Executive Summary / Key Takeaways

• Defensive Portfolio & Strong Fundamentals: Kimco Realty has strategically transformed its portfolio into high-quality, open-air, grocery-anchored shopping centers and mixed-use properties in top metropolitan markets. This focus on necessity-based retail, now comprising an all-time high of 86% of annual base rent, drives stable occupancy, robust leasing spreads, and consistent cash flow, even amidst economic uncertainties.
• Operational Excellence & AI-Driven Efficiency: The company consistently achieves impressive operational metrics, including record-high small shop occupancy of 92.2% and double-digit leasing spreads. Kimco is leveraging AI for accelerated lease abstraction, tenant prospecting, and redevelopment planning, enhancing efficiency, reducing costs, and strengthening its competitive moat.
• Strategic Capital Allocation & Balance Sheet Strength: Kimco maintains a "rock solid" balance sheet with over $2.2 billion in liquidity, enabling opportunistic capital deployment. The company is actively recycling capital from lower-growth assets into higher-yielding acquisitions and structured investments, exemplified by its recent $500 million bond issuance at a historically low spread and strategic share repurchases.
• Robust Growth Outlook: Bolstered by strong first-half performance and a significant "signed, but not yet open" (SNO) pipeline of $66 million in annual base rent, Kimco has raised its 2025 FFO guidance to $1.73-$1.75 per diluted share (4.8%-6.1% growth) and its same-property NOI outlook to 3% or better, signaling continued FFO growth exceeding 5% for the second consecutive year.
• Competitive Edge in a Tight Market: Amidst historically low new retail supply and high demand, Kimco's scale, strategic market positioning, and ability to quickly backfill vacant spaces (often at significantly higher rents) provide a distinct competitive advantage. This allows the company to continuously upgrade its tenant mix and capture market share from weaker competitors.

A Foundation Forged in Necessity: Kimco's Enduring Strategy

Kimco Realty Corporation has cultivated a formidable position as a leading owner and operator of open-air, grocery-anchored shopping centers and mixed-use properties across the United States. Its strategic focus on first-ring suburbs within top major metropolitan markets, including high-barrier-to-entry coastal areas and rapidly expanding Sun Belt cities, has been a cornerstone of its enduring success. This deliberate geographic concentration, coupled with a tenant mix heavily weighted towards essential, necessity-based goods and services, underpins the company's mission: to create destinations for everyday living that inspire community and deliver value.

The company's journey, from its REIT election in 1992 to its UPREIT reorganization in 2023, reflects a continuous adaptation to market dynamics. A pivotal moment arrived with the opportunistic $1.4 billion acquisition of RPT Realty in January 2024, which added 56 shopping centers and significantly expanded Kimco's scale. This strategic move, along with the 2020 launch of its Structured Investment Program (SIP), has allowed Kimco to identify and secure high-quality real estate, often with a right of first offer or refusal, creating a pipeline for future fee-simple ownership. The SIP's success was recently demonstrated by the conversion of its first structured investment into outright ownership of The Markets at Town Center in Jacksonville, Florida, for $108 million in January 2025.

The Technological Edge: AI-Driven Operational Excellence

Kimco's strategic prowess extends beyond real estate fundamentals into the realm of technological innovation, a key differentiator in a competitive landscape. The company is actively deploying Artificial Intelligence (AI) in targeted, high-impact areas to enhance operational efficiency, reduce costs, and accelerate growth. This isn't merely about adopting new tools; it's about fundamentally transforming core processes to create a competitive moat.

One significant application is the acceleration of lease abstraction, which frees up internal resources and improves data accuracy, directly contributing to more efficient property management and financial reporting. Kimco is also piloting AI tools to enhance small shop tenant prospecting, streamlining the identification and outreach to potential tenants. This directly supports leasing momentum and the company's goal of achieving higher occupancy rates. Furthermore, AI is being used to streamline early-stage redevelopment planning, allowing for more agile and data-informed decisions on property enhancements. While specific quantitative figures for these benefits are not publicly detailed, management states these applications are "already generating measurable returns" and strengthening the foundation for future performance by improving recovery rates and accelerating collection timelines. This technological foresight contributes to Kimco's competitive advantage by enabling faster, more precise decision-making and operational execution, setting it apart from rivals who may rely on more traditional, less efficient processes.

Competitive Landscape: Dominance in a Tight Market

Kimco operates within a competitive retail REIT sector, facing direct rivals such as Simon Property Group (SPG), Federal Realty Investment Trust (FRT), Regency Centers Corporation (REG), and Brixmor Property Group (BRX). Each competitor possesses unique strengths, but Kimco's strategic positioning and operational execution provide distinct advantages.

Kimco's unwavering focus on grocery-anchored, open-air centers in first-ring suburbs offers a more stable and defensive profile compared to Simon Property Group's emphasis on larger, enclosed malls, which are more susceptible to discretionary spending fluctuations. While SPG boasts greater scale and aggressive expansion, Kimco's strategy prioritizes consistent cash flow and resilience, often translating to more stable profitability margins. For instance, Kimco's TTM Gross Profit Margin stands at 68.89%, with an Operating Profit Margin of 34.56%, reflecting strong operational efficiency. In contrast, SPG's TTM Gross Profit Margin is 83%, with an Operating Profit Margin of 52%, indicating higher revenue per square foot from premium properties, but potentially greater cyclicality.

