Kimco Realty(KIM) - 2025 Q2 - Quarterly Report

Explanatory Note This section provides context for the combined reporting structure of Kimco Realty Corporation and Kimco OP Combined Reporting Structure This report combines the Form 10-Q for Kimco Realty Corporation and Kimco OP, managed as a single business with primary differences in equity sections - This is a combined quarterly report for Kimco Realty Corporation (Parent Company) and its operating partnership, Kimco Realty OP, LLC (Kimco OP)[7] - The Parent Company is a REIT and serves as the managing member of Kimco OP, holding a 99.79% ownership interest as of June 30, 2025[8] - Substantially all operations are conducted through Kimco OP. The primary financial statement differences between the two entities are in the equity sections (Stockholders' Equity vs. Members' Capital)[9][10][11] PART I - FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements for Kimco Realty Corporation and Kimco OP, including key financial statements and notes Condensed Consolidated Financial Statements of Kimco Realty Corporation Kimco Realty Corporation reported $19.8 billion in total assets, with revenues increasing to $1.06 billion and net income rising to $280.6 million Kimco Realty Corporation - Condensed Consolidated Balance Sheet (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $19,796,555 | $20,309,896 | | Total liabilities | $9,078,579 | $9,464,107 | | Total equity | $10,671,410 | $10,797,912 | Kimco Realty Corporation - Condensed Consolidated Statement of Income (in thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenues | $1,061,799 | $1,003,985 | | Operating income | $386,296 | $291,405 | | Net income attributable to the Company | $295,803 | $108,764 | | Net income available to common shareholders | $280,564 | $92,861 | | Diluted EPS | $0.41 | $0.14 | - Net cash flow from operating activities for the six months ended June 30, 2025, was $529.2 million, compared to $470.2 million in the same period of 2024[34] Condensed Consolidated Financial Statements of Kimco Realty OP, LLC Kimco Realty OP, LLC's financial statements mirror the Parent Company's, with net income available to common unitholders at $281.1 million ($0.41 per diluted unit), up from $93.0 million ($0.14 per diluted unit) in the prior year period, differing primarily in the capital section Kimco Realty OP, LLC - Condensed Consolidated Balance Sheet (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $19,796,555 | $20,309,896 | | Total liabilities | $9,078,579 | $9,464,107 | | Total capital | $10,671,410 | $10,797,912 | Kimco Realty OP, LLC - Condensed Consolidated Statement of Income (in thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenues | $1,061,799 | $1,003,985 | | Operating income | $386,296 | $291,405 | | Net income attributable to Kimco OP | $296,361 | $108,940 | | Net income available to common unitholders | $281,122 | $93,037 | | Diluted EPU | $0.41 | $0.14 | Notes to Condensed Consolidated Financial Statements The notes detail the company's business, accounting policies, and financial items, covering the RPT Merger, real estate, debt, and NOI - The company is the leading owner and operator of high-quality, open-air, grocery-anchored shopping centers and mixed-use properties in the U.S., with a portfolio concentrated in top major metropolitan markets[56] - On January 2, 2024, the company completed its merger with RPT Realty ("RPT Merger"), acquiring 56 shopping centers. Merger-related expenses of $25.2 million were incurred in the first six months of 2024[58][68] - During the six months ended June 30, 2025, the company acquired operating properties for a total purchase price of $134.6 million and disposed of properties for an aggregate sales price of $51.9 million, generating a gain of $39.8 million[74][77] - The company has a $2.0 billion unsecured revolving credit facility, which had no outstanding balance as of June 30, 2025. In June 2025, the company issued $500.0 million in senior unsecured notes due 2036[104][108] - The company repurchased 3.0 million shares of common stock for $58.8 million and 58,342 depositary shares of Class N Preferred Stock for $3.5 million during the first six months of 2025[153][157] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results, highlighting the company's leading position, RPT Merger impact, and growth in net income, FFO, and Same Property NOI Executive Overview Kimco is a self-administered REIT specializing in open-air, grocery-anchored shopping centers, with interests in 566 U.S. properties totaling 100.9 million square feet of GLA, significantly expanded by the RPT Merger - As of June 30, 2025, Kimco had interests in 566 U.S. shopping center properties, totaling 100.9 million square feet of gross leasable area (GLA) across 30 states[183] - 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.S[184] - The RPT Merger on January 2, 2024, added 56 open-air shopping centers (13.3 million sq. ft. of GLA) to the company's portfolio[184] Results of Operations Net income available to common shareholders increased to $280.6 million from $92.9 million, driven by higher rental revenues, property sale gains, and lower income taxes Comparison of Results (Six Months Ended June 30) | (in thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues from rental properties, net | $1,052,216 | $995,126 | $57,090 | | Gain on sale of properties | $39,809 | $393 | $39,416 | | Interest expense | ($161,581) | ($147,906) | ($13,675) | | Provision for income taxes, net | ($830) | ($72,227) | $71,397 | | Net income available to common shareholders | $280,564 | $92,861 | $187,703 | - The $57.1 million YTD increase in rental revenue was primarily due to a $29.4 million increase from leasing and portfolio growth, and a $22.1 million increase from properties acquired in 2025 and 2024[196] - The significant decrease in income tax provision was due to the 2024 sale of Albertsons Companies Inc. (ACI) common stock, which generated a large taxable gain in that period[210] Liquidity and Capital Resources The company maintains liquidity via operating cash flow, a $2.0 billion credit facility, and capital markets, with cash used for property improvements, acquisitions, and debt repayments Summary of Cash Flow Activities (Six Months Ended June 30, in thousands) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flow provided by operating activities | $529,216 | $470,150 | | Net cash flow used for investing activities | ($233,135) | ($10,532) | | Net cash flow used for financing activities | ($757,986) | ($1,115,820) | | Net change in cash | ($461,905) | ($656,202) | - Key investing activities in the first half of 2025 included $138.2 million for property improvements and $106.2 million for an property acquisition[219][220] - Key financing activities in the first half of 2025 included issuing $500.0 million of unsecured notes, repaying $740.5 million of unsecured notes, and paying $354.3 million in dividends[223][224] - The company is in compliance with all senior note covenants, including maintaining Consolidated Indebtedness to Total Assets below 60% (actual 37%)[237] Funds From Operations (FFO) FFO, a non-GAAP measure, increased for the six months ended June 30, 2025, with FFO available to common shareholders at $599.5 million ($0.88 per diluted share), reflecting higher net income FFO Reconciliation (in thousands, except per share data) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income available to common shareholders | $280,564 | $92,861 | | Adjustments (Depreciation, Gains, etc.) | $318,887 | $444,926 | | FFO available to common shareholders | $599,451 | $537,787 | | FFO per common share – diluted | $0.88 | $0.80 | Same Property Net Operating Income (Same property NOI) Same Property NOI, a non-GAAP measure, showed positive growth, increasing by 3.1% for three months and 3.5% for six months ended June 30, 2025, driven by minimum rent increases - Same property NOI increased by 3.1% for the three months ended June 30, 2025, compared to the prior year period[268] - Same property NOI increased by 3.5% for the six months ended June 30, 2025, compared to the prior year period, mainly due to a $22.8 million increase in minimum rent[269] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, managed through interest rate swaps totaling $860.0 million, with most debt being fixed-rate, limiting the impact of rate increases - The company's primary market risk exposure is from interest rate changes[272] - As of June 30, 2025, the company had 26 interest rate swaps with a total notional amount of $860.0 million to hedge variable rate debt[272] Debt Obligations by Rate Type as of June 30, 2025 (in millions) | Debt Type | Fixed Rate | Variable Rate | Total | | :--- | :--- | :--- | :--- | | Secured Debt | $425.0 | $16.5 | $441.5 | | Unsecured Debt | $7,717.2 | $0.0 | $7,717.2 | | Total | $8,142.2 | $16.5 | $8,158.7 | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of quarter-end, with no material changes to internal control over financial reporting during the period - Management for both Kimco Realty Corporation and Kimco Realty OP, LLC concluded that disclosure controls and procedures were effective as of the end of the reporting period[276][278] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[277][279] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other significant information Legal Proceedings The company is not currently involved in any litigation that management believes would materially adversely affect its financial condition or operations - The Company is not presently involved in any material litigation[282] Risk Factors There are no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - There are no material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[283] Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company repurchased 3.0 million shares of common stock for $58.8 million and 11,307 depositary shares of Class N preferred stock, also satisfying tax withholding obligations - During the six months ended June 30, 2025, the Company repurchased 3.0 million shares of common stock for $58.8 million. As of June 30, 2025, $166.0 million remained available under the repurchase program[284] - During the three months ended June 30, 2025, the company repurchased 11,307 Class N depositary shares[284] Other Information The One Big Beautiful Bill Act (OBBBA) was enacted, permanently extending the 20% deduction for qualified REIT dividends and increasing the TRS asset test limit, with no expected material impact - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted, which permanently extended the 20% deduction for "qualified REIT dividends" and increased the permissible value of TRS securities a REIT may hold from 20% to 25% of total assets[292] - The company is evaluating the OBBBA but does not expect it to have a material impact on its financial position or results of operations[292]