UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DD.C..C.20549
Form
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017
March 31, 2022
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:1-10899
Kimco Realty CorporationKIMCO REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Maryland | 13-2744380 | |
(State or other jurisdiction of incorporation or organization) |
|
|
| (I.R.S. Employer Identification No.) |
3333 New Hyde Park Road, New Hyde Park,500 North Broadway, Suite 201, Jericho, NY 1104211753
(Address of principal executive offices) (Zip Code)
(516) 869-9000
(Registrant’sRegistrant’s telephone number, including area code)
N/A
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $.01 per share. | KIM | New York Stock Exchange |
Depositary Shares, each representing one-thousandth of a share of 5.125% Class L Cumulative Redeemable, Preferred Stock, $1.00 par value per share. | KIMprL | New York Stock Exchange |
Depositary Shares, each representing one-thousandth of a share of 5.250% Class M Cumulative Redeemable, Preferred Stock, $1.00 par value per share. | KIMprM | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b-2 of the Exchange Act.
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |
Smaller reporting company | ☐ | Emerging growth company | ☐ |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-212b-2 of the Exchange Act). Yes ☐ No ☒
As of October 16, 2017,April 20, 2022, the registrant had 425,653,409618,006,814 shares of common stock outstanding.
PART I - FINANCIAL INFORMATION
Financial |
| ||
|
| ||
| |||
|
| ||
3 | |||
| |||
4 | |||
5 | |||
6 | |||
7 | |||
Notes to Condensed Consolidated Financial | 8 | ||
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share information)
September 30, | December 31, | |||||||||||||||
2017 | 2016 | March 31, 2022 | December 31, 2021 | |||||||||||||
Assets: | ||||||||||||||||
Operating real estate, net of accumulated depreciation of $2,458,806 and $2,278,292 respectively | $ | 9,771,654 | $ | 9,394,755 | ||||||||||||
Real estate, net of accumulated depreciation and amortization of $3,128,182 and $3,010,699, respectively | $ | 14,950,391 | $ | 15,035,900 | ||||||||||||
Real estate under development | 5,672 | 5,672 | ||||||||||||||
Investments in and advances to real estate joint ventures | 509,448 | 504,209 | 1,013,940 | 1,006,899 | ||||||||||||
Real estate under development | 361,264 | 335,028 | ||||||||||||||
Other real estate investments | 213,859 | 209,146 | ||||||||||||||
Mortgages and other financing receivables | 22,538 | 23,197 | ||||||||||||||
Other investments | 104,195 | 122,015 | ||||||||||||||
Cash and cash equivalents | 156,588 | 142,486 | 370,318 | 334,663 | ||||||||||||
Marketable securities | 14,044 | 8,101 | 1,334,873 | 1,211,739 | ||||||||||||
Accounts and notes receivable, net | 182,012 | 181,823 | 253,687 | 254,677 | ||||||||||||
Operating lease right-of-use assets, net | 145,784 | 147,458 | ||||||||||||||
Other assets | 470,834 | 431,855 | 364,721 | 340,176 | ||||||||||||
Total assets (1) | $ | 11,702,241 | $ | 11,230,600 | $ | 18,543,581 | $ | 18,459,199 | ||||||||
Liabilities: | ||||||||||||||||
Notes payable, net | $ | 4,700,423 | $ | 3,927,251 | $ | 7,110,804 | $ | 7,027,050 | ||||||||
Mortgages payable, net | 850,848 | 1,139,117 | 378,644 | 448,652 | ||||||||||||
Dividends payable | 123,270 | 124,517 | 5,366 | 5,366 | ||||||||||||
Operating lease liabilities | 122,615 | 123,779 | ||||||||||||||
Other liabilities | 603,417 | 549,888 | 697,510 | 730,690 | ||||||||||||
Total liabilities (2) | 6,277,958 | 5,740,773 | 8,314,939 | 8,335,537 | ||||||||||||
Redeemable noncontrolling interests | 16,139 | 86,953 | 13,480 | 13,480 | ||||||||||||
Commitments and Contingencies | ||||||||||||||||
Stockholders' equity: | ||||||||||||||||
Preferred stock, $1.00 par value, authorized 6,017,400 and 6,029,100 shares, respectively, 32,000 shares issued and outstanding (in series) Aggregate liquidation preference $800,000 | 32 | 32 | ||||||||||||||
Common stock, $.01 par value, authorized 750,000,000 shares issued and outstanding 425,633,409 and 425,034,113 shares, respectively | 4,256 | 4,250 | ||||||||||||||
Preferred stock, $1.00 par value, authorized 7,054,000 shares; Issued and outstanding (in series) 19,580 shares; Aggregate liquidation preference $489,500 | 20 | 20 | ||||||||||||||
Common stock, $.01 par value, authorized 750,000,000 shares; Issued and outstanding 618,002,532 and 616,658,593 shares, respectively | 6,180 | 6,167 | ||||||||||||||
Paid-in capital | 5,926,392 | 5,922,958 | 9,589,955 | 9,591,871 | ||||||||||||
Cumulative distributions in excess of net income | (715,621 | ) | (676,867 | ) | ||||||||||||
Retained earnings | 412,659 | 299,115 | ||||||||||||||
Accumulated other comprehensive income | (1,727 | ) | 5,766 | 2,216 | 2,216 | |||||||||||
Total stockholders' equity | 5,213,332 | 5,256,139 | 10,011,030 | 9,899,389 | ||||||||||||
Noncontrolling interests | 194,812 | 146,735 | 204,132 | 210,793 | ||||||||||||
Total equity | 5,408,144 | 5,402,874 | 10,215,162 | 10,110,182 | ||||||||||||
Total liabilities and equity | $ | 11,702,241 | $ | 11,230,600 | $ | 18,543,581 | $ | 18,459,199 | ||||||||
(1) | Includes restricted assets of consolidated variable interest entities (“VIEs”) at |
(2) | Includes non-recourse liabilities of consolidated VIEs at |
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSINCOME
(Unaudited)
(in thousands,thousands, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Revenues from rental properties | $ | 290,919 | $ | 279,286 | $ | 873,153 | $ | 859,492 | ||||||||
Management and other fee income | 3,926 | 5,790 | 12,456 | 14,274 | ||||||||||||
Total revenues | 294,845 | 285,076 | 885,609 | 873,766 | ||||||||||||
Operating expenses | ||||||||||||||||
Rent | 2,764 | 2,728 | 8,312 | 8,274 | ||||||||||||
Real estate taxes | 38,363 | 37,703 | 115,379 | 107,966 | ||||||||||||
Operating and maintenance | 33,197 | 32,590 | 102,862 | 100,366 | ||||||||||||
General and administrative | 28,588 | 27,983 | 86,395 | 89,840 | ||||||||||||
Provision for doubtful accounts | 701 | 1,092 | 4,201 | 5,752 | ||||||||||||
Impairment charges | 2,944 | 10,073 | 34,280 | 68,126 | ||||||||||||
Depreciation and amortization | 88,443 | 96,827 | 275,787 | 264,436 | ||||||||||||
Total operating expenses | 195,000 | 208,996 | 627,216 | 644,760 | ||||||||||||
Operating income | 99,845 | 76,080 | 258,393 | 229,006 | ||||||||||||
Other income/(expense) | ||||||||||||||||
Other income, net | 1,101 | 4,358 | 3,813 | 3,176 | ||||||||||||
Interest expense | (47,258 | ) | (46,552 | ) | (139,830 | ) | (149,482 | ) | ||||||||
Early extinguishment of debt charges | (1,753 | ) | (45,674 | ) | (1,753 | ) | (45,674 | ) | ||||||||
Income/(loss) from continuing operations before income taxes, net, equity in income of joint ventures, net, gain on change in control of interests and equity in income from other real estate investments, net | 51,935 | (11,788 | ) | 120,623 | 37,026 | |||||||||||
Benefit/(provision) for income taxes, net | 697 | (61,426 | ) | 2,224 | (73,292 | ) | ||||||||||
Equity in income of joint ventures, net | 9,142 | 11,537 | 37,044 | 190,155 | ||||||||||||
Gain on change in control of interests | - | 6,584 | 71,160 | 53,096 | ||||||||||||
Equity in income of other real estate investments, net | 19,909 | 3,774 | 61,952 | 22,532 | ||||||||||||
Income/(loss) from continuing operations | 81,683 | (51,319 | ) | 293,003 | 229,517 | |||||||||||
Gain on sale of operating properties, net of tax | 40,533 | 9,771 | 62,102 | 75,935 | ||||||||||||
Net income/(loss) | 122,216 | (41,548 | ) | 355,105 | 305,452 | |||||||||||
Net income attributable to noncontrolling interests | (1,186 | ) | (1,997 | ) | (13,926 | ) | (4,875 | ) | ||||||||
Net income/(loss) attributable to the Company | 121,030 | (43,545 | ) | 341,179 | 300,577 | |||||||||||
Preferred stock redemption charge | (7,014 | ) | - | (7,014 | ) | - | ||||||||||
Preferred stock dividends | (12,059 | ) | (11,555 | ) | (35,169 | ) | (34,665 | ) | ||||||||
Net income/(loss) available to the Company's common shareholders | $ | 101,957 | $ | (55,100 | ) | $ | 298,996 | $ | 265,912 | |||||||
Per common share: | ||||||||||||||||
Net income/(loss) available to the Company: | ||||||||||||||||
-Basic | $ | 0.24 | $ | (0.13 | ) | $ | 0.70 | $ | 0.63 | |||||||
-Diluted | $ | 0.24 | $ | (0.13 | ) | $ | 0.70 | $ | 0.63 | |||||||
Weighted average shares: | ||||||||||||||||
-Basic | 423,688 | 420,073 | 423,574 | 416,829 | ||||||||||||
-Diluted | 424,311 | 420,073 | 424,193 | 418,234 | ||||||||||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Revenues | ||||||||
Revenues from rental properties, net | $ | 422,654 | $ | 278,871 | ||||
Management and other fee income | 4,595 | 3,437 | ||||||
Total revenues | 427,249 | 282,308 | ||||||
Operating expenses | ||||||||
Rent | (4,081 | ) | (3,035 | ) | ||||
Real estate taxes | (54,314 | ) | (38,936 | ) | ||||
Operating and maintenance | (69,225 | ) | (46,520 | ) | ||||
General and administrative | (29,948 | ) | (24,478 | ) | ||||
Impairment charges | (272 | ) | 0 | |||||
Depreciation and amortization | (130,294 | ) | (74,876 | ) | ||||
Total operating expenses | (288,134 | ) | (187,845 | ) | ||||
Gain on sale of properties | 4,193 | 10,005 | ||||||
Operating income | 143,308 | 104,468 | ||||||
Other income/(expense) | ||||||||
Other income, net | 5,983 | 3,357 | ||||||
Gain on marketable securities, net | 121,764 | 61,085 | ||||||
Interest expense | (57,019 | ) | (47,716 | ) | ||||
Early extinguishment of debt charges | (7,173 | ) | 0 | |||||
Income before income taxes, net, equity in income of joint ventures, net, and equity in income from other investments, net | 206,863 | 121,194 | ||||||
Benefit/(provision) for income taxes, net | 153 | (1,308 | ) | |||||
Equity in income of joint ventures, net | 23,570 | 17,752 | ||||||
Equity in income of other investments, net | 5,373 | 3,787 | ||||||
Net income | 235,959 | 141,425 | ||||||
Net loss/(income) attributable to noncontrolling interests | 1,343 | (3,483 | ) | |||||
Net income attributable to the Company | 237,302 | 137,942 | ||||||
Preferred dividends | (6,354 | ) | (6,354 | ) | ||||
Net income available to the Company's common shareholders | $ | 230,948 | $ | 131,588 | ||||
Per common share: | ||||||||
Net income available to the Company's common shareholders: | ||||||||
-Basic | $ | 0.37 | $ | 0.30 | ||||
-Diluted | $ | 0.37 | $ | 0.30 | ||||
Weighted average shares: | ||||||||
-Basic | 614,767 | 430,524 | ||||||
-Diluted | 616,758 | 432,264 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income/(loss) | $ | 122,216 | $ | (41,548 | ) | $ | 355,105 | $ | 305,452 | |||||||
Other comprehensive income: | ||||||||||||||||
Change in unrealized loss/gain on marketable securities | 153 | 51 | (1,466 | ) | 18 | |||||||||||
Change in unrealized loss on interest rate swaps | 103 | 327 | 308 | (432 | ) | |||||||||||
Change in foreign currency translation adjustment | (8,056 | ) | (1,383 | ) | (6,335 | ) | 971 | |||||||||
Other comprehensive (loss)/income: | (7,800 | ) | (1,005 | ) | (7,493 | ) | 557 | |||||||||
Comprehensive income/(loss) | 114,416 | (42,553 | ) | 347,612 | 306,009 | |||||||||||
Comprehensive income attributable to noncontrolling interests | (1,186 | ) | (1,997 | ) | (13,926 | ) | (4,875 | ) | ||||||||
Comprehensive income/(loss) attributable to the Company | $ | 113,230 | $ | (44,550 | ) | $ | 333,686 | $ | 301,134 | |||||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Net income | $ | 235,959 | $ | 141,425 | ||||
Other comprehensive income: | ||||||||
Change in unrealized gains related to defined benefit plan | 0 | 0 | ||||||
Other comprehensive income | 0 | 0 | ||||||
Comprehensive income | 235,959 | 141,425 | ||||||
Comprehensive loss/(income) attributable to noncontrolling interests | 1,343 | (3,483 | ) | |||||
Comprehensive income attributable to the Company | $ | 237,302 | $ | 137,942 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
`
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the NineThree Months Ended September 30, 2017March 31, 2022 and 20162021
(Unaudited)
(in thousands)
Cumulative | Accumulated | |||||||||||||||||||||||||||||||||||||||
Distributions | Other | Total | ||||||||||||||||||||||||||||||||||||||
in Excess | Comprehensive | Preferred Stock | Common Stock | Paid-in | Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||||
of Net Income | Income | Issued | Amount | Issued | Amount | Capital | Equity | Interests | Equity | |||||||||||||||||||||||||||||||