Against Federal Realty Investment Trust and Regency Centers Corporation, both of whom also focus on grocery-anchored assets, Kimco distinguishes itself through its broad portfolio scale and geographic diversity. This allows for better cost efficiencies and operational resilience across various major metropolitan areas, whereas FRT and REG may exhibit more targeted, niche-specific strengths. Kimco's ability to leverage its scale in areas like insurance costs, which came in below budget due to portfolio diversity and loss prevention, further highlights its operational edge. Brixmor Property Group, another open-air center peer, emphasizes value-oriented operations and cost efficiency. While BRX might show strong efficiency metrics, Kimco's strategic stability in top markets and its AI-driven operational enhancements provide a robust competitive moat, allowing it to maintain premium positioning and drive higher long-term occupancy.

The broader market dynamics also play directly into Kimco's strengths. New shopping center construction remains at historic lows, measured at just three-tenths of a percent of existing retail stock, coupled with a near-record low national vacancy rate. This creates a supply-constrained environment where prospective tenants have limited options for high-quality space. This scarcity empowers Kimco to achieve impressive leasing spreads, with Q2 2025 blended pro-rata spreads hitting 15%—the highest in nearly eight years—and new lease spreads reaching 34%. The company's ability to quickly backfill vacant spaces, such as those from recent bankruptcies like JOANN and Party City, often at significantly higher rents, further underscores its competitive advantage. For example, the majority of JOANN and Party City locations are now re-leased or under LOI, many at significantly higher rents, with some JOANN boxes signed with TJX (TJX) in under 10 days. This rapid re-leasing, combined with a focus on internet-resistant service tenants (now over 50% of new lease volume), ensures continued demand and pricing power.

Financial Strength and Growth Trajectory

Kimco's financial performance in the first half of 2025 reflects the successful execution of its strategy. For the second quarter ended June 30, 2025, revenues from rental properties, net, reached $520.93 million, contributing to a total revenue of $525.18 million. For the six months ended June 30, 2025, revenues from rental properties, net, were $1.05 billion, with total revenues of $1.06 billion. This represents a 5.0% year-over-year increase in rental revenues for the quarter and a 5.7% increase for the six-month period, driven by robust leasing activity and portfolio growth.

Net Operating Income (NOI) at share increased by $20.8 million (5.4%) in Q2 2025, while Same Property NOI grew by 3.1% in Q2 and 3.5% for the six months ended June 30, 2025. This growth is a testament to higher minimum rents, stronger net recoveries, and a favorable credit loss trend, which stood at 89 basis points in Q2 2025 and 72 basis points year-to-date. Funds From Operations (FFO) available to common shareholders for Q2 2025 was $297.56 million, or $0.44 per diluted share, marking a 7.3% year-over-year increase. For the first half of 2025, FFO totaled $599.45 million, or $0.88 per diluted share, a 10% increase over the first half of 2024. This FFO growth was supported by a $4.8 million incremental contribution from the structured investment program.

The company maintains a strong balance sheet, ending Q2 2025 with over $2.2 billion in available liquidity, including $228 million in cash. Its consolidated net debt to EBITDA stood at 5.4x, with a look-through leverage ratio of 5.6x, reflecting disciplined financial management. Kimco proactively managed its debt profile, completing a $500 million bond issuance in June 2025 at a 5.3% rate—its lowest issuance spread in many years—to repay existing debt and fund future investments. The company also opportunistically repurchased 3 million shares in April 2025 at an average price of $19.61, recognizing an attractive FFO yield of 9% and a 24% discount to consensus NAV, highlighting its commitment to shareholder value.

Outlook and Risks

Kimco's management has expressed strong confidence in its full-year outlook, raising its 2025 FFO per diluted share range to $1.73-$1.75, representing annual growth of 4.8% to 6.1% over 2024. The full-year same-property NOI growth outlook was also raised to 3% or better. This positive outlook is supported by the "signed, but not yet open" (SNO) pipeline, which represents approximately $66 million of annual base rent, with about 40% expected to commence in the second half of 2025, contributing an additional $7 million in incremental rent. The company anticipates collecting a total of $30 million in ABR from the SNO pipeline in 2025. While overall occupancy dipped slightly in Q2 2025 due to anticipated lease rejections, management expects this to be the trough, with improvement projected in Q3 and Q4 as backfilling efforts materialize. A credit loss assumption of 75 to 100 basis points is maintained as a prudent measure.

Despite this optimistic outlook, Kimco acknowledges ongoing macroeconomic challenges, including elevated inflation, interest rates, and potential tenant bankruptcies. These factors could impact tenant profitability and demand for retail space. While concerns related to tariffs have largely subsided, the company remains vigilant. A persistent disconnect between public and private market valuations also presents a challenge, though Kimco views this as an opportunity for strategic share repurchases. Vulnerabilities also include potential impacts from e-commerce shifts and, for some assets, geographic concentration risks. However, Kimco's strategic focus on necessity-based retail and its proactive approach to re-leasing mitigate many of these risks.

Conclusion

Kimco Realty stands as a compelling investment in the retail REIT sector, distinguished by its strategically curated, grocery-anchored portfolio and a robust operational platform. The company's disciplined capital allocation, exemplified by its accretive acquisitions, opportunistic share repurchases, and proactive debt management, underpins its financial strength. Furthermore, its early adoption and integration of AI in core operations provide a tangible competitive advantage, enhancing efficiency and driving future growth.

With strong property-level fundamentals, record occupancy in key segments, and a substantial pipeline of future rent commencements, Kimco is well-positioned to deliver consistent FFO growth, targeting over 5% for the second consecutive year. The company's ability to transform challenges like tenant bankruptcies into opportunities for portfolio enhancement, coupled with a favorable supply-demand imbalance in the retail real estate market, reinforces its resilient investment thesis. For discerning investors, Kimco offers a blend of stability, growth, and operational excellence, making it a noteworthy consideration for long-term value creation.