Kimco Realty Corporation (KIM) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights a raised FFO guidance, strong SNO pipeline, and a dividend increase, indicating positive financial health. The Q&A section reveals strategic focus on high-return leasing and redevelopment, improved tenant health, and proactive capital recycling. Despite challenges like tenant bankruptcies, management's optimistic guidance and strategic initiatives suggest a positive outlook. The combination of these factors, alongside the dividend increase, points to a likely positive stock price movement in the short term.
Key Financial Performance
Nareit FFO per share growth 6.7% growth year-over-year. This was driven by the embedded growth characteristics of the portfolio and an increase of 4.9% from pro rata NOI.
Credit rating upgrade Upgraded to A- from Moody's during the fourth quarter. This reflects a disciplined approach to the balance sheet and positions Kimco as one of only 13 REITs with multiple A-, A3 ratings from the 3 rating agencies.
Overall portfolio occupancy 96.4%, matching the all-time high. This was supported by strong leasing activity and tenant demand.
Small shop occupancy 92.7%, a new all-time high. This was driven by strong leasing activity and tenant demand.
Signed but not open (SNO) pipeline 390 basis points, representing $73 million of future annual base rent. This is a record high and reflects robust leasing activity.
Same-site NOI growth 3% for the full year. This was supported by sustained demand for space and consistent rent growth.
Free cash flow Over $165 million after the payment of all dividends and leasing costs. This strengthens the ability to self-fund growth while supporting a well-covered and growing dividend.
Fourth quarter FFO $294.3 million or $0.44 per diluted share, representing a 4.8% increase year-over-year. This was driven by higher pro rata NOI, primarily reflecting greater minimum rents.
Full year FFO Approximately $1.2 billion or $1.76 per diluted share, representing a 6.7% per share increase compared to 2024. This was driven by the embedded growth characteristics of the portfolio.
Pro rata NOI growth 4.9% year-over-year. This was driven by the embedded growth characteristics of the portfolio.
Credit loss 74 basis points for the full year, at the low end of the range. This underscores the solid tenant credit profile across the portfolio.
Liquidity Over $2.2 billion of immediate liquidity, including $213 million of cash and full availability on the $2 billion unsecured revolving credit facility. This demonstrates strong financial flexibility.
Net debt-to-EBITDA 5.4x consolidated and 5.7x on a look-through basis, including pro rata JV debt and preferred stock outstanding. This reflects a solid balance sheet.
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Operating Highlights
New Leasing Volume: Achieved a record 1.2 million square feet of new leasing volume in Q4 2025, the highest in over a decade.
Grocery-Anchored Centers: Converted 9 non-grocery sites to grocery-anchored locations in 2025, enhancing portfolio quality.
Small Shop Occupancy: Reached a record high of 92.7% in 2025.
Market Valuation Strategy: Focused on closing the value gap between public market valuation and private market pricing by selling assets at cap rates of 5%-6% and redeploying proceeds into higher return opportunities.
Acquisition Strategy: Acquired Shoppes at 82nd Street in Queens, NY, a grocery-anchored center, as part of a 1031 exchange to defer tax gains.
Operational Efficiency: Implemented a functionally aligned operating model to drive efficiencies, saving $3 million in G&A expenses in 2026.
Leasing Strategy: Adopted package deals, completing 10 deals in 2025, including a notable deal with Ross Dress for Less for 6 leases in 30 days.
Capital Recycling: Identified a $300-$500 million disposition pipeline to sell lower-growth assets and reinvest in higher-growth opportunities.
Structured Investment Expansion: Planned a $100 million net growth in structured investments in 2026 with a 9% average yield.
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Risk or Challenges
Tenant Credit Risk: Potential bankruptcy activity from tenants such as JOANN's, Party City, Rite Aid, and Big Lots could impact rental income in 2026. Credit loss assumption is set at 75 to 100 basis points, reflecting potential risks.
Macroeconomic Disruptions: The company acknowledges the risk of significant macroeconomic disruptions that could impact performance in 2026, though no specific disruptions are currently anticipated.
Interest Rate Headwinds: Over $800 million of consolidated maturities at an average effective rate of approximately 2.65% in 2026 represent a known headwind, as refinancing these at higher rates could increase costs.
Competition for Acquisitions: Increased competition for open-air retail acquisitions is leading to tighter return hurdles, forcing the company to be more selective in achieving acceptable yields.
