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Kimco's (KIM) Q2 FFO & Revenues Beat Estimates, '22 View Up

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Kimco Realty Corp.’s (KIM - Free Report) second-quarter 2022 funds from operations (FFO) per diluted share came in at 40 cents, surpassing the Zacks Consensus Estimate of 38 cents. The figure grew 17.6% from the year-ago quarter’s 34 cents.

Results reflect year-over-year growth in the top line. The rise in occupancy levels and rental rate growth aided Kimco’s performance. It raised 2022 FFO outlook.

This retail REIT clocked in revenues of $427.2 million, beating the consensus mark of $418.7 million. Quarterly revenues jumped 47.8% year over year.

According to Conor Flynn, Kimco’s CEO, “Our last-mile, open-air, grocery-anchored portfolio is facilitating higher retention, driving strong new tenant demand, and maintaining solid pricing power, even in the current inflationary environment, all of which should lead to greater free cashflow and visible earnings growth.”

Subsequent to the quarter end, Kimco acquired two grocery-anchored centers encompassing 329,000 square feet for $89 million. These are located in Philadelphia, PA and Massapequa, NY.

Quarter in Detail

Pro-rata portfolio occupancy at the end of the second quarter was 95.1%, reflecting an expansion of 120 basis points (bps) year over year and 40 bps sequentially. Pro-rata anchor occupancy was 97.6%, up 70 bps year over year and 30 bps from the previous quarter. Pro-rata small shop occupancy ended the quarter at 89.2%, representing an uptick of 370 bps from the prior-year quarter and 80 bps sequentially.

The company signed 498 leases, aggregating 2.3 million square feet in the quarter. Blended pro-rata rental-rate spreads on comparable spaces increased 7.1%, with rental rates for new leases growing 16.6% and renewals and options rising 5.6%.

Same-property net operating income (NOI) increased 3.4% year over year to $317.3 million, backed by a rise in minimum rent of 4.7%.

Portfolio Activity

In the reported quarter, Kimco acquired three previously unowned parcels for a gross purchase price of $6.3 million. These are part of the company’s existing grocery-anchored centers. Kimco’s share of the purchase price was $5.6 million.

Further, it increased its ownership interest in Kimco Income REIT (KIR) joint venture to 52.1% through the acquisition of an additional 3.58% ownership interest from existing partners. The purchase was carried out for $55.1 million.

Kimco sold four shopping centers and four land parcels for $221.6 million. The total square feet for the same aggregated 1.1 million. The company’s pro-rata share of the sales price was $100.3 million.

Balance Sheet Position

This retail REIT exited the second quarter of 2022 with nearly $2.3 billion of immediate liquidity. This included full availability under its $2-billion unsecured revolving credit facility and cash and cash equivalents of $296.8 million.

At the end of the quarter, Kimco’s investments in Albertsons Companies, Inc. were valued at more than $1.0 billion, subject to certain lock-up provisions until Sep 10, 2022.

Also, its net-debt-to-EBITDA was 6.4X on a look-through basis at the end of the second quarter, down from 7.1X year over year.

The company issued around 450,000 shares common stock through the at-the-market (ATM) program at a weighted average price of $25.30 per share, generating net proceeds of $11.3 million.

Dividend Update

Concurrent with the second-quarter earnings release, Kimco’s board of directors approved a quarterly cash dividend of 22 cents per share. This represents a 10% sequential rise in the dividend payment and a 29.4% increase year over year.

This dividend will be paid out on Sep 23 to its shareholders on record as of Sep 9, 2022.

Raised 2022 Guidance

Kimco projects FFO per diluted share in the range of $1.54-$1.57, up from the prior outlook of $1.50-$1.53. The Zacks Consensus Estimate for the same is currently pegged at $1.54.

Kimco currently carries a Zacks Rank #3 (Hold). 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 price-consensus-eps-surprise-chart | Kimco Realty Corporation Quote

Performance of Other REITs
 

UDR Inc. (UDR - Free Report) reported second-quarter 2022 FFO as adjusted per share of 57 cents, in line with the Zacks Consensus Estimate. The figure is 16.3% higher than the prior-year quarter’s 49 cents.

UDR’s quarterly results reflect an increase in revenues from rental income that fueled the quarter’s top-line growth. Robust operating trends and strong pricing power were major contributing factors.

Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported second-quarter 2022 adjusted FFO per share of $2.10, surpassing the Zacks Consensus Estimate of $2.06. The reported figure also compared favorably with the year-ago quarter’s $1.93.

ARE witnessed continued healthy leasing activity and rental rate growth during the quarter.

Boston Properties Inc.’s (BXP - Free Report) second-quarter 2022 FFO per share of $1.94 beat the Zacks Consensus Estimate of $1.85. The figure also compared favorably with the year-ago quarter’s $1.72.

BXP’s quarterly results reflect growth in the bottom line. Also, it experienced strong leasing activity during the quarter.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.