Kimco Realty upgraded to ’A-’ by S&P on strong performance

Investing.com -- S&P Global Ratings has upgraded Kimco Realty Corp. to ’A-’ from ’BBB+’ with a stable outlook, citing the company’s solid operating performance and well-positioned balance sheet.

Kimco, which operates the largest portfolio of open-air shopping centers in the U.S. with $21.3 billion in undepreciated real estate assets as of June 30, 2025, has benefited from healthy retail fundamentals and strong tenant demand.

The company’s focus on grocery-anchored centers, which now account for 86% of average base rent (ABR), has positioned it well in the current retail environment. S&P views these centers favorably as they generate repeat foot traffic and generally result in higher occupancy and more consistent cash flow.

Kimco reported 3.1% same-property NOI growth in the second quarter of 2025 compared to the same period in 2024, driven by rental rate increases. The company achieved blended pro-rata cash rent spreads of 15.2% on comparable spaces, its highest quarterly level in over seven years, along with leased occupancy of 95.4% and small-shop occupancy of 92.2%.

While pro-rata leased occupancy declined 40 basis points sequentially due to some anchor bankruptcies, Kimco has made significant progress addressing vacant spaces from Party City, Joann, Big Lots, and Rite Aid, with approximately 90% either re-leased or under letter of intent with releasing spreads averaging 30% to 40%.

S&P expects Kimco to achieve same-store NOI growth of around 3% or better in 2025 and 2026, attributable to base rent increases, rent commencement from redevelopment projects, acquisition activity, and strong new lease rates.

The rating agency noted that Kimco’s leverage has declined, with S&P Global Ratings-adjusted trailing-12-month debt to EBITDA at 5.9x as of June 30, 2025, down from 6.5x during the same period the previous year. S&P expects Kimco to operate with debt to EBITDA in the mid- to high-5x area over the next two years with fixed-charge coverage in the high-3x area.

In the second quarter of 2025, Kimco issued $500 million of 5.30% senior unsecured notes maturing in February 2036 and repaid $240.5 million of maturing unsecured notes. The company has no remaining consolidated debt maturing until July 2026 and maintains a well-staggered debt maturity schedule with an average consolidated debt maturity of 8.5 years.

S&P’s stable outlook reflects expectations for solid operating performance over the next two years, driven by favorable retail fundamentals and strong embedded rent growth from high leased occupancy and robust leasing activity.

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