-----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, JFJIVvH4VFhVYMhDTwxTO9pfeDYunz2Aw7zB1LOGiDiZr5n85nMIKIX07BoX2b2r pHP1qfgRAt1sCU/UXKU6Kw== 0000889812-97-002366.txt : 19971114 0000889812-97-002366.hdr.sgml : 19971114 ACCESSION NUMBER: 0000889812-97-002366 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 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: SEC FILE NUMBER: 001-10899 FILM NUMBER: 97712803 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, 1997 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 of (I.R.S. Employer 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. X Yes _____ 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. 40,393,389 shares outstanding as of October 31, 1997. 1 of 12 PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Financial Statements - Condensed Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996. Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 1997 and 1996. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997 and 1996. 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 $10.0 million or 24.4% to $50.8 million for the three months ended September 30, 1997, as compared with $40.8 million for the corresponding quarter ended September 30, 1996. Similarly, revenues from rental property increased $16.4 million or 13.1% to $141.3 million for the nine months ended September 30, 1997, as compared with $124.9 million for the corresponding nine month period ended September 30, 1996. These net increases are primarily attributable to (i) property acquisitions during the nine month period ended September 30, 1997 (56 property interests) and throughout calendar year 1996 (39 property interests), (ii) the completion of certain property redevelopment projects and (iii) new leasing and re-tenanting within the portfolio at improved rental rates. Rental property expenses, including depreciation and amortization, increased $7.6 million or 32.7% to $30.6 million for the three months ended September 30, 1997, as compared with $23.0 million for the corresponding quarter ended September 30, 1996. Similarly, rental property expenses increased $7.6 million or 10.4% to $80.7 million for the nine months ended September 30, 1997, as compared with $73.1 million for the nine-month period ended September 30, 1996. Rent, real estate taxes and depreciation and amortization charges contributed significantly to this net increase in rental property expenses (increasing $4.0 million and $5.9 million, or 33.8% and 16.6%, respectively, for the three and nine month periods ended September 30, 1997, as compared with the corresponding three and nine month periods in the preceding year) primarily due to the 1997 property acquisitions and the property acquisitions throughout calendar year 1996. Interest expense increased $2.4 million and $1.9 million, or 36.2% and 9.5%, respectively, for the three and nine month periods ended September 30, 1997, as compared with the corresponding three and nine month periods in the preceding year, reflecting higher outstanding borrowings during 1997 (resulting from the issuance of an aggregate $100 million unsecured medium-term notes during May and July 1997 and the assumption of approximately $59.5 million of mortgage debt during August 1997) as compared to the corresponding periods in 1996. General and administrative expenses increased approximately $.4 million and $1.0 million, to $3.0 million and $8.5 million, respectively, for the three and nine month periods ended September 30, 1997, as compared to $2.6 million and $7.5 million for the corresponding periods in the preceding year. This increase is primarily attributable to increased senior management and staff levels during 1997. During June 1997, the Company disposed of a property in Troy, OH. Cash proceeds from the disposition totaling $1.6 million, together with an additional $8.3 million cash investment, were used to acquire an exchange shopping center property located in Ocala, FL. During September 1996, the Company disposed of a property in Watertown, NY. Cash proceeds from the disposition, totaling approximately $1.8 million, together with an additional $2.2 million cash investment, were used to acquire an exchange shopping center property located in Lafayette, IN during January 1997. Net income for the three and nine month periods ended September 30, 1997 was $20.6 million and $62.3 million, respectively. Net income for the three and nine month periods ended September 30, 1996 was $19.8 million and $54.2 million, respectively. This represents an increase in net income of $.04 and $.15 per common share for the three and nine month periods ended September 30, 1997, respectively, after adjusting for the gains on sales of shopping center properties in the respective periods. These increases reflect the effects of property acquisitions, the completion of certain property redevelopment projects 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 $1.2 billion for the purposes of acquiring interests in neighborhood and community shopping center properties, repaying indebtedness and for expanding and improving properties in the portfolio. Management believes the public debt and equity markets will continue to 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 2000, 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. 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 has 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. 