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Kimco Realty (KIM) Meets Q4 FFO Estimates, Revenues Down Y/Y
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Retail real estate investment trust (“REIT”), Kimco Realty Corporation’s (KIM - Free Report) fourth-quarter 2016 funds from operations (“FFO”) as adjusted came in at 38 cents per share, in line with the Zacks Consensus Estimate and up a cent from the prior-year quarter figure of 37 cents.
Total revenue for the quarter was $297.0, ahead of the Zacks Consensus Estimate of $286.2 million. However, total revenue was down 1.3% from the year-ago quarter.
Further, the company remains on track with its strategic 2020 Vision, which envisages the ownership of premium assets in core markets in the U.S. as well as a reduction in the joint-venture portfolio. The company essentially accomplished its exit from Canada by selling 34 Canadian shopping centers for a gross price of $894.7 million during 2016.
For full-year 2016, Kimco reported FFO as adjusted per share of $1.50, up from $1.46 in the prior year. The company’s total revenue inched up 0.3% from a year ago to nearly $1.2 billion.
Quarter in Details
At quarter end, U.S. pro-rata occupancy came in at 95.4%, reflecting an expansion of 30 basis points (bps) sequentially, but a contraction of 40 bps year over year.
Further, pro-rata occupancy for small shop space (under 10,000 square feet) was 89.9%, up 70 bps sequentially and 120 bps from a year ago, while anchor occupancy was 97.3%, denoting a 30 bps rise sequentially, but a decline of 90 bps from the comparable prior-year period.
U.S. same-property net operating income (NOI) climbed 2.7% year over year. Notably, same-property NOI for fourth-quarter 2016 contracted 110 bps due to the bankruptcy of Sports Authority. Pro-rata rental-rate leasing spreads moved north 14.8%, with rental rates for new leases and renewals/options, jumping 36.5% and 7.1%, respectively.
Balance Sheet Position
Kimco exited fourth-quarter 2016 with cash and cash equivalents of around $142.5 million, down from $189.5 million at year-end 2015.
Notably, in Nov 2016, the company issued a new $400 million, seven-year unsecured bond with a coupon of 2.70% and a new $350 million, 30-year unsecured bond with a coupon of 4.125%. The company used the proceeds for general corporate needs.
Portfolio Activity
Kimco’s fourth-quarter acquisitions totaled 353,000 square feet of space, worth $88.7 million, of which the company’s share was $68.1 million.
On the other hand, Kimco’s fourth-quarter sales aggregated $134.4 million and included 966,000 square feet for six U.S. shopping centers. The company’s share of the sales price was $63.7 million.
For full-year 2016, Kimco acquired stakes in 15 shopping centers, aggregating 2.4 million square feet. This included eight acquisitions from existing joint-venture partners. Total purchase price for these acquisitions was $625.3 million (including $210.2 million of debt) and Kimco’s share of the purchase price was $457.1 million.
For 2016, Kimco’s share of shopping center dispositions aggregated $982.4 million from the sale of interests in 34 Canadian properties for $571.5 million as well as 31 U.S. properties for $410.9 million. (Read more: Kimco Discloses Q4 and 2016 Transaction Activities)
Guidance
Kimco provided its outlook for 2017. The company projects FFO as adjusted per share in the $1.50–$1.54 band. The Zacks Consensus Estimate is currently pegged at $1.57.
Notably, the company estimates the U.S. portfolio occupancy in the range of 95.8–96.2%, same-property NOI (including redevelopments) to grow 2.0–3.0%, operating property acquisitions of $300–$400 million and dispositions of $250–$350 million.
Dividend Update
Kimco’s board of directors announced a quarterly cash dividend of 27 cents. The dividend will be paid on Apr 17, 2017, to shareholders of record as of Apr 5.
Our Viewpoint
Kimco remains on track with its strategic 2020 Vision, which envisages the ownership of premium assets in core markets in the U.S. and a reduction in the joint-venture portfolio. Its efforts included exit from Canada and the exodus from secondary markets. However, earnings dilution led by high disposition activity remains a concern.
In addition, mall traffic continues to suffer amid a rapid shift in customers’ shopping preferences and patterns with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint and eventually opt for store closures. Further, retailers that are not being able to cope with competition are filing bankruptcies. This has emerged as a pressing concern for retail REITs like Kimco, as this trend is curtailing demand for the retail real estate space considerably.
Among other retail REITs, General Growth Properties Inc. , which changed its name officially to GGP Inc. on Jan 27, came up with FFO per share of 43 cents. This was in line with the Zacks Consensus Estimate as well as the prior-year quarter tally. Total revenue in the quarter came in at $610.3 million and exceeded the Zacks Consensus Estimate of $607 million. (Read more: GGP Q4 FFO in Line with Estimates, Revenue Tops, NOI Grows)
Moreover, Simon Property Group, Inc. (SPG - Free Report) reported fourth-quarter 2016 adjusted FFO per share of $2.91, up from the year-ago quarter tally of $2.73. The Zacks Consensus Estimate for the quarter was $2.51. Growth in operating income aided the results. (Read more: Simon Property Q4 FFO & Revenues Top, Dividend Up)
We now look forward to the earnings releases of another retail REIT – The Macerich Company (MAC - Free Report) – which is expected to report early next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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.
