Kimco Realty (KIM - Free Report) is well-poised to benefit from its portfolio of premium retail properties in key metro markets. Its conveniently located grocery-anchored properties, a focus on mixed-use assets and a strong balance sheet position augur well.
Kimco’s properties are located in the drivable first-ring suburbs of its major metropolitan Sunbelt and coastal markets, which offer several growth levers like high employment and strong spending power. Particularly, 86% of the annual base rent comes from its top major metro markets.
During uncertain times, the grocery component saved the grace of the retail REITs and currently, 81% of Kimco’s annual base rent comes from grocery-anchored centers. The company targets to achieve 85% of its ABR from this segment by 2025.
Kimco signed 1,696 leases, aggregating 10.7 million square feet in 2022, of which 1,171 were renewals and options and 525 were new leases. Pro-rata portfolio occupancy at the end of the fourth quarter was 95.7%, reflecting an expansion of 130 basis points (bps) year over year and 40 bps sequentially.
Pro-rata anchor occupancy was 98.0%, up 90 bps year over year and 20 bps from the previous quarter. Pro-rata small-shop occupancy ended the quarter at 90.0%, representing an uptick of 230 bps from the prior-year quarter and 80 bps from the prior quarter.
Given the necessity-driven nature of the grocery-anchored portfolio, this upbeat trend is likely to continue in the upcoming period, ensuring a steady stream of cash flow.
Further, Kimco has been focusing on its mixed-use assets clustered in strong economic metropolitan statistical areas that serve the last mile. This segment is gaining from the recovery in the apartment and retail sectors. Through a selected collection of mixed-use projects, redevelopments and active investment management, KIM has been targeting to increase its net asset value.
Also, Kimco maintains a robust balance sheet position and has ample financial flexibility. This retail REIT exited the fourth quarter of 2022 with more than $2.1 billion of immediate liquidity.
However, inflationary pressure and economic slowdown might cast a pall on the recovery. Also, higher e-commerce adoption might continue to affect retail landlords’ cash flows.
With the pandemic's impact waning, mall traffic has rebounded significantly. However, given the convenience of online shopping, it is likely to continue being a popular choice among consumers. Consequently, this might impact the market share for brick-and-mortar stores and hurt the demand for KIM’s properties.
Higher interest rates might increase Kimco's borrowing costs, affecting its ability to purchase or develop real estate. Further, the dividend payout might become less attractive than the yields on fixed-income and money market accounts.
Shares of this Zacks Rank #3 (Hold) company have lost 14.4% in the past three months, wider than the industry’s decline of 6.7%. The Zacks Consensus Estimate for Kimco’s first-quarter 2023 funds from operations per share has remained unchanged at 39 cents over the past two months.
Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Federal Realty Investment Trust (FRT - Free Report) and Essential Properties Realty Trust (EPRT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Federal Realty’s ongoing year’s FFO per share has been revised 2 cents upward over the past week to $6.45.
The Zacks Consensus Estimate for Essential Properties Realty’s 2023 FFO per share has been revised a cent upward over the past month to $1.64.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Kimco Realty (KIM - Free Report) is well-poised to benefit from its portfolio of premium retail properties in key metro markets. Its conveniently located grocery-anchored properties, a focus on mixed-use assets and a strong balance sheet position augur well.
Kimco’s properties are located in the drivable first-ring suburbs of its major metropolitan Sunbelt and coastal markets, which offer several growth levers like high employment and strong spending power. Particularly, 86% of the annual base rent comes from its top major metro markets.
During uncertain times, the grocery component saved the grace of the retail REITs and currently, 81% of Kimco’s annual base rent comes from grocery-anchored centers. The company targets to achieve 85% of its ABR from this segment by 2025.
Kimco signed 1,696 leases, aggregating 10.7 million square feet in 2022, of which 1,171 were renewals and options and 525 were new leases. Pro-rata portfolio occupancy at the end of the fourth quarter was 95.7%, reflecting an expansion of 130 basis points (bps) year over year and 40 bps sequentially.
Pro-rata anchor occupancy was 98.0%, up 90 bps year over year and 20 bps from the previous quarter. Pro-rata small-shop occupancy ended the quarter at 90.0%, representing an uptick of 230 bps from the prior-year quarter and 80 bps from the prior quarter.
Given the necessity-driven nature of the grocery-anchored portfolio, this upbeat trend is likely to continue in the upcoming period, ensuring a steady stream of cash flow.
Further, Kimco has been focusing on its mixed-use assets clustered in strong economic metropolitan statistical areas that serve the last mile. This segment is gaining from the recovery in the apartment and retail sectors. Through a selected collection of mixed-use projects, redevelopments and active investment management, KIM has been targeting to increase its net asset value.
Also, Kimco maintains a robust balance sheet position and has ample financial flexibility. This retail REIT exited the fourth quarter of 2022 with more than $2.1 billion of immediate liquidity.
However, inflationary pressure and economic slowdown might cast a pall on the recovery. Also, higher e-commerce adoption might continue to affect retail landlords’ cash flows.
With the pandemic's impact waning, mall traffic has rebounded significantly. However, given the convenience of online shopping, it is likely to continue being a popular choice among consumers. Consequently, this might impact the market share for brick-and-mortar stores and hurt the demand for KIM’s properties.
Higher interest rates might increase Kimco's borrowing costs, affecting its ability to purchase or develop real estate. Further, the dividend payout might become less attractive than the yields on fixed-income and money market accounts.
Shares of this Zacks Rank #3 (Hold) company have lost 14.4% in the past three months, wider than the industry’s decline of 6.7%. The Zacks Consensus Estimate for Kimco’s first-quarter 2023 funds from operations per share has remained unchanged at 39 cents over the past two months.
Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Federal Realty Investment Trust (FRT - Free Report) and Essential Properties Realty Trust (EPRT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Federal Realty’s ongoing year’s FFO per share has been revised 2 cents upward over the past week to $6.45.
The Zacks Consensus Estimate for Essential Properties Realty’s 2023 FFO per share has been revised a cent upward over the past month to $1.64.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
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