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 payment of additional rent calculated as a percentage of tenants' gross sales above pre-determined thresholds, 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. KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS --------------------------- September 30, December 31, 1997 1996 ------------------ ----------------- Assets: Real estate, net of accumulated depreciation of $199,156,875 and $180,552,647 $1,103,340,060 $ 891,503,339 Investment in retail store leases 16,408,989 18,994,321 Cash and cash equivalents 122,645,949 37,425,206 Accounts and notes receivable 16,090,574 13,986,138 Other assets 76,027,470 61,123,557 -------------- -------------- $1,334,513,042 $1,023,032,561 ============== ============== Liabilities: Notes payable $ 410,250,000 $ 310,250,000 Mortgages payable 108,129,377 54,404,939 Other liabilities, including minority interests in partnerships 72,450,843 52,606,653 -------------- -------------- 590,830,220 417,261,592 -------------- -------------- Stockholders' Equity: Preferred stock, $1.00 par value, authorized 5,000,000 and 930,000 shares, respectively Class A Preferred Stock, $1.00 par value, authorized 345,000 shares Issued and outstanding 300,000 shares 300,000 300,000 Aggregate liquidation preference $75,000,000 Class B Preferred Stock, $1.00 par value, authorized 230,000 shares Issued and outstanding 200,000 shares 200,000 200,000 Aggregate liquidation preference $50,000,000 Class C Preferred Stock, $1.00 par value, authorized 460,000 shares Issued and outstanding 400,000 shares 400,000 400,000 Aggregate liquidation preference $100,000,000 Common stock, $.01 par value, authorized 100,000,000 and 50,000,000 shares, respectively Issued and outstanding 40,390,889 and 36,215,055 shares, respectively 403,909 362,151 Paid-in capital 857,568,979 719,601,956 Cumulative distributions in excess of net income (115,190,066) (115,093,138) -------------- -------------- 743,682,822 605,770,969 -------------- -------------- $1,334,513,042 $1,023,032,561 ============== ============== The accompanying notes are an integral part of these condensed consolidated financial statements. KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three and Nine Months ended September 30, 1997 and 1996 ---------------------------------------
Three Months Ended September 30, Nine Months Ended September 30, 1997 1996 1997 1996 ------------- ------------- ------------- ------------- Revenues from rental property $ 50,822,619 $ 40,837,356 $ 141,294,177 $ 124,943,673 ------------- ------------- ------------- ------------- Rental property expenses: Rent 1,644,698 336,489 2,499,182 1,018,286 Real estate taxes 6,573,729 4,697,077 17,479,097 14,524,830 Interest 9,181,521 6,742,537 22,252,562 20,320,905 Operating and maintenance 5,397,149 4,337,982 16,687,602 16,973,053 Depreciation and amortization 7,776,881 6,919,811 21,737,600 20,233,607 ------------- ------------- ------------- ------------- 30,573,978 23,033,896 80,656,043 73,070,681 ------------- ------------- ------------- ------------- Income from rental property 20,248,641 17,803,460 60,638,134 51,872,992 Income from investment in retail store leases 895,107 904,371 2,704,761 2,723,735 ------------- ------------- ------------- ------------- 21,143,748 18,707,831 63,342,895 54,596,727 Management fee income 891,031 946,427 2,754,842 2,693,763 General and administrative expenses (2,991,139) (2,572,785) (8,526,158) (7,514,268) Other income, net 1,597,444 1,949,764 4,474,666 3,621,433 ------------- ------------- ------------- ------------- Income before gain on sale of shopping center property 20,641,084 19,031,237 62,046,245 53,397,655 Gain on sale of shopping center property -- 801,955 243,995 801,955 ------------- ------------- ------------- ------------- Net Income $ 20,641,084 $ 19,833,192 $ 62,290,240 $ 54,199,610 ============= ============= ============= ============= Net income applicable to common shares $ 16,031,659 $ 15,223,767 $ 48,461,965 $ 42,674,560 ============= ============= ============= ============= Net income per common share $ 0.44 $ 0.42 $ 1.33 $ 1.19 ============= ============= ============= =============
The accompanying notes are an integral part of these condensed consolidated financial statements. KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months ended September 30, 1997 and 1996 ---------------------------------- 1997 1996 ------ ------ Cash flow provided by operations $ 100,186,622 $ 78,658,029 ------------- ------------ Cash flow from investing activities: Acquisition of and improvements to real estate (173,518,344) (126,261,585) Investment in marketable securities (1,968,889) (4,935,008) Acquisition of real estate through joint venture investment (907,068) - Advances to affiliated companies (12,036,000) - Proceeds from disposition of shopping center property 1,550,000 1,825,000 ------------- ------------- Net cash flow used for investing activities (186,880,301) (129,371,593) ------------- ------------- Cash flow from financing activities: Principal payments on debt, excluding normal amortization of rental property debt (4,650,000) (649,153) Principal payments on rental property debt, net (860,754) (1,055,942) Change in notes payable 100,000,000 (15,000,000) Dividends paid (60,583,605) (51,037,393) Proceeds from issuance of stock 138,008,781 156,789,824 ------------- ------------- Net cash flow provided by financing activities 171,914,422 89,047,336 ------------- ------------- Change in cash and cash equivalents 85,220,743 38,333,772 Cash and cash equivalents, beginning of period 37,425,206 16,164,666 ------------- ------------- Cash and cash equivalents, end of period $ 122,645,949 $ 54,498,438 ============= ============= Interest paid during the period $ 17,050,469 $ 17,556,631 ============= ============= Supplemental financing activity: Acquisition of real estate interests by assumption of debt $ 59,235,192 $ - ============= ============= Declaration of dividends paid in succeeding period $ 20,524,382 $ 17,261,237 ============= ============= The accompanying notes are an integral part of these condensed consolidated financial statements. 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. Certain account balances in the accompanying Condensed Consolidated Balance Sheet as of December 31, 1996 have been reclassified so as to conform with the current year presentation. 