(Source: Business Wire)
Kimco Realty Corporation (NYSE: KIM) today reported results for the
quarter and nine months ended September 30, 2009.
Highlights for the third quarter
2009
Declared regular quarterly cash dividend of $0.16 per common share
for the first quarter of 2010;
Posted quarter end occupancy of 92.4 percent in its combined
shopping center portfolio and 91.9 percent in the U.S. portfolio;
In the U.S., executed 426 leases totaling 1.7 million square feet,
approximately a 42 percent increase on a square footage basis over the
same period in the prior year and an 18 percent increase over the
prior quarter;
Reported 1.3 percent increase in same-space leasing spreads in the
U.S.: 2.1 percent increase for lease renewals and options partially
offset by a 0.2 percent decline for new leases;
Reported a 3.6 percent decline in U.S. same-property net operating
income (NOI) from the third quarter of 2008 and a 2.2 percent decline
on year-to-date basis;
Acquired 100 percent interest in seven properties previously owned
in its joint ventures for an enterprise price of $71 million; and
Completed a $300 million 6.875% 10-year unsecured bond offering.
Net income to common shareholders including non-cash impairments
and charges for the acceleration of deferred costs from early debt
repayment was $28.3 million or $0.07 per diluted share for the third
quarter of 2009 compared to $96.8 million or $0.37 per diluted share for
the third quarter of 2008.
Before non-cash impairments of $2.0 million and $5.9 million for the
third quarter of 2009 and 2008 respectively, and charges for the
acceleration of deferred costs from early debt repayment of $3.3 million
in the third quarter of 2009, net income available to common
shareholders was $33.6 million and $102.7 million for the third quarter
of 2009 and 2008, respectively. Comparable results were impacted by a
reduction of approximately $86 million in transaction-based income,
including $10 million of gains on sales not included in funds from
operations (FFO), and an increase in depreciation expense of
approximately $2.6 million. These declines were partially offset by a
$13.5 million decrease in income taxes and a $4.9 million adjustment to
the re-measurement of a derivative instrument.
Year-to-date, net loss available to common shareholders per diluted
share was ($0.27) compared to net income available to common
shareholders per diluted share of $1.03 through September 30, 2008.
Excluding non-cash impairment and charges for the acceleration of
deferred costs from early debt repayment, year-to-date net income
available to common shareholders per diluted share was $0.27 compared to
$1.07 for the same period in 2008.
Funds from operations (FFO), a widely accepted supplemental
measure of REIT performance, was $112.6 million or $0.30 per diluted
share for the third quarter of 2009 compared to $176.9 million or $0.68
per diluted share in the same period a year ago. Excluding non-cash
impairments and charges for the acceleration of deferred costs from
early debt repayment, FFO was $117.9 million or $0.31 per diluted share
for the third quarter 2009 compared to $182.8 million or $0.70 per
diluted share for the third quarter of 2008.
Year-to date, FFO per diluted share was $167.6 million or $0.49 compared
to $512.4 million or $1.98 for the same period in 2008. Excluding
non-cash impairments and charges for the acceleration of deferred costs
from early debt repayment, FFO per diluted share was $349.4 million or
$1.03 compared to $522.1 million or $2.01 for the period ending
September 30, 2008. A reconciliation of net income to FFO is provided in
the attached tables.
Core Business Operations
Shopping Center Portfolio
Kimco's shopping center portfolio includes 914 operating properties,
comprised of 805 assets in the United States and Puerto Rico, 51 in
Canada, 48 in Mexico and ten in South America, as well as 18 development
properties, consisting of four assets in the United States, nine in
Mexico and five in South America.
Occupancy in the company's combined shopping center portfolio was 92.4
percent at the end of the third quarter. In addition, the company has 18
properties previously included in development, which are approximately
75 percent leased and are not included in the company's occupancy. As
these properties reach stabilization of 90 percent leased, they will be
included in the company's occupancy. The company executed a total of 634
leases totaling 2.1 million square feet: 342 new leases for 1.0 million
square feet and 292 lease renewals for 1.1 million square feet.
