Kimco Realty Announces Second Quarter 2019 Results

Portfolio Occupancy Matches All-Time High Level

Updates 2019 Outlook

NEW HYDE PARK, N.Y.--(BUSINESS WIRE)--July 25, 2019--Kimco Realty Corp. (NYSE:KIM) today reported results for its second quarter ended June 30, 2019. For the three months ended June 30, 2019 and 2018, net income available to the company’s common shareholders was $0.20 per diluted share and $0.36 per diluted share, respectively.

Second Quarter Highlights:

Increased pro-rata occupancy to a record-tying 96.2%.
Generated new leasing spreads of 37.0%, representing the 22^nd consecutive quarter in which spreads on new leases increased by double digits.
Grew same-property net operating income (“NOI”) by 2.5% during the second quarter compared to the same period in 2018.
Sold three properties and one land parcel totaling 875,000 square feet for $103.7 million. Kimco’s share was $65.8 million.

“With our pro-rata occupancy at an all-time high, impressive spreads on new leases and positive same-property NOI, our strong operating results continue to reflect the successful execution of our 2020 Vision strategy, along with the quality, strength and resiliency of our portfolio,” said Conor Flynn, Kimco’s Chief Executive Officer. “We also remain focused on our value-creation initiatives designed to drive long-term cash flow growth for our shareholders. An excellent example is the success we’re seeing at Phase One of Pentagon Centre, where in just one month, we’re seeing strong demand that has enabled us to lease over 45 percent of the residential units, well exceeding our expectations.”

Financial Results

Net income available to the company’s common shareholders for the second quarter of 2019 was $86.5 million, or $0.20 per diluted share, compared to $150.9 million, or $0.36 per diluted share, for the second quarter of 2018. The change was primarily due to the sale of over $1.0 billion of properties since 2018 through the first six months of 2019. The result of the sales was $70.4 million of lower gains on sale of properties, net of impairments, partially offset by $10.0 million of lower depreciation expense.

NAREIT Funds From Operations (“FFO”)* was $151.2 million, or $0.36 per diluted share, for the second quarter of 2019 compared to $158.6 million, or $0.38 per diluted share, for the second quarter of 2018. NAREIT FFO for the second quarter of 2019 included $1.0 million of transactional income (net of transactional charges) compared to $2.8 million in the second quarter of 2018.

FFO as adjusted available to common shareholders (“FFO as adjusted”)*, which excludes the effects of transactional income and charges, was $150.2 million, or $0.36 per diluted share, for the second quarter of 2019 compared to $155.7 million, or $0.37 per diluted share, for the second quarter of 2018.

*A reconciliation of net income available to the company’s common shareholders to NAREIT FFO, FFO as adjusted and same-property NOI is provided in the tables accompanying this press release.

Operating Results

Pro-rata occupancy ended the second quarter at 96.2%, representing a 20-basis-point sequential increase and an expansion of 20 basis points over the same period in 2018.
Pro-rata anchor occupancy ended the second quarter at 98.2%, representing a 40-basis-point sequential increase and a year-over-year expansion of 10 basis points.
Pro-rata small shop occupancy ended the second quarter at 90.5%, representing a 30-basis-point increase year-over-year and a sequential decrease of 10 basis points. Second quarter 2019 small shop occupancy includes a 20-basis-point reduction from the vacancy of 18 Payless, Inc. stores.
Pro-rata rental-rate leasing spreads increased 7.9% during the second quarter 2019, with rental rates for new leases up 37.0% and renewals/options up 4.1%.
Generated 2.5% growth in same-property NOI for the second quarter of 2019 over the comparable period in 2018 driven by a 3.0% increase in minimum rent.

Investment Activity

During the second quarter, the company sold three properties and one land parcel totaling 875,000 square feet for $103.7 million. Kimco’s share of the sales price was $65.8 million.

Year to date, the company’s dispositions included 12 properties and one land parcel, totaling 1.9 million square feet, for a gross sales price of $226.1 million. Kimco’s share of the sales price was $161.1 million. The blended cap rate for the property sales is in line with the company’s expected range of 7.25%-7.75%. Currently, the company has approximately $145.3 million of properties under contract expected to close during 2019. Kimco’s share of the sales would be $86.6 million.

