– Leasing Results Propelled by Robust Demand
and Strong Absorption Opportunities – – Further Expands Liquidity
with Ongoing Monetization of Albertsons Investment – – Board
Declares Dividends and Expects to Announce Special Dividend to
Shareholders by Year End – – Updates 2023 Outlook –
Kimco Realty® (NYSE: KIM), North America’s largest publicly
traded owner and operator of open-air, grocery-anchored shopping
centers and a growing portfolio of mixed-use assets, today reported
results for the second quarter ended June 30, 2023. For the three
months ended June 30, 2023 and 2022, Kimco Realty’s net
income/(loss) available to the company’s common shareholders per
diluted share was $0.16 and ($0.21), respectively.
Second Quarter
Highlights
- Produced Funds From Operations* (FFO) of $0.39 per diluted
share.
- Increased pro-rata portfolio occupancy 70 basis points
year-over-year to 95.8%.
- Grew pro-rata small shop occupancy 30 basis points sequentially
to 91.0%, representing an increase of 180 basis points
year-over-year.
- Generated pro-rata cash rent spreads of 25.3% for new leases on
comparable spaces, including four former Bed Bath & Beyond
(Nasdaq: BBBY) leases with a blended rent increase of 31%.
- Produced 2.3% growth in Same-Property Net Operating Income*
(NOI) over the same period a year ago.
- Generated $144.9 million in proceeds from the sale of 7.0
million shares of Albertsons Companies, Inc. (NYSE: ACI).
- Published 10th annual Corporate Responsibility Report detailing
ESG performance.
*Reconciliations of non-GAAP measures to
the most directly comparable GAAP measure are provided in the
tables accompanying this press release.
“Our results demonstrate the strength of our operating platform
with the strong execution on backfilling vacancies in an accretive
manner at meaningful rental spreads that will drive cashflow. It is
a true testament to the quality of our portfolio and dedicated
leasing team,” stated Kimco CEO Conor Flynn. “Further, with over
$500 million of cash on hand from the ongoing monetization of our
Albertsons stock, we also have a unique advantage to quickly
execute on external growth opportunities as well as further reduce
leverage in our continuous effort to maximize results for all of
our stakeholders. This includes the returning of capital to
shareholders in the form of a one-time special dividend, expected
to be announced and paid by year end.”
Financial Results
Net income available to the company’s common shareholders for
the second quarter of 2023 was $100.4 million, or $0.16 per diluted
share, for the second quarter of 2023, compared to Net (loss)
available to the company’s common shareholders of ($125.8) million,
or ($0.21) per diluted share, for the second quarter of 2022.
Included in the change was a $276.0 million benefit from
mark-to-market gains on marketable securities, primarily stemming
from a change in the value of ACI common stock held by the company.
Partially offsetting this benefit was a $30.9 million increase in
provision for income taxes, net, mainly attributable to the capital
gains from the monetization of 7.0 million shares of ACI during the
second quarter of 2023, and a $27.0 million reduction in Equity in
income of joint ventures, net, primarily due to a lower level of
gains on sales of properties during the second quarter of 2023,
compared to the second quarter of 2022.
FFO was $243.9 million, or $0.39 per diluted share, for the
second quarter of 2023, compared to $246.4 million, or $0.40 per
diluted share, for the second quarter 2022. The company excludes
from FFO all realized or unrealized marketable securities gains and
losses as well as any income tax implications, including those
related to its investment in ACI. Also excluded from FFO are gains
and losses from the sale of operating properties, real
estate-related depreciation, and profit participations from other
investments.
Operating Results
- Executed 485 leases totaling 2.7 million square feet,
generating blended pro-rata rent spreads on comparable spaces of
9.9%, with pro-rata rental rates for new leases up 25.3% and
renewals and options growing 7.6%.
- Pro-rata portfolio occupancy ended the quarter at 95.8%, which
was flat sequentially and an increase of 70 basis points
year-over-year. This includes the impact of vacating 8 BBBY and 11
Tuesday Morning spaces during the second quarter of 2023 which
reduced occupancy by approximately 25 basis points.
- Pro-rata small shop occupancy expanded 30 basis points
sequentially and 180 basis points year-over-year to 91.0%, which is
10 basis points below the company’s all-time high.
- Pro-rata anchor occupancy ended the quarter at 97.7%,
representing an increase of 10 basis points year-over-year.
- Reported a 300-basis-point spread between leased (reported)
occupancy versus economic occupancy at the end of the second
quarter, representing approximately $50 million in future annual
base rent.
- Produced 2.3% growth in Same-Property NOI over the same period
a year ago, driven by a 3.1% increase in minimum rent.