Same-property NOI on an aggregate basis declined 3.6 percent from the
third quarter of 2008. The decline in same-property NOI is partially
related to lost rent and recoveries from Linens N Things, Circuit City
and Value City of approximately two percent. The remainder is primarily
attributable to the decline in occupancy.
In the U.S. portfolio, occupancy was 91.9 percent at the end of the
third quarter, up ten basis points sequentially. During the third
quarter, the company executed 426 leases totaling 1.7 million square
feet. Same space leases totaling 1.5 million square feet included 128
new leases for 501,000 square feet at a (0.2) percent spread from the
prior rent and 228 leases for renewals and options totaling 1.0 million
square feet at a 2.1 percent rent spread which together aggregate a 1.3
percent rent increase over the prior leases. The negative leasing spread
on new leases is attributable to re-leasing three bankrupt junior
anchors (two former Linens N Things and one Circuit City). Excluding
these three leases, the leasing spread on new leases is 5.1 percent.
The characteristics of Kimco's U.S. shopping center portfolio include a
well diversified, high-credit quality tenant base, a national footprint
with over 92 percent of its shopping centers inside dense, in-fill
first-ring suburbs and low average base rent per square foot. These
attributes have contributed to the company's ability to achieve above
average operating metrics, including better than average leasing spreads
with lower tenant improvement allowances, solid same-property NOI
comparisons and portfolio occupancy of approximately 92 percent. The
Company continually conducts portfolio reviews with regional and
national credit tenants in the discount, comparison, consumer staple and
personal services sectors to matchits national real estate portfolio
with the needs of expanding or relocating tenants.
Investment Management Programs
The company realized fee income of $10.7 million from its investment
management business in the third quarter of 2009. This included $9.3
million in management fees and $1.4 million in other ongoing fees.
At quarter-end, the company had a total of 326 properties in its
investment management programs with 14 institutional partners.
During the quarter, the company acquired the remaining 90 percent
interest in one property comprising 0.1 million square feet for $23
million from one of its joint ventures. Subsequent to quarter end, Kimco
acquired the remaining 85 percent interest in six unencumbered
properties from its joint venture with Prudential Real Estate Investors
for approximately $48 million. The six properties, well located in the
Portland, Oregon market, total 687,000 square feet and are 79 percent
leased.
Structured Investments and
Non-Core Business
During the quarter, the company recognized $24 million of income related
to its structured investments and other non-core assets of which $22
million was recurring and $2 million was transactional. The recurring
income was primarily attributable to $8 million from preferred equity
investments, $7 million of interest and dividends, $2 million of other
income and $5 million from joint ventures including its various
investments with Westmont Hospitality.
The company monetized $23 million in mortgage receivables through the
payoff of two mortgages: Save-Mart and 84 Lumber. Additionally, the
company liquidated its investments totaling $41 million in the following
marketable securities: Burlington Coat Factory, Duane Reade, Innvest
Real Estate and Toys R Us.
In keeping with its previously announced objective of disposing of its
non-core investments and other structured investments, the Company has
monetized an aggregate of approximately $104 million through the third
quarter of this year. The majority of these investments were comprised
of marketable securities and mortgage financing receivables as the
market for these investments is generally more stable and readily
accessible. The company continues to seek opportunities in the
marketplace to execute this strategy for the remaining non-core
investments.
Dividend and Capital Structure
The Board of Directors declared a quarterly cash dividend of $0.16 per
common share, payable on January 15, 2010 to shareholders of record on
January 4, 2010, representing an ex-dividend date of December 30, 2009.
In September, the company issued $300 million of 10-year unsecured
senior notes at a coupon of 6.875% per annum. The net proceeds of
approximately $297.3 million were used to repay the $220.0 million
unsecured term loan that was scheduled to mature in April 2011, with the
residual proceeds utilized toward the repayment of various construction
loans. In connection with the prepayment of the $220 million unsecured
term loan and certain construction loans, the company recognized a
non-cash charge related to the acceleration of deferred costs of
approximately $3.3 million or $0.01 per diluted share of FFO.
Through the nine months ended September 30, 2009, the company made
significant strides in rebalancing its debt maturities. At the beginning
of this year, approximately $452 million of total debt was scheduled to
mature during the year and an additional $1.8 billion or 40 percent of
total outstanding debt due between 2010 -- 2012. As of September 30,
2009, there are no remaining debt maturities in 2009 and $1.0 billion or
26 percent of total outstanding debt is scheduled to mature during 2010
-- 2012.