2019 Full Year Guidance

The company is increasing its 2019 guidance range for Net Income and the operational assumption for Same-property NOI:

Guidance (per diluted share)		Current		Previous
Net income available to the company’s common shareholders:		$0.82 to $0.88		$0.77 to $0.82
NAREIT FFO* & FFO as adjusted*:		Unchanged		$1.44 to $1.48
* Reconciliations are provided for these forward-looking non-GAAP metrics (NAREIT FFO and FFO as adjusted) in the tables accompanying this press release.
Operational Assumptions (Kimco’s pro-rata share)	Current		Previous
Same-property NOI (excluding redevelopments):	2.00% to 2.70%		1.75% to 2.50%
Net dispositions:	Unchanged		$200 million to $300 million
Blended disposition cap rates:	Unchanged		7.25% to 7.75%
Combined redevelopment & development investment:	Unchanged		$275 million to $350 million

Dividend Declarations

Kimco’s board of directors declared a quarterly cash dividend of $0.28 per common share, payable on October 15, 2019, to shareholders of record on October 2, 2019.

The board of directors also declared quarterly dividends with respect to each of the company’s Class I, Class J, Class K, Class L and Class M series of cumulative redeemable preferred shares. All dividends on the preferred shares will be paid on October 15, 2019, to shareholders of record on October 1, 2019.

Conference Call and Supplemental Materials

Kimco will hold its quarterly conference call on Thursday, July 25, 2019, at 10:00 a.m. Eastern Daylight Time (EDT). The call will include a review of the company’s second quarter 2019 results as well as a discussion of the company’s strategy and expectations for the future. To participate, dial 1-888-317-6003 (Passcode: 8735026).

A replay will be available through Friday, October 25, 2019, by dialing 1-877-344-7529 (Passcode: 10131592). Access to the live call and replay will be available through the company's website at investors.kimcorealty.com.

About Kimco

Kimco Realty Corp. (NYSE: KIM) is a real estate investment trust (REIT) headquartered in New Hyde Park, N.Y., that is one of North America’s largest publicly traded owners and operators of open-air shopping centers. As of June 30, 2019, the company owned interests in 428 U.S. shopping centers comprising 75 million square feet of leasable space primarily concentrated in the top major metropolitan markets. Publicly traded on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center acquisitions, development and management for more than 60 years. For further information, please visit www.kimcorealty.com, the company’s blog at blog.kimcorealty.com, or follow Kimco on Twitter at www.twitter.com/kimcorealty.

The company announces material information to its investors using the company’s investor relations website (investors.kimcorealty.com), SEC filings, press releases, public conference calls, and webcasts. The company also uses social media to communicate with its investors and the public, and the information the company posts on social media may be deemed material information. Therefore, the company encourages investors, the media, and others interested in the company to review the information that it posts on the company’s blog (blog.kimcorealty.com) and social media channels, including Facebook (www.facebook.com/kimcorealty), Twitter (www.twitter.com/kimcorealty), YouTube (www.youtube.com/kimcorealty) and LinkedIn (www.linkedin.com/company/kimco-realty-corporation). The list of social media channels that the company uses may be updated on its investor relations website from time to time.

Safe Harbor Statement

The statements in this news release state the company’s and management’s intentions, beliefs, expectations or projections of the future and are forward-looking statements. It is important to note that the company’s actual results could differ materially from those projected in such forward-looking statements. 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 inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms to the company, (iv) the company’s ability to raise capital by selling its assets, (v) changes in governmental laws and regulations and management’s ability to estimate the impact of such changes, (vi) the level and volatility of interest rates and foreign currency exchange rates and management’s ability to estimate the impact thereof, (vii) risks related to the company’s international operations, (viii) the availability of suitable acquisition, disposition, development and redevelopment opportunities, and risks related to acquisitions not performing in accordance with our expectations, (ix) valuation and risks related to the company’s joint venture and preferred equity investments, (x) valuation of marketable securities and other investments, (xi) increases in operating costs, (xii) changes in the dividend policy for the company’s common and preferred stock and the company’s ability to pay dividends at current levels, (xiii) the reduction in the company’s income in the event of multiple lease terminations by tenants or a failure by multiple tenants to occupy their premises in a shopping center, (xiv) impairment charges and (xv) unanticipated changes in the company’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company’s SEC filings. Copies of each filing may be obtained from the company or the SEC.

