Kimco Realty(US:KIM)2025-07-31 13:32Financial Data and Key Metrics Changes - Funds from operations (FFO) for Q2 was $297.6 million, representing a 7.3% increase year-over-year to $0.44 per diluted share compared to $0.41 in the same quarter last year [23][24] - Same site net operating income (NOI) increased by 3.1%, driven by contractual rent growth and contributions from ancillary income [25][28] - The company ended the quarter with over $2 billion in available liquidity and a consolidated net debt to EBITDA ratio of 5.4 times [27] Business Line Data and Key Metrics Changes - Executed 174 new leases for 916,000 square feet at an average spread of 34% and completed 332 renewals covering 1.8 million square feet at a 9.6% spread, contributing to a blended spread of 15.2% [9][10] - Small shop occupancy reached a record high of 92.2%, with the RPT portfolio's small shop occupancy climbing to 90.3% [8][10] - The company reported a slight dip in overall pro rata occupancy to 95.4%, primarily due to anticipated lease rejections from Joanne and Party City [9] Market Data and Key Metrics Changes - The company noted strong tenant demand translating into robust leasing spreads, with a blended pro rata leasing spread of 15%, the highest in nearly eight years [8] - The market for grocery-anchored shopping centers remains strong, with 86% of annual base rent now coming from these centers, an all-time high [10] Company Strategy and Development Direction - The company is focused on enhancing execution through innovation, including deploying AI to improve leasing processes and reduce costs [11] - Capital allocation remains disciplined, with a strategy to recycle capital from low-growth assets into higher-yielding investments [12][22] - The company aims to maintain a strong balance sheet while pursuing growth opportunities in well-located markets [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving FFO growth of over 5% for the second consecutive year, supported by strong leasing momentum and a robust pipeline of rent commencements [14][28] - The management team acknowledged the current market volatility but highlighted the opportunities it presents for Kimco due to its strong balance sheet and industry relationships [16][20] Other Important Information - The company has proactively repurchased 3 million shares at an average price of $19.61, reflecting a 9% FFO yield [27][90] - The company anticipates selling between $100 million to $150 million in low cap rate properties annually to reinvest in higher growth opportunities [18][22] Q&A Session Summary Question: Can you help us understand the outlook for the back half of the year regarding same property NOI growth? - Management increased the annual guidance to 3% or better, accounting for the impact of bankruptcies and positive operating performance [33][34] Question: What is the outlook for the structured finance book and its sustainability? - Guidance incorporates expectations of repayments, and management believes the structured finance business has viability through all parts of the cycle [39][40] Question: Is there a desire to expand the joint venture platform for acquisitions? - Management indicated ongoing conversations with partners about potential co-investments while focusing on internal recycling of capital [46][47] Question: Can you provide an update on the backfills of the Joann's and Party City boxes? - Management reported strong interest in backfill opportunities, with over 90% of spaces either leased or in advanced stages of negotiation [76] Question: What types of private buyers are competing for new deals? - Competition includes pension funds and sovereign wealth funds, with aggressive pricing observed across both single assets and portfolios [96][100]