Kimco Realty Corporation (KIM)

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Kimco Realty (KIM)

Q1 2011 Earnings Call

May 05, 2011 9:00 am ET

Executives

Michael Pappagallo - Chief Operating Officer and Executive Vice President

Barbara Pooley - Chief Administrative Officer and Executive Vice President

Glenn Cohen - Chief Financial Officer, Executive Vice President and Treasurer

Milton Cooper - Executive Chairman and Chairman of Executive Committee

David Henry - Vice Chairman, Chief Executive Officer, President, Chief Investment Officer, Director and Member of Executive Committee

David Bujnicki - Senior Director of Investor Relations

Analysts

Laura Clark - Greenstreet Advisors

Jonathan Habermann - Goldman Sachs Group Inc.

David L. Wigginton

Nathan Isbee

James Sullivan - Cowen and Company, LLC

Steve Sakwa - ISI Group Inc.

Christy McElroy - UBS Investment Bank

Vincent Chao - Deutsche Bank

Richard Moore - RBC Capital Markets, LLC

Quentin Velleley - Citigroup Inc

Michael Bilerman - Citigroup Inc

Ross Nussbaum - UBS Investment Bank

Michael Mueller - JP Morgan Chase & Co

Craig Schmidt - BofA Merrill Lynch

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to Kimco's First Quarter Earnings Conference Call. Please be aware today's conference is being recorded. [Operator Instructions] At this time, it is my pleasure to introduce your speaker today Mr. Dave Bujnicki. Please go ahead.

David Bujnicki

Thanks, Clayton. Thank you all for joining the First Quarter 2011 Kimco Earnings Call. With me on the call this morning are Milton Cooper, Executive Chairman; Dave Henry, President and Chief Executive Officer; Mike Pappagallo, Chief Operating Officer; and Glenn Cohen, our Chief Financial Officer. There are also other key executives who will be available to address questions at the conclusion of our prepared remarks.

As a reminder, statements made during the course of this call represent the company and management’s hopes, intentions, beliefs, expectations or projections of the future, which 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. Information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained in the company’s SEC filings.

During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco’s operating results. Examples include, but are not limited to, funds from operations and net operating income. Reconciliations of these non-GAAP financial measures are available on our website.

Finally, during the Q&A portion of the call, we request that you respect the limit of one question so that all of our callers have the opportunity to speak with management. Feel free to return to the queue if you have additional questions. And if we have time, at the end of the call, we will address those questions.

With that, I now turn the call over to Dave Henry.

David Henry

Good morning, and thanks for calling in today. We are pleased with our first quarter results and believe that they represent solid and steady progress on our key 2011 objectives. With help from a slowly improving economy and renewed expansion activity from our national retailers, our most important portfolio metrics continue to improve with positive same-store NOI, leasing spreads and renewals.

Mexico also made an important contribution as our combined portfolio of both existing and newly completed shopping centers achieved an 80% aggregate occupancy level and leasing activity accelerated.

Overall, we are particularly pleased with the increase in our recurring FFO over year-ago levels. While the economy remains fragile with weak employment and housing levels, the recovery has achieved critical momentum in many respects.

Retailers are growing again, and there's virtually no new development activity. Excess space is being slowly absorbed, and rent levels are improving in many markets. Mike will go into the specifics, but we continue to be optimistic about our full year property level results.

Subsequent to quarter end, we completed the sale of the Valad convertible bonds to Blackstone. And as a result, we reduced our non-retail portfolio to just over $600 million. We're only 5% of our total assets. We will continue to decrease our non-retail assets in a measured and disciplined way.

On a parallel course, we also continue to make progress in reducing our portfolio of retail preferred equity investments through property sales, refinancing, partner buyouts and conversion to pursue joint ventures. The preferred equity retail portfolio has declined from $297 million and 125 properties to $156 million and 91 properties over the past 15 months.

Our earnings release also outlined new business activity. And without again listing the specific individual transactions, it is important to note that we are again actively acquiring properties from third parties for both our institutional joint ventures and our own portfolio.

So far, new business has come in the form of one-off transactions, but we also continue to evaluate portfolio opportunities. The market is clearly heated for high-quality retail properties, and we, together with our institutional partners, are being disciplined and patient. With our large portfolio, long history and many relationships, we are confident we will continue to have success adding excellent retail properties to our portfolio on an accretive basis.

Forgive me for again closing by repeating our 2011 priorities: continued improvement in our key metrics, occupancy, same store NOI and leasing spreads; achieving stability and lease-up of our Latin American property portfolio; reducing our non-retail investments and selling our non-strategic retail properties; growing in a measured way by acquiring high-quality retail properties in our core markets; and further reducing our debt with a target net debt-to-EBITDA ratio of 6.0 or lower.

Now I'd like to turn it over to Glenn for highlights of our quarterly financial results and then Mike Pappagallo will provide details on our property operation. Milton will close with his perspective.

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