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KIMCO REALTY CORP 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Kimco Realty Corporation (HC)

Filing date:

02/21/2025

TLDR:

Kimco Realty Corp’s 2024 10-K filing shows a decrease in net income but an increase in FFO. The company faces economic and cybersecurity risks but has opportunities in mixed-use developments and strategic acquisitions.

ELI5:

Kimco, a shopping center company, made less money this year but is still doing okay. They have some challenges like the economy and hackers, but also chances to grow by building new types of properties and buying other companies.

Accession #:

0000950170-25-024723

Published on

Analyst Summary

  • Net income decreased from $629.3 million in 2023 to $375.7 million in 2024.
  • FFO per diluted share increased from $1.57 in 2023 to $1.65 in 2024.
  • Same-property NOI growth was 3.5%.
  • Occupancy rate of 96.4% in the consolidated operating portfolio.
  • Immediate liquidity of over $2.7 billion.
  • Gross Profit Margin: 99.17%
  • Operating Profit Margin: 30.88%
  • Net Profit Margin: 20.17%
  • Return on Assets (ROA): 2.07%
  • Return on Equity (ROE): 3.80%
  • Basic EPS: $0.558
  • Diluted EPS: $0.559
  • Current Ratio: 2.15
  • Quick Ratio: 0.31
  • Cash Ratio: 0.07
  • Debt-to-Equity Ratio: 0.78
  • Debt-to-Assets Ratio: 0.42
  • Interest Coverage Ratio: 2.04
  • Asset Turnover: 0.10
  • Price-to-Earnings Ratio (P/E): 38.57
  • Price-to-Book Ratio (P/B): 0.63
  • Price-to-Sales Ratio (P/S): 4.07
  • Enterprise Value to EBITDA (EV/EBITDA): 10.79
  • Revenue Growth: 14.22%
  • Net Income Growth: -36.99%
  • EPS Growth: -45.29%
  • FFO per common share – basic: $1.66
  • Same Property NOI: 3.54%

Opportunities and Risks

  • Economic Conditions: Elevated inflation and interest rates could negatively impact tenants and consumer spending.
  • Competition: Intense competition for tenants and acquisition opportunities.
  • Tenant Financial Health: The financial condition of tenants, including anchor tenants, could weaken, leading to lease terminations and reduced rental income.
  • E-commerce: The growth of e-commerce presents challenges for many tenants.
  • Cybersecurity: Cybersecurity attacks and security incidents could disrupt operations and compromise sensitive information.
  • Climate Change: Natural disasters, severe weather conditions, and the effects of climate change could damage properties and increase operating costs.
  • REIT Status: Failure to maintain REIT status could have significant adverse tax consequences.
  • Mixed-Use Developments: Redevelopment projects with residential and mixed-use components offer potential for value creation.
  • Strategic Acquisitions: Accretive acquisitions, such as the RPT Merger, can expand the company’s portfolio and market presence.
  • Entitlement Program: Unlocking the highest and best use of real estate through its entitlement program and redevelopment projects through a disciplined capital allocation strategy.
  • Strong Balance Sheet: The company’s strong balance sheet and liquidity position provide flexibility for future investments and growth.
  • Corporate Responsibility Leadership: Over 60 years of delivering value to investors, tenants, employees, and communities.

Potential Implications

Company Performance

  • The RPT Merger presents both opportunities and integration risks.
  • Company demonstrates revenue growth but needs to address declining profitability and improve cash management.

Stock Price

  • Investors should monitor the company’s progress in integrating RPT Realty, managing debt levels, and mitigating cybersecurity and climate change risks.
  • A P/E of 38.57 suggests that the stock may be overvalued relative to its earnings.
  • A P/B ratio of 0.63 suggests that the market values the company at less than its book value.

Kimco Realty Corp (KIM) 2024 10-K Filing Report

Executive Summary

This report analyzes Kimco Realty Corp’s 2024 10-K filing. Key findings include a decrease in net income compared to 2023, driven by factors such as the absence of a special dividend from Albertsons and increased merger-related costs, offset partially by the RPT Realty merger. While FFO increased, same-property NOI growth was modest. The company maintains a strong balance sheet and liquidity position. Risks include economic conditions, competition, and cybersecurity threats. Opportunities exist in mixed-use developments and strategic acquisitions. A ‘Hold’ rating is suggested, pending further assessment of the integration of RPT Realty and the impact of economic headwinds.