2. Public Stock Offering On September 30, 1997, the Company completed a primary public stock offering of 4,000,000 shares of common stock at $35.50 per share. The net proceeds from this sale of common stock, totaling approximately $134.5 million (after related transaction costs of approximately $7.5 million),will be used for general corporate purposes, including the acquisition of interests in neighborhood and community shopping centers as suitable opportunities arise and the expansion and improvement of properties in the Company's portfolio. 3. Retail Properties Acquisition During August 1997, certain subsidiaries of the Company acquired interests in 49 fee and leasehold properties from a retailer, comprising approximately 5.9 million square feet of leasable area located in Illinois, Missouri, Texas, Oklahoma, Kansas, Indiana and Iowa. The aggregate price was approximately $130 million, consisting of $70.5 million in cash and the assumption of approximately $59.5 million of existing mortgage debt on certain of these properties. The mortgage debt bears interest at 10.54% per annum and cannot be repaid, without penalty, until its maturity July 1, 2000. The Company was also granted (i) an option to acquire 11 other properties in this transaction should certain conditions be satisfied, (ii) an option to acquire two other properties for $4.5 million, and (iii) rights of first refusal to acquire 31 additional properties containing 4.2 million square feet of leasable area for a period of 5 years. The transaction also includes approximately 573,000 square feet of retail space substantially occupied by other retailers and approximately 165,000 square feet of available retail space. Simultaneously with this transaction, the Company entered into a single long-term unitary lease covering all premises occupied by this retailer pursuant to which this seller/tenant may remain in occupancy and continue to conduct business in these premises. 4. Property Acquisitions During the nine months ended September 30, 1997, the Company and its affiliates acquired interests in 6 shopping center properties located in Indiana, Florida, South Carolina, Texas and Louisiana and a health care facility located in Pennsylvania through separate transactions for an aggregate purchase price of approximately $64.5 million. 5. Investment in Retail Store Leases Income from the investment in retail store leases for the nine months ended September 30, 1997 and 1996 represents sublease revenues of approximately $15.8 million and $15.9 million, respectively, less related expenses of $11.5 million for each respective period, and amounts, which in management's estimation, reasonably provide for the recovery of the investment over a period representing the expected remaining term of the retail store leases. 6. Property Dispositions During June 1997, the Company disposed of a shopping center property in Troy, OH. Cash proceeds from the disposition totaling $1.6 million, together with an additional $8.3 million cash investment, were used to acquire an exchange shopping center property located in Ocala, FL. During September 1996, the Company disposed of a property in Watertown, NY. Cash proceeds from the disposition, totaling approximately $1.8 million together with an additional $2.2 million cash investment, were used to acquire an exchange shopping center located in Lafayette, IN. 7. Net Income Per Common Share Net income per common share is based upon weighted average numbers of common shares outstanding of 36,633,269 and 36,375,024 for the three and nine month periods ended September 30, 1997, respectively, and 36,148,885 and 35,815,472 for the three and nine month periods ended September 30, 1996, 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, 1997. The pro forma financial information set forth below is based upon the Company's historical, Condensed Consolidated Statement of Income for the nine months ended September 30, 1996, and the Condensed Consolidated Statement of Income for the nine months ended September 30, 1997, adjusted to give effect to these transactions as of January 1, 1996. 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, 1996, nor does it purport to represent the results of future operations. (Amounts presented in millions, except per share figures.) Nine Months Ended Nine Months Ended September 30, 1997 September 30, 1996 ------------------ ------------------ Revenues from rental property $ 144.8 $ 131.4 Net income $ 62.8 $ 55.2 Net income per common share $ 1.35 $ 1.22 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 - 4.1 Agreement to File Instruments Kimco Realty Corporation (the "Registrant") hereby agrees to file with the Securities and Exchange Commission, upon request of the Commission, all instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries, and for any of its unconsolidated subsidiaries for which financial statements are require to be filed, and for which the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. Form 8-K None. 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 08/12/97 /s/ Milton Cooper - ----------- ---------------------- (Date) Milton Cooper Chairman of the Board 08/12/97 /s/ Michael V. Pappagallo - ----------- ------------------------------ (Date) Michael V. Pappagallo Chief Financial Officer EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1 9-MOS DEC-31-1997 SEP-30-1997 122,645,949 9,747,199 17,440,574 1,350,000 0 0 1,302,496,935 199,156,875 1,334,513,042 0 518,379,377 0 900,000 403,909 742,378,913 1,334,513,042 141,294,177 141,294,177 36,665,881 36,665,881 0 0 22,252,562 62,290,240 0 62,290,240 0 0 0 62,290,240 1.33 1.33 Financial Data Schedule information has been extracted from the Registrant's Condensed Consolidated Balance Sheet (non-classified) as of September 30, 1997 and the Condensed Consolidated Statement of Income for the nine months then ended.
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