Kimco Realty Announces First Quarter 2013 Results - FFO Increases 6.5 Percent Per Share; Strong Same
Kimco Realty Announces First Quarter 2013 Results - FFO Increases 6.5 Percent Per Share; Strong Same-Property NOI Growth of 4.0 Percent - Highest Quarterly Increase Since 2007
Highlights for the First Quarter 2013 and Subsequent Activity
- Reported funds from operations ("FFO") of $0.33 per diluted share for the first quarter 2013, representing an increase of 6.5 percent over the same period in 2012;
- FFO as adjusted was $0.32 per diluted share for the first quarter 2013, compared to $0.31 per diluted share for the same period in 2012;
- Combined same-property net operating income ("NOI") increased 4.0 percent from the first quarter 2012, representing the twelfth consecutive quarter with a positive increase;
- Recognized 13.5 percent positive spread on new U.S. leases signed during the quarter;
- Signed 693 new leases, renewals and options during the quarter totaling 3.7 million square feet;
- Completed the funding of Kimco's 15 percent interest in the consortium that acquired five grocery banners from SUPERVALU Inc. (NYS: SVU) , as well as a minority interest in the outstanding common shares of SVU; and
- Executed a purchase and sales agreement for the sale of a nine-property Mexican shopping center portfolio for a gross sales price of approximately US$271 million.
Net income available to common shareholders for the first quarter of 2013 was $53.2 million, or $0.13 per diluted share, compared to $38.1 million, or $0.09 per diluted share, for the first quarter of 2012.
FFO, a widely accepted supplemental measure of REIT performance, was $134.9 million, or $0.33 per diluted share, for the first quarter of 2013, compared to $126.2 million, or $0.31 per diluted share, for the first quarter of 2012.
FFO as adjusted, which excludes the effects of non-operating impairments and transactional income and expenses, was $132.2 million, or $0.32 per diluted share, for the first quarter of 2013, compared to $125.9 million, or $0.31 per diluted share, for the first quarter of 2012.
A reconciliation of net income to FFO and FFO as adjusted is provided in the tables accompanying this press release.
Shopping Center Operating Results
First quarter 2013 shopping center portfolio operating results:
Combined Shopping Center Portfolio (includes U.S., Canada and Latin America)
- Pro-rata occupancy was 93.6 percent, an increase of 70 basis points over the first quarter of 2012;
- Combined same-property NOI increased 4.0 percent over the first quarter of 2012; and
- Total leases executed in the combined portfolio: 693 new leases, renewals and options totaling 3.7 million square feet.
The combined same-property NOI increase of 4.0 percent represents twelve consecutive quarters of positive same-property NOI, and the highest quarterly increase since the fourth quarter of 2007. Kimco reports same-property NOI on a cash-basis, excluding lease termination fees, and including charges for bad debts.
U.S. Shopping Center Portfolio
- Pro-rata occupancy was 93.7 percent, an increase of 90 basis points over the first quarter of 2012;
- U.S. same-property NOI increased 3.7 percent during the first quarter of 2013, compared to the same period in 2012; and
- Pro-rata U.S. cash-basis leasing spreads increased 3.8 percent; new leases increased 13.5 percent, and renewals/options increased 2.7 percent.
In addition, the U.S. shopping center portfolio's pro-rata occupancy for small shop space (defined as space of less than 10,000 square feet) was 84.0 percent, an increase of 170 basis points from the first quarter of 2012.
As previously announced, during the first quarter of 2013, Kimco acquired or increased its equity interests in eight retail properties totaling 1.5 million square feet for approximately $221 million. First quarter acquisition activity includes:
- Purchased four properties that were either adjacent or in close proximity to an existing Kimco shopping center and are supported by an average household income of $121,000 within a three-mile radius, for a total purchase price of $76.0 million.
- Acquired from existing joint venture partners the remaining interest in three shopping centers that are 97.5 percent occupied for a gross purchase price of $144.9 million.
- Converted a Canadian retail preferred equity investment into a pari passu joint venture. Kimco holds a 55.5 percent interest in this 429,000 square foot shopping center.
Also in the first quarter of 2013, Kimco increased its ownership interest in the Kimco Income Fund (KIF) joint venture portfolio from 15.2 percent to 29.8 percent through the acquisition of a minority partner's interest for $19.9 million.
