Good day and thank you for standing by. Welcome to the Kite Realty Group's Third Quarter 2022 Earnings Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bryan McCarthy, Senior Vice President of Corporate Marketing and Communications. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to Kite Realty Group's third quarter earnings call. Some of today's comments contain forward-looking statements that are based on assumptions of future events and are subject to inherent risks and uncertainties. Actual results may differ materially from these statements. For more information about the factors that can adversely affect the company's results, please see our SEC filings, including our most recent Form 10-K. Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's earnings press release available on our website for a reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today are Chairman and Chief Executive Officer, John Kite; President and Chief Operating Officer, Tom McGowan; Executive Vice President and Chief Financial Officer, Heath Fear; Senior Vice President and Chief Accounting Officer, Dave Buell; and Senior Vice President, Capital Markets and Investor Relations, Tyler Henshaw. I will now turn the call over to John.

Thanks Bryan. Good morning everyone. So, before we dive into our strong quarterly results, I wanted to take a moment to mark the one-year anniversary of our highly successful merger. While we knew from the outset, this was going to be an incredible transaction, we significantly outperformed both internal and external expectations. Due to our best-in-class operating platform and the strength of our high quality portfolio, over the past year, KRG generated a quantum leap forward across every meaningful metric. Of the top 10 open-air peers by total enterprise value, we rank first in year-over-year FFO growth, first in year-to-date blended cash spreads, first in NOI margin, first in recovery ratio, and first in year-over-year decrease in G&A as a percentage of total revenue. We ranked second in net debt plus preferred to EBITDA; second in year-to-date leasing production as a percentage of our total GLA; second in percentage of ABR coming from the Sunbelt; and second in signed-not-open NOI as a percentage of same-store NOI. We also ranked fourth in liquidity as a percentage of total enterprise value. The numbers I've listed are remarkable and we've demonstrated our ability to operate with the best in the industry. When you compare metrics across our sector, we stack up much higher than we're giving credit for and I specifically wanted to call attention to that before diving into our results. Turning to our fantastic results, KRG generated FFO as adjusted per share of $0.48, beating consensus estimates by $0.03, and representing a 45% increase per share over the comparable period last year. Our same-property NOI growth for the quarter was 4.4% and 4.7% year-to-date. Heath will discuss guidance and provide more details around the components of these metrics, but suffice to say, we're continuing our streak of outperformance The primary driver…

Good morning and thank you for joining us today. As we marked the one-year anniversary of the merger, I am in awe of what our team has been able to accomplish. Looking a little further into the past, it is evident that the sheer velocity of positive change I've witnessed at KRG over the past four years is unparalleled in my career. All this change would not be possible, but for the boldness of our initiatives and tenacity of our people. We are in the business of fulfilling our promises to our stakeholders and that's exactly what we've done. Project focus in 2019, our sector leading COVID response in 2020, the execution of the transformational merger in 2021, and the intense integration efforts over the course of 2022, all of these are promises kept. Here's one more, we promised to work tirelessly, until we get the appropriate credit for all the progress John noted in his remarks. Turning to our results, for the third quarter KRG generated $0.48 per share on an as adjusted basis. Same-property NOI grew by 4.4% this quarter, with 260 basis points of this growth being driven by contractual rent bumps and increased occupancy and 100 basis points attributable to an increase in net recoveries. Due to our continued leasing outperformance and higher levels of overdraft versus our initial expectations, our stance to our results this quarter beat our internal budget. Given our same-store guidance was increased to 50 basis points to 4.5% at the midpoint, it is safe to assume that our same-store growth for the balance of the year is expected to be largely in line with this quarter. As John noted earlier, we are raising FFO as adjusted guidance to a range of $1.86 to $1.90, which is a $0.05 increase at the…

Thank you. [Operator Instructions] Our first question comes from Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Hi, thanks. Good morning. Couple of questions around the guidance -- the revised guidance. Heath maybe you can help us bridge the move down from $0.48 in the third quarter to $0.45 at the midpoint of the revised guidance for the fourth quarter. Didn't seem like there was anything really non-recurring in the third quarter -- lease term fee income was pretty minimal. And just curious if you could maybe provide a little bit of detail around that step down as we look forward?

Yes, that's absolutely so. First of all, there was there was a land sale game, which is nearly a $0.01 in the quarter. So, that's sort of a one-time item. Again, these things recur, but they're unpredictable. We also said in our investor deck, I'm on page five, our development fees are decelerating. And we had some nice outperformance this quarter of overage and specialty rent and while we hope to be able to repeat that into the into the fourth quarter, it's something that we can't bank on. So, again, it's a slight deceleration based on some things that were, like I said, recurring but unpredictable that happened in the third quarter.

