- Operating Fundamentals Solid; Small Shop
Occupancy Reaches All-Time High -
- Company Raises 2018 Guidance Ranges -
Kimco Realty Corp. (NYSE:KIM) today reported results for the
third quarter and year-to-date period ended September 30, 2018.
Highlights:
- Reported net income available to the
company’s common shareholders (“Net Income”) of $85.6 million or
$0.19 per diluted share for the third quarter of 2018.
- Increased same-property net operating
income (“NOI”) by 2.2% (2.3% including redevelopments) during the
third quarter compared to the same period in 2017.
- Expanded pro-rata small shop occupancy
to a record high of 90.8%.
- Generated new leasing spreads of 12.1%,
representing the nineteenth consecutive quarter that the rental
rate for new leases over the prior rent for the comparable space
increased by more than 10%.
- Disposed of 10 shopping centers and two
land parcels totaling 1.3 million square feet for a gross sales
price of $156.8 million during the third quarter of 2018. Kimco’s
share of the sales price was $153.7 million.
Financial Results
Net Income for the third quarter of 2018 was $85.6 million, or
$0.19 per diluted share, compared to $102.0 million, or $0.24 per
diluted share, for the third quarter of 2017. The change was
primarily due to $11.0 million of higher early extinguishment of
debt charges related to the redemption of the company’s $300
million 6.875% unsecured bond during the third quarter of 2018, as
well as $4.4 million of lower gains on the sales of operating
properties, net of impairments, on a year-over-year basis.
For the nine months ended September 30, 2018, Net Income was
$366.0 million, or $0.85 per diluted share, compared to $299.0
million, or $0.70 per diluted share, for the nine months ended
September 30, 2017. The increase was primarily due to:
- $51.5 million of higher gains on the
sales of operating properties, net of impairments; and
- $37.9 million of lower depreciation
expense on operating properties
Offset by:
- $11.0 million of higher early
extinguishment of debt charges; and
- $5.2 million of lower NOI compared to
the same period in 2017 as a result of the net dispositions
completed during the nine months ended September 30, 2018.
Funds From Operations available to the company’s common
shareholders (“NAREIT FFO”) was $144.4 million, or $0.34 per
diluted share, for the third quarter 2018 compared to $165.3
million, or $0.39 per diluted share, for the third quarter 2017.
NAREIT FFO for the third quarter of 2018 included $7.7 million of
transactional charges (net of transactional income), compared to
$3.9 million of transactional income (net of transactional charges)
for the third quarter 2017. NAREIT FFO for the third quarter 2018
was additionally impacted by lower NOI compared to the same period
in 2017 as a result of the company’s proactive disposition plan
completed during the nine months ended September 30, 2018. Gains on
sales, property impairments, and depreciation related to operating
properties are excluded from the calculation of NAREIT FFO.
For the nine months ended September 30, 2018, NAREIT FFO was
$474.5 million, or $1.12 per diluted share, compared to $495.4
million, or $1.17 per diluted share, for the same period last year.
The change is partially attributable to $8.7 million in lower
transactional income (net of transactional charges) recognized
during 2018 compared to the same period in 2017 and the previously
mentioned impact on NOI from the proactive disposition plan
completed during the nine months ended September 30, 2018.
FFO available to the company’s common shareholders as adjusted
(FFO as adjusted), which excludes the effects of non-operating
impairments as well as transactional income and charges, was $152.1
million, or $0.36 per diluted share, for the third quarter 2018
compared to $161.3 million, or $0.38 per diluted share, for the
third quarter 2017. For the nine months ended September 30, 2018,
FFO as adjusted was $465.6 million, or $1.10 per diluted share,
compared to $477.8 million, or $1.13 per diluted share, for the
same period in 2017.
A reconciliation of Net Income to NAREIT FFO, FFO as adjusted
and same-property NOI is provided in the tables accompanying this
press release.
Operating Results
- Pro-rata occupancy ended the quarter at
95.8%, a 20-basis-point decrease from the second quarter of 2018,
and flat compared to the third quarter of 2017. Third quarter 2018
occupancy was reduced 40 basis points from seven Toys R Us
vacates.