Company Overview

Kimco Realty Corporation is a leading owner and operator of open-air, grocery-anchored shopping centers and mixed-use properties in the United States. The company focuses on high-quality locations in major metropolitan markets, emphasizing necessity-based goods and services. Recent significant events include the acquisition of RPT Realty and strategic capital allocation initiatives.

Detailed Analysis

Financial Statement Analysis

Income Statement

Net income available to common shareholders decreased from $629.3 million in 2023 to $375.7 million in 2024. This decline is primarily attributed to the absence of a special dividend from Albertsons ($194.1 million in 2023) and increased merger-related costs ($25.2 million in 2024 vs. $4.8 million in 2023). Revenues from rental properties increased, driven by the RPT Merger and leasing activity.

Key Ratios:

  • FFO per diluted share: $1.65 (2024) vs. $1.57 (2023)
  • Same-property NOI growth: 3.5%

Balance Sheet

Total assets increased, reflecting the RPT Merger. The company maintains a strong liquidity position with over $2.7 billion in immediate liquidity. Debt levels remain substantial, but the weighted average debt maturity profile is long (8.0 years).

Key Observations:

  • High occupancy rate of 96.4% in the consolidated operating portfolio.
  • Significant unencumbered properties (approximately 91% of the portfolio).

Cash Flow Statement

Net cash flow from operating activities decreased slightly, primarily due to the absence of the Albertsons special dividend. Investing activities reflect acquisitions and redevelopment projects. Financing activities show debt issuances and repayments, as well as dividend payments.

Management’s Discussion and Analysis (MD&A)

Management highlights the company’s strong core portfolio, recent acquisitions, and focus on high-quality locations. They acknowledge the challenges posed by the current economic environment, including inflation and elevated interest rates. The narrative emphasizes a strategy of attracting local area customers with a diverse tenant base and focusing on first-ring suburbs in major metropolitan areas.

Red Flags & Uncommon Metrics

  • Merger Charges: Significant merger-related costs associated with the RPT Merger.
  • Ground Leased Properties: A substantial number of properties are subject to ground leases, which could pose risks upon lease expiration.
  • Cybersecurity Risks: The company acknowledges past cybersecurity incidents and the ongoing threat landscape.
  • Climate Change Risks: The company identifies physical and transition risks associated with climate change.

Risk & Opportunity Assessment

Risks

  • Economic Conditions: Elevated inflation and interest rates could negatively impact tenants and consumer spending.
  • Competition: Intense competition for tenants and acquisition opportunities.
  • Tenant Financial Health: The financial condition of tenants, including anchor tenants, could weaken, leading to lease terminations and reduced rental income.
  • E-commerce: The growth of e-commerce presents challenges for many tenants.
  • Cybersecurity: Cybersecurity attacks and security incidents could disrupt operations and compromise sensitive information.
  • Climate Change: Natural disasters, severe weather conditions, and the effects of climate change could damage properties and increase operating costs.
  • REIT Status: Failure to maintain REIT status could have significant adverse tax consequences.

Opportunities

  • Mixed-Use Developments: Redevelopment projects with residential and mixed-use components offer potential for value creation.
  • Strategic Acquisitions: Accretive acquisitions, such as the RPT Merger, can expand the company’s portfolio and market presence.
  • Entitlement Program: Unlocking the highest and best use of real estate through its entitlement program and redevelopment projects through a disciplined capital allocation strategy.
  • Strong Balance Sheet: The company’s strong balance sheet and liquidity position provide flexibility for future investments and growth.
  • Corporate Responsibility Leadership: Over 60 years of delivering value to investors, tenants, employees, and communities.

Conclusion & Actionable Insights

Kimco Realty faces challenges in the current economic environment, but its strong portfolio and strategic initiatives position it for long-term growth. The RPT Merger presents both opportunities and integration risks. The company’s commitment to corporate responsibility and sustainability is a positive factor. Given the current economic uncertainty and integration risks, a ‘Hold’ rating is recommended. Investors should monitor the company’s progress in integrating RPT Realty, managing debt levels, and mitigating cybersecurity and climate change risks.

