Kimco Realty (KIM) Q4 FFO & Revenues Top Estimates, NOI Up

Kimco Realty Corp.’s (NYSE:KIM) fourth-quarter 2019 funds from operations (FFO) as adjusted, excluding the impact of transactional income and charges, came in at 37 cents per share, surpassing the Zacks Consensus Estimate of 36 cents. The reported tally comes in higher than the year-ago quarter’s FFO as adjusted of 35 cents per share.

Results reflect portfolio occupancy maintaining an all-time high level, healthy leasing spreads on new lease and positive same-property net operating income (NOI). The company registered new leasing spreads of 12.5%. This marks the 24th straight quarter in which spreads on new leases improved in double digits.

The retail REIT generated revenues of $296.1 million, beating the Zacks Consensus Estimate of $281.7 million. The revenue figure also compares favorably with the year-ago number of $284.2 million.

For full-year 2019, the FFO per share came in at $1.47, matching the Zacks Consensus Estimate and higher than the prior-year tally of $1.45. However, revenues witnessed a marginal decline, year over year, to $1.16 billion.

Quarter in Detail

At the end of the fourth quarter, the company maintained its all-time high level of pro-rata occupancy at 96.4%. This marked an expansion of 150 basis points (bps) year on year.

Pro-rata anchor occupancy ended the quarter at 98.9%, denoting a 150-basis-point expansion, year over year.

Pro-rata small-shop occupancy ended the reported quarter at 89.3%. This marks a year-over-year contraction of 180 bps, and 60 bps sequentially.

Pro-rata rental-rate leasing spreads increased 6%, with rental rates for new leases and renewals/options climbing 12.5% and 4%, respectively.

Same-property NOI grew 2.7% year over year.

Balance-Sheet Position

Kimco exited 2019 with cash and cash equivalents of $123.9 million, down from the $143.6 million recorded at the end of 2018.

During the fourth quarter, the company issued 9.5 million shares of common stock under its at-the-market (ATM) equity offering program, raising net proceeds of $200.1 million.

Portfolio Activity

During the reported quarter, Kimco sold 12 properties, aggregating 1.9 million square feet of space. The dispositions were made for $153 million, of which the company’s share amounted to $146.5 million. The company also disposed two wholly-owned land parcels for $47.5 million.

Guidance

Kimco has provided 2020 FFO projections, and estimates Nareit FFO per share in the $1.46-$1.50 range. The Zacks Consensus Estimate for the same is currently pinned at $1.50.

The company also issued its operational assumption for same-property NOI and forecasts it in the range of 1.5-2%.

Moreover, acquisitions for the year are projected to be worth $100-$200 million, with a blended cap rate of 5-6%. Disposition guidance is $200-$300 million, with a blended cap rate of 7-7.5%, and the combined redevelopment and development investment projection is in the band of $200-$250 million.

Dividend Update

Kimco’s board of directors announced a quarterly cash dividend of 28 cents per share. This will be paid on Apr 15, to shareholders of record as of Apr 2, 2020.

Conclusion

Kimco’s stellar quarterly results are encouraging. A healthy job-market environment and stable economy stimulating consumer spending have likely enabled the company witness decent occupancy level and healthy leasing spreads during the December-end quarter.

The company remains well poised to navigate through retail blues, with focus on service and experiential tenants, and omni-channel players in the days ahead. Moreover, the company is aiming to expand its small shops portfolio. These shops basically comprise service-based industries, such as restaurants, salons and spas, personal fitness and medical practices. The shops enjoy frequent customer traffic and are Internet resistant.

Kimco Realty Corporation Price, Consensus and EPS Surprise

Kimco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like SITE Centers Corp. (NYSE:SITC) , Regency Centers Corporation (NASDAQ:REG) and Healthpeak Properties, Inc. (NYSE:PEAK) . While SITE Centers is slated to report quarterly numbers on Feb 13, Regency Centers and Healthpeak Properties will report Q4 results on Feb 12 and Feb 11, respectively.

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

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