The company refers you to the documents filed by the company from time to time with the SEC, specifically the section titled “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2018, as may be updated or supplemented in the company’s Quarterly Reports on Form 10-Q and the company’s other filings with the SEC, which discuss these and other factors that could adversely affect the company’s results. The company disclaims any intention or obligation to update the forward-looking statements, whether as a result of new information, future events or otherwise.

Condensed Consolidated Balance Sheets
(in thousands, except share information)
(unaudited)

	June 30,			December 31,
	2019			2018
Assets:
Real estate, net of accumulated depreciation and amortization of $2,426,924 and $2,385,287, respectively	$	9,164,375		$	9,250,519
Real estate under development		304,624			241,384
Investments in and advances to real estate joint ventures		584,983			570,922
Other real estate investments		191,834			192,123
Cash and cash equivalents		113,991			143,581
Accounts and notes receivable, net		182,369			184,528
Operating lease right-of-use assets, net		99,997			-
Other assets		398,730			416,043
Total assets	$	11,040,903		$	10,999,100

Liabilities:
Notes payable, net	$	4,420,370		$	4,381,456
Mortgages and construction loan payable, net		485,132			492,416
Dividends payable		130,460			130,262
Operating lease liabilities		93,233			-
Other liabilities		520,557			560,231
Total liabilities		5,649,752			5,564,365
Redeemable noncontrolling interests		23,690			23,682

Stockholders' equity:
Preferred stock, $1.00 par value, authorized 5,996,240 shares; issued and outstanding (in series) 42,580 shares; Aggregate liquidation preference $1,064,500		43			43
Common stock, $.01 par value, authorized 750,000,000 shares; issued and outstanding 422,094,230 and 421,388,879 shares, respectively		4,221			4,214
Paid-in capital		6,125,572			6,117,254
Cumulative distributions in excess of net income		(835,934	)		(787,707	)
Total stockholders' equity		5,293,902			5,333,804
Noncontrolling interests		73,559			77,249
Total equity		5,367,461			5,411,053
Total liabilities and equity	$	11,040,903		$	10,999,100

Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
	2019				2018				2019				2018
Revenues
Revenues from rental properties, net	$	280,710			$	289,383			$	571,344			$	589,100
Management and other fee income		4,163				4,020				8,539				8,381
Total revenues		284,873				293,403				579,883				597,481
Operating expenses
Rent		(2,924	)			(2,742	)			(5,616	)			(5,560	)
Real estate taxes		(37,005	)			(37,274	)			(76,352	)			(77,708	)
Operating and maintenance		(43,217	)			(41,325	)			(84,113	)			(84,656	)
General and administrative		(22,633	)			(24,029	)			(48,464	)			(46,427	)
Provision for doubtful accounts		-				(1,051	)			-				(3,182	)
Impairment charges		(17,451	)			(22,873	)			(21,626	)			(30,519	)
Depreciation and amortization		(69,005	)			(79,760	)			(140,566	)			(161,142	)
Total operating expenses		(192,235	)			(209,054	)			(376,737	)			(409,194	)

Gain on sale of properties/change in control of interests		14,762				95,240				38,357				152,211
Operating income		107,400				179,589				241,503				340,498

Other income/(expense)
Other income, net		1,938				3,277				4,560				9,456
Interest expense		(44,097	)			(46,434	)			(88,492	)			(96,377	)
Income before income taxes, net, equity in income of joint ventures, net,
and equity in income from other real estate investments, net		65,241				136,432				157,571				253,577

Benefit/(provision) for income taxes, net		344				720				(286	)			668
Equity in income of joint ventures, net		22,533				19,040				41,287				35,953
Equity in income of other real estate investments, net		13,269				9,617				19,493				19,593

Net income		101,387				165,809				218,065				309,791
Net income attributable to noncontrolling interests		(360	)			(423	)			(869	)			(315	)
Net income attributable to the Company		101,027				165,386				217,196				309,476
Preferred dividends		(14,534	)			(14,534	)			(29,068	)			(29,123	)
Net income available to the Company's common shareholders	$	86,493			$	150,852			$	188,128			$	280,353

Per common share:
Net income available to the Company: (2)
Basic	$	0.20			$	0.36			$	0.45			$	0.66
Diluted	$	0.20		(1)	$	0.36		(1)	$	0.44		(1)	$	0.66		(1)
Weighted average shares:
Basic		419,697				420,731				419,581				422,060
Diluted		420,646				421,928				420,798				423,236

(1) Reflects the potential impact if certain units were converted to common stock at the beginning of the period. The impact of the conversion would have an anti-dilutive effect on net income and therefore have not been included. Adjusted for distributions on convertible units of $0 and $282 for the three months ended June 30, 2019 and 2018, respectively. Adjusted for distributions on convertible units of $20 and $521 for the six months ended June 30, 2019 and 2018, respectively.