- Pro-rata small shop occupancy ended the
quarter at 90.8%, representing an increase of 60 basis points
sequentially and an expansion of 130 basis points over the same
period in 2017.
- Pro-rata anchor occupancy ended the
quarter at 97.6%, representing a decrease of 50 basis points
sequentially, which was fully attributable to the Toys R Us
vacates. Year-over-year, anchor occupancy decreased 30 basis
points.
- Pro-rata rental-rate leasing spreads
increased 8.9% during the third quarter 2018, with rental rates for
new leases up 12.1% and renewals/options up 7.9%.
- Generated a 2.2% increase in
same-property NOI compared to the third quarter 2017, which
excludes a positive 10-basis-point impact from redevelopments. For
the nine months ended September 30, 2018, same-property NOI grew
3.0% compared to the same period in 2017.
Investment Activity
During the third quarter of 2018, the company sold 10 shopping
centers and two land parcels totaling 1.3 million square feet for
$156.8 million. Kimco’s share of the sales price was $153.7
million.
The dispositions included Skyline Village, a
190,000-square-foot property in Harrisonburg, Virginia for $32.5
million, Temple Towne Center, a 264,000-square-foot property
in Temple, Texas for $26.9 million, and Kirkwood Crossing, a
253,000-square-foot property in Kirkwood, Missouri for $15.9
million.
For the nine months ended September 30, 2018, the company’s
dispositions included 48 shopping centers and six land parcels,
totaling 6.3 million square feet, for a gross sales price of $712.9
million. Kimco’s share of the sales price was $685.5 million. The
blended cap rate for the property sales is in line with the
company’s expected range of 7.50% to 8.00%.
Capital Activity
In August, the company redeemed $300.0 million of 6.875% Senior
Notes due October 2019, which expanded Kimco’s consolidated debt
maturity profile to 10.7 years with no unsecured debt due until
2021. As a result of this transaction, the company recognized a
$12.8 million charge for the early extinguishment of debt.
2018 Full Year
Guidance
Guidance (per diluted share)
Current Previous Net Income attributable to
common shareholders: $1.00 to $1.06 $0.92 to
$1.00 NAREIT FFO: $1.45 to $1.47 $1.43 to
$1.46 FFO as adjusted: $1.44 to $1.46 $1.43 to
$1.46
Reconciliations are provided for these
current forward-looking non-GAAP metrics (NAREIT FFO andFFO as
adjusted) in the tables accompanying this press release.
Pro-rata Operational Assumptions
Current Previous Same-property NOI (excluding
redevelopments): 2.30% to 2.70% 2.00% to 2.50%
Net dispositions (7.50% to 8.00% blended cap rate):
$800 million to
$900 million
$700 million to
$900 million
Total redevelopment & development investment:
$425 million to
$475 million
$425 million to
$525 million
Dividend Declarations
Kimco’s board of directors declared a quarterly cash dividend of
$0.28 per common share, payable on January 15, 2019, to
shareholders of record on January 2, 2019.
The board of directors also declared quarterly dividends with
respect to each of the company’s Class I, Class J, Class K, Class L
and Class M series of cumulative redeemable preferred shares. All
dividends on the preferred shares will be paid on January 15, 2019,
to shareholders of record on January 2, 2019.
Conference Call and Supplemental
Materials
Kimco will hold its quarterly conference call on Thursday,
October 25, 2018, at 10:00 a.m. Eastern Time (ET). The call will
include a review of the company’s third quarter and year-to-date
results as well as a discussion of the company’s strategy and
expectations for the future. To participate, dial 1-888-317-6003
(Passcode: 1148671).
A replay will be available through January 25, 2019, by dialing
1-877-344-7529 (Passcode: 10122975). Access to the live call and
replay will be available through the company's website at
investors.kimcorealty.com.
About Kimco
Kimco Realty Corp. (NYSE: KIM) is a real estate investment trust
(REIT) headquartered in New Hyde Park, N.Y., that is one of North
America’s largest publicly traded owners and operators of open-air
shopping centers. As of September 30, 2018, the company owned
interests in 450 U.S. shopping centers comprising 78 million square
feet of leasable space primarily concentrated in the top major
metropolitan markets. Publicly traded on the NYSE since 1991, and
included in the S&P 500 Index, the company has specialized in
shopping center acquisitions, development and management for 60
years. For further information, please visit
www.kimcorealty.com, the company’s
blog at blog.kimcorealty.com, or follow Kimco on Twitter at
www.twitter.com/kimcorealty.