I think I'd just add that, it's a range Todd. So, we're giving you a range. And so far this year, we've outperformed. So, we would hope to be in the top end of that range, not the midpoint, but we'll see. As Heath said, there's a couple unpredictable things, but it's a range.

Okay, with regard to the income, so yes, I see that and appreciate that -- those 2023 considerations that you provided in the in the slide deck. So, $6.6 million of fee income, what should we be thinking about in terms of how that moderates going forward? I mean what's an appropriate range to consider relative to that $6.6 million?

That's a great question Todd. And it really allows some more visibility on that. In February, the issue is that we're sitting on a project with a third-party that will -- maybe or may not commence into next year. So, we have the development phase in the existing project, or sort of trailing off into 2023. And then there's a potential that we'll sign up something else and have some additional fees in the back half of the year. However, I can tell you that it's going to be less -- even though we started another project and so maybe for your purposes, thinking about it as maybe half or a little less than half going into next year, is probably the right number. But again, we'll have more visibility in February, in terms of where those fees will be and whether or not we've got other projects started.

Yes. And we're working on it right now in the first phase. So, we are hoping to take that to continuous point. But like Heath said, we'll wait for the final information.

Okay, got it. And then regarding the $0.01 increase in accretion from investments that were completed during the year, and that change to the guidance, what was the driver of that?

At this point in the year, Todd, we're we don't think we're going to close anything else for the balance of the year, and we're $25 million net acquirer at this point. So, just based on the fact that that the acquisitions were early in the year that the dispositions and that were slightly net acquire. It's just -- math works out to $0.01.

Okay. All right. Great. Thank you.

Thanks.

Thank you. And our next question comes from Craig Mailman with Citi. Your line is now open.

Thanks guys. Just kind of curious here. Was RPI kind of in the books for a year? Could you just maybe walk through your experience on maybe the performance relative to underwriting or any disconnects between the performance of that portfolio, the benchmark to market versus the legacy portfolio? I guess I'm just trying to get at how much of a kind of, a topper on growth, that could continue to be if you guys continue to kind of wring the value out of it?

Hey, Craig, I'll try to -- I'm trying to understand the full question. But in terms of just -- I think we were pointing that out in our comments that the performance a year end absolutely exceeded expectations. And I mean, if you just look at where we started the year, in terms of the midpoint, our guidance, and we're 10% above that now. So, I mean, each quarter that has gone along, the leasing has been pretty balanced across our total portfolio. And it's also in terms of the topline rents, they've grown each quarter as well, if that's what you're asking. So, I mean, I think, at this point a year end, as you know, we don't really look at these properties independently, we look at the totality of the company and we're in a really good position right now with our signed-not-open pipeline, our balance sheet, and actually the fact that we have room to run on our occupancy right? So, overall, I don't think there's any one particular thing in terms of the underwriting that is different other than the fact that we outperformed our estimates on rent and the timing of the lease up. I mean, we significantly outperformed in those two categories. And we've talked about that each quarter. And it's coming from the different elements of all of the property types that we own. And I think it's really important that we have that balance between, neighborhood centers and community centers and lifestyle and mixed use, because we're able to generate these returns -- those returns on capital, we talked about north of 20%, while driving FFO and cash flow. So that may not be exactly what you were looking for in the question, but that's how we feel right now.

No, I thought I [Indiscernible] it a little bit weirdly, I guess I was just trying to get at you guys did raise guidance by about 10% this year. How much of that may have been outperformance from RPIA versus outperformance from kind of a legacy portfolio? And as we head into 2023, is there may be more juice from RPAI than maybe what you guys are willing to underwrite going forward? I'm just trying to it was just a way of getting at, is this a sort of upside? That's maybe not quite as understood by The Street?

Yes, no, I appreciate that. And I think you're right, it is misunderstood. And the fact that our operating platform, really has shined across this combined portfolio. And yes, there's no doubt that in the acquired portfolio that there was opportunity for us to step in and squeeze more out of the orange, so to speak. So, yes, I mean, I think we think that continues. It's why we've kind of set it up the way we have in terms of looking into the year end. And again, when you have one of the very highest percentages of signed-not-open NOI in the space as a percentage of your total, same NOI, you've got more room to run.

