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Kimco Realty's (KIM) Q4 FFO and Revenues Beat Estimates

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Zacks Equity Research
·5 min read
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Kimco Realty Corp.’s KIM fourth-quarter 2020 NAREIT funds from operations (FFO) came in at 31 cents per share, surpassing the Zacks Consensus Estimate of 30 cents. Results reflect better-than-anticipated revenue numbers.

Remarkably, the retail REIT generated revenues of $269.4 million, exceeding the consensus mark of $267.8 million.

According to Conor Flynn, Kimco’s chief executive officer, “During the fourth quarter our rent collections remained strong, our leasing volume reached pre-pandemic levels and we continued our efforts to help tenants overcome the impact of COVID-19.”

With a well-located and largely grocery-anchored portfolio that offers essential goods and services, rent-collection figures remain healthy. At the end of January, all of the company’s shopping centers were open and operational with 97% of tenants open, based on the annualized base rent, including some that are operating on a limited basis. Moreover, the company collected 92% of total pro-rata base rents billed during the fourth quarter and later collected 91% for the month of January.

Nonetheless, the FFO per share comes in lower than the year-ago quarter’s 36 cents. Also, revenues declined 9% year on year. Results underline a fall in same-property net operating income (NOI), mainly affected by a charge for potentially uncollectible accounts receivable. The company also witnessed a decline in occupancy.

For 2020, the company reported NAREIT FFO per share of $1.17, down from the prior year’s $1.44. The reported figure, nevertheless, topped the Zacks Consensus Estimate of $1.16. Total revenues of $1.06 billion slid 8.7% year on year.

Quarter in Detail

Pro-rata portfolio occupancy at the end of the fourth quarter was 93.9%, reflecting a contraction of 70 basis points (bps) sequentially and 250 bps year on year. Anchor- and small-shop occupancy came in at 96.7% and 86.1%, respectively.

The company executed 247 leases aggregating 1.1 million square feet of space. This includes 92 new leases for 406,000 square feet of space in the December-end quarter, marking an increase of 37.6% from the third quarter and 18% from the prior-year period.

Pro-rata rental-rate leasing spreads on comparable spaces jumped 6%, with rental rates for new leases and renewals/options climbing 6.8% and 5.6%, respectively.

Same-property NOI declined 10.5% year over year, primarily highlighting a charge for potentially uncollectible accounts receivable.

Balance Sheet Position

Kimco exited 2020 with cash and cash equivalents of $293.19 million, up from the $123.95 million recorded at the end of 2019. The retail REIT had $2.3 billion of immediate liquidity at the end of the fourth quarter. This included full availability under its $2-billion unsecured revolving credit facility, and around $293 million in cash and cash equivalents. In addition, at the end of the quarter, Kimco held more than $700 million of Albertson’s common stock, subject to certain lock-up provisions.

Notably, Kimco’s consolidated weighted-average debt maturity profile is 10.9 years. Its upcoming debt maturities in 2021 total around 3% of total pro-rata debt. This includes $204.2 million of total pro-rata mortgage debt coming due with no unsecured debt maturities in 2021.

Outlook

Kimco projects 2021 NAREIT FFO per share at $1.18-$1.24. The guided range is below the Zacks Consensus Estimate of $1.26.

Kimco currently carries a Zacks Rank #4 (Sell).

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 and EPS Surprise
Kimco Realty Corporation Price, Consensus and EPS Surprise

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

Performance of Another Retail REIT

Simon Property Group, Inc.’s SPG fourth-quarter 2020 FFO per share of $2.17 missed the Zacks Consensus Estimate of $2.19. The reported figure also came in 26.7% lower than the year-ago quarter’s $2.96. Results reflected the pandemic’s adverse impact on the company’s domestic and international operations, with an impact of 95 cents per share, mainly on reduced revenues, partly mitigated by cost-reduction moves.

We, now, look forward to the earnings releases of other REITs, like SITE Centers Corp. SITC and Ventas Inc. VTR, which are scheduled to release their quarterly numbers next week.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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