Kimco's (KIM) Q2 FFO Meets, Revenues Beat, '23 View Revised
Kimco Realty Corp. KIM reported second-quarter 2023 funds from operations (FFO) per share of 39 cents, in line with the Zacks Consensus Estimate. The figure was only a cent lower than the year-ago quarter’s tally.
Results reflect better-than-anticipated revenues, aided by rental rate growth and a rise in occupancy levels. Kimco revised its 2023 FFO per share outlook.
This retail REIT clocked in revenues of $442.8 million, beating the consensus mark of $435.1 million. Moreover, the figure improved 3.7% year over year.
According to Conor Flynn, CEO of Kimco, “Our results demonstrate the strength of our operating platform with the strong execution on backfilling vacancies in an accretive manner at meaningful rental spreads that will drive cashflow.”
Quarter in Detail
Pro-rata portfolio occupancy at the end of the second quarter was 95.8%, reflecting an expansion of 70 basis points (bps) year over year but remaining flat sequentially. Pro-rata anchor occupancy was 97.7%, up 10 bps year over year. Pro-rata small shop occupancy ended the quarter at 91%, representing an uptick of 180 bps from the prior-year quarter.
The company signed 485 leases, aggregating 2.7 million square feet in the quarter. Blended pro-rata rent spreads on comparable spaces increased 9.9%, with rental rates for new leases climbing 25.3% and renewals and options rising 7.6%.
Same-property net operating income (NOI) grew 2.3% year over year to $326.5 million, backed by a rise in minimum rent of 3.1%.
Portfolio Activity
In the reported quarter, Kimco disposed of five wholly-owned parcels encompassing 87,000 square feet of gross leasable area for $46.2 million.
Balance Sheet Position
This retail REIT exited the second quarter with more than $2.5 billion of immediate liquidity. This included full availability under its $2-billion unsecured revolving credit facility and cash and cash equivalents of more than $500 million.
During the quarter, Kimco sold 7 million shares of Albertsons Companies, Inc. ACI common stock, generating net proceeds of $144.9 million. As of Jun 30, 2023, Kimco held 14.2 million shares of ACI common stock valued at $310.1 million.
Its net-debt-to-EBITDA was 5.9X on a look-through basis as of Jun 30, 2023, down from 6.4X witnessed in the prior-year quarter.
Dividend Update
Concurrent with the second-quarter earnings release, Kimco’s board of directors approved a quarterly cash dividend of 23 cents per share, representing a 4.5% increase year over year. This dividend will be paid out on Sep 21 to its shareholders on record as of Sep 7, 2023.
2023 Guidance Revised
For 2023, Kimco now projects FFO per share in the range of $1.55-$1.57, revised from the prior outlook of $1.54-$1.57. The Zacks Consensus Estimate for the same is currently pegged at $1.56, which lies within the guided range.
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-eps-surprise-chart | Kimco Realty Corporation Quote
Upcoming Earnings Releases
We now look forward to the earnings releases of other retail REITs like Simon Property Group SPG and Regency Centers REG slated to report on Aug 2 and Aug 3, respectively.
The Zacks Consensus Estimate for Simon Property’s second-quarter 2023 FFO per share is pegged at $2.91, suggesting a year-over-year fall of 1.7%. SPG currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for Regency Centers’ second-quarter 2023 FFO per share is pegged at $1.01, implying a year-over-year increase of 1%. REG currently carries a Zacks Rank #2 (Buy).
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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