Kimco Realty Corporation (KIM) Earnings Call Transcript & Summary

Welcome to Citi's 2024 Global Property CEO Conference. I'm Nick Joseph, joined by Craig Mailman with Citi Research, and we're pleased to have with us Kimco, and CEO, Conor Flynn. The session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AB desk. For those in the room or the webcast, you can go to liveqa.com and enter code GPC24 to submit any questions. Conor, we'll turn it over to you to introduce your company and team, provide any opening remarks, tell the audience the top reasons that investors should buy your stock today, and then we can get into Q&A.

Thanks very much. Thanks for having us. With me today are Ross Cooper, our President and Chief Investment Officer; Glenn Cohen, our CFO; and Dave Bujnicki, our Head of Investor Relations and Strategy. I'd like to kick things off and just give you some high-level updates at the start of the year and then we can go into Q&A. First, the first 3 things on reasons why to buy Kimco. I think Milton has always taught us, it's all about management and trusted management. I think when you start with the company, you have to trust management. And we try and execute on what we say we're going to do and do what we're going to say. And I think it starts there. First and foremost, the disconnect in terms of public and private valuation, I think that really is a highlight today in terms of where the shopping centers trade as well as specifically, Kimco relative to the open market. There hasn't been a tremendous amount of transactions yet this year, but we believe that, that's about to change with the increase in transaction going forward. And that should even highlight the disconnect even further. Second, when you look at our growth profile, it's really accelerating. Back half of the year is when we anticipate $15 million to $20 million of our signed but not open pipeline coming online. And that's just a fraction of what we have still to bring online. The signed but not open pipeline is over 350 basis points, the largest in the company's history. So very visible growth coming in the years going forward. And then third is a combination of two things. First and foremost, our -- really our entitlement program differentiates ourselves between any of the peers. We have close to 10,000 apartment units entitled on our assets for future value creation, which really allows us to set a highest and best use asset strategy for each and every asset we own. Many times, shopping centers are positioned, especially Kimco's portfolio, in the first-ring suburb where you've seen continued growth in that trade area, and the density has gone up around us. And our asset is typically 75% to 80% parking lot and the remainder is single-story buildings. And so when you think about that ratio, there's a lot of untapped potential built into our parking lot, and our platform is built to unlock that potential for shareholders in the future. And the last piece I would say is, obviously, we're focused on improving the balance sheet significantly. If you look at our net debt-to-EBITDA on a look-through basis, we finished the year at 6x. And we've had -- the most liquidity we've ever had as an organization and feel the -- really the balance sheet is in the best shape it's ever been and when you look at the debt maturity profile and our access to capital. So to start the year, we're off to a great start. Clearly, the RPT transaction was a great way to start the year. The integration has gone extraordinarily well. We have a phenomenal integration team. Obviously, the playbook we followed from Weingarten is very much in play. We've seen that this portfolio is one that has a lot of juice to squeeze. You start with really sort of the G&A synergies. We feel very confident in the underwriting that we did there and feel like we gave ourselves the runway to not really lose any momentum that they had built, but also jump right into the driver seat. And really the focus is on -- the first year is really on the leasing side. Their over -- their small shops are 250 basis points below our occupancy, and that's where we see tremendous upside. Because of the significant overlap where their assets are located, our team is already digging in and producing results on the small shop side. The reason why we have such conviction there is if you look back just on the last quarter, we had the largest small shop occupancy gains sequentially in the company's history at 70 basis points in one quarter. That's sort of remarkable if you think about the size and effort that, that takes. Now if you layer on the assets that we just acquired, our team is incredibly enthused about jumping in and taking advantage of really the disconnect between supply and demand right now and how the first time in a long time, shopping center industry is really benefiting from a lack of new supply. That 10 basis points of existing stock is under construction, that's the lowest of any commercial real estate sector. Vacancies are at all-time lows for the shopping center sector. It's actually the lowest of any commercial real estate sector, which is a first in my career. When I saw that headline pop up that retail is the lowest vacancy rate of any commercial real estate sector was nice to see. And then on the demand side, it's really interesting. If you think about what's happened through COVID, the value of brick-and-mortar convenience retail was crystallized through COVID. And if you think about all the things that different industries had to face, you could say that retail, if it was marked for death, if a government came in and said, "If you're nonessential, you have to stay closed," That would pretty much be the nail in the coffin. But what happened was, the grocery-anchored shopping center evolved to become really mission-critical, and people recognized the importance of -- and the value of convenience retail that they can get to quickly and they could shop and that provides value to the consumer. And so when you come out of COVID, the first 2 years, we had record-setting FFO growth. We had occupancy gains. A lot of the worst credit tenants were washed away. We were able to backfill with some of the best and brightest retailers of today. And that continues. That leasing momentum, that demand drivers are significant. And it's very diverse, which is really exciting. Because I think one of the things you've got to be sure of is that you have multiple drivers of growth and multiple drivers of demand. And right now, we have our traditional retailers which, for us, would be the treasure hunters or the trade -- the T.J. Maxxs, the Marshalls, the HomeGoods, the HomeSense, the Burlingtons, the Rosses, They're all doing 100-plus stores every year, and they're looking for space and it's getting hard to find. Grocery stores continue to expand at a rapid clip. The traditional grocers as well as the specialty grocers and the ethnic grocers and the discount grocers all are on offense looking for space. And our platform is ideally situated because we've taken the portfolio from 50% grocery-anchored to 82% grocery-anchored, combination of transformation of dispositions and acquisitions, but also the leasing platform is laser-focused on looking at our assets and seeing how we can reposition real estate to add a grocery anchor because the cap rate compression you can achieve there is significant. And so we're in a very good spot to start the year. We issued our FFO guidance midpoint. It's right about 2% growth. We feel like, obviously, that's a good place to start. That's not where we anticipate ending. We really want to continue the momentum, the push through the year. 1.5% to 2.5% is our same-site NOI guidance to start the year. Again, we're lapping up against a quarter where Bed Bath & Beyond was all in and paying rent last year. And so we figured it was best to start the first quarter with a range that we could capture, the first quarter same-site NOI and hopefully build momentum throughout the year there and build that. So that's where we start the year. We're very excited about, obviously, the fundamentals being in our favor. It's odd that the fundamentals are so strong, and yet the cloud over commercial real estate and the share price has not reflected sort of the opportunity we see ahead. But obviously, that's our mission, is to execute and let the numbers speak for themselves.

