Nobody Does It Better Than Kimco, Baby You're The Best

Kimco Realty is the owner and operator of the largest publicly traded portfolio of neighborhood and community shopping centers in North America. The company was founded in 1958 and listed shares in 1991. In 2006, Kimco was added to the S&P 500 Index.

Summary

  • "Physical retail has a large role to play in this effort to bring the best shopping experience for the customer." CEO of Kimco Realty.
  • "Kimco is well positioned to deliver growth into the future." CEO of Kimco Realty.
  • You don’t need to be a Russian spy to understand that Kimco is a BLUE-CHIP REIT on SALE.

Around 75 days ago, I decided to upgrade shares in the shopping center REIT, Kimco Realty (KIM), from a BUY to a STRONG BUY. Since that time, here’s what happened:

Were you expecting to see shares bounce back overnight?

Of course not. But remember that I have been riding the Kimco train for quite some time. My first article appeared on Seeking Alpha over five years ago, and in that article I quipped,

“…in investing there is a unique feeling when you discover a REIT that makes me wonder, "How'd you learn to do the things you do?"

Here’s how KIM shares have performed since that very first article:

A picture is worth a thousand words and that chart tells it all – shares in Kimco have been devastated by the “retail apocalypse” that has unleashed a wave of fear among retail REIT Investors. Just take a look at some of the grossly exaggerated media headlines…

It’s truly astonishing to see the continued media pressure in the shopping center sector and while I do recognize the fact that many retailers are experiencing pressure, the death of the shopping center sector is far from extinct. Here’s the reality…

The truth is that many retailers are growing their store count…

While some shopping center landlords may be experiencing trouble, KIM’s 2017 store closures have had a limited impact, as evidenced below:

On the recent earnings call (Q2-17), Kimco’s CEO, Conor Flynn, explains:

“Omni-channel is a win-win for the retail sector. For the consumer, it provides convenience, lower prices and optionality. For the retailer, it provides opportunity to reach more customers, generate add-on sales upon pick up, reduce shipping costs and limit the number of returns.
Physical retail has a large role to play in this effort to bring the best shopping experience for the customer, especially as retailers continue to explore different ways to overcome the last-mile challenge. And let's not forget that notwithstanding the changes and challenges that confront retail, off-price, grocery, home improvement, fitness, beauty and other service retailers continue to thrive in this environment…
…while we are excited and confident about our future, we are not naïve about the changes in the retail landscape. We believe that physical store is critical to retailing success. But we also know that formats will change and that will require a significant effort to innovate and redevelop assets to meet demands of the future shopper. Kimco is up to the task. Having the right real estate, the right team and a strong balance sheet is why we believe Kimco is well positioned to deliver growth into the future.”

In that very first Kimco article (referenced above) I explained:

"The Spy Who Loved Me" was perhaps one of Roger Moore's best James Bond films. In this tenth film of the series, directed by Lewis Gilbert, secret agents James Bond and Anya Amasova foil an attempt by the reclusive Stromberg to destroy the world.
What began as a rivalry between Bond and Amasova later grew into a love affair, and that affection was best illustrated in the theme song performed by Carly Simon, "Nobody Does It Better."

Five years have gone by, and I still stand behind my conviction that Kimco Realty is the highest-quality shopping center REIT and there is simply “nobody that does it better, baby you’re the best!”

The Case For Kimco

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