Business Wire | Aug 7, 2020 07:12AM EDT

Kimco Realty Announces Second Quarter 2020 Results

Aug. 07, 2020

JERICHO, N.Y.--(BUSINESS WIRE)--Aug. 07, 2020--Kimco Realty Corp. (NYSE: KIM), one of North America's largest publicly traded owners and operators of open-air, grocery-anchored shopping centers and mixed-use assets, today reported results for the second quarter ended June 30, 2020. For the three months ended June 30, 2020 and 2019, Kimco's net income available to the company's common shareholders was $1.71 per diluted share and $0.20 per diluted share, respectively.

Second Quarter Highlights:

* Reported pro-rata portfolio occupancy of 95.6% with anchor occupancy at 98.2%. * Signed 52 new leases generating pro-rata cash rental rate leasing spreads of 22.9%. * Executed 180 lease renewals & options at an average rental rate increase of 10.7%. * Collected approximately 70% of rents for the second quarter, including 76% for the month of June. * Recognized $715.5 million in gains from the company's investment in Albertsons Companies Inc. (NYSE: ACI). * Ended the quarter with a liquidity position of over $2.2 billion in immediate availability.

Subsequent Highlights:

* Collected 82% of July 2020 rent. * Expanded debt maturity profile with the issuance of a $500 million, 10-year green bond at 2.700%. Proceeds were used to pay off a $325 million unsecured term loan facility and redeem $200 million of bonds maturing in 2021. * Enhanced ESG disclosure with 2019 Corporate Responsibility Report that aligns with guidelines established by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD).

"Our results reflect the resiliency of our portfolio, our balance sheet and our people," stated Conor Flynn, Kimco's Chief Executive Officer. All of our centers are open and operating, serving their local communities with essential goods and services in a safe, inviting environment. Quality is more important than ever, and our repositioned portfolio continues to hold up in the face of the pandemic. We thank all the front-line workers as they combat the challenges of COVID-19. And we remain committed to our tenants, shoppers and associates in these unprecedented times."

Financial Results:

Net income available to the company's common shareholders for the second quarter of 2020 was $741.5 million, or $1.71 per diluted share, compared to $86.5 million, or $0.20 per diluted share, for the second quarter of 2019. The increase was due primarily to $190.8 million of gains related to the partial monetization of Kimco's investment in ACI from the sale of stock during the second quarter, as well as a $524.7 mark-to-market adjustment on the remaining 39.8 million common shares of ACI still held by the company. Additionally, during the second quarter of 2020, the company recognized a $51.7 million charge for potentially uncollectible accounts receivable due to the negative economic impact caused by the COVID-19 pandemic. This charge consisted of a $40.1 million adjustment against accounts receivable (including $5.1 million as the pro-rata share from joint ventures) and an $11.6 million adjustment against straight line rent receivables (including $1.8 million as the pro-rata share from joint ventures).

NAREIT Funds From Operations (FFO)* was $103.5 million, or $0.24 per diluted share, for the second quarter 2020 compared to $151.2 million, or $0.36 per diluted share, for the second quarter 2019. NAREIT FFO excludes the impact from the $715.5 million of gains recognized from Kimco's investment in ACI and includes the $51.7 million pro-rata charge to the allowance for doubtful accounts during the second quarter of 2020.

Operating Results:

* Pro-rata portfolio occupancy ended the quarter at 95.6%. * Pro-rata anchor occupancy ended the quarter at 98.2%, flat on a year-over-year basis. On a sequential basis it was down 40 basis points primarily due to the vacates of four 24 Hour Fitness locations, one Lucky's Market, two Pier 1 leases and the closing of three A.C. Moore stores during the second quarter of 2020. * Small shop occupancy ended the quarter at 88.0%, representing a 250-basis-point decline year-over-year and an 80-basis-point sequential decrease. * Pro-rata rental-rate spreads on comparable spaces during the second quarter of 2020 increased 12.0%, with rental rates for new leases up 22.9% and renewals/options up 10.7%. * Same-property Net Operating Income (NOI)* decreased 13.6% for the second quarter of 2020 over the comparable period in 2019 due primarily to a charge for potentially uncollectible accounts receivable.