Balance, January 1, 2016 | $ | (572,335 | ) | $ | 5,588 | 32 | $ | 32 | 413,431 | $ | 4,134 | $ | 5,608,881 | $ | 5,046,300 | $ | 135,651 | $ | 5,181,951 | |||||||||||||||||||||
Contributions/deemed contributions from noncontrolling interests | - | - | - | - | - | - | - | - | 507 | 507 | ||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||
Net income | 300,577 | - | - | - | - | - | - | 300,577 | 4,875 | 305,452 | ||||||||||||||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||||||||||||||||||||||
Change in unrealized gain on marketable securities | - | 18 | - | - | - | - | - | 18 | - | 18 | ||||||||||||||||||||||||||||||
Change in unrealized loss on interest rate swaps | - | (432 | ) | - | - | - | - | - | (432 | ) | - | (432 | ) | |||||||||||||||||||||||||||
Change in foreign currency translation adjustment, net | - | 971 | - | - | - | - | �� | - | 971 | - | 971 | |||||||||||||||||||||||||||||
| - | - | |||||||||||||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | - | - | - | - | - | - | - | - | (3,240 | ) | (3,240 | ) | ||||||||||||||||||||||||||||
Dividends ($0.765 per common share; $1.1250 per | ||||||||||||||||||||||||||||||||||||||||
Class I Depositary Share, and $1.0313 per | ||||||||||||||||||||||||||||||||||||||||
Class J Depositary Share, and $1.0547 per | ||||||||||||||||||||||||||||||||||||||||
Class K Depositary Share, respectively) | (357,068 | ) | - | - | - | - | - | - | (357,068 | ) | - | (357,068 | ) | |||||||||||||||||||||||||||
Distributions to noncontrolling interests | - | - | - | - | - | - | - | - | (7,288 | ) | (7,288 | ) | ||||||||||||||||||||||||||||
Issuance of common stock, net | - | - | - | - | 10,701 | 107 | 285,757 | 285,864 | - | 285,864 | ||||||||||||||||||||||||||||||
Surrender of restricted stock | - | - | - | - | (270 | ) | (3 | ) | (6,901 | ) | (6,904 | ) | - | (6,904 | ) | |||||||||||||||||||||||||
Exercise of common stock options | - | - | - | - | 1,151 | 12 | 20,732 | 20,744 | - | 20,744 | ||||||||||||||||||||||||||||||
Amortization of equity awards | - | - | - | - | - | - | 11,387 | 11,387 | - | 11,387 | ||||||||||||||||||||||||||||||
Balance, September 30, 2016 | $ | (628,826 | ) | $ | 6,145 | 32 | $ | 32 | 425,013 | $ | 4,250 | $ | 5,919,856 | $ | 5,301,457 | $ | 130,505 | $ | 5,431,962 | |||||||||||||||||||||
Balance, January 1, 2017 | $ | (676,867 | ) | $ | 5,766 | 32 | $ | 32 | 425,034 | $ | 4,250 | $ | 5,922,958 | $ | 5,256,139 | $ | 146,735 | $ | 5,402,874 | |||||||||||||||||||||
Contributions/deemed contributions from noncontrolling interests | - | - | - | - | - | - | - | - | 48,867 | 48,867 | ||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||
Net income | 341,179 | - | - | - | - | - | - | 341,179 | 13,926 | 355,105 | ||||||||||||||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||||||||||||||||||||||
Change in unrealized loss on marketable securities | - | (1,466 | ) | - | - | - | - | - | (1,466 | ) | - | (1,466 | ) | |||||||||||||||||||||||||||
Change in unrealized loss on interest rate swaps | - | 308 | - | - | - | - | - | 308 | - | 308 | ||||||||||||||||||||||||||||||
Change in foreign currency translation adjustment | - | (6,335 | ) | - | - | - | - | - | (6,335 | ) | - | (6,335 | ) | |||||||||||||||||||||||||||
Redeemable noncontrolling interests income | - | - | - | - | - | - | - | - | (1,203 | ) | (1,203 | ) | ||||||||||||||||||||||||||||
Dividends ($0.81 per common share; $1.1250 per Class I Depositary Share, and $0.9625 per Class I Depositary Share Redeemed, and $1.0313 per Class J Depositary Share, and $1.0547 per Class K Depositary Share, and $0.1602 per Class L Depositary Share, respectively) | (379,933 | ) | - | - | - | - | - | - | (379,933 | ) | - | (379,933 | ) | |||||||||||||||||||||||||||
Distributions to noncontrolling interests | - | - | - | - | - | - | - | - | (13,513 | ) | (13,513 | ) | ||||||||||||||||||||||||||||
Issuance of common stock | - | - | - | - | 776 | 8 | (8 | ) | - | - | - | |||||||||||||||||||||||||||||
Issuance of preferred stock | 9 | 9 | 217,566 | 217,575 | 217,575 | |||||||||||||||||||||||||||||||||||
Surrender of restricted stock | - | - | - | - | (239 | ) | (2 | ) | (5,597 | ) | (5,599 | ) | - | (5,599 | ) | |||||||||||||||||||||||||
Exercise of common stock options | - | - | - | - | 62 | - | 1,174 | 1,174 | - | 1,174 | ||||||||||||||||||||||||||||||
Amortization of equity awards | - | - | - | - | - | - | 15,290 | 15,290 | - | 15,290 | ||||||||||||||||||||||||||||||
Redemption of preferred stock | - | - | (9 | ) | (9 | ) | - | - | (224,991 | ) | (225,000 | ) | - | (225,000 | ) | |||||||||||||||||||||||||
Balance, September 30, 2017 | $ | (715,621 | ) | $ | (1,727 | ) | 32 | $ | 32 | 425,633 | $ | 4,256 | $ | 5,926,392 | $ | 5,213,332 | $ | 194,812 | $ | 5,408,144 | ||||||||||||||||||||
Retained Earnings/ (Cumulative Distributions in Excess | Accumulated Other Comprehensive | Preferred Stock | Common Stock | Paid-in | Total Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||||
of Net Income) | Income | Issued | Amount | Issued | Amount | Capital | Equity | Interests | Equity | |||||||||||||||||||||||||||||||
Balance at January 1, 2021 | $ | (162,812 | ) | $ | 0 | 20 | $ | 20 | 432,519 | $ | 4,325 | $ | 5,766,511 | $ | 5,608,044 | $ | 62,210 | $ | 5,670,254 | |||||||||||||||||||||
Net income | 137,942 | 0 | - | 0 | - | 0 | 0 | 137,942 | 3,483 | 141,425 | ||||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (169 | ) | (169 | ) | ||||||||||||||||||||||||||||
Dividends declared to common and preferred shares | (80,039 | ) | 0 | - | 0 | - | 0 | 0 | (80,039 | ) | 0 | (80,039 | ) | |||||||||||||||||||||||||||
Distributions to noncontrolling interests | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (370 | ) | (370 | ) | ||||||||||||||||||||||||||||
Issuance of common stock | 0 | 0 | 0 | 0 | 1,442 | 14 | (14 | ) | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Surrender of common stock | 0 | 0 | 0 | 0 | (521 | ) | (5 | ) | (9,087 | ) | (9,092 | ) | 0 | (9,092 | ) | |||||||||||||||||||||||||
Exercise of common stock options | 0 | 0 | 0 | 0 | 8 | 0 | 160 | 160 | 0 | 160 | ||||||||||||||||||||||||||||||
Amortization of equity awards | 0 | 0 | - | 0 | - | 0 | 6,298 | 6,298 | 0 | 6,298 | ||||||||||||||||||||||||||||||
Balance at March 31, 2021 | $ | (104,909 | ) | $ | 0 | 20 | $ | 20 | 433,448 | $ | 4,334 | $ | 5,763,868 | $ | 5,663,313 | $ | 65,154 | $ | 5,728,467 | |||||||||||||||||||||
Balance at January 1, 2022 | $ | 299,115 | $ | 2,216 | 20 | $ | 20 | 616,659 | $ | 6,167 | $ | 9,591,871 | $ | 9,899,389 | $ | 210,793 | $ | 10,110,182 | ||||||||||||||||||||||
Contributions from noncontrolling interests | 0 | 0 | - | 0 | - | 0 | 0 | 0 | 891 | 891 | ||||||||||||||||||||||||||||||
Net income/(loss) | 237,302 | 0 | - | 0 | - | 0 | 0 | 237,302 | (1,343 | ) | 235,959 | |||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (333 | ) | (333 | ) | ||||||||||||||||||||||||||||
Dividends declared to common and preferred shares | (123,758 | ) | 0 | - | 0 | - | 0 | 0 | (123,758 | ) | 0 | (123,758 | ) | |||||||||||||||||||||||||||
Distributions to noncontrolling interests | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (4,340 | ) | (4,340 | ) | ||||||||||||||||||||||||||||
Issuance of common stock | 0 | 0 | 0 | 0 | 1,712 | 17 | (17 | ) | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Surrender of common stock | 0 | 0 | 0 | 0 | (570 | ) | (6 | ) | (13,438 | ) | (13,444 | ) | 0 | (13,444 | ) | |||||||||||||||||||||||||
Exercise of common stock options | 0 | 0 | 0 | 0 | 128 | 1 | 2,567 | 2,568 | 0 | 2,568 | ||||||||||||||||||||||||||||||
Amortization of equity awards | 0 | 0 | - | 0 | - | 0 | 7,437 | 7,437 | 0 | 7,437 | ||||||||||||||||||||||||||||||
Redemption/conversion of noncontrolling interests | 0 | 0 | 0 | 0 | 73 | 1 | 1,535 | 1,536 | (1,536 | ) | 0 | |||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | 412,659 | $ | 2,216 | 20 | $ | 20 | 618,002 | $ | 6,180 | $ | 9,589,955 | $ | 10,011,030 | $ | 204,132 | $ | 10,215,162 | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||||||||||
Nine Months Ended September 30, | 2022 | 2021 | ||||||||||||||
2017 | 2016 | |||||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net income | $ | 355,105 | $ | 305,452 | $ | 235,959 | $ | 141,425 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 275,787 | 264,436 | 130,294 | 74,876 | ||||||||||||
Impairment charges | 34,280 | 68,126 | 272 | 0 | ||||||||||||
Deferred taxes | (238 | ) | 56,143 | |||||||||||||
Early extinguishment of debt charges | 1,753 | 45,674 | 7,173 | 0 | ||||||||||||
Equity award expense | 17,836 | 15,292 | 7,513 | 6,457 | ||||||||||||
Gain on sale of operating properties | (62,102 | ) | (81,873 | ) | ||||||||||||
Gain on change in control of interests | (71,160 | ) | (53,096 | ) | ||||||||||||
Gain on sale of properties | (4,193 | ) | (10,005 | ) | ||||||||||||
Gain on marketable securities, net | (121,764 | ) | (61,085 | ) | ||||||||||||
Equity in income of joint ventures, net | (37,044 | ) | (190,155 | ) | (23,570 | ) | (17,752 | ) | ||||||||
Equity in income from other real estate investments, net | (61,952 | ) | (22,532 | ) | ||||||||||||
Distributions from joint ventures and other real estate investments | 41,071 | 70,043 | ||||||||||||||
Change in accounts and notes receivable | (189 | ) | 3,779 | |||||||||||||
Equity in income of other real estate investments, net | (5,373 | ) | (3,787 | ) | ||||||||||||
Distributions from joint ventures and other investments | 25,925 | 19,198 | ||||||||||||||
Change in accounts and notes receivable, net | 990 | 18,593 | ||||||||||||||
Change in accounts payable and accrued expenses | 37,884 | 23,931 | (14,897 | ) | 15,387 | |||||||||||
Change in Canadian withholding tax receivable | 4,138 | (5,257 | ) | |||||||||||||
Change in other operating assets and liabilities | (41,353 | ) | (55,437 | ) | ||||||||||||
Change in other operating assets and liabilities, net | (43,778 | ) | (34,936 | ) | ||||||||||||
Net cash flow provided by operating activities | 493,816 | 444,526 | 194,551 | 148,371 | ||||||||||||
Cash flow from investing activities: | ||||||||||||||||
Acquisition of operating real estate and other related net assets | (110,802 | ) | (181,548 | ) | ||||||||||||
Acquisition of operating real estate | (18,671 | ) | (84,312 | ) | ||||||||||||
Improvements to operating real estate | (136,534 | ) | (102,084 | ) | (29,435 | ) | (20,569 | ) | ||||||||
Acquisition of real estate under development | (10,010 | ) | (51,588 | ) | ||||||||||||
Improvements to real estate under development | (121,764 | ) | (42,042 | ) | ||||||||||||
Investment in marketable securities | (9,822 | ) | (2,466 | ) | (1,469 | ) | 0 | |||||||||
Proceeds from sale of marketable securities | 2,442 | 1,907 | 100 | 50 | ||||||||||||
Investment in cost method investment | (3,000 | ) | 0 | |||||||||||||
Investments in and advances to real estate joint ventures | (26,788 | ) | (50,058 | ) | (13,116 | ) | (1,805 | ) | ||||||||
Reimbursements of investments in and advances to real estate joint ventures | 17,529 | 70,669 | 8,569 | 967 | ||||||||||||
Distributions from liquidation of real estate joint ventures | - | 135,648 | ||||||||||||||
Return of investment from liquidation of real estate joint ventures | - | 190,102 | ||||||||||||||
Investment in other real estate investments | (666 | ) | (233 | ) | ||||||||||||
Reimbursements of investments and advances to other real estate investments | 40,514 | 11,489 | ||||||||||||||
Investments in and advances to other investments | (8,445 | ) | (419 | ) | ||||||||||||
Reimbursements of investments in and advances to other investments | 24,398 | 343 | ||||||||||||||
Investment in other financing receivable | (3,000 | ) | (397 | ) | ||||||||||||
Collection of mortgage loans receivable | 760 | 688 | 43 | 37 | ||||||||||||
Reimbursements of other investments | - | 500 | ||||||||||||||
Proceeds from sale of operating properties | 76,869 | 262,708 | ||||||||||||||
Proceeds from sale of development properties | - | 4,551 | ||||||||||||||
Net cash flow (used for)/provided by investing activities | (278,272 | ) | 248,243 | |||||||||||||
Proceeds from sale of properties | 8,410 | 22,181 | ||||||||||||||
Net cash flow used for investing activities | (35,616 | ) | (83,924 | ) | ||||||||||||
Cash flow from financing activities: | ||||||||||||||||
Principal payments on debt, excluding normal amortization of rental property debt | (678,939 | ) | (602,079 | ) | (85,683 | ) | (12,272 | ) | ||||||||
