KIMCO REALTY CORP Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Q1 Highlights: Robust leasing with high new lease spreads, healthy occupancy, and 85% of rent from grocery-anchored centers. Resolved half of Party City leases, and same property NOI grew 3.9%.
• Transactions: $100 million net acquisitions in Q1, with plans to sell $100-150 million of assets in 2025. Structured investments include a $35 million senior loan in South Florida.
• Financials: FFO was $301.9 million ($0.44 per diluted share) in Q1, up 12.8% y-o-y. Net debt to EBITDA was 5.3x. Repurchased 3 million shares at $19.61 per share in April.

Segment Performance

• Leasing: Signed 583 leases totaling 4.4 million square feet, with blended pro-rata cash rent spreads of 13.3% and new lease spreads of 48.7%. Occupancy was 95.8% pro-rata, with small shops at 91.7% (up 20 basis points y-o-y). 85% of annual base rent is from grocery-anchored centers.
• Same Property NOI: Grew 3.9% driven by leasing activity, rent growth, and cost management. Tenant credit loss was 56 basis points.
• Acquisitions: Completed $108 million acquisition of The Markets at Town Center, and two Las Vegas grocery-anchored shopping centers. $35 million senior loan funded in South Florida.

Guidance

• Raised FFO guidance to $1.71-$1.74 per diluted share from $1.70-$1.72. Driven by strong Q1 results, lease commencements, and balance sheet strength. Same-site NOI growth expected 2.5% or better. Credit loss assumption remains 75-100 basis points.

Risks

• Macroeconomic fluctuations, tariff changes, unforeseen tenant bankruptcies, employment trends, inflation, and interest rates pose risks to results.

Question and Answer

Q: Credit loss in the first quarter was 56 basis points, which compares to your full-year reserve of 75 basis points to 100 basis points. So I just want to understand the dynamics of what happened in the quarter and how the rest of the year can play out relative to your expectations?

A: Credit loss includes uncollectible receivables and unbudgeted tenant vacates/bankruptcies. Q1 was 56 basis points, below guidance, with Joann's vacating impact on minimum rent.

Q: I believe it's been quite some time since you last repurchased shares. I think it was back to 2018 or so. Can you just walk through the internal discussions you had versus other potential capital uses?

A: Repurchased 3 million shares in April due to market sell-off, opportunistic with FFO yield ~9% and 24% discount to NAV.

Q: Just looking at the supplement, what's driving the higher reimbursements in the quarter and maybe help us understand sort of the trajectory for that, for expense recovery for the rest of the year?

A: Recoveries strong, fixed CAM tenants, lower insurance costs contributed.

Q: Clearly, it's a uncertain macro backdrop. Despite your strong first quarter, most companies out there have – even if they had a good first quarter, they maintain guidance unless it was something truly like one time-ish outsized. So either you guys are packing a lot more punch in there that gave you the confidence to raise, or what else is giving you that comfort?

A: Strong traffic, leasing demand, future cash flow from rent commencements, and balance sheet strength gave confidence to raise guidance.

Q: Good morning, everybody. Hey Glenn, just looking at the supplement, what's driving the higher reimbursements in the quarter and maybe help us understand sort of the trajectory for that, for expense recovery for the rest of the year?

A: Recoveries strong, fixed CAM tenants, lower insurance costs contributed.