(2) Adjusted for earnings attributable from participating securities of ($660) and ($863) for the three months ended June 30, 2019 and 2018, respectively. Adjusted for earnings attributable from participating securities of ($1,285) and ($1,472) for the six months ended June 30, 2019 and 2018, respectively.

Reconciliation of Net Income Available to the Company's Common Shareholders to
FFO and FFO as Adjusted Available to the Company's Common Shareholders
(in thousands, except per share data)
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018 (1)			2019			2018 (1)
Net income available to the Company's common shareholders	$	86,493		$	150,852		$	188,128		$	280,353
Gain on sale of properties/change in control of interests		(14,762	)		(96,788	)		(38,357	)		(154,212	)
Gain on sale of joint venture properties		(8,496	)		(1,510	)		(13,186	)		(3,549	)
Depreciation and amortization - real estate related		68,723			77,250			139,983			156,242
Depreciation and amortization - real estate jv's		10,115			11,611			20,276			20,895
Impairment charges		18,247			22,920			24,655			30,634
Profit participation from other real estate investments, net		(8,754	)		(5,253	)		(9,784	)		(9,981	)
(Gain)/loss on marketable securities		(71	)		(24	)		(1,574	)		1,486
Noncontrolling interests (2)		(333	)		(507	)		(581	)		(1,924	)
Funds from operations available to the Company's common shareholders		151,162			158,551			309,560			319,944
Transactional income, net		(1,000	)		(2,822	)		(2,000	)		(6,403	)
Funds from operations available to the Company's common shareholders as adjusted	$	150,162		$	155,729		$	307,560		$	313,541

Weighted average shares outstanding for FFO calculations:
Basic		419,697			420,731			419,581			422,060
Units		835			935			825			927
Dilutive effect of equity awards		949			350			1,166			352
Diluted (3)		421,481			422,016			421,572			423,339

FFO per common share - basic	$	0.36		$	0.38		$	0.74		$	0.76
FFO per common share - diluted (3)	$	0.36		$	0.38		$	0.74		$	0.76
FFO as adjusted per common share - diluted (3)	$	0.36		$	0.37		$	0.73		$	0.74

(1) Certain amounts have been reclassified in order to conform with NAREIT's clarification guidance adopted January 1, 2019.

(2) Related to gains, impairments and depreciation on properties, where applicable.

(3) Reflects the potential impact if certain units were converted to common stock at the beginning of the period. Funds from operations would be increased by $228 and $261 for the three months ended June 30, 2019 and 2018, respectively. Funds from operations would be increased by $446 and $525 for the six months ended June 30, 2019 and 2018, respectively.

Funds From Operations (“FFO”) is a supplemental non-GAAP financial measure utilized to evaluate the operating performance of real estate companies. Effective January 1, 2019, the Company adopted the National Association of Real Estate Investment Trusts (“NAREIT”) Funds From Operations White Paper – 2018 Restatement ("FFO White Paper - 2018 Restatement") which clarifies, where necessary, existing guidance and consolidates alerts and policy bulletins into a single document for ease of use. NAREIT defines FFO as net income/(loss) available to the Company’s common shareholders computed in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding (i) depreciation and amortization related to real estate, (ii) gains or losses from sales of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis. Included in the FFO White Paper - 2018 Restatement is an option for the Company to make an election to include or exclude gains and losses on the sale of assets and impairments of assets incidental to its main business in the calculation of FFO. In conjunction with the adoption of the FFO White Paper - 2018 Restatement, the Company has elected to exclude gains/impairments on land parcels, gains/losses (realized or unrealized) from marketable securities and gains/impairments on preferred equity participations in NAREIT defined FFO.

The Company’s reconciliation of net income available to the Company’s common shareholders to FFO available to the Company’s common shareholders and FFO available to the Company’s common shareholders as adjusted, is reflected in the table above (in thousands, except per share data). In conjunction with the adoption of NAREIT’s FFO White Paper – 2018 Restatement, the Company has reclassified $6.7 million and $10.2 million from transactional income into FFO available to the Company’s common shareholders for the three and six months ended June 30, 2018, respectively, relating to incidental gains and losses on the sale of assets and mark-to-market changes in equity securities. This reclassification had no impact on FFO available to the Company’s common shareholders as adjusted for the three and six months ended June 30, 2018.

