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What's in the Cards for Kimco (KIM) This Earnings Season?
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Kimco Realty Corporation (KIM - Free Report) is slated to report fourth-quarter and full-year 2023 results on Feb 8 before the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Jericho, NY-based retail real estate investment trust (REIT) delivered a positive surprise of 2.56% in terms of FFO per share. Results reflected better-than-anticipated revenues.
Over the preceding four quarters, Kimco’s FFO per share surpassed the Zacks Consensus Estimate on one occasion, met on another two and missed the same once, the average beat being 0.00%. This is depicted in the graph below:
Per a report from CBRE Group (CBRE - Free Report) , the U.S. overall retail availability rate hit a record-low 4.7% at year-end, down 10 basis points (bps) quarter over quarter and 31 bps year over year. Among the categories, the neighborhood, community & strip center segment tightened the most. This property type continues to experience positive net absorption, with the fourth quarter net absorption of 12.5 million square feet, bringing the 2023 annual total to 40 million square feet.
There is a dearth of supply, and elevated construction costs and interest rates are likely to continue to keep new supply in check. Fourth-quarter and full-year construction completions of 5.3 million and 27 million square feet, respectively, marked record lows. The average asking rent was up by 0.8% in the fourth quarter and 2.4% for the year to $23.76 per square foot, and both the growth rates were higher than their 10-year averages, per the CBRE report.
Factors at Play
Kimco owns properties in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets, which offer several growth levers like high employment and strong spending power. Given a healthy retail real estate environment in the fourth quarter, the company is likely to have witnessed decent demand for its properties, boosting its quarterly performance.
Led by a healthy mix of essential, necessity-based tenants and omnichannel retailers, this retail REIT enjoys a diverse tenant base. This is likely to have aided stable revenue generation during the to-be-reported quarter, boosting top-line growth.
As the mixed-use segment continues to gain from the recovery in the apartment and retail sectors, Kimco’s focus on developing mixed-use assets clustered in strong economic metropolitan statistical areas that serve the last mile is likely to have given it an edge by driving net asset value.
The company’s top line is expected to have improved due to these tailwinds. The Zacks Consensus Estimate for KIM’s quarterly revenues stands at $449.71 million, implying 2.25% growth from the prior-year reported number. The consensus mark for revenues from the rental property is currently pegged at $449.14 million, up from $435.88 million in the year-ago period.
Our estimate for revenues from rental properties stands at $440.1 million, suggesting a 1% increase year over year and leased occupancy of 95.3%, implying a 20-basis point decline from the prior quarter.
The company’s robust balance sheet position is likely to have supported its growth endeavors.
Nonetheless, higher e-commerce adoption and a rise in interest expenses are anticipated to have cast a pall on Kimco’s performance to some extent during the quarter. We estimate a year-over-year increase of 1.2% in its fourth-quarter interest expenses.
Before the fourth-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has remained unchanged in the past month at 39 cents. However, it suggests a year-over-year increase of 2.63%.
For 2023, Kimco projected FFO per share in the range of $1.56-$1.57. This is backed by the company’s projection for same-property NOI growth of 1.75-2.25% and total property acquisitions (including structured investments), net of dispositions, of $175 million.
For 2023, we expect same-property net operating income (NOI) to increase 2.1% year over year. We estimate a year-over-year increase of 7.6% in its 2023 interest expenses.
For the full year, the Zacks Consensus Estimate for FFO per share is pegged at $1.56. The figure indicates a 1.27% decrease year over year on 2.98% year-over-year growth in revenues to $1.78 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Kimco this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Kimco currently carries a Zacks Rank of 2 and has an Earnings ESP of -2.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are three stocks from the broader REIT sector — VICI Properties Inc. (VICI - Free Report) , Mid-America Apartment Communities, Inc. (MAA - Free Report) and American Homes 4 Rent (AMH - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Mid-America Apartment Communities, slated to release quarterly numbers on Feb 7, has an Earnings ESP of +0.53% and carries a Zacks Rank of 3 at present.
American Homes 4 Rent, slated to release quarterly numbers on Feb 22, has an Earnings ESP of +0.80% and carries a Zacks Rank of 3 at present.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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What's in the Cards for Kimco (KIM) This Earnings Season?
