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Retail real estate investment trust (REIT) Kimco Realty Corp.’s (KIM - Free Report) first-quarter 2018 funds from operations (FFO) came in at 39 cents per share, surpassing the Zacks Consensus Estimate of 36 cents. This compares favorably with the year-ago figure of 37 cents.
The company posted revenues from rental properties of $230.4 million in the reported quarter, reflecting a year-over-year increase of 1.2%. Moreover, total revenues improved 3.6% to $304.1 million year over year.
Notably, the company registered new leasing spreads of 15.6%. This represents the 16th sequential increase in rental rate for new leases by more than 10% over the prior rent for the comparable space.
Quarter in Detail
At the end of the first quarter, pro-rata occupancy came in at 96.1%, indicating a sequential expansion of 10 basis points (bps), and 80 bps year over year.
Same-property net operating income (NOI) climbed 2.6% year over year. Pro-rata rental-rate leasing spreads grew 8.1%, with rental rate for new leases and renewals/options, climbing 15.6% and 7.3%, respectively.
Balance Sheet Position
Kimco exited first-quarter 2018 with cash and cash equivalents of around $218.3 million, down from $238.5 million recorded at year-end 2017.
Portfolio Activity
During the reported quarter, Kimco sold 21 shopping centers, spanning 2.3 million square feet of space, for a gross price of $219.5 million, with the company’s share of the sales price being $210.2 million.
Guidance
Kimco provided its FFO per share outlook for full-year 2018. The company projects FFO per share at $1.42-$1.46, similar to the previous guidance. This is based on same-property NOI growth (excluding redevelopments) projections of 1.5-2.00%, net disposition estimations of $700-$900 million, and total redevelopment & development investment of $425-$525 million.
The Zacks Consensus Estimate for full-year 2018 FFO per share is currently pegged at $1.44.
Share Repurchase Program
The company repurchased 1.6 million shares of common stock for $24.3 million under its $300-million share-repurchase program in the first quarter.
Our Viewpoint
We are impressed by Kimco’s performance which indicates higher leasing spreads, same-property NOI and occupancy. In addition, the company remains on track with its strategic 2020 Vision, which envisages the disposal of non-strategic assets and ownership of premium assets in major metro markets in the United States. Further, its share buyback program raises optimism.
Nevertheless, shrinking footfall at malls amid shift of consumers toward online channels, store closures and bankruptcy of retailers are expected to hurt this retail REIT’s performance. Also, we note that aggressive disposition activities have a dilutive impact on earnings and might impede the company’s growth in the short run.
Kimco Realty Corporation Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Regency Centers Corporation (REG - Free Report) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while Essex Property is slated to report its numbers on May 2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Image: Bigstock
Kimco Realty (KIM) Q1 FFO Beats Estimates, Occupancy Rises
Retail real estate investment trust (REIT) Kimco Realty Corp.’s (KIM - Free Report) first-quarter 2018 funds from operations (FFO) came in at 39 cents per share, surpassing the Zacks Consensus Estimate of 36 cents. This compares favorably with the year-ago figure of 37 cents.
The company posted revenues from rental properties of $230.4 million in the reported quarter, reflecting a year-over-year increase of 1.2%. Moreover, total revenues improved 3.6% to $304.1 million year over year.
Notably, the company registered new leasing spreads of 15.6%. This represents the 16th sequential increase in rental rate for new leases by more than 10% over the prior rent for the comparable space.
Quarter in Detail
At the end of the first quarter, pro-rata occupancy came in at 96.1%, indicating a sequential expansion of 10 basis points (bps), and 80 bps year over year.
Same-property net operating income (NOI) climbed 2.6% year over year. Pro-rata rental-rate leasing spreads grew 8.1%, with rental rate for new leases and renewals/options, climbing 15.6% and 7.3%, respectively.
Balance Sheet Position
Kimco exited first-quarter 2018 with cash and cash equivalents of around $218.3 million, down from $238.5 million recorded at year-end 2017.
Portfolio Activity
During the reported quarter, Kimco sold 21 shopping centers, spanning 2.3 million square feet of space, for a gross price of $219.5 million, with the company’s share of the sales price being $210.2 million.
Guidance
Kimco provided its FFO per share outlook for full-year 2018. The company projects FFO per share at $1.42-$1.46, similar to the previous guidance. This is based on same-property NOI growth (excluding redevelopments) projections of 1.5-2.00%, net disposition estimations of $700-$900 million, and total redevelopment & development investment of $425-$525 million.
The Zacks Consensus Estimate for full-year 2018 FFO per share is currently pegged at $1.44.
Share Repurchase Program
The company repurchased 1.6 million shares of common stock for $24.3 million under its $300-million share-repurchase program in the first quarter.
Our Viewpoint
We are impressed by Kimco’s performance which indicates higher leasing spreads, same-property NOI and occupancy. In addition, the company remains on track with its strategic 2020 Vision, which envisages the disposal of non-strategic assets and ownership of premium assets in major metro markets in the United States. Further, its share buyback program raises optimism.
Nevertheless, shrinking footfall at malls amid shift of consumers toward online channels, store closures and bankruptcy of retailers are expected to hurt this retail REIT’s performance. Also, we note that aggressive disposition activities have a dilutive impact on earnings and might impede the company’s growth in the short run.
Kimco Realty Corporation Price, Consensus and EPS Surprise
Kimco Realty Corporation Price, Consensus and EPS Surprise | Kimco Realty Corporation Quote
Kimco currently has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Regency Centers Corporation (REG - Free Report) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while Essex Property is slated to report its numbers on May 2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>