Kimco Realty Corp. 10-Q Summary: Period Ended September 30, 1999
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 1999, for Kimco Realty Corporation, a Maryland corporation operating as a Real Estate Investment Trust (REIT). The company focuses on acquiring, developing, and managing neighborhood and community shopping centers. As of October 29, 1999, there were 60,730,510 shares of common stock outstanding.
Key Financial Metrics
| Metric | Three Months Ended Sept 30, 1999 | Nine Months Ended Sept 30, 1999 |
|---|---|---|
| Revenues from Rental Property | $106.0 million | $325.0 million |
| Net Income | $45.6 million | $127.5 million |
| Net Income Per Share (Basic) | $0.64 | $1.78 |
| Cash Flow from Operations | N/A | $179.8 million |
| Total Debt (Notes & Mortgages) | $1.14 billion | $1.14 billion |
| Cash and Cash Equivalents | $32.9 million | $32.9 million |
| Dividends Paid (9 Months) | N/A | $126.7 million |
Material Changes vs. Prior Period
- Revenue Growth: Rental revenues increased 8.1% ($7.9 million) for the quarter and 41.0% ($94.5 million) for the nine-month period compared to 1998. Growth was driven by 23 new acquisitions in 1999, 65 acquisitions in 1998, the Price REIT acquisition, and improved leasing rates.
- Expense Increases: Rental property expenses rose 3.7% for the quarter and 40.6% for the nine months, primarily due to property acquisitions and the Price REIT integration.
- Profitability: Net income increased significantly to $45.6 million for the quarter (from $31.3 million in 1998) and $127.5 million for the nine months (from $84.3 million in 1998).
- Debt Structure: Interest expense increased $19.9 million for the nine months due to higher average borrowings from new debt issuances and the Price REIT acquisition, partially offset by the deconsolidation of $252.4 million in mortgage debt following the sale of a controlling interest in Kimco Income REIT (KIR).
- Portfolio Changes: The company deconsolidated 19 properties into KIR in April 1999, shifting to an equity method of accounting for that entity. It also disposed of four shopping centers during the nine-month period.
Outlook, Risks, and Management Commentary
- Liquidity Strategy: Management maintains a conservative dividend payout ratio to reserve capital for expansion and debt repayment. The company utilizes public debt and equity markets, a $215 million revolving credit facility ($60 million outstanding as of Sept 30, 1999), and a $200 million Medium-Term Note (MTN) program.
- Capital Resources: Approximately $493.2 million remains available under a shelf registration statement for future debt or equity issuance. The company holds over 300 unencumbered property interests.
- Year 2000 Compliance: Management believes internal systems are compliant. Costs incurred to date are immaterial. However, risks remain regarding third-party vendors and partners; a contingency plan is being developed.
- Market Risks: The company faces interest rate risk on approximately $238.7 million of floating-rate debt, though $160 million is hedged via interest rate swaps. Other risks include general economic conditions, financing availability, and changes in government regulations.
- Forward-Looking Statements: Actual results may differ due to factors such as local real estate conditions, interest rate volatility, and the availability of acquisition opportunities.
Investor Verification Checklist
- Verify the impact of the Price REIT acquisition on long-term debt service obligations and interest rate exposure.
- Confirm the occupancy rates and rental rate trends for the 23 properties acquired in 1999.
- Review the terms of the $215 million revolving credit facility and the status of the $200 million MTN program.
- Assess the financial performance and equity income contribution from the Kimco Income REIT (KIR) joint venture.
- Monitor the status of third-party vendor Year 2000 compliance and the effectiveness of the company's contingency plans.