KIMCO REALTY CORP Q3 FY2024 earnings call

2024 has seen great progress, including achieving the goal of securing 12,000 multifamily unit entitlements a year ahead of schedule, valued at an estimated $175 million to $325 million. The RPT acquisition integration has gone extremely well, with the portfolio exceeding expectations in operational synergies and NOI projections. The supply and demand dynamic for high quality retail favors Kimco, with vacancy levels and new shopping center construction at historic lows. Leasing metrics are strong: occupancy was 96.4% in Q3, up 20 basis points sequentially and 90 basis points year-over-year; anchor occupancy was 98.2%, up 10 basis points; small shop occupancy was 91.8%, a record high. New lease volume totaled 119 deals totaling 543,000 square feet, with a rent spread of 41.9% for 12 consecutive quarters of double-digit rent spreads.

FFO was $287.4 million or $0.43 per diluted share, representing a 7.5% per share growth compared to the third quarter of the previous year. Total pro rata NOI in the third quarter was $394.1 million, an increase of $51.3 million or 15% over the same period in the prior year, driven by $39 million from the RPT acquisition and $12 million from the operating portfolio. Same site NOI grew by 3.3% in the third quarter. The signed but not open pipeline at the end of September represented 310 basis points of occupancy related to 399 leases totaling $61.2 million of annual base rent.

FFO per diluted share range is raised to $1.64 to $1.65 from $1.60 to $1.62. Same site NOI growth is expected to be 3.25% plus. Interest income is expected to be between $20 million and $22 million. Investment guidance is raised to a range of $565 million to $625 million, including the fourth quarter acquisition of Waterford Lakes for $322 million. Disposition outlook is lowered by $50 million to $250 million to $300 million.

The company's actual results could differ materially from forward-looking statements due to various risks, uncertainties and other factors, including economic cycle fluctuations, interest rate changes, and potential challenges in the leasing market.

Q: Alexander Goldfarb of Piper Sandler asked about how much the RPT and Weingarten transactions exceeded original underwriting.

A: Conor Flynn said RPT has been ahead of expectations on synergy and NOI assumptions, and both transactions improved Kimco's growth profile.

Q: Michael Goldsmith of UBS asked about RPT small shop leasing.

A: Ross Cooper said the operating team is performing well, demand drivers are real, and they're compressing the sign but not open pipeline.

Q: Juan Sanabria of BMO Capital Markets asked about structured investments.

A: Ross Cooper said there are opportunities to convert structured investments to fee simple acquisitions, with about $470 million outstanding in the program.

Q: Dori Kesten of Wells Fargo asked about timing to activate entitled projects.

A: Ross Cooper said they'll be disciplined, with some projects in progress and considering various structures.

Q: Jeff Spector of Bank of America asked about lifestyle center acquisition criteria.

A: Ross Cooper said diversification and team performance are key, with opportunities in various markets.

Q: Samir Khanal of Evercore ISI asked about 2025 growth.

A: Conor Flynn said the backdrop is favorable, with muted bankruptcy season, resilient consumer, and diverse demand.

Q: Floris van Dijkum of Compass Point asked about monetizing assets.

A: Conor Flynn and Ross Cooper said they'll accretively redeploy capital into higher growth assets.

Q: Craig Mailman of Citi asked about inflation impact.

A: Ross Cooper said inflation is a focus, and they need to outpace it.

Q: Ravi Vaidya of Mizuho asked about acquisition market competition.

A: Ross Cooper said cap rates reflect transactions, with competition for grocery anchored centers.

Q: Greg McGinniss of Scotiabank asked about sellers in the market.

A: Ross Cooper said sellers have various rationales, and cap rates for Waterford have changed.

Q: Caitlin Burrows of Goldman Sachs asked about leasing environment.

A: Conor Flynn said leasing is strong due to supply demand, with good rollover schedules.

Q: Linda Tsai of Jefferies asked about mezzanine investments.

A: Ross Cooper said they mirror the owned portfolio.

Q: Wes Golladay of Baird asked about 2025 assets.

A: Conor Flynn said focus on retail first, with potential future larger assets.

Q: Paulina Rojas of Green Street asked about NOI CAGR.

A: Conor Flynn said strong fundamentals are sticky with lack of new supply.

Q: Michael Mueller of JP Morgan asked about disposition guidance.

A: Ross Cooper said it's due to joint venture and portfolio performance.

Q: Ronald Kamdem of Morgan Stanley asked about same store considerations.

A: Glenn Cohen said credit loss is monitored but low.

Q: Alexander Goldfarb of Piper Sandler asked about 2025 maturities.

A: Glenn Cohen said they're in good shape with options to address maturities.