Good morning and welcome to Kimco's First Quarter 2020 Earnings Conference call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to David Bujnicki, Senior Vice President, Investor Relations and Strategy. Please go ahead.

Good morning, and thank you for joining Kimco's first quarter 2020 earnings call. From wherever you find yourself following social distancing guidelines. Honestly hosting this call remotely from our homes as a new dynamic and we hope to make the best of it. Even at the occasion of dog barking and kids yelling in the background. The Kimco management team participating on the call include Conor Flynn, Kimco's CEO; Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; Dave Jamieson, Kimco’s Chief Operating Officer; as well as other members of our executive team that are available to answer questions during this call. As a reminder, statements made during the course of this call may be deemed forward-looking, it is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements due to a variety of risks, uncertainties and other factors. Please refer to the Company's SEC filings that address such factors. During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP financial measures can be found in the Investor Relations area of our website. And with that, I will turn the call over to Conor.

Good morning and thanks for joining us. Today we will take a bit of a modified approach to our quarterly call. I will give you an overview of how we have confronted the challenges posed by COVID-19 and how we plan to move forward as the country begin to re-emerge. So I will follow with a recap of the numbers for Q1 and our desirable liquidity position. First, on behalf of the entire Kimco team. I want to thank all the first responders, medical professionals, volunteers, grocery store workers and essential retailers that have risked their own personal safety to serve and help all of us. They are the true heroes, and their efforts should not be forgotten. And on a personal note, I also want to thank all of you for your support in my personal battle with the virus, your e-mails, texts, and thoughts were as powerful as any vaccinations, and were a big part of my recovery. I would also like to recognize the entire Kimco team for their tireless efforts to ensure our centers continue to provide essential goods and services to our local community. All of our centers are open and operated. And we will continue to provide our shoppers, our vendors, our employees and our extended Kimco family with a safe experience. Our best health and safety practices have been shared with companies both small and large, so that we can help those with less resources in more critical needs. As an organization we are battle tested, having successfully weathered both industry specific cycles and macroeconomic downturn. That said, this current situation is unprecedented, and poses new challenges. We have been working seamlessly and remotely since mid March, focusing all our efforts, as Milton reminds us to survive so we can thrive. Our strategy…

Thanks Conor, and good morning. Clearly we are all experiencing an unprecedented health crisis that is causing a global financial recession or what some may view as a global depression. It is times like these that bring out the best in all of us. I eco Conor’s sentiments and that we salute all the workers on the front lines who are caring for the sick and ensuring that we have the most vital essentials such as groceries, medicine and medical office inside supplies. And I cannot be proud of how the entire Kimco organization is handling this crisis. We are fortunate to have significantly invested in our technology infrastructure, which has enabled us to quickly convert from a multi office setting to a work-at-home environment for 500 associates within 24-hours. What was truly amazing is we have never skipped a beat. As a matter of fact, communication and productivity across the entire organization is at the highest level. We have positioned the Company to withstand the severity of the current situation and come out stronger on the other side of which I will elaborate on shortly. 2020 was off to a solid start as the first quarter results will demonstrate. Let me provide some color on the first quarter and spend some time on our balance sheet strength and significant liquidity position. As a reminder, beginning in 2020 we are reporting only on Navy defined FFO. If we recognize a unique transactional gain or charge, we will definitely be sure to point it out. Maybe the FFO came in at 160.5 million or $0.37 per diluted share for the first quarter of 2020, this compares to 158.4 million or $0.38 per diluted share for the first quarter of 2019. Our first quarter results included a decrease in NOI, 7.5 million.…

Before we start the Q&A, I just want to offer a reminder that you may ask a question with an additional follow-up. If you have further questions, you are more than welcome to rejoin the queue. Grant, you may take the first caller in the Q&A.

We will now begin the question and answer session. [Operator Instructions] Our first question will come from Christine McElroy with Citigroup. Please go ahead.

Hi, good morning and thank you. So Conor, just this is for you. We have seen April collection rates from you and all of your peers. The variance among the group is not that wide, but it is there. How should be investment community be looking at April collections in the context of what is the most important thing is which is ultimately the entire collectability of these rents. So, some national tenants are playing hardball, but should ultimately be in a position to pay, while local or and maybe regionals are getting a little bit more support from the government and landlords, so what are sort of the most important factors we should be considering ultimately?

Yes. Hi, Christy. It is a good question. I think it is so early on, in the pandemic, the first month of collections that everybody is tracking should be taken with a grant assault I think, because the real question mark was how long this will last and how deep it will go. And so we are still sort of in the early innings of it. And you are spot on in terms of the lion's share of what we did early on, was to help our small shop tenants, because we felt we have been pretty clear from the get go, that we think our large national retailers who have the balance sheets and the cash on hand positions to pay their rent, should pay their rent. So we can use our balance sheet to go and help the small shops, the ones that don't have the balance sheet or the cash positions to weather the storm. And so the first month that you are seeing being reported, I would say that the lion's share of the numbers that are reported, probably capture something similar where the bigger players are paying a portion or all of their rents. And then the smaller mom and pops are probably working through this to try and make sure that they survive and get to the other side of it. So as it progresses I think obviously May will be important than June, and the reopening will be critical, right. So you have started to see now a few states start to reopen. And anecdotally, we have heard a few of our retailers from store managers say that so far so good. They have been pleasantly surprised. So we continue to monitor the situation, but again take it with a grant assault that it is extremely early.

Okay. And then about half of your projected CapEx reduction in leasing CapEx. How much of this is a function of just you expect lower leasing volume in this environment versus a concerted effort to pull back on leasing incentives. And in that context, how much does the current environment, where many tenants are not respecting that long-term lease contract, how does that change your view on the economics and the risk associated with some of these upfront leasing costs and how much you are willing to invest?

Hey Christie, it is Dave. So it is a bit of a layered question. So let me just try to break it down a little bit to make sure I address everything that you did ask. As it relates to the leasing CapEx right now a lot of that is deferred CapEx. Not necessarily, we won't be doing, but we will probably be pushing to 2021. We are anticipating that there will be some delays in terms of RCD commencements and or the leasing volume itself maybe accelerated in the back half of this year as we started to get better visibility into the situation with COVID and reopening of markets then targeting those retailers that are actively looking to expand, because there are a number of them that are looking this as a real opportunity to continue to strengthen their own brick and mortar portfolios. So that is where we will typically see it, you know as it relates to you know, sourcing of deals and how we evaluate new deals going forward. We have always taken a very hard look at the quality of the tenant and their balance sheet and that will continue throughout this. It is always been a historic focus, and it will remain a focus, because it is really at these times is where that matters most. And in those with the strong balance sheet and great operating fundamentals will be the ones that continue to thrive, during this time and then on the back end of it as well.

