Kimco's (KIM) Q4 FFO Meets Estimates, Revenues Rise Y/Y
Kimco Realty Corp. KIM reported fourth-quarter 2023 funds from operations (FFO) per share of 39 cents, in line with the Zacks Consensus Estimate. The figure was only a cent higher than the year-ago quarter’s tally.
Though Kimco reported growth in revenues, a rise in interest expenses acted as a dampener. This retail REIT provided an initial outlook for 2024 FFO per share, which is below the consensus mark. Probably because of these negatives, shares of the company lost nearly 2% so far today despite better-than-expected results.
This retail REIT clocked in revenues of $451.6 million, beating the consensus mark of $449.7 million. Moreover, the figure improved 2.7% year over year.
According to Conor Flynn, CEO of Kimco, “The lack of new supply and continued strong demand for our high-quality, grocery-anchored, and mixed-use portfolio bodes well for 2024. And with the completion of the RPT acquisition, our best-in-class team is already working to unlock additional growth and long-term value for our shareholders.”
For full-year 2023, Kimco’s FFO per share came in at $1.57, lower than the prior-year tally of $1.58 and missing the Zacks Consensus Estimate of $1.56. This was backed by 3.2% growth in revenues to $1.78 billion, in line with the consensus mark.
Subsequent to the quarter end, Kimco completed the acquisition of RPT Realty in an all-stock transaction. The buyout adds 56 open-air shopping centers to Kimco’s portfolio encompassing 13.3 million square feet of gross leasable area. Of the 56 shopping centers, 43 are wholly owned.
Quarter in Detail
Pro-rata portfolio occupancy at the end of the fourth quarter was 96.2%, reflecting an expansion of 50 basis points (bps) year over year and 70 bps sequentially.
Pro-rata anchor occupancy ended the quarter at 98%, remaining unchanged year over year and rising 80 bps from the previous quarter. Pro-rata small shop occupancy ended the quarter at 91.7%, representing an uptick of 170 basis points year over year and 60 bps sequentially.
Kimco executed 480 leases, aggregating 2.7 million square feet in the quarter. Blended pro-rata rent spreads on comparable spaces generated was 11.2%, with pro-rata cash rent spreads for new leases climbing 24%, and renewals and options rising 7.8%.
Same-property net operating income (NOI) grew 3.2% year over year to $329.6 million, backed by a rise in the minimum rent of 3.1%. Interest expenses were up 11.2% year over year to $67.8 million in the reported quarter.
Portfolio Activity
During the quarter, Kimco acquired an improved parcel at an existing shopping center for $7.8 million.
In the reported quarter, Kimco sold five shopping centers and one land parcel totaling 846,000 square feet for $141.7 million.
Balance Sheet Position
This retail REIT exited the fourth quarter with $2.8 billion of immediate liquidity. This included full availability under its $2-billion unsecured revolving credit facility and cash and cash equivalents of $783.8 million. Its net-debt-to-EBITDA was 6.0X on a look-through basis as of Dec 31, 2023, down from 6.4X witnessed in the prior-year quarter.
At the end of the year, Kimco held 14.2 million shares of Albertsons Companies, Inc. ACI. Subsequently, it sold all 14.2 million shares at a price of $21.05 per share, resulting in $299.1 million of proceeds.
Dividend Update
Concurrent with the fourth-quarter earnings release, Kimco’s board of directors declared a quarterly cash dividend of 24 cents per share. This dividend will be paid out on Mar 21 to its shareholders of record as of Mar 7, 2024.
2024 Guidance
For 2024, Kimco projects FFO per share in the range of $1.54-$1.58. This is lower than the current Zacks Consensus Estimate of $1.62.
Kimco’s 2024 projection is based on the assumption of same property NOI growth of 1.5-2.5% (including RPT), and total acquisitions and structured investments are expected between $300 million and $350 million.
Kimco currently carries a Zacks Rank #2 (Buy).
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 Federal Realty Investment Trust FRT and Realty Income O, which are slated to report on Feb 12 and Feb 20, respectively.
The Zacks Consensus Estimate for Federal Realty’s fourth-quarter 2023 FFO per share is pegged at $1.64, suggesting a year-over-year increase of 3.8%. FRT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Realty Income’s fourth-quarter 2023 FFO per share is pegged at $1.02, implying a year-over-year increase of 2%. O currently carries a Zacks Rank #3.
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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