-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RTb4KUkHNAArHAD8MmUv/wioF9A20esEEDdVGsWiNIkX4cx6x0oFpc9C3B/IQPvn lSNAtbfgNKrblpnWfS8TMg== 0000889812-96-001699.txt : 19961118 0000889812-96-001699.hdr.sgml : 19961118 ACCESSION NUMBER: 0000889812-96-001699 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIMCO REALTY CORP CENTRAL INDEX KEY: 0000879101 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 132744380 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10899 FILM NUMBER: 96662718 BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PARK RD STREET 2: PO BOX 5020 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5168699000 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 1-10899 Kimco Realty Corporation - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Maryland 13-2744380 - --------------------------------- ------------------ (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No) 3333 New Hyde Park Road, New Hyde Park, NY 11042 - ------------------------------------------------------------------------------ (Address of principal executive offices - Zip Code) (516)869-9000 - ------------------------------------------------------------------------------ (Registrant's telephone number, including area code) - ------------------------------------------------------------------------------ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 36,182,682 shares outstanding as of October 31, 1996. 1 of 12 PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Financial Statements - Condensed Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995. Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 1996 and 1995. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995. Notes to Condensed Consolidated Financial Statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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. Results of Operations Revenues from rental property increased $4.9 million or 13.6% to $40.8 million for the three months ended September 30, 1996, as compared with $35.9 million for the corresponding quarter ended September 30, 1995. Similarly, revenues from rental property increased $18.1 million or 16.9% to $124.9 million for the nine months ended September 30, 1996, as compared with $106.8 million for the corresponding nine-month period ended September 30, 1995. These net increases are primarily attributable to (i) the acquisition of interests in 38 properties during the nine months ended September 30, 1996 and throughout calendar year 1995 (18 properties), and (ii) new leasing and re-tenanting within the portfolio at improved rental rates. Rental property expenses, including depreciation and amortization, increased $.7 million or 3.2% to $23.0 million for the three months ended September 30, 1996, as compared with $22.3 million for the corresponding quarter ended September 30, 1995. Rental property expenses also increased $6.8 million or 10.3% to $73.1 million for the nine months ended September 30, 1996, as compared with $66.3 million for the nine-month period ended September 30, 1995. These net increases in rental property expenses are primarily due to the aforementioned property acquisitions, as well as increased snow removal costs which inflated operating and maintenance expenses during the first six months of 1996. During July 1995, certain subsidiaries of the Company made investments in various retail store leases relating to the anchor store premises in neighborhood and community shopping centers. These premises have been substantially sublet to retailers which lease the stores pursuant to net lease agreements. Income from the investment in retail store leases was $2.7 million and $.9 million for the nine months ended September 30, 1996 and the quarter ended September 30, 1995, respectively. Other income (expenses), net for the three and nine months ended September 30, 1996 increased $1.4 million and $2.6 million, respectively, as compared with the corresponding periods in the preceding year. The 1996 amounts include interest earned on funds raised through public equity offerings and held in short-term income 2 producing investments pending the acquisition of interests in neighborhood and community shopping center properties. During September 1996, the Company disposed of a property in Watertown, New York. Proceeds from the disposition, totaling approximately $1.8 million in cash, will be used to acquire an exchange shopping center property. Net income for the three and nine months ended September 30, 1996 was $19.8 million, and $54.2 million, respectively. Net income for the three and nine months ended September 30, 1995 was $13.9 million and $38.7 million, respectively. Net income improved $.06 and $.16 per share for the three and nine month periods ended September 30, 1996, respectively, after adjusting for the gain on the sale of a shopping center property, reflecting the effects of property acquisitions, the investment in retail store leases and increased leasing activity which strengthened operating profitability. Liquidity and Capital Resources Since the Company's initial public stock offering in November 1991, the Company has completed additional offerings of its public unsecured debt and equity raising in the aggregate in excess of $900 million for the purposes of acquiring interests in neighborhood and community shopping center properties, repaying secured