Sign in

    Kimco Realty Corp (KIM)

    You might also like

    Business Description

    No business description found.

    Q2 2024 Summary

    Initial Price$19.57April 1, 2024
    Final Price$19.27July 1, 2024
    Price Change$-0.30
    % Change-1.53%

    What went well

    • KIM is experiencing strong rent growth supported by healthy tenant demand, as retailers view brick-and-mortar stores as critical components of their e-commerce fulfillment strategies, enhancing store margins and driving capital towards expansion goals .
    • Significant upside from leasing small shop space, with every 100 basis points increase in small shop occupancy contributing approximately $8 million in annual base rent, and small shops comprising 47% of their $63 million pipeline, enhancing growth prospects .
    • KIM is achieving higher same-site NOI growth, exceeding 3% over the past three quarters, surpassing historical averages, and is strategically pushing rent escalations and building a robust future pipeline to sustain growth .

    What went wrong

    • Potential Limitations on Rent Growth due to Tenant Occupancy Costs: Analysts question how much continued rent growth the tenant environment can support, given occupancy cost ratios and whether tenants can allocate more of their cost structure towards rent and real estate. This suggests potential constraints on Kimco's ability to increase rents without impacting tenant viability.
    • Dependence on Small Shops for Rent Growth: It appears that most of the rent growth is coming from the small shop side of the business, with less negotiating power or rent escalation from anchor tenants. Relying heavily on small shops for growth could pose risks, as they may be more vulnerable in economic downturns.
    • Uncertainty in Sustaining Higher Same-Site NOI Growth: While the company has been able to produce over 3% same-site NOI growth in the past three quarters, they acknowledge that historically, the sector has produced around 2% growth, and it is "hard to extract exactly what the new glide path looks like," indicating uncertainty about maintaining these higher growth rates.

    Q&A Summary

    1. Raised FFO Guidance
      Q: What drove the increase in FFO guidance?
      A: Management raised FFO guidance to $1.60–$1.62, primarily driven by quicker rent commencements in the operating portfolio and effective expense control at both the property and G&A levels. Additionally, better execution of the RPT acquisition contributed positively.

    2. NOI Growth Deceleration
      Q: Why will same-property NOI growth decelerate in H2?
      A: Despite achieving 3.4% same-property NOI growth in the first half, management expects deceleration in the back half due to tougher comps from onetime items in the prior year's third quarter. They remain comfortable with the revised annual guidance range, viewing same-site NOI as an annualized metric.

    3. Small Shop Occupancy Upside
      Q: How does increased small shop occupancy impact FFO?
      A: Increasing small shop occupancy by 100 basis points adds approximately $8 million in annualized base rent, excluding recovery benefits. With 25 million square feet of small shop space, management sees significant FFO growth potential as occupancy rises.

    4. The Rim Investment Potential
      Q: What's the outlook for The Rim investment?
      A: The Rim is an exceptional asset with Kimco's structured investment at about $200 million, representing an 80% loan-to-value ratio. With at least $50 million of equity in the deal, management is well-positioned whether they are repaid or potentially acquire the asset, viewing either outcome as positive.

    5. Reduced Dispositions
      Q: Why reduce disposition guidance?
      A: Having completed most planned dispositions, management sees no need for further sales due to strong portfolio performance and ample liquidity. With full access to their credit facility and the portfolio performing well, they feel comfortable reducing disposition activity.

    6. Private Equity Interest
      Q: How is private equity interest affecting the sector?
      A: Capital formations for open-air shopping centers are accelerating, with private equity moving from "retail curious to retail active". This heightened interest reflects favorable supply-demand dynamics and attractive cap rates compared to other sectors.

    7. Structured Investment Opportunities
      Q: What's the outlook for structured investments?
      A: Structured investments are unique and varied, including recent deals like The Rim. Management anticipates more core acquisitions in the second half, with structured investments being one-off opportunities.

    8. Leasing Strategy Amid Uncertainty
      Q: Is leasing strategy changing due to economic signals?
      A: Management remains consistent and proactive, working closely with retail partners to anticipate growth needs 2–5 years ahead. They leverage their scale and new tools to generate leasing opportunities, maintaining aggressive leasing activity.

    9. Bad Debt Levels
      Q: Any concerns about bad debt levels?
      A: Year-to-date credit loss stands at 86 basis points, within the guidance range of 75–100 basis points. There are no significant tenant concerns affecting this figure, and accounts receivable levels remain stable.

    10. Closing RPT Occupancy Gap
      Q: How will you close the small shop occupancy gap in the RPT portfolio?
      A: Management views the 400-basis-point small shop occupancy gap as real upside. As anchor tenants commence operations, they anticipate increased small shop leasing, focusing on driving occupancy to unlock growth.

