KIMCO REALTY CORPORATION Forward-Looking Statements
This Quarterly Report on Form 10-Q, together with other statements and
information publicly disseminated by the Company contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 and includes this statement for purposes of
complying with the safe harbor provisions. Forward-looking statements, which
are based on certain assumptions and describe the Company's future plans,
strategies and expectations, are generally identifiable by use of the words
"believe," "expect," "intend," "commit," "anticipate," "estimate," "project,"
"will," "target," "plan", "forecast" or similar expressions. You should not rely
on forward-looking statements since they involve known and unknown risks,
uncertainties and other factors which, in some cases, are beyond the Company's
control and could materially affect actual results, performances or
achievements. Factors which may cause actual results to differ materially from
current expectations include, but are not limited to, (i) general adverse
economic and local real estate conditions, (ii) the impact of competition,
including the availability of acquisition or development opportunities and the
costs associated with purchasing and maintaining assets; (iii) the inability of
major tenants to continue paying their rent obligations due to bankruptcy,
insolvency or a general downturn in their business, (iv) the reduction in the
Company's income in the event of multiple lease terminations by tenants or a
failure of multiple tenants to occupy their premises in a shopping center, (v)
the potential impact of e-commerce and other changes in consumer buying
practices, and changing trends in the retail industry and perceptions by
retailers or shoppers, including safety and convenience, (vi) the availability
of suitable acquisition, disposition, development and redevelopment
opportunities, and risks related to acquisitions not performing in accordance
with our expectations, (vii) the Company's ability to raise capital by selling
its assets, (viii) disruptions and increases in operating costs due to inflation
and supply chain issues, (ix) risks associated with the development of mixed-use
commercial properties, including risks associated with the development, and
ownership of non-retail real estate, (x) changes in governmental laws and
regulations, including, but not limited to changes in data privacy,
environmental (including climate change), safety and health laws, and
management's ability to estimate the impact of such changes, (xi) valuation and
risks related to the Company's joint venture and preferred equity investments
and other investments, (xii) valuation of marketable securities and other
investments, including the shares of Albertsons Companies, Inc. common stock
held by the Company, (xiii) impairment charges, (xiv) criminal cybersecurity
attacks disruption, data loss or other security incidents and breaches, (xv)
impact of natural disasters and weather and climate-related events, (xvi)
pandemics or other health crises, such as coronavirus disease 2019 ("COVID-19"),
(xvii) our ability to attract, retain and motivate key personnel, (xviii)
financing risks, such as the inability to obtain equity, debt or other sources
of financing or refinancing on favorable terms to the Company, (xix) the level
and volatility of interest rates and management's ability to estimate the impact
thereof, (xx) changes in the dividend policy for the Company's common and
preferred stock and the Company's ability to pay dividends at current levels,
(xxi) unanticipated changes in the Company's intention or ability to prepay
certain debt prior to maturity and/or hold certain securities until maturity,
and (xxii) the Company's ability to continue to maintain its status as a REIT
for federal income tax purposes and potential risks and uncertainties in
connection with its UPREIT structure, and (xxiii) the other risks and
uncertainties identified under Item 1A, "Risk Factors" in our Annual Report on
Form 10-K for the year ended
The following discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto. These unaudited financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature.
Executive Overview
The Company, a
The Company is a self-administered real estate investment trust ("REIT") and has
owned and operated open-air shopping centers for over 60 years. The Company has
not engaged, nor does it expect to retain, any REIT advisors in connection with
the operation of its properties. As of
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The Company's primary business objective is to be the premier owner and operator
of open-air, grocery-anchored shopping centers, and a growing portfolio of
mixed-use assets, in the
? increasing the value of its existing portfolio of properties and generating
higher levels of portfolio growth;
? increasing cash flows for reinvestment and/or for distribution to shareholders
while maintaining conservative payout ratios;
? improving debt metrics and upgraded unsecured debt ratings
? continuing growth in desirable demographic areas with successful retailers,
primarily focused on grocery anchors; and
? increasing the number of entitlements for residential use.
Economic Conditions
The economy continues to face several issues including inflation risk, bank
failures and liquidity restraints, the lack of qualified employees, tenant
bankruptcies and supply chain issues, which could impact the Company and its
tenants. In response to the rising rate of inflation the
Any of these events could materially adversely impact the Company's business, financial condition, results of operations or stock price. The Company continues to monitor economic, financial, and social conditions and will assess its asset portfolio for any impairment indicators. If the Company determines that any of its assets are impaired, the Company would be required to take impairment charges, and such amounts could be material.