indebtedness and for expanding and improving properties in the portfolio. Management believes the public debt and equity markets will be the Company's principal source of capital for the future. A $100 million, unsecured revolving credit facility established in June 1994, which is scheduled to expire in June 1999, has made available funds to both finance property acquisitions and meet any short-term working capital requirements. The Company has also implemented a $150 million medium-term notes program pursuant to which it may from time to time offer for sale its senior unsecured debt for any general corporate purposes, including (i) funding specific liquidity requirements in its business, including property acquisitions and redevelopment costs and (ii) better managing the Company's debt maturities, including its mortgage maturities during 1996 and succeeding years. In connection with its intention to continue to qualify as a REIT for Federal income tax purposes, the Company expects to continue paying regular dividends to its stockholders. These dividends will be paid from operating cash flows which are expected to increase due to property acquisitions and growth in rental revenues in the existing portfolio and from other sources. Since cash used to pay dividends reduces amounts available for capital investment, the Company generally intends to maintain a conservative dividend payout ratio, reserving such amounts as it considers necessary for the expansion and renovation of shopping centers in its portfolio, debt reduction, the acquisition of interests in new properties as suitable opportunities arise, and such other factors as the Board of Directors considers appropriate. It is management's intention that the Company continually have access to the capital resources necessary to expand and develop its business. Accordingly, the Company may seek to obtain funds through additional equity offerings or debt financing in a manner consistent with its intention to operate with a conservative debt capitalization policy. The Company anticipates that adequate cash will be available from operations to fund its operating and administrative expenses, regular debt service obligations and the payment of dividends in accordance with REIT requirements in both the short-term and long-term. 3 Effects of Inflation Substantially all of the Company's leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive percentage rents based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses are often related to increases 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. Most of the Company's leases require the tenant to pay an allocable share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. The Company periodically evaluates its exposure to short-term interest rates and will, from time to time, enter into interest rate protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate loans. 4 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ---------------------------
September 30, December 31, 1996 1995 --------------- --------------- Assets: Real estate, net of accumulated depreciation of $173,591,070 and $156,131,718 (Notes 3, 4, and 6) $ 883,969,817 $ 776,258,543 Investment in retail store leases (Note 5) 19,425,675 22,127,786 Cash and cash equivalents 54,498,438 16,164,666 Accounts and notes receivable 16,444,160 16,146,808 Other assets 60,948,587 53,544,331 --------------- --------------- $ 1,035,286,677 $ 884,242,134 =============== =============== Liabilities: Notes payable $ 310,250,000 $ 325,250,000 Mortgages payable 62,267,640 63,972,735 Other liabilities, including minority interests in partnerships 58,539,857 47,868,939 --------------- --------------- 431,057,497 437,091,674 --------------- --------------- Stockholders' Equity (Note 2): Preferred stock, $1.00 par value, authorized 930,000 shares Class A Preferred Stock, authorized 345,000 shares Issued and outstanding 300,000 shares 300,000 300,000 Aggregate liquidation preference $75,000,000 Class B Preferred Stock, authorized 230,000 shares Issued and outstanding 200,000 shares 200,000 200,000 Aggregate liquidation preference $50,000,000 Class C Preferred Stock, authorized 460,000 shares Issued and outstanding 400,000 shares 400,000 -- Aggregate liquidation preference $100,000,000 Common stock, $.01 par value, authorized 50,000,000 shares Issued and outstanding 36,168,010 and 33,731,348 361,680 337,313 shares, respectively Paid-in capital 718,677,279 562,311,822 Cumulative distributions in excess of net income (114,546,477) (114,665,183) Loans receivable from officer stockholders (1,163,302) (1,333,492) --------------- --------------- 604,229,180 447,150,460 --------------- --------------- $ 1,035,286,677 $ 884,242,134 =============== ===============