Investment Activities
- Sold five wholly-owned parcels during the second quarter for
$46.2 million, totaling 87,000 square feet of gross leasable
area.
Capital Market
Activities
- As previously announced, Kimco sold 7.0 million shares of ACI
common stock resulting in net proceeds of $144.9 million. The
company recorded a $31.0 million provision for income taxes during
the second quarter of 2023.
- Repurchased 38,237 depositary shares of its 5.125% Preferred
Series L with a weighted average price of $22.56 for over $862,000.
In addition, the company also repurchased 16,050 depositary shares
of its 5.250% Preferred Series M with a weighted average price of
$22.37 for over $359,000.
- Ended the second quarter with over $2.5 billion of immediate
liquidity, including full availability of the company’s $2.0
billion unsecured revolving credit facility and over $500 million
of cash and cash equivalents on the balance sheet. In addition, the
company held 14.2 million shares of ACI common stock valued at
$310.1 million as of June 30, 2023.
Dividend Declarations
- Kimco’s board of directors declared a cash dividend of $0.23
per common share, representing a 4.5% increase over the quarterly
dividend in the corresponding period of the prior year. The
quarterly cash dividend on common shares is payable on September
21, 2023, to shareholders of record on September 7, 2023.
- The board of directors also declared quarterly dividends with
respect to each of the company’s Class L and Class M series of
cumulative redeemable preferred shares. These dividends on the
preferred shares will be paid on October 16, 2023, to shareholders
of record on October 2, 2023.
2023 Full Year Outlook
Based on the actual results of the second quarter, including
gains, net of impairments and other charges impacting net income
available to the company’s common shareholders and outlook for the
remainder of 2023, the company has updated its full-year guidance
ranges as follows:
Current
Previous
Net income available to the company’s
common shareholders (per diluted share):
$0.92 to $0.95
$0.92 to $0.96
FFO (per diluted share)*:
$1.55 to $1.57
$1.54 to $1.57
*The tables accompanying this press release provide a
reconciliation for the Current forward-looking non-GAAP
measure.
Conference Call
Information
When:
8:30 AM ET, July 27, 2023
Live Webcast:
2Q23 Kimco Realty Earnings Conference Call
or on Kimco Realty’s website investors.kimcorealty.com (replay
available through October 27, 2023)
Dial #:
1-888-317-6003 (International:
1-412-317-6061). Passcode: 0454076
About Kimco Realty®
Kimco Realty® (NYSE:KIM) is a real estate investment trust
(REIT) headquartered in Jericho, N.Y. that is North America’s
largest publicly traded owner and operator of open-air,
grocery-anchored shopping centers and a growing portfolio of
mixed-use assets. The company’s portfolio is primarily concentrated
in the first-ring suburbs of the top major metropolitan markets,
including those in high-barrier-to-entry coastal markets and
rapidly expanding Sun Belt cities, with a tenant mix focused on
essential, necessity-based goods and services that drive multiple
shopping trips per week. Kimco Realty is also committed to
leadership in environmental, social and governance (ESG) issues and
is a recognized industry leader in these areas. Publicly traded on
the NYSE since 1991, and included in the S&P 500 Index, the
company has specialized in shopping center ownership, management,
acquisitions, and value enhancing redevelopment activities for more
than 60 years. As of June 30, 2023, the company owned interests in
528 U.S. shopping centers and mixed-use assets comprising 90
million square feet of gross leasable space. For further
information, please visit www.kimcorealty.com.
The company announces material information to its investors
using the company’s investor relations website
(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 social media channels, including
Facebook (www.facebook.com/kimcorealty), Twitter
(www.twitter.com/kimcorealty) and LinkedIn
(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
This communication contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The company intends such forward-looking statements to be
covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995 and includes this statement for purposes of complying
with the safe harbor provisions. Forward-looking statements, which
are based on certain assumptions and describe the company’s future
plans, strategies and expectations, are generally identifiable by
use of the words “believe,” “expect,” “intend,” “commit,”
“anticipate,” “estimate,” “project,” “will,” “target,” “plan,”
“forecast” or similar expressions. You should not rely on
forward-looking statements since they involve known and unknown
risks, uncertainties and other factors which, in some cases, are
beyond the company’s control and could materially affect actual
results, performances or achievements. 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 impact of competition,
including the availability of acquisition or development
opportunities and the costs associated with purchasing and
maintaining assets, (iii)the inability of major tenants to continue
paying their rent obligations due to bankruptcy, insolvency or a
general downturn in their business, (iv) the reduction in the
company’s income in the event of multiple lease terminations by
tenants or a failure of multiple tenants to occupy their premises
in a shopping center, (v) the potential impact of e-commerce and
other changes in consumer buying practices, and changing trends in
the retail industry and perceptions by retailers or shoppers,
including safety and convenience, (vi) the availability of suitable
acquisition, disposition, development and redevelopment
opportunities, and risks related to acquisitions not performing in
accordance with our expectations, (vii) the company’s ability to
raise capital by selling its assets, (viii) disruptions and
increases in operating costs due to inflation and supply chain
issues, (ix) risks associated with the development of mixed-use
commercial properties, including risks associated with the
development and ownership of non-retail real estate, (x) changes in
governmental laws and regulations, including, but not limited to,
changes in data privacy, environmental (including climate change),
safety and health laws, and management’s ability to estimate the
impact of such changes, (xi) valuation and risks related to the
company’s joint venture and preferred equity investments and other
investments, (xii) valuation of marketable securities and other
investments, including the shares of Albertsons Companies, Inc.