The company announces material information to its investors
using the company’s investor relations website
(http://investors.kimcorealty.com), SEC filings, press releases,
public conference calls, and webcasts. The company also uses social
media to communicate with its investors and the public, and the
information the company posts on social media may be deemed
material information. Therefore, the company encourages investors,
the media, and others interested in the company to review the
information that it posts on the company’s blog
(http://blog.kimcorealty.com) and social media channels, including
Facebook (http://www.facebook.com/kimcorealty), Twitter
(http://www.twitter.com/kimcorealty), Youtube
(http://www.youtube.com/kimcorealty) and LinkedIn
(http://www.linkedin.com/company/kimco-realty-corporation). The
list of social media channels that the company uses may be updated
on its investor relations website from time to time.
Safe Harbor Statement
The statements in this news release state the company’s and
management’s intentions, beliefs, expectations or projections of
the future and are forward-looking statements. It is important to
note that the company’s actual results could differ materially from
those projected in such forward-looking statements. Factors which
may cause actual results to differ materially from current
expectations include, but are not limited to, (i) general adverse
economic and local real estate conditions, (ii) the inability of
major tenants to continue paying their rent obligations due to
bankruptcy, insolvency or a general downturn in their business,
(iii) financing risks, such as the inability to obtain equity, debt
or other sources of financing or refinancing on favorable terms to
the company, (iv) the company’s ability to raise capital by selling
its assets, (v) changes in governmental laws and regulations and
management’s ability to estimate the impact of such changes, (vi)
the level and volatility of interest rates and foreign currency
exchange rates and management’s ability to estimate the impact
thereof, (vii) risks related to the Company’s international
operations, (viii) the availability of suitable acquisition,
disposition, development and redevelopment opportunities, and risks
related to acquisitions not performing in accordance with our
expectations, (ix) valuation and risks related to the company’s
joint venture and preferred equity investments, (x) valuation of
marketable securities and other investments, (xi) increases in
operating costs, (xii) changes in the dividend policy for the
company’s common and preferred stock and the company’s ability to
pay dividends at current levels, (xiii) the reduction in the
company’s income in the event of multiple lease terminations by
tenants or a failure by multiple tenants to occupy their premises
in a shopping center, (xiv) impairment charges and (xv)
unanticipated changes in the company’s intention or ability to
prepay certain debt prior to maturity and/or hold certain
securities until maturity. Additional information concerning
factors that could cause actual results to differ materially from
those forward-looking statements is contained from time to time in
the company’s SEC filings. Copies of each filing may be obtained
from the company or the SEC.
The company refers you to the documents filed by the company
from time to time with the SEC, specifically the section titled
“Risk Factors” in the company’s Annual Report on Form 10-K for the
year ended December 31, 2017, as may be updated or supplemented in
the company’s Quarterly Reports on Form 10-Q and the company’s
other filings with the SEC, which discuss these and other factors
that could adversely affect the company’s results. The company
disclaims any intention or obligation to update the forward-looking
statements, whether as a result of new information, future events
or otherwise.
Non-GAAP Financial
Measures
NAREIT FFO: A supplemental non-GAAP measure utilized to
evaluate the operating performance of real estate companies. The
National Association of Real Estate Investment Trusts (“NAREIT”)
defines funds from operations (“NAREIT FFO”) as net income/(loss)
attributable to common shareholders computed in accordance with
generally accepted accounting principles in the United States
(“GAAP”), excluding gains or losses from sales of operating real
estate assets and change in control of interests, plus (i)
depreciation and amortization of operating properties and (ii)
impairment of depreciable real estate and in substance real estate
equity investments and (iii) after adjustments for unconsolidated
partnerships and joint ventures calculated to reflect NAREIT FFO on
the same basis.
The company considers NAREIT FFO an important supplemental
measure of our operating performance and believes it is frequently
used by securities analysts, investors and other interested parties
in the evaluation of REITs, many of which present NAREIT FFO when
reporting results. Comparison of our presentation of NAREIT FFO to
similarly titled measures for other REITs may not necessarily be
meaningful due to possible differences in the application of the
NAREIT definition used by such REITs.
