Kimco Realty Corporation ( KIM ), a real estate
investment trust (REIT), reported adjusted FFO (funds from
operations) per share of 32 cents, in line with the Zacks Consensus
Estimate and rising by a cent from the prior-year
The results were aided by better-than expected growth in revenues
and net operating income, which represented the highest quarterly
increase since 2007. The company has also raised the lower end of
its previously issued guidance.
Total revenue of $241.2 million during the reported quarter was up
7.7% year over year and exceeded the Zacks Consensus Estimate of
Including non-operating impairments and transactional income and
expenses, FFO, on a reported basis, was $134.9 million or 33 cents
per share in the reported quarter, up from $126.2 million or 31
cents per share in the year-ago period.
Quarter in Detail
Gross occupancy in Kimco's combined shopping center portfolio was
93.6% as of the end of the quarter, reflecting an uptick of 70
basis points (bps) from the prior-year quarter. In the U.S.
portfolio, gross occupancy was 93.7%, an increase of 90 bps
compared with the year-ago period.
Same-property net operating income (NOI) in the combined portfolio
climbed up 4.0% year over year. This represented the 12th
consecutive quarter of positive same-property NOI and the highest
quarterly increase since the fourth quarter of 2007. Same-property
NOI in the U.S. portfolio increased 3.7% over the same time
During the reported quarter, Kimco inked a total of 693 new
leases, renewals and options in the combined portfolio, spanning
3.7 million square feet. Pro-rata U.S. leasing spreads in the U.S.
portfolio increased 3.8% (cash-basis), including 13.5% for new
leases, and 2.7% for renewals/options.
Notable Activities during 1Q
During the reported quarter, Kimco acquired or increased its
equity interests in 8 retail properties spanning 1.5 million square
feet for around $221 million. Among the acquired properties, 4 are
next to or in immediate vicinity to Kimco's existing shopping
Moreover, the company purchased residual stake in 3 properties
from its joint venture partners and in one property, it converted
its preferred equity investment into a long-term retail joint
The acquisitions provided Kimco with a strong tenant base of
world-class retailers with long-term leases, such as Bed
Bath & Beyond Inc. ( BBBY ) and The
TJX Companies Inc. ( TJX ).
Kimco also raised its ownership interest in the Kimco Income Fund
(KIF) joint venture portfolio to 29.8% from 15.2% through the
acquisition of a minority partner's interest for $19.9
Kimco sold 2 shopping centers in the first quarter. The properties
aggregated 292,000 square feet and were vended at a gross sale
price of $10.3 million. The company also divested a non-retail
urban property in Bronx, N.Y. for $3.6 million. Around 14 retail
properties are currently in the contract negotiation stage for
about $111 million.
Moreover, Kimco participated in a consortium that acquired 5
grocery banners' operations totaling 877 locations from
SUPERVALU Inc. ( SVU ). The company
invested $71 million in total for its 15% interest in a consortium
that is participating in two previously announced transactions with
SUPERVALU Inc. This included $37 million for the acquisition of the
Moreover, as part of a tender offer, Kimco financed $34 million
for around 8.2 million common shares (3.2% of the total shares
outstanding) of SUPERVALU Inc.
As of Mar 31, 2013, Kimco had $166.9 million (up from $141.9
million at year-end 2012), with consolidated net debt to adjusted
EBITDA (earnings before interest, tax, depreciation and
amortization) ratio of 6.0x (compared to 5.7x from the prior
Kimco has raised the lower end of its prior issued guidance range.
The company now expects adjusted FFO per share in the range of
$1.29 - $1.33, compared to the prior range of $1.28 -$1.33.
In addition, Kimco increased its 2013 guidance range for the
combined same-property NOI and now expects it to be 2.75% - 3.75%,
compared with the prior guidance of 2.5% - 3.5%. The company
expects combined portfolio occupancy to increase by 50 - 75
bps.BED BATH&BEYOND (BBBY): Free Stock Analysis
ReportKIMCO REALTY CO (KIM): Free Stock Analysis
ReportSUPERVALU INC (SVU): Free Stock Analysis ReportTJX COS INC NEW (TJX): Free Stock Analysis
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Kimco announced a quarterly cash dividend of 21 cents per share on
its common stock. The dividend will be paid on July 15, 2013 to
shareholders of record on July 3.
We are encouraged by the decent results at Kimco. The company has
a premium portfolio of retail properties in high-income,
high-growth areas and is currently focusing on its core business
activities to tide over the volatility in the market. It is also
making strategic acquisitions, which are expected to boost the
In addition, it has a strong balance sheet with easy access to
capital to allow continued growth. However, stiff competition from
other players in the market and short-term headwinds for occupancy
in the midst of an unsettled economic environment remain our
Kimco currently carries a Zacks Rank #3 (Hold).
Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.