High-Yield REITs to Avoid: Kimco (KIM)
Kimco Realty Corp (NYSE:KIM) is one of the largest open air shopping mall owners in the U.S. It has 510 malls, with more than 4,000 tenants open in the top metropolitan markets. That adds up to more than 84 million square feet of space in 32 states, Puerto Rico and Canada.
The problem is, no matter how diversified KIM might be geographically, it’s in the one sector having the toughest time right now — retail. As of its Q2 numbers in late July, KIM isn’t in terrible shape. It’s FFO and revenues are good, net income is a little weak, but not anything to lose sleep over. The challenge is if it can keep up with the transitioning retail dynamics from brick-and-mortar to online.
Its selling properties, and it issued a new preferred stock for financing and ostensibly to retire older debt. But these efforts can become more burdens than advantages.
Off 20% year-to-date, its 5% dividend just isn’t worth the looming challenges in the sector.