Principal payments on rental property debt | (11,508 | ) | (15,316 | ) | (2,600 | ) | (2,661 | ) | ||||||||
Proceeds from mortgage loan financings | 206,000 | - | 19,000 | 0 | ||||||||||||
(Repayments)/proceeds from unsecured revolving credit facility, net | (42 | ) | 226,447 | |||||||||||||
Proceeds from issuance of unsecured notes | 1,250,000 | 650,000 | 600,000 | 0 | ||||||||||||
Repayments under unsecured term loan/notes | (460,988 | ) | (861,850 | ) | ||||||||||||
Repayments of unsecured notes | (500,000 | ) | 0 | |||||||||||||
Financing origination costs | (22,975 | ) | (14,033 | ) | (10,165 | ) | 0 | |||||||||
Payment of early extinguishment of debt charges | (2,461 | ) | (45,674 | ) | (6,470 | ) | 0 | |||||||||
Change in tenants' security deposits | 891 | 1,240 | ||||||||||||||
Contributions from noncontrolling interests | 1,422 | - | 891 | 0 | ||||||||||||
Conversion/distribution of noncontrolling interests | (95,410 | ) | (3,190 | ) | ||||||||||||
Redemption/distribution of noncontrolling interests | (4,673 | ) | (539 | ) | ||||||||||||
Dividends paid | (381,182 | ) | (354,112 | ) | (123,758 | ) | (80,039 | ) | ||||||||
Proceeds from issuance of stock, net | 218,750 | 306,809 | 2,568 | 160 | ||||||||||||
Redemption of preferred stock | (225,000 | ) | - | |||||||||||||
Shares repurchased for employee tax withholding on equity awards | (13,428 | ) | (9,082 | ) | ||||||||||||
Change in tenants' security deposits | 1,038 | 650 | ||||||||||||||
Net cash flow used for financing activities | (201,442 | ) | (711,758 | ) | (123,280 | ) | (103,783 | ) | ||||||||
Change in cash and cash equivalents | 14,102 | (18,989 | ) | |||||||||||||
Net change in cash, cash equivalents and restricted cash | 35,655 | (39,336 | ) | |||||||||||||
Cash, cash equivalents and restricted cash, beginning of the period | 334,663 | 293,188 | ||||||||||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 370,318 | $ | 253,852 | ||||||||||||
Cash and cash equivalents, beginning of period | 142,486 | 189,534 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 156,588 | $ | 170,545 | ||||||||||||
Interest paid during the period (net of capitalized interest of $10,671 and $3,762, respectively) | $ | 118,736 | $ | 194,234 | ||||||||||||
Income taxes paid during the period (net of refunds received of $8,323 and $86,100, respectively) | $ | (6,694 | ) | $ | 34,296 | |||||||||||
Interest paid during the period including payment of early extinguishment of debt charges of $6,470 and $0, respectively (net of capitalized interest of $102 and $296, respectively) | $ | 60,213 | $ | 29,383 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.Interim Financial StatementsBusiness and Organization
Business -
Kimco Realty Corporation, a Maryland corporation, is North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers, including mixed-use assets. The terms “Kimco,” the “Company,” “we,” “our” and “us” each refers to Kimco Realty Corporation and our subsidiaries, (the "Company"),unless the context indicates otherwise. The Company, its affiliates and related real estate joint ventures are engaged principally in the ownership, management, development and operation of open-air shopping centers, including mixed-use assets which are anchored generally by discount department stores, grocery stores, off-price retailers, home improvement centers, discounters and/or drugstores.service-oriented tenants. Additionally, the Company provides complementary services that capitalize on the Company’sCompany’s established retail real estate expertise.
The Company elected status as a Real Estate Investment Trust (a “REIT”) for federal income tax purposes beginning in its taxable year ended December 31, 1991 and operates in a manner that enables the Company to maintain its status as a REIT. As a REIT, with respect to each taxable year, the Company must distribute at least 90 percent of its taxable income (excluding capital gain) and does not pay federal income taxes on the amount distributed to its shareholders. The Company is not generally subject to federal income taxes if it distributes 100 percent of its taxable income. Most states where the Company holds investments in real estate conform to the federal rules recognizing REITs. Certain subsidiaries have made a joint election with the Company to be treated as taxable REIT subsidiaries (“TRSs”), which permit the Company to engage in certain business activities which the REIT may not conduct directly. A TRS is subject to federal and state income taxes on its income, and the Company includes, when applicable, a provision for taxes in its condensed consolidated financial statements. The Company is subject to and also includes in its tax provision non-U.S. income taxes on certain investments located in jurisdictions outside the U.S. These investments are held by the Company at the REIT level and not in the Company’s taxable REIT subsidiaries. Accordingly, the Company does not expect a U.S. income tax impact associated with the repatriation of undistributed earnings from the Company’s foreign subsidiaries.
Weingarten Merger
On August 3, 2021, Weingarten Realty Investors (“Weingarten”) merged with and into the Company, with the Company continuing as the surviving public company (the “Merger”), pursuant to the definitive merger agreement (the “Merger Agreement”) between the Company and Weingarten, entered into on April 15, 2021. Under the terms of the Merger Agreement, each Weingarten common share was entitled to 1.408 newly issued shares of the Company’s common stock plus $2.20 in cash, subject to certain adjustments specified in the Merger Agreement.
The following highlights the Company’s significant activity upon completion of the $4.1 billion strategic Merger with Weingarten on August 3, 2021:
● | Acquired 149 properties, including 30 held through joint venture programs. |
● | Assumed senior unsecured notes of $1.5 billion (including $95.6 million in fair market value adjustments) and mortgage debt of $317.7 million (including $11.0 million in fair market value adjustments) encumbering 16 operating properties. |
● | Issued 179.9 million shares of common stock valued at $3.8 billion and paid cash consideration of $0.3 billion. |
See the Company's audited Annual Report on Form 10-K for the year ended December 31, 2021 (the “10-K”) for further disclosure regarding the Merger transaction.
COVID-19 Pandemic
The coronavirus disease 2019 (“COVID-19”) pandemic continues to impact the retail real estate industry for both landlords and tenants. The extent to which the COVID-19 pandemic impacts the Company’s financial condition, results of operations and cash flows, in the near term, will continue to depend on future developments, which are uncertain at this time. The Company’s business, operations and financial results will depend on numerous evolving factors, including the duration and scope of the pandemic, governmental, business and individual actions that have been and continue to be taken in response to the pandemic, the distribution and effectiveness of vaccines, impacts on economic activity from the pandemic and actions taken in response, the effects of the pandemic on the Company’s tenants and their businesses and the ability of tenants to make their rental payments. Any of these events could materially adversely impact the Company’s business, financial condition, results of operations or stock price. The development and distribution of COVID-19 vaccines has assisted in allowing many restrictions to be lifted, providing a path to recovery. The overall economy continues to recover but several issues including the lack of qualified employees, inflation risk, supply chain issues and new COVID-19 variants have impacted the pace of the recovery. The Company will continue to monitor the economic, financial, and social conditions resulting from the COVID-19 pandemic and will assess its asset portfolio for any impairment indicators.
2.Summary of Significant Accounting Policies
Principles of Consolidation -
The accompanying Condensed Consolidated Financial Statements include the accounts of the Company. The Company’sCompany’s subsidiaries include subsidiaries which are wholly-owned and all entities inwholly owned or which the Company has a controlling financial interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity (“VIE”) in accordance with the Consolidationconsolidation guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). All inter-company balances and transactions have been eliminated in consolidation. The information presented in the accompanying Condensed Consolidated Financial Statements is unaudited and reflects all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's audited Annual Report on Form 10-K for the year ended December 31, 2016 (the “10-K”),10-K, as certain disclosures in this Quarterly Report on Form 10-Q10-Q for the quarterly period ended September 30, 2017, March 31, 2022 that would duplicate those included in the 10-K10-K are not included in these Condensed Consolidated Financial Statements.
Subsequent Events -
The Company has evaluated subsequent events and transactions for potential recognition or disclosure in the condensed consolidated financial statements (see Footnote 9).its Condensed Consolidated Financial Statements.
Earnings Per Share -New Accounting Pronouncements
The following table sets forth the reconciliation of earnings and the weighted average number of shares used in the calculation of basic and diluted earnings per share (amounts presented in thousands except per share data):
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Computation of Basic and Diluted Earnings/(Loss) Per Share: | ||||||||||||||||
Net income/(loss) available to the Company's common shareholders | 101,957 | (55,100 | ) | 298,996 | 265,912 | |||||||||||
Earnings attributable to participating securities | (526 | ) | (502 | ) | (1,596 | ) | (1,493 | ) | ||||||||
Net income/(loss) available to the Company’s common shareholders for basic earnings/(loss) per share | 101,431 | (55,602 | ) | 297,400 | 264,419 | |||||||||||
Distributions on convertible units | 24 | - | 43 | - | ||||||||||||
Net income/(loss) available to the Company’s common shareholders for diluted earnings/(loss) per share | 101,455 | (55,602 | ) | 297,443 | 264,419 | |||||||||||
Weighted average common shares outstanding – basic | 423,688 | 420,073 | 423,574 | 416,829 | ||||||||||||
Effect of dilutive securities (a): | ||||||||||||||||
Equity awards | 513 | - | 556 | 1,405 | ||||||||||||
Assumed conversion of convertible units | 110 | - | 63 | - | ||||||||||||
Weighted average common shares outstanding – diluted | 424,311 | 420,073 | 424,193 | 418,234 | ||||||||||||
Net income/(loss) available to the Company's common shareholders: | ||||||||||||||||
Basic earnings/(loss) per share | 0.24 | (0.13 | ) | 0.70 | 0.63 | |||||||||||
Diluted earnings/(loss) per share | 0.24 | (0.13 | ) | 0.70 | 0.63 | |||||||||||
|
|
The Company's unvested restricted share awards contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings.
New Accounting Pronouncements –
The following table represents Accounting Standard UpdatesStandards Update (“ASU”) to the FASB’s Accounting Standards Codification (“ASC”)ASCs that, as of March 31, 2022, are not yet effective for the Company and for which the Company has not elected early adoption, where permitted:
ASU | Description | Effective Date | Effect on the financial statements or other significant matters |
ASU | The acquisition date required by Topic 805. | January 1, | The adoption of this ASU is not expected to have a material |
|
|
|
|
| The |
|
|
|
|
|
|
|
|
|
|
The following ASU’sASU to the FASB’s ASC havehas been adopted by the Company:Company as of the date listed:
ASU | Description | Adoption Date | Effect on the financial statements or other significant matters |
ASU |
| January 1, |
|
|
|
| The adoption of this ASU did not |
2. Operating Property Activities
3.Real Estate
Acquisitions of Operating Real Estate -
During the ninethree months ended September 30, 2017, March 31, 2022, the Company acquired the following operating properties,2 parcels for an aggregate purchase price of $18.6 million, in separate transactions, through direct asset purchases or consolidation due to changewhich are located in control resulting from the purchase of additional interests or obtaining control through the modification of a joint venture investment:San Marcos, CA and Columbia, MD.