Thank you.

Our next question will come from Greg McGinniss with Scotia. Please go ahead.

Hey, good morning Glen. Kimco has done a really good job in making sure that it has the liquidity to survive and this is not necessarily a unique position for Kimco operating in this difficult environment, but how are you thinking about managing leverage throughout the shutdown once we get onto the other side of this pandemic and then Ross, you wouldn't mind commenting on the transaction environment, your ability to help fund any expenses with dispositions that would be appreciated as well. Thanks.

Hi Greg. I mean look, leverage always continues to be a focus for us. The liquidity that we have right now has not had an impact on leverage, because it is really net debt right. You have cash that we have put on the balance sheet, or debt that we repaid with some of that liquidity. So leverage really hasn't moved in and you see that both in the numbers at the end of the first quarter and where I would expect it to be even at the end of the second quarter. Again, leverage is an important thing, we will keep a very close eye on it. We are a strong BBB plus BAA1 rated company, which is important to us. We still have desires to get us to a positive outlook. And I think we are doing really all the right things around that, where the Rating Agencies will see a difference. I mean they are tapping the bank market and having 15 banks participate in this environment, is fairly unique. I do feel, as I mentioned in my prepared remarks, that we have clear access to the bond market. If we wanted to do it. And so again we feel like we are in pretty good shape on that standpoint and leverage will continue to be a focus of trying to reduce it further.

Again as it relates to the second part of the question, I would just say that the current market is really taking a bit of a wait and see approach to really better determine the longer term impacts to cash flow, to tenancy. We have seen a few smaller deals trying to structure around the situation with master leases, escrows or hold backs, but it is really a pretty diminimus component of the overall transaction market. In terms of our own portfolio and utilizing dispositions, I mean, we are extremely confident in the portfolio transformation that we have undertaken over the last five to seven years. As you know, our intent coming into this year pre-COVID was to have a very modest level of dispositions. And really that hasn't changed even in the midst of this. You will see a very light second and third quarter from a disposition and transaction overall standpoint for Kimco as we get into the fourth quarter. And we may evaluate a couple of deals if the market defrosts to a certain extent, but we do not anticipate utilizing dispositions as a major funding mechanism in any meaningful way.

Great. Thanks. And Conor, you have shown a clear focus on helping out the smaller shop tenants. And I'm just curious how successful your tenants have been at obtaining the PPP funds with guidance from the Tenant Assistant Program. Do you have any stats on maybe how many tenants have applied for and received funds?

It is obviously something we focus on and I will tell you that the first round was uninspiring, because typically as you have seen some of those stats come out, it is sort of reflected exactly what we saw in our small shop tenants that around 5% of them were only successful in the first round. But the good news is we have seen, quite a few be, very successful in the round following it. And we think that since they have made tweaks to the program and it is been more focused on the small shop, and the small restaurant and the mom and pop, we think that they have the tools now to get through the window and be successful on obtaining those funds. So we are cautiously optimistic that obviously they did it extremely fast and had to get it out there and they were some loopholes in there that people took advantage of. But now we think that the small shops that we have the right tools in place and are ready to go and hopefully get the PPP loan so that they can make it to the other side of this. So we are cautiously optimistic that they have made the changes needed.

Alright. Thanks for the color guys.

Our next question will come from Alexander Goldberg with Piper Sandler. Please ahead.

Hey, good morning and thank you. First just on the dividend, you guys suspended the common dividend, but it sounds like you are still going to pay the preferred. So based on where you have paid the common so far, and presumably you are going to pay prefers the rest of the year. Do you guys need to pay a common dividend, the balance of the year to satisfy a tax compliance with reach status?

Hi, Alice. It is Glenn. Based on where we are currently and based on our own internal forecast, the answer is yes, we would still need to pay a further dividend to cover taxable income.

Can you share how much are you close to the line or you are still, are you still on the tee box and you still?

And we can’t share that Alex.

Honestly Alex, it is too early. There is a lot of moving parts that go into it. But as I mentioned, we would still need based on the current forecast, there would be a need for further dividend to make our distributions equal 100% of our taxable income.

Okay, great. And then the second question is, you are just in speaking to your REITs, other REITs out there. Sounds like tenants have credit as part of their bank lending. They have to be current and all of their leases, et cetera. But some of the tenants have been seeking waivers from their creditors, so that if they don't pay their leases, they are not in default of their credit. Do you know how many of your tenants have sought those waivers out from their banks?

Alex yes it is Dave. We haven't really had that discussion with retailers and they have brought up to my attention.

Okay. Thank you.

Our next question will come from Rich Hill with Morgan Stanley. Please go ahead.

Hey, good morning and Conor. I'm glad. I'm glad to hear you are feeling better. I want to come back to start off coming back to a question Christy asked about maybe ability to defer expenses and thinking back to how much CapEx you were able to reduce during the GST, but maybe Conor, if you are thinking about fully loaded CapEx both reoccurring and then development and redevelopment CapEx, how much do you think you could reduce that from your run rate in 2019?