Supply Chain and Construction Delays: Challenges in streamlining workflows with municipalities and retail partners could delay rent commencements and impact cash flow growth.
Asset Disposition Risks: The company plans to sell $300 million to $500 million in assets, but achieving favorable cap rates and mitigating tax impacts through 1031 exchanges could pose challenges.
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Guidance & Outlook
2026 FFO per share: Expected to range between $1.80 to $1.84, representing a 2.3% to 4.5% growth over 2025.
Same-property NOI growth: Projected to grow by 2.5% to 3.5% in 2026, with the first quarter being the low point and growth accelerating in subsequent quarters.
Capital deployment: Anticipates $100 million to $150 million in development and redevelopment investment, $275 million to $300 million in capitalized lease-related and maintenance spending, and net new structured investment activity between $75 million to $125 million with yields in the 8% to 10% range.
Disposition pipeline: Identified $300 million to $500 million in asset sales, primarily flat ground leases, lower growth multi-tenant centers, and non-income-producing land, with expected blended cap rates of 5% to 6%.
Acquisition strategy: Plans to acquire shopping centers at cap rates roughly 100 basis points higher than dispositions, with incremental compounded annual growth of approximately 200 basis points.
Occupancy and SNO pipeline: Optimistic about driving occupancy higher than 2025 levels and expects the SNO pipeline to grow further before compressing toward the end of 2026 and into 2027.
Credit loss assumption: Assumes 75 to 100 basis points for 2026, consistent with historical norms.
Balance sheet and maturities: Over $800 million of consolidated maturities at an average effective rate of approximately 2.65% in 2026, with plans to address them proactively.
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Shareholder Return Plan
Dividend Growth: Kimco produced over $165 million of free cash flow after the payment of all dividends and leasing costs in 2025, supporting a well-covered and growing dividend.
Dividend Yield: Kimco continues to provide an attractive dividend yield, supported by growing cash flow and robust leasing activity.
Special Dividend Possibility: To the extent gains from asset sales cannot be fully deferred, it is possible that Kimco may have to distribute a special dividend at year-end.
Share Repurchase Program: Kimco repurchased 6.1 million common shares in 2025 at an average price of $19.79 per share, viewing buybacks as an important lever when valuation reflects a meaningful discount to the value of real estate and internal growth profile.
Future Share Repurchase Plans: Kimco plans to redeploy proceeds from asset sales into potential share repurchases, offering roughly a 9% FFO yield.
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Key Q&A
Q:Can you elaborate on the potential for a special dividend and how it aligns with the company's goal of being a top quartile earnings grower?
A:Conor Flynn explained that the company is focused on closing the gap between public and private valuations by taking assets to market. While they aim to shield taxable gains through 1031 exchanges, a special dividend may be triggered if gains cannot be shielded. The focus remains on maintaining growth while addressing valuation disconnects.
Q:What are the most accretive capital allocation opportunities, and why not accelerate these actions?
A:Conor Flynn highlighted leasing as the top priority due to its high returns, followed by redevelopment opportunities with double-digit returns and a halo effect on shopping centers. The company is scaling its structured investment book and focusing on accretive acquisitions. They are accelerating actions year-over-year but face restrictions like parceling ground leases for optimal pricing.
Q:How does the opportunity set look for larger portfolio acquisitions compared to one-off transactions?
A:Ross Cooper stated that while larger portfolio acquisitions remain part of the strategy, the current focus is on joint ventures and structured investments due to cost of capital challenges and private market competition. Most acquisitions in 2025 were from existing investments or rights of first refusal.
Q:What is the current state of tenant health and trends in the portfolio?
A:David Jamieson noted improved credit quality post-COVID, with retailers like Michaels and 24 Hour Fitness repositioning successfully. High demand is evident, with 98% of 47 anchor leases resolved and strong consumer growth in discretionary spending. Retailers are planning for 2027 and 2028 to maintain momentum.
Q:Can you explain the components of the same-store NOI guidance of around 3%?
A:Glenn Cohen explained that the range of 2.5% to 3.5% accounts for challenges in Q1 due to tenant bankruptcies but is supported by the SNO pipeline. The guidance aligns with the overall target of $1.80 to $1.84.
Q:What drove the realignment to a national leadership structure, and what changes are expected?
A:David Jamieson explained that the shift from a regional to a national structure aims to improve efficiency, consistency, and scalability. The new structure accelerates workflows, leverages technology, and reduces G&A expenses. Early results include faster deal execution and streamlined asset management.
