Kimco targets $71M in future rent growth as leasing and redevelopment pipeline reach record levels

Earnings Call Insights: Kimco Realty Corporation (KIM) Q3 2025

MANAGEMENT VIEW

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Conor Flynn, CEO, reported, "For the third quarter, we delivered funds from operations of $0.44 per diluted share, reflecting another quarter of performance ahead of expectations." He highlighted the raising of the full year FFO outlook and emphasized strong performance in the grocery-anchored portfolio, robust leasing spreads, and rapid re-tenanting of large anchor spaces. Flynn noted, "The re-leasing of those spaces has been a meaningful contributor to the expansion of our pipeline of leases signed but not yet opened up 360 basis points, totaling $71 million of future incremental rent growth. Both of these amounts are all-time high records for Kimco." The CEO also announced the formal creation of the Office of Innovation and Transformation, led by Will Teichman, to drive operational improvement, digital transformation, and AI initiatives.

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Glenn Cohen, CFO, stated, "For the quarter, FFO grew to $300.3 million or $0.44 per diluted share, 2.3% above last year. The improvement was primarily driven by $21 million of higher pro rata NOI led by increases in minimum rent, notwithstanding lost rents from the earlier recapture of spaces mentioned previously." Cohen added the quarter included a one-time benefit of $3.2 million from below-market rents recaptured from two Rite Aid spaces. He highlighted, "We are again raising our full year FFO guidance range to $1.75 to $1.76 per diluted share, up from $1.73 to $1.75 previously. This represents FFO per share growth of over 6% compared to 2024."

OUTLOOK

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Management raised full year FFO guidance to a range of $1.75 to $1.76 per diluted share and reaffirmed a same-site NOI growth outlook of 3% or better. The credit loss assumption was revised to a more favorable range of 75 to 85 basis points, down from 75 to 100 basis points. Cohen explained, "Our signed not open pipeline has reached a record level of 360 basis points, totaling $71 million. We anticipate that approximately 20% of these leases will commence in the fourth quarter, contributing $2 million to $3 million in incremental rent."

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The company signaled ongoing leasing momentum into 2026, with 60% of the current SNO pipeline projected to commence next year, creating a favorable tailwind for FFO and NOI growth.

FINANCIAL RESULTS

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FFO for the quarter reached $300.3 million or $0.44 per diluted share. Pro rata NOI increased by $21 million, primarily driven by higher minimum rent and other rental property income. Interest expense rose by $8 million due to refinancing activity. Liquidity remained robust at over $2.1 billion, with consolidated net debt to EBITDA of 5.3x. Credit loss tracked at 75 basis points for the quarter. The quarter included a modest one-time benefit of $3.2 million from below-market rent recapture.

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The Board approved a 4% increase in the quarterly common stock cash dividend to $0.26 per share.

Q&A

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Caroline, Morgan Stanley: Asked about transaction environment and deal opportunities. Ross Cooper, President & Chief Investment Officer, responded that the environment is "extremely competitive" with "a lot of different capital sources, particularly on the private side... chasing these deals." He emphasized Kimco's strategic advantage in deal flow and recycling capital. Flynn added, "Our market intelligence has never been higher... our funnel has been opened up even further."

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Michael Goldsmith, UBS: Inquired about the SNO pipeline and early look at 2026. Cohen answered, "About 60% of the current SNO pipeline should start to produce results during 2026... that's a key to the NOI growth." He noted interest expense will remain a headwind in 2026 due to $825 million of debt maturing next year.

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Alexander Goldfarb, Piper Sandler: Asked about the rarity and future of retailer investments like Family Dollar. Cooper explained, "It's hard to predict when these may come about but we're staying front and center with all of these retailers and know that we're going to be absolutely one of their first calls if there's a capital need."

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Samir Khanal, Bank of America: Sought clarification on one-time benefits. Cohen replied, "In total for the year, they've amounted to about $0.03... they are one timers, they are part of the fabric of the business."

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Floris Van Dijkum, Ladenburg Thalmann: Questioned capital recycling and asset sales. Cooper detailed an ongoing program focusing on ground leases and non-income-producing assets, with plans to increase volume in 2026. Flynn added, "We do see this as a recurring program... we're backfilling that ground lease pipeline."

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Michael Griffin, Evercore ISI: Asked about retailer sentiment for 2026-2027. Management reported continued strong retailer confidence and ongoing demand for expansion.

SENTIMENT ANALYSIS

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Analysts posed probing but constructive questions, focusing on capital recycling, SNO pipeline growth, and risk management, with a neutral to slightly positive tone.

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Management maintained a confident tone throughout prepared remarks and Q&A, using phrases such as "we are confident," "the good news is," and "we feel good about heading into the year." Tone remained consistent with prior quarters, expressing optimism about leasing, redevelopment, and innovation initiatives.

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Compared to the previous quarter, the sentiment was similarly positive, with slightly more emphasis on structural innovation and future rent growth.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for 2025 was raised again this quarter, with FFO per share growth now projected at over 6%, compared to 4.8% to 6.1% in Q2. Same-site NOI growth outlook remained at 3% or better. The signed not open pipeline increased to a record $71 million from $66 million in Q2, and the SNO pipeline gap widened by 50 basis points.

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Management tone remained highly confident, while analysts maintained a neutral-to-positive stance, pressing for details on transaction markets, capital allocation, and rent commencements.

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Strategic focus expanded with the formal creation of the Office of Innovation and Transformation, and redevelopment pipeline growth accelerated.

RISKS AND CONCERNS

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Management acknowledged interest expense as a headwind for 2026 due to $825 million in maturing debt. Cohen assured, "We're going to look at all of our refinancing options that we have available to us as we go through the year."

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Analysts questioned the predictability of capital flows in the structured investment program and the approach to funding an expanded redevelopment pipeline. Management emphasized proactive planning and flexibility in capital allocation and funding sources.

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No significant near-term credit loss concerns were raised, and management highlighted ongoing stability in retailer demand and limited supply.

FINAL TAKEAWAY

Kimco delivered another quarter of strong performance, raising its full year FFO guidance and highlighting record leasing momentum, robust signed-not-open pipeline, and accelerating redevelopment activity. With strategic capital recycling, innovation initiatives, and disciplined portfolio management, the company is positioned for sustained growth, supported by stable retailer demand and a resilient grocery-anchored portfolio.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/kim/earnings/transcripts]

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