Kimco Realty Corporation (KIM) Earnings Call Transcript & Summary

CEO conference. I am Christy McElroy with Citi Research. Next to me is Michael Bilerman. Oh, there he is. And we are pleased to have with us Kimco Realty and CEO, Conor Flynn. This session is for investing clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available up here and on the webcast on the Disclosures tab. For those in the room or on the webcast, you can sign on to liveqa.com and enter code Citi2020 to submit any questions or you can just raise your hand. Conor, I'll turn it over to you to introduce your company and your management team and provide the audience 3 reasons why investors should buy your stock today, and then we'll kick off the Q&A.

Thanks, Christy. With me today is Glenn Cohen, our CFO; and Dave Bujnicki, our Head of Investor Relations. Thank you for having us. As most of you know, Kimco has been in the retail real estate business for over 60 years. And we were the first REIT to go public in 1991. Our portfolio stands at just over 400 U.S. shopping centers and mixed-use assets, comprising over 72 million square feet, concentrated in the top 20 major metropolitan markets. We're focused on executing our 2020 Vision strategy, which is designed to help us successfully navigate the challenging and rapidly changing retail landscape that we're seeing today. That strategy was founded on 3 key pillars: upgrade the portfolio, unlock the embedded value in the portfolio and maintain a strong and flexible balance sheet. Our 2019 operating results were the clearest evidence yet of our steadfast commitment to our 2020 Vision plan. And they highlight quality of our refined portfolio. We achieved 3% same-site NOI growth, exceeding the high end of our guidance range for the year and marking 30 -- and achieved -- and marking 38 consecutive quarters of positive same-site NOI growth. We ended the year at all-time highs in overall occupancy at 96.4% and anchor occupancy at 98.9%. Spreads on new leases were an impressive 20.8% for the year, and Q4 2019 was a 24th consecutive quarter where spreads on new leases exceeded 10%. While the industry will likely see change in the years to come, bricks-and-mortar real estate will continue to play an integral part of retailer strategies. We're seeing the most successful retailers use their physical stores as platforms for launching pioneer omnichannel strategies, such as the successful buy online, pick up in store initiative as well as innovation and automation and order fulfillment. With the right population of assets, we are now unlocking the highest and best use of our real estate through our mixed-use redevelopment platform. We are attracting the live, work, play population by adding density, traffic and value to our properties with the addition of complementary uses like residential, hospitality and office. Our Signature Series pipeline is producing flagship assets that are meaningful contributors to NOI and FFO growth. As we mine our portfolio for future redevelopment and mixed-use opportunities, we have found that the potential for value creation was even greater than we originally anticipated. We have now secured entitlements for more than 4,500 apartments, more than 800 hotel keys and 1.2 million square feet of office on only 8 of our 400-plus assets. The final piece of our 2020 Vision is to further strengthen the balance sheet. Currently, we have $2 billion available on our credit facility. Approximately 80% of our portfolio is unencumbered. We have only $90 million of consolidated debt maturing in 2020, and our weighted average maturity profile is now 10.6 years, representing one of the longest in the REIT industry. We are proud to be one of only a select few REITs across all sectors with investment grades, unsecured debt ratings of BBB+, Baa1. As we look towards the future and the long runway of opportunities ahead of us, we have not lost sight of our responsibility to listen to and engage with our many stakeholders, including our tenants, our shoppers, our communities, our local governments, our associates and our shareholders.

And Wall Street analysts.

And Wall Street analysts.

Especially Citigroup.