That's helpful. And then just in the quarter, you guys had a pretty good step up in renewal leasing versus new, I assume, maybe some of that is higher retention? And could you just talk about the experience you guys had over the last couple of quarters, on tenants really looking to stay in space despite rent increases? And you know, how that those were kind of a 2023?

Sure, Tom, you want to hit that?

Yes, I would say there's no question about the fact that the overall demand generators have really helped us in terms of our ability to both maintain and secure new tenancy. We're in a position right now that we have a limited amount of space. And as part of that the demand is truly outpacing what we have. So, we're hoping that that situation continues. And that has been the basis for us for being able to generate strong returns and be able to generate the numbers that we're reporting here today. But we like where we are at this point. We'll proceed forward in a cautious manner. But all indications, if you look at our pipelines to the fourth and first quarter, are not showing slowdowns.

Okay. And maybe If I could slip one more in for Heath, just on the amortization of derivative game [ph], I missed when -- how many years that's going to be amortized over? And I just assume it's probably just ratable. Is that the way to look at it?

It was a 10-year swap. So, it's over a 10-year term and that amortization will start in 2023.

Great. Thanks so much.

Thanks.

Thank you. Our next question comes from Jeff Spector with Bank of America. Your line is now open.

Hi, good morning. I guess my first question just, again, greatly appreciate all the comments and the great presentation comparing your metrics versus the peers. So, just trying to pinpoint what you think the disconnect is, is it too much of a focus, let's say on average size center demographics? Is it maybe just a few quarters where you're consistently are delivering these type of numbers to close that multiple gap? What are your thoughts?

Hey Jeff. Yes, look, I mean, I wish we knew the specific answer to that. I think our job is to lay out the disconnection and then work to fix that. I think when we look at the total picture, part of it -- I mean, instinctually, I would say when a company does a major merger a year ago, it more than doubles in size, at a complex time in the world. I think there was a lot of -- people wanted to wanted to see -- show me story. And I think we've clearly, clearly, clearly shown them. And now we just need to get people to understand that you're looking at a company that stacks up as one of the best in this open air shopping center business, but it's priced in an opposite way. So, I can't tell you exactly Jeff. I mean, when you talk about demographics, our demographics are strong. The three-mile average household income and three-mile population are both over 100,000. We're in the Sunbelt. We have a good mixture of you no grocery anchored properties. So, we checked the boxes. And more importantly, we've outperformed. I mean, we've just flat out outperformed. And that was what I laid out in my opening remarks. So, when you have this combination of quality real estate, one of the best teams in the business and outperformance, we do not understand why it's not reflected.

Thanks, John. Fair comments. My second question, then is just on the signed-but-not-opened. Just what are the risks? I guess, if you think about the next 12 months, at least, on the opening in particular anchors, is there any risks around these -- signed leases and openings compared to the -- your chart where you lay out kind of the expected income over the coming years?

Well, I will say one thing, and part of this relates to our construction backgrounds, and a group that has been doing this for a tremendously long time, we have a mentality that we're going to figure out whatever it takes to make it happen. And I will tell you that we're sourcing parts in China, we're looking for different components for switchgear, we're trying to figure out the pre-sourced mechanical units. So, there's a tremendous amount of work that goes on to make sure we hit these days. But I think you can be assured that this team has got a lot of experience, on how to deal with issues. We have a building right now that has 800-amp service in it. And we're not going to have permanent power for a while. And we're figuring out how to get underground power to it. So, we're going to figure it out. And that's, that's the OSR mentality. And -- but it's the battle. I will tell you that. But that's what this team does. So, we have confidence in our ability to deliver at the end of the day.

I mean, Jeff, bottom-line, though, if you look at what we've done this year, we've delivered on-time this year, in fact, we've been ahead of schedule. So, I think what Tom's referring to is, this is another reason to own this company, because we have the background, we have the strength in a particularly complicated world, in construction that a lot of our other peers don't have, because that's how this company started. It was a construction company when it started. And we don't anticipate that we'll have any problems continuing to do that next year in 2023. And frankly, it's when you do have a problem, it's 30 days, 60 days, whatever, the rents coming. So, this idea that maybe people don't understand what signed-not-open means, that rents coming. It's a matter of which month it's coming in, and we lay it out in our investor presentation as good as we can and we believe that that's pretty accurate.

Our job is try to hit the bottom-line.

No, thank you for the comments. I guess to clarify that we still get that question, in particular, again, on the anchors, are there any clauses where the anchor could still back out?

