Kimco Realty Corp. reported results for the second quarter ended June 30.
-Reported funds from operations (FFO) of $0.44 per diluted share for the second quarter of 2015 representing a 29.4 percent increase over the comparable 2014 period; FFO as adjusted was $0.37 per diluted share for the second quarter of 2015 reflecting a 5.7 percent increase over the same period in 2014;
-U.S. same-property net operating income (NOI) increased 3.7 percent for the second quarter compared to the same period in 2014;
-U.S. portfolio pro-rata rental-rate leasing spreads increased 11.9 percent with rental rates for new leases up 26 percent and renewals/options increasing 8.7 percent;
-Business simplification continued - reduced joint venture ownership with the acquisition of the remaining 24.7 percent ownership interest in the $341.1 million KIF II portfolio and sold last remaining retail properties in Mexico; and
-Recognized $32.4 million gain on sale of 6.4 million shares of SUPERVALU Inc. common stock.
Net income available to common shareholders for the second quarter of 2015 was $112.4 million, or $0.27 per diluted share, compared to $74.9 million, or $0.18 per diluted share, for the second quarter of 2014. For the six months ended June 30, net income available to common shareholders was $408.2 million, or $0.98 per diluted share, compared to $147.4 million, or $0.36 per diluted share, through June 30, 2014.
FFO, a widely accepted supplemental measure of REIT performance, was $182.7 million, or $0.44 per diluted share, for the second quarter of 2015 compared to $141.2 million, or $0.34 per diluted share, for the second quarter of 2014. For the six months ended June 30, FFO was $336.2 million, or $0.81 per diluted share compared to $279.6 million, or $0.68 per diluted share, for the same period last year.
FFO as adjusted, which excludes the effects of non-operating impairments as well as transactional income and expenses, was $152.7 million, or $0.37 per diluted share, for the second quarter of 2015 compared to $143.2 million, or $0.35 per diluted share, for the second quarter of 2014. FFO as adjusted for the six months ended June 30, was $299.9 million, or $0.73 per diluted share, compared to $284.0 million, or $0.69 per diluted share, for the same period in 2014.
Second quarter 2015 shopping center portfolio operating results demonstrate continuous progress and reflect the positive impact from the company's portfolio transformation efforts:
-Pro-rata occupancy in the U.S. and combined portfolios (including Canada) ended the quarter at 95.7 percent and 95.5 percent, respectively. This represents an increase of 70 basis points for both the U.S. and combined portfolios over the second quarter of 2014.
-U.S. shopping center portfolio pro-rata occupancy for anchor space (10,000 square feet and greater) was 98.4 percent, a 60 basis- point increase from the second quarter of 2014. The pro-rata occupancy for small shop space increased 170 basis points to 88 percent during this same period.
-U.S. same-property NOI increased 3.7 percent, including a 50 basis point increase from the inclusion of redevelopments, compared to the second quarter of 2014. For the six months ended June 30, same-property NOI increased 3.4 percent, including a 40 basis point increase from the inclusion of redevelopments, compared to the same period last year.
-U.S. portfolio pro-rata rental-rate leasing spreads increased 11.9 percent with rental rates for new leases up 26 percent and renewals/options increasing 8.7 percent.
-Total leases executed in the combined portfolio: 477 new leases, renewals and options totaling 1.8 million pro-rata square feet.
The company continues to upgrade its portfolio with high-quality acquisitions and the selective disposition of retail properties in secondary markets. Since the company initiated its portfolio transformation in September 2010, Kimco has acquired 197 properties for a gross amount of $5.1 billion while selling 253 properties totaling $2.4 billion. The result has been a significant upgrade and repositioning of the company's portfolio with fewer properties overall but with larger, higher-quality assets in key long-term growth markets.