Thanks for that. It is nice to be back in the saddle that is for sure. Look, we look at our CapEx and our OpEx really on a site-by-site basis and we have multi-year CapEx and OpEx plans. And so what we do is we go through that in detail to figure out what is required to be sure that the operating plan keeps the shopping centre as safe as possible, making sure that the required upgrades are done and that the needs and the wants, I guess, are separated. So we obviously prioritize the needs and then we push out the wants. And that is just on the capital plan for each and every asset. On the offense of CapEx where we are looking at our development and redevelopment plan. We continue to think that our asset base is right for redevelopment. And as I mentioned in my comments, we think we are really only in the early innings of the entitlement plans that we have played these last few years. We have been successful with gain traction on the multi-family entitlement plan. We think that we are again probably going to double the amount of entitlements in the next few years mainly because of we see that the path ahead. Now the question is, how much of that can we activate and how much we will be putting that in the pipeline? In this environment, we are probably going to hit the pause button on taking on projects ourselves. But we may look at ground leasing or doing some other projects that way that limit the amount of capital that we would have to implement in the projects. But look at the value creation over the long-term. And again, it is all about the long-term here. We know that we are in an unprecedented situation, but typically what we have seen in the past, at least when I was out west, when we went through the last crisis, we were very, very successful on the entitlement plans during the downturn. Many times, cities and states are in desperate need of raising taxes and capital, and they loosen up their grip a little bit on the entitlement plan. So we might be actually even more successful on our entitlements in a situation like this than we even expected. And so the key for us is securing the entitlements. And then, as we have talked about before, is that decision tree of where our cost of capital is, and do we elect to sell the entire rights, do we elect the ground the entitlement rights, do we elect a joint venture the entitlement rights, or do we elect to self develop. And I think in this current situation, the likelihood of doing self development is very slim. But we do think that long-term value creation on entitlements is critical to our success and critical to our shareholders.

Got it. I think that is a pretty, pretty helpful color. I wanted to talk about in negotiations with tenants maybe not just what you are hearing currently, but I think what a lot of, what, I'm certainly trying to understand what I think a lot of us are trying to understand is, you know, does the structural dynamic change over the medium to long-term? So I'm curious, are you hearing about any tenants wanting to stay in your properties but maybe go to more of a percentage rent structure or anything? It is asking for lower rent. I would think that there was a fair amount of tenants that still are very viable and want to be involved. But maybe a little bit more cushion than they did previously. So I'm curious, are you engaging in any of those discussions yet or is it still too early days?

Yes, this is Dave. It is a great question. It is very much still the early days. I mean when despite it feeling like almost a decade that we have been through this and it is really only been about six weeks. So, keeping that in context, you know, the way we have approached this is really wanting to take a very methodical and measured approach. One month at a time, have those discussions as needed as they arise. And then we continue to get more visibility, through the course of the summer and then into the fall to better understand exactly what the outcome and the long-term implications will be. From the retailer side, a lot of our retailers, again as I mentioned earlier, see this long-term as an opportunity to continue to strengthen their portfolio and will be wanting to expand and they are starting to reopen their locations as markets start to open as well. So, for us it is going to be a very measured approach. And as we get further along we will have better visibility into the longer term outcome.

One point is to add to that. I think it is important to know and retailers are prioritizing this is they look at their opportunity set and they see their boxes. And the differentiator for Kimco, is that we have third-parties validates that our market rents on our anchor boxes are 55% below market. And so when they look at their fleet of stores, they recognize which stores they need to protect because they are not going to be able to replace that type of economic deal. And so I think one thing you are probably going to see is there is going to be a limited amount of landlords through this as well as on the other side of this that have the capital to invest in some of the larger and the junior box type of deals that are out there. So I would anticipate that you are going to see those anchor tenants, those junior that successful, prioritize the spaces that they have that are either on ground leases or significantly below market rents. And we think that is a differentiator for Kimco.

Got it. Very helpful guys. Thanks again.

Our next question will come from Craig Schmidt with Bank of America. Please go ahead.

Thank you. Under deferral rental agreements when are you generally targeting for the payback of the deferred rent. And are you getting any other control rights as you enter into these deferral agreements?

Yes, this is Dave. Hey Craig. It really is a case-by -case analysis. We treat each retailer on its own in those discussions. And so they will vary based on need they want on both sides. And again, we wanted to take a very measured approach here, just addressing a one month at a time.

We have seen opportunities, Craig, to recapture control areas and things like that that would open up some redevelopment entitlement opportunities. But as Dave says, it really is every, individual tenant, every site, every lease is a little bit different. So you have to go one-by-one.

Okay, great. And then just turning to the Kimco’s curbside pickup program. I wondered how you are monitoring it and does the national rollout seem to be eminent?

Yes. So we first launched it in Texas and Texas is going to be one of the first markets to open a require curbside. So Grand Parkway is actually fully deployed at this point with stalls and play and as those retailers have started to open, we have seen both local and nationals utilize it. We anticipated curbside to be a trend into the future at some point. It's been an ongoing dialogue for years now, at various events and in our conversations with our retail partners. COVID what that did was really just accelerate, this trend that was imminent. And so for us, we were able to get out in front of it very, very quickly because we were already working on plans and our system being centralized, we are able to offer those retailers specific zones in which they can utilize for their curbside pickup. And then they communicate directly with their tenant or their shoppers of what zones to go to. And then those shoppers call, the retailer to identify exactly what stall they are in. And so thus far it is early, right. We are about a week or two into our initial deployment in Texas. But the response right now has been very favorable. And as it relates to the balance of the national program, we have been already in process with that. And we will have, again, a very measured approach on that rollout. But the way the trend is going is that curbside will just be one of those other tools that retailers and landlords will be working collectively to ensure that we service the customer in the best way possible.

Craig, I think it is a way to get customers more comfortable coming back to the shopping center as well. So you know, one of the key challenges that we have focused on is helping our small shop tenants as well as getting the customer to a level of comfort so that they can go back to their daily needs and services when the States are allowed to open back up. And we feel that because most of our grocery stores are big box tenants and our home improvement centers have been opened through this, that the customer is, is actually comfortable with that program, that they have been very successful. Our retailers have reported a 200% plus growth in curbside pickup. So we figured why not take the best practices of our largest national tenants and share that with our small shop tenants so that they can hopefully rebound quickly and that we also invite the customer back to the shopping center in a way that gives them the comfort level I think that is going to be required to make sure that we rebound as quickly as possible.

Yes, it does sound like a good rate to facilitate towards the reopening. Thank you for your comments.

Our next question will come from Samir Khanal with Evercore ISI. Please go ahead.

Good morning guys. So Conor, I guess the question I had was on co-tenancy risk, I mean, how should we think about that? I guess in the portfolio, especially as it relates to some of the bigger, box your centers or there are the newer developments that you had. I assume there are leases that are tied to some of these non-essentials, right? The gyms, the theaters. I mean, if they were to potentially restructure or even closed doors. I mean, how does that trickle through, I guess the renters or the other tenants?