Q:What is the AFFO contribution from capital recycling, considering economic cap rates?
A:Ross Cooper stated that the AFFO remains positive and growing despite additional capital needs for multi-tenant shopping centers. The growth in rents and leasing spreads outweighs the costs, ensuring AFFO contribution aligns with FFO growth.
Q:What is the strategy for the 3,700 entitled apartment units?
A:Ross Cooper explained that the strategy includes monetizing, JVing, or developing the units based on individual opportunities. The focus is on recycling capital efficiently, with some projects structured as long-term ground leases or joint ventures to minimize CapEx.
Q:What is the outlook for leased occupancy and small shop leasing?
A:David Jamieson stated that while small shop occupancy is at a record 92.7%, there is room for growth in anchor spaces and repositioning chronic vacancies. The SNO pipeline and redevelopment activities are expected to drive further occupancy and cash flow growth.
Q:What are the motivations behind private market activity in retail?
A:Ross Cooper noted strong fundamentals and improved financing conditions attracting investors. Retail is seen as a compelling opportunity due to positive leverage and supply-demand dynamics, leading to increased competition in acquisitions.
Q:What is the visibility on structured investment repayments and growth?
A:Ross Cooper stated that no significant repayments are expected in 2026, and the pipeline for new deals is strong. The company is confident in achieving net growth in the structured investment book.
Q:Are there plans to replace tenants or unlock redevelopments among the 47 anchor leases?
A:David Jamieson confirmed that some leases involve replacing tenants with higher-quality ones or redeveloping assets. Examples include replacing a tenant with Sprouts in South Miami and repositioning another with Total Wine, enhancing asset value and tenant quality.
Q:Why is the company guiding to higher acquisition and disposition volumes?
A:Ross Cooper explained that the strategy focuses on accretive capital recycling, selling low-growth assets like ground leases and acquiring higher-growth properties. This approach aims to enhance portfolio quality and long-term growth.
Q:Where will digital transformation efforts have the most immediate impact?
A:Will Teichman stated that initial benefits are seen in expense reduction, particularly G&A. Efforts include reducing reliance on professional services, vendor consolidation, and deploying automation and AI tools to improve efficiency.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific AFFO contribution relative to the 100 basis points of redeployment accretion, providing only a general explanation of the positive impact on AFFO and FFO. Additionally, while discussing digital transformation, the focus was on expense reduction without clear quantification of top-line or operational impacts.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Anchor Leases
Conor
Director
FFO
NOI
SNO
Shoppes nd
accomplishment
air
balance sheet
base rent
cap rate
capital allocation
center REITs
coordination
dividend
exchange tax
gain
gap
grocery
lease
leasing
midpoint
milestone
occupancy
package deal
quality
rating
record
renewal option
rent commencement
shopping center
tenant
valuation
volume
yield
KIM Transcript
Kimco Realty Corporation (KIM) Q4 2025 Earnings Call Transcript
Positive2-12
The earnings call highlights a raised FFO guidance, strong SNO pipeline, and a dividend increase, indicating positive financial health. The Q&A section reveals strategic focus on high-return leasing and redevelopment, improved tenant health, and proactive capital recycling. Despite challenges like tenant bankruptcies, management's optimistic guidance and strategic initiatives suggest a positive outlook. The combination of these factors, alongside the dividend increase, points to a likely positive stock price movement in the short term.
Kimco Realty Corporation (KIM) Q3 2025 Earnings Call Transcript
Unknown10-30
The earnings call presents a mixed outlook. While there are positive signs such as increased FFO guidance, strong retailer sentiment, and structured investment program flexibility, concerns remain. The debt maturing in 2026 and management's reluctance to provide specific guidance for 2026 introduce uncertainties. Additionally, the lack of recent retailer investments and the competitive environment for large acquisitions may temper enthusiasm. Overall, the sentiment is balanced, leading to a neutral prediction.
Kimco Realty Corporation (KIM) Presents At BofA Securities 2025 Global Real Estate Conference Transcript
Neutral9-10
Kimco Realty Corporation (KIM) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call summary indicates strong financial performance with increased FFO guidance and NOI growth. The Q&A reveals optimism about demand, occupancy, and strategic initiatives. Despite some vague responses, the overall sentiment is positive due to operational achievements and shareholder returns. Management's focus on capital allocation and growth through acquisitions and redevelopments further supports a positive outlook.
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KIM Report
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