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6 Reasons to Add Kimco (KIM) Stock to Your Portfolio Now
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Kimco Realty (KIM - Free Report) and other retail REITs are poised to benefit from the favorable job-and-wage-growth environment, which supports consumer confidence, and extra accumulated savings during the pandemic. Also, there is pent-up consumer demand as consumers look for an exclusive in-store shopping experience following the pandemic downtime.
Undoubtedly, the broader market has been widely affected because of geopolitical uncertainties, inflation and consequent rate hikes. Kimco could not escape the same.
Shares of Kimco have declined 3.1% in the past three months, narrower than its industry’s fall of 8.4%.
A Well-Located Property Base: 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, 85% of the annual base rent (ABR) comes from its major metro markets.
For the company’s top Sunbelt markets, the estimated five-year population growth of 67% exceeds the U.S. average. In addition, the company’s top coastal markets have superior trade area demographics, exceeding the U.S. average by 22% for the median household income.
Grocery-Anchored Centers: For Kimco, 80% of its ABR came from grocery-anchored centers in the second quarter of 2022. The company targets to achieve 85% of its annual base rent from this segment by 2025. With a well-located and largely grocery-anchored portfolio that offers essential goods and services, this retail REIT is expected to witness strong leasing activity going forward.
Mixed-Use Asset Focus: 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 both 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. This diversifies the portfolio cash flow and offers a higher CAGR than retail-only sites.
Currently, KIM generates 13% of ABR from mixed-use centers and aims at generating 15% of ABR from such centers by 2025.
Expansion Efforts: Kimco has been following an opportunistic investment policy to enhance its overall portfolio quality. Subsequent to the second quarter-end, Kimco acquired two grocery-anchored centers encompassing 329,000 square feet for $89 million. These are located in Philadelphia, PA and Massapequa, NY. Moreover, Kimco has an active development and redevelopment pipeline.
Also, the company’s 2021 acquisition of the grocery-anchored shopping center owner — Weingarten Realty Investors — has been a strategic fit as the combined company is well-positioned to benefit from its increased scale, density in key Sun Belt markets and a broader redevelopment pipeline.
Balance Sheet Strength: Kimco maintains a robust balance sheet position and has ample financial flexibility. It exited the second quarter of 2022 with nearly $2.3 billion of immediate liquidity. Kimco’s consolidated debt maturity profile is 8.8 years. The company’s unencumbered properties represent around 90% of both its properties and its total net operating income.
Estimate Revisions: The estimate revision trend for full-year 2022 funds from operations (FFO) per share indicates a favorable outlook for this retail REIT. The Zacks Consensus Estimate for the current-year FFO per share has moved north marginally over the past two months. The projected FFO per share growth rate for 2022 is 13%.
Other Stocks to Consider
Some other key picks from the retail REIT sector are Regency Centers Corporation (REG - Free Report) and SITE Centers Corp. (SITC - Free Report) .
The Zacks Consensus Estimate for Regency Centers’ ongoing year’s FFO per share has been raised marginally over the past week to $3.96. REG currently holds a Zacks Rank #2.
The Zacks Consensus Estimate for SITE Centers’ 2022 FFO per share has moved marginally upward in the past two months to $1.16. SITC presently carries a Zacks Rank of 2.
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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6 Reasons to Add Kimco (KIM) Stock to Your Portfolio Now
Kimco Realty (KIM - Free Report) and other retail REITs are poised to benefit from the favorable job-and-wage-growth environment, which supports consumer confidence, and extra accumulated savings during the pandemic. Also, there is pent-up consumer demand as consumers look for an exclusive in-store shopping experience following the pandemic downtime.
Undoubtedly, the broader market has been widely affected because of geopolitical uncertainties, inflation and consequent rate hikes. Kimco could not escape the same.
Shares of Kimco have declined 3.1% in the past three months, narrower than its industry’s fall of 8.4%.
Image Source: Zacks Investment Research
However, this Zacks Rank #2 (Buy) stock has strong growth potential and seems a solid choice for your portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Let’s Explore What Makes KIM a Solid Choice
A Well-Located Property Base: 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, 85% of the annual base rent (ABR) comes from its major metro markets.
For the company’s top Sunbelt markets, the estimated five-year population growth of 67% exceeds the U.S. average. In addition, the company’s top coastal markets have superior trade area demographics, exceeding the U.S. average by 22% for the median household income.
Grocery-Anchored Centers: For Kimco, 80% of its ABR came from grocery-anchored centers in the second quarter of 2022. The company targets to achieve 85% of its annual base rent from this segment by 2025. With a well-located and largely grocery-anchored portfolio that offers essential goods and services, this retail REIT is expected to witness strong leasing activity going forward.
Mixed-Use Asset Focus: 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 both 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. This diversifies the portfolio cash flow and offers a higher CAGR than retail-only sites.
Currently, KIM generates 13% of ABR from mixed-use centers and aims at generating 15% of ABR from such centers by 2025.
Expansion Efforts: Kimco has been following an opportunistic investment policy to enhance its overall portfolio quality. Subsequent to the second quarter-end, Kimco acquired two grocery-anchored centers encompassing 329,000 square feet for $89 million. These are located in Philadelphia, PA and Massapequa, NY. Moreover, Kimco has an active development and redevelopment pipeline.
Also, the company’s 2021 acquisition of the grocery-anchored shopping center owner — Weingarten Realty Investors — has been a strategic fit as the combined company is well-positioned to benefit from its increased scale, density in key Sun Belt markets and a broader redevelopment pipeline.
Balance Sheet Strength: Kimco maintains a robust balance sheet position and has ample financial flexibility. It exited the second quarter of 2022 with nearly $2.3 billion of immediate liquidity. Kimco’s consolidated debt maturity profile is 8.8 years. The company’s unencumbered properties represent around 90% of both its properties and its total net operating income.
Estimate Revisions: The estimate revision trend for full-year 2022 funds from operations (FFO) per share indicates a favorable outlook for this retail REIT. The Zacks Consensus Estimate for the current-year FFO per share has moved north marginally over the past two months. The projected FFO per share growth rate for 2022 is 13%.
Other Stocks to Consider
Some other key picks from the retail REIT sector are Regency Centers Corporation (REG - Free Report) and SITE Centers Corp. (SITC - Free Report) .
The Zacks Consensus Estimate for Regency Centers’ ongoing year’s FFO per share has been raised marginally over the past week to $3.96. REG currently holds a Zacks Rank #2.
The Zacks Consensus Estimate for SITE Centers’ 2022 FFO per share has moved marginally upward in the past two months to $1.16. SITC presently carries a Zacks Rank of 2.
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.