Yes. Co-tenancy risk for us is pretty minimal when you think about the way that co-tenancy has been drafted. And a lot of these leases, it does vary, case-by-case. But for predominantly across our portfolio, a co-tenancy clause has a number of tenants having to go dark in order for as we triggered. And so if you think about typically a shopping centre has maybe three to five anchors, typically a co-tenancy clause in our portfolio needs at least two to three of those anchors to be dark, in order for it to be triggered. And we do come into this from a position of strength, you think about the multi-year repositioning that we have gone through, if you think about the balance sheet and how we position is to go along. And if you think about our occupancy from an anchor perspective at over 90%. In a lot of ways we have been preparing for this, now we knew that the cycle we are going to end, we never would have guessed it was going to end this way. But in a lot of ways, we have been preparing for this since a lot of deferral programs that we have been talking to the tenants as well are allowing us to sort of water down those co-tenancy clauses or give us even a little bit more strength on the other side of it. So hopefully, that helps.

Thanks for that. I guess my second one is on the groceries, right? I mean, can you provide an update on or maybe even Albertsons here, what is the potential to monetize that investment is played, I mean, it clearly the grocery sector has been pretty solid during the pandemic, and Albertsons have certainly reduced their debt position so I actually think about that?

Good morning, it is Ray Edwards, how are you? I hope you and your family are safe and healthy. For Albertsons I think you might have seen on Tuesday night they are-filed and updated their S-1, based on the fiscal year end for them, which was in February. And they really have performed extremely well, their comp store sales are up in March like 47%. And I think over the first two months over 30%, and they have done a great job, as you have mentioned on the balance sheet and improving their debt profiles. So they feel great position, potentially on IPO, but markets are the market. So we have to work with the underwriters see what the right thing is to do on that front. And it will execute at the right time, but they are really focused right now on running the business and it is much more complicated today for them than it was two months ago. So you know, we want to as owners, make sure they execute correctly and make the company as strong as it can be.

Thanks, guys. I appreciate the color.

Our next question will come from Mike Muller with JPMorgan. Please go ahead.

Yes. Hi, can you begin plans for deferrals. But how are you thinking about the risks that, there is so many people out of work that this could turn into cuts and permanent closures, if sales are slow to come back?

Yes, hi, it is Dave again. So again, it is so early in this cycle to really make any real forecasts on what the longer term outcome will be. So for us with the development program, we have been wanting to take a one month at a time, gain better visibility into the program in two, how COVID is going to have these impacts on the retailers and employment etcetera longer term. And then in which case, we will be able to address that. But our focus has always been on the tenant - retention out of the gate, as COVID started and we are exhausting all of our resources to ensure that they have the appropriate support to survive and thrive through this in long-term.

Got it. Are you operating with the view though that this is worse than the TFC or better or just similar?

It is unprecedented in a lot of ways and it is a very different outcome. This was a - I think the great recession or the financial crisis, this was a social crisis initially and now we are starting to see how it evolves and how it plays, but it is still early days. So I would hate to forecast exactly what the expectation would be longer term here until we start to see a little bit more in the future.

Hey it is Glenn. To talk a little bit more to his point, again this is a health crisis that is turning into a financial crisis. A lot of these companies, really the strong retailers that many of them that are closed today, they are not closed because their business was bad or they had bad inventory. They are closed because of the pandemic that we are in. So it is very difficult to compare it to the great financial crisis. I mean, look at unemployment, unemployment is at 14.7%, 30 million people that are out of work temporarily or on furlough, but different than the great financial crisis. The government has been incredibly positive about pumping liquidity, helping the consumer, giving them $600 checks on top of the unemployment. So it is very different. And the end though is it is too early to really tell whether we are going to come out. So we just take it a day at a time, a week at a time and a month at a time.

Got it. Okay, thank you.

Our next question will come from Derek Johnson with Deutsche Bank. Please go ahead.

Hi, good morning everybody. I wanted to go back to the tenant assistant program real quickly. How can it become more substance versus PR and I say that respectfully, right. So how have you invested in tweaking the approach to filing for the program so that more tenants actually see relief in round two and or is it a buy in issue with local tenants, so, bottom line what can you do to generate a higher success rate going forward?

Yes, this is David. So with the program to start as Conor mentioned in his prepared remarks, we have over 600 tenants already through the program itself are participating currently in the program. To ensure that we bolstered the effectiveness of it too, we also align ourselves with local banks that seem to have the greatest success early on in terms of getting the loans to the end customer, which was our retailer. And when we look at the program to-date, I think it has been very effective. We have over $20 million either approved and or submitted for loans. So when you think about substance, I think that barely carries very substantive and we continue to work through this. And if the program as it relates to the government in terms of government assistance continues to expand, we have the infrastructure in place to continue to support that and to provide further assistance to those retailers as they navigate the PPP process and the other submittal processes for or assistance.

Okay, great and just secondly with respect to Albertson you know if an IPO was successful could you just remind us how your stake would be treated and/or taxed.

Hi, it is Glenn. So if something was to get done, you have to step back and we have a basis of about $140 million. A portion of the investment was previously held in the REIT and then there is another portion that was in our TRS, which has now been merged back into the REIT. We know that based on the studies that we have done and where we stand, that the max tax is roughly $50 million in total on everything in respect to the how big, how much capital you would get from a transaction. So what is going to happen is if it was to go public, the investment that we have today, which is on the cost method, would then turn into a marketable security and you would mark-to-market the unsold shares on your balance sheet. And then the cash you are getting is basically like a free equity offering. You get all this cash with no impact to NOI, because we are not generating any NOI from the investment.

Thank you guys.

Our next question comes from Jeremy Metz with BMO Capital Markets. Please go ahead.

Hey, good morning. Hey Conor I was just hoping to get a little more color on the dividend here and the decision to suspend it versus possibly cut it. You saw a detail amount of CapEx with the slight reduction, you outlined AFFO coverage was pretty tight before that. So was there a thought at all to use this opportunity to just better right side there now? And is that something, maybe we should be looking at in the coming quarters and therefore suspending was just the right first step or how should we think about that?

