Kimco Realty(US:KIM)2024-05-03 17:21Explanatory Note Corporate Structure and Reporting The company operates under an UPREIT structure where it is the managing member of Kimco OP, holding a 99.84% interest - The company reorganized into an Umbrella Partnership Real Estate Investment Trust (UPREIT) structure on January 1, 202391011 - Kimco Realty Corporation (the Parent Company) is a REIT and acts as the managing member of Kimco OP, owning 99.84% of its OP Units as of March 31, 20241213 - The financial statements of the Parent Company and Kimco OP are largely identical, with primary differences in stockholders' equity and members' capital1415 PART I - FINANCIAL INFORMATION Financial Statements The company reported a Q1 2024 net loss of $18.9 million, a significant decrease from Q1 2023's net income of $283.5 million Condensed Consolidated Financial Statements of Kimco Realty Corporation Q1 2024 saw a net loss of $18.9 million, driven by merger charges and the absence of a prior-year special dividend Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $19,466,379 | $18,274,022 | | Real estate, net | $16,626,386 | $15,094,925 | | Total Liabilities | $8,628,084 | $8,548,287 | | Notes payable, net | $7,242,570 | $7,262,851 | | Total Equity | $10,767,856 | $9,653,458 | Condensed Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Total Revenues | $503,754 | $442,892 | | Operating Income | $130,695 | $172,481 | | Merger Charges | ($25,246) | - | | Special Dividend Income | - | $194,116 | | Net (Loss)/Income Attributable to the Company | ($10,974) | $289,763 | | Net (Loss)/Income per Share (Diluted) | ($0.03) | $0.46 | - Net cash flow from operating activities was $176.1 million, a decrease from $345.2 million in Q1 2023, while financing activities used $1.02 billion in cash35 Notes to Condensed Consolidated Financial Statements Notes detail the RPT Realty merger, portfolio changes, debt structure, and the sale of Albertsons (ACI) shares - On January 2, 2024, the company completed its merger with RPT Realty (RPT), acquiring 56 open-air shopping centers in an all-stock transaction5859 RPT Merger Provisional Purchase Price Allocation (in thousands) | Category | Provisional Allocation | | :--- | :--- | | Real estate assets | $1,886,306 | | Investments in real estate joint ventures | $433,345 | | Total assets acquired | $2,395,980 | | Total liabilities assumed | ($953,520) | | Total purchase price | $1,442,460 | - During Q1 2024, the company sold its remaining 14.2 million shares of Albertsons Companies Inc. (ACI) for net proceeds of $299.1 million, resulting in a taxable gain101 - In Q1 2024, the company repaid approximately $1.16 billion in unsecured notes, including some assumed from the RPT merger124254 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the RPT merger's impact, a Q1 net loss, 3.9% same property NOI growth, and a strong liquidity position Executive Overview Kimco is North America's largest owner of open-air, grocery-anchored shopping centers, with 569 U.S. properties - As of March 31, 2024, Kimco had interests in 569 U.S. shopping center properties, totaling 100.8 million square feet of GLA206 - The merger with RPT Realty was completed on January 2, 2024, adding 56 open-air shopping centers (13.3 million sq. ft. of GLA) to Kimco's portfolio207 - Management acknowledges economic risks such as inflation, rising interest rates, and a potential recession, which could adversely affect the company and its tenants209210 Results of Operations Q1 2024 net loss of $18.9 million contrasts with Q1 2023 net income of $283.5 million due to non-recurring items Q1 2024 vs Q1 2023 Performance (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues from rental properties, net | $498,905 | $438,338 | | Merger charges | ($25,246) | $0 | | Special dividend income | $0 | $194,116 | | Net (loss)/income available to common shareholders | ($18,916) | $283,512 | | Diluted (loss)/earnings per share | ($0.03) | $0.46 | - The $60.6 million increase in rental property revenue was driven by $44.7 million from the RPT merger properties and $13.7 million from existing portfolio growth218 - The provision for income taxes increased by $41.2 million, mainly due to taxes on the capital gain from the sale of ACI common stock229 Liquidity and Capital Resources Primary capital