it is sort of remarkable to think that we have done that 5%-6%+ FFO growth for the last three years with no external growth. You think of other sectors that are spread investors or 100% externally growth focused. Our organic growth is really driving that, which is sort of remarkable. All while we do not have a cost of capital advantage. When you look at what else can drive growth going forward, that is where I think Kimco sits uniquely positioned to have more levers than others. Ross and his team have done a great job in terms of building a structured investment program that allows us to invest at a spread of about, call it 10% on average, a yield to Kimco. That is usually in a preferred equity or a mezzanine financing position. It is on assets we want to own. It is in markets we love. It is in areas where we already have a big portfolio.
It is in essence getting paid to wait, because every one of those investments has a right of first offer or right of first refusal, and we have acted on those and bought three assets out of that program. That is a big lever for us. If rates stay where they are or even go up, we think there is an opportunity set to continue to grow that book of future acquisition opportunities in getting paid to wait. The other piece of it is that flywheel of development that we are now on in multifamily side. We are in essence building to a spread of 300 basis points, because our land is free. That is not income producing right now, our parking lots. We are able to contribute that with the entitlements that we have put in place at a spread of 300 basis points to where those assets trade in the open market.
That capital is going to be an enhancing flywheel for us as well. When you look at those unique situations alongside how every time we sell a flat ground lease and buy a grocery-anchored shopping center, the growth improves. Those are all pieces of the puzzle that we have that we continue to look at and say, there is a lot of asset management we can do on the portfolio still to allow us to enhance the growth profile going forward. Look, we still have a mark-to-market of 65% on our anchors, and so we will be working hard to try and generate those upside scenarios of recapturing space all at a time where there is virtually no new supply. Clearly the leasing front is still very much the driver of our growth.
The opportunity to enhance our margins, I think, is going to be one where platform, the scale, the advantages all come into focus, all while that economic occupancy still sits at 92.5%.
That's the really interesting dynamic of our sector, and it's a bit of an anomaly when you think about it, compared to other sectors. Elsewhere, if you are at 95%, 96% occupancy, you're going to see a ton of shovels in the ground in other sectors. Retail is just not the case for all the reasons that we've talked about. Land is expensive when you're comparing it to other potential uses and asset classes that can be developed. Construction costs, financing costs, the challenges of lining up a tenant, co-tenancy line up, and delivering all of those spaces at the same time. It is very expensive and challenging to deliver new retail construction. We really don't see on the horizon any meaningful amount of new construction or development within retail anytime soon.
Even as you're continuing to push occupancy to new levels, that is where we're going to continue to see the ability to push rents in addition to the other terms that create real value for us as a landlord. Conor mentioned it before, but you're seeing virtually no co-tenancy provisions in lease negotiations anymore. Exclusives have been completely watered down, which gives us a lot of flexibility to lease our space and to create a tenancy that is very important to have that traffic morning, afternoon into evening.
As we talked about creating additional density, whether it's just the outlets, urgent care facilities on the out parcels or a 26-story tower in our parking fields, having elimination of no build areas and having more control over your parking fields and your common areas, which we're able to negotiate today based upon the leverage that we have, has real value when you don't need to go back to the tenant and ask for permission, where inevitably they'll have their hand out for something if you need their approval. As well as control periods. Long gone are the days where you have excessive amounts of tenant option periods for the anchor tenants. We are negotiating very hard to reduce and control the amount of options so that we can get to that mark-to-market sooner than what we've been able to do historically.
When you look at the rent roll today, whereas on 6%- 7% of our rent roll that rolls in any given year, you have 75% of them that have options of which are being exercised at a 90% clip. You're only getting to 2%- 3% of your rent roll to really hit that mark-to-market in any given year. The more that we can push, the more that we can get to sooner, we'll be able to push NOI, FFO, and rents much more aggressively than we've been able to do in the past.
We do have some pretty unique levers to help really drive the growth where we are today. The structured investment program, the initial yields are high single- digit, low double- digit, and we are getting paid to wait. Again, we bought a couple of the assets from there. We still have about $150 million a year of redevelopments that we are doing in the portfolio, which is generating a 10%+ yield. No one else has 9% of their ABR coming from flat leases that we were able to sell at low 5% caps, redeploy that capital at a minimum of a 6% or a low 6% cap rate with a growth rate that is 300 basis points higher than the flat lease. Then, if the stock is not performing well, we put the balance sheet together that is as good as anyone's. We are A-/A3 across the board.
