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Why Is Kimco Realty (KIM) Up 51.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Kimco Realty (KIM - Free Report) . Shares have added about 51.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kimco Realty due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kimco Realty Beats on Q1 FFO, Collects 60% of April Rent
Kimco’s first-quarter 2020 FFO per share came in at 37 cents, surpassing the Zacks Consensus Estimate of 36 cents. The retail REIT generated revenues of $289.7 million, beating the Zacks Consensus Estimate of $287.7 million.
Results reflect healthy portfolio occupancy, leasing spreads on new lease and positive same-property NOI.
However, on a year-over-year basis, the FFO per share came in lower than the year-ago quarter’s number of 38 cents. Revenues too slipped 1.8% year on year.
Notably, at the end of April, all of the company’s shopping centers remained open and operational with around 56% of tenants, based on the annualized base rent currently open, including some that are operating on a limited basis. About 43% of the company’s tenants are deemed to be essential.
The company noted that it has collected roughly 60% of the total pro-rata base rents billed for April. This included 78% from its top 50 tenants and 40% from those tenants that are shut. Further, it received rent deferral requests approximating 35% of its pro-rata minimum base rent for April. Kimco is selectively permitting deferrals for 14% of the minimum base rent for this period and is negotiating for payment of the residual April rent not yet collected.
Kimco had earlier withdrawn its guidance for the full year. The company’s board has now temporarily suspended the dividend on its common shares amid the coronavirus pandemic and related economic uncertainties.
Quarter in Detail
Pro-rata occupancy ended the first quarter at 96%, stable year on year. The company attained pro-rata anchor occupancy of 98.6%, displaying an 80-basis-point expansion, year over year. However, small-shop occupancy ended the reported quarter at 88.8%. This marks a sequential contraction of 50 basis points. It primarily reflects Pier 1 vacating four leases and six remaining Dress Barn stores closing during the quarter.
Pro-rata rental-rate leasing spreads on comparable spaces increased 7.3%, with rental rates for new leases and renewals/options climbing 13.3% and 6.8%, respectively. Same-property NOI inched up 1.5% year over year, primarily reflecting a 230-basis-point contribution from minimum rent.
Portfolio Activity
During the reported quarter, Kimco sold one property for $13.5 million. The company also acquired an unowned parcel at North Valley Shopping Center in Peoria, AZ for $7 million.
Balance-Sheet Position
Kimco exited first-quarter 2020 with cash and cash equivalents of $451.8 million, down from the $123.9 million recorded at the end of 2019. Further, the company ended the quarter with a consolidated weighted-average debt maturity profile of 10.1 years and more than 320 unencumbered properties.
The company closed on a new $2-billion unsecured revolving credit facility. This facility can be expanded to $2.75 billion under an accordion feature, with commitments from 21 lending institutions.
Moreover, in April, the company secured a new $590-million unsecured term loan facility due April 2021, with an option to extend it through April 2022.
At the end of April, Kimco has access to more than $2.2 billion of immediate liquidity, with nearly $900 million of cash on the balance sheet and $1.3 billion available under its unsecured revolving credit facility.
Furthermore, it ended April with total pro-rata debt of $113.5 million and $707.2 million maturing during 2020 and 2021, respectively.
Notably, the company has deferred roughly $95 million of capital spending and investment initially planned for the current year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -8.13% due to these changes.
VGM Scores
At this time, Kimco Realty has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Kimco Realty has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Kimco Realty (KIM) Up 51.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Kimco Realty (KIM - Free Report) . Shares have added about 51.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kimco Realty due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kimco Realty Beats on Q1 FFO, Collects 60% of April Rent
Kimco’s first-quarter 2020 FFO per share came in at 37 cents, surpassing the Zacks Consensus Estimate of 36 cents. The retail REIT generated revenues of $289.7 million, beating the Zacks Consensus Estimate of $287.7 million.
Results reflect healthy portfolio occupancy, leasing spreads on new lease and positive same-property NOI.
However, on a year-over-year basis, the FFO per share came in lower than the year-ago quarter’s number of 38 cents. Revenues too slipped 1.8% year on year.
Notably, at the end of April, all of the company’s shopping centers remained open and operational with around 56% of tenants, based on the annualized base rent currently open, including some that are operating on a limited basis. About 43% of the company’s tenants are deemed to be essential.
The company noted that it has collected roughly 60% of the total pro-rata base rents billed for April. This included 78% from its top 50 tenants and 40% from those tenants that are shut. Further, it received rent deferral requests approximating 35% of its pro-rata minimum base rent for April. Kimco is selectively permitting deferrals for 14% of the minimum base rent for this period and is negotiating for payment of the residual April rent not yet collected.
Kimco had earlier withdrawn its guidance for the full year. The company’s board has now temporarily suspended the dividend on its common shares amid the coronavirus pandemic and related economic uncertainties.
Quarter in Detail
Pro-rata occupancy ended the first quarter at 96%, stable year on year. The company attained pro-rata anchor occupancy of 98.6%, displaying an 80-basis-point expansion, year over year. However, small-shop occupancy ended the reported quarter at 88.8%. This marks a sequential contraction of 50 basis points. It primarily reflects Pier 1 vacating four leases and six remaining Dress Barn stores closing during the quarter.
Pro-rata rental-rate leasing spreads on comparable spaces increased 7.3%, with rental rates for new leases and renewals/options climbing 13.3% and 6.8%, respectively. Same-property NOI inched up 1.5% year over year, primarily reflecting a 230-basis-point contribution from minimum rent.
Portfolio Activity
During the reported quarter, Kimco sold one property for $13.5 million. The company also acquired an unowned parcel at North Valley Shopping Center in Peoria, AZ for $7 million.
Balance-Sheet Position
Kimco exited first-quarter 2020 with cash and cash equivalents of $451.8 million, down from the $123.9 million recorded at the end of 2019. Further, the company ended the quarter with a consolidated weighted-average debt maturity profile of 10.1 years and more than 320 unencumbered properties.
The company closed on a new $2-billion unsecured revolving credit facility. This facility can be expanded to $2.75 billion under an accordion feature, with commitments from 21 lending institutions.
Moreover, in April, the company secured a new $590-million unsecured term loan facility due April 2021, with an option to extend it through April 2022.
At the end of April, Kimco has access to more than $2.2 billion of immediate liquidity, with nearly $900 million of cash on the balance sheet and $1.3 billion available under its unsecured revolving credit facility.
Furthermore, it ended April with total pro-rata debt of $113.5 million and $707.2 million maturing during 2020 and 2021, respectively.
Notably, the company has deferred roughly $95 million of capital spending and investment initially planned for the current year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -8.13% due to these changes.
VGM Scores
At this time, Kimco Realty has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Kimco Realty has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.