Kimco Realty CorporationKIMNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $37.90 per share(market-calibrated)

+61.1%

Upside to Fair Value

Current

$23.53

Pure Model

$40.27

Fair Value

$37.90

Bull Case

$53.56

Bear Case

$29.27

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $40.27.

What's Driving This Ratingfor KIM

↓

CapEx normalizing toward maintenance

Historical CapEx is 5.50% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$106M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 46.40% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 2.56% revenue growth, fading to 2.50% by Year 10. Revenue reaches $3.5B (vs $2.1B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 91.47% indicates efficient cash generation. FCF reaches $2.1B by Year 10 (59.52% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.06

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.26%

Cost of Debt

Pre-tax Cost of Debt3.31%

Tax Rate5.00%

After-tax Cost of Debt3.15%

Equity Weight (E/V)65.30%

Debt Weight (D/V)34.70%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (65.30% × 9.26%) + (34.70% × 3.15%)

= 7.14%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.2B	$2.4B	$2.7B	$3.2B	$3.5B
EBIT	$1.0B	$1.1B	$1.3B	$1.5B	$1.6B
Tax	$51M	$56M	$64M	$73M	$82M
NOPAT	$968M	$1.1B	$1.2B	$1.4B	$1.6B
+ Depreciation	$410M	$448M	$511M	$588M	$659M
- Capex	$121M	$116M	$114M	$110M	$88M
- Δ NWC	$16M	$37M	$70M	$58M	$26M
Free Cash Flow	$1.2B	$1.4B	$1.5B	$1.8B	$2.1B
Discount Factor	0.933	0.813	0.708	0.617	0.502
Present Value	$1.2B	$1.1B	$1.1B	$1.1B	$1.1B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.1B

Terminal Growth Rate2.50%

WACC7.14%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$46.4B

PV of Terminal Value$23.3B

Exit Multiple Method

Year 10 EBITDA$2.3B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$50.5B

PV of Terminal Value$25.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$11.0B

PV of Terminal Value$23.3B

Enterprise Value$34.3B

(-) Net Debt$8.2B

Equity Value$26.1B

Shares Outstanding674M

Price per Share$38.73

Exit Multiple Method

PV of Projected FCFs$11.0B

PV of Terminal Value$25.4B

Enterprise Value$36.4B

(-) Net Debt$8.2B

Equity Value$28.2B

Shares Outstanding674M

Price per Share$41.80

Pure Model Fair Value

$40.27

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
5.14%	$55.02	$59.36	$65.35	$74.14	$74.81
6.14%	$44.49	$46.87	$49.89	$53.88	$59.38
7.14%	$37.06	$38.51	$40.27	$42.45	$45.23
8.14%	$31.41	$32.36	$33.47	$34.80	$36.41
9.14%	$26.90	$27.55	$28.30	$29.17	$30.19

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$29.27

24.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.32

Base Case

$40.27

71.1% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.06

Bull Case

$53.56

127.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.90

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth2.56%

Year 3 Revenue Growth5.43%

Year 5 Revenue Growth9.31%

Year 7 Revenue Growth6.59%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin46.40%

Tax Rate5.00%

Historical Capex / Rev5.50%

Terminal Capex / Rev2.50%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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