These forecasts are down from our prior estimates of

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These forecasts are down from our prior estimates of $1.20 billion and $1.25 billion, respectively. FINANCIAL STRENGTH & DIVIDEND Our financial strength rating for KIM is Medium, the midpoint on our five-point scale; the company’s financial strength metrics are in line with peers. At the end of the quarter, KIM had $5.1 billion in debt, unchanged from 1Q17; $218 million in cash, up from $167 million; and $2.2 billion available on its revolving credit facility. KIM’s total debt/cap ratio was 48% at the end of 1Q18, below the peer median of 52%. The net debt/adjusted EBITDA ratio was 5.7, below the peer median of 6.6. EBITDA covered interest expense by a factor of 4.0 during the first quarter, above the peer median of 3.7. Management is working to raise the company’s S&P credit rating from BBB+ to A. Moody’s rates KIM’s debt at Baa1. Kimco pays a quarterly dividend of $0.28 per share, or $1.12 annually, for a yield of about 7.8%. The next payment will be made on July 16 to shareholders of record as of July 3. Our dividend estimates are $1.12 for 2018 and $1.16 for 2019. We think the dividend is secure given a forecast FFO payout ratio in the high 60% range. However, the high yield could be a negative for the stock if the Fed raises interest rates too quickly. Over the past five years, KIM has raised its dividend at an annual rate of 5.9%. The company repurchased 1.6 million shares of stock for $24 million in 1Q18 under its $300 million repurchase authorization. MANAGEMENT & RISKS Conor Flynn became CEO in January 2016 after serving as the company’s president and chief information officer since 2014. In February 2017, he noted that Kimco focused on the “sweet spot” of retail, i.e., stores offering name-brand clothing at discount prices, such as TJ Maxx and Nordstrom Rack. Kimco’s top tenants are TJX Companies (4% of annualized base rent), followed by Home Depot (3%), Ahold Delhaize (a Dutch food retailer), Bed Bath & Beyond, Albertson’s, Ross Stores, Wal-Mart, Kohl’s and PetSmart (2% each). The company’s diversification is a strength, as tenant bankruptcy is a risk in a weak economy. This risk was highlighted by the March 2016 bankruptcy of Sports Authority, which accounted for 1% of Kimco’s rent and square footage, and the September 2017 bankruptcy of Toys “R” Us, which also accounted for 1% of rent and square footage. Leases will expire on 7% of the company’s square footage in 2018, including month-to-month leases, and on 12% of square footage in 2019. The average in-place minimum rent for tenants with leases expiring in 2018 is $17.22 per square foot.
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M ARKET D IGEST - 11 - COMPANY DESCRIPTION Kimco is a real estate investment trust (REIT), specializing in the acquisition, development and management of open- air shopping centers. As of March 31, Kimco owned equity interests in 475 shopping center properties in the United States. The shares are included in the S&P 500.
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  • Spring '12
  • DirkJenter
  • Finance, ........., BHF, Market Digest

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