Kimco Realty Corp. (KIM), a leading real estate investment trust (REIT), reported fourth quarter 2010 rental revenues of $215.2 million compared with $203.5 million in the year-earlier quarter – an increase of 5.7%. Total revenues for the reported quarter exceeded the Zacks Consensus Estimate of $214 million.
For full year 2010, Kimco reported total revenues of $849.5 million compared to $773.4 million in the previous year. Total fiscal 2010 revenues were well below the Zacks Consensus Estimate of $865 million.
Kimco reported fourth quarter 2010 FFO (fund from operations) of $118.4 million or 29 cents per share compared with $119.5 million or 31 cents in the year-ago period. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Excluding certain non-recurring items, FFO for the reported quarter was $119.7 million or 29 cents per share compared with $108.3 million or 28 cents in the year-earlier quarter. The recurring FFO for the quarter marginally beat the Zacks Consensus Estimate by a penny.
For full year 2010, Kimco reported FFO of $460.5 million or $1.13 per share compared with $287.1 million or $0.82 in 2009. Recurring FFO for the reported fiscal was $1.14 per share compared with $1.26 in the previous fiscal. The recurring FFO for fiscal 2010 surpassed the Zacks Consensus Estimate by 2 cents.
Overall occupancy in Kimco’s combined shopping center portfolio was 93.0% at the end of the quarter, an increase of 40 bps compared with fourth quarter 2009. In the U.S. portfolio, occupancy was 92.7% as on December 31, 2010, an increase of 50 bps compared with the year-ago period. Same-store net operating income (cash-basis, excluding lease termination fees and including charges for bad debts) in the U.S. portfolio increased 1.8% year-over-year.
During the quarter, Kimco executed a total of 598 leases spanning 1.7 million square feet. Leasing spreads in the U.S. portfolio decreased 2.8% (cash basis). For full year 2010, the company executed 2,703 leases totaling over 8.2 million square feet, including 478 same-store new leases totaling 1.2 million square feet and 1,188 lease renewals and options for 4.8 million square feet.
The company acquired 4 shopping centers during the quarter spanning 982,000 square feet of retail space for approximately $151.1 million, including $50.9 million in mortgage debt. The acquired properties are presently 97% occupied on an average and are located in North Carolina, South Carolina, Texas and Maryland.
During fourth quarter 2010, Kimco Realty sold about 8 non-core shopping center properties totaling 536,000 square feet for approximately $35.2 million. At the same time, the company monetized approximately $55.0 million in non-retail assets to increase its liquidity.
During 2010, Kimco acquired 3 unencumbered shopping centers and 1 land parcel totaling 512,000 square feet for $79.5 million. The company sold 11 non-strategic shopping centers totaling 1.3 million square feet for $122.4 million during the year.
The reported quarter also saw the company recognizing $9.6 million of fee income related to its investment management business, including $7.5 million in management fees, $0.2 million in acquisition fees and $1.9 million in other ongoing fees. Kimco had 285 properties in investment management funds with 24 institutional partners at year-end 2010. During the quarter, the company generated $42.6 million of income from its structured investments and other non-retail assets, out of which $17.6 million was recurring in nature.
At year-end 2010, Kimco had over $1.6 billion available under its revolving credit facilities. The company’s consolidated net debt to EBITDA (earnings before interest, tax, depreciation and amortization) ratio was 5.3x, while consolidated net debt to recurring EBITDA was 6.3x.
About $112.5 million or 3% of the total debt is scheduled to mature in 2011. For fiscal 2011, the company reiterated its earlier recurring FFO guidance in the range of $1.17 – $1.21 per share.
We maintain our ‘Neutral’ recommendation for the long term on the stock, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ rating. However, we have an ‘Outperform’ recommendation and a Zacks #3 Rank for CBL & Associates Properties Inc. (CBL), one of the competitors of Kimco.
CBL&ASSOC PPTYS (CBL): Free Stock Analysis Report
KIMCO REALTY CO (KIM): Free Stock Analysis Report
Zacks Investment Research