Our 2019 NAREIT Leader in the Light award, our inclusion in Newsweek's America's Most Responsible Companies and our addition into the FTSE4Good Index were crowning achievements in 2019 that highlight the importance we place on environmental, social and government issues. The decade ahead will undoubtedly bring more change, more challenges, but also more opportunity. We are prepared. With our refined portfolio, our streamlined operations, our best-in-class team and fortifying our balance sheet, we are poised to embrace the inevitable change. We are focused on executing the opportunities we have uncovered and continue to create vibrant communities that will produce value for our shareholders for years to come. And with that, Christy, on your 3 questions of why to buy Kimco stock today? I think in an environment where, obviously, people are focused on risk, we look at Kimco as a unique opportunity because when you look at our balance sheet, clearly, that's where most people focus when there's a lot of risk in the market. And when you look at our optionality, our access to the capital markets, the liquidity that we have and the debt maturity profile that we have, it really is outstanding. The second main reason I would say is that our visible earnings and cash flow growth. We've transformed the portfolio and feel like we're in a really good position to showcase the growth going forward or past that transformation period, and now we can really unlock the earnings potential that we can produce. And then third, and probably the one that does not maybe get enough credit is the potential for the future redevelopment of the portfolio. I mentioned some of the entitlements that we've already secured. We have 2 Signature Series projects that are really shining stars today in Lincoln Square and The Witmer at Pentagon and a long, long list of entitled projects that we can backfill the pipeline with for decades to come.

Great. Thank you for that, Conor. We've kicked off each of these sessions talking about ESG, which is increasingly important to all company stakeholders. What is the one thing Kimco is doing to improve the company's overall ESG score over the next 12 months?

So ESG for Kimco has been a focal point for a long time. It's actually something that we have embedded in the organization throughout the operations. If you look back 10-plus years ago, I give a lot of credit to our team to really have this be a priority and put ourselves in a position of strength for the long haul. I also give some credit to our European shareholders that actually had this as a focal point a decade ago and has made us a leader in that as we continue to push in our efforts forward. We did win the NAREIT Leader in the Light award last year, which is the highest award you can achieve for ESG efforts in the REIT world. We also are the highest scoring in ISS. We're in the FTSE4Good. We're in the Dow Jones Sustainability Index. But we've set ourselves up for more goals this year, including the task force climate financial disclosure and the SASB, the Sustainability Accounting Standards Board. We've developed green leasing standards, where our retailers have to abide by what we believe are sustainability initiatives that we believe in for the long haul. And Glenn, I think maybe you should comment a little bit on what we do on the balance sheet as well.

Yes. So we recently renewed our revolving credit facility, a $2 billion credit facility. And although it has a standard pricing grid, like many other companies, we also included a sustainability grid in it. So it's based on greenhouse gas emissions reductions. And if we meet certain targets, we actually have a separate grid. It's not material in terms of basis points, it's 1 basis point on the grid, but it's just another piece to the puzzle in terms of sustainability metrics for us. And then the other thing that we are continuing to look at very closely would be the issuance of a green bond. So we're evaluating our own framework of what we think would work. And that probably is something on the table for us during 2020.

So our Board is involved. We have an ESG Steering Committee. We look at it from both sides, from the balance sheet as well as from the operations side, and we feel like we have a pretty large lead in our efforts today.

I want to take your third point you talked about was the future redevelopment opportunities and the entitlements that you're seeking coming off the success of some of the recent projects that you've done. I guess how do you think about -- on one hand, you want to maximize the retail GLA, where you've had more closures, right? So you want to take advantage of redeveloping that space perhaps into others, and you also want to take advantage of where your assets lie, which do provide that vertical construction. Do you feel like you want to sell those entitlements off because we are later in the cycle and the returns of those projects may not be as attainable and may not be the returns that your shareholders envision? So how do you sort of think about pursuing those at this sort of time?