Purchase Price (in thousands) | ||||||||||||||||||||||
Property Name | Location | Month Acquired/ Consolidated | Cash* | Debt | Other Consideration** | Total | GLA*** | |||||||||||||||
Plantation Commons | Plantation, FL (1)(3) | Jan-17 | $ | - | $ | - | $ | 12,300 | $ | 12,300 | 60 | |||||||||||
Gordon Plaza | Woodbridge, VA (1)(3) | Jan-17 | - | - | 3,100 | 3,100 | 184 | |||||||||||||||
Plaza del Prado | Glenview, IL | Jan-17 | 39,063 | - | - | 39,063 | 142 | |||||||||||||||
Columbia Crossing Parcel | Columbia Crossing, MD | Jan-17 | 5,100 | - | - | 5,100 | 25 | |||||||||||||||
The District at Tustin Legacy | Tustin, CA (2)(3) | Apr-17 | - | 206,000 | 98,698 | 304,698 | 688 | |||||||||||||||
Jantzen Beach Center | Portland, OR | Jul-17 | 131,927 | - | - | 131,927 | 722 | |||||||||||||||
Del Monte Plaza Parcel | Reno, NV | Jul-17 | 24,152 | - | - | 24,152 | 83 | |||||||||||||||
Gateway Station Phase II | Burleson, TX | Aug-17 | 15,355 | - | - | 15,355 | 79 | |||||||||||||||
Jantzen Beach Center Parcel | Portland, OR | Sep-17 | 6,279 | - | - | 6,279 | 25 | |||||||||||||||
Webster Square Outparcel | Nashua, NH | Sep-17 | 4,985 | - | - | 4,985 | 22 | |||||||||||||||
| $ | 226,861 | $ | 206,000 | $ | 114,098 | $ | 546,959 | 2,030 | ||||||||||||||
* The Company utilized an aggregate $115.9 million associated with Internal Revenue Code §1031 sales proceeds.
** Includes the Company’s previously held equity interest investment.
*** Gross leasable area ("GLA")
|
|
|
|
|
|
Property Name | Current Ownership Interest | Gain on change in control of interests | ||||||
Plantation Commons | 76.25% | $ | 9,793 | |||||
Gordon Plaza | 40.62% | 395 | ||||||
The District at Tustin Legacy | (a) | 60,972 | ||||||
| $ | 71,160 | |||||||
|
|
Included in the Company’s Condensed Consolidated Statements of Operations are $17.8 million and $12.1 million in revenues from rental properties from the date of acquisition through September 30, 2017 and 2016, respectively, for operating properties acquired during each of the respective years.Dispositions
The Company adopted ASU 2017-01 effective January 1, 2017 and appliedtable below summarizes the guidanceCompany’s disposition activity relating to its operating property acquisitions during the nine months ended September 30, 2017. The purchase price for these acquisitions is allocated to real estate and related intangible assets acquired and liabilities assumed, as applicable, in accordance with our accounting policies for asset acquisitions.
The purchase price allocations for properties acquired/consolidated during the nine months ended September 30, 2017, are as follows (in thousands):
Land | $ | 190,226 | ||
Buildings | 293,355 | |||
Above-market leases | 11,992 | |||
Below-market leases | (30,246 | ) | ||
In-place leases | 42,412 | |||
Building improvements | 30,917 | |||
Tenant improvements | 12,737 | |||
Mortgage fair value adjustment | (6,222 | ) | ||
Other assets | 5,090 | |||
Other liabilities | (3,302 | ) | ||
Net assets acquired | $ | 546,959 |
As of September 30, 2017, the allocation adjustments and revised allocations for properties accounted for as business combinations during the year ended December 31, 2016, are as follows (in thousands):
Allocation as of December 31, 2016 | Allocation Adjustments | Revised Allocation as of September 30, 2017 | ||||||||||
Land | $ | 179,150 | $ | (5,150 | ) | $ | 174,000 | |||||
Buildings | 309,493 | (30,696 | ) | 278,797 | ||||||||
Above-market leases | 11,982 | 885 | 12,867 | |||||||||
Below-market leases | (31,903 | ) | (4,716 | ) | (36,619 | ) | ||||||
In-place leases | 44,094 | (1,063 | ) | 43,031 | ||||||||
Building improvements | 124,105 | 41,895 | 166,000 | |||||||||
Tenant improvements | 12,788 | (1,155 | ) | 11,633 | ||||||||
Mortgage fair value adjustment | (4,292 | ) | - | (4,292 | ) | |||||||
Other assets | 234 | - | 234 | |||||||||
Other liabilities | (27 | ) | - | (27 | ) | |||||||
Net assets acquired | $ | 645,624 | $ | - | $ | 645,624 | ||||||
Dispositions and Assets Held for Sale –
During the nine months ended September 30, 2017, the Company disposed of 15 consolidated operating properties and eight parcels (dollars in separate transactions, for an aggregate sales price of $230.2 million. These transactions resulted in (i) an aggregate gain of $62.1 million and (ii) aggregate impairment charges of $13.0 million.millions):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Aggregate sales price | $ | 8.7 | $ | 23.0 | ||||
Gain on sale of properties (1) | $ | 4.2 | $ | 10.0 | ||||
Number of properties sold | 0 | 1 | ||||||
Number of parcels sold | 4 | 4 | ||||||
(1) | Before noncontrolling interests of $3.0 million and taxes of $1.0 million, for the three months ended March 31, 2021. |
Assets Held-For-Sale
At September 30, 2017, March 31, 2022, the Company had onea property and land parcel classified as held-for-sale at a net carrying amount of $14.9 million, net of accumulated depreciation of $2.9$13.7 million, which is included in Other assets on the Company’s Condensed Consolidated Balance Sheets. The Company’s determination of the fair value of the property was based upon an executed contract of sale with a third party.
Impairments–
During the nine months ended September 30, 2017, the Company recognized aggregate impairment charges of $34.3 million. These impairment charges consist of (i) $13.0 million related4.Investments in and Advances to the sale of certain operating properties, as discussed above, (ii) $5.1 million related to adjustments to property carrying values for properties which the Company has marketed for sale as part of its active capital recycling program and as such has adjusted the anticipated hold periods for such properties and (iii) $16.2 million related to a property for which the Company has re-evaluated its long-term plan for the property due to unfavorable local market conditions. The Company’s estimated fair values of these properties were primarily based upon estimated sales prices from (i) signed contracts or letters of intent from third party offers or (ii) a discounted cash flow model. See Footnote 11 for fair value disclosure.
Hurricane Impact –
The impact of Hurricanes Harvey, which hit Texas on August 25, 2017, and Irma, which hit Florida on September 10, 2017, resulted in minimal damage to the Company’s properties located in Texas and Florida.
With respect to Hurricane Maria, which hit the island of Puerto Rico on September 20, 2017, the Company is currently assessing damages at its seven operating properties located throughout Puerto Rico, aggregating 2.2 million square feet of GLA. Two of these operating properties, located in the southern region of the island were less impacted and most tenants have resumed operations, while the remaining five operating properties in the northern region sustained varying amounts of damage. Initial repairs are in progress, however, a final assessment and recovery plan will require additional time. The Company maintains a comprehensive property insurance policy on these properties with total coverage of up to $62.0 million, as well as business interruption insurance with coverage up to $39.3 million in the aggregate, subject to a collective deductible of $1.2 million. The Company anticipates that all damages and any loss of operations sustained will be covered under these existing policies. As further detailed information becomes available, the Company expects to recognize a charge, which it believes will not have a material effect on the Company’s financial position and/or results of operations. This charge will result from the write-down of the undepreciated portion of the property that has been permanently damaged, which would be less than the replacement costs and offset by insurance proceeds received by the Company.
3. Real Estate Under DevelopmentJoint Ventures
The Company is engaged in various real estate development projects for long-term investment. As of September 30, 2017, the Company had in progress a total of five active real estate development projects and two additional projects held for future development.
The costs incurred to date for these real estate development projects are as follows (in thousands):
Property Name | Location | September 30, 2017 | December 31, 2016 | ||||||
Grand Parkway Marketplace (1) | Spring, TX | $ | 41,222 | $ | 94,841 | ||||
Dania Pointe | Dania Beach, FL | 137,743 | 107,113 | ||||||
Promenade at Christiana | New Castle, DE | 31,563 | 25,521 | ||||||
Owings Mills | Owings Mills, MD | 30,746 | 25,119 | ||||||
Lincoln Square (2) | Philadelphia, PA | 62,022 | - | ||||||
Avenues Walk (3) | Jacksonville, FL | 48,573 | 73,048 | ||||||
Staten Island Plaza (4) | Staten Island, NY | 9,395 | 9,386 | ||||||
| $ | 361,264 | $ | 335,028 | ||||||
|
|
|
|
|
|
|
|
During the nine months ended September 30, 2017, the Company capitalized (i) interest of $8.4 million, (ii) real estate taxes, insurance and legal costs of $3.7 million and (iii) payroll of $2.8 million, in connection with these real estate development projects.
4. Investments in and Advances to Real Estate Joint Ventures
The Company and its subsidiaries have investments in and advances to various real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. The Company and the joint venture partners have joint approval rights for major decisions, including those regarding property operations. As such, the Company holds noncontrolling interests in these joint ventures and accounts for them under the equity method of accounting.
The Company manages certain of these joint venture investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, asset management fees and construction management fees. The table below presents unconsolidated joint venture investments for which the Company held an ownership interest at September 30, 2017 March 31, 2022 and December 31, 2016 (in millions, except number of properties)2021 (dollars in millions):
As of September 30, 2017 | As of December 31, 2016 | Ownership | The Company’s Investment | ||||||||||||||||||||||||||||||||
Venture | Ownership Interest | Number of Properties | The Company's Investment | Ownership Interest | Number of Properties | The Company's Investment | |||||||||||||||||||||||||||||
Prudential Investment Program (“KimPru” and “KimPru II”) (1) (2) | 15.0 | % | 46 | $ | 179.0 | 15.0 | % | 48 | $ | 182.5 | |||||||||||||||||||||||||
Joint Venture | Interest | March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||
Prudential Investment Program | 15.0% | $ | 154.8 | $ | 163.0 | ||||||||||||||||||||||||||||||
Kimco Income Opportunity Portfolio (“KIR”) | 48.6 | % | 44 | 149.6 | 48.6 | % | 45 | 145.2 | 48.6% | 192.3 | 186.0 | ||||||||||||||||||||||||
Canada Pension Plan Investment Board (“CPP”) | 55.0 | % | 5 | 122.4 | 55.0 | % | 5 | 111.8 | 55.0% | 175.1 | 165.1 | ||||||||||||||||||||||||
Other Institutional Joint Ventures | Various | 279.3 | 281.8 | ||||||||||||||||||||||||||||||||
Other Joint Venture Programs | Various | 31 | 58.4 | Various | 37 | 64.7 | Various | 212.4 | 211.0 | ||||||||||||||||||||||||||
Total* | 126 | $ | 509.4 | 135 | $ | 504.2 | |||||||||||||||||||||||||||||
Total* | $ | 1,013.9 | $ | 1,006.9 | |||||||||||||||||||||||||||||||
* Representing 24.6 million117 property interests and 26.224.0 million square feet of GLA, as of September 30, 2017 March 31, 2022, and 120 property interests and 24.7 million square feet of GLA, as of December 31, 2016, respectively.2021.
|
|
|
|
The table below presents the Company’sCompany’s share of net income for the above investments which is included in Equity in income of joint ventures, net on the Company’s Condensed Consolidated Statements of OperationsIncome for the three and nine months ended September 30, 2017 March 31, 2022 and 20162021 (in millions):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
KimPru and KimPru II | $ | 3.2 | 2.2 | $ | 9.7 | 7.5 | ||||||||||
KIR | 8.2 | 7.9 | 24.7 | 27.4 | ||||||||||||
CPP | 1.3 | 1.3 | 4.3 | 6.2 | ||||||||||||
Other Joint Venture Programs (1) | (3.6 | ) | 0.1 | (1.7 | ) | 149.1 | ||||||||||
Total | $ | 9.1 | $ | 11.5 | $ | 37.0 | $ | 190.2 | ||||||||
|
|
Three Months Ended | ||||||||
March 31, | ||||||||
Joint Venture | 2022 | 2021 | ||||||
Prudential Investment Program | $ | 2.4 | $ | 2.6 | ||||
KIR | 13.4 | 8.7 | ||||||
CPP | 3.1 | 2.1 | ||||||
Other Institutional Joint Ventures | 1.5 | 0 | ||||||
Other Joint Venture Programs | 3.2 | 4.4 | ||||||
Total | $ | 23.6 | $ | 17.8 | ||||
During the ninethree months ended September 30, 2017, March 31, 2022, certain of the Company’s real estate joint ventures disposed of six operating3 properties, and a portion of one property, in separate transactions, for an aggregate sales price of $49.3$81.5 million. These transactions resulted in an aggregate net gain to the Company of $0.1$2.6 million before income taxes, for the ninethree months ended September 30, 2017. In addition, during the nine months ended September 30, 2017, the Company acquired a controlling interest in three operating properties from certain joint ventures, in separate transactions, for a gross fair value of $320.1 million. See Footnote 2 for the operating properties acquired by the Company.March 31, 2022.
During the ninethree months ended September 30, 2016, March 31, 2021, certain of the Company’s real estate joint ventures disposed of or transferred interests to joint venture partners in 39 operating2 properties, in separate transactions, for an aggregate sales price of $959.2$53.7 million. These transactions resulted in an aggregate net gain to the Company of $143.3$4.2 million before income taxes, for the ninethree months ended September 30, 2016. In addition, during the nine months ended September 30, 2016, the Company acquired a controlling interest in six operating properties and one development project from certain joint ventures, in separate transactions, for a gross fair value of $486.2 million.March 31, 2021.