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, Nine Months Ended September 30, -------------------------------- ------------------------------- 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Revenues from rental property $ 40,837,356 $ 35,958,338 $ 124,943,673 $ 106,859,780 ------------- ------------- ------------- ------------- Rental property expenses: Rent 336,489 325,944 1,018,286 975,736 Real estate taxes 4,697,077 4,035,280 14,524,830 12,716,405 Interest 6,742,537 6,375,946 20,320,905 18,959,242 Operating and maintenance 4,337,982 4,674,996 16,973,053 14,198,638 Depreciation and amortization 6,919,811 6,897,583 20,233,607 19,422,269 ------------- ------------- ------------- ------------- 23,033,896 22,309,749 73,070,681 66,272,290 ------------- ------------- ------------- ------------- Income from rental property 17,803,460 13,648,589 51,872,992 40,587,490 Income from investment in retail store leases (Note 5) 904,371 879,138 2,723,735 879,138 ------------- ------------- ------------- ------------- 18,707,831 14,527,727 54,596,727 41,466,628 Management fee income 946,427 1,068,738 2,693,763 2,748,692 General and administrative expenses (2,572,785) (2,243,641) (7,514,268) (6,535,752) Other income (expenses), net 1,949,764 521,739 3,621,433 1,060,084 ------------- ------------- ------------- ------------- Income before gain on sale of shopping center property 19,031,237 13,874,563 53,397,655 38,739,652 Gain on sale of shopping center property (Note 6) 801,955 -- 801,955 -- ------------- ------------- ------------- ------------- Net income $ 19,833,192 $ 13,874,563 $ 54,199,610 $ 38,739,652 ============= ============= ============= ============= Net income applicable to common shares $ 15,223,767 $ 11,665,882 $ 42,674,560 $ 33,624,721 ============= ============= ============= ============= Net income per common share (Note 7) $ 0.42 $ 0.34 $ 1.19 $ 1.01 ============= ============= ============= =============
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months ended September 30, 1996 and 1995 ----------------------------------
1996 1995 ------------- ------------- Cash flow provided by operations $ 78,658,029 $ 55,319,540 ------------- ------------- Cash flow from investing activities: Acquisition of and improvements to real estate (126,261,585) (71,456,055) Investment in retail store leases -- (23,026,673) Investment in marketable securities (4,935,008) (1,235,442) Proceeds from disposition of real estate 1,825,000 4,975,582 Construction advance to real estate joint venture -- 6,794,928 ------------- ------------- Net cash flow used for investing activities (129,371,593) (83,947,660) ------------- ------------- Cash flow from financing activities: Principal payments on debt, excluding normal amortization of rental property debt (649,153) (24,210,728) Principal payments on rental property debt, net (1,055,942) (918,148) Change in notes payable (15,000,000) (24,950,000) Dividends paid (51,037,393) (39,384,939) Proceeds from issuance of stock 156,789,824 120,249,424 ------------- ------------- Net cash flow provided by financing activities 89,047,336 30,785,609 ------------- ------------- Change in cash and cash equivalents 38,333,772 2,157,489 Cash and cash equivalents, beginning of period 16,164,666 10,944,226 ------------- ------------- Cash and cash equivalents, end of period $ 54,498,438 $ 13,101,715 ============= ============= Interest paid during the period $ 17,556,631 $ 16,538,483 ============= ============= Supplemental schedule of noncash investing/ financing activity: Acquisition of real estate interests by issuance of common stock and assumption of debt -- $ 38,714,717 ============= ============= Declaration of dividends paid in succeeding period $ 17,261,237 $ 12,868,260 ============= =============
The accompanying notes are an integral part of these condensed consolidated financial statements. 7 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Interim Financial Statements The accompanying Condensed Consolidated Financial Statements include the accounts of Kimco Realty Corporation (the "Company"), its subsidiaries, all of which are wholly-owned, and all majority-owned partnerships. The information furnished is unaudited and reflects 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. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K. 2. Public Equity Offerings On February 2, 1996, the Company completed a primary public stock offering of 2,200,000 shares of Common Stock at $26.50 per share. The proceeds from this sale of Common Stock, net of related transaction costs of approximately $3.4 million, totaling approximately $55.0 million, have been used primarily for the acquisition of neighborhood and community shopping centers. On April 10, 1996, the Company completed a public offering of 4,000,000 Depositary Shares (the "Class C Depositary Shares") at $25.00 per share, each such Class C Depositary Share representing 1/10 of a share of the Company's 8-3/8% Class C Cumulative Redeemable Preferred Stock (the "Class C Preferred Stock"), par value $1.00 per share. The cash proceeds to the Company, net of related transaction costs of approximately $3.6 million, totaling approximately $96.4 million, will be used for general corporate purposes, including the acquisition of interests in neighborhood and community shopping centers, and the redevelopment, expansion and improvement of properties in the Company's portfolio. Dividends on the Class C Depositary Shares are cumulative and payable quarterly in arrears at the rate of 8-3/8% per annum based on the $25 per share initial offering price, or $2.0938 per share. The Class C Depositary Shares are redeemable, in whole or in part, for cash on or after April 15, 2001 at the option of the Company at a redemption price of $25 per share, plus any accrued and unpaid dividends thereon. The redemption price of the Class C Preferred Stock may be paid solely from the sale proceeds of other capital stock of the Company, which may include other classes or series of preferred stock. The Class C Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The Class C Preferred Stock (represented by the Class C Depositary Shares outstanding) ranks pari passu with the Company's 7-3/4% Class A Cumulative Redeemable Preferred Stock and 8-1/2% Class B Cumulative Redeemable Preferred Stock as to voting rights, priority for receiving dividends and liquidation preferences. 