That's a good question. So we look at it as it's our responsibility to entitle as much as we possibly can across the portfolio. We've developed a best-in-class team to go about the entire portfolio to look for ways how we can entitle really density across the portfolio. We've made some strides, obviously, with the numbers that I talked about earlier. We talk about our decision tree once we obtain those entitlements. And should we sell those entitlement rights? Should we ground lease those entitlement rights? Should we joint venture and develop those entitlement rights or should we self develop those entitlement rights? And it really depends on a few major factors. The first is cost of capital, like where are we going to be allocating capital and what's the best return for that capital. As of today, the majority of our projects have been either ground leased or JV-ed with a multifamily expert. That continues to be, I think, our sweet spot, as we look forward. We always have the ability to sell entitlement rights, which we've done. We did it in Palm Beach Gardens, just up the road here. We sold it to an end user hotel. We also sold our office entitlements to Spirit Airlines up the road here at our Dania Pointe project where they're going to develop their corporate headquarters with over 1,000 employees, 2 office towers and a 40,000 square foot flight simulator. We've ground leased entitlement rights. We did a ground lease deal with Wood Partners to develop 240 units on an asset that we have in Columbia, Maryland. And then we joint ventured the 2 mixed-use assets, Lincoln Square and The Witmer and have been successful there. So it really depends on the supply and demand in the market, the cost of capital and how much we want to put into the active pipeline at one time. If you look at our capital spend over the past few years, it really has been a mix, almost 50-50 of ground-up development and redevelopment. We think going forward because of the huge amount of untapped potential in our real estate, we think that the best risk-adjusted return is to have it be close to 100% redevelopment capital investment going forward. We see that entitlements don't have a shelf life. So if we go into a downturn, we can put those entitlements on the back burner and say, let's just operate the grocery-anchored shopping center and develop it at a different point in time in the cycle. So it gives us total optionality. We're going to entitle through all different cycles. Sometimes you're most successful entitling in downturns. The nice part about our ESG efforts is we've engaged in the local community to a point where they feel like we are a partner and a good steward of the community. And so it's actually helped us in our entitlement, right to work, because they know that we're in it for the long haul. We're not developers that are going to come in, entitle something and then flip it out to somebody else. They see us as community builders. And so we've seen that as we go into these communities, we bring our ESG and our corporate sustainability report and showcase what we've done in other communities, and they see the value, they see the focus that we have on creating these vibrant communities and adding value for the long term. And it's really helped us as we embrace the mixed-use platform.

Yes. The one other thing I was just going to say just on these entitlement rights that we're gaining. In order to activate them again, one advantage what we do have is that our land basis is pretty low on these because we've owned the properties for so long. So it does give us that other advantage. And in a lot of cases, it's really just taking a piece of the parking lot. So you have a shopping center that is 75% basically land that we've owned for a very long time where we can activate some of those parking lots. We're truly just adding NAV to the property. And then, again, it's about the cost that go in above it, but having low land basis gives you an advantage.

Can you put some parameters around, though, and in that context, where you're ground leasing some and you're JV-ing others, annual redevelopment spend and the returns that are associated with that, but also against what you expect in terms of your cost of capital and underwriting that?

Yes. So I'll give you a few examples here. We believe going forward that our sweet spot is around $150 million to $250 million a year of redevelopment investment. And that can be a blend of a number of projects. We want to try and do as many of the smaller projects as possible, which typically generate an ROI between 8% and 12%. That we sort of tap out in the $75 million to $100 million of amount of spend that we can do annually. We want to do as much of that as possible because those returns are the highest that we can find. And then we look at the Signature Series projects on top of that. And those are the large-scale projects where we're adding different types of uses. Many times, it's an apartment building or it's a hotel or it's an office tower on a parking lot, as Glenn said. On specific examples, there's one in Boca Raton that we own here, called Camino Square. We've ground leased 350 apartments to a multifamily developer, and we're going to redevelop the retail side of it to a grocery-anchored center. We just thought in that location, we weren't comfortable with the supply coming online in Boca. There's a lot in the pipeline. But we feel good about owning the dirt long term. We just felt like where we are in the cycle, taking on that amount of development risk in an area where there's a huge amount of supply. We just couldn't get comfortable with the returns there. We look for a 200 basis point spread, our ROI versus our exit cap, to feel like that's really a nice cushion to continue to look for these projects that are going to create significant value for our shareholders long term. And that's why we've activated the second tower at the Pentagon. So the first tower was 440 units. We leased it in 6 months, raised rents 4x, unheard of in the apartment world, and there's not a single Amazon employee that's living in that tower yet and they have -- they're going to start constructing their headquarters here this year. The second tower will be 250-plus units. And we feel like there's a huge amount of pent-up demand there, and we haven't even seen the Amazon effect yet. So those are the types of decisions that we're weighing as we look through the portfolio. We feel like because of all the entitlements that we've already achieved, we have the complete optionality to push and pull, to make sure that we view our cost of capital, we look at the returns, the 200 basis point spread, where we are in the cycle and make sure that we're adding the low-hanging fruit to the active pipeline. And if we're not comfortable with the supply and demand dynamic or the cost of capital dynamic, the ground lease opportunity is significant. And it's a way for us to add density without really having a tremendous amount of capital outlay. It's a little bit of a flatter income stream, but we like ground leases. We have over 15% of our income is coming from ground leases, which is a differentiator for us.