Kimco Realty Corporation (KIM - Free Report) is slated to report fourth-quarter and full-year 2023 results on Feb 8 before the opening bell. The company’s quarterly results are likely to display year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Jericho, NY-based retail real estate investment trust (REIT) delivered a positive surprise of 2.56% in terms of FFO per share. Results reflected better-than-anticipated revenues.
Over the preceding four quarters, Kimco’s FFO per share surpassed the Zacks Consensus Estimate on one occasion, met on another two and missed the same once, the average beat being 0.00%. This is depicted in the graph below:
Kimco Realty Corporation Price and EPS Surprise
Kimco Realty Corporation price-eps-surprise | Kimco Realty Corporation Quote
US Retail Real Estate Market in Q4
Per a report from CBRE Group (CBRE - Free Report) , the U.S. overall retail availability rate hit a record-low 4.7% at year-end, down 10 basis points (bps) quarter over quarter and 31 bps year over year. Among the categories, the neighborhood, community & strip center segment tightened the most. This property type continues to experience positive net absorption, with the fourth quarter net absorption of 12.5 million square feet, bringing the 2023 annual total to 40 million square feet.
There is a dearth of supply, and elevated construction costs and interest rates are likely to continue to keep new supply in check. Fourth-quarter and full-year construction completions of 5.3 million and 27 million square feet, respectively, marked record lows. The average asking rent was up by 0.8% in the fourth quarter and 2.4% for the year to $23.76 per square foot, and both the growth rates were higher than their 10-year averages, per the CBRE report.
Factors at Play
Kimco owns properties in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets, which offer several growth levers like high employment and strong spending power. Given a healthy retail real estate environment in the fourth quarter, the company is likely to have witnessed decent demand for its properties, boosting its quarterly performance.
Led by a healthy mix of essential, necessity-based tenants and omnichannel retailers, this retail REIT enjoys a diverse tenant base. This is likely to have aided stable revenue generation during the to-be-reported quarter, boosting top-line growth.
As the mixed-use segment continues to gain from the recovery in the apartment and retail sectors, Kimco’s focus on developing mixed-use assets clustered in strong economic metropolitan statistical areas that serve the last mile is likely to have given it an edge by driving net asset value.
The company’s top line is expected to have improved due to these tailwinds. The Zacks Consensus Estimate for KIM’s quarterly revenues stands at $449.71 million, implying 2.25% growth from the prior-year reported number. The consensus mark for revenues from the rental property is currently pegged at $449.14 million, up from $435.88 million in the year-ago period.
Our estimate for revenues from rental properties stands at $440.1 million, suggesting a 1% increase year over year and leased occupancy of 95.3%, implying a 20-basis point decline from the prior quarter.
The company’s robust balance sheet position is likely to have supported its growth endeavors.
Nonetheless, higher e-commerce adoption and a rise in interest expenses are anticipated to have cast a pall on Kimco’s performance to some extent during the quarter. We estimate a year-over-year increase of 1.2% in its fourth-quarter interest expenses.
Before the fourth-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has remained unchanged in the past month at 39 cents. However, it suggests a year-over-year increase of 2.63%.
For 2023, Kimco projected FFO per share in the range of $1.56-$1.57. This is backed by the company’s projection for same-property NOI growth of 1.75-2.25% and total property acquisitions (including structured investments), net of dispositions, of $175 million.
For 2023, we expect same-property net operating income (NOI) to increase 2.1% year over year. We estimate a year-over-year increase of 7.6% in its 2023 interest expenses.
For the full year, the Zacks Consensus Estimate for FFO per share is pegged at $1.56. The figure indicates a 1.27% decrease year over year on 2.98% year-over-year growth in revenues to $1.78 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for Kimco this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
Kimco currently carries a Zacks Rank of 2 and has an Earnings ESP of -2.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are three stocks from the broader REIT sector — VICI Properties Inc. (VICI - Free Report) , Mid-America Apartment Communities, Inc. (MAA - Free Report) and American Homes 4 Rent (AMH - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
VICI Properties, scheduled to report quarterly numbers on Feb 22, has an Earnings ESP of +2.16% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mid-America Apartment Communities, slated to release quarterly numbers on Feb 7, has an Earnings ESP of +0.53% and carries a Zacks Rank of 3 at present.
American Homes 4 Rent, slated to release quarterly numbers on Feb 22, has an Earnings ESP of +0.80% and carries a Zacks Rank of 3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.