Kimco Realty(KIM) - 2024 Q1 - Quarterly Results

Kimco Realty® Q1 2024 Earnings Release Overview and Highlights Kimco Realty reported strong Q1 2024 results, marked by the RPT Realty acquisition, strategic divestitures, and robust leasing activity, leading to an increased full-year outlook Q1 2024 Key Performance Indicators | Metric | Value | | :--- | :--- | | Funds From Operations (FFO) | $0.39 per diluted share | | Same Property NOI Growth (YoY) | 3.9% | | Pro-rata Portfolio Occupancy | 96.0% | | Total Leased Area | 4.0 million sq. ft. | | Blended Pro-rata Rent Spreads | 10.2% | | New Lease Pro-rata Rent Spreads | 35.5% | - Successfully completed the $2.3 billion acquisition of RPT Realty on January 2, 2024[3] - Disposed of ten former RPT properties for an aggregate price of $248 million, achieving the company's 2024 disposition target for these specific assets[3] Financial and Operating Performance Despite a net loss due to non-recurring items and merger costs, core operations remained strong with stable FFO, robust leasing, and strategic capital management Financial Results Kimco reported a Q1 2024 net loss of ($0.03) per diluted share, primarily due to non-recurring items and merger charges, while Funds from Operations (FFO) remained stable at $0.39 per diluted share Q1 Financial Results Comparison (per diluted share) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net (Loss)/Income | ($0.03) | $0.46 | | FFO | $0.39 | $0.39 | - The year-over-year decrease in net income was primarily driven by a $194.1 million one-time special dividend from Albertsons (ACI) in Q1 2023 that did not recur, $25.2 million in RPT merger charges, and $40.4 million less in gains on property sales[7] - Q1 2024 FFO of $261.8 million, or $0.39 per diluted share, includes $25.2 million ($0.04 per share) in RPT-related merger charges[4] Operating Results Strong Q1 operational performance was marked by significant leasing activity, a 10.2% blended rent spread, 3.9% Same Property NOI growth, and high portfolio occupancy Q1 2024 Leasing and Occupancy Metrics | Metric | Value | YoY Change | | :--- | :--- | :--- | | Pro-rata Portfolio Occupancy | 96.0% | +20 bps | | Pro-rata Small Shop Occupancy | 91.5% | +80 bps | | Blended Rent Spreads | 10.2% | N/A | | New Lease Rent Spreads | 35.5% | N/A | | Renewal/Option Rent Spreads | 7.8% | N/A | - Same Property NOI grew 3.9% over Q1 2023, primarily driven by a 2.8% increase in minimum rent[8] - The company reported a 330-basis-point spread between leased and economic occupancy, representing approximately $63 million in future annual base rent[8] Investment & Disposition Activities Following the RPT acquisition, the company strategically disposed of ten properties for $248 million while reinvesting $67 million into eight of them through its Structured Investment program - Disposed of ten former RPT properties for an aggregate price of $248 million, totaling 2.1 million square feet[8] - Opportunistically invested approximately $67 million in eight of the disposed properties under its Structured Investment program, with an expected 10% blended return[8] Capital Market Activities Kimco enhanced its capital structure by repaying $646.9 million in unsecured notes and exiting its Albertsons investment, maintaining a strong $2.0 billion immediate liquidity position - Repaid two unsecured notes totaling $646.9 million, leaving no unsecured debt maturing for the remainder of 2024[9] - Sold the remaining 14.2 million shares of ACI common stock, generating $299.1 million in net proceeds[9] - Ended the quarter with $2.0 billion of immediate liquidity, including over $135 million in cash and $1.9 billion available on its revolving credit facility[9] Shareholder Returns and Outlook Kimco's board declared a $0.24 per common share quarterly dividend and raised its full-year 2024 FFO and Same Property NOI growth guidance, reflecting strong performance and strategic confidence Dividend Declarations The Board declared a $0.24 per common share quarterly cash dividend and also declared quarterly dividends for all series of preferred shares - A quarterly cash dividend of $0.24 per common share was declared, payable on June 20, 2024, to shareholders of record on June 6, 2024[9] - Quarterly dividends were also declared for the company's Class L, Class M, and Class N series of preferred shares[9] 2024 Full Year Outlook Kimco updated its 2024 full-year guidance, increasing FFO per diluted share to $1.56-$1.60 