Executive Summary / Key Takeaways

• Kimco Realty Corporation is a leading owner and operator of high-quality, open-air, grocery-anchored shopping centers and mixed-use properties, strategically positioned in first-ring suburbs with high barriers to entry, benefiting from a favorable supply-demand imbalance in the retail sector.
• The company demonstrates strong operational execution, achieving record-high occupancy levels and consistently generating double-digit cash rent spreads on new leases, effectively backfilling vacant spaces from bankrupt tenants with higher-credit retailers.
• Disciplined capital allocation, including accretive acquisitions like The Markets at Town Center and strategic recycling of lower-growth assets, coupled with a robust balance sheet and strong credit ratings, provides financial flexibility and supports future growth initiatives.
• The company's significant portfolio of 12,000 entitled multifamily units offers substantial long-term value creation potential through various activation strategies, including self-development, joint ventures, or monetization.
• Management has raised its full-year 2025 FFO guidance to $1.71-$1.74 per diluted share, reflecting confidence in continued operational momentum and the visibility into future cash flow from its signed-but-not-open leasing pipeline, despite potential macroeconomic uncertainties and tenant specific risks.

Kimco's Foundation and Strategic Evolution in a Constrained Market

Kimco Realty Corporation, with a history spanning over 60 years and operating as a Real Estate Investment Trust (REIT) since 1992, has strategically evolved to become a premier owner and operator in the U.S. open-air retail sector. Its core business centers on high-quality, grocery-anchored shopping centers and a growing portfolio of mixed-use assets, primarily located in the first-ring suburbs of major metropolitan markets. This strategic focus on high-barrier-to-entry locations is a cornerstone of Kimco's competitive positioning, designed to leverage natural pricing power advantages and mitigate the impact of new competition. The company's transition to an UPREIT structure in 2023 further aligns its operational and ownership structure.

The retail real estate landscape in which Kimco operates is currently defined by a significant supply-demand imbalance. New shopping center development remains at historic lows, measured at approximately 0.2% of existing stock, a trend that has persisted below 1% since 2010. This constraint on new supply, coupled with a near-record national vacancy rate, creates a favorable environment for existing, well-located properties. This dynamic is a critical component of Kimco's competitive moat, providing a structural tailwind that supports high occupancy and rental growth across its portfolio.

In this environment, Kimco competes directly with other retail REITs specializing in open-air centers and mixed-use properties, such as Brixmor Property Group (BRX), Federal Realty Investment Trust (FRT), and to some extent, larger diversified players like Simon Property Group (SPG) and net-lease focused entities like Realty Income Corporation (O). While companies like SPG command a larger overall market share through their mall and outlet presence, Kimco's specific focus on necessity-based, grocery-anchored centers provides a distinct advantage in attracting resilient consumer traffic and a diverse tenant mix less susceptible to e-commerce disruption compared to traditional mall formats. Compared to peers like BRX and FRT, Kimco benefits from greater scale (over 100 million square feet) and a more diversified geographic footprint, which enhances its ability to execute package deals with national retailers and manage risk across different markets. While some peers like O may exhibit higher net margins due to their net-lease structure, Kimco's operational model allows for more direct value creation through active management, leasing, and redevelopment.

Kimco's strategic response to market dynamics and competitive pressures involves leveraging its scale and platform capabilities. The successful integration of the RPT Realty portfolio, acquired in January 2024, is a prime example. This acquisition added 56 centers and 13.3 million square feet, significantly boosting Kimco's presence and providing opportunities to apply its operational expertise to enhance performance, particularly in increasing small shop occupancy which was notably lower in the acquired portfolio. The integration has exceeded expectations, improving cost synergies and driving strong same-site NOI growth in the RPT assets.

Operationally, Kimco utilizes tools to enhance its leasing efforts. The company has developed a brand-new interactive site plan that links to its data, providing field teams with a unique tool to utilize with retailers to generate more leasing opportunities. While not a technological differentiator in the sense of a proprietary manufacturing process, this operational technology supports the core leasing function, which is vital in a competitive market. Furthermore, the company's focus on sustainability metrics, integrated into its credit facilities, demonstrates a commitment to operational efficiency and responsible management, contributing to reduced borrowing costs.