Hey, Jeremy, it is a good question. Look, I think we are all very much in the early innings of this pandemic and we want to get more color on how May plays out, how June plays out and really see the amount of rent we are collecting, before we can really get an understanding of hopefully how the economy opens back up and how our retailers respond. And so it is all about clarity and I think the Board has discussed a number of different scenarios of what may or may not happen. And the tricky part is nobody has a perfect crystal ball of what we are dealing with today. And so the suspension is exactly that and we did to comment that it will be reviewed monthly, because we do want to keep the board in constant communication to understand all the ins and outs that we are seeing and the different scenarios that may play out and the taxable income piece that is going to be critically important as well. So there is a lot of different scenarios that may play out. We think suspending it is the right move today. We think reviewing it monthly is the right move going forward, in that way we can move quickly if and when we - and we know we need to reinstate it. We made that comment before, we made it in the press release and we had it in our remarks and so it will be reinstated in 2020 and we just have to understand what that level at the right point is going to be clear up a little bit more.

Yes. That is helpful. And second one for me, in terms of the deferrals that were granted, the 14%, that was mentioned does this cover some tenants that were in the pain camp for April, and it is, so how much is from that group that actually paid in April versus coming from that bucket that didn’t?

Could you just, I guess, clarify the question, just wanting to better understand what was asked?

Yes. I think, the deferrals get thought of as being granted towards, the 40% that didn't in April and when reality I think some of the tenants that have paid this sorts gain more favorable standing. And so I guess what I'm trying to figure out is, of the deferrals that were granted is some of those coming from that tenant base that paid in April versus the bucket that didn’t.

Got it. Yes. It varies. It is really case-by-case. Some times in the early discussions as all this started to unfold, some retailers tried to take a very hard position early on, and then that position evolved and changed acknowledging that they had financial obligations to meet and so they paid April rent with nothing tied to that, but it really is always a case-by-case so it is hard to, I would say contextualize exactly it being one thing or another?

So, just I guess. So can we assume that there possibly were some tenants that paid April that might get rent deferred for May or June, I guess, that is where I was going with it. Are there potential future in our expectations we need to be thinking about some tenants that paid, is it not just so clean as bits of the group that didn’t pay, and those are the other ones getting deferrals?

Yes. I mean, that that can very much be part of the discussion, as well as Conor mentioned earlier, other considerations in terms of loosening restrictions within leases and providing more favorable terms to ourselves and landlord that will enable us to do other things in the future. So all of those points or discussions in negotiating points on the table.

Okay. Thanks guys.

Our next question will come from Vince Tibone with Green Street Advisors. Please go ahead.

Hey, good morning. Ross, could you provide a little more color on the conversations taking place in the transactions market today? How are people thinking about stabilize NOI and cap rates in this environment?

Sure. Good morning. I know it is early for you. That really is the challenge today is that the lack of clarity that the retailers have in terms of the opening is very difficult for an acquisition to take place when the NOI is so uncertain. So, as I mentioned previously, there are opportunities or attempts to try and box in what that risk may be. So you have seen some conversations related to trying to understand which tenants are paying which tenants are not paying. Who you may want to try to box in an escrow agreements for or to cover some rent for a period of time. But I would say right now the vast majority of investors or owners that have capital are really a bit on the sidelines right now just waiting to see how it unfolds. If there becomes a period of more distress or dislocation, I think we and some others are ready to take advantage of it. But right now it has really been a situation where I heard a quote that I like that in the first quarter the planes that were in the air landed and not a lot of planes have taken off since. So we are waiting to see when there is clearance to fly them.

Makes sense. I mean, in your mind, what needs to change maybe to unfreeze the transaction market? I mean is it just more than country reopening, rent collection levels getting back to normal-ish levels or what is those criteria in your mind to kind of get things moving again?

Yes. First and foremost, there needs to be a comfort level in the country, that it is safe to reemerge and to start shopping again and for these retailers to open. Even in some of the States and the counties where reopening plans have started to exist. Not all the retailers have opened yet, even if they are capable or allowed to legally. So we are still a little bit early in people getting comfortable, whether it be a testing capacity or ultimately a vaccine. So as soon as I think there is a return to normalcy and there is a better understanding of which retailers in which categories of retail will open it and what that looks like. Are there capacity issues are FNB, theaters, fitness, going to be able to return back to a 100% capacity. As soon as we have more clarity in that scenario, I think both investors and lenders will become a little bit more comfortable in loosening the perseverance and starting to invest again.

That makes sense. So that is helpful color. One more. Just quick one for me if I could. What is the pre-leasing level at the Boulevard, that impacted at all in recent months due to the pandemic?

Yes. Right now we are close to 90% on the pre-leasing with and Boulevard and nothing has changed at this point. So we continue to do our fit out work with all the retail tenants. As Conor mentioned earlier, it was deemed essential. We got the waiver, ShopRite is underway, we are going through the inspections and then for the balance of the shopping center, we continue to do our fit out work.

Kudos to our team that went above and beyond to get those waivers, because it was not easy and to get it expeditiously and get it back to having the construction workers on site was not easy. So I think all the team that has been working on that because it has been pretty incredible to see how a site that was closed down in essence from the shutdown to quickly ramp back up was pretty impressive.

Thanks Vince. We will take the next question.

The next question will come from Floris Van Dijkum with Compass Point. Please go ahead.

Thanks guys, thanks for taking my question. Can you remind us again what your break even rent collection is to cover your ongoing expenses?

Yes. Hi Floris. If you look at run rate, total expenses, GNA, operating expenses at property level, interest expense all that kind of stuff. It runs about 115 million a quarter. So somewhere roughly around 15 million a month.

So what percentage of the cash rents would you need to collect to get to that level?

Well, we are above that with our 60%, so we are more than where we are.

But is that in the mid fifties?

It is probably around the 50% level to do the math specifically, but it is around that.

Okay. Another question maybe for you, Glenn as well. Your straight line receivables, it doesn't appear like you have taken any write downs on any of that. Could you walk us through how you think about some of your riskier tenancies and also maybe talk about that in terms of the bad debt, which was four million relative to the 1.7 million last year how much of as the COVID impacted your thinking about tenants.