The table below presents debt balances within the Company’sCompany’s unconsolidated joint venture investments for which the Company held noncontrolling ownership interests at September 30, 2017 March 31, 2022 and December 31, 2016 (dollars2021 (dollars in millions):
As of September 30, 2017 | As of December 31, 2016 | ||||||||||||||||||||||||
Venture | Mortgages and Notes Payable, Net | Weighted Average Interest Rate | Weighted Average Remaining Term (months)* | Mortgages and Notes Payable, Net | Weighted Average Interest Rate | Weighted Average Remaining Term (months)* | |||||||||||||||||||
KimPru and KimPru II | $ | 626.9 | 3.35 | % | 62.9 | $ | 647.4 | 3.07 | % | 67.5 | |||||||||||||||
KIR | 725.7 | 4.54 | % | 49.7 | 746.5 | 4.64 | % | 54.9 | |||||||||||||||||
CPP | 84.9 | 2.78 | % | 7.0 | 84.8 | 2.17 | % | 16.0 | |||||||||||||||||
Other Joint Venture Programs | 289.0 | 4.37 | % | 29.8 | 584.3 | 5.40 | % | 23.4 | |||||||||||||||||
Total | $ | 1,726.5 | $ | 2,063.0 | |||||||||||||||||||||
As of March 31, 2022 | As of December 31, 2021 | |||||||||||||||||||||||
Joint Venture | Mortgages and Notes Payable, Net | Weighted Average Interest Rate | Weighted Average Remaining Term (months)* | Mortgages and Notes Payable, Net | Weighted Average Interest Rate | Weighted Average Remaining Term (months)* | ||||||||||||||||||
Prudential Investment Program | $ | 416.0 | 2.30 | % | 43.0 | $ | 426.9 | 2.02 | % | 45.6 | ||||||||||||||
KIR | 468.7 | 2.74 | % | 25.1 | 492.6 | 2.55 | % | 27.9 | ||||||||||||||||
CPP | 83.9 | 2.20 | % | 52.1 | 84.2 | 1.85 | % | 55.0 | ||||||||||||||||
Other Institutional Joint Ventures | 233.0 | 2.00 | % | 56.7 | 232.9 | 1.65 | % | 59.7 | ||||||||||||||||
Other Joint Venture Programs | 401.5 | 3.63 | % | 80.1 | 402.1 | 3.58 | % | 83.0 | ||||||||||||||||
Total | $ | 1,603.1 | $ | 1,638.7 | ||||||||||||||||||||
* Includes extension options
5. 5.Other Real Estate Investments
Preferred Equity Capital -
The Company previouslyhas provided capital to owners and developers of real estate properties and loans through its Preferred Equity Program. The Company’s maximum exposure to losses associated with its preferred equity investments is primarily limited to its net investment. As of September 30, 2017, March 31, 2022, the Company’s net investment under the Preferred Equity Program was $198.1$74.2 million relating to 357 properties, including 345 net leased21 properties. During the ninethree months ended September 30, 2017,March 31, 2022 and 2021, the Company recognized net income of $27.2$5.9 million and $3.2 million from its preferred equity investments, including $14.8 million of cumulative foreign currency translation gain recognized as a result of the substantial liquidation of the Company’s investments in Canada during 2017. During the nine months ended September 30, 2016, the Company earned $22.3 million from its preferred equity investments, including $10.1 million in profit participation earned from four capital transactions.respectively. These amounts are included in Equity in income of other real estate investments, net on the Company’s Condensed Consolidated Statements of Operations.Income.
Kimsouth (Albertsons) -The Company has an investment with a funding commitment of $25.0 million, of which $9.4 million has been funded as of March 31, 2022.
6.Marketable Securities
Kimsouth Realty Inc. (“Kimsouth”) is a wholly-owned subsidiaryThe amortized cost and unrealized gains, net of the Company. KRS AB Acquisition, LLC (the “ABS Venture”) is a subsidiarymarketable securities as of Kimsouth that has a 14.35% noncontrolling interest (of which the Company’s share is 9.8%), in AB Acquisition, LLC (“AB Acquisition”), a joint venture which owns Albertsons LLC (“Albertsons”), NAI Group Holdings Inc. March 31, 2022 and Safeway Inc. The Company holds a controlling interest in the ABS Venture and consolidates this entity.December 31, 2021, are as follows (in thousands):
As of March 31, 2022 | As of December 31, 2021 | |||||||
Marketable securities: | ||||||||
Amortized cost | $ | 115,529 | $ | 114,159 | ||||
Unrealized gains, net | 1,219,344 | 1,097,580 | ||||||
Total fair value | $ | 1,334,873 | $ | 1,211,739 | ||||
During June 2017, the three months ended March 31, 2022 and 2021,the Company recognized net unrealized gains on marketable securities of $121.8 million and ABS Venture received an aggregate cash distribution of $34.6$61.1 million, from Albertsons, of which the Company’s combined share was $23.7 million with the remaining $10.9 million distributed to the two noncontrolling interest members in the ABS Venture. This distribution exceeded the Company’s carrying basis and as such was recognized as income and isrespectively. These net unrealized gains are included in Equity in income from other real estate investments,Gain on marketable securities, net on the Company’s Condensed Consolidated Statements of Operations.Income.
6.
7.Accounts and Notes Receivable
The components of accounts and notes receivable, net of potentially uncollectible amounts as of March 31, 2022 and December 31, 2021, are as follows (in thousands):
As of March 31, 2022 | As of December 31, 2021 | |||||||
Billed tenant receivables | $ | 34,393 | $ | 20,970 | ||||
Unbilled common area maintenance, insurance and tax reimbursements | 33,223 | 55,283 | ||||||
Deferred rent receivables | 3,671 | 5,029 | ||||||
Other receivables | 16,833 | 15,725 | ||||||
Straight-line rent receivables | 165,567 | 157,670 | ||||||
Total accounts and notes receivable, net | $ | 253,687 | $ | 254,677 | ||||
8.Leases
Lessor Leases
The Company’s primary source of revenues is derived from lease agreements, which includes rental income and expense reimbursement. The Company’s lease income is comprised of minimum base rent, expense reimbursements, percentage rent, lease termination fee income, ancillary income, amortization of above-market and below-market rent adjustments and straight-line rent adjustments.
The disaggregation of the Company’s lease income, which is included in Revenues from rental properties, net on the Company’s Condensed Consolidated Statements of Income, as either fixed or variable lease income based on the criteria specified in ASC 842, for the three months ended March 31, 2022 and 2021, is as follows (in thousands):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Lease income: | ||||||||
Fixed lease income (1) | $ | 331,998 | $ | 213,005 | ||||
Variable lease income (2) | 83,447 | 60,312 | ||||||
Above-market and below-market leases amortization, net | 4,297 | 5,702 | ||||||
Adjustments for potentially uncollectible revenues and disputed amounts (3) | 2,912 | (148 | ) | |||||
Total lease income | $ | 422,654 | $ | 278,871 | ||||
(1) | Includes minimum base rents, expense reimbursements, ancillary income and straight-line rent adjustments. |
(2) | Includes minimum base rents, expense reimbursements, percentage rent, lease termination fee income and ancillary income. |
(3) | The amounts represent adjustments associated with potentially uncollectible revenues and disputed amounts primarily due to the COVID-19 pandemic. |
Lessee Leases
The Company currently leases real estate space under non-cancelable operating lease agreements for ground leases and administrative office leases. The Company’s operating leases have remaining lease terms ranging from one to 64 years, some of which include options to extend the terms for up to an additional 75 years.
The weighted-average remaining non-cancelable lease term and weighted-average discount rates for the Company’s operating and finance leases as of March 31, 2022 were as follows:
Operating Leases | Finance Leases | |||||||
Weighted-average remaining lease term (in years) | 25.6 | 1.8 | ||||||
Weighted-average discount rate | 6.62 | % | 4.44 | % | ||||
The components of the Company’s lease expense, which are included in interest expense, rent expense and general and administrative expense on the Company’s Condensed Consolidated Statements of Income for the three months ended March 31, 2022 and 2021, were as follows (in thousands):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Lease cost: | ||||||||
Finance lease cost | $ | 327 | $ | 0 | ||||
Operating lease cost | 2,983 | 2,830 | ||||||
Variable lease cost | 1,407 | 683 | ||||||
Total lease cost | $ | 4,717 | $ | 3,513 | ||||
9.Notes and Mortgages Payable
Notes Payable
The Company has a $2.0 billion unsecured revolving credit facility (the “Credit Facility”) with a group of banks which is scheduled to expire in March 2024, with two additional six-month options to extend the maturity date, at the Company’s discretion, to March 2025. The Credit Facility is a green credit facility tied to sustainability metric targets, as described in the agreement. The Company achieved such targets, which effectively reduced the rate on the Credit Facility by one basis point. The Credit Facility, which accrues interest at a rate of LIBOR plus 76.5 basis points (1.22% as of March 31, 2022), can be increased to $2.75 billion through an accordion feature. Pursuant to the terms of the Credit Facility, the Company, among other things, is subject to covenants requiring the maintenance of (i) maximum indebtedness ratios and (ii) minimum interest and fixed charge coverage ratios. As of March 31, 2022, the Credit Facility had 0 outstanding balance, appropriations for letters of credit of $1.9 million and the Company was in compliance with its covenants.
In February 2022, the Company issued $600.0 million of senior unsecured notes, which are scheduled to mature in April 2032 and accrue interest at a rate of 3.20% per annum. Proceeds from this issuance were used for general corporate purposes, including the early redemption of the Company’s $500.0 million 3.40% senior unsecured notes, which were scheduled to mature in November 2022. As a result of this redemption, the Company incurred a prepayment charge of $6.5 million and $0.7 million in write-off of deferred financing costs during the three months ended March 31, 2022.
Mortgages Payable
During the three months ended March 31, 2022, the Company (i) obtained a $19.0 million mortgage relating to a consolidated joint venture operating property and (ii) repaid $85.9 million of mortgage debt (including fair market value adjustment of $0.2 million) that encumbered 4 operating properties.
10.Noncontrolling Interests
Noncontrolling interests represent the portion of equity that the Company does not own in those entities it consolidates as a result of having a controlling interest or having determined that the Company was the primary beneficiary of a VIE in accordance with the provisions of the FASB’s Consolidation guidance. The Company accounts and reports for noncontrolling interests in accordance with the Consolidation guidance and the Distinguishing Liabilities from Equity guidance issued by the FASB. The Company identifies its noncontrolling interests separately within the equity section on the Company’s Condensed Consolidated Balance Sheets. The amounts of consolidated net income attributable to the Company and to the noncontrolling interests are presented separately on the Company’s Condensed Consolidated Statements of Income.
Included within noncontrolling interests are units that were determined to be contingently redeemable that are classified as Redeemable noncontrolling interests and presented in the mezzanine section between Total liabilities and Stockholders equity on the Company’s Condensed Consolidated Balance Sheets.
The following table presents the change in the redemption value of the Redeemable noncontrolling interests for the three months ended March 31, 2022 and 2021 (in thousands):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Balance at January 1, | $ | 13,480 | $ | 15,784 | ||||
Fair value allocation to partnership interest | 0 | 2,068 | ||||||
Net income | 333 | 169 | ||||||
Distributions | (333 | ) | (169 | ) | ||||
Balance at March 31, | $ | 13,480 | $ | 17,852 | ||||
11.Variable Interest Entities(“ (“VIE”)
Included within the Company’sCompany’s consolidated operating properties at September 30, 2017, March 31, 2022 and December 31, 2021 are 2433 and 34 consolidated partnership entities, respectively, that are VIEs for which the Company is the primary beneficiary. These entities have been established to own and operate real estate property. The Company’s involvement with these entities is through its majority ownership and management of the properties. The entities were deemed VIEs primarily based on the fact thatbecause the unrelated investors do not have substantialsubstantive kick-out rights to remove the general or managing partner by a vote of a simple majority or less, and they do not have substantive participating rights. The Company determined that it was the primary beneficiary of these VIEs as a result of its controlling financial interest. At September 30, 2017, March 31, 2022, total assets of these VIEs were $1.2$1.6 billion and total liabilities were $385.6$152.0 million. At December 31, 2021, total assets of these VIEs were $1.6 billion and total liabilities were $153.9 million.
The majority of the operations of these VIEs are funded with cash flows generated from the properties. The Company has not provided financial support to any of these VIEs that it was not previously contractually required to provide, which consists primarily of funding any capital expenditures, including tenant improvements, which are deemed necessary to continue to operate the entity and any operating cash shortfalls that the entity may experience.
Additionally, included within the Company’s real estate development projects at September 30, 2017, are three consolidated partnership entities that are VIEs, for which the Company is the primary beneficiary. These entities have been established to develop real estate properties to hold as long-term investments. The Company’s involvement with these entities is through its majority ownership and management of the properties. These entities were deemed VIEs primarily based on the fact that the equity investments at risk are not sufficient to permit the entities to finance their activities without additional financial support. The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period. The Company determined that it was the primary beneficiary of these VIEs as a result of its controlling financial interest. At September 30, 2017, total assets of these real estate development VIEs were $269.3 million and total liabilities were $22.5 million.
Substantially all the projected development costs to be funded for these three real estate development projects, aggregating $129.3 million, will be funded with capital contributions from the Company, when contractually obligated. The Company has not provided financial support to these VIEs that it was not previously contractually required to provide.
