Kimco Realty, the NY-headquartered REIT which owns and operates the biggest footprint of premier shopping centers in all of North America, consisting of some 125M square feet across 855 properties geographically diversified over 42 states (as well as 7 provinces in Canada, in addition to Mexico, Puerto Rico, and South America), has earned a solid reputation in the real estate sector for acquiring and turning around shopping infrastructure, driven by a 50-plus year tradition rooted in localized expertise/relationship building and a strong entrepreneurial business culture.
This company was founded back in 1958 and was the IPO that kicked off the modern REIT era, founded on the integrity of a handshake and the significance of trusted partnerships between the company and its associates. Traded on the NYSE since 1991 and part of the S&P 500 since 2006, KIM’s strong business culture has produced bedrock results, with occupancy across the footprint running upwards of 94.1% (as of Sept 30, 2013). A major reason for the company’s success is real-estate industry veteran and strategic visionary, David B. Henry, President and CEO of KIM. Mr. Henry came to Kimco after a distinguished career at GE spanning more than two decades as CIO/Senior VP of GE Capital Real Estate and as Chairman of GE Capital Investment Advisors, helping to manage some $20B plus in real estate investments across 11 countries. KIM has paid a quarterly cash dividend since the initial listing (approximately 4.4% yield as of Nov 29, 2013) and has a firm plan for direct stock repurchase, as well as dividend reinvestment, outperforming the NAREIT Equity REIT Index in total returns since IPO by 1.8%, and by 5.4% over the last year.
Beyond the geographic diversity of the company’s footprint and high occupancy rate, there is a really stable mix to their some 7.1k tenants across roughly 13.6k leases, a mix which grants KIM an almost unquantifiable organic robustness in their portfolio. The biggest landlord across its operating footprint for household name shopping destinations like Costco, Home Depot, TJX, Walgreens, and Walmart, KIM enjoys a nice cushion from approximately 58% of their portfolio being food and grocery, with roughly 41% of U.S. locations in the top 10 high-pop Metropolitan Statistical Areas (MSAs). The richness of their operations team is distributed through 28 regional offices and the company has taken major steps in recent years to exit essentially all of their non-retail investments, really harnessing the power of their operations team, while beefing up Latin American operations (5.3% of portfolio) and achieving roughly $1B in asset monetization there.
KIM is on target for achieving 100% retail sources for recurring earnings this year and by sticking to a “back to basics” strategy, as well as focusing on institutional-grade assets in markets where they have a strong presence, the company is anticipated as executing beautifully amid historically low shopping strip center supply growth. Concentration on key markets where the company already has multi-channel infrastructure and established relationships, as well as on properties with a minimum square footage of 75k, KIM has rapidly transformed their platform since only a handful of years ago to create a leaner, cleaner operation, cutting the non-retail fat and JV component mightily, either through divestment or acquisition.
Kimco is acquisition hungry and one of the biggest players in the game, ably positioned to take advantage in a market where over 81k store openings are slated in the next two years alone according to RBC Capital Markets. Wise to establish a portfolio of staggered, long-term lease maturities with delimited rollover, and firmly rooted by a strong credit tenant base with an over 47% year-to-date climb in stock price among the top 20 publicly traded tenants, KIM is set to tidy up the remaining 2% of their footprint that isn’t retail this year and rake in growth on their highly internet-resistant, necessity-based retail locations like Home Depot, Starbucks, Walmart, and Whole Foods.
KIM just picked up a 189k square foot, grocery-anchored position in the New York City MSA back in November, landing a great deal on a three-property, fully-occupied position in the densely populated Union County, N.J. suburb. This deal fit the bill perfectly with two established national grocers on long-term leases, a nicely performing 85k square foot ShopRite and a newer 53k square foot A&P Fresh Market, with other notable tenants like a Bally Total Fitness and a Rite Aid. Supported by some 155k residents in the median household income range of $90k/year within just three miles, this was a no-brainer that is well over the target criterion and showcases KIM’s sage experience in acquiring retail property.
For more info, visit Kimco Realty Corp. at www.KimcoRealty.com
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