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Kimco (KIM) Q1 FFO Meets, Revenues Beat, '23 View Revised

Kimco Realty Corp.’s KIM first-quarter 2023 funds from operations (FFO) per share came in at 39 cents, in line with the Zacks Consensus Estimate. The figure was on par with the year-ago quarter’s tally and our estimate.

Results reflect better-than-anticipated revenues, aided by rental rate growth and a rise in occupancy. It revised its 2023 FFO per share outlook.

This retail REIT clocked in revenues of $442.9 million, beating the consensus mark of $440.2 million and our estimate of $432.2 million. Quarterly revenues improved 3.7% year over year.

According to Conor Flynn, Kimco’s CEO, “Our team continues to drive strong leasing performance, with the 4.5 million square feet leased this quarter further validating the demand for our well-located, high-quality portfolio of open-air, grocery-anchored shopping centers in the most coveted locations across the country.”

Quarter in Detail

Pro-rata portfolio occupancy at the end of the first quarter was 95.8%, reflecting an expansion of 110 basis points (bps) year over year and 10 bps sequentially. Pro-rata anchor occupancy was 97.8%, up 50 bps year over year. Pro-rata small shop occupancy ended the quarter at 90.7%, representing an uptick of 230 bps from the prior-year quarter.

The company signed 600 leases, aggregating 4.5 million square feet in the quarter. Blended pro-rata rent spreads on comparable spaces increased 10.3%, with rental rates for new leases jumping 44% and renewals and options rising 7.7%.

Same-property net operating income (NOI) grew 1.4% year over year to $326.2 million, backed by a rise in minimum rent of 4.3%.

Portfolio Activity

In the reported quarter, Kimco acquired the remaining 85% interest in three California grocery-anchored shopping centers for $127.5 million.

The company also purchased two improved, adjacent parcels at existing shopping centers for $14.6 million.

Kimco disposed of three power centers and two land parcels covering 592,000 square feet for $98.9 million. The company’s pro-rata share of the sales price was $96.9 million.

Balance Sheet Position

This retail REIT exited the first quarter of 2023 with more than $2.3 billion of immediate liquidity. This included full availability under its $2-billion unsecured revolving credit facility and cash and cash equivalents of $329.2 million.

Kimco generated net proceeds of $137.4 million from the sale of 7.1 million shares of Albertsons Companies, Inc. ACI common stock during the first quarter. Following the quarter end, Kimco sold an additional 7 million shares of ACI common stock, generating net proceeds of $144.9 million. Kimco held 14.2 million shares of ACI common stock as of Apr 27, 2023, which are valued at roughly $300 million.

Its net-debt-to-EBITDA was 6.2X on a look-through basis at the end of the reported quarter, down from 6.4X year over year.

Dividend Update

Concurrent with the first-quarter earnings release, Kimco’s board of directors approved a quarterly cash dividend of 23 cents per share, representing a 15% increase year over year. This dividend will be paid out on Jun 22 to its shareholders on record as of Jun 8, 2023.

2023 Guidance Revised

For 2023, Kimco projects FFO per share in the range of $1.54-$1.57, revised from the prior outlook of $1.53-$1.57. The Zacks Consensus Estimate for the same is currently pegged at $1.56, which lies within the guided range.

Kimco also lowered its assumption for lease termination income for 2023 from $14-$16 million projected earlier to $4-$6 million. Other assumptions, such as that of same property NOI growth of 1.0-2.0% and total property acquisitions (including structured investments), net of dispositions, of $100 million remained unchanged.

Kimco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kimco Realty Corporation Price, Consensus and EPS Surprise

Kimco Realty Corporation price-consensus-eps-surprise-chart | Kimco Realty Corporation Quote

Upcoming Earnings Releases

We now look forward to the earnings releases of other retail REITs like Simon Property Group SPG and Federal Realty Investment Trust FRT. While Simon Property Group is slated to report on May 2, Federal Realty is scheduled on May 4.

The Zacks Consensus Estimate for Simon Property’s first-quarter 2023 FFO per share is pegged at $2.80, suggesting a marginal increase year-over-year. SPG currently carries a Zacks Rank #3.

The Zacks Consensus Estimate for Federal Realty’s first-quarter 2023 FFO per share is pegged at $1.57, implying a year-over-year increase of 4.7%. FRT currently carries a Zacks Rank of 3.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.


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