and raising Same Property NOI growth and RPT-related cost synergy forecasts Updated 2024 Full Year Guidance (per diluted share) | Metric | Current Guidance | Previous Guidance | | :--- | :--- | :--- | | Net Income | $0.40 to $0.44 | $0.47 to $0.51 | | FFO | $1.56 to $1.60 | $1.54 to $1.58 | Key Updated 2024 Assumptions | Assumption | Current | Prior | | :--- | :--- | :--- | | Same Property NOI Growth | 2.25% to 3.0% | 1.5% to 2.5% | | RPT-related Cost Synergies | $34 million to $35 million | $30 million to $34 million | | Interest Income | $10 million to $12 million | $2 million to $4 million | Financial Statements and Reconciliations This section presents detailed unaudited financial statements and reconciliations of GAAP to non-GAAP measures, reflecting asset growth from the RPT acquisition and clarifying key performance indicators Condensed Consolidated Balance Sheets As of March 31, 2024, Kimco's total assets increased to $19.47 billion, primarily due to the RPT acquisition, with corresponding changes in liabilities and equity Balance Sheet Summary (in billions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $19.47 | $18.27 | | Total Liabilities | $8.63 | $8.55 | | Total Equity | $10.77 | $9.65 | Condensed Consolidated Statements of Operations Q1 2024 total revenues increased to $503.8 million, but the company reported a net loss of ($18.9) million, primarily due to merger charges and non-recurring items from the prior year Statement of Operations Summary (in millions) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total Revenues | $503.8 | $442.9 | | Operating Income | $130.7 | $172.5 | | Net (Loss)/Income Available to Common Shareholders | ($18.9) | $283.5 | Reconciliation to FFO This section reconciles the GAAP net loss of ($18.9) million to Funds From Operations (FFO) of $261.8 million for Q1 2024, primarily adjusting for depreciation and other non-cash items Q1 2024 FFO Reconciliation (in thousands) | Item | Amount | | :--- | :--- | | Net loss available to common shareholders | ($18,916) | | Depreciation and amortization (real estate related) | $175,060 | | Other adjustments (gains, impairments, etc.) | $105,685 | | FFO available to common shareholders | $261,829 | - The Q1 2024 FFO includes $25.2 million, or $0.04 per diluted share, in merger-related charges[26] Reconciliation to Same Property NOI This reconciliation adjusts GAAP net loss to derive Same Property NOI, which increased by 3.9% to $381.3 million in Q1 2024, reflecting operational performance for a consistent property pool Same Property NOI (in thousands) | Period | Same Property NOI | | :--- | :--- | | Q1 2024 | $381,273 | | Q1 2023 | $367,108 | Reconciliation of Projected Guidance This section reconciles the projected full-year 2024 Net Income per share to FFO per share, with real estate-related depreciation and amortization being the primary adjustment Full Year 2024 Guidance Reconciliation (per diluted share) | Item | Low End | High End | | :--- | :--- | :--- | | Net income available | $0.40 | $0.44 | | Depreciation & amortization (real estate) | $1.00 | $1.04 | | Other adjustments | $0.16 | $0.12 | | FFO available | $1.56 | $1.60 | Other Information This section provides standard corporate information, including the company profile and the required Safe Harbor statement regarding forward-looking statements About Kimco Realty® Kimco Realty is a leading REIT specializing in grocery-anchored shopping centers and mixed-use assets across major U.S. metropolitan markets, with a portfolio of 569 properties totaling 101 million square feet as of March 31, 2024 - Kimco Realty is a REIT focused on owning and operating high-quality, open-air, grocery-anchored shopping centers in major U.S. metro markets[12] - As of March 31, 2024, the company's portfolio consisted of 569 U.S. shopping centers and mixed-use assets with 101 million square feet of gross leasable space[12] Safe Harbor Statement This statement cautions that the report contains forward-looking statements subject to various risks and uncertainties, including economic conditions, tenant insolvencies, and RPT Realty merger integration challenges - The press release contains forward-looking statements that are not guarantees of future performance and are subject to known and unknown risks[14] - Key risks include adverse economic conditions, tenant insolvencies, the impact of e-commerce, and challenges related to the successful integration of the RPT Realty merger[14]