Kimco Realty Corp. 10-Q Summary: Q1 2001
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2001. Kimco Realty Corporation is a Real Estate Investment Trust (REIT) focused on neighborhood and community shopping centers. As of April 30, 2001, there were 63,556,574 shares of common stock outstanding. The company operates a development subsidiary, KDI, which elected taxable REIT subsidiary status effective January 1, 2001.
Key Financial Metrics
| Metric | Q1 2001 | Q1 2000 |
|---|---|---|
| Revenues from Rental Property | $121.6 million | $112.4 million |
| Net Income | $56.1 million | $48.7 million |
| Diluted EPS | $0.77 | $0.69 |
| Cash Flow from Operations | $73.2 million | $63.8 million |
| Total Debt (Notes & Mortgages) | $1.33 billion | $1.33 billion |
| Cash and Equivalents | $25.4 million | $19.1 million |
| Dividends Paid | $52.0 million | $46.7 million |
Material Changes vs. Prior Period
- Revenue Growth: Rental revenues increased 8.2% ($9.2 million) driven by 12 property acquisitions in 2000 ($3.7 million incremental) and improved leasing/redevelopment ($5.5 million incremental), partially offset by property sales.
- Expense Increases: Rental property expenses rose 9.7% ($6.6 million) due to acquisitions, renovations, and higher snow removal costs. Operating and administrative expenses increased $1.6 million, largely due to personnel growth and a $1.1 million stock grant to a new executive.
- Development Profit: The taxable REIT subsidiary (KDI) sold a development project in Chandler, AZ, generating a net gain of $3.5 million after taxes.
- Investment Income: Equity in income from Kimco Income REIT (KIR) increased to $2.9 million due to additional capital investments. Other income rose $1.9 million due to higher interest and dividend income.
Outlook, Risks, and Unusual Items
- Liquidity: The company maintains a $250 million unsecured revolving credit facility with $55 million outstanding as of March 31, 2001. It also has a medium-term notes program and approximately $106.7 million available under a shelf registration statement.
- Derivatives: The company adopted FASB No. 133, designating an interest rate swap on $110 million of floating-rate debt as a cash flow hedge. The fair value of the swap was recorded as a liability of approximately $3.2 million.
- Strategic Acquisitions: The company acquired asset designation rights for 315 properties from the bankrupt estate of Montgomery Ward LLC through a joint venture. The initial price was $60.5 million, with potential total costs exceeding $435.5 million.
- Risks: Forward-looking statements highlight risks related to general economic conditions, financing availability, interest rate volatility, and operating cost increases.
Investor Verification Checklist
- Verify the impact of the Montgomery Ward asset designation rights on future capital requirements and carrying costs.
- Confirm the sustainability of rental revenue growth given the offsetting effect of property sales.
- Review the terms of the $250 million revolving credit facility and the company's debt maturity schedule.
- Assess the performance of the taxable REIT subsidiary (KDI) and its contribution to net income versus traditional rental operations.
- Monitor the company's ability to maintain REIT qualification while managing taxable subsidiary activities.