We have more liquidity than anyone else in our sector. If warranted, we can buy back stock. Any aspect of the cycle, we built the balance sheet in the company today to actually be opportunistic.
I think total shareholder return is what we continue to hammer. That to us, and hopefully to everyone in this room, is super important. When you look at our dividend, and we raised it 12% last quarter, it is all being driven by operations. It is all being driven by recurring cash flow operations. It sits right on top of taxable income, so everything we do from the portfolio level is going to be distributed out. That to me is real upside that has yet to be reflected. Our dividend yield is 4.75% with FFO growth of north of 5% three years running with a huge SNO pipeline and an A-/A3 balance sheet. That to me is pretty compelling.
I am curious, what is the pushback you are getting from people? You said you traded, what, 3 turn discount, give or take. I am just sort of curious, what are they saying to you?
It's sort of like, what's your favorite flavor of ice cream? It depends on who you ask. I think when you look at the size and the liquidity we have, typically, I've always been taught fund flows is like 80% of your performance. When rates are going up and there's a potential rate hike on the horizon, that probably is a fund flow issue, in my opinion. REITs haven't really benefited from fund flows. I think the majority, if not the entirety of the sector is trading at a discount. When you look at the consumer and where oil is and some of the major macro issues, obviously, the point of the spear is the consumer for us. That could be an overhang as well.
I think when you look at the opportunity set of what else the incremental dollar can invest in, even though we're proud of our run here of really strong earnings growth, you stack that up relative to what's taking the oxygen out of the room, which is data centers in the real estate space, then you layer on top of that AI and space, and all of a sudden the growth profile doesn't really capture a lot of eyeballs. I think there's the overhang of retail still and the generalist view of it's the hardest sector. There's bankruptcies, there's consumer concerns, there's rate concerns. That incremental dollar may be going elsewhere. Our mission is to show that the watchlist has never been smaller. The supply side is virtually zero. The demand side is super strong.
We continue to show that this is not like a three-year freak incident of growth. We have really the runway to continue. You stack us up relative to other sectors, total shareholder return is pretty compelling. Again, we have the balance sheet now to take advantage of the dislocations and buy back our stock when we think it's opportunistic.
It's interesting. We're a pretty cycle-tested management team. We've been through pretty much anything bad that you can think of and come out the other side of it. When you look at the consumer, the interesting thing is this sector, our sector, is pretty recession resistant. We've been through all these bad cycles. People still shop. They still go to the grocery store. They may buy something different in their basket, and it could be chicken instead of steak, but they're still shopping there two, three times a week. They still get their hair done. They still get their nails done. They still go to the liquor store. They still feed their pets, and they still treasure hunt. All through those cycles, good times, bad times. It's kind of being a human being and you want to be out.
There's a social environment to it, and it's held up through every cycle you can think of. COVID, great financial crisis, Russian debt crisis. Pick whichever one you want. This product is pretty resilient. We've actually made a lot of money during times when there's been a downturn. Not that we're looking for a downturn. We're in a position from a balance sheet standpoint where we can be really opportunistic today.
What do you think the rating agency is going to say on your share buyback intention?
What are they going to say? We're an A- rated company. I think as long as we keep our leverage where we've committed to keep it, which is low 5x net debt- to- EBITDA on a consolidated basis and mid- 5x on a look-through basis with our perpetual preferreds and pro rata JV debt, I think that they're going to be fine. I'll let you know. I have a call with them on Thursday.
I think we're at a point where we have capacity.
We have capacity.
That's I think the key where before we didn't. We're near all-time low levels of debt. When we have capacity like we do, w e believe we should take advantage of these unique opportunities where there's dislocation.
Is A- a must? Can you be a BB B+ if you see an opportunity?
It's a cycle we've all been through. We were an A- company up until 2002, and then we were a BB B+ company from 2002 until 2024 or so. We think there's real merit in being an A- rated company. We're a very disciplined group. We think our capital allocation warrants being at that level. We're operating the company that way. I think it sets us apart a little bit. There's only a dozen REITs that are A- or better. It gives us access to different pockets of capital.