All liabilities of these consolidated VIEs are non-recourse to the Company (“VIE Liabilities”). Of the 27 total VIEs, 22 are unencumbered and theThe assets of thesethe unencumbered VIEs are not restricted for use to settle only the obligations of these VIEs. The remaining five VIEsVIE assets are encumbered by third party-party non-recourse mortgage debt. The assets associated with these encumbered VIEs (“Restricted Assets”) are collateral under the respective mortgages and are therefore restricted and can only be used to settle the corresponding liabilities of the VIE. The table below summarizes the consolidated VIEs and the classification of the Restricted Assets and VIE Liabilities on the Company’s Condensed Consolidated Balance Sheets are as follows (in(dollars in millions):
September 30, 2017 | December 31, 2016 | |||||||
Restricted Assets: | ||||||||
Real estate, net | $ | 630.9 | $ | 326.9 | ||||
Cash and cash equivalents | 10.5 | 3.8 | ||||||
Accounts and notes receivable, net | 2.8 | 1.6 | ||||||
Other assets | 3.0 | 1.4 | ||||||
Total Restricted Assets | $ | 647.2 | $ | 333.7 | ||||
VIE Liabilities: | ||||||||
Mortgages payable, net | $ | 341.4 | $ | 138.6 | ||||
Other liabilities | 66.7 | 37.6 | ||||||
Total VIE Liabilities | $ | 408.1 | $ | 176.2 | ||||
7. Mortgages and Other Financing Receivables
The Company has various mortgages and other financing receivables which consist of loans acquired and loans originated by the Company. The Company reviews payment status to identify performing versus non-performing loans. As of September 30, 2017, the Company had a total of 11 loans aggregating $22.5 million, of which all were identified as performing loans.
8. Marketable Securities
During the nine months ended September 30, 2017, the Company acquired available-for-sale marketable equity securities for an aggregate purchase price of $9.8 million. At September 30, 2017, the Company’s investment in marketable securities was an aggregate of $14.0 million, which includes an unrealized loss of $1.1 million.
9. Notes and Mortgages Payable
Notes Payable -
In February 2017, the Company closed on a $2.25 billion unsecured revolving credit facility (the “Credit Facility”) with a group of banks, which is scheduled to expire in March 2021, with two additional six month options to extend the maturity date, at the Company’s discretion, to March 2022. This Credit Facility, which accrues interest at a rate of LIBOR plus 87.5 basis points (2.10% as of September 30, 2017), can be increased to $2.75 billion through an accordion feature. The Credit Facility replaced the Company’s $1.75 billion unsecured revolving credit facility that was scheduled to mature in March 2018. In addition, the Credit Facility includes a $500.0 million sub-limit which provides the company the opportunity to borrow in alternative currencies including Canadian Dollars, British Pounds Sterling, Japanese Yen or Euros. Pursuant to the terms of the Credit Facility, the Company, among other things, is subject to covenants requiring the maintenance of (i) maximum leverage ratios on both unsecured and secured debt and (ii) minimum interest and fixed coverage ratios. As of September 30, 2017, the Credit Facility had a balance of $25.0 million outstanding and $0.5 million appropriated for letters of credit.
As of March 31, 2022 | As of December 31, 2021 | |||||||
Number of unencumbered VIEs | 29 | 30 | ||||||
Number of encumbered VIEs | 4 | 4 | ||||||
Total number of consolidated VIEs | 33 | 34 | ||||||
Restricted Assets: | ||||||||
Real estate, net | $ | 220.7 | $ | 222.9 | ||||
Cash and cash equivalents | 3.1 | 2.0 | ||||||
Accounts and notes receivable, net | 2.2 | 2.0 | ||||||
Other assets | 1.7 | 1.0 | ||||||
Total Restricted Assets | $ | 227.7 | $ | 227.9 | ||||
VIE Liabilities: | ||||||||
Mortgages payable, net | $ | 79.7 | $ | 78.9 | ||||
Accounts payable and accrued expenses | 10.0 | 11.8 | ||||||
Operating lease liabilities | 6.7 | 6.7 | ||||||
Other liabilities | 55.6 | 56.5 | ||||||
Total VIE Liabilities | $ | 152.0 | $ | 153.9 | ||||
During the nine months ended September 30, 2017, the Company issued the following Senior Unsecured Notes (amounts in millions):
Date Issued | Maturity Date | Amount Issued | Interest Rate | |||||||
Mar-17 | Apr-27 | $ | 400.0 | 3.80 | % | |||||
Aug-17 | Feb-25 | $ | 500.0 | 3.30 | % | |||||
Aug-17 | Sept-47 | $ | 350.0 | 4.45 | % | |||||
During the nine months ended September 30, 2017, the Company repaid the following notes (amounts in millions):
Type | Date Paid | Amount Repaid | Interest Rate | Maturity Date | |||||||
Term Loan | Jan-17 | $ | 250.0 | (a) | Jan-17 | ||||||
Medium Term Notes (“MTN”) (b) | Aug-17 | $ | 211.0 | 4.30% | Feb-18 | ||||||
|
|
|
Mortgages Payable -
During the nine months ended September 30, 2017, the Company (i) consolidated $212.2 million of individual non-recourse mortgage debt (including a fair market value adjustment of $6.2 million) relating to a joint venture operating property which the Company now controls, (ii) paid off $684.6 million of maturing mortgage debt (including fair market value adjustments of $5.7 million) that encumbered 25 operating properties and (iii) obtained a $206.0 million non-recourse mortgage relating to one operating property.
10. Redeemable Noncontrolling Interests
Redeemable noncontrolling interests includes amounts related to partnership units issued by consolidated subsidiaries of the Company in connection with certain property acquisitions. Partnership units which are determined to be contingently redeemable under the FASB’s Distinguishing Liabilities from Equity guidance are classified as Redeemable noncontrolling interests and presented in the mezzanine section between Total liabilities and Stockholder’s equity on the Company’s Condensed Consolidated Balance Sheets. The amounts of consolidated net income attributable to the Company and to the noncontrolling interests are presented on the Company’s Condensed Consolidated Statements of Operations.
The following table presents the change in the redemption value of the Redeemable noncontrolling interests for the nine months ended September 30, 2017 and 2016 (amounts in thousands):
2017 | 2016 | |||||||
Balance at January 1, | $ | 86,953 | $ | 86,709 | ||||
Issuance of redeemable partnership interests (1) | 10,000 | - | ||||||
Income (2) | 1,203 | 3,240 | ||||||
Distributions | (2,448 | ) | (3,093 | ) | ||||
Redemption/conversion of redeemable units (3) | (79,569 | ) | - | |||||
Balance at September 30, | $ | 16,139 | $ | 86,856 | ||||
|
|
|
|
|
|
11. 12.Fair Value Measurements
All financial instruments of the Company are reflected in the accompanying Condensed Consolidated Balance Sheets at amounts which, in management’s estimation, based upon an interpretation of available market information and valuation methodologies, reasonably approximate their fair values, except those listed below, for which fair values are disclosed. The valuation method used to estimate fair value for fixed-rate and variable-rate debt is based on discounted cash flow analyses, with assumptions that include credit spreads, market yield curves, trading activity, loan amounts and debt maturities. The fair values for marketable securities are based on published values, securities dealers’ estimated market values or comparable market sales. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition.
As a basis for considering market participant assumptions in fair value measurements, the FASB’sFASB’s Fair Value Measurements and Disclosures guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
The following are financial instruments for which the Company’s estimate ofCompany’s estimated fair value differs from the carrying amountsvalue (in thousands):
September 30, 2017 | December 31, 2016 | March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||
Carrying Amounts | Estimated Fair Value | Carrying Amounts | Estimated Fair Value | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
Notes payable, net (1) | $ | 4,700,423 | $ | 4,676,777 | $ | 3,927,251 | $ | 3,890,797 | ||||||||||||||||||||||||
Mortgages payable, net (2) | $ | 850,848 | $ | 852,165 | $ | 1,139,117 | $ | 1,141,047 | ||||||||||||||||||||||||
Notes payable, net (1) | $ | 7,110,804 | $ | 6,875,691 | $ | 7,027,050 | $ | 7,330,723 | ||||||||||||||||||||||||
Mortgages payable, net (2) | $ | 378,644 | $ | 361,700 | $ | 448,652 | $ | 449,758 | ||||||||||||||||||||||||
| The Company determined that the valuation of its |
| The Company determined that its valuation of |
The Company has certain financial instruments that must be measured under the FASB’sFASB’s Fair Value Measurements and Disclosures guidance, including available for sale securities. The Company currently does not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.
The tables below presentpresents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 at March 31, 2022 and December 31, 2016, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
Balance at September 30, 2017 | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Marketable equity securities | $ | 12,715 | $ | 12,715 | $ | - | $ | - | ||||||||
Liabilities: | ||||||||||||||||
Interest rate swaps | $ | 667 | $ | - | $ | 667 | $ | - | ||||||||
Balance at March 31, 2022 | Level 1 | Level 2 | Level 3 | |||||||||||||
Marketable equity securities | $ | 1,334,873 | $ | 1,334,873 | $ | 0 | $ | 0 | ||||||||
Balance at December 31, 2016 | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Marketable equity securities | $ | 6,502 | $ | 6,502 | $ | - | $ | - | ||||||||
Liabilities: | ||||||||||||||||
Interest rate swaps | $ | 975 | $ | - | $ | 975 | $ | - | ||||||||
Balance at December 31, 2021 | Level 1 | Level 2 | Level 3 | |||||||||||||
Marketable equity securities | $ | 1,211,739 | $ | 1,211,739 | $ | 0 | $ | 0 | ||||||||
AssetsThe table below presents the Company’s assets measured at fair value on a non-recurring basis at September 30, 2017 and December 31, 2016, are as follows (in2021 (in thousands):
Balance at September 30, 2017 | Level 1 | Level 2 | Level 3 | |||||||||||||
Real estate | $ | 40,558 | $ | - | $ | - | $ | 40,558 | ||||||||
Balance at December 31, 2016 | Level 1 | Level 2 | Level 3 | |||||||||||||
Real estate | $ | 117,930 | $ | - | $ | - | $ | 117,930 | ||||||||
Balance at December 31, 2021 | Level 1 | Level 2 | Level 3 | |||||||||||||
Other investments | $ | 9,834 | $ | 0 | $ | 0 | $ | 9,834 | ||||||||
During the nine months ended September 30, 2017 and 2016, the Company recognized impairment charges related to adjustments to property carrying values of $34.3 million and $68.1 million, respectively. The Company’s estimated fair values of these propertiesassets were primarily based upon estimated sales prices from (i) signed contracts or letters of intent from third party-party offers, or (ii) a discounted cash flow model.which were less than the carrying value of the assets. The Company does not have access to the unobservable inputs used to determine the estimated fair values of third party-party offers. For the discounted cash flow model, a capitalization rate of 8.50% and a discount rate of 10.00% were utilized in the model based upon unobservable rates that the Company believes to be within a reasonable range of current market rates for this respective investment. Based on these inputs, the Company determined that its valuation of these investments was classified within Level 3 of the fair value hierarchy. (See Footnote 2 for additional discussion regarding impairment charges).
13.Incentive Plans
12. Preferred StockIn May 2020, the Company’s stockholders approved the 2020 Equity Participation Plan (the “2020 Plan”), which is a successor to the Restated Kimco Realty Corporation 2010 Equity Participation Plan (together with the 2020 Plan, the “Plans”) that expired in March 2020. The 2020 Plan provides for a maximum of 10,000,000 shares of the Company’s common stock to be reserved for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, stock payments and Common Stockdeferred stock awards. At March 31, 2022, the Company had 6.8 million shares of common stock available for issuance under the 2020 Plan.
The Company’s accounts for equity awards in accordance with FASB’s Compensation – Stock Compensation guidance, which requires that all share-based payments to employees, including grants of employee stock options, restricted stock and performance shares, be recognized in the Condensed Consolidated Statements of Income over the service period based on their fair values. Fair value of performance awards is determined using the Monte Carlo method which is intended to estimate the fair value of the awards at the grant date. Fair value of restricted shares is calculated based on the price on the date of grant.
The Company recognized expenses associated with its equity awards of $7.5 million and $6.5 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, the Company had $62.8 million of total unrecognized compensation cost related to unvested stock compensation granted under the Plans. That cost is expected to be recognized over a weighted-average period of approximately 3.2 years.
14.Stockholders’ Equity
Preferred Stock
The Company’s outstanding Preferred Stock is detailed below:
As of September 30, 2017 | |||||||||||||||||||||||||
Series of Preferred Stock | Shares Authorized | Shares Issued and Outstanding | Liquidation Preference (in thousands) | Dividend Rate | Annual Dividend per Depositary Share |
Par Value | Optional Redemption Date | ||||||||||||||||||
Series I | 18,400 | 7,000 | $ | 175,000 | 6.00 | % | $ | 1.50000 | $ | 1.00 | 3/20/2017 | ||||||||||||||
Series J | 9,000 | 9,000 | 225,000 | 5.50 | % | $ | 1.37500 | $ | 1.00 | 7/25/2017 | |||||||||||||||
Series K | 8,050 | 7,000 | 175,000 | 5.625 | % | $ | 1.40625 | $ | 1.00 | 12/7/2017 | |||||||||||||||
Series L | 10,350 | 9,000 | 225,000 | 5.125 | % | $ | 1.28125 | $ | 1.00 | 8/16/2022 | |||||||||||||||
| 45,800 | 32,000 | $ | 800,000 | ||||||||||||||||||||||
As of March 31, 2022 and December 31, 2021 | |||||||||||||||||||||||||
Class of Preferred Stock | Shares Authorized | Shares Issued and Outstanding | Liquidation Preference (in thousands) | Dividend Rate | Annual Dividend per Depositary Share | Par Value | Optional Redemption Date | ||||||||||||||||||
Class L | 10,350 | 9,000 | $ | 225,000 | 5.125 | % | $ | 1.28125 | $ | 1.00 | 8/16/2022 | ||||||||||||||
Class M | 10,580 | 10,580 | 264,500 | 5.250 | % | $ | 1.31250 | $ | 1.00 | 12/20/2022 | |||||||||||||||
| 19,580 | $ | 489,500 | |||||||||||||||||||||||
Common Stock
As of December 31, 2016 | |||||||||||||||||||||||||
Series of Preferred Stock | Shares Authorized | Shares Issued and Outstanding | Liquidation Preference (in thousands) | Dividend Rate | Annual Dividend per Depositary Share |
Par Value | Optional Redemption Date | ||||||||||||||||||
Series I | 18,400 | 16,000 | $ | 400,000 | 6.00 | % | $ | 1.50000 | $ | 1.00 | 3/20/2017 | ||||||||||||||
Series J | 9,000 | 9,000 | 225,000 | 5.50 | % | $ | 1.37500 | $ | 1.00 | 7/25/2017 | |||||||||||||||
Series K | 8,050 | 7,000 | 175,000 | 5.625 | % | $ | 1.40625 | $ | 1.00 | 12/7/2017 | |||||||||||||||
| 35,450 | 32,000 | $ | 800,000 | ||||||||||||||||||||||
The following Preferred Stock series was issuedCompany has a share repurchase program, which is scheduled to expire February 29,2024. Under this program, the Company may repurchase shares of its common stock, par value $0.01 per share, with an aggregate gross purchase price of up to $300.0 million. The Company did not repurchase any shares under the share repurchase program during the ninethree months ended September 30, 2017:March 31, 2022. As of March 31, 2022, the Company had $224.9 million available under this share repurchase program.