common stock held by the company, (xiii) impairment charges, (xiv)
criminal cybersecurity attacks disruption, data loss or other
security incidents and breaches, (xv) impact of natural disasters
and weather and climate-related events, (xvi) pandemics or other
health crises, such as coronavirus disease 2019 (“COVID-19”),
(xvii) our ability to attract, retain and motivate key personnel,
(xviii) financing risks, such as the inability to obtain equity,
debt or other sources of financing or refinancing on favorable
terms to the company, (xix) the level and volatility of interest
rates and management’s ability to estimate the impact thereof, (xx)
changes in the dividend policy for the company’s common and
preferred stock and the company’s ability to pay dividends at
current levels, (xxi) unanticipated changes in the company’s
intention or ability to prepay certain debt prior to maturity
and/or hold certain securities until maturity, (xxii) the company’s
ability to continue to maintain its status as a REIT for federal
income tax purposes and potential risks and uncertainties in
connection with its UPREIT structure, and (xxiii) the other risks
and uncertainties identified under Item 1A, “Risk Factors” and
elsewhere in our Annual Report on Form 10-K for the year-ended
December 31, 2022 and in the company’s other filings with the
Securities and Exchange Commission (“SEC”). Accordingly, there is
no assurance that the company’s expectations will be realized. The
company disclaims any intention or obligation to update the
forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised to refer to any further
disclosures the company makes or related subjects in the company’s
quarterly reports on Form 10-Q and current reports on Form 8-K that
the company files with the SEC.
Condensed Consolidated Balance Sheets (in thousands, except
share data) (unaudited) June 30, 2023 December 31, 2022
Assets: Real estate, net of accumulated depreciation and
amortization of $3,631,686 and $3,417,414, respectively
$
15,019,986
$
15,039,828
Investments in and advances to real estate joint ventures
1,098,336
1,091,551
Other investments
136,555
107,581
Cash and cash equivalents
536,477
149,829
Marketable securities
314,826
597,732
Accounts and notes receivable, net
294,608
304,226
Operating lease right-of-use assets, net
130,287
133,733
Other assets
396,643
401,642
Total assets
$
17,927,718
$
17,826,122
Liabilities: Notes payable, net
$
6,775,080
$
6,780,969
Mortgages payable, net
359,609
376,917
Accounts payable and accrued expenses
207,545
207,815
Dividends payable
5,308
5,326
Operating lease liabilities
111,129
113,679
Other liabilities
620,706
601,574
Total liabilities
8,079,377
8,086,280
Redeemable noncontrolling interests
92,933
92,933
Stockholders' Equity: Preferred stock, $1.00 par
value, authorized 7,054,000 shares; Issued and outstanding (in
series) 19,367 and 19,435 shares, respectively; Aggregate
liquidation preference $484,179 and $485,868, respectively
19
19
Common stock, $.01 par value, authorized 750,000,000 shares; issued
and outstanding 619,888,890 and 618,483,565 shares, respectively
6,199
6,185
Paid-in capital
9,621,686
9,618,271
Cumulative distributions in excess of net income
(20,748
)
(119,548
)
Accumulated other comprehensive income
15,942
10,581
Total stockholders' equity
9,623,098
9,515,508
Noncontrolling interests
132,310
131,401
Total equity
9,755,408
9,646,909
Total liabilities and equity
$
17,927,718
$
17,826,122
Condensed Consolidated Statements of Operations (in
thousands, except per share data) (unaudited) Three Months
Ended June 30, Six Months Ended June 30,
2023
2022
2023
2022
Revenues Revenues from rental properties, net
$
439,008
$
423,273
$
877,346
$
845,927
Management and other fee income
3,832
3,925
8,386
8,520
Total revenues
442,840
427,198
885,732
854,447
Operating expenses Rent
(4,145
)
(4,070
)
(8,158
)
(8,151
)
Real estate taxes
(57,621
)
(56,075
)
(115,127
)
(110,389
)
Operating and maintenance
(75,073
)
(69,784
)
(150,315
)
(139,009
)
General and administrative
(32,734
)
(27,981
)
(67,483
)
(57,929
)
