Kimco Realty Corporation (KIM), a real estate investment trust (REIT), reported total revenues of $235.4 million in second quarter 2012, compared with $220.1 million in the year-earlier quarter – a year-over-year increase of approximately 7%.
Kimco reported second quarter 2012 FFO (funds from operations) of $138.0 million or 34 cents per share, compared with $126.0 million or 31 cents in the year-ago period. The reported FFO for the second quarter of 2012 exceeded the Zacks Consensus Estimate by 3 cents.
Excluding certain non-recurring items, FFO for the reported quarter was $126.2 million or 31 cents per share, compared with $121.4 million or 30 cents in the year-earlier quarter.
Overall occupancy in Kimco’s combined shopping center portfolio was 93.5% at the end of the quarter, an increase of 40 bps compared with second quarter 2011. In the U.S. portfolio, occupancy was 93.4%, an increase of 50 bps compared with the year-ago period.
Same-store net operating income (NOI) in the combined portfolio (including the impact of foreign currency) increased 1.7% in second quarter 2012 compared to the prior year. Same-store NOI in the U.S. portfolio increased 2.1% year over year.
During the reported quarter, Kimco executed a total of 649 leases in the combined portfolio, spanning 2 million square feet. These included 161 new leases in the same-store portfolio totaling 373,000 pro-rata square feet and 315 lease renewals and options for 1.3 million pro-rata square feet.
In addition, Kimco executed 173 new leases totaling 301,000 square feet for spaces vacant for more than one year. Leasing spreads in the U.S. portfolio increased 4.5% (cash basis).
Kimco acquired five shopping centers (435,000 square feet) during the quarter, along with two land parcels for approximately $97.3 million. These properties have a pro-rata average occupancy of 94.8 % and an annual base rent of $16.97 per square foot.
The company also acquired the remaining 70% ownership stake in a 680,000 square foot grocery-anchored power center in Towson, Maryland, from an existing institutional joint venture partner for $127 million, which included $57.6 million in mortgage debt.
Additionally, the company purchased a 90% ownership interest in a grocery-anchored shopping center totaling 140,000 square feet in Canada for $42.4 million, including $26.4 million of mortgage debt.
During second quarter 2012, Kimco completed the divesture of 10 non-core assets (887,000 square feet) and a land parcel for $77.6 million. The company is currently under negotiations to sell 12 non-core properties for $120 million.
Kimco continues to reposition its portfolio through the divestiture of non strategic assets and acquisition of high-quality properties. Since September 2010, the company had acquired 42 properties spanning 5.4 million square feet with an average occupancy of 93.8% for $860.6 million.
During this same period, the company sold 63 non-strategic shopping centers, totaling 5.3 million square feet, for $364.9 million. These properties had a pro-rata average occupancy of 80.9% and an annual base rent of $9.35 per square foot.
During the quarter, the company generated $15.3 million of income from its structured investments and other non-retail assets, out of which $10.0 million was recurring in nature. As of June 30, 2012, Kimco reduced its non-retail assets to approximately $459 million compared to $612 million at the end of second quarter 2011.
Kimco obtained an unsecured term loan worth $400 million to increase its liquidity. The loan is scheduled to mature in April 2014, and includes an accordion feature by virtue of which the company can increase the debt maturity by three additional one-year periods to April 2017 at its own discretion. The term loan bears an annualized interest rate at LIBOR plus 105 basis points The company utilized the proceeds from the loan to repay its existing debt.
At quarter-end, Kimco had over $2 billion of liquidity, with a consolidated net debt to recurring EBITDA (earnings before interest, tax, depreciation and amortization) ratio of 5.6x. For full year 2012, the company revised its recurring FFO guidance from the range of $1.22 – $1.26 to $1.24 -$1.26 per share.
Kimco currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We maintain our long-term Neutral recommendation on the stock. One of its competitors, Simon Property Group Inc. (SPG), currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.
Note: Funds from operations, 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.
KIMCO REALTY CO (KIM): Free Stock Analysis Report
SIMON PROPERTY (SPG): Free Stock Analysis Report
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