One of the things you talked about early on and why you're pursuing some of this redevelopment is the structural change going on within bricks-and-mortar and overall retail. There's a question that came through on LiveQA that talked about whether -- has the growth rate of the shopping center or retail business been permanently -- I hope my ice cream is okay back there. It has been permanently impaired from that 2% to 3% historical growth rate down to something that's flat to up 1% or 1.5%. And then sort of how do you sort of see the traditional sort of bricks-and-mortar retail part of your business, which is still the majority of the company? And how do you sort of think that's changed?

Well, last year, we produced 3% same-site NOI. The year before that, it was 2.9%. So we think we're in a position of strength when you look at the portfolio and where it's concentrated. There is an oversupply of retail in the United States, there's no debating that. But there's a lack of high-quality retail in dense urban markets. Nothing new is being built. We're at a 40-year low in terms of new supply. And if you think about the dynamic of developing a shopping center, the land prices have gotten so expensive in these major metro markets, there's no way you can dedicate 75% of your land parcel to parking and make the economics work. And so we don't see that dynamic changing where supply is all of a sudden going to start to ramp back up. And so everything that's existing is in demand and retailers want to be where their customers are. They want to be focused on convenience and value. And that's why you're seeing our occupancy at all-time highs because the anchor occupancy over 10,000 square feet is at 98.9%. We've never even come close to that occupancy level before. And retailers want to access that ability to use their stores as a distribution point, create the type of convenience that customers are looking for today, whether it's buy online, whether it's ship from store, but the whole distribution of goods is changing quite rapidly. And the most -- probably in the last 6 to 12 months, more data has come out to showcase how retailers have really the blueprint for the future of utilizing their store base as distribution points. And Target has said that if they use their store, which they have, for same-day delivery, it's 90% cheaper than if they use distribution from their warehouses. That's a game changer. Like if people start to follow that model, it starts to look like store economics, not like loss leaders that people have been using with its e-commerce part of the business.

How is it 90% cheaper when the rent in an industrial warehouse is 1/3 of what it is and the egress and ingress out of a shopping center in terms of truck volumes and things like that? I would have thought the spread is much, much more efficient to do it out of a warehouse than do it out of a -- especially the cost of bringing the good into the store, take it off the shelf, put into a box, getting on to a small truck and get it to the consumer, just the time and the labor and all of that relative to a fully automated warehouse at $5 a foot versus $20 a foot in your center.

Yes. I think a lot of it has to do with the fixed cost of the store versus utilizing that as a buy online, pick up in store base. So instead of having to pay for the shipping, instead of having to pick it and make sure that it's refrigerated. If it's being shipped from the warehouse, you're utilizing your store base in a way that you haven't before. And so you already have those fixed costs associated with the store. So you're utilizing your employees to go and fulfill orders that may be restocking shelves. So they already are embedded in the cost structure of the organization. And then you're getting the consumer to drive for free to the store. So you don't have to pay for the shipping costs. You don't -- you -- typically, if people come into the store and buy it, there's a much lower return threshold. So they actually see the goods, and so therefore, they're not necessarily going to return 3 of the 4 items that they purchased online. So all of those metrics, I think, is what has allowed Target to come out and disclose that data, which was pretty eye opening.