Portfolio Overview
As of September 30, 2009, Kimco owned equity interests in 1,462 retail
properties totaling 153 million square feet in the United States, Puerto
Rico, Canada, Mexico and South America. This portfolio encompasses 434
consolidated shopping centers, 326 shopping centers in investment
management programs, 154 other joint venture shopping centers and 18
development properties that together total 932 properties and 138
million square feet. This also includes 530 properties totaling 15
million square feet in the company's preferred equity program.
At September 30, the company had interests in 125 retail properties
totaling 16.4 million square feet in Canada. This is comprised of 51
shopping centers and 74 preferred equity investments. In Mexico, the
company owned interests in 57 shopping centers totaling 12.7 million
square feet comprised of 48 shopping centers and nine properties under
development. The company also has investments in 11 properties in Chile,
three development projects in Brazil and one project in Peru.
2009 Guidance
The company estimates FFO before non-cash impairments for the year of
$1.30 -- 1.33 per diluted share. Including non-cash impairments taken
through September 30, 2009, the company estimates FFO of $0.79 - $0.82
per diluted share. Estimated portfolio metrics are as follows:
Occupancy for the U.S. shopping center portfolio of approximately 92
percent; and
Same-property NOI for U.S. shopping center portfolio for the year
between -3 to -1 percent.
The company remains committed to its core business objectives:
1) Increasing shareholder value through the ownership, management and
selective acquisition of neighborhood and community shopping centers;
2) Actively engaging in the disposition of its non-core assets, and
3) Strengthening its balance sheet with a long term focus on reducing
its leverage levels and employing a conservative capital mix.
The company has provided further detail on guidance elements in its
supplemental package available on its website.
Conference Call and Supplemental
Materials
The company will hold its quarterly conference call on Thursday,
November 5th at 10:00 a.m. Eastern Time. The call will include a review
of the company's third quarter 2009 performance as well as a discussion
of the company's strategy and expectations for the future.
To participate, dial 1-866-205-6786. A replay will be available until
November 18th by dialing 1-888-203-1112; the Passcode will be 1991314.
Access to the live call and replay will be available through the
company's website at www.kimcorealty.com
under "Investor Relations: Presentations."
About Kimco
Kimco Realty Corporation, a real estate investment trust (REIT), owns
and operates North America's largest portfolio of neighborhood and
community shopping centers. As of September 30, 2009, the company owned
interests in 1,462 retail properties comprising 153 million square feet
of leasable space across 45 states, Puerto Rico, Canada, Mexico and
South America. Publicly traded on the NYSE under the symbol KIM and
included in the S&P 500 Index, the company has specialized in shopping
center acquisitions, development and management for 50 years. For
further information, visit the company's web site at www.kimcorealty.com.
Safe Harbor Statement
The statements in this 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 that could cause actual results to
differ materially from current expectations include, but are not limited
to, (i) general adverse economic and local real estate conditions,
including the current economic recession, (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, (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) the availability of suitable
acquisition opportunities, (viii) valuation of joint venture
investments, (ix) valuation of marketable securities and other
investments, (x) increases in operating costs, (xi) changes in the
dividend policy for our common stock, (xii) the reduction in our income
in the event of multiple lease terminations by tenants or a failure by
multiple tenants to occupy their premises in a shopping center, (xiii)
impairment charges and (xiv) 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 filings, including but
not limited to the company's Annual Report on Form 10-K for the year
ended December 31, 2008. Copies of each filing may be obtained from the
company or the Securities and Exchange Commission.
The company refers you to the documents filed by the company from time
to time with the Securities and Exchange Commission, specifically the
section titled "Risk Factors" in the company's Annual Report on Form
10-K for the year ended December 31, 2008, as may be updated or
supplemented in the company's Form 10-Q filings, which discuss these and
other factors that could adversely affect the company's results.