Series of Preferred Stock | Date Issued | Depositary Shares Issued | Fractional Interest per Share | Net Proceeds, After Expenses (in millions) | Offering Price | Optional Redemption Date | ||||||||||
Series L | 8/16/2017 | 9,000,000 | 1/1000 | $ | 217.6 | 25.00 | 8/16/2022 | |||||||||
The following Preferred Stock series was partially redeemed during the nine months ended September 30, 2017:
Series of Preferred Stock | Date Issued | Depositary Shares Redeemed | Redemption Amount (in millions) | Redemption Price | Redemption Date | ||||||||||
Series I (1) | 3/20/2012 | 9,000,000 | $ | 225.0 | $ | 25.00 | 9/6/2017 | ||||||||
|
|
During February 2015, During August 2021, the Company established an at the marketat-the-market continuous offering program (the “ATM program”) which is effective for a term of three years, pursuant to which the Company may offer and sell from time-to-time shares of its common stock, par value $0.01 per share, with an aggregate gross sales price of up to $500.0 million through a consortium of banks acting as sales agents. Sales of the shares of common stock may be made, as needed, from time to time in “at the market” offerings as defined in Rule 415 of the Securities Act of 1933, including by means of ordinary brokers’ transactions on the New York Stock Exchange (the “NYSE”) or otherwise (i) at market prices prevailing at the time of sale, (ii) at prices related to prevailing market prices or (iii) as otherwise agreed to with the applicable sales agent. In addition, the Company may from time to time enter into separate forward sale agreements with one or more banks. The Company did not offer for sale issue any shares of common stock under the ATM program during the ninethree months ended September 30, 2017. March 31, 2022. As of September 30, 2017, March 31, 2022, the Company had $211.9$422.4 million available under this ATM program.
Dividends Declared
13. The following table provides a summary of the dividends declared per share:
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Common Shares | $ | 0.19000 | $ | 0.17000 | ||||
Class L Depositary Shares | $ | 0.32031 | $ | 0.32031 | ||||
Class M Depositary Shares | $ | 0.32813 | $ | 0.32813 | ||||
15.Supplemental Schedule of Non-Cash Investing / Financing Activities
The following schedule summarizes the non-cash investing and financing activities of the Company for the ninethree months ended September 30, 2017 March 31, 2022 and 20162021 (in thousands):
2017 | 2016 | |||||||
Proceeds deposited in escrow through sale of real estate interests | $ | 150,697 | $ | 66,431 | ||||
Acquisition of real estate interests through proceeds held in escrow | $ | 115,853 | $ | 66,044 | ||||
Acquisition of real estate interests by assumption of mortgage debt | $ | - | $ | 33,174 | ||||
Issuance of common stock | $ | - | $ | 85 | ||||
Surrender of restricted common stock | $ | (5,599 | ) | $ | (6,904 | ) | ||
Declaration of dividends paid in succeeding period | $ | 123,270 | $ | 118,136 | ||||
Capital expenditures accrual | $ | 56,879 | $ | 17,604 | ||||
Deemed contribution from noncontrolling interest | $ | 10,000 | $ | - | ||||
Consolidation of Joint Ventures: | - | |||||||
Increase in real estate and other assets | $ | 325,981 | $ | 316,772 | ||||
Increase in mortgages payable, other liabilities and non-controlling interests | $ | 258,626 | $ | 194,964 | ||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Surrender of common stock | $ | 13,444 | $ | 9,092 | ||||
Declaration of dividends paid in succeeding period | $ | 5,366 | $ | 5,366 | ||||
Capital expenditures accrual | $ | 33,885 | $ | 36,062 | ||||
Lease liabilities arising from obtaining operating right-of-use assets | $ | 0 | $ | 553 | ||||
Allocation of fair value to noncontrolling interests | $ | 0 | $ | 2,068 | ||||
Decrease in redeemable noncontrolling interests from redemption of units for common stock | $ | 1,536 | $ | 0 | ||||
Purchase price fair value adjustment to prepaid rent | $ | 0 | $ | 15,620 | ||||
The following table provides a reconciliation of cash, cash equivalents and restricted cash recorded on the Company’s Condensed Consolidated Balance Sheets to the Company’s Condensed Consolidated Statements of Cash Flows (in thousands):
As of March 31, 2022 | As of December 31, 2021 | |||||||
Cash and cash equivalents | $ | 367,331 | $ | 325,631 | ||||
Restricted cash | 2,987 | 9,032 | ||||||
Total cash, cash equivalents and restricted cash | $ | 370,318 | $ | 334,663 | ||||
16.Commitments and Contingencies
Letters of Credit
The Company has issued letters of credit in connection with the completion and repayment guarantees primarily on certain of the Company’s redevelopment projects and guaranty of payment related to the Company’s insurance program. At March 31, 2022, these letters of credit aggregated $42.6 million.
Funding Commitments
The Company has an investment with a funding commitment of $25.0 million, of which $9.4 million has been funded as of March 31, 2022.
Defined Benefit Plan
The Company’s noncontributory qualified cash balance retirement plan (the “Benefit Plan”) was terminated as of December 31, 2021. NaN contributions are anticipated to be made to the Benefit Plan during 2022.
Other
In connection with the construction of its development and redevelopment projects and related infrastructure, certain public agencies require posting of performance and surety bonds to guarantee that the Company’s obligations are satisfied. These bonds expire upon the completion of the improvements and infrastructure. As of March 31, 2022, there were $12.3 million in performance and surety bonds outstanding.
In connection with the Merger, the Company now provides a guaranty for the payment of any debt service shortfalls on the Sheridan Redevelopment Agency issued Series A bonds which are tax increment revenue bonds issued in connection with a development project in Sheridan, Colorado. These tax increment revenue bonds have a balance of $49.7 million outstanding at March 31, 2022. The bonds are to be repaid with incremental sales and property taxes and a public improvement fee ("PIF") to be assessed on current and future retail sales and, to the extent necessary, any amounts we may have to provide under a guaranty. The revenue generated from incremental sales, property taxes and PIF have satisfied the debt service requirements to date. The incremental taxes and PIF are to remain intact until the earlier of the payment of the bond liability in full or 2040.
The Company is subject to various other legal proceedings and claims that arise in the ordinary course of business. Management believes that the final outcome of such matters will not have a material adverse effect on the financial position, results of operations or liquidity of the Company taken as a whole as of March 31, 2022.
14. Incentive Plans
The Company accounts for equity awards in accordance with FASB’s Compensation – Stock Compensation guidance which requires that all share based payments to employees, including grants of employee stock options, restricted stock and performance shares, be recognized in the Condensed Consolidated Statements of Operations over the service period based on their fair values. Fair value is determined, depending on the type of award, using either the Black-Scholes option pricing formula or the Monte Carlo method for performance shares, both of which are intended to estimate the fair value of the awards at the grant date. Fair value of restricted shares is calculated based on the price on the date of grant.
The Company recognized expenses associated with its equity awards of $17.8 million and $15.3 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, the Company had $32.8 million of total unrecognized compensation cost related to unvested stock compensation granted under the Plans. That cost is expected to be recognized over a weighted average period of approximately 2.9 years.
15. Accumulated Other Comprehensive Income (“AOCI”)17.Earnings Per Share
The following tables display sets forth the changereconciliation of earnings and the weighted-average number of shares used in the componentscalculation of accumulated other comprehensive income for the nine months ended September 30, 2017basic and 2016:diluted earnings per share (amounts presented in thousands except per share data):
Foreign Currency Translation Adjustments | Unrealized Gain/(Loss) on Available-for- Sale Investments | Unrealized Loss on Interest Rate Swaps | Total | |||||||||||||
Balance as of January 1, 2017 | $ | 6,335 | $ | 406 | $ | (975 | ) | $ | 5,766 | |||||||
Other comprehensive income before reclassifications | 3,711 | (1,466 | ) | 308 | 2,553 | |||||||||||
Amounts reclassified from AOCI (1) | (10,046 | ) | - | - | (10,046 | ) | ||||||||||
Net current-period other comprehensive income | (6,335 | ) | (1,466 | ) | 308 | (7,493 | ) | |||||||||
Balance as of September 30, 2017 | $ | - | $ | (1,060 | ) | $ | (667 | ) | $ | (1,727 | ) | |||||
Three Months Ended | ||||||||
March 31, | ||||||||
2022 | 2021 | |||||||
Computation of Basic and Diluted Earnings Per Share: | ||||||||
Net income available to the Company's common shareholders | $ | 230,948 | $ | 131,588 | ||||
Earnings attributable to participating securities | (1,360 | ) | (792 | ) | ||||
Net income available to the Company’s common shareholders for basic earnings per share | 229,588 | 130,796 | ||||||
Distributions on convertible units | 11 | 9 | ||||||
Net income available to the Company’s common shareholders for diluted earnings per share | $ | 229,599 | $ | 130,805 | ||||
Weighted average common shares outstanding – basic | 614,767 | 430,524 | ||||||
Effect of dilutive securities (1): | ||||||||
Equity awards | 1,874 | 1,606 | ||||||
Assumed conversion of convertible units | 117 | 134 | ||||||
Weighted average common shares outstanding – diluted | 616,758 | 432,264 | ||||||
Net income available to the Company's common shareholders: | ||||||||
Basic earnings per share | $ | 0.37 | $ | 0.30 | ||||
Diluted earnings per share | $ | 0.37 | $ | 0.30 | ||||
|
|
Foreign Currency Translation Adjustments | Unrealized Gains on Available-for- Sale Investments | Unrealized Loss on Interest Rate Swaps | Total | |||||||||||||
Balance as of January 1, 2016 | $ | 6,616 | $ | 398 | $ | (1,426 | ) | $ | 5,588 | |||||||
Other comprehensive income before reclassifications | 971 | 18 | (432 | ) | 557 | |||||||||||
Amounts reclassified from AOCI | - | - | - | - | ||||||||||||
Net current-period other comprehensive income | 971 | 18 | (432 | ) | 557 | |||||||||||
Balance as of September 30, 2016 | $ | 7,587 | $ | 416 | $ | (1,858 | ) | $ | 6,145 | |||||||
The Company's unvested restricted share awards contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings.
ItemItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by the CompanyKimco Realty Corporation (the “Company”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with the safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “commit,” “anticipate,” “estimate,” “project,” “will,” “target,” “forecast” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which, are, in some cases, are beyond the Company’s control and could materially affect actual results, performances or achievements. 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) the reduction in the Company’s income in the event of multiple lease terminations by tenants or a failure of multiple tenants to occupy their premises in a shopping center, (iv) the availability of suitable acquisition, disposition, development and redevelopment opportunities, and risks related to acquisitions not performing in accordance with our expectations, (v) the Company’s ability to raise capital by selling its assets, (vi) increases in operating costs due to inflation and supply chain issues, (vii) risks related to future opportunities and plans for the combined company, including the uncertainty of expected future financial performance and results of the combined company following the merger between Kimco and Weingarten Realty Investors (the "Merger"), (viii) the possibility that, if the Company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial analysts or investors, the market price of the Company’s common stock could decline, (ix) changes in governmental laws and regulations and management’s ability to estimate the impact of such changes, (x) valuation and risks related to the Company’s joint venture and preferred equity investments, (xi) valuation of marketable securities and other investments, including the shares of Albertsons Companies, Inc. common stock held by the Company, (xii) impairment charges, (xiii) pandemics or other health crises, such as coronavirus disease 2019 (“COVID-19”), (xiv) 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, (vi)(xv) the level and volatility of interest rates and foreign currency exchange rates and managements’management’s ability to estimate the impact thereof, (vii) risks related to the Company’s international operations, (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)(xvi) changes in the dividend policy for the Company’s common and preferred stock (xiii) the reduction inand the Company’s income in the event of multiple lease terminations by tenants or a failure by multiple tenantsability to occupy their premises in a shopping center, (xiv) impairment charges, (xv)pay dividends at current levels, (xvii) unanticipated changes in the Company’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity, and (xvi)(xviii) the other risks and uncertainties identified under Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year endedyear-ended December 31, 2016.2021. Accordingly, there is no assurance that the Company’s expectations will be realized. The Company disclaims any intention or obligation to update the forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to refer to any further disclosures the Company makes or related subjects in the Company’s Current Reports on Form 8-K that the Company files with the Securities and Exchange Commission (“SEC”).
