No bad stock

Kimco Realty Corporation
CEO : Mr. Conor C. Flynn

Quarterly earnings growth(YoY,%)

Conor Flynn says,

Kimco’s Q4 2022 Earnings Call Highlights

• Kimco enjoyed a successful 2022, and the fourth quarter saw outstanding results in leasing.
• Overall occupancy increased by 40 basis points to 95.7%, representing a recovery of nearly 90% of COVID inventory.
• Kimco leased over 11.5 million square feet, which is the highest level on record.
• Kimco set another record by entitling 2,805 apartment units in 2022, bringing the current total entitlements to 5,461 units.
• Efficiencies of scale are just beginning to demonstrate their potential, and Kimco’s unmatched diversification, access to capital, and mixed-use redevelopment strategy are just some of the differentiators.
• Kimco anticipates controlling expenses, upgrading the credit and merchandize mix of the tenant base, and attracting recurring customers in 2023.
• They are also in active negotiations with retailers to reduce exposure to weaker credit tenants.

Ross Cooper says,

Acquisition of Open-Air Retail Centers

• Kimco closed on the $375.8 million acquisition of eight open-air retail centers in Q4 2022 from a privately-held portfolio based in the high barrier to entry Long Island, New York market.
• Five of the centers are grocery-anchored, which is well aligned with Kimco’s long-term investment approach.
• The acquisition was structured using a combination of cash, the assumption of below-market fixed rate debt and tax deferred down REIT units, making it an accretive transaction for the company.

Structured Investment Program

• Kimco closed another unique opportunity for their structured investment program in Q4 2022 with a $22 million participating loan on a three-property grocery-anchored portfolio in Pennsylvania.
• The borrower sold the assets for a sizable gain in just over four months, and Kimco received a $4 million participating interest, yielding a 76% IRR on an annualized basis.

Property Sales and Acquisitions

• In Q1 2023, Kimco disposed of two slower growth commodity power centers in Georgia, and recycled the capital into a 1031 exchange on two high-quality open-air grocery-anchored shopping centers in Southern California.
• The acquired assets are located in Huntington Beach and Tustin, anchored by Avon’s Grocer and a soon-to-open 99 Ranch grocer, and have a combined average three-mile population approaching 200,000 people and an average household income in excess of $120,000.
• The demographic profile for the acquired assets is expected to far outpace that of the sold properties in Georgia, contributing to portfolio enhancement efforts and generating outperformance.

Outlook for 2023

• Kimco plans to take advantage of the current market conditions with a combination of select open-air grocery-anchored acquisitions, continued partnership buyouts, and opportune structured investments.
• The company has the strongest liquidity in its history with over $2.1 billion from cash on hand and its line of credit, as well as unique access to additional low yield and capital in the form of Albertsons stock.
• Dispositions will be modest in 2023 as the portfolio has proven to be in very healthy shape with only a select level of pruning and sales of non-income-producing land parcels and holdings.

Financial Results and Forecast

• Glenn will provide details on the financial results and forecast for the year ahead.

Q & A sessions,

Limited Inventory Supply

• There is no new development supply in the coming years.
• COVID inventory is the only available inventory.
• Well-capitalized retailers are taking advantage of opportunities to set themselves up for growth potential in the future.

Entitlement Activation Strategy

• The company wants to activate entitlements using a CapEx-light strategy.
• The goal is to increase the value of the asset and unlock the highest and best use.
• The company continues to monitor the projects to monetize those that are appropriate.

Acquisition Market

• The bid-ask spread is still somewhat wide and inconsistent.
• The company is not forced to do anything and will continue to invest when the market comes to them.
• Deals that make sense are somewhere in the low six cap range.

Asset Shake-Up

• Companies are going through internal analyses to determine where to move certain assets.
• Open-air grocery is an asset class that has retained its value well.
• The company is actively having conversations to take advantage of any assets that may become available.