Kimco Realty (KIM) Q2 FY26 earnings call: guidance and Q&A

Inquired about the expected level and mix of transaction activity in the back half of the year, given the significant progress in Q2.

Management expects continued capital recycling, with disposals of low-growth assets (like Costco leases and multifamily) and reinvestment into higher-growth grocery-anchored centers. The Whitmer (second residential tower) is anticipated to be monetized this year. The structured investment program will continue to source acquisitions.

“the disposals have been front-weighted in the first half of this year, but we do anticipate that the activity on the acquisition side will continue to grow here in the back half, and we have a couple of things that we're excited about that we're working through.”

asked by Michael Goldsmith · answered by Ross Cooper

Asked for clarification on why implied FFO might be flat in H2 despite accelerating same-store NOI and expected acquisition activity, considering a one-time cost.

Glenn Cohen explained that the raised guidance reflects strong H1 performance. The flat implied FFO is due to a known $0.0067 (2/3 of a penny) charge in Q3 and the timing of transactions, where disposals are ahead of acquisitions. Cash on hand earns about 4%, mitigating some impact.

“Again, the first half of the year, if you look at where we were, we had a first deal with lapping the bankruptcy activity that happened last year with Party cities, JOANN, Big Lots and others. So to your point, we are expecting continued acceleration of growth in the back half of the year.”

asked by Juan Sanabria · answered by Glenn Cohen

Asked if all residential/mixed-use developments are prioritized for sale or if some would be held long-term.

Ross Cooper stated that Kimco retains optionality for each project, making determinations based on market conditions and exit strategies. They view it as a form of currency to monetize when aggressive cap rates are available, but can hold if higher yields or long-term ownership makes sense. The focus is on enhancing the retail component.

“we look at each and every of these projects through a very unique decision tree and make the determination as to how we activate it, what the exit strategy is, what the timing of that is. And we really do retain the right in each and every one of these instances to really control our exit, control our destiny.”

asked by Michael Mueller · answered by Ross Cooper

Questioned the actual AFFO accretion from the 350 basis point IRR spread on capital recycling, considering the CapEx-light nature of ground leases versus acquired shopping centers.

Ross Cooper clarified that the 300-350 basis point IRR spread factors in all costs associated with operating multi-tenant shopping centers. While year 1 AFFO might be impacted, the long-term growth trajectory and IRR (high 8s, low 9s for acquisitions vs. sub-6% for dispositions) make it a good trade for growth.

“you're seeing that 300 to 350 basis point spread on the IRR inclusive of costs associated with the multi-tenant shopping center. So it's definitely a good trade for us from the growth trajectory even factoring in the CapEx-light nature of the ground leases.”

asked by Andrew Reale · answered by Ross Cooper

Asked about the impact of the new operating model on retailer conversations, the size of tech investment (data, AI, collab tools), and expected long-term margin benefit.

Dave Jamieson noted improved retailer conversations due to a unified message and national account team, accelerating deal execution. Will Teichman stated that the office of innovation is coordinating efforts, with AI utilization above 80% among associates and AI-powered workflows across functions. Year-to-date, AI initiatives yielded a 5x return on investment in expense savings. Conor Flynn added that the model enhances negotiating leverage and will drive FFO growth, especially from renewals.

“year-to-date, we've yielded approximately 5x return on the amount of money that we've spent and invested in our AI initiatives. So 5x in terms of expense savings offsetting the expenses that we've invested into these efforts.”

asked by Greg McGinniss · answered by David Jamieson

Inquired if there have been any recent shifts in cap rates or if they have remained steady.

Ross Cooper stated that cap rates remain very competitive, with increased compression and tightening between different formats (grocery, power, lifestyle, unanchored strip). There's also a narrowing spread between primary and secondary/tertiary markets, with aggressive cap rates seen across all geographies.

“you're seeing a bit of a convergence of cap rates for all formats. And I would say that, that also holds true geographically whereas several years ago, I think you saw a pretty significant premium or spread between some of the gateway sort of primary markets versus secondary and even tertiary, you're seeing that spread really narrowing and more aggressive cap rates in some of the secondary markets that historically may not have been chased by a lot of institutions.”

asked by Paulina Rojas Schmidt · answered by Ross Cooper