Operational Excellence and Leasing Power

Kimco's operational strength is evident in its consistent ability to drive leasing velocity and achieve favorable terms in a competitive environment. The company's tenant mix, heavily weighted towards essential retailers like grocery stores (contributing to achieving the strategic target of 85% of annual base rent from grocery-anchored assets in Q1 2025), off-price retailers, discounters, and service providers, underpins the resilience of its portfolio. This focus ensures consistent consumer traffic, which management reports has remained positive year-over-year and sequentially, even amidst macroeconomic fluctuations.

Leasing activity has been robust. In the first quarter of 2025, Kimco executed 451 leases totaling 3.9 million square feet, achieving blended pro-rata cash rent spreads of 13.3%, including a remarkable 48.7% spread on new leases – the highest in over seven years. This follows strong performance in prior quarters, such as Q3 2024 with a 12.3% blended spread (41.9% new) and Q2 2024 with an 11.7% blended spread (26.3% new). These double-digit new lease spreads, consistently achieved over multiple quarters, highlight the pricing power derived from the favorable supply-demand dynamics and the quality of Kimco's locations.

This strong leasing momentum has translated directly into high occupancy levels. Pro-rata occupancy stood at 95.8% in Q1 2025, with small shop occupancy climbing to 91.7% year-over-year, matching previous record highs. Anchor occupancy also remains healthy. The company's ability to quickly backfill spaces vacated by bankrupt tenants, such as Party City, Big Lots, and Joann's, underscores the demand for its properties. Management reports successfully resolving a significant portion of these vacancies through assignments or new leases, often at substantial rent spreads (e.g., ~35% for Party City, ~45% for Big Lots), demonstrating the effectiveness of its leasing platform and the value of well-located second-generation space in a supply-constrained market.

The strength in leasing and occupancy is the primary driver of Kimco's solid Same Property Net Operating Income (NOI) growth. Same property NOI increased by 3.9% in Q1 2025 compared to the prior year period, following growth of 4.5% in Q4 2024 (3.5% for the full year 2024) and 3.3% in Q3 2024. This growth is primarily fueled by higher minimum rents resulting from strong leasing activity, contractual rent increases, and the faster commencement of rent from the signed-but-not-open pipeline. The signed-but-not-open pipeline represented $61.2 million of future annual base rent at the end of Q3 2024, with approximately 90% expected to commence by the end of 2025, providing significant visibility into future cash flow growth.

Strategic Capital Allocation and Balance Sheet Strength

Kimco maintains a disciplined approach to capital allocation, leveraging its strong financial position to pursue accretive growth opportunities and enhance portfolio quality. The company's balance sheet is characterized by robust liquidity, including a $2 billion unsecured revolving credit facility (with an accordion feature to $2.75 billion) and a significant cash balance ($132.5 million as of March 31, 2025).

Net Debt to EBITDA stood at 5.3x consolidated and 5.6x on a look-through basis as of Q4 2024, metrics that management highlights as being at their best levels since 2009.

The company actively manages its debt profile, utilizing unsecured term loans and notes, and strategically employing interest rate swaps to manage exposure to variable rates. Recent financing activities include increasing term loans and issuing a new long 10-year unsecured bond at a favorable coupon (4.85% maturing in 2035). Kimco has also achieved positive outlooks on its credit ratings (Moody's Baa1 positive, S&P BBB+ positive, Fitch A- stable), which further reduces borrowing costs. Debt maturities for 2025 are modest, with approximately $241.5 million of consolidated debt remaining, which is anticipated to be repaid through operating cash flow and/or refinancing.

Strategic acquisitions are a key component of Kimco's growth strategy. The $108 million acquisition of The Markets at Town Center in Jacksonville in January 2025, which originated from the company's structured investment program, exemplifies this approach. This program, with approximately $470 million outstanding as of late 2024, provides opportunities to invest in high-quality real estate at attractive returns (e.g., 8% to 9% coupons) and includes rights to acquire, potentially serving as a future pipeline for fee simple ownership. Other notable acquisitions, like Waterford Lakes Town Center in Orlando (acquired Q4 2024), target larger format assets in desirable markets, where Kimco believes its platform can drive significant value creation through active management and re-leasing.