Right. I think most -- I don't know -- I think most consumers would rather get it for free ship to home. And if the retailers, it's sort of a pivot point where they do have this big fixed installed base that they're paying for, but at the same time, they're ramping their distribution network pretty rapidly. I just don't know how, in 5 years, that may flip a little bit.

So I actually agree with you that I thought at one point that why would people drive and pick it up in store when you could just get it shipped to your home for free. But then you look at Home Depot's metrics, and -- over 50% of the online orders are being picked up in store. And buy online, pick up in store is growing by north of 50%. And so I think it's all about convenience. And everybody lives a very busy life. And you're typically running to and from, whether it's your work or whether it's your kids, you're driving a lot to these different points. And sometimes, the convenience of a store, if it's well-located in the neighborhood close to where you live or where you work, it's actually more convenient because you don't have to be home to be there to sign or be worried about something that's left on your doorstep that may not be there when you arrive. I think there's a dynamic shift that's going on that, originally, I thought most people would wanted it ship to their home for free, where actually, the store experience and buying it online and picking it up in store is actually potentially more convenient.

So it was 2015 at the Palace, you did the 2020 Vision. So are we going to get the 2025 Vision this year?

So we want to finish off the year. We -- obviously, it's early in the year. We feel like we're in a really good position for the future. We will be laying out our continued strategy going forward. But it won't be a dramatic change from what you've seen. It really is -- we'll be leaning in deeper into the pillars that we talked about and unlocking more value from the portfolio. We feel like we have got more work to do. The balance sheet is in good shape, but you can always improve it. We've gone long in terms of making sure that we recognize this is not a sprint. This is a very long marathon. We've accessed the 30-year bond market. We have one of the longest debt maturity profiles, but our look through net debt-to-EBITDA could improve, and we're focused on improving that. The portfolio can always be improved. And you can see how early on we are in our evolution of our mixed-use platform where we've only got 8 assets entitled for 4,500 apartment units, and we feel like there's real low-hanging fruit throughout the portfolio to continue to do that.

Questions from the audience at all?

We had -- read some questions on Veracast, and I'm going to kind of blend it in with one of the questions that I had. So many of the strip center REITs have been calling for lower CapEx, leasing CapEx, including landlord cost over the last couple of years. If you think about the trajectory of the boxes that you've gotten back between Sports Authority and Toys, there's been a lot of box breakup. And so it's like, okay, we're going through this period of time where leasing CapEx, landlord costs are abnormally high and then it's going to come down. And so you're expecting leasing CapEx to be at a similar pace in 2020 as 2019. We've seen that kind of across the space. It seems like we're at more of a structural point right now where leasing CapEx is just going to kind of remain high. And the questions on Veracast are around AFFO. And shouldn't we be really looking at earnings from an AFFO perspective, when you're thinking about driving same-store NOI growth, driving FFO growth? There's a real capital commitment that's involved in that. And given what's happened in retail, that is structurally higher. So how -- what are your thoughts on that?

So on the TI investment, a lot of it had to do with your point about the dislocation of some of those boxes coming back, and you saw like the increase of re-leasing and splitting some of those spaces. Because we're at 98.9% occupied, over 10,000 square feet, we do anticipate the tenant improvement and landlord work to drift down. Now that could change depending on the environment. So I think our strategy is to sort of keep it where it is to be conservative and see how the fluid environment unfolds. As of today, it's been a very light bankruptcy season. Really, Pier 1 is the only one that's filed. They've only closed 9 of our 30 stores. We do a very granular ground up budgeting space by space of our over 7,000 spaces. And we anticipated all the Pier 1s to be gone by the end of this month. If they're successful in the reorganization, they're trying to do a debt for equity swap. We'll see what that looks like. But if only the 9 closed by the end of the month, and even if they go to liquidation after that, they'll probably need 60 days for going out of business sale. So we'll be ahead of the game from that perspective because we have all of them out by the end of the month. And so we feel really good about the way we positioned ourselves. And then, look, we'll continue to see what boxes we get back. There's a lot of demand for the right retail. There's not a lot of new supply. And you'll see those tenant improvement landlord work for us anyways continue to drift, I think, in the right direction.