sources include operating cash flow and a $2.0 billion credit facility, ensuring strong liquidity Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash flow provided by operating activities | $176,091 | $345,233 | | Net cash flow provided by investing activities | $201,430 | $43,559 | | Net cash flow used for financing activities | ($1,024,511) | ($209,444) | | Net change in cash | ($646,990) | $179,348 | - The company has a $2.0 billion unsecured revolving credit facility, which can be increased to $2.75 billion, with $125.0 million outstanding as of March 31, 2024232255 - The company anticipates capital commitments of approximately $225.0 million to $275.0 million for redevelopment and re-tenanting efforts for the remainder of 2024238 - As of March 31, 2024, the company was in compliance with all debt covenants, with Consolidated Indebtedness to Total Assets at 36%, well below the 60% limit252 Funds From Operations (FFO) Q1 2024 FFO was $261.8 million, or $0.39 per share, stable year-over-year despite merger-related charges FFO Reconciliation Highlights (in thousands) | Metric | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net (loss)/income available to common shareholders | ($18,916) | $283,512 | | Depreciation and amortization - real estate related | $153,462 | $125,278 | | Special dividend income | - | ($194,116) | | FFO available to the Company's common shareholders | $261,829 | $238,087 | | FFO per common share – diluted | $0.39 | $0.39 | - FFO for Q1 2024 includes $25.2 million, or $0.04 per diluted share, of merger-related charges278 Same Property Net Operating Income (NOI) Same property NOI increased by 3.9% in Q1 2024, driven by strong rental revenue growth and lower credit losses Same Property NOI (in thousands) | Period | Same Property NOI | % Change | | :--- | :--- | :--- | | Three Months Ended March 31, 2024 | $381,273 | 3.9% | | Three Months Ended March 31, 2023 | $367,108 | | - The 3.9% increase in Same property NOI was driven by higher rental revenue from leasing, lower credit losses, and reduced non-recoverable operating expenses284 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuation, managed through interest rate swaps and fixed-rate debt - The company's main market risk exposure is from interest rate fluctuations and it utilizes interest rate swaps to manage this risk on its variable-rate debt288 Debt Obligations by Rate Type as of March 31, 2024 (in millions) | Debt Type | Fixed Rate | Variable Rate | Total | | :--- | :--- | :--- | :--- | | Secured Debt | $334.0 | $17.4 | $351.4 | | Unsecured Debt | $7,123.8 | $118.8 | $7,242.6 | | Total | $7,457.8 | $136.2 | $7,594.0 | - A 1.0% increase in short-term interest rates would have resulted in a $0.3 million increase in interest expense for the three months ended March 31, 2024290 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period292295 - The company is in the process of integrating RPT's operations into its internal control over financial reporting following the January 2, 2024 merger293296 PART II - OTHER INFORMATION Legal Proceedings The company is not currently involved in any litigation that would have a material adverse effect on its business - The Company is not presently involved in any material litigation, nor is any material litigation threatened against it300 Risk Factors No material changes to risk factors have occurred since the 2023 Annual Report on Form 10-K - There are no material changes to the risk factors disclosed in the company's 2023 Annual Report on Form 10-K301 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under public programs, though some were bought to cover employee tax obligations - The company did not repurchase any shares under its common or preferred stock repurchase programs during Q1 2024302303 - As of March 31, 2024, $224.9 million was available under the common share repurchase program303 - The company repurchased 738,633 common shares for $14.6 million to cover tax withholding obligations for employee equity awards304305 Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2024309 Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and required certifications - The exhibits include the Amended and Restated LLC Agreement of Kimco Realty OP, credit agreements, parent guarantees, and CEO/CFO certifications310