Business context and reporting period
Kimco Realty Corporation’s Form 10-K covers the fiscal year ended December 31, 2021; it is an annual filing, not a standalone fourth-quarter report. Kimco owns and operates U.S. open-air shopping centers, primarily grocery-anchored, and qualifies as a REIT. At year-end, it had interests in 541 shopping center properties totaling 93.3 million square feet, across 29 states.
The August 3, 2021 merger with Weingarten Realty Investors was a major change in scale: Kimco acquired 149 properties, including 30 held through joint ventures. Consideration was approximately $4.1 billion, primarily 179.9 million newly issued Kimco shares and $281.1 million cash. 2021 results include Weingarten’s operations for only five months, so reported year-over-year comparisons are not fully like-for-like.
Financial and operating highlights
| Metric | 2021 | 2020 |
|---|---|---|
| Total revenue | $1,364.6 million | $1,057.9 million |
| Net income available to common shareholders | $818.6 million; $1.60 diluted EPS | $975.4 million; $2.25 diluted EPS |
| FFO available to common shareholders (non-GAAP) | $706.8 million; $1.38 diluted per share | $503.7 million; $1.17 diluted per share |
| Cash from operating activities | $618.9 million | $589.9 million |
| Cash used in investing activities | $476.3 million | $33.3 million |
| Cash used in financing activities | $101.1 million | $387.4 million |
| Cash, cash equivalents and restricted cash at year-end | $334.7 million | $293.2 million |
Net income declined despite higher revenue, reflecting, among other items, a lower gain on marketable securities than in 2020, the absence of the 2020 gain on sale of a cost-method investment, and $50.2 million of 2021 merger costs. The $505.2 million 2021 marketable-securities gain primarily reflected mark-to-market appreciation of Kimco’s Albertsons Companies (ACI) shares; it is not property operating income. FFO is a supplemental non-GAAP measure and is not a substitute for GAAP earnings or operating cash flow.
For the fourth quarter, net income available to common shareholders was $75.3 million versus $194.9 million in Q4 2020. FFO was $240.1 million, or $0.39 per diluted share, versus $133.0 million, or $0.31 per diluted share. Q4 same-property NOI was $311.6 million, up 12.9% from $275.9 million; the comparison includes Weingarten same-property NOI for both quarters. Annual same-property NOI was $864.8 million, up 8.8% from $795.2 million; Weingarten properties were excluded from the annual comparison because Kimco did not own them for the full comparison period.
At December 31, consolidated debt was approximately $7.48 billion, comprising $7.03 billion of notes payable and $448.7 million of mortgages payable, compared with approximately $5.36 billion a year earlier. Consolidated debt had a weighted-average interest rate of 3.39% and an 8.5-year weighted-average maturity. The $2.0 billion revolving credit facility had no borrowings outstanding. Kimco reported $2.3 billion of immediate liquidity, including $334.7 million of cash, and more than 480 unencumbered property interests. It held 39.8 million ACI shares valued at $1.2 billion, subject to lock-up provisions scheduled to expire in June 2022.
Operating indicators improved: consolidated portfolio occupancy was 94.2% at year-end versus 93.9% in 2020; the combined shopping center portfolio was 94.4% leased. Average base rent per leased square foot in the consolidated portfolio rose from $18.16 to $19.05, with the increase substantially influenced by merger-acquired properties. Kimco executed 1,147 leases, renewals and options covering approximately 7.5 million square feet.
Changes, outlook and risks
- Merger and financing: Kimco issued $500 million of 2.25% senior notes due 2031 during 2021 and assumed Weingarten debt. Approximately $921 million of consolidated debt was scheduled to mature in 2022 as of year-end. In February 2022, Kimco issued $600 million of 3.20% notes due 2032 and announced redemption of $500 million of 3.40% notes due November 2022, with an expected $6.5 million prepayment charge.
- Capital plans: Management anticipated 2022 acquisitions of approximately $100–$200 million and redevelopment and re-tenanting commitments of approximately $150–$200 million. No company-wide earnings or FFO guidance is provided in the supplied filing text.
- Dividend: The 2021 common dividend paid was $0.68 per share. In February 2022, the Board declared a quarterly common dividend of $0.19 per share, an 11.8% increase from the prior quarterly dividend. Future declarations remain subject to Board discretion, cash flows, capital needs, debt restrictions and REIT distribution requirements.
- COVID-19 and collections: Management reported improving rent collections but continued uncertainty from COVID-19 variants, tenant financial health, staffing shortages, inflation and supply-chain constraints. At year-end, 35% of consolidated accounts receivable and 11% of straight-line rent receivables were described as potentially uncollectible; these percentages include tenants accounted for on a cash basis. Further receivable adjustments or property impairments could be material.
- Other material exposures: Principal risks include tenant defaults and bankruptcies, e-commerce and retail-sector changes, interest rates and refinancing, leverage and covenant compliance, development costs and delays, weather and climate risks, cybersecurity, joint-venture exposures, and valuation volatility in ACI shares. The company provided a guaranty for potential debt-service shortfalls on $49.7 million of Sheridan, Colorado tax-increment bonds; tax and fee revenues had met debt service to date.
- Tax matter and litigation: Mexican tax assessments reached the Mexican Supreme Court in 2021; Kimco stated its estimated share of revised assessments was $41 million but recorded no liability, citing its legal position and concluding collection was remote. Management said ordinary-course legal matters were not expected to have a material effect; it reported no litigation expected to materially affect the portfolio as a whole.
PricewaterhouseCoopers issued unqualified opinions on the financial statements and internal control over financial reporting. The auditor identified real-estate impairment assessment and valuation of real estate acquired in the Weingarten merger as critical audit matters.
Most important facts for investors to verify
- How post-merger occupancy, leasing spreads and same-property NOI develop, separating organic performance from acquired assets.
- Whether rent collections improve and potentially uncollectible receivables decline from the year-end levels disclosed.
- How Kimco manages 2022 maturities and refinancing, and whether leverage, coverage ratios and liquidity remain within covenant limits.
- The timing and proceeds of any ACI share sales after the lock-up expires, and the effect of ACI price changes on reported GAAP earnings.
- The outcome and potential financial exposure of the Mexican tax assessments, Sheridan bond guaranty and other disclosed commitments.