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REIT Outlook Strong for 2013, Kimco CEO Says

Monday, 17 Sep 2012 | 5:43 PM ET

The promise of low interest rates over the next few years are bringing greater earnings potential to real estate investment trusts, Kimco Realty CEO David Henry said Monday on CNBC.

“We’re seeing as interest rates come down, property values going up and the net asset value of most REIT portfolios are going up substantially,” he said on “Fast Money.”

Specifically, Henry said that Kimco is using low interest rates to refinance its debt. Holding roughly 500 mortgages with an average interest rate of 6.5 percent, the company is turning them into 3.5 percent, 10-year mortgages.

REIT 2013 Outlook Strong: Kimco CEO
Low interest rates are bringing greater earnings potential to REITs, Kimco Realty CEO David Henry says.

What does that mean?

“Powerful earnings,” he said.

“Our tenants are retailers, and with lower cost of capital, they’re more inclined to expand. So we’re seeing many of the national retailers resuming their expansion plans, increasing store count, which is all good for our metrics.”

Kimco’s top 10 tenants are Home Depot, Bed Bath & Beyond, Best Buy, Kohl’s, Kmart, PetSmart, Costco, Wal-Mart, Ahold and T.J. Maxx.

Trader disclosure: On Sept. 17, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Pete Najarian is long AAPL; Pete Najarian is long BAC; Pete Najarian is long C; Pete Najarian is long JPM; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long PSX; Steve Grasso is long AET; Steve Grasso is long ASTM; Steve Grasso is long AUO; Steve Grasso is long BA; Steve Grasso is long F; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long P; Steve Grasso is long NVIV; Steve Grasso is long PFE; Steve Grasso is long S;

For Brian Marshall
Neither ISI nor its affiliates beneficially own 1% or more of any class of common equity securities of the subject companies referenced in this Report. No person(s) responsible for preparing this report or a member of his/her household serve as an officer, director or advisory board member of any of the subject companies. Neither ISI nor its affiliates have any investment banking or market making operations. At various times these reports mention clients of ISI from whom ISI has received non-investment banking securities related compensation in the past 12 months.


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