Capital Markets:

* Obtained a $590 million unsecured term loan priced at LIBOR plus 140 basis points in April, scheduled to mature April 2021, extendable at Kimco's option for one year. During the quarter, the company repaid $265 million of the term loan mainly through the proceeds realized from the monetization of the company's ownership stake in Albertsons. The outstanding balance of the term loan at the end of the second quarter was $325 million. * Ended the second quarter with over $2.2 billion of immediate liquidity, including full availability under the company's $2.0 billion unsecured revolving credit facility, and a consolidated weighted-average debt maturity profile of 10.6 years, which remains one of the longest in the industry. In addition, Kimco maintains $628.2 million of ACI common stock, subject to certain lock-up provisions, and has approximately 320 unencumbered properties in its portfolio. * Subsequent to quarter end, Kimco issued a $500 million, 10-year green bond at a 2.700% coupon. Prior to investments in eligible green projects, proceeds were used primarily to pay off the remaining $325 million unsecured term loan and redeem $200 million of 3.20% Senior Notes due 2021.

*A reconciliation of net income available to the company's common shareholders to NAREIT FFO and same-property NOI is provided in the tables accompanying this press release.

COVID-19 Update:

* At the end of July, all of Kimco's shopping centers remain open and operational with approximately 94% of tenants, based on annualized base rent (ABR), currently open, including those that are operating on a limited basis. * Kimco has collected approximately 70% and 82% of the total pro-rata base rents billed for the second quarter of 2020 and for the month of July, respectively. * The company granted rent deferrals approximating 18% of pro-rata minimum base rent for the second quarter of 2020. The company continues to negotiate with tenants the payment of rents not yet collected or deferred.

Dividend Declarations:

* Quarterly dividend declared for each of the company's Class L and Class M series of cumulative redeemable preferred shares by Kimco's board of directors. All dividends on the preferred shares will be paid on October 15, 2020 to shareholders of record on October 1, 2020. * Kimco paid a second quarter dividend of $0.28 per common share in April of 2020. In May, the company's Board of Directors temporarily suspended the dividend on common shares due to the economic uncertainties related to COVID-19. Kimco's Board of Directors will continue to monitor the company's financial performance and economic outlook on a monthly-basis and intends to reinstate the common dividend at some point during 2020 to maintain compliance with its REIT taxable income distribution.

Conference Call and Supplemental Materials

Kimco will hold its quarterly conference call on Friday, August 7, 2020, at 8:30 a.m. Eastern Daylight Time (EDT). The call will include a review of the company's second quarter results as well as a discussion of the company's strategy and expectations for the future. To participate, dial 1-888-317-6003 (Passcode: 1326586).

A replay will be available through November 7, 2020, by dialing 1-877-344-7529 (Passcode: 10144270). Access to the live call and replay will be available through the company's website at investors.kimcorealty.com.

About Kimco

Kimco Realty Corp. (NYSE:KIM) is a real estate investment trust (REIT) headquartered in Jericho, N.Y. that is one of North America's largest publicly traded owners and operators of open-air, grocery-anchored shopping centers and mixed-use assets. As of June 30, 2020, the company owned interests in 400 U.S. shopping centers and mixed-use assets comprising 70 million square feet of gross leasable space primarily concentrated in the top major metropolitan markets. Publicly traded on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center acquisitions, development and management for more than 60 years. For further information, please visit www.kimcorealty.com, the company's blog at blog.kimcorealty.com, or follow Kimco on Twitter at www.twitter.com/kimcorealty.

The company announces material information to its investors using the company's investor relations website (investors.kimcorealty.com), SEC filings, press releases, public conference calls, and webcasts. The company also uses social media to communicate with its investors and the public, and the information the company posts on social media may be deemed material information. Therefore, the company encourages investors, the media, and others interested in the company to review the information that it posts on the company's blog (blog.kimcorealty.com) and social media channels, including Facebook (www.facebook.com/KimcoRealty), Twitter (www.twitter.com/kimcorealty), YouTube (www.youtube.com/kimcorealty) and LinkedIn (www.linkedin.com/company/kimco-realty-corporation). The list of social media channels that the company uses may be updated on its investor relations website from time to time.

Safe Harbor Statement

The statements in this news release state the company's and management's intentions, beliefs, expectations or projections of the future and are forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, (i) general adverse economic and local real estate conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms to the company, (iv) the company's ability to raise capital by selling its assets, (v) changes in governmental laws and regulations and management's ability to estimate the impact of such changes, (vi) the level and volatility of interest rates and management's ability to estimate the impact thereof, (vii) pandemics or other health crises, such as coronavirus disease 2019 (COVID-19), (viii) the availability of suitable acquisition, disposition, development and redevelopment opportunities, and risks related to acquisitions not performing in accordance with our expectations, (ix) valuation and risks related to the company's joint venture and preferred equity investments, (x) valuation of marketable securities and other investments, (xi) increases in operating costs, (xii) changes in the dividend policy for the company's common and preferred stock and the company's ability to pay dividends, (xiii) the reduction in the company's income in the event of multiple lease terminations by tenants or a failure by multiple tenants to occupy their premises in a shopping center, (xiv) impairment charges and (xv) unanticipated changes in the company's intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity. Additional information concerning factors that could cause actual results to differ materially from those forward- looking statements is contained from time to time in the company's Securities and Exchange Commission ("SEC") filings. Copies of each filing may be obtained from the company or the SEC.