And Conor, you bring up the -- a little bit of a disconnect here on how good fundamentals are versus where you and a lot of your peers are trading this year. And there were some interesting reactions on initial guidance prints in 4Q earnings. I guess, how would you respond to the pushback that everything you just said, sounds like fundamentals have been the best they've been in north of a decade. Same-store NOI growth though is 2% at the midpoint, FFO growth is 2% at the midpoint. Like if this is the best it can get, what's the play? And maybe give us a sense of where the recovery is in '25.

Yes. No, that's a very valid question. And I think what you have to think about is, again, there's a ramp period. When you sign a lease, you don't get rent day 1. And there's -- that's the signed but not open pipeline. That 350 basis points is enormous, especially when you think about the size and scale of Kimco. And it does start to ramp in the back half of the year. So the 2% midpoint of FFO guidance again is where we start, That's not where we intend to finish. But when you think about the ramp of the demand that we've executed leases with, you start to see a build and compound as you go forward through this year and obviously into next year. And you have to think of -- everyone is facing some similar like interest expense headwinds, right? So we're refinancing, everyone else is refinancing at higher rates. We've been able to push out debt maturities. We have no more maturities throughout the rest of the year. We monetized our last investment in Albertsons in January this year, and that close to $300 million of proceeds went to pay off our bonds. We have nothing really left to pay off this year. But we believe that the organic growth that's embedded in the portfolio and that was those fundamentals that we talked about is just starting to be recognized because it's yet to flow through, but it's so crystal clear that it's on the horizon. And our mission this year is to try and compress that deal curve from lease commencement date to rents commencement date because every day is a significant amount of money. If you can bring that date forward or you can get them to open earlier, then the rent starts earlier. And so we have a tremendous amount of work to do to get the volume of tenants open that are sitting, waiting to take the space and open their doors. But we feel that's really the lever we can pull to really generate some significant growth this year and next year.

At what point would you expect supply to start to reenter the shopping center side?