I think it's relatively light so far, but there are more headlines. There are more retailers that are troubled. You do have Pier 1 and the guidance ranges for 2020 across the space suggests a real deceleration in the growth rate this year. So clearly, it's having an impact, right? And I don't think companies are being just conservative. It's warranted. But yet, the capital associated with driving that growth remains very high. And so I think people are just trying to get their arms around what is -- what's the longer-term growth rate for this business? Last year, we did see an occupancy tailwind. But what -- is the capital required to drive that just higher today? And is the growth rate lower than we thought?

Yes. Typically, historically, the business from a sector to sector has run around 2%. So we've always believed that if we can get to the right portfolio, we should be growing at 2.5% plus. And so if you look back at the last few years and how we started off the year, it's very different from how we finish the year. And we do believe it's not how you start, it's how you finish. And so if you look at the range that we put out and the news that's been so far has been those 9 Pier 1 stores. And so we're going to continue to watch it carefully. And we think the way to do it in retail today is to be sure that you're very confident in your range and know that you're in a position of strength going forward. And we feel like the portfolio has shown that we are at that point in the last few years because, again, the guidance range that we started out every year was not how we finished. And so we believe that the environment is fluid. We totally agree there's going to be more changes, there's going to be more closures, but there's a huge amount of demand as well. And that's why our occupancy is at all-time highs. And your point on AFFO and FFO, I completely agree. That's why you saw us in the FFO adoption language, we stripped out land sale gains. We stripped out preferred equity share gains. We stripped out marketable security gains. We've learned from the past that you really want to focus on cash flow, you really want to focus on AFFO. And our definition today of FFO is as close to an AFFO definition as you can get because we've taken all those transactional items out. And so when you look at our FFO number going forward, you probably will have some gains from those other items that we've removed, but we think it's much better to focus on the business and the recurring flows that we can better -- really position ourselves through all the different cycles because transactions are onetime in nature. And we saw that market evaporate. And so we don't necessarily want to have an FFO number that's wildly different from an AFFO number.

So with more accretion from redevelopment projects coming online, when do you start to drive real meaningful AFFO growth? And as you think about where the dividend payout is that has direct implications on free cash flow, which has implications on your cost of capital, right? So how do you think about AFFO growth from that perspective?

So we do have in our guidance AFFO growth this year. Obviously, we -- again, it's not how you start, it's how you finish. And we think that we're well positioned to continue to show significant growth going forward since we've really finished off the heavy transformation. We had a lot of dispositions -- dilutive dispositions to handle over the past few years. To be in a position where we are today, where it's very visible in terms of the development and redevelopment income that's coming online, the lease-up, the strength of the portfolio, the occupancy, the spreads, the mark-to-market opportunities, it gives us a level of confidence that we haven't had in the past few years to look at the metrics and say, you know what, this is the year and this is going forward, the next few years, where the FFO growth can really shine because the operating metrics have been really strong in the last few years. If you look at same site, if you look at occupancy, if you look at spreads, all of those are top of the charts versus our peers. It's really the dilutive dispositions that have been weighing on the FFO. And now we're in a position to turn the corner and really shine a light there. So it's a focus of ours and will continue to be, hopefully, in the top of the charts on that metric as well.