Complementing its acquisition strategy, Kimco is focused on accretive capital recycling. The company has identified lower-growth assets, including certain long-term ground leases and non-income-producing assets like select multifamily entitlements, for potential disposition. The plan for 2025 includes $100 million to $150 million in dispositions, aiming for a net neutral acquisition target. This strategy allows Kimco to redeploy capital into higher-yielding, higher-growth operating properties, enhancing the overall portfolio's growth profile.

Mixed-Use and Future Growth Initiatives

Beyond its core retail operations, Kimco is actively pursuing opportunities in mixed-use development, leveraging its extensive land holdings. A significant achievement is the securing of 12,000 multifamily unit entitlements, a goal reached a year ahead of schedule. These entitlements, valued at an estimated $175 million to $325 million, represent a substantial source of potential long-term value creation.

Kimco has flexibility in how it activates these entitlements. Options include self-developing projects, contributing land to joint ventures, ground leasing the land to third-party developers, or outright selling the entitlements. The company has already activated over 3,500 units through various structures, including operational projects like those at The Milton and The Whitmer, and a project under construction at Coulter Place (structured as a preferred equity investment). While the pace of activation is disciplined (typically one to two projects per year), the large pool of entitled units provides a long runway for future growth and densification of its shopping centers, creating live-work-play environments that can further enhance the value and appeal of the adjacent retail components.

The strategic intent behind adding multifamily density is to increase overall asset value, drive additional traffic to the retail center, and create a more dynamic and resilient property. While the cost of capital and development yields for apartment projects are carefully evaluated against other investment opportunities, Kimco aims to structure these initiatives accretively, potentially utilizing capital-light approaches like ground leases or joint ventures where appropriate.

Outlook and Risks

Based on its strong first-quarter results and positive operational momentum, Kimco has raised its full-year 2025 FFO guidance to a range of $1.71 to $1.74 per diluted share. This updated outlook reflects management's confidence in the continued performance of the operating portfolio, driven by expectations for Same Property NOI growth of 2.5% or better. The guidance incorporates a credit loss assumption of 75 to 100 basis points, reflecting potential impacts from tenant bankruptcies but also the opportunity to backfill these spaces. Management anticipates a temporary dip in physical occupancy in Q2 2025 due to planned vacates, followed by an increase as new leases commence later in the year.

The outlook assumes a net neutral acquisition target for 2025, funded by dispositions of $100 million to $150 million of lower-growth assets. Interest income is expected to be lower ($6 million to $9 million) compared to 2024 due to lower cash balances after debt repayments. G&A expense is projected between $131 million and $137 million, reflecting cost control efforts.

Despite the positive outlook, Kimco faces several risks. Macroeconomic conditions, including elevated inflation and interest rates, could impact consumer spending and tenant health. While the portfolio is diversified, tenant bankruptcies remain a risk, although the company has demonstrated an ability to mitigate this through effective re-leasing. Competition for acquisitions and tenants persists. Financing risks, including the ability to obtain debt on favorable terms, could affect capital allocation plans. Cybersecurity threats and natural disasters also pose potential risks to operations. Management's ability to attract and retain key personnel is crucial for continued execution.

Conclusion

Kimco Realty Corporation is well-positioned in a U.S. retail real estate market characterized by favorable supply-demand dynamics. The company's strategic focus on high-quality, grocery-anchored centers in first-ring suburbs, coupled with operational excellence in leasing and asset management, drives strong fundamental performance and consistent Same Property NOI growth. The ability to achieve high occupancy and significant rent spreads, even when backfilling spaces from distressed tenants, underscores the strength of its portfolio and platform.

Disciplined capital allocation, including accretive acquisitions and strategic recycling of lower-growth assets, enhances the portfolio's growth profile. A robust balance sheet and strong credit ratings provide financial flexibility and reduce borrowing costs. The substantial pipeline of entitled multifamily units offers a compelling long-term growth opportunity through densification. While macroeconomic uncertainties and tenant-specific risks persist, management's raised 2025 FFO guidance reflects confidence in the company's ability to navigate these challenges and deliver continued growth, making Kimco a compelling consideration for investors seeking exposure to resilient retail real estate.