Yes. It's an interesting question. So when you look at the supply dynamic that we're experiencing, if you look back almost like a decade, there's been virtually no new supply. And a lot of that obviously had to do with the amount of supply that was in the system that had to work its way through. There's been a lot of demolition, so a lot of repurposing. The Kimco strategy is to focus on first-ring suburbs in major metro markets. And that was a big shift for us because we wanted to be in a position where there were high barriers to entry, so very difficult to build new and have multiple levers for growth. And we thought that first-ring suburb of diverse economies would allow us to be in a position for sustained long-term growth and allow us to have future value creation through our entitlement program. Looking back over the last 5 years, I still believe that's probably the right spot to be, where if you think about the wave of demand that we're experiencing right now, there's still a sizable gap between where development costs are, which are north of $400, sometimes even north of $450 a foot. And if you look at where rents would have to be to justify a return to have a spread over your exit cap, you're in the $38 to $42 a foot in terms of rent per square foot across the whole shopping centers, so that includes the anchors. And if you think Kimco is on average around $20 a foot in average base rent, there's a sizable gap there that needs to occur. And it's unlikely with the land cost and the construction costs, especially in that first-ring suburb, and the way that the shopping center lays out with the amount of underutilized parking that you're going to see more new supply come in and compete with the Kimco shopping center. We have started to see, maybe on one hand, the amount of projects that have started to come up in the outskirts of Phoenix, in the outskirts of Vegas against the [indiscernible] of the sprawl, the third ring, where people have moved out and there's new household formations, and you're starting to see a few of those, but those are really retail deserts where new, like neighborhoods have occurred and there hasn't been retail to support it. That's not really competing with our product. So it's hard to say when that supply development cycle will kick back in that will compete with our portfolio, but we don't see it in the near term.

And can you talk a little bit about how you guys have continued to create value in this environment where it is tougher to develop straight up retail with mixing in resi, some mixed-use components to these, and what the opportunity is within the portfolio and kind of the structure that you guys pursue versus maybe some of your peers?

Happy to. So the strategy for us is unlocking the highest and best use of our real estate. And so we have a world-class team that's really focused on asset strategies across the whole portfolio to look at where it makes sense to spend our time. And again, that's where we see a lot of value, is in the time allocation of working these entitlements. And the majority of our entitlements do not have a shelf life. And so that means you're not -- you don't have a gun to your head and have to start constructing when you don't want to. And so again, we can lay out a development plan that lends itself to when the time is right to put a shovel on the ground. And so right now, it's very hard to make a deal pencil primarily because where interest rates are, where construction costs are and where the supply is coming online for multifamily. And so our original thesis was still to this day playing out in the projects that we have delivered. If you have build apartments with your retail, your retail is the amenity base for your apartment. So it's driving significant premiums to your apartments versus market because if your apartments are priced accordingly in the market, they're usually priced by the amenity package and the size of the space that you're renting. And there's no amenity package that competes with the shopping center. If you think about our Whole Foods or you name it, Trader Joe's or your grocer of choice, down here Publix, obviously, and then you layer in the fitness facility, layer in the coffee shop, the bagel shop, the grocery store, it goes on and on and on. Just the amenity package is just unmatched. And we've seen it in all of our projects that we've brought online, is the apartment's priced at a premium to market. And the same goes for our retailers is, the built-in shopper is going to shop your shopping center more than others and more frequently. And we've seen it drive incremental sales to the retail. So that thesis still plays out. And what we've tried to do in a time where our cost of capital is a little out of whack and doesn't allow us to be aggressive on the development cycle, what we've done is we've used ground leases. So similar to what we do with Costco and Walmart and Target is, we have identified a parking lot typically that's underutilized. And we go to the best-in-class apartment developers in that trade area and we work out of a ground lease deal where they pay us rent for that parking lot. And it's shovel-ready, ready to go. So we get value for the entitlements that we've put on the property. And then they put their own capital in to construct and lease and manage the asset. Actually, if you just go down the road here, you'll see 3 apartment towers that are on ground leases at Dania Pointe. So again, it's a nice way to activate entitlements and get that flywheel working without having a lot of capital going out that you don't have the ability to invest an accretive valuation. That's one way we've done it. The other way we've done it is contribute the entitlements to a joint venture. So shovel-ready, similar type project, but we contribute the land and the entitlement value into a joint venture as our equity. And that way, again, capital light allows us to ride side saddle with the apartment developer and ride the upside of the rents in the apartment side. So those are the two ways we've activated projects allowing us to again get value for these entitlements without having a lot of capital going on today.

And we actually have a question coming in dovetailing on this, asking, does your -- can you basically offer discounts to your tenants to activate the retail, gyms, et cetera?