Condensed Consolidated Statements of Operations
(in thousands, except share information)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues from Rental Properties $ 191,886 $ 189,952 $ 575,065 $ 561,715
Rental Property Expenses:
Rent 3,669 3,320 10,308 9,804
Real Estate Taxes 28,983 23,991 80,841 70,760
Operating and Maintenance 25,572 26,798 80,799 77,635
58,224 54,109 171,948 158,199
Net Operating Income 133,662 135,843 403,117 403,516
Income from Other Real Estate Investments 9,249 24,032 26,973 77,443
Mortgage Financing Income 3,747 5,136 11,619 13,602
Management and Other Fee Income 10,173 12,959 30,397 35,816
Depreciation and Amortization (55,596 ) (53,013 ) (168,006 ) (152,903 )
101,235 124,957 304,100 377,474
Interest, Dividends and Other Investment Income 9,236 7,092 22,370 48,605
Other Income / (Expense), Net 4,383 (1,643 ) 468 (1,869 )
Interest Expense (54,551 ) (52,775 ) (152,023 ) (160,335 )
General and Administrative Expenses (27,965 ) (30,591 ) (83,449 ) (80,225 )
32,338 47,040 91,466 183,650
Benefit / (Provision) for Income Taxes 1,148 (12,336 ) 3,483 (20,608 )
Equity in Income of Joint Ventures, Net 8,946 78,469 3,317 138,016
Gain on Sale of Development Properties,
Net of Tax of $429, $1,863, $1,390 and $13,699, Respectively 644 2,795 2,086 20,549
Impairments:
Property Carrying Values - - (52,100 ) -
Investments in Other Real Estate Investments - - (40,602 ) -
Marketable Equity Securities & Other Investments - (5,902 ) (29,573 ) (9,710 )
Investments in Real Estate Joint Ventures - - (26,896 ) -
Income / (Loss) from Continuing Operations 43,076 110,066 (48,819 ) 311,897
Discontinued Operations:
Income / (Loss) from Discontinued Operating Properties 62 527 (22 ) 5,840
Loss on Operating Properties Held for Sale/Sold, Net of Tax - - (80 ) -
Gain on Disposition of Operating Properties, Net of Tax 18 8,809 421 9,531
Income from Discontinued Operations 80 9,336 319 15,371
Gain on Transfer of Operating Properties (1) - 1,188 26 1,188
Gain on Sale of Operating Properties (1) 600 - 2,155 587
Loss on Sale of Operating Properties (1) (111 ) - (111 ) -
489 1,188 2,070 1,775
Net Income / (Loss) 43,645 120,590 (46,430 ) 329,043
Net Income Attributable to Noncontrolling Interests (1) (3,537 ) (12,006 ) (9,689 ) (27,618 )
Net Income / (Loss) Attributable to the Company 40,108 108,584 (56,119 ) 301,425
Preferred Dividends (11,822 ) (11,822 ) (35,466 ) (35,466 )
Net Income / (Loss) Available to the Company's Common Shareholders $ 28,286 $ 96,762 $ (91,585 ) $ 265,959
Per Common Share:
Income / (Loss) from Continuing Operations: (3)
Basic $ 0.07 $ 0.34 $ (0.27 ) $ 0.99
Diluted $ 0.07 (2) $ 0.34 (2) $ (0.27 ) (2) $ 0.98 (2)
Net Income / (Loss):
Basic $ 0.07 $ 0.38 $ (0.27 ) $ 1.05
Diluted $ 0.07 (2) $ 0.37 (2) $ (0.27 ) (2) $ 1.03 (2)
Weighted Average Shares Outstanding for Net Income / (Loss) Calculations:
Basic 376,559 256,164 339,018 254,286
Diluted 378,127 258,933 339,018 257,376
(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 have not been included.
(3)Includes the net income attributable to noncontrolling interests related to discontinued operations of $0 and $148 for the quarters ended September 30, 2009 and September 30, 2008, $0 and $1,281 for the nine months ended September 30, 2009 and September 30, 2008, respectively.