The company refers you to the documents filed by the company from time to time with the SEC, specifically the section titled "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 31, 2019, as may be updated or supplemented in the company's Quarterly Reports on Form 10-Q and the company's other filings with the SEC, which discuss these and other factors that could adversely affect the company's results. The company disclaims any intention or obligation to update the forward-looking statements, whether as a result of new information, future events or otherwise.

Condensed Consolidated Balance Sheets(in thousands, except share information)(unaudited) June 30, 2020 December 31, 2019Assets:Real estate, net of accumulated depreciation and $ 9,397,045 $ 9,209,053 amortizationof $2,606,653 and $2,500,053, respectivelyReal estate under development 5,672 220,170

Investments in and advances to real estate joint 585,363 578,118 venturesOther real estate investments 176,037 194,400

Cash and cash equivalents 201,687 123,947

Marketable securities 633,551 9,353

Accounts and notes receivable, net 250,150 218,689

Operating lease right-of-use assets, net 96,437 99,125

Other assets 214,028 345,012

Total assets $ 11,559,970 $ 10,997,867

Liabilities:Notes payable, net $ 4,961,972 $ 4,831,759

Mortgages and construction loan payable, net 388,406 484,008

Dividends payable 5,366 126,274

Operating lease liabilities 90,364 92,711

Other liabilities 477,545 516,265

Total liabilities 5,923,653 6,051,017

Redeemable noncontrolling interests 17,943 17,943

Stockholders' equity:Preferred stock, $1.00 par value, authorized7,054,000 shares; 20 20 Issued and outstanding (in series) 19,580shares;Aggregate liquidation preference $489,500 Common stock, $.01 par value, authorized750,000,000 shares; issued and 4,325 4,318 outstanding 432,503,634 and 431,814,951 shares,respectivelyPaid-in capital 5,752,658 5,765,233

Cumulative distributions in excess of net income (200,492 ) (904,679 )

Total stockholders' equity 5,556,511 4,864,892

Noncontrolling interests 61,863 64,015

Total equity 5,618,374 4,928,907

Total liabilities and equity $ 11,559,970 $ 10,997,867

Condensed Consolidated Statements of Income(in thousands, except per share data)(unaudited) Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

RevenuesRevenues from rental $ 235,961 $ 280,710 $ 521,965 $ 571,344 properties, netManagement and other 2,955 4,163 6,695 8,539 fee incomeTotal revenues 238,916 284,873 528,660 579,883

Operating expensesRent (2,827 ) (2,924 ) (5,662 ) (5,616 )

Real estate taxes (38,678 ) (37,005 ) (78,330 ) (76,352 )

Operating and (38,940 ) (43,217 ) (81,348 ) (84,113 )maintenanceGeneral and (22,504 ) (22,633 ) (43,521 ) (48,464 )administrativeImpairment charges (138 ) (17,451 ) (3,112 ) (21,626 )

Depreciation and (73,559 ) (69,005 ) (142,956 ) (140,566 )amortizationTotal operating (176,646 ) (192,235 ) (354,929 ) (376,737 )expenses Gain on sale of 1,850 14,762 5,697 38,357 propertiesOperating income 64,120 107,400 179,428 241,503

Other income/(expense)Other income, net 49 1,867 1,293 2,986

Gain on marketable 526,243 71 521,577 1,574 securities, netGain on sale of cost 190,832 - 190,832 - method investmentInterest expense (48,015 ) (44,097 ) (94,075 ) (88,492 )

Income before incometaxes, net, equity inincome of jointventures,net, and equity in 733,229 65,241 799,055 157,571 income from other realestate investments, net (Provision)/benefit for (51 ) 344 (94 ) (286 )income taxes, netEquity in income of 10,158 22,533 23,806 41,287 joint ventures, netEquity in income of 4,782 13,269 15,740 19,493 other real estateinvestments, net Net income 748,118 101,387 838,507 218,065

Net income attributable (225 ) (360 ) (514 ) (869 )to noncontrollinginterestsNet income attributable 747,893 101,027 837,993 217,196 to the CompanyPreferred dividends (6,354 ) (14,534 ) (12,708 ) (29,068 )

Net income available to $ 741,539 $ 86,493 $ 825,285 $ 188,128 the Company's commonshareholders Per common share:Net income available tothe Company: (2)Basic $ 1.71 $ 0.20 $ 1.91 $ 0.45