Let me just talk generally about this AR reserves as it relates to us. We as a practice have always had reserves against straight line. So the number that appears in our supplemental, that is net of reserves. So we have reserves up already and pretty robust policies and procedures and how we analyze tenants as we go forward. Now the pandemic makes us review those procedures and policies, make sure they are sufficient for the current environment. But we have always had - may be a little different than others, we have always had reserves against straight line, good times and bad. So you don't see a whole lot of movement there because that actually is a netted number. So there is a sizable reserve against straight line today. On the AR, the billed AR and will be quote, unbilled AR, which is our - the tax that you are accruing as you go along. We have very significant reserves there as well. And again, very - again what we believe are extremely very robust policies about how we look at it. And we go tenant-by-tenant, lease-by-lease in making determinations about the appropriate level of reserves. Now do I think the reserves will go up in the second quarter? I do, but I think as of 331, the reserves are very adequate and clear about where things are. So you will see movement, but I'm not expecting drastic movement as it relates to or AR. The four million that you saw for the quarter, which is - it is roughly 138 basis points. As you know, we carry in our forecast and our budget around a 100 basis points for a year. So that at 138 basis points is roughly 35 basis points for the quarter. So even relative to our original plan, we still have 65 basis points available to us. And I would also tell you that, a portion of the reserve taken, was really related to one tenant that is still operating. So, it was really sent to fairway grocer in plain view for us. That was about a million dollars of the reserve. They are still operating so that may come back to us too.

Thanks Glenn. I appreciate it.

Our next question will come from Haendel St. Juste with Mizuho. Please go ahead.

Good morning. Glad to hear everyone doing well especially you Conor. So my first question is on the non-essential rent on your COVID update slide. That bucket comprises just under a half of your rent, 43% it looks like, and it looks like you collected 42% from that group in April and the seed deferral request for another 21%. So I'm trying to get a sense of how we should understand that, what do you expect from the 37% with not requested deferrals and then maybe you could share some thoughts on how you see the probability collection for this group overall versus say the essential and if we could see a narrowing of the GAAP between that and the 86% you collected in your essential bucket. Thanks.

Sure. So I will try to break this down a little bit and make sure I address all parts of your question. So for those that have not requested any deferrals at this time, it could be for a variety of reasons. One they are continuing to operate or they are still paying, they can be closed and paying. It also means that they just have been going through the loan process and wanting to wait to see gain more visibility into what type of assistance they could secure to meet their financial obligations with us in our lease. We have seen that actually happen a couple times for those that have requested deferrals had since called us back and said that they are willing to pay rent, because they just got the PPP loan. So they are able to meet that obligation. So it really does vary. In terms of collectability on the back end, again, it is still too early to tell we are only six, seven weeks into this, so you are going to have to play that out a little bit further to understand exactly, as markets start to reopen and these retailers start to get back in the swing, what that looks like. And I do apologize, but I think you have one last part to your question.

I was just looking for some perspective on the two buckets if you can see from narrowing, and I think, somewhat address this. But the crux of my question was there is a big chunk here that hasn't either paid or requested the problems and was really trying to get some clarity on what the nature of conversations and what you understood to be the current situation there?

Okay. Yes, I think what I just mentioned probably answers that does.

That is helpful. Thank you. And then maybe a question for you Glenn, just want to clarify, on the collection numbers we are seeing here, it looks like it is based on ADR. In other words, total occupied, total potential rent not necessarily based on an occupancy based numbers, in a sense that if you had lower occupancy, you would benefit because you have less rent to collect. Just wanted to make sure because there is a lot of numbers being thrown out there in the industry right now. Some are based on total potential ADR assuming a 100% occupancy, some are based on current occupied ADR some are putting Canon, So it is important I just want to make sure we understand what is being reflected here.

It is strictly based on build AR.

Okay.

It is simple, it is not complicated. It is the build AR for the month of April.

Haendel I think you are talking about what would it be, you included the cam and the other recoveries, it is comparable to what we collected.

Got it. Okay. Thank you guys.

Our next question will come from Chris Lucas with Capital One, Please go ahead.

Good morning guys. I guess two quick ones for me. As it relates to the deferrals, did you guys have a, like a weighted average duration by ADR that today you could provide just in terms of how long the deferrals are across to your the 14%?

No, right now, and I mean, similar to how I addressed this earlier, it really is a case-by-case. situation. And I also stated earlier, some of these deferment that were issued to some of these retailers that started to get paid back just because they had secured the loan. So it is still very fluid. We will have better visibility as we progress through this over the next couple months.

Okay. And then, Glen, right, earlier in your comments you mentioned something about a mortgage. I think you did. It looks like you there was JP Morgan, you pushed out 90 days, I guess I'm just curious as to what you are seeing in the direct lending market in terms of how people were underwriting or if they are not, if they pulled back here, maybe some commentary about what is going on in the mortgage market will be very helpful.

Yes. So we have property in the Bronx, Concourse Plaza right near the Yankee Stadium that was really a development project over time with our partner. We are 50/50 partners. So we had a loan that was maturing in 2020 and we sourced a new loan for hire proceeds actually, at $75 million and closed on it in early April. So it is a new seven year loan at a 3.13%. So actually the plus savings for the partnership and extended the term out much longer. The mortgage market is very, very specific as to the property that you are looking to finance. For a while the CMBS market froze for a bit. Bank lending is has its level of challenges. I would say more of the money, big money center bank than it is at the regional banks. I think the regional banks are still very active. The other thing I could give you some visibility on is, again on the residential side, the Fanny & Freddy market is completely operating and functioning. And for the right assets you can still clearly get mortgages and financing for term at incredibly low rates.

On the multifamily sides. Construction financing. Have you guys looked at that in terms of what is available and how that is being underwritten -.

We really haven't, we don't have actually any construction financing. As a matter of fact, the one construction loan that we did have, which was on Dania, which was $67 million, we paid off there in the first quarter. So we actually have no construction financing. We haven't been outsourcing it. I believe if we wanted to quite candidly, if we wanted to get construction financing, I think with the banking relationships that we have, we could obtain it, but it is not something that we are doing at the moment.

Okay, great. Thank you.

Our next question Collin Mings with Raymond James. Please go ahead.

Thanks and good morning. I just wanted to go back to the transaction market and you touched on Albertsons specifically a bit, but if we did reflect on Kimco's history and the plus business, can you maybe just expand on your potential appetite for any similar opportunistic investments as this cycle plays out and how would you balance these type of investments versus obviously the near-term focus on liquidity or potentially ramping back up for me, development opportunities you just have?