We have a commercial paper program that we established that we haven't even used yet, that's available to us, because of where we are. We have another segment of the bond investor that we can be approached by and invest in our securities because we're at that A- level. I think it adds another level of discipline to the management team. We think it's actually a really important piece, and it does separate us a little bit from the rest of the pack.
It was a strategic goal for us to get there. For a good pocket of Kimco's history, we were towards the upper end of leverage in the sector. We felt like, because of the capital intensity nature of the business and the defensive nature of having a balance sheet you can lean on, has become critical in terms of weathering the storm. We intend to maintain that. I think the key, though, is that our leverage is so low that we have the ability to buy back and have that still be in that A-/ A3 rating range.
I can just tell you, I have been going to investor meetings for 30 years. I am actually getting questions about how low you will let leverage go. I have never heard that in my lifetime. It is kind of an interesting thing to actually hear. We are very cognizant of the balance sheet. We are also, if you look at what we have done, we are one of the few that has issued 30-year paper. We went really long when rates were really low. We have $1.5 billion of 30-year paper that has coupons that range from 3.7%- 4.45% that do not mature until 2045. We have two perpetual preferreds that are at 5.25% and 5.125% that they are just irreplaceable today. We have a very laddered maturity profile. We have basically the longest maturity profile of any REIT.
We are almost eight years. We can live through higher interest rates, lower interest rates, and all the cycles because we have spread it.
Thank you.
Guys, I want to ask. For the structured investment book that you have, the underlying assets, is the credit quality very similar to what you guys own at this point?
That is a gating factor when we're evaluating any one of these investments. We have to be very confident and comfortable with the real estate. If we were to step in either via acquisition, which as we talked about, we acquired three assets from this program, or in the unlikely event that there was default situation where we had to step in and protect our collateral, we are very comfortable with the quality, the tenancy, the demographics, and with that right of first offer or right of first refusal that we have on every single one of these assets. If this is not an asset that we would want to or be very comfortable owning, then we won't invest in it.
Do you expect the structured investment book as a source of acquisitions to become more significant in the coming years?
It's hard to predict. It can be lumpy in nature, but having that first and/or last look we know is going to continue to lead to opportunities. Now, it's very much going to be dependent on timing, cost of capital when it gets presented to us. We've acquired three from the program. We've been repaid in full on 19 of them. It's not a situation where we expect that even half of them are ultimately going to be acquired. But selectively, when we have the right cost of capital and we have the right opportunity, it's a great opportunity to layer it into our acquisition program.
We get paid pretty well to wait. We get paid in, we get paid out, we get paid while we are waiting, then we have, again, the right of first offer or right of first refusal to take a look at the asset if it makes sense for us.
It is actually a benefit to the borrower, too, because they are actually able to get better terms on their first mortgage piece when they know Kimco is in the stack. So there is a win-win situation that we continue to experience and that the players in this book continue to benefit from as well.
It is an advantage you have, b ecause the market is very competitive.
Totally.
The transaction market and-
It's a differentiator for us. While we refer to it as our structured investment program, we think of it as a capital solutions program. Every deal is bespoke. We're sort of solving a problem or a need for the borrower, whether it's a stretch senior pref equity, mezzanine financing on a new acquisition, on a repositioning of an existing asset where there's debt maturing and they need a bit of a bridge. We can be a solution on high-quality real estate with good operators that we like and get paid handsomely for that participation.
I know we got a minute here. So rapid- fire questions. I know, Conor, you like this stuff. Number one. Long-term rates stay higher for longer, which has the biggest impact on your sector? Let's call it sector earnings. Higher refinancing costs, lower transaction activity, or less new supply.
I think it's higher refinancing activity. It's the really sort of the hurdle that everyone's going to continue to jump over.
Number two. Over the next three years, will third-party capital become a more important source of growth for public REITs than balance sheet capital? Yes or no, choose one.
I think so if we stay where we are. I think, look, we have a large JV platform with Blackstone, GIC, CPP, New York Common, PGIM, you name it. It's a portfolio of assets that we've had in the JV book for a number of years. I think JV capital comes into play when your cost of capital doesn't allow you to be competitive in the open market. I could see that becoming a bigger piece of the playbook.
Number three. Next year, same for NOI growth, higher, same, or lower than this year? For the sector.
For the sector, I think it's going to be at or above where we're at today.
Thanks a lot.
Thank you.