Kimco Withdraws Guidance, Boosts Liquidity on Coronavirus Scare

Kimco Realty KIM has withdrawn its 2020 guidance that was previously provided on Jan 30. The move comes in light of the coronavirus pandemic that has wreaked havoc across the globe. The company has also informed its stakeholders about the actions being taken to improve its liquidity and strengthen the balance sheet to sail through the challenging times.

Kimco’s withdrawal of guidance follows similar actions by other retail REITs, including The Macerich Company MAC and SITE Centers Corp SITC, Regency Centers Corporation REG. This owner and operator of open-air, grocery-anchored shopping centers and mixed-use assets had earlier projected Nareit FFO per share in the $1.46-$1.50 range and same-property net operating income growth of 1.5-2%.

As part of its efforts to bolster its financial flexibility, the company has obtained a new $375-million unsecured term loan facility. The proceeds from the term loan will help the company enjoy $800 million of cash on its balance sheet. Apart from this, Kimco has more than $1.3 billion available under its revolving credit facility and more than 300 unencumbered properties.

With sufficient availability on its revolving credit facility, a solid cash position as well as a large group of unencumbered properties, the company seems well poised to meet its $171.9 million in pro-rata debt obligations maturing during 2020. Moreover, the company has one of the longest weighted-average debt maturity profiles in the industry at 10.6 years, owing to its decent balance-sheet management so far.

Notably, the escalating number of coronavirus cases has forced several retailers to close their stores, in order to contain the spread of the virus. Some of the retailers have also reduced store hours, while many others are keeping their e-retail operations running as consumers are now increasingly opting for online purchases. As a result, retail REITs, which have already been battling store closure and bankruptcy issues, are feeling the brunt because consumers are avoiding gathering in large public spaces.

Nevertheless, in these uncertain times, having a grocery component has been saving the grace of retail REITs. Therefore, with a high-quality, mixed-use portfolio concentrated in the top U.S. markets and with 78% of its annual base rent coming from grocery-anchored centers, along with solid liquidity with availability in excess of $2 billion, Kimco remains well poised to navigate through the current blues.

Shares of Kimco, currently carrying a Zacks Rank #3 (Hold), have depreciated 62.6% so far this year, while its industry has declined 42.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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