Impairment charges
-
(14,419
)
(11,806
)
(14,691
)
Depreciation and amortization
(129,245
)
(124,611
)
(255,546
)
(254,905
)
Total operating expenses
(298,818
)
(296,940
)
(608,435
)
(585,074
)
Gain on sale of properties
13,170
2,944
52,376
7,137
Operating income
157,192
133,202
329,673
276,510
Other income/(expense) Special dividend income
-
-
194,116
-
Other income, net
7,571
6,642
10,703
12,625
Gain/(loss) on marketable securities, net
14,561
(261,467
)
4,417
(139,703
)
Interest expense
(60,674
)
(56,466
)
(121,980
)
(113,485
)
Early extinguishment of debt charges
-
(57
)
-
(7,230
)
Income/(loss) before income taxes, net, equity in income of joint
ventures, net, and equity in income from other investments, net
118,650
(178,146
)
416,929
28,717
(Provision)/benefit for income taxes, net
(31,027
)
(96
)
(61,856
)
57
Equity in income of joint ventures, net
17,128
44,130
41,332
67,700
Equity in income of other investments, net
4,519
3,385
6,641
8,758
Net income/(loss)
109,270
(130,727
)
403,046
105,232
Net (income)/loss attributable to noncontrolling interests
(2,644
)
11,226
(6,657
)
12,569
Net income/(loss) attributable to the company
106,626
(119,501
)
396,389
117,801
Preferred dividends, net
(6,200
)
(6,250
)
(12,451
)
(12,604
)
Net income/(loss) available to the company's common shareholders
$
100,426
$
(125,751
)
$
383,938
$
105,197
Per common share: Net income/(loss) available to the
company's common shareholders: (1) Basic
$
0.16
$
(0.21
)
$
0.62
$
0.17
Diluted (2)
$
0.16
$
(0.21
)
$
0.62
$
0.17
Weighted average shares: Basic
617,077
615,642
616,785
615,207
Diluted
617,257
615,642
619,749
616,943
(1)
Adjusted for earnings attributable from
participating securities of ($647) and ($533) for the three months
ended June 30, 2023 and 2022, respectively. Adjusted for earnings
attributable from participating securities of ($2,074) and ($1,000)
for the six months ended June 30, 2023 and 2022, respectively.
(2)
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 antidilutive
effect on net income and therefore have not been included.
Distributions on convertible units did not have a dilutive impact
for the three months ended June 30, 2023 and 2022. Adjusted for
distributions on convertible units of $1,479 and $0 for the six
months ended June 30, 2023 and 2022, respectively.
Reconciliation of Net Income/(Loss) Available to the Company's
Common Shareholders to FFO Available to the Company's Common
Shareholders (1) (in thousands, except per share data)
(unaudited) Three Months Ended June 30, Six Months Ended
June 30,
2023
2022
2023
2022
Net income/(loss) available to the company's common shareholders
$
100,426
$
(125,751
)
$
383,938
$
105,197
Gain on sale of properties
(13,170
)
(2,944
)
(52,376
)
(7,137
)
Gain on sale of joint venture properties
(180
)
(27,198
)
(7,890
)
(30,184
)
Depreciation and amortization - real estate related
127,725
123,672
253,003
253,133
Depreciation and amortization - real estate joint ventures
15,599
16,616
32,146
33,501
Impairment charges (including real estate joint ventures)
-
17,233
11,803
17,933
Profit participation from other investments, net
(2,792
)
(1,988
)
(2,761
)
(5,651
)
Special dividend income
-
-
(194,116
)
-
(Gain)/loss on marketable securities, net
(14,561
)
261,467
(4,417
)
139,703
Provision/(benefit) for income taxes, net (2)
31,259
3
62,132
(8
)
Noncontrolling interests (2)
(424
)
(14,729
)
507
(19,459
)
FFO available to the company's common shareholders
$
243,882
$
246,381
$
481,969
$
487,028
(4
)
Weighted average shares outstanding for FFO calculations:
Basic
617,077
615,642
616,785
615,207
Units
2,563
2,473
2,551
2,509
Dilutive effect of equity awards
122
1,419
490
1,689
Diluted
619,762
619,534
619,826
619,405
FFO per common share - basic
$
0.40
$
0.40
$
0.78
$
0.79
FFO per common share - diluted (3)
$
0.39
$
0.40
$
0.78
$
0.79
(1)
The company considers FFO to be an
important supplemental measure of its 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 FFO when reporting results. Comparison of the
company's presentation of 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.