I mean, in general, obviously you've got -- you cannot over categorize something like that. Each deal is different. Every lease has some nuance to it. But when you're talking in general, that's not a big risk of anchors backing out. Generally, once you're under construction, it's really all on the landlord, and you've got built -- you've got time built in for cure, et cetera. It would be rare. I mean, is it possible? Of course, it's possible, but it would be very rare. We can't remember the last time.

It has not happened within the last decade, I guess.

So, very rare. But I'm glad you bring that up, Jeff. If that is a question, I think people are missing a lot of potential upside there for us.

Great. Thank you.

Thank you.

Thank you. And our next question comes from Wes Golladay with Baird. Your line is now open.

Hey, good morning, everyone. And congratulations on getting the new zoning at Loudon. I'm just curious if you're going to do more of the residential yourself or you're going to lift the joint venture of the platform?

I think like we talked about, Wes, I mean, we're going to analyze this, like we're going to analyze every land parcel that we own. I think we've mentioned in the past, we generally like to look at these from the perspective of what is our -- what's the highest return on capital we can get in any particular situation. So we haven't determined yet exactly what the structure will be. I mean, we just got the rezoning within the last few weeks. The point I think we're trying to make is that the land value has a significant bump relative to what's going on in that particular market in multi-family. So we'll just take that one step at a time. But whatever we do, we're going to maximize the value for KRG.

Got it. And then as we look to next year, I'm not looking for guidance, but is there any other moving parts that we should be aware of? We discussed the fees. We discussed the swap. One of the questions we're getting is, is there anything on the non-cash fair value adjustments as we go into next year, anything along those lines? Or any other things you want to call out that may be one-time in nature?

No. We set them all forth on Page 5 of the investor presentation. There's nothing occult happening in the non-cash. So again, we're not prepared to give our outlook for 2023, but we don't expect any non-cash surprises.

Got it. Thanks, everyone.

Thank you.

Thank you. [Operator Instructions] One moment for our next question. Our next question comes from Connor Mitchell with Piper Sandler. Your line is now open.

Hey, good morning. Thanks for taking my question. I guess just looking at a big picture view. So we see the headlines of inflation and impact on people's abilities to shop retailers with tougher range of sales, but what you guys are talking to your tenants and the retailers. Does it seem like there's any correlation to their demand and maybe if they're changing their real estate positioning?

No. I mean not at this point, as we pointed out, I think, in our remarks and our results, at this point, we continue to see strong demand for an ever shrinking supply base in Class A open-air retail, which is what we own. Sometimes people like to draw these correlations that are second derivatives that don't necessarily happen right away. I would say that our conversations now continue to be long-term conversations and we've mentioned this before that when you're dealing with a quality retailer, they're thinking about their physical real estate in the sense of decades, not months, right? So these are decisions that are generally decade long decisions, investments in that platform. And I think it's been pointed out on other earnings calls, it's pretty darn clear that the profitability in retail is generated in the physical space. There's a lot of reasons why you do other types of retail, but if you're looking to make money, you need physical space. So I think that kind of combination of things is really great for us. And we take it one month at a time in terms of the overall economy. But right now, it continues to be pretty strong.

Okay. That's helpful. And then I guess just kind of sticking with the big picture theme, maybe narrow it down to the markets and the different regions you guys are in. I mean, you pointed out that you're in the Sunbelt, but I guess just is more of the focus staying on the Sunbelt? Or are you guys also looking at some of the higher growth -- highest growth markets that you point out in your IR deck. It seems that a lot of your acquisitions are in the Sunbelt or seven regions versus dispositions being further north. So if you guys could just touch on the market's update.

Sure. I mean, yes, we definitely are and have been focused on the Sunbelt markets, I mean, but we are also very fortunate to own extremely high quality real estate in some major metros such as New York, Seattle, Chicago, et cetera, that would not be on that Sunbelt kind of definition. But when you own 200 properties and you're looking at growth rates and you're looking at opportunities to increase cash flow, that's really what's driving our decision-making, but we continue to be very enamored with the markets that we're in. And as I've pointed out in the past, we're the only open air major player that owns 40% -- 40% of the revenue comes from Texas and Florida. So you can't deny that those two states are very, very important. That doesn't mean that there aren't other markets that are important and there aren't other markets that we're in. So I think our balance is very good, and we'll continue to grow where we see appropriate going forward.

Okay. Appreciate the color. Thank you.

