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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