FFO as Adjusted: A supplemental non-GAAP measure that the
company believes is more reflective of its core operating
performance and provides investors and analysts an additional
measure to compare the company’s performance across reporting
periods on a consistent basis by excluding items that we do not
believe are indicative of our core operating performance. FFO as
adjusted is generally calculated by the company as NAREIT FFO
excluding certain transactional income and expenses and
non-operating impairments which management believes are not
reflective of the results within the company’s operating real
estate portfolio.
Same-Property NOI: A supplemental non-GAAP measure of
real estate companies’ operating performance and should not be
considered an alternative to net income in accordance with GAAP or
as a measure of liquidity. The company considers same-property NOI
as an important operating performance measure because it is
frequently used by securities analysts and investors to measure
only the net operating income of properties that have been owned by
the company for the entire current and prior year reporting
periods. It excludes properties under development and pending
stabilization; properties are deemed stabilized at the earlier of
(i) reaching 90% leased or (ii) one year following a projects
inclusion in operating real estate. Same-property NOI assists in
eliminating disparities in net income due to the development,
acquisition or disposition of properties during the period
presented, and thus provides a more consistent performance measure
for the comparison of the company's properties.
Same-property NOI is calculated using revenues from rental
properties (excluding straight-line rent adjustments, lease
termination fees, amortization of above/below market rents and
includes charges for bad debt) less operating and maintenance
expense, real estate taxes and rent expense plus the company’s
proportionate share of same-property NOI from unconsolidated real
estate joint ventures, calculated on the same basis. The company’s
method of calculating same-property NOI may differ from methods
used by other REITs and, accordingly, may not be comparable to such
other REITs.
Condensed Consolidated Balance Sheets (in thousands,
except share information) (unaudited)
September 30, December 31, 2018 2017
Assets: Operating real
estate, net of accumulated depreciation and amortization of
2,376,667 and $2,433,053, respectively $ 9,043,480 $ 9,817,875
Investments in and advances to real estate joint ventures 580,737
483,861 Real estate under development 540,188 402,518 Other real
estate investments 191,029 217,584 Mortgages and other financing
receivables 29,222 21,838 Cash and cash equivalents 146,386 238,513
Marketable securities 12,026 13,265 Accounts and notes receivable,
net 183,440 189,757 Other assets 383,013
378,515 Total assets $ 11,109,521 $ 11,763,726
Liabilities: Notes payable, net $ 4,409,500 $ 4,596,140
Mortgages and construction loan payable, net 477,974 882,787
Dividends payable 130,263 128,892 Other liabilities 615,613
617,617 Total liabilities 5,633,350
6,225,436 Redeemable noncontrolling interests 20,074
16,143
Stockholders' equity: Preferred
stock, $1.00 par value, authorized 5,996,240 shares; 42,580 and
41,200 shares issued and outstanding (in series), respectively;
Aggregate liquidation preference $1,064,500 and $1,030,000,
respectively 43 41 Common stock, $.01 par value, authorized
750,000,000 shares issued and outstanding 421,391,305 and
425,646,380 shares, respectively 4,214 4,256 Paid-in capital
6,117,339 6,152,764 Cumulative distributions in excess of net
income (743,346) (761,337) Accumulated other comprehensive loss
- (1,480) Total stockholders' equity 5,378,250
5,394,244 Noncontrolling interests 77,847
127,903 Total equity 5,456,097 5,522,147 Total
liabilities and equity $ 11,109,521 $ 11,763,726
Condensed Consolidated Statements of Income (in thousands,
except per share data) (unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017 Revenues Revenues from rental properties $
215,049 $ 225,836 $ 668,115 $ 679,321 Reimbursement income 58,007
59,490 182,929 178,590 Other rental property income 5,643 5,593
16,755 15,242 Management and other fee income 4,381
3,926 12,762 12,456 Total
revenues 283,080 294,845 880,561
885,609 Operating expenses Rent 2,702 2,764
8,262 8,312 Real estate taxes 37,862 38,363 115,570 115,379
Operating and maintenance 39,265 40,262 123,921 125,539 General and
administrative 21,348 21,523 67,775 63,718 Provision for doubtful
accounts 1,389 701 4,571 4,201 Impairment charges 3,336 2,944
