Kimco Realty Corporation (NYSE:KIM) has emerged as one of the most opportunistic shopping center REITs. Its valuation, relative to the sector and on an absolute scale, has gotten cheaper. At today’s price, one is no longer paying a premium for Kimco’s scale, yet they retain significant advantages of scale, such as Kimco’s reduced frictional cost of operations, as it now has the lowest deal gestation period in the business. I rate Kimco a "Strong Buy." Gestation Period As A Key Indicator Of Negotiating Power ...

Financial Data and Key Metrics Changes - Comparable FFO for the first quarter was $0.63 per share, an increase of $0.08 compared to $0.55 per share in the same quarter last year, primarily due to positive ground rent reset at PENN1 and higher NOI from rent commencements [20][26] - Overall GAAP same store NOI increased by 3.5% [20] - The company expects 2025 comparable FFO to be essentially flat compared to last year, down from previous estimates due to lower than expected PENN1 ground rent [27][28] Business Line Data and Key Metrics Changes - The company leased a total of 1,039,000 square feet, with 709,000 square feet in New York office space at starting rents of $95 per square foot [20][30] - A major lease of 337,000 square feet was completed with Universal Music Group at PENN2, contributing to the overall leasing activity [20][30] - At 555 California Street, 222,000 square feet were leased at starting rents of $120 per square foot, indicating strong performance in a historically soft market [21] Market Data and Key Metrics Changes - New York office occupancy decreased to 84.4% from 88.8% due to PENN2 being placed fully into service, but is expected to rise to the low 90s over the next year [28] - The New York office leasing market maintained strong momentum, with the strongest quarterly volume since Q4 2019 [28] - Availability in the best ISA market continues to shrink, with only 500,000 square feet of new construction expected in the coming years [29] Company Strategy and Development Direction - The company is focused on the Penn District as a growth engine, with expectations of significant earnings growth by 2027 from the lease-up of PENN1 and PENN2 [22][28] - The company plans to develop both office and apartments in the Penn District, but will primarily focus on office developments [84][104] - The company is actively looking for opportunities to deploy cash from recent transactions into new investments while also addressing higher-cost debt [46][47] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the market despite current volatility, citing strong demand and a shrinking supply of quality office space [29][30] - The company believes that as occupancy rises, earnings will significantly increase, with expectations to return to around 94% occupancy in the coming years [62][63] - Management highlighted the trend of owner-occupiers in both office and retail sectors, indicating a strong long-term demand for prime locations in New York [92][94] Other Important Information - The company has reduced its debt by $915 million and increased cash balances to $1.4 billion, providing significant liquidity [19] - The company completed a master lease with NYU for 1,100,000 square feet, which will generate substantial cash flow and is treated as a sale for GAAP purposes [15][16] - The company has achieved 100% certification across its entire portfolio of in-service buildings for sustainability [25] Q&A Session Summary Question: Can you break down the 2,000,000 square foot negotiation between PENN1, PENN2, and the balance of the portfolio? - Approximately 50% of the 2,000,000 square foot pipeline is from PENN1 and PENN2, with strong activity expected at PENN2 [38] Question: What is the confidence level around reaching 80% leased at PENN2 by year-end? - Management remains confident in reaching the target, with significant rent increases expected [40] Question: What are the plans for the $1.4 billion cash on the balance sheet? - The cash will be used for new investments, debt repayment, and maintaining a buffer for volatility [46][47] Question: How do you view the current market for retail and office owner-occupiers? - There is a strong trend of retailers wanting to own prime locations, which is beneficial for the market [92][94] Question: What is the outlook for real estate valuations? - The company expects to see valuations recover to pre-COVID levels, with great assets commanding great prices [56][57] Question: How much of the leasing pipeline will drive occupancy in the next couple of years? - A significant portion of the pipeline will increase occupancy, with many new deals and expansions expected [58]