3. Retail Property Acquisitions During January 1996, the Company entered into two sale-leaseback transactions pursuant to which it acquired fee title to 16 retail properties located in Texas, Iowa, Oklahoma, Illinois and Kansas for a purchase price of $40 million. Simultaneously, the Company executed two long-term net leases covering the 16 locations pursuant to which the seller/tenant may remain in occupancy and continue to conduct business in these premises. 8 During August 1996, certain subsidiaries of the Company acquired interests in 16 retail properties, including 2 properties to which the Company and its affiliates already held fee title, for $21.8 million in cash. These property interests were acquired from a retailer which had elected to discontinue operation of its discount department store division. The Company has executed long-term net leases with tenants covering 7 of the properties and is actively involved in negotiations concerning the re-tenanting and redevelopment of the remaining locations. 4. Shopping Center Acquisitions During the nine months ended September 30, 1996, the Company acquired interests in 6 shopping center properties in Florida, Michigan, North Carolina, Texas and Arizona through separate transactions for an aggregate purchase price of approximately $33.0 million. 5. Investment in Retail Store Leases During July 1995, certain subsidiaries of the Company obtained interests in various retail store leases relating to the anchor store premises in neighborhood and community shopping centers. These premises have been substantially sublet to retailers which lease the stores pursuant to net lease agreements. Income from the investment in these retail store leases for the nine months ended September 30, 1996 was approximately $2.7 million. This amount represents sublease revenues of approximately $15.9 million less related expenses of $11.5 million and an amount which, in management's estimation, reasonably provides for the recovery of the investment over a ten-year period. 6. Property Disposition During September 1996, the Company disposed of a property in Watertown, New York. Proceeds from the disposition, totaling approximately $1.8 million in cash, will be used to acquire an exchange shopping center property. 7. Net Income Per Common Share Net income per common share is based upon weighted average numbers of common shares outstanding of 36,148,885 and 35,812,472 for the three and nine month periods ended September 30, 1996, respectively, and 33,636,863 and 33,280,905 for the three and nine month periods ended September 30, 1995, respectively. 8. Pro Forma Financial Information As discussed in Notes 4 and 6, the Company and certain of its subsidiaries acquired and disposed of interests in certain shopping center properties during the nine months ended September 30, 1996. The pro forma financial information set forth below is based upon the Company's historical, Consolidated Statement of Income for the year ended December 31, 1995, and the Condensed Consolidated Statement of Income for the nine months ended September 30, 1996, adjusted to give effect to these transactions as of January 1, 1995. 9 The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred as of January 1, 1995, nor does it purport to represent the results of future operations. (Amounts presented in millions, except per share figures.)
Nine Months Ended Year Ended September 30, December 31, 1996 1995 ---------- -------- Revenues from rental property $126.9 $148.3 Net income $54.5 $54.7 Net income per common share $1.20 $1.38
10 PART II OTHER INFORMATION Item 1. Legal Proceedings The Company is not presently involved in any litigation, nor to its knowledge is any litigation threatened against the Company or its subsidiaries, that in management's opinion, would result in any material adverse effect on the Company's ownership, management or operation of its properties, or which is not covered by the Company's liability insurance. Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K Exhibits - None Form 8-K - None 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KIMCO REALTY CORPORATION 11/13/96 /s/ Milton Cooper - ------------ ---------------------------- (Date) Milton Cooper Chairman of the Board 11/13/96 /s/ Louis J. Petra - ------------ ---------------------------- (Date) Louis J. Petra Chief Financial Officer 12 EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1 9-MOS DEC-31-1996 SEP-30-1996 54,498,438 13,401,157 17,794,160 1,350,000 0 0 1,057,560,887 173,591,070 1,035,286,677 0 372,517,640 0 900,000 361,680 602,967,500 1,035,286,677 124,943,673 124,943,673 32,516,169 32,516,169 0 0 20,320,905 54,199,610 0 54,199,610 0 0 0 54,199,610 1.19 1.19 Financial Data Schedule information has been extracted from the Registrant's Condensed Consolidated Balance Sheet (non-classified) as of September 30, 1996 and the Condensed Consolidated Statement of Income for the nine months then ended.
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