Kimco Realty Corporation (KIM) Financial Analysis – 2024

1. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:
    Calculation: Total Revenue (2,037,014) – Rent Expense (16,837) / Total Revenue (2,037,014) = 99.17%
    Trend: 99.17% – (Total Revenue (1,783,400) – Rent Expense (15,997) / Total Revenue (1,783,400) = 99.10%) = 0.07%
    Industry: REITs generally have high gross margins due to the nature of rental income. Industry averages typically range from 60% to 90%, but can be higher for companies with minimal operating expenses beyond property-level costs. Kimco’s gross profit margin is very high, reflecting its efficient operations.
  • Operating Profit Margin:
    Calculation: Operating Income (629,088) / Total Revenue (2,037,014) = 30.88%
    Trend: 30.88% – (Operating Income (638,777) / Total Revenue (1,783,400) = 35.82%) = -4.94%
    Industry: Operating margins for REITs typically range from 20% to 40%. Kimco’s operating margin is within this range, but the decrease indicates rising operating expenses relative to revenue.
  • Net Profit Margin:
    Calculation: Net Income Attributable to the Company (410,785) / Total Revenue (2,037,014) = 20.17%
    Trend: 20.17% – (Net Income Attributable to the Company (654,273) / Total Revenue (1,783,400) = 36.69%) = -16.52%
    Industry: Net profit margins for REITs can vary widely, but generally fall between 15% and 30%. Kimco’s net profit margin is lower than the previous year, indicating a decrease in overall profitability.
  • Return on Assets (ROA):
    Calculation: Net Income (419,439) / Total Assets (20,309,896) = 2.07%
    Trend: 2.07% – (Net Income (665,949) / Total Assets (18,274,022) = 3.64%) = -1.57%
    Industry: ROA for REITs is typically lower than other industries, often ranging from 2% to 5%. Kimco’s ROA is at the lower end of this range and has decreased, suggesting less efficient asset utilization.
  • Return on Equity (ROE):
    Calculation: Net Income Attributable to the Company (410,785) / Total Equity (10,797,912) = 3.80%
    Trend: 3.80% – (Net Income Attributable to the Company (654,273) / Total Equity (9,653,458) = 6.78%) = -2.98%
    Industry: ROE for REITs typically ranges from 5% to 15%. Kimco’s ROE is below this range and has decreased, indicating a less effective use of equity to generate profits.
  • Earnings Per Share (EPS) – Basic and Diluted:
    Calculation: Basic EPS = Net Income Available to Common Shareholders (375,718) / Weighted Average Shares Outstanding (671,561) = $0.558
    Diluted EPS = Net Income Available to Common Shareholders (375,718) / Weighted Average Shares Outstanding (672,136) = $0.559
    Trend: Basic EPS: $0.558 – $1.02 = -45.29%
    Diluted EPS: $0.559 – $1.02 = -45.21%
    Industry: EPS varies widely among REITs. The decrease in EPS reflects the decline in net income available to common shareholders.

Liquidity

  • Current Ratio:
    Calculation: Total Assets (20,309,896) / Total Liabilities (9,464,107) = 2.15
    Trend: 2.15 – (Total Assets (18,274,022) / Total Liabilities (8,548,287) = 2.14) = 0.01
    Industry: A current ratio of 1.0 or greater is generally considered healthy. Kimco’s current ratio indicates good liquidity.
  • Quick Ratio (Acid-Test Ratio):
    Calculation: (Total Assets (20,309,896) – Real Estate (16,810,333) – Other assets (578,569) ) / Total Liabilities (9,464,107) = 0.31
    Trend: 0.31 – ((Total Assets (18,274,022) – Real Estate (15,094,925) – Other assets (241,948) ) / Total Liabilities (8,548,287) = 0.34) = -0.03
    Industry: A quick ratio of 0.31 is low, suggesting that the company may have difficulty meeting its short-term obligations without relying on less liquid assets.
  • Cash Ratio:
    Calculation: Cash, Cash Equivalents and Restricted Cash (689,731) / Total Liabilities (9,464,107) = 0.07
    Trend: 0.07 – (Cash, Cash Equivalents and Restricted Cash (783,757) / Total Liabilities (8,548,287) = 0.09) = -0.02
    Industry: A cash ratio of 0.07 is very low, indicating that the company has limited cash to cover its immediate liabilities.

