Kimco Realty KIM is well-positioned to gain from its portfolio of premium shopping centers, which are predominantly grocery anchored. Its portfolio is located in the top major metropolitan Sunbelt and coastal markets. A diversified tenant base assures stable cash flows. The focus on developing mixed-use assets that serve the last mile bodes well for growth. A solid balance sheet position will support its growth endeavors.

In early January, Kimco announced the acquisition of The Markets at Town Center in Jacksonville, FL, spanning 254,000 square feet, for $108 million. The acquisition strengthens this retail REIT’s footprint in the Jacksonville market, which includes six properties encompassing 1.5 million square feet with a 98.6% occupancy rate as of Dec. 31, 2024.

Shares of this Zacks Rank #2 (Buy) company based in Jericho, NY, have gained 9.4% over the past six months compared with the industry’s growth of 6.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Analysts seem positive about this stock, with its 2024 funds from operations (FFO) being revised northward marginally to $1.64 over the past two months.

Image Source: Zacks Investment Research

Factors That Make Kimco a Solid Pick

Healthy Operating Platform: Kimco has well-located properties in the drivable first-ring suburbs of its top major metropolitan Sunbelt and coastal markets that offer several growth levers like high employment and strong spending power. Particularly, the top major metro markets contribute 82% of the annual base rent.

In addition, the company’s top coastal markets have superior trade area demographics, exceeding the U.S. average by 21% for the median household income. From 2020 to the third quarter of 2024 period, rent per square foot witnessed a CAGR of 3.8%.

Diverse Tenant Base: Kimco enjoys a highly diversified tenant base led by a healthy mix of essential, necessity-based tenants and omni-channel retailers. Popular names include TJX Companies TJX, The Home Depot HD, Ross Stores ROST, Burlington Stores, Inc. and Amazon/Whole Foods Market. Given the strength of its retailers with a developed omnichannel presence, Kimco is likely to witness stable cash flows.

Grocery-Anchored Centers: A major portion of Kimco’s portfolio comprises grocery-anchored centers that offer essential goods and services. In the third quarter of 2024, the company generated 84% of its ABR from grocery-anchored centers. Moreover, Kimco targets to achieve 85% of its ABR from this segment by 2025, which is encouraging.

Focus on Mixed-Use Assets: With mixed-use assets having gained popularity in recent years, Kimco’s focus on investing in and redeveloping such assets clustered in strong economic metropolitan statistical areas that serve the last mile bodes well. Such efforts enable the company to diversify the portfolio cash flow and offer a higher CAGR than retail-only sites.

Balance Sheet Strength: Kimco focuses on maintaining a robust balance sheet position. It exited the third quarter with more than $2.8 billion of immediate liquidity. Its consolidated weighted average debt maturity profile is 8.3 years. The company’s unencumbered properties represent more than 90%. A strong financial position enables the company to borrow at favorable rates.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The TJX Companies, Inc. (TJX) : Free Stock Analysis Report

The Home Depot, Inc. (HD) : Free Stock Analysis Report

Kimco Realty Corporation (KIM) : Free Stock Analysis Report

Ross Stores, Inc. (ROST) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research