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Reconciliation of Certain Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Reconciliation of Net Income to Funds From Operations - "FFO"
Net Income / (Loss) $ 43,645 $ 120,590 $ (46,430 ) $ 329,043
Net Income Attributable to the Noncontrolling Interest (3,537 ) (12,006 ) (9,689 ) (27,618 )
Gain on Disposition of Operating Prop., Net of Tax (618 ) (9,997 ) (2,602 ) (11,306 )
Gain on Disposition of Joint Venture Operating Properties - (185 ) - (2,273 )
Depreciation and Amortization 54,870 52,774 165,753 152,149
Depr. and Amort. - Real Estate JV's, Net of Noncontrolling Interests 32,845 35,471 100,664 100,622
Unrealized Remeasurement of Derivative Instrument (2,830 ) 2,069 (4,591 ) 7,208
Preferred Stock Dividends (11,822 ) (11,822 ) (35,466 ) (35,466 )
Funds From Operations $ 112,553 $ 176,894 $ 167,639 $ 512,359
Non-Cash Impairments Recognized $ (2,011 ) $ (5,902 ) $ (178,498 ) $ (9,710 )
Funds From Operations Before Impairments $ 114,564 $ 182,796 $ 346,137 $ 522,069
Weighted Average Shares Outstanding for FFO Calculations:
Basic 376,559 256,164 339,018 254,286
Units 1,557 6,057 723 5,992
Dilutive Effect of Options 86 2,748 87 3,069
Diluted 378,202 (1) 264,969 (1) 339,828 (1) 263,347 (1)
FFO Per Common Share - Basic $ 0.30 $ 0.69 $ 0.49 $ 2.01
FFO Per Common Share - Diluted $ 0.30 (1) $ 0.68 (1) $ 0.49 (1) $ 1.98 (1)
FFO Before Impairments Per Common Share - Diluted $ 0.30 (1) $ 0.70 (1) $ 1.02 (1) $ 2.01 (1)
(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 $90 and $2,944 for the three months ended September 30, 2009 and 2008 respectively, and $324 and $8,197 for the nine months ended September 30, 2009 and 2008 respectively.
Pursuant to the definition of Funds from Operations ("FFO") adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"), FFO is calculated by adjusting net income (loss) (computed in accordance with GAAP), excluding gains from sales of depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis.
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Condensed Consolidated Balance Sheets
(in thousands, except share information)
(unaudited)
September 30, December 31,
2009 2008
Assets:
Operating Real Estate, Net of Accumulated Depreciation of $1,292,319 and $1,159,664, Respectively $ 5,825,326 $ 5,690,277
Investments and Advances in Real Estate Joint Ventures 1,178,177 1,161,382
Real Estate Under Development 759,964 968,975
Other Real Estate Investments 553,799 566,324
Mortgages and Other Financing Receivables 153,750 181,992
Cash and Cash Equivalents 140,757 136,177
Marketable Securities 218,627 258,174
Accounts and Notes Receivable 106,840 97,702
Other Assets 350,801 336,144
Total Assets $ 9,288,041 $ 9,397,147
Liabilities:
Notes Payable $ 2,854,958 $ 3,440,818
Mortgages Payable 1,073,648 847,491
Construction Loans Payable 43,540 268,337
Dividends Payable 34,425 131,097
Other Liabilities 416,072 388,818
Total Liabilities 4,422,643 5,076,561
Redeemable Noncontrolling Interests 101,328 115,853
Stockholders' Equity:
Preferred Stock, $1.00 Par Value, Authorized 3,232,000 Shares
Class F Preferred Stock, $1.00 Par Value, Authorized 700,000 Shares
Issued and Outstanding 700,000 Shares 700 700
Aggregate Liquidation Preference $175,000
Class G Preferred Stock, $1.00 Par Value, Authorized 184,000 Shares
Issued and Outstanding 184,000 Shares 184 184
Aggregate Liquidation Preference $460,000
Common Stock, $.01 Par Value, Authorized 750,000,000 Shares Issued and Outstanding 376,720,376, and 271,080,525 Shares, Respectively 3,767 2,711
Paid-In Capital 4,946,357 4,217,806
Cumulative Distributions in Excess of Net Income (314,208 ) (58,162 )
4,636,800 4,163,239
Accumulated Other Comprehensive Income (98,711 ) (179,541 )
Total Stockholders' Equity 4,538,089 3,983,698
Noncontrolling Interests 225,981 221,035
Total Equity 4,764,070 4,204,733
Total Liabilities and Equity $ 9,288,041 $ 9,397,147
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