Solvency/Leverage

  • Debt-to-Equity Ratio:
    Calculation: (Notes Payable (7,964,738) + Mortgages Payable (496,438)) / Total Equity (10,797,912) = 0.78
    Trend: 0.78 – ((Notes Payable (7,262,851) + Mortgages Payable (353,945)) / Total Equity (9,653,458) = 0.79) = -0.01
    Industry: A debt-to-equity ratio of 0.78 is moderate for a REIT.
  • Debt-to-Assets Ratio:
    Calculation: (Notes Payable (7,964,738) + Mortgages Payable (496,438)) / Total Assets (20,309,896) = 0.42
    Trend: 0.42 – ((Notes Payable (7,262,851) + Mortgages Payable (353,945)) / Total Assets (18,274,022) = 0.42) = 0
    Industry: A debt-to-assets ratio of 0.42 indicates that 42% of Kimco’s assets are financed by debt.
  • Interest Coverage Ratio (Times Interest Earned):
    Calculation: Operating Income (629,088) / Interest Expense (307,806) = 2.04
    Trend: 2.04 – (Operating Income (638,777) / Interest Expense (250,201) = 2.55) = -0.51
    Industry: An interest coverage ratio of 2.04 indicates that Kimco’s operating income is 2.04 times its interest expense.

Activity/Efficiency

  • Asset Turnover:
    Calculation: Total Revenue (2,037,014) / Total Assets (20,309,896) = 0.10
    Trend: 0.10 – (Total Revenue (1,783,400) / Total Assets (18,274,022) = 0.10) = 0
    Industry: Asset turnover for REITs is typically low, often below 0.2, due to the capital-intensive nature of real estate. Kimco’s asset turnover is consistent with this industry characteristic.

Valuation

  • Price-to-Earnings Ratio (P/E):
    Calculation: Stock Price (21.52) / EPS (0.558) = 38.57
    Trend: N/A
    Industry: The P/E ratio for REITs can be volatile and is often higher than other sectors. A P/E of 38.57 suggests that the stock may be overvalued relative to its earnings.
  • Price-to-Book Ratio (P/B):
    Calculation: Market Cap (679,493,522 * 0.01 + 11,033,485 + ( 398,792) + 11,038) / Total Equity (10,797,912) = 0.63
    Trend: N/A
    Industry: A P/B ratio of 0.63 suggests that the market values the company at less than its book value.
  • Price-to-Sales Ratio (P/S):
    Calculation: Market Cap (679,493,522 * 0.01 + 11,033,485 + ( 398,792) + 11,038) / Total Revenue (2,037,014) = 4.07
    Trend: N/A
    Industry: The P/S ratio varies depending on the REIT’s strategy and portfolio.
  • Enterprise Value to EBITDA (EV/EBITDA):
    Calculation: EBITDA = Net Income (419,439) + Interest Expense (307,806) + Provision for Income Taxes (25,417) + Depreciation and Amortization (603,685) = 1,356,347
    Market Cap = 679,493,522 * 21.52 = 14,622,933,084
    EV = Market Cap + Total Debt – Cash = 14,622,933,084 + (7,964,738 + 496,438) – 689,731 = 14,630,606,539
    EV/EBITDA = 14,630,606,539 / 1,356,347 = 10.79
    Trend: N/A
    Industry: An EV/EBITDA of 10.79 is within a reasonable range for REITs.

Growth Rates

  • Revenue Growth:
    Calculation: (2,037,014 – 1,783,400) / 1,783,400 = 14.22%
    Trend: N/A
    Industry: Revenue growth of 14.22% is strong, indicating successful expansion or increased rental income.
  • Net Income Growth:
    Calculation: (419,439 – 665,949) / 665,949 = -36.99%
    Trend: N/A
    Industry: Net income growth of -36.99% is a significant decline, indicating challenges in maintaining profitability.
  • EPS Growth:
    Calculation: (0.558 – 1.02) / 1.02 = -45.29%
    Trend: N/A
    Industry: EPS growth of -45.29% is a substantial decrease, reflecting the decline in net income available to common shareholders.

Other Relevant Metrics

  • FFO per common share – basic:
    Calculation: 2024: $1.66, 2023: $1.57
    Trend: (1.66 – 1.57) / 1.57 = 5.73%
    Industry: FFO per share is a key metric for REITs. The increase indicates improved operational performance.
  • Same Property NOI:
    Calculation: (1,526,913 – 1,474,712) / 1,474,712 = 3.54%
    Trend: N/A
    Industry: Same-property NOI growth is a key indicator of a REIT’s organic growth. A positive growth rate indicates improved performance of existing properties.

2. Commentary

Kimco Realty Corporation’s financial performance in 2024 presents a mixed picture. While revenue experienced strong growth, profitability metrics such as net profit margin, ROA, and ROE declined significantly, indicating rising expenses and less efficient utilization of assets. The company maintains a healthy liquidity position, but its cash ratio is low. FFO per share increased, suggesting improved operational performance, while same-property NOI also showed positive growth. Overall, Kimco demonstrates revenue growth but needs to address declining profitability and improve cash management.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️