Kimco Realty (KIM) is a large-cap shopping center REIT (with an $18 billion portfolio) that's been public since 1992. It was, at one time, a "blue-chip" REIT, but lost that designation in 2008 when some of its non-real estate investments began to perform poorly in the Great Recession and Credit Crunch. It has been disposing of these, and reducing debt leverage, but that caused FFO/AFFO to stagnate, and the company thought it prudent to cut its dividend in 2008 or 2009 (although it's been raising it steadily over the past few years).It takes a while to turn around a big battleship, but that's what KIM has been doing. It has disposed of most of its non-traditional businesses and investments, and is now almost entirely out of Mexico and South America (but has kept its profitable Canadian assets and its very productive asset management business). It has reduced debt leverage, but slowly and - in the opinion of some - not by enough.I have been adding to my KIM holdings recently, as KIM's turnaround is slowly taking hold. They have been selling properties in secondary markets, and putting capital into primary markets with better long-term growth potential. They are slowly getting back into development, on a limited basis, and current projects are expected to generate returns of 250 bps over current cap rates - thus creating shareholder value. They will require approximately 80% pre-leasing before breaking ground. KIM still has excellent relationships with both national and regional tenants, and with institutional investors, which enables it to lease properties efficiently and to generate above-average investment returns via JVs.Strip centers are in a favorable spot in the property cycle, with few new developments being launched and leasing and occupancy rates rising nicely now - propelled by greater demand from small-shop tenants. KIM is likely to grow AFFO by 8% next year (as dilutive capital transactions burn off and they are able to continue to boost occupancy and even rental rates) and by another 8% the following year. Meanwhile, KIM stock still trades below estimated NAV, and the payout ratio is just 77% of next year's estimated AFFO, leaving plenty of room for more dividend growth. The current dividend yield is 3.8%.KIM is a stock that's less exciting than a 6-year old's T-ball game. However, for conservative investors, it merits a look. As KIM's tenants sell everyday necessities, it's not likely to be much affected by e-commerce, and average property quality is improving. The management team is deep and experienced. Milton Cooper, who is still KIM"s Executive Chairman and remains widely-respected in REIT world, just bought 50K shares on August 8 in an open-market transaction.Ralph
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