Trading Kimco Following Pullback

Kimco Realty Corp (NYSE: KIM) has largely repositioned its portfolio. While Kimco’s shares have been under pressure since early August due to expectations of interest rate hikes, the company’s FFO (funds from operations) growth could accelerate in 2017, Argus’s John Eade said in a report.

Eade upgraded the rating on the company from Hold to Buy, while maintaining the price target at $30.

Transforming The Company

Kimco has repositioned its portfolio through asset sales. Having sold five of its properties in Canada in Q3, the company has only one retail property remaining in the country. “We have a favorable view of Kimco’s transformation into a pure-play U.S. retail REIT as it exits Canada and all joint ventures,” Eade commented.

The analyst expects the company’s focus on redeveloping high-quality shopping centers to support dividend hikes and growth in same-property net operating income. He also expects FFO growth to accelerate to 7 percent in 2017, following three years of 4–5 percent growth.

Upside To Shares

Following the recent 19 percent decline, Kimco’s shares already seem to price in the impact of interest rate increases. This, along with the fact that the company has completed most of its planned asset dispositions, lends potential near-term upside to shares, the analyst mentioned.

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