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Milton CooperExecutive Chairman of the Board of Directors1960Milton Cooper co-founded Kimco Realty Corporation's predecessor in 1960. He served as Chairman and CEO from November 1991 to December 2009 and has been a director since 1991. He played a significant role in the company's IPO and expansion. Mr. Cooper is a voting member of the Investment Committee and holds degrees from City College and Brooklyn Law School .
    Conor C. FlynnChief Executive OfficerJanuary 2016Conor C. Flynn has been CEO since January 2016. He joined Kimco in 2003 as an asset manager and held roles such as President, COO, and CIO. He holds a B.A. from Yale and a Master’s in Real Estate Development from Columbia. He is involved with Nareit and its Dividends Through Diversity, Equity & Inclusion CEO Council .
    Ross CooperPresident and Chief Investment OfficerFebruary 2017Ross Cooper joined Kimco in 2006 and became President and CIO in February 2017. Previously, he was EVP and CIO starting in May 2015. He has held various roles in acquisitions and asset management. He holds a B.S. from the University of Michigan and a master's in Real Estate from NYU. He is the grandson of Milton Cooper .
    Glenn G. CohenExecutive Vice President, Chief Financial OfficerJune 2010Glenn G. Cohen has been EVP and CFO since June 2010. He joined Kimco in 1995 as Director of Accounting and Taxation and served as Treasurer from 1997 to 2024. He oversees financial strategy, accounting, and IT activities. He is a CPA and holds a B.S. in accounting from SUNY Albany .
    David JamiesonExecutive Vice President, Chief Operating OfficerFebruary 2017David Jamieson became EVP and COO in February 2017. He joined Kimco in 2007 and has held roles such as EVP of Asset Management and Operations. He focuses on value creation strategies and ESG strategy. He holds a B.S. from Boston College and an M.B.A. from Babson College .

    Questions to Ask Management

    1. Given your significant $200 million investment in The Rim at a high 9% interest rate with an 80% loan-to-value ratio, how are you managing the risks associated with this position, and what are your plans if market conditions become unfavorable? ,

    2. With rents at Mary Brickell Village increasing from the $40s to triple digits during redevelopment, what challenges might you face in achieving these higher rents, and how do you plan to address potential tenant resistance or market saturation?

    3. As your same-site NOI growth guidance has increased to 2.75%–3.25% for the year, given the high occupancy levels of your portfolio, what factors could hinder sustaining this growth rate in the long term? , ,

    4. Considering that approximately 30% of your anchor leases expiring through 2025 have no options and a 40% mark-to-market opportunity, are you prepared to potentially risk occupancy by seeking higher rents or replacing tenants, and how might this impact your tenant relationships?

    5. In light of mixed economic signals and shifts in consumer spending towards value retailers, are you adjusting your leasing strategy to mitigate potential risks, or do you plan to maintain your current approach, and what justifies this stance? ,

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateN/AJanuary 2024
    End Date/DurationFebruary 28, 2026 February 28, 2026
    Total additional amount$300.0 million Up to 891,000 Class L, 1,047,000 Class M, and 185,000 Class N depositary shares
    Remaining authorization$224.9 million N/A
    DetailsCommon Share Repurchase ProgramPreferred Stock Repurchase Program

    Past Guidance

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. FFO per Diluted Share: Raised to $1.60 to $1.62.
      2. Same-Site NOI Growth: Updated to 2.75% to 3.25%.
      3. Credit Loss Assumption: 75 basis points to 100 basis points.
      4. Full Year Cost Savings Synergies from the RPT Acquisition: $35 million to $36 million.
      5. Interest Income: $13 million to $15 million.
      6. Disposition Guidance: Lowered to $300 million to $350 million .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. FFO per Diluted Share: Raised to $1.56 to $1.60.
      2. Same-Site NOI Growth: Increased to 2.25% to 3%.
      3. Credit Loss Assumption: 75 basis points to 100 basis points.
      4. Interest Income: $10 million to $12 million.
      5. RPT Related Noncash GAAP Accounting Income: $4 million to $5 million.
      6. Disposition Range: $350 million to $450 million.
      7. Investment Range: $300 million to $350 million.
      8. G&A Synergies from RPT Integration: $34 million .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. FFO per Share: $1.58 to $1.62.
      2. Same-Site NOI Growth: 1.5% to 2.5%.
      3. Lease Termination Income: $1 million to $3 million.
      4. Interest Income: $2 million to $4 million.
      5. Acquisitions: $300 million to $350 million.
      6. Dispositions: $350 million to $450 million.
      7. Corporate Financing Costs: $319 million to $325 million.
      8. Annual G&A Expense: $133 million to $139 million.
      9. No Material Impact Assumed: From RPT-related noncash GAAP accounting income.
      10. No Redemption or Prepayment Charges: Assumed for callable preferred stock or early repayment of debt .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: N/A
    • Guidance: The documents do not contain information about the guidance provided in the Q3 2024 earnings call for Kimco. Therefore, I cannot provide the guidance for Q3 2024.

    Latest news

    Recent developments and announcements about KIM.

    Financial Actions

      Dividend Policy

      ·
      Jan 3, 2024, 12:00 AM

      Kimco Realty has announced a change in its dividend policy following the completion of its acquisition of RPT Realty. As part of the merger agreement, Kimco's Board of Directors declared a 'stub period' cash dividend for the Kimco Class N Preferred Stock. This dividend amounts to $0.14097 per depositary share and is payable on January 16, 2024, to shareholders of record on January 5, 2024. This stub dividend reflects the regular quarterly dividend for the period from January 1, 2024, to January 15, 2024 .