(2)
Related to gains, impairments,
depreciation on properties and gains/(losses) on sales of
marketable securities, where applicable.
(3)
Reflects the potential impact if certain
units were converted to common stock at the beginning of the
period. FFO available to the company’s common shareholders would be
increased by $584 and $483 for the three months ended June 30, 2023
and 2022, respectively. FFO available to the company's common
shareholders would be increased by $1,166 and $955 for the six
months ended June 30, 2023 and 2022, respectively. The effect of
other certain convertible units would have an anti-dilutive effect
upon the calculation of FFO available to the company’s common
shareholders per share. Accordingly, the impact of such conversion
has not been included in the determination of diluted earnings per
share calculations.
(4)
Includes Early extinguishment of debt
charges of $7.2 million recognized during the six months ended June
30, 2022.
Reconciliation of Net income/(loss) Available to the Company's
Common Shareholders to Same Property NOI (1)(2) (in
thousands) (unaudited) Three Months Ended June 30, Six
Months Ended June 30,
2023
2022
2023
2022
Net income/(loss) available to the company's common shareholders
$
100,426
$
(125,751
)
$
383,938
$
105,197
Adjustments: Management and other fee income
(3,832
)
(3,925
)
(8,386
)
(8,520
)
General and administrative
32,734
27,981
67,483
57,929
Impairment charges
-
14,419
11,806
14,691
Depreciation and amortization
129,245
124,611
255,546
254,905
Gain on sale of properties
(13,170
)
(2,944
)
(52,376
)
(7,137
)
Special dividend income
-
-
(194,116
)
-
Interest expense and other income, net
53,103
49,881
111,277
108,090
(Gain)/loss on marketable securities, net
(14,561
)
261,467
(4,417
)
139,703
Provision/(benefit) for income taxes, net
31,027
96
61,856
(57
)
Equity in income of other investments, net
(4,519
)
(3,385
)
(6,641
)
(8,758
)
Net income/(loss) attributable to noncontrolling interests
2,644
(11,226
)
6,657
(12,569
)
Preferred dividends, net
6,200
6,250
12,451
12,604
Non same property net operating income
(15,549
)
(15,513
)
(32,379
)
(33,119
)
Non-operational expense/(income) from joint ventures, net
22,766
(2,858
)
38,805
16,826
Same Property NOI
$
326,514
$
319,103
$
651,504
$
639,785
(1)
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 redevelopment, development and pending
stabilization; properties are deemed stabilized at the earlier of
(i) reaching 90% leased or (ii) one year following a project’s
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 particular
period presented, and thus provides a more consistent performance
measure for the comparison of the company's properties. 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.
(2)
Amounts represent Kimco Realty's pro-rata
share.
Reconciliation of the Projected Range of Net Income Available to
the Company's Common Shareholders to Funds From Operations
Available to the Company's Common Shareholders (unaudited, all
amounts shown are per diluted share) Projected Range Full
Year 2023
Low High Net income available to the company's common
shareholders
$
0.92
$
0.95
Gain on sale of properties
(0.08
)
(0.11
)
Gain on sale of joint venture properties
(0.01
)
(0.02
)
Depreciation & amortization - real estate related
0.82
0.84
Depreciation & amortization - real estate joint ventures
0.10
0.11
Impairment charges (including real estate joint ventures)
0.02
0.02
Special dividend income (1)
(0.31
)
(0.31
)
Gain on marketable securities, net
(0.01
)
(0.01
)
Provision for income taxes (2)
0.10
0.10
FFO available to the company's common shareholders
$
1.55
$
1.57
(1)
Related to the special cash dividend from
ACI
(2)
Related to gains, impairments,
depreciation on properties and gains/(losses) on sales of
marketable securities, where applicable.
Projections involve numerous assumptions such as rental
income (including assumptions on percentage rent), interest rates,
tenant defaults, occupancy rates, 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/20230727040584/en/
David F. Bujnicki Senior Vice President, Investor Relations and
Strategy Kimco Realty Corporation 1-866-831-4297
dbujnicki@kimcorealty.com
Kimco Realty (NYSE:KIM)
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