In This Article:
Kimco Realty (KIM) is well-positioned to gain from its grocery-anchored portfolio of premium retail properties in high-growth areas, a diversified tenant base and balance sheet-strengthening efforts. However, higher e-commerce adoption is a key concern for Kimco. High-interest expenses add to its woes.
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Last month, Kimco reported first-quarter 2025 funds from operations (FFO) per share of 44 cents, which outpaced the Zacks Consensus Estimate of 42 cents. The metric grew 12.8% from the year-ago quarter. Results reflected better-than-expected growth in revenues, though a rise in interest expenses acted as a dampener.
What’s Aiding KIM Stock?
Kimco is well-positioned to gain from its portfolio of premium shopping centers in the drivable first-ring suburbs of the top major metropolitan Sunbelt and coastal markets. Particularly, 82% of the annual base rent (ABR) comes from its top major metro markets.In addition, its top coastal markets have superior trade area demographics, exceeding the U.S. average by 21% for the median household income. Amid these, the company continues to see positive year-over-year traffic increases, both on a quarterly and yearly basis.
With a well-located and largely grocery-anchored portfolio that offers essential goods and services, this retail REIT is witnessing healthy leasing activity. In the first quarter of 2025, Kimco executed 583 leases, aggregating 4.4 million square feet in its consolidated operating portfolio, of which 439 were renewals and options and 144 were new leases. Given the necessity-driven nature of Kimco’s grocery-anchored portfolio, it is likely to continue witnessing healthy leasing activity in the upcoming period.
Kimco has a well-diversified tenant base led by a healthy mix of essential, necessity-based tenants and omnichannel retailers. National/regional tenants accounted for 82% of Kimco’s pro rata ABR as of the end of the first quarter of 2025. Given the strength of its retailers and developed omnichannel presence, Kimco is likely to witness stable cash flows.
Kimco has been making efforts to bolster its financial strength. This retail REIT exited the first quarter of 2025 with $2 billion of immediate liquidity. Kimco’s consolidated weighted average debt maturity profile was 8.2 years, and the company’s unencumbered properties represent around 94.8% of its portfolio as of March 31, 2025. The strong balance sheet allows it to borrow at a favorable rate.
Solid dividend payouts remain the biggest attraction for REIT investors, and Kimco has remained committed to that. Concurrent with its third-quarter 2024 earnings release, it announced a 4.2% increase in the dividend to 25 cents per share from 24 cents paid out earlier. In the last five years, this retail REIT has increased its dividend nine times, with a five-year annualized dividend growth rate of 15.31%. These efforts to increase the dividend reaffirm investors’ confidence in the stock. Check Kimco’s Dividend History.