Kimco Realty Corp
KIM
Delayed Nyse - 10/20 10:02:22 pm
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Kimco Realty : Reports Second Quarter 2017 Results

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08/03/2017 | 07:25 pm

By a News Reporter-Staff News Editor at Investment Weekly News -- Kimco Realty Corp. (NYSE:KIM) reported results for the second quarter ended June 30, 2017. Highlights: Received a $23.7 million cash distribution from the company's investment in Albertsons LLC;

Raises 2017 guidance for net income and Funds From Operations (NAREIT FFO) available to the company's common shareholders;

U.S. pro-rata occupancy increased 20 basis points sequentially over the prior quarter to 95.5%; and

U.S. leasing spreads increased 17.0% for new leases and 7.8% for renewals/options. Combined leasing spreads increased 10.5%. Financial Results Net Income available to common shareholders for the second quarter of 2017 was $131.9 million, or $0.31 per diluted share, compared to $191.9 million, or $0.46 per diluted share, for the second quarter of 2016. The decrease was primarily due to $65.9 million* of lower gains on sales or pending dispositions of operating properties, net of impairments, as compared to the same quarter in 2016, when the company's strategic portfolio repositioning was still underway. In the second quarter of 2017, Kimco sold interests in nine shopping centers for a gross price of $152.2 million, compared to the 34 shopping centers sold for $695.0 million in the second quarter of 2016. Both gains on sales and operating property impairments are excluded from the calculation of FFO available to the company's common shareholders.

For the six months ended June 30, 2017, net income available to common shareholders was $197.0 million, or $0.46 per diluted share, compared to $321.0 million, or $0.77 per diluted share, for the six months ended June 30, 2016. The change was attributable to $134.8 million* of lower gains on sales or pending dispositions of operating properties, net of impairments, as compared to the same period in 2016. During the six months ended June 30, 2017, Kimco sold interests in 17 shopping centers for a gross price of $264.4 million, compared to the 47 shopping centers sold for $1.1 billion during the comparable period in 2016.

NAREIT FFO was $175.0 million, or $0.41 per diluted share, for the second quarter of 2017 compared to $158.1 million, or $0.38 per diluted share, for the second quarter of 2016. NAREIT FFO for the second quarter of 2017 included $14.3 million of transactional income (net of transactional charges) due to a $23.7 million cash distribution the company received from its investment in Albertsons LLC, offset by a $9.5 million impairment from a legacy Canada land parcel. This compares to $2.6 million of transactional income (net of transactional charges) in the second quarter of 2016.

For the six months ended June 30, 2017, NAREIT FFO was $330.1 million, or $0.78 per diluted share, compared to $316.3 million, or $0.76 per diluted share, for the same period last year. NAREIT FFO for the six months ended June 30, 2017 included $13.6 million of transactional income (net of transactional charges). This compares to $7.9 million of transactional income (net of transactional charges) for the same period in 2016.

FFO available to the company's common shareholders as adjusted (FFO as adjusted), which excludes the effects of transactional income and charges, was $160.7 million, or $0.38 per diluted share, for the second quarter of 2017 compared to $155.5 million, or $0.37 per diluted share, during the same period in 2016. FFO as adjusted for the six months ended June 30, 2017 was $316.5 million, or $0.75 per diluted share, compared to $308.4 million, or $0.74 per diluted share, for the same period in 2016.

A reconciliation of net income to NAREIT FFO, FFO as adjusted and same-property NOI is provided in the tables accompanying this press release. Operating Results Reported pro-rata portfolio occupancy of 95.5% at the end of the second quarter, representing a 20-basis-point sequential increase over the first quarter of 2017;

Increased anchor and small shop occupancy by 20 basis points and 10 basis points, respectively, over the first quarter of 2017. At June 30, 2017, anchor and small shop occupancy was 97.5% and 89.7%, respectively;

Expanded pro-rata leasing spreads by 10.5%, with rental rates for new leases up 17.0% and renewals/options growing 7.8%;

Generated a 30-basis-point increase in same-property NOI compared to the same period in 2016, including the previously disclosed negative impact from Sports Authority which came in at 210 basis points; and

Same-property NOI increased 1.20% for the six months ended June 30, 2017, compared to the same period in 2016. Investment Activity As part of the company's strategic 2020 Vision, Kimco continues to upgrade the quality of its portfolio with selective acquisitions funded by proceeds from dispositions. As previously announced, Kimco reported its transaction activity during, and subsequent to, the second quarter of 2017: Acquisitions: The company acquired a parcel adjacent to its Augusta Exchange shopping center in Augusta, Georgia, for a gross purchase price of $700,000. The acquisition presents an excellent redevelopment opportunity for an outparcel that will complement the existing tenant mix. Kimco's share of the purchase price was $340,000.

After the second quarter, the company acquired Jantzen Beach, a high-quality, 746,000-square-foot flagship shopping center for $131.8 million. Jantzen Beach is the company's eighth property in the Portland-Vancouver-Hillsboro MSA, expanding Kimco's concentration in a top 25 market where it also maintains a regional office.

Jantzen Beach is situated on 67 acres along Portland's busy I-5 artery, with traffic counts of over 128,000 cars per day, and a trade area extending over 10 miles reaching into neighboring Washington State. The center is 96% occupied and features a prime collection of national tenants in today's strongest retail categories, and also benefits from sales tax-free shopping, attracting approximately five million visits per year.

The Jantzen Beach acquisition will expand the company's future redevelopment pipeline through potential outparcel development of two 6,000-square-foot pad buildings and mixed-use densification opportunities supported by flexible zoning. The center also offers strong mark-to-market upside from several below-market anchor leases.

Keywords for this news article include: Investment and Finance, Kimco Realty Corporation.

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