Yes. We can. Yes, we can. It really is site-specific. Like one of the sites where we have an active project right now Suburban Square in Ardmore, Pennsylvania has a Life Time Fitness. And we've been in talks with them about even branding. They have a branding concept where you can brand the apartment's Life Time Living. And they have data that shows that you can get premiums to market because of that branding. So there's a lot of different things you can do with your retailers and a lot of different ways you can offer discounts or ways to get them to shop more frequently in the shopping center. Discounts is definitely one of them, and we've done that.

Perfect. Maybe circling back to RPT. You mentioned earlier on the process of the integration is going well. You've kind of done this before so you have some sense of it. I mean, you guys are -- we're a month removed now from the call. So I'm just kind of curious, other than the typical G&A synergies and the things that you've outlined, kind of what are the early reads here as you get into the portfolio to maybe behind that accretion that you guys -- or the extra accretion you guys got through on Weingarten through maybe vendor synergies and things on the ground where you're using your scale to really cut into the cost a little bit more than maybe you had underwritten but are -- could be meaningful to the accretion.

No, you're exactly right. I think that's really sort of the cream on top that we're really strained to recognize. And so when you look at the platform that we have at Kimco, we do have -- our model this year is to take what we've always had in our DNA, which is efficiencies of scale. Milton has always been a focused leader on efficiencies of scale, and I'm a big believer in it as well, and turn the dial to advantages of scale and showcasing that advantage of scale on the RPT platform. And so we do it in a couple of different ways. You mentioned the G&A synergies. I talked about the leasing upside and the opportunity there to bring it up to Kimco's standards. The other piece of it is, to your point, when you go bid out recurring services, we have a very large platform. So when we bid out recurring services and include the RPT assets, those savings are significant. And so you think about the recurring services that happen in the shopping center every day, whether it's the trash or the sweeping or any of those management type of situations, we also have a significant ancillary income program where we learn from Weingarten that we can really see significant growth in that platform. And that's -- there's no real sort of -- ancillary income is a number of different initiatives. It can be solar, it can be EV charging stations, but it also is advertising and marketing, where we have relationships with these large national brands that want to do -- if there's a new TV show or a new movie coming out and they want to brand things for that release, they look to our assets to try and have additional marketing. And so we've done a number of events. We've done a number of advertising campaigns. We've done a number of -- if it's a new car release, like leasing just even parking stalls. So more than just the seasonality leasing that's been typical, we have a pretty robust program there that we are super excited about layering over the RPT portfolio. The other piece of it is digging into these assets more, you see some real opportunities that were not necessarily captured in the underwriting. We've done a number of tours just down the road here in Mary Brickell Village. Brickell, if you haven't been recently, it's transformed. It's really sort of the hot bed in Miami today. And this asset -- and we have to verify this with Publix, but RPT in their disclosures, so this is the #1 Publix in terms of sales per square foot in the entire Publix chain. And so the volume coming out of this Publix store is enormous. But the best part about this asset is the mark-to-market on the rent side. You're sitting with in-place rents in the $40 a square foot, where everything down Brickell Corridor is signing north of $100 a foot. It's attracting the best in class in the world of retailers. And we're seeing significant demand coming for those spaces that are rolling. In addition, the upside, again, that our platform is focused on is on density in the future. And the interesting thing about Brickell versus the other parts of Miami is there's really no cap on height restrictions. And so the amount of volume that's going up around our asset is staggering. Citadel, obviously, building their HQ there, a number of office towers going up as of right, we can do 98 story towers. And it's one of those situations where we've got some work to do. It's going to be longer term, but we are super excited to dig in and do what we do best and work the asset and really create value over the long term and the short term.

Maybe just related to the merger charges, can you go over the timing of those?

Sure. I'll take that. So they'll -- in the first quarter, we're anticipating about $25 million of merger costs, which is about $0.04 a share. And that $0.04 will wind up in our NAREIT FFO when we report first quarter earnings.

And maybe going back to Mary Brickell for a second. The air rights has been a source of potential future upside. It's hard to put a value on those. But where are you in the thinking of whether you build them out yourself, whether you bring in a partner? And maybe at this point, do you guys have a little bit better view of where the -- what they're worth relative to maybe even what you -- the implied value that was in the merger cost?