-As previously announced, Kimco acquired the remaining ownership interests in the 14-property Kimco Income Fund II (KIF II) portfolio from three existing joint venture partners based on a gross value of $341.1 million. Kimco, which previously held a 75.3 percent ownership interest in this consolidated joint venture, paid approximately $30.5 million for the remaining 24.7 percent equity interest. The KIF II portfolio is a geographically-diversified, primarily grocery-anchored portfolio totaling 1.9 million square feet across nine states including four sites located in California. The properties feature a well-known lineup of national retailers including Kroger, Giant Food, Ross Stores, Bed Bath & Beyond, Best Buy, DSW and Burlington Stores, Inc.
-The company purchased several improved parcels adjacent to existing Kimco Tier 1 shopping centers: Milleridge Inn at Whole Foods-anchored Jericho Commons (Jericho, N.Y.); Michael's at Nordstrom Rack-anchored West Farms (Farmington, Conn.), the fee interest and several to-be-developed pad parcels at Jewel-Osco- anchored 87th Street Center (Chicago, Ill.) and two well-positioned outparcels at Woodgrove Festival (Chicago, Ill.) for an aggregate price of $26.3 million.
-Subsequent to the second quarter, Kimco acquired the remaining 80 percent interest in the 465,000-square-foot Montgomery Plaza shopping center (Dallas-Fort Worth-Arlington MSA) from RioCan Real Estate Investment Trust (RioCan) for $58.3 million based upon a gross value of $72.9 million. Montgomery Plaza is anchored by Super Target (shadow anchor), Marshalls, Ross Dress for Less, PetSmart and Michaels, and also features two luxury residential condo towers offering the potential to add additional density in the future.
-Kimco sold ownership interests in 13 U.S. properties totaling 1.3 million square feet for a gross sales price of $130.0 million. The company's pro-rata share from these sales was $92.1 million.
-The company disposed of several properties in Mexico during the second quarter of 2015 including its three remaining shopping centers for $14.0 million. In addition, the company sold 13 land parcels and one building in Mexico for a gross sales price of $23.3 million. Kimco's share from these sales totaled $22.9 million.
-Also during the second quarter of 2015, the company sold seven wholly owned net-leased restaurant properties for a gross sales price of $14.5 million.
-Kimco currently has 47 properties for sale that are under contract or with an accepted offer totaling approximately $332.0 million, of which the company's share from these sales is anticipated to be approximately $191.4 million.
As previously announced, the company sold 6.4 million shares of SUPERVALU Inc. common stock. As a result of this transaction, Kimco received approximately $58.6 million in net proceeds and recognized a gain on sale of approximately $32.4 million, or $0.08 per diluted share, during the second quarter of 2015. After this sale, Kimco still holds 1.8 million shares of SUPERVALU Inc. common stock.
Kimco has increased its 2015 full-year guidance range for FFO and FFO as adjusted as well as transactional income, net and disposition volume:
Previous Guidance FFO (per diluted share): $1.52 - $1.56 $1.50 - $1.55 FFO as adjusted (per diluted share): $1.43 - $1.46 $1.42 - $1.45 Transactional Income, net $37 million - $42 million $33 million - $41 million Dispositions (Kimco's share of price) $800 million - $1.1 billion $550 million - $750 million
The company's 2015 full-year operational guidance range for occupancy, same-property NOI and acquisitions remain as follows: U.S. Portfolio Occupancy +25 to +50 basis points U.S. Same-Property NOI +3.00 percent to +3.50 percent Acquisitions (Kimco's share of price) $1.1 billion - $1.3 billion
-Kimco's board of directors declared a quarterly cash dividend of $0.24 per common share, payable on October 15, to shareholders of record on October 5, with an ex-dividend date of October 1. This dividend represents a 6.7 percent increase over the previous dividend paid for the comparable period in 2014.
-The board of directors also declared quarterly dividends with respect to the company's various series of cumulative redeemable preferred shares (Class H, Class I, Class J and Class K). All dividends on the preferred shares will be paid on October 15, to shareholders of record on October 2, with an ex-dividend date of September 30.
Kimco Realty Corp. is a real estate investment trust (REIT) that is a publicly traded owner and operator of open-air shopping centers.
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