Thank you. And our final question comes from Linda Tsai with Jefferies. Your line is now open.

Hi. Seems like the 2019 side the not occupied coming online in 2023 is a nice cushion. Could you remind us the expectation for bad debt this year and what you're thinking about for 2023?

Yes, this year, in my remarks, the assumption is 1% of revenues. And then I'd like to sort of pass on the next question, in February, we'll have a better view of where we think that will be for 2023. And we took a very conservative approach this year, started out with 150 basis points into 2022. I wouldn't be surprised if we're looking in 2023, we take a conservative approach, probably not as conservative as 150 basis points, but maybe a little bit higher than what our historical average is based on just some of the headwinds we're seeing. So again, it's something that we'll have a lot more clarity on in February, when we give our full year guidance. But again, I think it's going to be prudent for us to remain conservative on our assumption.

Helpful. And then nice same-store NOI growth momentum and raising guidance by 50 basis points. How are you thinking about it preliminarily same-store NOI growth for 2023?

It's going to be good. We've got obviously a stacked SNO pipeline. In addition, we had leases that turned on last quarter that are going to be fully annualized into 2023 as well. So we're -- at this point in time, and again, it's -- we'll know more in February, and we're going through our budget season here in November to relook at all of our assumptions heading into, but the preliminary outlook is that we're looking at a very, very strong same-store NOI heading into next year.

Got it. And then why did merge our integration cost estimate, why did that go down so much?

There were some technology items that we had conservatively budgeted to be higher than they were, and some of those items were, again, just was less costly, some of those items were going to trickle into next year. So again, it's just basically technology costs.

Got it. Just one last one, when you -- for John. When you look across the different formats community, neighborhood, mixed use power, where are you seeing the most leasing competition from retailers?

Well, I mean, I think it's competitive across the board, Linda. I mean, I think probably the segment that has picked up a ton this year, as we pointed out in the past, is the Lifestyle segment. So we've seen real strength there, but we've also seen real strength really across the board. So I just think, again, I'm going to pound the table as one person put it, we're in a shrinking supply world. So the macro is maybe a little less sensitive in the sense of this idea that we have headwinds. I mean, I hear that, I understand that. But the reality is, as I said, these tenants are making really long-term decisions, they have limited quality space, and they're moving around. I mean, as we said before, I mean, we did an Adidas deal, for example, in a power center, and it's performing extremely well. You look at Total Wine and what they're doing and the different types of properties that they're going in. I mean, I can give you a long list, Tom can give you even a longer list, I think that it's actually pretty strong across the board is what I'm trying to say.

Got it. Thank you.

Thanks, Linda.

Thank you. And we do have an additional question from Christopher Lucas with Capital One.

Okay. All right. I started before maybe -- anyway, I missed a bunch of the call. I just wanted to find out, and if you touched on it, do not worry about it, but big spike in the maintenance CapEx for the quarter. Was that specific to Ian?

No, it was not Ian. Sorry, to everybody that was definitely not Ian. But go ahead, Tom.

Yes. So on the -- go ahead, Chris.

I was just going to say what drove that big spike?

Yes. So the spike related to a couple of items. One is we're coming out of COVID which delayed some of the process. The other one was we were really trying to contemplate what is the best way to spend this capital during this inflationary supply chain situation that we had. So we moved some things out of roof because of pricing being so high brought them down in the parking lots. So we were really maneuvering trying to get the best bang for our buck. And that really pushed us to create this higher spend towards the end of the year. And then I think the final thing, Chris, is we spent a lot of time going through the portfolio through the merger. And we wanted to make sure that everything in the portfolio met the standards. And there were some things that we wanted to address to make sure we have consistency throughout the platform. So that's an overview, but it was really just the timing and a lot of hard work going in to make sure we got the best pricing possible.

I mean say it another way, Chris, I mean, we have strong free cash flow. So we're investing in the properties, as Tom said. So I don't think there's a particular 1 reason and some of it's seasonal, by the way. But going into next year, we will continue to spend and invest in these properties, and that's one of the beauties of having good free cash flow.

Okay. Thank you. And then Tom, while I have you, so you got a good strong SNO for next year, what is the likelihood at this point that sort of your pipeline of deals will contribute to next year's ABR?

I can't be too specific, but we have a very nice pipeline of boxes coming up, and so I think we're going to continue to see nice growth in that area. I was just looking at that list as we came in. But we feel like our run is going to continue into 2023. And then obviously, we're going to try to open as many of these projects as possible based upon my previous comments and get them done in the most efficient way. But we still have a lot of gas in the tank in terms of pushing those that signed in a lot.

