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Kimco Realty's (KIM) Q3 FFO and Revenues Miss Estimates

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Zacks Equity Research
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Kimco Realty Corp.’s KIM third-quarter 2020 funds from operations (FFO) came in at 25 cents per share, marginally missing the Zacks Consensus Estimate of 26 cents. The FFO per share also comes in lower than the year-ago quarter’s 35 cents.

Results reflect a decline in same-property net operating income (NOI) mainly affected by a charge for potentially uncollectible accounts receivable. The company also witnessed a decline in occupancy due to the tenant bankruptcies.

The retail REIT generated revenues of $259.8 million, which slipped 8.2% year over year and also missed the Zacks Consensus Estimate of $265.4 million.

However, at the end of October, all of the company’s shopping centers were open and operational with around 98% of tenants, based on the annualized base rent currently open, including some that are operating on a limited basis.

With a well-located and largely grocery-anchored portfolio that offers essential goods and services, rent collection figures are improving. The company collected roughly 89% of the total pro-rata base rents billed for third-quarter 2020 and 90% for October. It also granted rent deferrals approximating 5% of pro-rata minimum base rent for the reported quarter.

Quarter in Detail

Pro-rata portfolio occupancy at the end of the third quarter was 94.6%, reflecting a contraction of 100 basis points (bps) sequentially and 180 bps year on year. Results reflect tenant bankruptcies, including Modell’s, Pier 1 Imports, Ascena and GNC.

Kimco ended the July-September quarter with pro-rata anchor occupancy at 97.4%, down 80 bps sequentially and 130 bps year on year. Small-shop occupancy at the end of the reported quarter was 86.7%. This marks a contraction of 130 bps sequentially and 320 bps, year on year.

The company executed 233 leases aggregating 1.5 million square feet of space. Renewals/options marked roughly 75% of all leases executed in the said period and totaled 174 leases for 1.2 million square feet of space, with only eight leases at a lower spread than the prior lease.

Pro-rata rental-rate leasing spreads on comparable spaces increased 8.2%, with rental rates for new leases and renewals/options climbing 5.1% and 8.8%, respectively.

Same-property NOI declined 9.1% year over year, primarily reflecting a charge for potentially uncollectible accounts receivable.

Balance Sheet Position

Kimco exited third-quarter 2020 with cash and cash equivalents of $324.98 million, up from the $123.9 million recorded at the end of 2019. The retail REIT had more than $2.3 billion of immediate liquidity at the end of the quarter. This included full availability under its $2-billion unsecured revolving credit facility and $325 million in cash. Moreover, Kimco maintains more than $550 million of Albertson’s common stock, subject to certain lock-up provisions.

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

Kimco Realty Corporation Price, Consensus and EPS Surprise

Kimco Realty Corporation Price, Consensus and EPS Surprise
Kimco Realty Corporation Price, Consensus and EPS Surprise

Kimco Realty Corporation price-consensus-eps-surprise-chart | Kimco Realty Corporation Quote

We, now, look forward to the earnings releases of other REITs like Simon Property Group, Inc. SPG, Ventas, Inc. VTR and Taubman Centers, Inc. TCO. While Ventas is scheduled to release earnings on Nov 6, Simon Property and Taubman Centers will report on Nov 9.

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

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