As previously announced, Kimco sold two shopping centers, totaling 292,000 square feet, for a gross sales price of $10.3 million during the first quarter. Currently, the company has 14 U.S. retail properties in contract negotiations for approximately $111 million. Since Kimco's Investor Day in September 2010, the company has disposed of 110 properties, comprising 11.1 million square feet, for $835.6 million, including $194.1 million of mortgage debt. The company's share of the proceeds from these sales was $514.5 million.
Also during the first quarter, the company sold a non-retail urban property located in Bronx, N.Y., for $3.6 million. In addition, Kimco anticipates completing the sale of the InTown Suites extended-stay portfolio and two New York City non-retail urban properties that are under contract during the second quarter of 2013. These transactions are expected to generate proceeds to the company of approximately $137 million.
Subsequent to the end of the first quarter of 2013, a purchase and sales agreement was executed for the sale of a portfolio of nine Mexican shopping centers to a local real estate operator for a gross sales price of 3.35 billion Mexican pesos (US$271 million), including mortgage debt of 574 million Mexican pesos (US$46 million). Kimco holds a 47.6 percent interest in this portfolio, which totals 2.6 million square feet and is approximately 91 percent occupied.
As previously announced, Kimco, through wholly owned subsidiaries, invested a total of approximately $71 million for its 15 percent interest in a consortium that is participating in two previously announced transactions with SUPERVALU Inc. The company invested $37 million toward the acquisition of the Albertsons, Shaw's, Jewel-Osco, Acme and Star Market banners from SUPERVALU Inc., comprising 877 grocery locations for $3.3 billion. In addition, as part of a tender offer, Kimco funded approximately $34 million for 8.2 million common shares of SUPERVALU Inc. (NYS: SVU) , priced at $4 per share which compares favorably to the current market price.
Kimco's board of directors declared a quarterly cash dividend of $0.21 per common share, payable on July 15, 2013, to shareholders of record on July 3, 2013, representing an ex-dividend date of July 1, 2013.
The board of directors also declared quarterly dividends for the company's preferred shares as follows:
- For the Class H depositary shares, each representing 1/100 of a share of 6.90 percent Class H cumulative redeemable preferred shares, a quarterly dividend of $0.43125 per preferred depositary share will be paid on July 15, 2013, to shareholders of record on July 2, 2013, representing an ex-dividend date of June 28, 2013;
- For the Class I depositary shares, each representing 1/1000 of a share of 6.00 percent Class I cumulative redeemable preferred shares, a quarterly dividend of $0.37500 per preferred depositary share will be paid on July 15, 2013, to shareholders of record on July 2, 2013, representing an ex-dividend date of June 28, 2013.
- For the Class J depositary shares, each representing 1/1000 of a share of 5.50 percent Class J cumulative redeemable preferred shares, a quarterly dividend of $0.34375 per preferred depositary share will be paid on July 15, 2013, to shareholders of record on July 2, 2013, representing an ex-dividend date of June 28, 2013.
- For the Class K depositary shares, each representing 1/1000 of a share of 5.625 percent Class K cumulative redeemable preferred shares, a quarterly dividend of $0.35156 per preferred depositary share will be paid on July 15, 2013, to shareholders of record on July 2, 2013, representing an ex-dividend date of June 28, 2013.
2013 Revised Guidance
The company's 2013 full-year guidance range for FFO as adjusted, which does not include any estimate for transactional activities or non-operating impairments, has been increased by raising the low end of the guidance range. In addition, Kimco has increased its 2013 guidance range for the combined same-property NOI. Kimco's 2013 revised guidance is as follows:
|FFO as adjusted per diluted share:||$1.29 - $1.33||$1.28 - $1.33|
|Combined portfolio occupancy:||+50 to +75 basis points||+50 to +75 basis points|
|Combined same-property NOI:||+2.75 to +3.75 percent||+2.5 to +3.5 percent|
Conference Call and Supplemental Materials
Kimco will hold its quarterly conference call on Thursday, May 2, 2013, at 10:00 a.m. EDT. The call will include a review of the company's first quarter 2013 results, as well as a discussion of the company's strategy and expectations for the future. To participate, dial 1-888-317-6003 (Passcode: 2655185).
A replay will be available through 9:00 a.m. EDT on June 3, 2013, by dialing 1-877-344-7529 (Passcode: 10026626). Access to the live call and replay will be available through the company's website at investors.kimcorealty.com.