Yes, the comps are pretty staggering. There was a church that just sold 2 blocks down for a record price. And so when you look at the opportunity we have, it's not something you can monetize today because there's leases and encumbrances in place. But what we've done in the past and what we continue to look at is lining up lease maturities and then putting a plan in place to activate the asset longer term for density. Now the flexibility we have is great because we can start the process today and not feel that we have to monetize or do things today in terms of picking a lane to go down. So what I mean is you don't necessarily have to do an office tower or an apartment tower or a hotel tower today. You can master plan it to be flexible. And so as the leases start to line up, and again, you have to put a plan in place to have all the leases mature around the same time so that you gain access to the asset and then you can take that down and go vertical. And the asset is almost 2 different assets. There's the public side, which has a lot of great leasing opportunities that I outlined earlier. And then there's the other side of the street, which is mostly single-story buildings that we feel is right for the long-term densification. And so what looks to be our master plan right now, we like obviously apartments. That's been our sweet spot in terms of what we feel adds the most value to our asset. Compresses the cap rate, that flywheel I talked about earlier, has proven out. So that's where we think -- again, we're working towards the process, but that's where we think we could add potentially 2 towers in the thousands of units. And so we're looking at that, obviously. And if someone comes in with a big number, once we get it shovel-ready, we're always here. There's no sacred cows. You have to look at every asset and say, what could you do? And if that's a big number that someone wants to build their [indiscernible] headquarters on, we could take those proceeds and in essence, have the rest of the asset free and reduce the basis to 0.

We had another question come in through LiveQA asking about the time horizon to achieve the mark-to-market at Mary Brickell.

So it's all about lease role there. So we're ones that are patient landlords and wait for the opportunity to pounce when the leases mature. We still are the largest landlord for Kmart. And so if you think about the patience that we've exerted there, I think we'll be well rewarded with the same process at Mary Brickell. Looking at -- there's a good amount of lease turn each year there. And so our thought is really to attract the best-in-class from an F&B standpoint, from a merchandising mix, from a fashion mix, from -- it's really more a lifestyle restaurant. That corridor is just on fire at all points during the day. The traffic is enormous. And so I think what we want to do is carefully improve the mix of uses there by adding in the best-in-class retailers over time.

Last week, Jo-Ann just popped up as another tend to watch. You guys have a little bit of exposure there. Can you just walk through your views on what could ultimately happen there from a space perspective and maybe talk a little bit about whether -- what scenario may have been in your initial bad debt guidance so it may have already been captured to some extent?

Sure, happy to. So the nice part about Kimco is the diversification. That could be another reason stock. If you think about the opportunity that we have to be a well-diversified landlord with great real estate, it allows us to take these dislocations and get mark-to-market upside and replace them with best-in-class retailers. Again, not a lot of new supply. So you need some of this product to come back to get that. You saw it with our Bed Bath spreads, right, north of 40%. When you get that opportunity to mark-to-market, that's where you can really capture the upside. So Jo-Ann for us is obviously a well-known name that we've talked about a lot that we've been watching closely. It's 26 leases, 56 basis points of ABR. So overall, the exposure is minimal. If you look at a worst-case scenario. So I always try and do a stress test and identify sort of what's the worst-case scenario and then build it back from there. If they were to file today, they would probably have going out of business sales, liquidation sales. So the full probably termination of all those leases would probably be June 1 would be like the earliest it could happen. And so if you all -- if you take out all of Jo-Ann's June 1, that's $6 million of hit to Kimco. We have $18 million -- or approximately $18 million of bad debt reserve for the year. It's been a very light closure bankruptcy year thus far. Typically, it's first quarter weighted seasonality of bankruptcies. So if you take that $6 million, that's really around 1/3 or less than 1/3 of the $18 million that we've really earmarked for the year, and that's worst-case scenario. And so we feel really good about potentially using that as upside. For obviously, throughout the year, that's the way that we start the year and obviously hope to see better than what we anticipated in terms of failures. But when you look at what our bankruptcy experts has about Jo-Ann and he's pretty good at this, he says it's likely to be a debt for equity swap and it's likely to have minimal store closures. And the visibility we have into our performing leases, we think we're going to get 4 back. And we've already lined up replacements for those 4 boxes and the spreads are about double digits. So it's -- when you think about the size and diversification of Kimco, it's pretty small. And if we get 4 boxes back, we should lease them very quickly.

That's helpful. Maybe give a little bit of update on where you guys stand on the 350 to 450 of dispose. I know they are going to be kind of first half weighted. And you got a little bit done in Indiana already, but maybe where you stand today?