Effects of Inflation
Many of the Company's long-term leases contain provisions designed to help mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive payment of additional rent calculated as a percentage of tenants' gross sales above pre-determined thresholds, which generally increase as prices rise, and/or as a result of escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses often include increases based upon changes in the consumer price index or similar inflation indices. In addition, many of the Company's leases are for terms of less than 10 years, which permits the Company to seek to increase rents to market rates upon renewal. To assist in partially mitigating the Company's exposure to increases in costs and operating expenses, including common area maintenance costs, real estate taxes and insurance, resulting from inflation the Company's leases include provisions that either (i) require the tenant to pay an allocable share of these operating expenses or (ii) contain fixed contractual amounts, which include escalation clauses, to reimburse these operating expenses.
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Results of Operations
Comparison of the three months ended
The following table presents the comparative results from the Company's
Condensed Consolidated Statements of Income for the three months ended
Three Months Ended March 31,
2023 2022 Change
Revenues
Revenues from rental properties, net
4,554 4,595 (41 )
Operating expenses
Rent (1) (4,013 ) (4,081 ) 68
Real estate taxes (57,506 ) (54,314 ) (3,192 )
Operating and maintenance (2) (75,242 ) (69,225 ) (6,017 )
General and administrative (3) (34,749 ) (29,948 ) (4,801 )
Impairment charges (11,806 ) (272 ) (11,534 )
Depreciation and amortization (126,301 ) (130,294 ) 3,993
Gain on sale of properties 39,206 4,193 35,013
Other income/(expense)
Special dividend income 194,116 - 194,116
Other income, net 3,132 5,983 (2,851 )
(Loss)/gain on marketable securities, net (10,144 ) 121,764 (131,908 ) Interest expense
(61,306 ) (57,019 ) (4,287 )
Early extinguishment of debt charges - (7,173 ) 7,173
(Provision)/benefit for income taxes, net (30,829 ) 153 (30,982 )
Equity in income of joint ventures, net 24,204 23,570 634
Equity in income of other investments, net 2,122 5,373 (3,251 )
Net (income)/loss attributable to
noncontrolling interests (4,013 ) 1,343 (5,356 )
Preferred dividends, net (6,251 ) (6,354 ) 103
Net income available to the Company's
common shareholders $ 283,512 $ 230,948 $ 63,964
Net income available to the Company's
common shareholders:
Diluted per common share $ 0.46 $ 0.37 $ 0.10
(1) Rent expense primarily relates to ground lease payments for which the
Company is the lessee.
(2) Operating and maintenance expense consists of property related costs
including repairs and maintenance costs, roof repair, landscaping, parking
lot repair, snow removal, utilities, property insurance costs, security and
various other property related expenses.
(3) General and administrative expense includes employee-related expenses
(including salaries, bonuses, equity awards, benefits, severance costs and
payroll taxes), professional fees, office rent, travel and entertainment
costs and other company-specific expenses.
Net income available to the Company's common shareholders was
The following describes the changes of certain line items included on the
Company's Condensed Consolidated Statements of Income that the Company believes
changed significantly and affected Net income available to the Company's common
shareholders during the three months ended
Revenues from rental properties, net -
The increase in Revenues from rental properties, net of
Real estate taxes -
The increase in Real estate taxes of
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Operating and maintenance -
The increase in Operating and maintenance expense of
General and administrative -
The increase in General and administrative expense of
Impairment charges -
During the three months ended
Depreciation and amortization -
The decrease in Depreciation and amortization of
Gain on sale of properties -
During the three months ended
Special dividend income -
During the three months ended
(Loss)/gain on marketable securities, net -
The change in (Loss)/gain on marketable securities, net of
Interest expense -
The increase in Interest expense of
Early extinguishment of debt charges -
Early extinguishment of debt charges of
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(Provision)/benefit for income taxes, net -
The change in (Provision)/benefit for income taxes, net of
Equity in income of other investments, net -
The decrease in Equity in income of other investments, net of
Net (income)/loss attributable to noncontrolling interests -
The change in Net (income)/loss attributable to noncontrolling interests of
Tenant Concentration
The Company seeks to reduce its operating and leasing risks through
diversification achieved by the geographic distribution of its properties and a
large tenant base. As of
Liquidity and Capital Resources
The Company's capital resources include accessing the public debt and equity
capital markets, unsecured term loans, mortgages and construction loan
financing, marketable securities (including 21.2 million shares of ACI common
stock held by the Company, which had a value of
The Company anticipates that cash on hand, net cash flow provided by operating activities, borrowings under its Credit Facility and the issuance of equity, public debt, as well as other debt and equity alternatives, and the sale of marketable equity securities, will provide the necessary capital required by the Company. The Company will continue to evaluate its capital requirements for both its short-term and long-term liquidity needs, which could be affected by various risks and uncertainties, including, but not limited to, the effects of the current inflationary environment, rising interest rates, and other risks detailed in Part I, Item 1A. Risk Factors of our 10-K.
The Company's cash flow activities are summarized as follows (in thousands):
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