Kimco Realty(US:KIM)2024-08-02 17:26PART I - FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for the company, reflecting the impact of the RPT Realty merger Condensed Consolidated Financial Statements of Kimco Realty Corporation The company's balance sheet expanded due to the RPT merger, while net income decreased significantly compared to the prior year Kimco Realty Corporation - Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $19,504,177 | $18,274,022 | | Real estate, net | $16,565,463 | $15,094,925 | | Total Liabilities | $8,707,560 | $8,548,287 | | Notes payable, net | $7,337,253 | $7,262,851 | | Total Equity | $10,726,607 | $9,653,458 | Kimco Realty Corporation - Income Statement Highlights (in thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenues | $1,003,985 | $885,732 | | Operating Income | $291,405 | $329,673 | | Net Income Attributable to the Company | $108,764 | $396,389 | | Net Income Available to Common Shareholders | $92,861 | $383,938 | | Diluted EPS | $0.14 | $0.62 | - Net cash flow from operating activities decreased to $470.2 million for the six months ended June 30, 2024, from $600.3 million in the same period of 2023, while net cash used for financing activities increased significantly to $1.12 billion36 Condensed Consolidated Financial Statements of Kimco Realty OP, LLC The operating partnership's financial statements mirror the parent company's, with a capital structure presented as Members' Capital - The assets and liabilities of Kimco Realty OP, LLC are identical to those of the parent company, Kimco Realty Corporation, as the parent consolidates the OP for financial reporting1538 Kimco Realty OP, LLC - Income Statement Highlights (in thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenues | $1,003,985 | $885,732 | | Operating Income | $291,405 | $329,673 | | Net Income Attributable to Kimco OP | $108,940 | $396,389 | | Net Income Available to Common Unitholders | $93,037 | $383,938 | | Diluted EPS | $0.14 | $0.62 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies and key financial events, including the RPT Realty merger, debt management, and equity transactions - The company operates as a single reportable segment, focusing on the ownership, management, and operation of open-air, grocery-anchored shopping centers55 - On January 2, 2024, the company completed its merger with RPT Realty, acquiring 56 shopping centers and incurring $25.2 million in related expenses during the first half of 20245759 RPT Merger Provisional Purchase Price Allocation (in thousands) | Category | Provisional Allocation as of June 30, 2024 | | :--- | :--- | | Real estate assets | $1,888,591 | | Investments in JVs & other | $446,017 | | Other assets acquired | $63,657 | | Total assets acquired | $2,398,265 | | Notes payable | ($821,500) | | Other liabilities assumed | ($134,305) | | Total liabilities assumed | ($955,805) | | Total purchase price | $1,442,460 | - During the first six months of 2024, the company sold its remaining shares of Albertsons Companies Inc (ACI), generating net proceeds of $299.1 million and a taxable gain of $288.7 million94 - In January 2024, the company entered into 21 interest rate swap agreements with notional amounts totaling $510.0 million to hedge variable-rate debt115 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, highlighting a 3.4% Same Property NOI growth alongside a net income decline due to merger costs and a non-recurring dividend - The company's primary business objective is to be the premier owner and operator of open-air, grocery-anchored shopping centers and mixed-use assets in the U.S177 Key Performance Indicators - Six Months Ended June 30 | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income Available to Common Shareholders | $92.9M | $383.9M | ($291.0M) | | Diluted EPS | $0.14 | $0.62 | ($0.48) | | FFO per Diluted Share | $0.80 | $0.78 | $0.02 | | Same Property NOI Growth | 3.4% | N/A | N/A | - The significant decrease in Net Income is primarily attributed to a $194.1 million special dividend from ACI received in 2023 and $25.2 million in one-time merger charges incurred in 2024186194198 Results of Operations Rental property revenue increased due to the RPT merger, but higher expenses and the absence of a prior-year special dividend reduced net income - Revenues from rental properties for the first half of 2024 increased by $117.8 million year-over-year, driven by $89.3 million from the RPT merger portfolio189 - Depreciation and amortization for the six months ended June 30, 2024, increased by $47.3 million year-over-year, mainly due to the addition of properties from the RPT merger196 - The company incurred $25.2 million in merger charges during the first six months of 2024, primarily consisting of severance, professional, and legal fees194 - A significant variance in year-over-year net income was the $194.1 million special dividend from Albertsons Companies