Yes, happy to take that. We're highly encouraged with the process and the progress that we're making. As we talked about on the call last month, we did close on our first RPT disposition. We have a handful of additional transactions that are well underway that we anticipate moving ahead of schedule. One is a unique portfolio transaction that we're working through that should be completed here shortly and then a couple of other one-off opportunities. But as we outlined, we expect that the vast majority of the dispositions will be front-loaded. We said first half of the year. Hopefully, we can even accelerate that a little bit further. Just to finish the execution, be done with the disposition program and then really focus on the acquisitions that -- our guide is back-half weighted. But our goal and our objective is to really pull that forward because we do see some unique opportunities in the marketplace that we can put capital to work accretively?

Nice part about executing on the dispositions. We'll highlight the impact of the RPT, even though it's a small portfolio, the impact of the RPT portfolio on Kimcos, it actually will increase the grocery percentage in terms of grocery-anchored shopping centers, and it will increase the percentage of mixed-use assets. So for a small portfolio to have that type of impact on Kimco's whole portfolio, again, the strategic merits. I think, will really start to shine through as we've identified the disconnect in pricing and the opportunistic timing, I think that's when Kimco is at its best, is when there's dislocations in a market. And if you think about when we did Weingarten, coming out of COVID, when things were just starting to emerge or just starting to come back, and the same went for last year when there was a real sort of disconnect in the financial markets, where there was pretty much all the private capital was on the sidelines and we felt like it was an opportunistic investment, and we think that if we execute and we plan to, we should be able to highlight sort of what we bought the assets for, what we sold the assets for, the worst tranche and what we have the remaining portfolio at. And if you mark that to where market rates are and market cap rates are for the whole portfolio that we purchased, I think it will shine a pretty bright light on the opportunity that we had closed on.

And one of your peers has clearly sold a fair bit of product in the last quarter or 2. Prices have surprised. I know you guys different geography here with some of these assets, but the 8.25%, 8.75% kind of cap rate, are you guys -- where do you think you shake out ultimately in terms of that range in terms of blended pricing?

Yes. I mean, we feel good about that range. Obviously, every asset is a bit unique in terms of the profile, the geography, the growth, the risk. So we try not to compare our assets, our portfolio, our execution to others because there are so many unique nuances in every single deal and what the cap rate represents. But I would say that the lower to the middle end of that range is exactly where we anticipate getting these deals done, and we feel good about that pricing. To Conor's point, when you look at the price that we paid for the overall company and to sell the lowest tranche of assets right on top of that cap rate, it really cements the fact that we feel good about where we price the company and the deal that we were able to cut with them.

And I think, if I remember correctly, the one deal you sold, you had to do a little bit of seller financing. Is that a big part of these assets that you guys to step in? Or is the debt market improved enough that maybe you guys don't need to be part of the capital stack?

Yes, I would frame it a little bit differently than saying that we had to provide seller financing. We see it as an opportunity to maintain a piece of the capital stack at an accretive yield. On assets that while they may not have the growth profile or the geography that we look for in terms of a long-term hold, we have a lot of conviction that the assets will perform and that they will at least be stable and maintain. So there was senior financing that was put in place. There is capital on the debt financing side for these assets. We just see a unique opportunity on a handful of these deals to maintain a slice of mezz in our structured investment program and be able to obtain an attractive yield while removing the assets from our long-term portfolio hold.

All right. We have our rapid fire to end the session. What will same-store NOI growth be for shopping centers overall, the sector overall next year in 2025?

Probably accelerate from here. So I would say probably 3 plus.

Will there be more or fewer the same number of public companies for shopping centers a year from now?

There always seems to be some that go away and some of that IPO. So I think it will probably be right around the same.

And finally, what is the best real estate decision today, buy, sell, build, develop, redevelop or buy back shares?

I mean, we always go down our capital allocation list and we start with leasing as we're seeing 20% returns on those. So that seems to be the best use of capital, followed by usually redevelopment -- smaller redevelopment, so you can add density on your property, which around 10%-plus type returns. Structured finance for us is a unique vehicle that we're excited about because we can get double-digit returns and a ROFR on it. So again, building a future pipeline of acquisitions using that capital. You can acquire assets today at less than half of replacement cost. So that's a pretty unique use of capital as well. Obviously, cost of capital is an issue. So we try and line that up and say, look, leasing is still #1.

Thank you, guys.

Thank you.