Reconciliation of Net Income Available to the Company's Common Shareholders
to Same Property NOI
(in thousands)
(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net income available to the Company's common shareholders	$	86,493		$	150,852		$	188,128		$	280,353
Adjustments:
Management and other fee income		(4,163	)		(4,020	)		(8,539	)		(8,381	)
General and administrative		22,633			24,029			48,464			46,427
Impairment charges		17,451			22,873			21,626			30,519
Depreciation and amortization		69,005			79,760			140,566			161,142
Gain on sale of properties/change in control of interests		(14,762	)		(95,240	)		(38,357	)		(152,211	)
Interest and other expense, net		42,159			43,157			83,932			86,921
(Benefit)/Provision for income taxes, net		(344	)		(720	)		286			(668	)
Equity in income of other real estate investments, net		(13,269	)		(9,617	)		(19,493	)		(19,593	)
Net income attributable to noncontrolling interests		360			423			869			315
Preferred dividends		14,534			14,534			29,068			29,123
Non same property net operating income		(17,757	)		(33,914	)		(45,067	)		(70,367	)
Non-operational expense from joint ventures, net		10,125			15,136			24,918			29,508
Same Property NOI	$	212,465		$	207,253		$	426,401		$	413,088

Certain reclassifications of prior year amounts have been made to conform with the current year presentation.

Reconciliation of Diluted Net Income Available to Common Shareholders Per Common Share
to Diluted Funds From Operations Available to Common Shareholders Per Common Share
(unaudited)

	Projected Range
	Full Year 2019
	Low			High

Diluted net income available to company's common shareholder per common share	$	0.82		$	0.88

Depreciation and amortization - real estate related		0.66			0.69

Depreciation and amortization - real estate joint ventures, net of noncontrolling interests		0.09			0.10

Gain on sale of properties/change in control of interests		(0.12	)		(0.16	)

Gain on sale of joint venture properties		(0.04	)		(0.05	)

Impairments charges		0.06			0.06

Profit participation from other real estate investments, net		(0.03	)		(0.03	)

Noncontrolling interests		-			(0.01	)

FFO per diluted common share	$	1.44		$	1.48

Transactional (income)/expense, net		-			-

FFO as adjusted per diluted common share	$	1.44		$	1.48

Projections involve numerous assumptions such as rental income (including assumptions on percentage rent), interest rates, tenant defaults, occupancy rates, selling prices of properties held for disposition, expenses (including salaries and employee costs), insurance costs and numerous other factors. Not all of these factors are determinable at this time and actual results may vary from the projected results, and may be above or below the range indicated. The above range represents management’s estimate of results based upon these assumptions as of the date of this press release.

Contacts

David F. Bujnicki
Senior Vice President, Investor Relations and Strategy
Kimco Realty Corp.
1-866-831-4297
dbujnicki@kimcorealty.com

Maryland		1-10899		13-2744380
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on
Title of each class	Trading Symbol(s)	which registered
Common Stock, par value $.01 per share.	KIM	New York Stock Exchange
Depositary Shares, each representing one-thousandth of a share of 6.000% Class I Cumulative Redeemable, Preferred Stock, $1.00 par value per share.	KIMprI	New York Stock Exchange
Depositary Shares, each representing one-thousandth of a share of 5.500% Class J Cumulative Redeemable, Preferred Stock, $1.00 par value per share.	KIMprJ	New York Stock Exchange
Depositary Shares, each representing one-thousandth of a share of 5.625% Class K Cumulative Redeemable, Preferred Stock, $1.00 par value per share.	KIMprK	New York Stock Exchange
Depositary Shares, each representing one-thousandth of a share of 5.125% Class L Cumulative Redeemable, Preferred Stock, $1.00 par value per share.	KIMprL	New York Stock Exchange
Depositary Shares, each representing one-thousandth of a share of 5.250% Class M Cumulative Redeemable, Preferred Stock, $1.00 par value per share.	KIMprM	New York Stock Exchange


	KIMCO REALTY CORPORATION

Date: July 25, 2019	By:	/s/ Glenn G. Cohen
		Name:	Glenn G. Cohen
		Title:	Chief Financial Officer