Oct 30, 2026 earnings call — Project Elevate progress and strong leasing momentum
KRG raised 2026 core FFO and NAREIT FFO midpoint by $0.01 to a range of $2.08 to $2.12 per share.
Revenue $0.2B (est $0.2B) · EPS $-0.07 (est $0.08)
Key quotes
"Strong leasing this quarter underscored the earnings power of our core portfolio as Project Elevate nears completion."
"Since the start of 2025, we've sold 22 non-core assets for over $1 billion and repurchased roughly 22 million shares for approximately $539 million at an average price of $24.46, well below consensus NAV."
"Reflecting our strong year-to-date results, we are raising our 2026 core FFO and NAREIT FFO guidance by $0.01 at the midpoint to a range of $2.08 to $2.12 per share."
Analyst Q&A 8
asset sales, market conditions, special dividend
Q (James Feldman · Wells Fargo): He asked how the transaction market is behaving, what assets they are selling, and whether underwriting or buyer behavior is changing. He also asked how large a potential special dividend might be or what would avoid one.
A: Management said the transactional market is still robust for high-quality deals and they have three assets left to sell this year. They priced two after the interest-rate rise and one sale is closing soon. If they complete all sales they would not need a special dividend, and remaining exposure after the imminent sale is around $60 million.
"So if we get all these sales done again, we won't have to do a special dividend." — Heath Fear (CFO)
guidance drivers and 2027 outlook
Q (Andrew Reale · BofA): He asked which recurring but unpredictable items affected the guide and what is driving the implied FFO step-up in 4Q. He also asked what will drive 2027 results and what are the main puts and takes.
A: Heath said one unpredictable item was a land sale at the Loudoun project that was anticipated, and there is an additional land sale in the fourth quarter that was not in prior guidance. For 2027, the biggest tailwind is organic growth from the nearly $39 million signed pipeline plus better embedded bumps; headwinds include a $0.03 noncash drag and lower interest income from 1031 activity that won't repeat.
"I think, listen, the biggest tailwind, obviously, going into next year is the organic growth associated with the nearly $39 million of signed on the pipeline." — Heath Fear (CFO)
use of sale proceeds and shop targets
Q (Craig Mailman · Citi): He asked whether the $230 million of excess proceeds should be used to pay down low-rate debt or for buybacks and which is less dilutive. He also asked the timing to reach the small-shop and occupancy targets.
A: Management said they are leaning toward near-term conservatism and keeping optionality, and they have not made a final decision. Heath noted the proceeds arrive over time — $30 million yesterday, $20 million soon, $100 million in December, and $75 million in the first quarter of '27 — and acquisitions are harder as debt costs and asset yields have converged. John said they won't give leasing timelines but the shop leasing pace picked up and they eclipsed an all-time high this quarter, and they feel good about the trajectory.
"I will tell you, if you look at our capital allocation menu, acquisitions have become a little harder as debt costs and the yield on an asset that would actually be complementary to our portfolio have sort of converged." — Heath Fear (CFO)
leasing spreads and lease-term improvements
Q (Connor Mitchell · UBS): He asked whether the strong leasing spreads this quarter were driven by deal mix or broad demand, and which lease negotiation terms have improved (options, terms, TIs, escalators).
A: Management said the strength is broad-based and reflects methodical merchandising and Project Elevate, not a single quarter anomaly. They highlighted very strong new spreads and said as portfolio quality improves they expect spreads to improve further. On lease terms, they are improving co-tenancy clauses and restricted uses, limiting options, and focusing on fair market value and other landlord-friendly changes.
"And to John's point, in the lease, we're improving things like the co-tenancy clause, restricted uses." — Heath Fear (CFO)
legacy West performance and cruising speed path
Q (Floris Gerbrand Van Dijkum · Ladenburg Thalmann): He asked how the legacy West acquisition has performed versus underwriting, including rent and NOI growth. He also asked whether the cruising-speed increase is the organic rate to expect and the timing to reach higher targets.
A: John said the asset has well exceeded expectations, noting retail leases have not been signed below $100 since acquisition and the asset has been very successful, though they were cautious on NOI detail because of the partner. Heath said about 90% of cruising-speed improvement is from leasing, they see it climbing toward 2% over time (maybe 18 months to 2 years), and after that they will target 2.25%.
"I will tell you, though, that there may be some assumption that a lot of the cruising speed improvement was by virtue of Project Elevate, but 90% of that improvement is through leasing." — Heath Fear (CFO)
Pelham fee purchase details and holding plan
Q (Todd Thomas · KeyBanc): He asked what yield was achieved by eliminating the ground lease at Pelham Manor and whether consolidating the fee gives redevelopment flexibility or was mainly an economic/1031 move. He also asked if Pelham is a long-term hold. He asked to confirm a $0.01 land-sale gain in 4Q.
A: Heath declined to discuss individual property yields and said they will report Project Elevate yields on a roll-up basis. He explained that with only 30 or 25 years left a ground-leased asset becomes harder to finance and sell, so consolidating the fee was logical and they used the ROFO as a 1031. John said they believe in the asset, it gives optionality and is likely a hold for now but they may reassess; John confirmed the guide includes about $0.01 of land-sale gains in the fourth quarter.
"But ultimately, when you get down to 30 or 25 years of term, the asset becomes harder to finance, it starts to lose value, harder to sell." — Heath Fear (CFO)
buyback limits and small shop tenant health
Q (Alexander Goldfarb · Piper Sandler): He asked whether using the $200-plus million cash for buybacks is limited by rating-agency or leverage concerns. He also asked whether small-shop tenants are mostly national or super-regional and whether credit-market changes have reduced small-shop expansion.
A: Heath said using all the cash on buybacks would put net debt-to-EBITDA right around 5.5x, still within a low- to mid-5s range, though their bias is toward balance-sheet conservatism. John said most shop deals are with national tenants or franchisees, but they also have healthy mom-and-pop business that is often self-financed; they have not seen evidence of a material problem in the shop portfolio.
"I mean, if you did the math, Alex, and we used all that to buy back stock, I think we'd be right around 5.5x net debt-to-EBITDA." — Heath Fear (CFO)
One Loudoun progress and other land uses
Q (Michael Mueller · JPMorgan): He asked if any future-opportunity items beyond One Loudoun are close to activation and whether other subprojects might be advanced. He mentioned Phase 2 residential expansions and asked about the future opportunities list.
A: John said the primary focus is One Loudoun, which is well underway, and they are reviewing a couple other opportunities, including monetizing some land parcels for multifamily or pursuing joint ventures for mixed-use. He said One Loudoun is heading towards 80% leased on the retail front with a strong tenant list, and other opportunities may evolve in 2027.
"It's heading towards 80% leased on the retail front and has a great environment with a really, really strong list of tenants." — John Kite (CEO·CHAIR)