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Kimco Realty (KIM) Meets Q4 FFO Estimates, Revenues Down Y/Y
Retail real estate investment trust (“REIT”), Kimco Realty Corporation’s (KIM - Free Report) fourth-quarter 2016 funds from operations (“FFO”) as adjusted came in at 38 cents per share, in line with the Zacks Consensus Estimate and up a cent from the prior-year quarter figure of 37 cents.
Total revenue for the quarter was $297.0, ahead of the Zacks Consensus Estimate of $286.2 million. However, total revenue was down 1.3% from the year-ago quarter.
Further, the company remains on track with its strategic 2020 Vision, which envisages the ownership of premium assets in core markets in the U.S. as well as a reduction in the joint-venture portfolio. The company essentially accomplished its exit from Canada by selling 34 Canadian shopping centers for a gross price of $894.7 million during 2016.
For full-year 2016, Kimco reported FFO as adjusted per share of $1.50, up from $1.46 in the prior year. The company’s total revenue inched up 0.3% from a year ago to nearly $1.2 billion.
Quarter in Details
At quarter end, U.S. pro-rata occupancy came in at 95.4%, reflecting an expansion of 30 basis points (bps) sequentially, but a contraction of 40 bps year over year.
Further, pro-rata occupancy for small shop space (under 10,000 square feet) was 89.9%, up 70 bps sequentially and 120 bps from a year ago, while anchor occupancy was 97.3%, denoting a 30 bps rise sequentially, but a decline of 90 bps from the comparable prior-year period.
U.S. same-property net operating income (NOI) climbed 2.7% year over year. Notably, same-property NOI for fourth-quarter 2016 contracted 110 bps due to the bankruptcy of Sports Authority. Pro-rata rental-rate leasing spreads moved north 14.8%, with rental rates for new leases and renewals/options, jumping 36.5% and 7.1%, respectively.
Balance Sheet Position
Kimco exited fourth-quarter 2016 with cash and cash equivalents of around $142.5 million, down from $189.5 million at year-end 2015.
Notably, in Nov 2016, the company issued a new $400 million, seven-year unsecured bond with a coupon of 2.70% and a new $350 million, 30-year unsecured bond with a coupon of 4.125%. The company used the proceeds for general corporate needs.
Portfolio Activity
Kimco’s fourth-quarter acquisitions totaled 353,000 square feet of space, worth $88.7 million, of which the company’s share was $68.1 million.
On the other hand, Kimco’s fourth-quarter sales aggregated $134.4 million and included 966,000 square feet for six U.S. shopping centers. The company’s share of the sales price was $63.7 million.
For full-year 2016, Kimco acquired stakes in 15 shopping centers, aggregating 2.4 million square feet. This included eight acquisitions from existing joint-venture partners. Total purchase price for these acquisitions was $625.3 million (including $210.2 million of debt) and Kimco’s share of the purchase price was $457.1 million.
For 2016, Kimco’s share of shopping center dispositions aggregated $982.4 million from the sale of interests in 34 Canadian properties for $571.5 million as well as 31 U.S. properties for $410.9 million. (Read more: Kimco Discloses Q4 and 2016 Transaction Activities)
Guidance
Kimco provided its outlook for 2017. The company projects FFO as adjusted per share in the $1.50–$1.54 band. The Zacks Consensus Estimate is currently pegged at $1.57.
Notably, the company estimates the U.S. portfolio occupancy in the range of 95.8–96.2%, same-property NOI (including redevelopments) to grow 2.0–3.0%, operating property acquisitions of $300–$400 million and dispositions of $250–$350 million.
Dividend Update
Kimco’s board of directors announced a quarterly cash dividend of 27 cents. The dividend will be paid on Apr 17, 2017, to shareholders of record as of Apr 5.
Our Viewpoint
Kimco remains on track with its strategic 2020 Vision, which envisages the ownership of premium assets in core markets in the U.S. and a reduction in the joint-venture portfolio. Its efforts included exit from Canada and the exodus from secondary markets. However, earnings dilution led by high disposition activity remains a concern.
In addition, mall traffic continues to suffer amid a rapid shift in customers’ shopping preferences and patterns with online purchases growing by leaps and bounds. These have made retailers reconsider their footprint and eventually opt for store closures. Further, retailers that are not being able to cope with competition are filing bankruptcies. This has emerged as a pressing concern for retail REITs like Kimco, as this trend is curtailing demand for the retail real estate space considerably.
Kimco currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kimco Realty Corporation Price, Consensus and EPS Surprise
Kimco Realty Corporation Price, Consensus and EPS Surprise | Kimco Realty Corporation Quote
Among other retail REITs, General Growth Properties Inc. , which changed its name officially to GGP Inc. on Jan 27, came up with FFO per share of 43 cents. This was in line with the Zacks Consensus Estimate as well as the prior-year quarter tally. Total revenue in the quarter came in at $610.3 million and exceeded the Zacks Consensus Estimate of $607 million. (Read more: GGP Q4 FFO in Line with Estimates, Revenue Tops, NOI Grows)
Moreover, Simon Property Group, Inc. (SPG - Free Report) reported fourth-quarter 2016 adjusted FFO per share of $2.91, up from the year-ago quarter tally of $2.73. The Zacks Consensus Estimate for the quarter was $2.51. Growth in operating income aided the results. (Read more: Simon Property Q4 FFO & Revenues Top, Dividend Up)
We now look forward to the earnings releases of another retail REIT – The Macerich Company (MAC - Free Report) – which is expected to report early next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>