Diluted (1) $ 1.71 $ 0.20 $ 1.90 $ 0.44

Weighted averageshares:Basic 429,967 419,697 429,851 419,581

Diluted 431,170 420,646 431,527 420,798

(1)Reflects the potential impact if certain units were converted to common stock at the beginning of the period. The impact of the conversion would have an anti-dilutive effect on net income and therefore have not been included. Adjusted for distributions on convertible units of $33 and $0 for the three months ended June 30, 2020 and 2019, respectively. Adjusted for distributions on convertible units of $81 and $20 for the six months ended June 30, 2020 and 2019, respectively.

(2)Adjusted for earnings attributable from participating securities of ($5,253) and ($660) for the three months ended June 30, 2020 and 2019, respectively. Adjusted for earnings attributable from participating securities of ($5,687) and ($1,285) for the six months ended June 30, 2020 and 2019, respectively.

Reconciliation of Net Income Available to the Company's Common Shareholders toFFO Available to the Company's Common Shareholders(in thousands, except per share data)(unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Net income available to $ 741,539 $ 86,493 $ 825,285 $ 188,128 the Company's commonshareholdersGain on sale of (1,850 ) (14,762 ) (5,697 ) (38,357 )propertiesGain on sale of joint - (8,496 ) (18 ) (13,186 )venture propertiesDepreciation and 72,296 68,723 141,003 139,983 amortization - realestate relatedDepr. and amort. - real 10,178 10,115 20,742 20,276 estate jvsImpairment charges 138 18,247 3,579 24,655 (including real estatejvs)Gain on sale of cost (190,832 ) - (190,832 ) - method investmentProfit participation (1,186 ) (8,754 ) (7,469 ) (9,784 )from other real estateinvestments, netGain on marketable (526,243 ) (71 ) (521,577 ) (1,574 )securities, netProvision for income - - 1 - taxes (1)Noncontrolling interests (559 ) (333 ) (1,063 ) (581 )(1)Funds available to the $ 103,481 $ 151,162 $ 263,954 $ 309,560 Company's commonshareholders Weighted average sharesoutstanding for FFOcalculations:Basic 429,967 419,697 429,851 419,581

Units 663 835 638 825

Dilutive effect of 970 949 1,469 1,166 equity awardsDiluted (2) 431,599 421,481 431,959 421,572

FFO per common share - $ 0.24 $ 0.36 $ 0.61 $ 0.74 basicFFO per common share - $ 0.24 $ 0.36 $ 0.61 $ 0.74 diluted (2)

(1)Related to gains, impairments and depreciation on properties, where applicable.

(2) Reflects the potential impact if certain units were converted to common stock at the beginning of the period. Funds from operations would be increased by $0 and $228 for the three months ended June 30, 2020 and 2019, respectively. Funds from operations would be increased by $160 and $446 for the six months ended June 30, 2020 and 2019, respectively.

Reconciliation of Net Income Available to the Company's Common Shareholdersto Same Property NOI(in thousands)(unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019

Net income available to $ 741,539 $ 86,493 $ 825,285 $ 188,128 the Company's commonshareholdersAdjustments:Management and other fee (2,955 ) (4,163 ) (6,695 ) (8,539 )incomeGeneral and 22,504 22,633 43,521 48,464 administrativeImpairment charges 138 17,451 3,112 21,626

Depreciation and 73,559 69,005 142,956 140,566 amortizationGain on sale of (1,850 ) (14,762 ) (5,697 ) (38,357 )propertiesInterest and other 47,966 42,230 92,782 85,506 expense, netGain on marketable (526,243 ) (71 ) (521,577 ) (1,574 )securities, netGain on sale of cost (190,832 ) - (190,832 ) - method investmentProvision/(benefit) for 51 (344 ) 94 286 income taxes, netEquity in income of other (4,782 ) (13,269 ) (15,740 ) (19,493 )real estate investments,netNet income attributable 225 360 514 869 to noncontrollinginterestsPreferred dividends 6,354 14,534 12,708 29,068

Non same property net (161 ) (19,169 ) (18,643 ) (47,994 )operating incomeNon-operational expense 16,764 10,125 35,777 24,918 from joint ventures, netSame Property NOI $ 182,277 $ 211,053 $ 397,565 $ 423,474

Certain reclassifications of prior year amounts have been made to conform with the current year presentation.

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CONTACT: David F. Bujnicki Senior Vice President, Investor Relations and Strategy Kimco Realty Corporation 1-866-831-4297 dbujnicki@kimcorealty.com