Inc (ACI) received in 2023, which did not recur in 2024198 Liquidity and Capital Resources The company maintains a strong liquidity position through operating cash flow, a $2.0 billion credit facility, and access to public capital markets Summary of Cash Flow Activities (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $470,150 | $600,279 | | Net cash (used for)/from investing activities | ($10,532) | $162,923 | | Net cash used for financing activities | ($1,115,820) | ($376,554) | | Net change in cash | ($656,202) | $386,648 | - The company has a $2.0 billion unsecured revolving credit facility, which can be increased to $2.75 billion, with $220.0 million outstanding as of June 30, 2024206231 - During the first half of 2024, the company repaid approximately $1.2 billion of unsecured notes, including $511.5 million assumed in the RPT merger216230 - The company anticipates spending up to $175.0 million on property acquisitions and up to $200.0 million on redevelopment for the remainder of 2024212213 Funds From Operations (FFO) FFO, a key non-GAAP performance metric, increased to $0.80 per diluted share for the first six months of 2024, despite including merger-related charges FFO Reconciliation and Per Share Data (in thousands, except per share) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net income available to common shareholders | $92,861 | $383,938 | | Adjustments (Depreciation, Gains, etc) | $444,926 | $98,031 | | FFO available to common shareholders | $537,787 | $481,969 | | FFO per diluted share | $0.80 | $0.78 | - FFO for the six months ended June 30, 2024, includes $25.2 million, or $0.04 per diluted share, of merger-related charges254 Same Property Net Operating Income (Same property NOI) Same property NOI, a non-GAAP measure, grew 3.4% in the first half of 2024, driven by increased rental revenue and lower operating expenses - Same property NOI for the six months ended June 30, 2024, increased by 3.4% year-over-year, rising to $758.8 million258259 - The 3.4% growth in six-month same property NOI was primarily driven by a $21.8 million increase in rental revenue from strong leasing activity259260 - For the three months ended June 30, 2024, same property NOI increased by 3.0% compared to the same period in 2023258 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuation, which it manages through a majority fixed-rate debt structure and interest rate swaps - The company's main market risk is interest rate risk, which it manages using derivative instruments like interest rate swaps263 - As of June 30, 2024, the company had interest rate swaps with a total notional value of $510.0 million to convert variable-rate debt to fixed-rate263 Debt Obligations by Type as of June 30, 2024 (in millions) | Debt Type | Total Carrying Value | | :--- | :--- | | Secured Debt | | | Fixed Rate | $320.3 | | Variable Rate | $17.2 | | Unsecured Debt | | | Fixed Rate | $7,123.1 | | Variable Rate | $214.2 | - A hypothetical 1.0% increase in short-term interest rates would have resulted in a $1.2 million increase in interest expense for the six months ended June 30, 2024267 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes during the quarter - The Chief Executive Officer and Chief Financial Officer of both Kimco Realty Corporation and Kimco Realty OP, LLC concluded that disclosure controls and procedures were effective as of June 30, 2024268271 - The company is integrating RPT's operations following the January 2, 2024 merger, but these activities have not materially impacted internal controls over financial reporting269272 PART II - OTHER INFORMATION Legal Proceedings The company is not currently involved in any material litigation, nor is it aware of any such threatened litigation - The company is not presently involved in any material legal proceedings, and none are known to be threatened276 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - There are no material changes to the risk factors disclosed in the company's 2023 Form 10-K277 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under public programs, but shares were repurchased to satisfy employee tax withholding obligations - The company did not repurchase any common or preferred stock under its publicly announced repurchase programs during the first six months of 2024278279 - As of June 30, 2024, $224.9 million was available for repurchase under the company's common share repurchase program279 - The company repurchased 740,406 common shares for $14.7 million during the first half of 2024 to cover employee tax withholding obligations on vested equity awards280 Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2024284 Exhibits This section lists exhibits filed with the Form 10-Q, including credit agreement amendments and required CEO/CFO certifications - The exhibits include amendments to credit agreements, CEO/CFO certifications under Sarbanes-Oxley, and XBRL data files286