The Kimco Difference - Part I
Experience, Relationships & Size
We have been in the business of developing, acquiring, managing and creating value in shopping centers for over 50 years. We have ownership interests in 950 shopping centers across North America, with a meaningful presence in the U.S., the five major cities in Canada, and over 22 markets throughout Mexico. With that head start, we possess an abundance of strong attributes that gives us an edge.
- As the largest owner of neighborhood and community shopping centers with more than 13,000 leases, the size, diversity and breadth of our portfolio provides sustainable, stable, and recurring long-term income;
- A tenant base consisting primarily of necessity-based shopping – whether the consumer shops at the grocer or the drug store, gets a haircut or picks up a pizza, our neighborhood and community shopping centers cater to retail formats that attract the value-conscious shopper. We have limited exposure to any one tenant, and our major tenant roster is weighted heavily towards investment-grade credits;
- A mature portfolio with older leases and lower average rents provides upside potential in strong market conditions and a cushion against declining rents in weak ones;
- Experience and expertise in leasing, property management and redevelopment enable us to create additional value from our existing portfolio;
- Long-standing retailer relationships provide us with another competitive edge, particularly in the current environment;
- We have ample liquidity, with access to reasonably-priced capital, and well-staggered debt maturities.
“We have been in the business of developing, acquiring, managing and
creating value in shopping centers for over 50 years.”
Portfolio Quality
One of our key differences - and one we feel is a clear advantage - is that the rents in our portfolio are generally lower than the market averages and lower than those of many other shopping center companies. This is one of the positive by-products of a mature, stable portfolio with leases that were signed over a period of many years. Low rents benefit Kimco in two ways: they contribute upside opportunity when the leases expire where the market rents are higher; conversely, they provide a substantial cushion when rents are under pressure – a scenario we are witnessing today in certain markets across the country. Two quantitative ways to evaluate the "value" or "protection" from below-market rents are: (1) “same site net operating income,” which compares the rate of change of that income for assets that have been in operation for both periods being measured; and (2) leasing spreads, the difference between the prior rent on a space and the new rent. Again, we have historically reported results above the overall shopping center sector averages, underscoring the underlying stability of the portfolio despite the turbulence of the marketplace. Finally, capital investment in the tenant space through tenant improvement allowances requires a higher rent in order to offset these expenditures. We prefer to limit our investment in the tenant´s business and provide lower tenant allowances – resulting in a lower rent – a good thing! Low rents, when coupled with strong demographics, in-fill locations, and strong tenancy, are the key ingredients in the profitable ownership of quality long-term retail assets.