33,855 34,280 Depreciation and amortization 74,972
88,443 236,114 275,787
Total operating expenses 180,874 195,000
590,068 627,216 Operating income
102,206 99,845 290,493 258,393 Other income/(expense) Other
income, net 5,219 1,101 14,675 3,813 Interest expense (44,081 )
(47,258 ) (140,458 ) (139,830 ) Early extinguishment of debt
charges (12,762 ) (1,753 ) (12,762 ) (1,753 ) Income from
continuing operations before income taxes, net, equity in income of
joint ventures, net, gain on change in control of interests
and equity in income from other real estate
investments, net 50,582 51,935 151,948 120,623 Benefit for
income taxes, net 315 697 983 2,224 Equity in income of joint
ventures, net 16,533 9,142 52,486 37,044 Gain on change in control
of interests - - - 71,160 Equity in income of other real estate
investments, net 5,045 19,909 24,638 61,952
Income from continuing operations 72,475 81,683 230,055
293,003 Gain on sale of operating properties/change in
control of interests 28,250 40,533 180,461 62,102
Net income 100,725 122,216 410,516 355,105 Net income
attributable to noncontrolling interests (567 )
(1,186 ) (882 ) (13,926 ) Net income attributable to
the Company 100,158 121,030 409,634 341,179 Preferred stock
redemption charges - (7,014 ) - (7,014 ) Preferred dividends
(14,534 ) (12,059 ) (43,657 ) (35,169 ) Net
income available to the Company's common shareholders $ 85,624
$ 101,957 $ 365,977 $ 298,996
Per common share: Net income available to the Company: (2) Basic $
0.19 $ 0.24 $ 0.86 $ 0.70 Diluted $
0.19 (1) $ 0.24 (1) $ 0.85 (1) $ 0.70
(1) Weighted average shares: Basic 419,230
423,688 421,106 423,574 Diluted
419,764 424,311 422,443
424,193 Reflects the potential impact if certain
units were converted to common stock at the beginning of the
period. The impact of the conversion would have an anti-dilutive
effect on net income and therefore have not been included. Adjusted
for distributions on convertible units of $24 for the three months
ended September 30, 2017, and $683 and $43 for the nine months
ended September 30, 2018 and 2017, respectively. Adjusted
for earnings attributable from participating securities of ($604)
and ($526) for the three months ended September 30, 2018 and 2017,
and ($1,818) and ($1,596) for the nine months ended September 30,
2018 and 2017, respectively. Adjusted for the change in carrying
amount of redeemable equity securities of ($3,918) for the three
and nine months ended September 30, 2018. Certain
reclassifications of prior year amounts have been made to conform
with the current year presentation.
Reconciliation of Net
Income Available to the Company's Common Shareholders to FFO
and FFO as Adjusted Available to the Company's Common
Shareholders (in thousands, except per share data) (unaudited)
Three Months Ended September 30,
Nine Months Ended September 30, 2018 2017 2018 2017 Net income
available to the Company's common shareholders $ 85,624 $ 101,957 $
365,977 $ 298,996 Gain on sale of operating properties/change in
control of interests (28,250 ) (40,533 ) (180,384 ) (61,394 ) Gain
on sale of joint venture operating properties/change in control of
interests (2,554 ) - (6,103 ) (72,185 ) Depreciation and
amortization - real estate related 74,751 87,262 230,993 272,232
Depreciation and amortization - real estate jv's 11,871 9,562
32,766 29,413 Impairments of operating properties 3,338 8,651
33,704 32,294 Benefit for income taxes (2) - - - (39 )
Noncontrolling interests (2) (411 ) (1,613 )
(2,470 ) (3,895 ) Funds from operations available to the
Company's common shareholders 144,369 165,286 474,483 495,422
Transactional charges/(income), net 7,718
(3,947 ) (8,855 ) (17,578 ) Funds from operations
available to the Company's common shareholders as adjusted $
152,087 $ 161,339 $ 465,628 $ 477,844
Weighted average shares outstanding for FFO calculations:
Basic 419,230 423,688 421,106
423,574 Units 823 973 926 854 Dilutive effect
of equity awards 534 513 515
556 Diluted (1) 420,587
425,174 422,547 424,984
FFO per common share - basic $ 0.34 $ 0.39 $ 1.13
$ 1.17 FFO per common share - diluted (1) $ 0.34
$ 0.39 $ 1.12 $ 1.17 FFO as adjusted
per common share - diluted (1) $ 0.36 $ 0.38 $ 1.10
$ 1.13 (1) Reflects the potential impact if certain
units were converted to common stock at the beginning of the
period. Funds from operations would be increased by $223 and $268
for the three months ended September 30, 2018 and 2017, and $787
and $688 for the nine months ended September 30, 2018 and 2017,
respectively. (2) Related to gains, impairments and depreciation on
operating properties, where applicable.
