Kimco's Recurring FFO in Line - Analyst Blog
July 27 2011 - 10:15AM
Zacks
Kimco Realty Corp.
(KIM), a leading real estate investment trust (REIT), reported
second quarter 2011 rental revenues of $219.2 million compared with
$208.3 million in the year-earlier quarter – an increase of 5.2%.
Total revenues for the reported quarter missed the Zacks Consensus
Estimate of $221.0 million.
Kimco reported second quarter 2011
fund from operations (FFO)of $118.0 million or 29 cents per share
compared with $105.6 million or 26 cents in the year-ago period.
Fund from operations, a widely used metric to gauge the performance
of REITs, is obtained after adding depreciation and amortization
and other non-cash expenses to net income.
Excluding certain non-recurring
items, FFO (Funds From Operations) for the reported quarter was
$121.4 million or 30 cents per share compared with $115.7 million
or 28 cents in the year-earlier quarter. The recurring FFO for the
quarter was in line with the Zacks Consensus Estimate.
Overall occupancy in Kimco’s
combined shopping center portfolio was 93.1% at the end of the
quarter, an increase of 30 bps compared with second quarter 2010.
In the U.S. portfolio, occupancy was 92.9% as of June 30, 2011, an
increase of 50 bps compared with the year-ago period. Same-store
net operating income in the combined portfolio increased 3.1%
year-over-year.
During the reported quarter, Kimco
executed a total of 594 leases spanning 1.9 million square feet.
These included 80 new leases in the same-store portfolio totaling
212,000 pro-rata square feet and 212 lease renewals and options for
927,000 pro-rata square feet in the U.S. portfolio. In addition,
Kimco executed over 130 new leases totaling 617,000 square feet for
spaces vacant for more than one year. Leasing spreads in the U.S.
portfolio on a pro-rata basis increased 2.1% (cash basis).
The company acquired 3 shopping
centers during the quarter for approximately $75 million. At the
same time, Kimco sold 11 non-strategic assets spanning 1.0 million
square feet for $48.5 million.
The reported quarter also saw the
company recognizing $8.4 million of fee income related to its
investment management business, including $7.2 million in
management fees, $0.2 million in acquisition fees and $1.0 million
in other ongoing fees. Kimco had 285 properties in investment
management funds with 24 institutional partners at quarter-end.
During the reported quarter, the
company generated $25.3 million of income from its structured
investments and other non-retail assets, out of which $14.9 million
was recurring in nature. As of June 30, 2011, Kimco reduced its
non-retail assets to approximately $612 million compared to $1.2
billion at the end of first quarter 2009.
At quarter-end, Kimco had over $1.7
billion available under its revolving credit facilities. The
company’s consolidated net debt to recurring EBITDA (earnings
before interest, tax, depreciation and amortization) ratio improved
to 6.0x from 6.6x in the year-ago quarter. For fiscal 2011, the
company reiterated its earlier recurring FFO guidance in the range
of $1.17 – $1.21 per share.
We maintain our ‘Neutral’
recommendation for the long term on the stock, which presently has
a Zacks #4 Rank translating into a short-term ‘Sell’ rating.
However, we have a ‘Neutral’ recommendation and a Zacks #3 Rank
(short-term ‘Hold’) for CBL & Associates Properties
Inc. (CBL), one of the competitors of Kimco.
CBL&ASSOC PPTYS (CBL): Free Stock Analysis Report
KIMCO REALTY CO (KIM): Free Stock Analysis Report
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