Are you guys running into any permitting delays? Or is it mostly supply chain that impacting it, if at all, your ability to get commenced?

Chris, I was down in Florida last week, and we were touring all the properties that ran into issues. We were very fortunate to end up with a number of damage around $1.5 million. So we're -- we felt very good about that, and the group is already jumping on taking care of those and getting them fixed as quickly as possible. So overall, I mean, I think we feel pretty good in terms of where we are on that whole front.

And then last one for you guys for me is the operating margin, recovery rates all bounced up nicely, at least on my numbers one of them is at a record level. I guess, I'm just trying to understand, is all of the opportunity that you saw in the RPAI portfolio fully rented out now in terms of those kinds of metrics? Or is there more opportunity to come?

No, I don't -- we don't think that we've gotten where we want to get, Chris, and we have more room to push there. I think as we pointed out in the past, there's many ways to do that, but one of them that we were very successful with historically was fixed cam and the RPI portfolio was at -- basically had no fixed cam, so we've gone from maybe about 50% to probably 35%. That's off the top of my head, but I know it's close. So there's room to run there and then just getting more and more efficient in the way that we operate and then also how we price things. So I think we hope that we continue to press that, just like we'll continue to press our lease percentages, we still have good room to run. So I'm really excited about the opportunity to get back to pre-COVID levels.

Thank you, guys. Appreciate it.

Thanks, Chris.

Thank you. And our next question comes from Paulina Rojas Schmidt with Green Street. Your line is now open.

Good morning.

Good morning.

The Allisonville program merger was a reminder of the risk of seeing further consolidation in that industry. So I mean tried about how you think about this risk, broadly speaking, not just related to this merger. And if you incorporate that in any way in your listing decisions when you evaluate grocer deals?

Look, I think in any industry that has potential consolidation, you're always looking in trying to think through how your portfolio is affected by that. In this particular situation, we don't see this as a big risk to our portfolio. Our largest grocer is Publix, which is an extremely strong independent private grocer. So in particular, in the grocery sector, I don't see this as a massive risk to us. And I think, quite honestly, it's why we continue to talk about how important it is to have a balanced portfolio when it comes down to the property types. And I think people misunderstand that and misprice that. So, we love the fact that we have the diversity in the different property types. We still have 75% of our centers or so have some sort of grocery component associated with them. But that's a good thing, and we don't see a massive risk of future consolidation, and then when you get into the other retailer types, the value players, et cetera, it's probably less of an issue than it is in the grocery space. But so far, not a huge issue to us in particular.

And Paulina specifically, just to put some numbers around Kroger Albertson merger, we have 17 units, 10 of them are Kroger, 7 are Albertsons, represents about 1.9% of our ABR, so not a huge exposure there. And also, we did a three-mile study for overlap, which arguably in the grocery world is a larger radius than necessary and we only have two overlaps, one in the Chicago area and one in the Dallas area. And the one in the Chicago area is already operating under the same flag, so they're already competing with each other. So we feel very good that this merger is going to be transparent to us. That's -- if the merger goes through, you may have seen the news this morning a couple of the state attorney generals are now challenging the merger. So we'll see, they've got a little bit of work to do to get it done.

Yes, it seems it will be a long process. And then the other question, I have is do you know of any beyond store closing in your portfolio?

Any Bed Bath closing, no, I mean, we obviously have -- we have some Bed Baths that have lease expirations. And so there's potential that upon those lease expirations, I think a couple of them in 2023, two of them expire. So they may potentially close, but that's not unusual. But no, we don't know of any premature closings. And candidly, we have very strong real estate there. The Bed Bath component of that company versus Buy By Baby, for example, the Bed Baths are generally lower rents. So it could be a very good opportunity for us.

We have studied all of our stores other than the ones that go through the natural expirations. And if you take a look at our sales, the way our stores are positioned, we feel pretty confident in terms of where they are. We, of course, talk to Bed Bath & Beyond and their advisers consistently. So we're keeping a close eye, but we like our position in terms of the specific stores themselves.

Great. Thank you.

Thank you.

Thank you. This concludes our Q&A session. I would now like to turn the conference back over to Mr. John Kite, Chairman and CEO, for closing remarks.

Well, I just want to thank everybody for joining us see on you soon at NAREIT. Look forward to it.

This concludes today's conference call. Thank you for participating. You may now disconnect.