Sure. I think when you look at the strategy of Kimco, we have always had the opportunity bucket. We look at retailers that are real estate rich and that is how close to 10 years ago. We wound up with the Albertson's investment of owning close to 10% of that grocery chain, they still own and control close to 50% of their real estate. And you know, the original thesis there was that the real estate alone was so valuable that it would make sense long-term. And clearly the operations now have been a shining star in the grocery sector. We still believe that there is going to be opportunities for that what we call the plus business going forward, we have been focused on making sure that we try and harvest our existing plus business investments before we go and start to make new investments just again so we can build on the wonderful track record that we have had over the decades of investing in those types of opportunities. That being said, we think it is a differentiator for Kimco. We think there is going to be opportunities ahead of us where the plus business will be utilized and come in handy to really create opportunities because we do think there is going to be. Because we do think there is going to be a significant amount of dislocation. And if we are one of the few that have the capability to underwrite the capability to invest, we think it will reward our shareholders.

Okay. So it sounds like that that does remain, again, more of an intermediate to longer term priority.

We always have it as part of our, our differentiated strategy. You know, we obviously have a very solid tier one portfolio where we are laser focused on executing our 2020 vision strategy. You know, if you think about it over the past few years, how we have transformed the asset base, how has we have gone long on the balance sheet. A lot of the effort that we have made has really positioned ourselves to be ready for this type of environment, so that the mothership can continue to hopefully outperform. But the bucket that we have for the plus business is always unique and opportunistic, when those opportunities present themselves. And so we are ready when we think it is a differentiator for us and we think it'll really reward our shareholders in the long-term.

Okay. And then Dave, that you spent some time discussing the curbside program, but to the extent social distancing becomes more of a focus going forward, are there any other longer term changes you have already started to work on with tenants in terms of expanding outdoor seating for restaurants or anything else along that line as you think about the actual physical location or the physical layout of your property?

Yes, great question. I mean, you absolutely nailed it with your example. The outdoor seating is something that we already talked to our restaurant operators with. And we have actually been serving each of them to, analyze those that already have outdoor seating, those that want to expand capacity, areas in the shopping center that we can support that capacity. How do we manage it in a centralized fashion with the appropriate social distancing measure is, do we support the individual restaurants and the outdoor or seating that they need. So all of that is very much on the table and under consideration between our development team, property management team, construction team and leasing folks, everyone is really directly engaged in best understanding how we can best serve our tenant base and the needs going forward. Obviously the situation will evolve. Different municipalities and counties have different restrictions and that is what we have seen through the outset is you really have to take this case-by-case, but we take all 400 of our assets and have been doing a very much a deep dive on how do we reformat those for the short-term and then what are more longer term solutions that will be more permanent.

Alright. Thanks guys.

Our next question will confirm Ki Bin Kim with SunTrust. Please go ahead.

Good morning. Hope you are all doing well. So you have about 3.5% of rent expiring this year, you have another 1% at month-to-month. What is the kind of current game plan to address those and how would those negotiations in this type of environment?

Sure. This is Dave. So in terms of the current renewals and the discussions in pre COVID those have been ongoing data. They are happening pre COVID and even as we are going through and first six weeks here those discussions continue. Again, the quality of our real estate has vastly improved over the years. And so our 400 locations really service the community well in terms of the retailers extremely well. I think what this is proven is that being close to your customer in these markets is really essential. And we have been able to service that. And the brick and mortar strategy will be critical long-term to serve as all these different options to the customer, whether it be curbside focus, which has been an evolving trend that looks to - will be in play for the long-term here and has really been growing over the last couple years. So we feel good about that. And then in terms of those that are month-to-month and how we address those, we are really looking at in a very measured way, we don't want to get too far out in front of it, similar to what we did with the great recession, as we can do shorter term renewals for the time being. Let's get more visibility to have this list long-term and then we can address a longer term renewal on the back end then.

Similar to what we have done in the past recession. I mean the past great recession is we adopted the phrase love the one you are with, and we recognized that the existing tenant base is your best friend right about now and so we are working with making sure that we love the one you are with and bridge them to the other side of that.

Okay. Alright, that translate into perhaps a shorter term leases for now, for the longer term leases that are expiring?

Not necessarily, again, it is case-by-case, it is hard to paint broad brush on it. Each situation is different and when you look at - the majority of our retail shopping centers have essential components to it with grocery, over 77% of our ABR is associated with shopping centers that have a grocery component to it. Those are the areas that people want to be in. I mean, it has been proven that through this pandemic, that having a essential component is really key and for those other retailers that can co-tenant across that our alongside. They really do want to stay in those centers longer term, but it is really hard to paint a broad brush over questions like that.

Yes, I appreciate that. And Glenn, were there a change in the lease spread definition, if I look t the supplemental is there some language that suggested that?

No. No, our lease spread definition hasn't changed.

Okay.

We just change the format in the presentation the way it looks.

Okay. I just noticed that the four two number changed versus what you reported for 4Q last quarter.

No, the definition didn’t change, it is just a presentation change.

Alright, thank you guys.

Our next question comes from Tammi Fique with Wells Fargo. Please go ahead.

Good morning. Glad you are feeling well Conor. Just following up on the commentary you made about loving the one you are with. Certainly there are a number of tenants that you may not love quite as much as others. I guess is this also an opportunity to address lower credit tenancy where you may want to reverse base longer term or is occupancy preservation is such a critical level that maybe that is not a consideration at this point?

No, that is a good question. And I think you look at each and every situation, and each and every site individually that make the best business plan for the long-term. And so we are always looking to upgrade tenancy, we are always looking to improve the credit quality as well as the -. Potentially, I personally think there is going to be a lot of opportunity to add a lot of grocers to our sites that don't currently have a grocery anchor and we are working on that right now. We are already close to 80% grocery anchored, I think we are going to be up over 80%. That is a challenge that we have laid out for ourselves. But that being said, we recognize that a lot of retailers are going to have their expansion plans put on pause, except for those that maybe have been operating through this pandemic. And so we do want to take it case-by-case. And the small shops to me are critically important because I think they are the secret sauce in terms of connecting with the community. You know, every shopping center has sort of the major national credit tenants that people are used to shopping and love. But I think the real important part of the shopping center is that secret sauce, the local mom and pop because it is typically a generational owner or someone from the community or someone that they really connect with. And I think that is where we really want to shine in this type of environment is helping those folks get to the other side of it.

Okay. Got it. Thanks. And then I guess some of your peers are looking to extend loans to their small shop tenants. I'm curious if you have given any thoughts to doing that.