Kimco Realty Corp. (NYS: KIM) is a real estate investment trust (REIT) headquartered in New Hyde Park, N.Y., that owns and operates North America's largest portfolio of neighborhood and community shopping centers. As of March 31, 2013, the company owned interests in 895 shopping centers comprising 131 million square feet of leasable space across 44 states, Puerto Rico, Canada, Mexico and South America. 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 more than 50 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.
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, (vi) the level and volatility of interest rates and foreign currency exchange rates, (vii) risks related to our international operations, (viii) the availability of suitable acquisition and disposition opportunities, and risks related to acquisitions not performing in accordance with our expectations, (ix) valuation and risks related to our 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 stock, (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 Securities and Exchange Commission (SEC) filings, including but not limited to the company's Annual Report on Form 10-K for the year ended December 31, 2012. 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, 2012, 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.
|Condensed Consolidated Statements of Income|
|(in thousands, except share information)|
|Three Months Ended|
|Revenues from rental properties||$||232,785||$||214,564|
|Management and other fee income||8,393||9,425|
|Real estate taxes||29,855||28,152|
|Operating and maintenance||28,849||26,415|
|General and administrative expenses||34,119||34,414|
|Provision for doubtful accounts||1,960||3,097|
|Depreciation and amortization||62,738||59,556|
|Total operating expenses||164,044||155,130|
|Mortgage financing income||986||2,007|
|Interest, dividends and other investment income||2,663||164|
|Other expense, net||(3,485||)||(3,597||)|
|Income from other real estate investments||403||727|
Income from continuing operations before income taxes, equity in income of joint ventures, gains on change in control of interests and equity in income from other real estate investments
|Provision for income taxes, net||(15,133||)||(4,054||)|
|Equity in income of joint ventures, net||24,111||34,738|
|Gains on change in control of interests||23,170||2,008|
|Equity in income of other real estate investments, net||11,163||11,027|
|Income from continuing operations||67,388||54,596|
|Income from discontinued operating properties, net of tax||115||1,497|
|Impairment/loss on operating properties sold, net of tax||(31||)||(8,924||)|
|Gain on disposition of operating properties||2,496||11,979|
|Income from discontinued operations||2,580||4,552|
|Gain on sale of operating properties, net of tax (1)||540||-|
|Net income attributable to noncontrolling interests (3)||(2,738||)||(5,510||)|
|Net income attributable to the Company||67,770||53,638|
|Preferred stock dividends||(14,573||)||(15,574||)|
|Net income available to the Company's common shareholders||$||53,197||$||38,064|
|Per common share:|
|Income from continuing operations: (3)|
|Net income: (4)|
|Weighted average shares:|
|(1)||Included in the calculation of income from continuing operations per common share in accordance with SEC guidelines.|
|(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 anti-dilutive effect on net income and therefore has not been included.|
|(3)||Includes the net income attributable to noncontrolling interests related to continued operations of ($2,750) and ($3,269) for the quarters ended March 31, 2013 and 2012, respectively.|
|(4)||Includes earnings attributable to unvested restricted shares of $390 and $338 for the quarters ended March 31, 2013 and 2012, respectively.|
|Condensed Consolidated Balance Sheets|
|(in thousands, except share information)|
|March 31,||December 31,|
Operating real estate, net of accumulated depreciation of $1,801,679 and $1,745,462, respectively
|Investments and advances in real estate joint ventures||1,442,240||1,428,155|
|Real estate under development||97,260||97,263|
|Other real estate investments||334,082||317,557|
|Mortgages and other financing receivables||72,361||70,704|
|Cash and cash equivalents||166,894||141,875|
|Accounts and notes receivable||164,510||171,540|
|Redeemable noncontrolling interests||86,324||81,076|
Preferred stock, $1.00 par value, authorized 5,961,200 shares
102,000 shares issued and outstanding (in series)
Aggregate liquidation preference $975,000
|Common stock, $.01 par value, authorized 750,000,000 shares|
|issued and outstanding 408,622,972 and 407,782,102 shares, respectively||4,086||4,078|
|Cumulative distributions in excess of net income||(856,620||)||(824,008||)|
|Accumulated other comprehensive income||(27,678||)||(66,182||)|
|Total stockholders' equity||4,787,735||4,765,160|
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