Any questions in the room? There's a bunch of questions on Veracast about just sort of exposure to at-risk retailers. There's a question on Bed Bath and noncore assets. I think that's very relevant, given that there's a lot of changes at that company. How are you feeling about that exposure, particularly Christmas Tree and CostPlus?

So we look at retailers and think they've got to have a good merchant. They've got to have a good balance sheet, and they've got to have a good brand. And so if you think about the ingredients that Bed Bath has, they do have now the Chief Merchant from Target at the head of the organization. They have a good balance sheet. They've laid out a plan to reinvest in the stores, and they have a good brand. They have a loyal following. I think one of the things that I learned when sitting with the Bed Bath team was, you sort of have this customer that use Bed Bath when they're going to college and then all of a sudden they lose them for the next decade plus. And I think Target understands how to keep a customer to their lifetime. And I think Bed Bath needs to do a better job of understanding how to keep a customer that loyalty throughout that lifetime. And so if you get the merchandising mix right, which I think they will, and you have the balance sheet to invest in the stores, which they do, I think they've got the right recipe to turn the corner. That being said, you'll see our exposure to them continue to go down. We have -- surprisingly, we actually had more leases renew this year than we anticipated. In 2020, we had about 15 Bed Bath leases coming up for maturity and 13 of the 15 exercised options. And the other 2, we have off-price and a grocer lined up for. So as leases come up for maturity, we'll continue to lower that exposure. They're at right now 1.5% of our ABR. And we feel like they've got the right ingredients to turn the corner, but we'll have to wait and see. And we're not sitting back. We're being proactive in trying to pre-lease spaces that we think we're going to recapture for the next 3 to 5 years.

Where do we stand on Albertsons today?

So Albertsons is doing all the right things. They have a wonderful CEO that I think is going to be very successful in that position. They have 8 quarters in a row of positive comp store ID sales. They have dramatically improved their balance sheet. They've done over $1 billion of sale leaseback, and their net debt-to-EBITDA now is right around 3.

2.9.

2.9. So we think they've positioned themselves to be a long-term performer in the grocery world. You're seeing that the traditional grocer has actually taken share mainly from the specialty grocers as organic becomes more mainstream. You go into a Safeway today, and it's filled to the brim with organic products and private label. So I think they've positioned themselves to take advantage of. Obviously, Kroger is, I think, yesterday, had a 52-week high and just got an investment from Warren Buffet. There's -- again, we'll see what happens with the markets, but they feel like they've done all the things that they laid out they were going to do to be in a position of strength. And if the market cooperates, they'll look to go public. And so we'll see when the timing is right for that. I think probably, nobody wants to wait to see what happens with the election. So we'll see what the timing looks like.

And would -- sorry, if I missed this, any proceeds would be earmarked for leverage reduction potentially? And maybe you can talk about sort of your leverage trajectory and the potential for you to go for an A rating?

So the beauty of an Albertsons monetization is, we have a menu of options, and they're all very accretive if we were to get to a position where we could monetize our investment. If you look at -- even acquiring would be a delevering event. So we could acquire assets, we could fund the redevelopment and development pipeline. We could pay off some debt that's maturing. We could buy back shares if you don't like where they're trading. So you name it, we'll have a menu of options, and we'll look to put the capital to work where it's most accretive. And then from the investment side of it, we like where the investment sits today, and we have it on our books for $140 million. And I think our max tax liability is $50 million. So regardless of how big the gain is, it's nice to know that that's the max tax we have there.

All right. We got 40 seconds for rapid fire. Will the shopping center sector have more or fewer public companies a year from now?

More.

More publicly listed shopping center companies, should be fewer. What will the same-store NOI growth be for the shopping center sector overall in 2021 for reference 2020 guidance is?

1.8%.

2.25%.

10-year treasury a year from now. Right now, it's at 1.10%?

1.5%.

The Fed just cut rates by 50 basis points. And what year will the U.S. enter a recession?

2024.

2024. Okay. Thank you.

Thank you.

Thanks, guys.