Yes. It is actually something we have talked about when we were rolling out the TAP program and looked at doing ourselves, but then we realized we should probably prioritize the government programs that are in place, because in essence they are there for a reason and we figured let's make sure the tenants that we have access those programs first and take advantage of those programs. And then as we watched the PPP program closely and see how it is playing out, if we need to. We have the ability obviously with our balance sheet to step in and help those in need. But right now the priority is to focus on the PPP.

Okay, great. Thanks. And then if I could sneak one more and I'm curious if you are seeing any differences in collectability based upon geography.

We really haven't seen much difference. Right now it is pretty consistent across the board.

Okay. Thank you.

Our next question will come from Linda Tsai with Jefferies. Please go ahead.

Hi thanks for taking my question. Any sense of the breakdown in April rent collection for anchors versus the small shops?

It is in the supplemental, you will find that in the supplemental and our COVID business update Linda.

Okay. I think by and large the anchors were paid and then it just varied a lot across the small shops. Right?

Yes. 73% of our anchors paid and 44% of our non-anchors paid for April.

Thanks for that. And then when you look at the pipeline of retailers announcing restructurings, you know, are there any strategies to best mitigate the impact of them upcoming increases? Maybe anything you can do to maintain occupancy on a shorter, medium term basis and then do you think your scale helps you in this context?

Our scale and our diversity definitely helps. I mean, when you look at the diversity of tenant base across the portfolio, it is pretty incredible how diversity are, especially when you take into the geographic diversity, top of the tenant diversity. Clearly we are watching the credit markets closely. Our tenants are some of the - top 50 has highest investment grade credits of our peer group, but we are watching closely how that plays out. Clearly there has been a lot of reorganizations, a lot of debt for equity swaps that we have been watching in other sectors. But we are going to monitor that closely and continue to evaluate the opportunities.

Our last question today comes from Christine McElroy with Citigroup. Please go ahead.

Hey it is Michael Bilerman with Christie. Conor it is great to hear that you are doing better. I wanted to sort of ask you, and I think obviously you are doing a lot of stuff on the deferral and working with your tenants. I assume you are paying a royalty fee to Steven stills for your - the one you are with as well, but how do you think about providing equity in stepping into retailers? It is obviously been a hallmark of Kimco for a long time, where you have been leading both initiatives. Do you view that as an opportunity today to invest into repost, put aside the deferrals and the loans but try to make commitments and roll out a much more significant program on that end?

Hey Michael, thanks for those comments. Yes, no, we look at it the same way. We have always looked at it. We want to be opportunistic when those events create dislocation where retailers that are real estate rich need a partner to come in and unlock the value of that real estate. So we are very careful on who we invest in and why. You can sort of look at our track record back to decades of all the investments we have made. And it is pretty consistent theme across the board. We like retailers that are real estate rich. We typically think we have the capacity to underwrite it. We have the capacity if we need to take back the real estate and help unlock the value there. And so that is what we have been focused on over the years. It has been a good track record for us. We want to see the current plus investments pay off, we anticipate them to continue to perform and hopefully there will be some more dislocation in the near-term that will create opportunities for us so that we believe as a differentiator can really shine and create a lot of value for our shareholders.

Okay, so is that an initiative right now, you obviously have had relationships with private equity firms. I'm just trying to get a sense of, obviously a lot of these retailers are struggling. Chapter 11 filings are rising pretty dramatically, so I just don't know whether that is an active dialogue -.

It is. It is part of our strategy. It has always been a Kimco differentiator. It always will be. And we have been looking at that, it is lumpy as you know, it is not the easiest thing to model, which I know sometimes causes you a lot of headaches, but we do think it is an opportunity for us at the right time and we haven't seen it happen, but we think the window is going to be opening here shortly for us to take advantage of it.

And then on the dividend so it is a suspension and you are in the review of monthly. What happens when you do re-instate do you view that as a - you want to catch up and pay the whatever dividends didn't get paid in the quarter? Is it just then when you are reinstated it is going to be on a go forward basis of whatever new rate you will feel comfortable with from a payout ratio perspective, how should the market think about the suspension?

Yes, it is a good question Michael. It is very, very early. We are going to take it month-by-month. We use that monthly review specifically because we do think we are going to have to have these updated calls monthly with our Board to give them where we sit from May, from June, from July, and then reinstate state where we think we will have confidence obviously in covering it and would be sustainable for the long-term. We know that the dividend is critically important to the investment thesis of Kimco shareholders and we want it to be tied to taxable income and to our cash flow. And as we get more information, as the Board digests the information that is coming in daily, weekly, monthly, we will be in a position to reinstate it where we believe that for the long-term it will be in a good spot not only for existing, but to grow overtime.

Right. So in this case you may have a pop up dividend, taxable income and then the new run rate quarterly dividends that you will feel comfortable going into the future.

It will really depend, obviously on the situation that is transpiring in front of us. A lot of options are available to us, a lot of levers that we can use. But that is one of the optionality that we have that we can look at when we get a little deeper into it.

And you feel from paying it in stocks, having the ability to 90% stock that the idea of just suspending was a better outcome than giving script to your shareholders?

We felt like suspension was the right approach at this point just because there is such a lack of clarity. Obviously, with the change from 80% to 90% of the stock issuance that we are doing then that is an interesting option as well. And again, from the base of Board discussion that we have been having regularly, we will continue to monitor the situation. And I believe that as it gets a little bit deeper, and we get the ability to see a little bit more clarity, then we will have more information at our hands to put it back in place at the right level.

Okay. And the last thing with some of the states to municipalities that have reopened, do you have any tenant sales from the stores, or the restaurants that have opened in your portfolio? Is there any anecdotes that you can share about the pent up demand that is going on in the economy when things do reopen?

We don't have any specific sales yet. Obviously, since it is only been a couple of days, but we have seen - we do have conversations with store managers that we have relationships with. And obviously the curbside pickup program that we have launched, we have a lot of dialogue surrounding that. They have been very pleasantly surprised with the curbside pickup and the accessibility and the use of it. They have been happy so far. So we will continue to monitor that closely. But we don't have any sales data yet.

Okay. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to David Bujnicki for any closing remarks.

Thank you for participating on our call today. I'm available to answer any follow-up questions you may have. I hope you and your families are staying safe and healthy during this crisis. And hopefully, by next call we can do this in a more normalized setting. Thank you, everybody. Bye -bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.