Reconciliation of
Net Income Available to the Company's Common Shareholders to
Same Property NOI (in thousands) (unaudited)
Three Months Ended September 30, Nine
Months Ended September 30, 2018 2017 2018 2017 Net income available
to the Company's common shareholders $ 85,624 $ 101,957 $ 365,977 $
298,996 Adjustments: Management and other fee income (4,381 )
(3,926 ) (12,762 ) (12,456 ) General and administrative 21,348
21,523 67,775 63,718 Impairment charges 3,336 2,944 33,855 34,280
Depreciation and amortization 74,972 88,443 236,114 275,787
Interest and other expense, net 51,624 47,910 138,545 137,770
Benefit for income taxes, net (315 ) (697 ) (983 ) (2,224 ) Gain on
change in control of interests - - - (71,160 ) Equity in income of
other real estate investments, net (5,045 ) (19,909 ) (24,638 )
(61,952 ) Gain on sale of operating properties/change in control of
interests (28,250 ) (40,533 ) (180,461 ) (62,102 ) Net income
attributable to noncontrolling interests 567 1,186 882 13,926
Preferred stock redemption charges - 7,014 - 7,014 Preferred
dividends 14,534 12,059 43,657 35,169 Non same property net
operating income (19,053 ) (34,644 ) (84,830 ) (108,139 )
Non-operational expense from joint ventures, net 17,690
24,580 47,198 63,611
Same Property NOI $ 212,651 $ 207,907 $
630,329 $ 612,238 Certain reclassifications of
prior year amounts have been made to conform with the current year
presentation.
Reconciliation of Diluted Net Income
Available to Common Shareholders Per Common Share to Diluted
Funds From Operations Available to Common Shareholders Per Common
Share (unaudited) Projected Range
Full Year 2018
Low
High
Diluted net income available to common shareholder $ 1.00 $
1.06 per common share Depreciation & amortization 0.72
0.75 Depreciation & amortization real estate joint
ventures, net of noncontrolling interests 0.10 0.11 Gain on
sale of operating properties/change in control of interests (0.43 )
(0.50 ) Gain on sale of joint venture operating
properties/change in control of interests (0.01 ) (0.02 )
Impairments of operating properties 0.08 0.08 Noncontrolling
interests (0.01 ) (0.01 ) Projected FFO per diluted
common share $ 1.45 $ 1.47 Transactional income, net (0.01 )
(0.01 ) Projected FFO, as adjusted per diluted common
share $ 1.44 $ 1.46 Projections involve numerous
assumptions such as rental income (including assumptions on
percentage rent), interest rates, tenant defaults, occupancy rates,
foreign currency exchange rates (such as the US-Canadian rate),
selling prices of properties held for disposition, expenses
(including salaries and employee costs), insurance costs and
numerous other factors. Not all of these factors are determinable
at this time and actual results may vary from the projected
results, and may be above or below the range indicated. The above
range represents management’s estimate of results based upon these
assumptions as of the date of this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181025005104/en/
Kimco Realty Corp.David F. Bujnicki, 1-866-831-4297Senior Vice
President, Investor Relations and
Strategydbujnicki@kimcorealty.com
Kimco Realty (NYSE:KIM)
Historical Stock Chart
From Aug 2024 to Sep 2024
Kimco Realty (NYSE:KIM)
Historical Stock Chart
From Sep 2023 to Sep 2024