Kimco Realty Corporation (KIM) is a publicly traded real estate investment trust (REIT). Kimco engages in acquisition, development, and management of neighborhood and community shopping centers. Kimco invests across the globe with a focus in North America. Formed in 1960 and based in New Hyde Park, NY, Kimco manages 1,857 properties totaling over 172.4 million square feet.
Kimco’s strong tenant base consists primarily of necessity-brand retail centers. As a result of its size and diversity, Kimco has limited exposure to any one tenant, and the major tenant roster is heavily weighted by investment grade tenants. As noted below, Kimco has a diverse geographic revenue stream with 13,000 leases and a majority of centers anchored by investment grade necessity brand tenants:
Kimco - Shopping Center Mix
Big Box Anchored (w/ grocery)
Bix Box Anchored
With over 50 years of experience, Kimco has a deep roster of shopping center professionals. Since the completion of the company’s IPO (1991), Kimco has utilized the public debt markets as its principal source of capital for expansion. Since the IPO, Kimco has completed additional offerings of its public unsecured debt and equity – raising over $ 7.5 Billion.
As further evidence of its management expertise, Kimco has executed 2,703 leases and / or renewals in 2010 (over 8.2 million square feet). Also, the company was successful in navigating the troubled economy in 2010 by increasing overall occupancy from 92.6% to 93.0%. In 2009 and 2010-- during a period of historical retail failures (like Circuit City, Linens ‘n Things, and Goody’s)-- Kimco was able to back-fill and redevelop centers and maintain (and slightly increase) occupancy rates. With its seasoned management, Kimco has focused its leasing efforts in 2010.
With over 13,000 leases under management, Kimco provides for a diverse, sustainable, and stable generator. Despite the headline bankruptcies of the past, Kimco has been able to provide noteworthy results:
Kimco Portfolio Occupancy
- 2010 93.0%
- 2009 92.8%
Of course one of the most common measures of a REIT's financial performance is Funds from Operations (FFO):
- 2010 $ 1.13
- 2009 $ .82
- 2008 $ 2.02
Note that Kimco finished 2010 with headline fourth-quarter FFO per share of $ .29. For the fourth-quarter, recurring FFO was $ 119.7 million or $ .29 per diluted share and for the full-year was $ 465.4 million or $ 1.14 per share, a 5% increase over the 2009 amount of $ 444 million.
2010 was a very productive year for Kimco as the company achieved total shareholder return of 39%, exceeding the NAREIT Equity REIT Index, which came in at 28%, and the retails sector index at just 33%. As legendary Kimco Chairman, Milton Cooper, stated in the company’s recent earnings call, “(Kimco) investors have earned total returns of 1,203% at an average return of 13.8% since the IPO (Kimco celebrates its 20 year anniversary as a public company in November 2011). Here are further 2010 highlights at Kimco:
- Increased US same-property NOI 1.8% over the 4th quarter of 2009
- Recognized cash proceeds of approximately $ 130 million from the disposition of non-core, non-retail assets ($22 million over 2010 book value)
- Improved consolidated net debt EBITDA ratio, on a recurring basis, to 6.3x at year end 2010
- Total year over year reduction in debt of approximately $ 375.4 million (Note that Kimco maintains an S&P rating of BBB+ and a Moody’s rating of Baa1)
Kimco expects to be active in acquisitions during 2011. The company has ample liquidity with access to reasonably-priced capital. Beginning in the third quarter of 2010, to date, Kimco has purchased and closed on 10 properties (4 JV deals and 6 core deals). These acquisitions totaled approximately $ 269 million and comprised 1.9 million square feet in 6 States.
As noted in the earnings call:
(Kimco), will continue to be selective and disciplined as the company purchases shopping centers of high quality with good long-term demographics.” Kimco believes the “worst is over”, as the company sees upside opportunity from the perspective of leasing velocity on small-shop leases. Retail spreads, another sign of market stabilization, have increased slightly. Keeping tenants in place is an important factor as it underscores the centers viability and down time (lease up) and added costs to market the space. As Milton Cooper stated, “cash flows of shopping centers located on thorough fares and strong markets are a wonderful safe haven. Demand for retail space is increasing because there are very few new developments and many retailers are experiencing angst as they wonder whether they will be able to meet their expansion plans for 2012 store openings. Overtime, we will have inflation and we will have growth in cash flow and growth in value.
Bigger is Better
As the largest owner of neighborhood and community centers, Kimco’s diversely-growing portfolio provides for a competitive advantage (over the peer owners). Kimco’s experience and long-standing retailer relationships make the “best in class” REIT an excellent investment alternative. Kimco delivers a 4% dividend and its track record for paying dividends is excellent:
With a highly globally- balanced tenant base, strong leadership base, and sustainable dividend record, Kimco is a great “safe haven” investment strategy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.