The following discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto. These unaudited financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature.
Executive SummaryOverview
Kimco Realty Corporation, a Maryland corporation, is one of the nation’sNorth America’s largest publicly-traded ownerspublicly traded owner and operatorsoperator of open-air, grocery-anchored shopping centers.centers, including mixed-use assets. The terms “Kimco,” the “Company,” “we,” “our” and “us” each refers to Kimco Realty Corporation and our subsidiaries, unless the context indicates otherwise. The Company’s mission is to create destinations for everyday living that inspire a sense of community and deliver value to our many stakeholders.
The Company is a self-administered real estate investment trust (“REIT”) and has owned and operated open-air shopping centers for over 60 years. The Company has not engaged, nor does it expect to retain, any REIT advisors in connection with the operation of its properties. As of September 30, 2017,March 31, 2022, the Company had interests in 508537 U.S. shopping center properties, aggregating 84.292.7 million square feet of gross leasable area (“GLA”), located in 32 states, Puerto Rico and Canada.29 states. In addition, the Company had 37432 other property interests, primarily through the Company’s preferred equity investments and other real estate investments, totaling 5.96.2 million square feet of GLA. The Company’s ownership interests in real estate consist of its consolidated portfolio and portfolios where the Company owns an economic interest, such as properties in the Company’s investment real estate management programs, where the Company partners with institutional investors and also retains management.
The executive officers are engaged in the day-to-day management and operation of real estate exclusively with the Company, with nearly all operating functions, including leasing, asset management, maintenance, construction, legal, finance and accounting, administered by the Company.
The Company’s strategyCompany’s primary business objective is to be the premier owner and operator of open-air, grocery-anchored shopping centers, through investments primarilyincluding mixed-use assets, in the U.S. ToThe Company believes it can achieve this strategyobjective by:
● | increasing the value of its existing portfolio of properties and generating higher levels of portfolio growth; |
● | increasing cash flows for reinvestment and/or for distribution to shareholders while maintaining conservative payout ratios; |
● | improving debt metrics and upgraded unsecured debt ratings |
● | continuing growth in desirable demographic areas with successful retailers, primarily focused on grocery anchors; and |
● | increasing the number of entitlements for residential use. |
Weingarten Merger
On August 3, 2021, Weingarten Realty Investors ("Weingarten") merged with and into the Company, is (i) continuing to transform the quality of its portfolio by disposing of lesser quality assets and acquiring larger, higher quality properties in key markets identified bywith the Company forcontinuing as the surviving public company, pursuant to the definitive merger agreement (the “Merger Agreement”) between the Company and Weingarten which substantial progress has been achieved aswas entered into on April 15, 2021. The Merger brought together two industry-leading retail real estate platforms with highly complementary portfolios and created the preeminent open-air shopping center and mixed-use real estate owner in the country. As a result of Septemberthe Merger, the Company acquired 149 properties, including 30 2017, (ii) simplifying its business by: (a) reducing the number ofheld through joint venture investmentsprograms. The increased scale in targeted growth markets, coupled with a broader pipeline of redevelopment opportunities, has positioned the combined company to create significant value for its shareholders.
COVID-19 Pandemic
The COVID-19 pandemic has resulted in a widespread health crisis that adversely affected businesses, economies and (b) exiting Mexico, South America and Canada, forfinancial markets worldwide. The COVID-19 pandemic significantly impacted the retail sector in which the exit of South America has been completed and Mexico and Canada have been substantially completed, (iii) pursuing redevelopment opportunities within its portfolio to increase overall value and (iv) selectively acquiring land parcels in our key markets for real estate development projects for long-term investment. As partCompany operates. The majority of the Company’s strategy each property is evaluatedtenants and their operations have been, and may continue to be impacted. Through the duration of the pandemic, a substantial number of tenants had to temporarily or permanently close their business, shortened their operating hours or offer reduced services for its highestsome period of time. The development and best use, which may include residentialdistribution of COVID-19 vaccines has assisted in allowing many restrictions to be lifted, providing a path to recovery. The overall economy continues to recover but several issues including the lack of qualified employees, inflation risk, supply chain issues and mixed-use components. In addition,new COVID-19 variants have impacted the Company may consider other opportunistic investments related to retailer controlled real estate such as, repositioning underperforming retail locations, retail real estate financing and bankruptcy transaction support. pace of the recovery.
The Company has an active capital recycling program which provides forcontinues to monitor the dispositionimpact of certain U.S. properties.COVID-19 on the Company’s business, its tenants' industries and the general economic, financial and social conditions. The magnitude and duration of the COVID-19 pandemic and its impact on the Company’s operations and liquidity remains uncertain as the pandemic continues to evolve globally and within the United States. If the Company accepts sales prices fordetermines that any of theseits assets that are less than their net carrying values,impaired as a result of the COVID-19 pandemic, the Company would be required to take impairment charges, and such amounts could be material. In orderThe Company did not incur any impairment charges during the three months ended March 31, 2022 relating to execute the Company’s strategy, the Company intends to continue to strengthen its balance sheet by pursuing deleveraging efforts over time, providing it the necessary flexibility to invest opportunistically and selectively, primarily focusing on U.S. open-air shopping centers.COVID-19.
Results of Operations
Comparison of the three months ended September 30, 2017March 31, 2022 and 20212016
Three Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
(amounts in millions) | ||||||||||||||||
2017 | 2016 | Change | % change | |||||||||||||
Revenues from rental property (1) | $ | 290.9 | $ | 279.3 | $ | 11.6 | 4.2 | % | ||||||||
Rental property expenses: (3) | ||||||||||||||||
Rent | $ | 2.8 | $ | 2.7 | $ | 0.1 | 3.7 | % | ||||||||
Real estate taxes | 38.4 | 37.7 | 0.7 | 1.9 | % | |||||||||||
Operating and maintenance | 33.2 | 32.6 | 0.6 | 1.8 | % | |||||||||||
| $ | 74.4 | $ | 73.0 | $ | 1.4 | 1.9 | % | |||||||||
Depreciation and amortization (4) | $ | 88.4 | $ | 96.8 | $ | (8.4 | ) | (8.7% | ) | |||||||
ComparisonThe following table presents the comparative results from the Company’s Condensed Consolidated Statements of Income for the ninethree months ended September 30, 2017and 2016March 31, 2022, as compared to the corresponding period in 2021 (in thousands, except per share data):
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
(amounts in millions) | ||||||||||||||||
2017 | 2016 | Change | % change | |||||||||||||
Revenues from rental property (2) | $ | 873.2 | $ | 859.5 | $ | 13.7 | 1.6 | % | ||||||||
Rental property expenses: (3) | ||||||||||||||||
Rent | $ | 8.3 | $ | 8.3 | $ | - | - | |||||||||
Real estate taxes | 115.4 | 108.0 | 7.4 | 6.9 | % | |||||||||||
Operating and maintenance | 102.9 | 100.4 | 2.5 | 2.5 | % | |||||||||||
| $ | 226.6 | $ | 216.7 | $ | 9.9 | 4.6 | % | |||||||||
Depreciation and amortization (5) | $ | 275.8 | $ | 264.4 | $ | 11.4 | 4.3 | % | ||||||||
Three Months Ended March 31, | ||||||||||||
2022 | 2021 | Change | ||||||||||
Revenues | ||||||||||||
Revenues from rental properties, net | $ | 422,654 | $ | 278,871 | $ | 143,783 | ||||||
Management and other fee income | 4,595 | 3,437 | 1,158 | |||||||||
Operating expenses | ||||||||||||
Rent (1) | (4,081 | ) | (3,035 | ) | (1,046 | ) | ||||||
Real estate taxes | (54,314 | ) | (38,936 | ) | (15,378 | ) | ||||||
Operating and maintenance (2) | (69,225 | ) | (46,520 | ) | (22,705 | ) | ||||||
General and administrative (3) | (29,948 | ) | (24,478 | ) | (5,470 | ) | ||||||
Impairment charges | (272 | ) | - | (272 | ) | |||||||
Depreciation and amortization | (130,294 | ) | (74,876 | ) | (55,418 | ) | ||||||
Gain on sale of properties | 4,193 | 10,005 | (5,812 | ) | ||||||||
Other income/(expense) | ||||||||||||
Other income, net | 5,983 | 3,357 | 2,626 | |||||||||
Gain on marketable securities, net | 121,764 | 61,085 | 60,679 | |||||||||
Interest expense | (57,019 | ) | (47,716 | ) | (9,303 | ) | ||||||
Early extinguishment of debt charges | (7,173 | ) | - | (7,173 | ) | |||||||
Benefit/(provision) for income taxes, net | 153 | (1,308 | ) | 1,461 | ||||||||
Equity in income of joint ventures, net | 23,570 | 17,752 | 5,818 | |||||||||
Equity in income of other investments, net | 5,373 | 3,787 | 1,586 | |||||||||
Net loss/(income) attributable to noncontrolling interests | 1,343 | (3,483 | ) | 4,826 | ||||||||
Preferred dividends | (6,354 | ) | (6,354 | ) | - | |||||||
Net income available to the Company's common shareholders | $ | 230,948 | $ | 131,588 | $ | 99,360 | ||||||
Net income available to the Company's common shareholders: | ||||||||||||
Diluted per common share | $ | 0.37 | $ | 0.30 | $ | 0.07 | ||||||
(1) |
| |
|
|
|
|
(2) | Operating and maintenance expense |
|
|
|
|
General and administrative costs include employee-related expenses (salaries, bonuses, equity awards, benefits, severance costs and payroll taxes), professional fees, office rent, travel expense and other company-specific expenses. General and administrative expenses decreased $3.4 million for the nine months ended September 30, 2017, as comparedNet income available to the corresponding period in 2016, primarily due to reductions in professional fees, public company costs and other personnel related costs.
During the nine months ended September 30, 2017 and 2016, the Company recognized impairment charges related to adjustments to property carrying values of $34.3 million and $68.1 million, respectively, for which the Company’s estimated fair values of these properties were primarily based upon estimated sales prices from (i) signed contracts or letters of intent from third party offers or (ii) discounted cash flow models. These adjustments to property carrying values were recognized in connection with the Company’s efforts to market certain properties and management’s assessment as to the likelihood and timing of such potential transactions and the long-term plan for certain properties. Certain of the calculations to determine fair value utilized unobservable inputs and as such are classified as Level 3 of the fair value hierarchy.
Other income, net decreased $3.3 for the three months ended September 30, 2017, as compared to the corresponding period in 2016. This decrease is primarily due to a decrease in income from the Company’s investment in retail store leases related to the termination of a lease during the three months ended September 30, 2016.
Interest expense decreased $9.7 million for the nine months ended September 30, 2017, as compared to the corresponding period in 2016. This decrease is primarily due to the Company’s utilization of net proceeds from unsecured debt offerings during 2017 and 2016 to payoff secured debt which had higher interest rates. As a result, the Company effectively lowered its overall interest rate on borrowings for the nine months ended September 30, 2017, as compared to the corresponding period in 2016.
During the nine months ended September 30, 2017, the Company incurred early extinguishment of debt charges aggregating $1.8 million in connection with the tender premium on Medium Term Notes that were partially tendered prior to maturity.
During the nine months ended September 30, 2016, the Company incurred early extinguishment of debt charges aggregating $45.7 million in connection with the optional make-whole provisions of unsecured notes that were repaid prior to maturity and prepayment penalties on a mortgage encumbering 10 operating properties, which the Company also paid prior to the scheduled maturity date.
Benefit/(provision) for income taxes, net changed $62.1 million to a benefit of $0.7common shareholders was $230.9 million for the three months ended September 30, 2017,March 31, 2022, as compared to a provision of $61.4$131.6 million for the correspondingcomparable period in 2016. This change is primarily due to (i) a decrease in tax provision of $63.5 million resulting from the recognition of a valuation allowance as a result of the Company’s merger of its taxable REIT subsidiary into a wholly-owned LLC of the Company on August 1, 2016.
Benefit/(provision) for income taxes, net changed $75.5 million to a benefit of $2.2 million for the nine months ended September 30, 2017, as compared to a provision of $73.3 million for the corresponding period in 2016. This change is primarily due to (i) a decrease of $63.5 million resulting from the recognition of a valuation allowance as a result of the Company’s merger of its taxable REIT subsidiary into a wholly-owned LLC of the Company on August 1, 2016 and (ii) a decrease in foreign tax expense of $31.0 million primarily relating to the sale of certain unconsolidated properties during 2016 within the Company’s Canadian portfolio which were subject to foreign taxes at a consolidated reporting entity level, partially offset by (iii) a decrease in tax benefit of $17.1 million primarily related to impairments recognized during the nine months ended September 30, 2016 and (iv) an increase of $2.0 million resulting from the favorable settlement of a tax audit during the nine months ended September 30, 2016.
Equity in income of joint ventures, net decreased $153.1 million for the nine months ended September 30, 2017, as compared to the corresponding period in 2016. This decrease is primarily due to (i) a decrease in net gains of $149.8 million resulting from fewer sales of properties and ownership interests within various joint venture investments, during the nine months ended September 30, 2017, as compared to the corresponding period in 2016, (ii) the recognition of cumulative foreign currency translation loss of $4.8 million as a result of the substantial liquidation of the Company’s investments in Canada during 2017 and (iii) lower equity in income of $4.6 million primarily resulting from the sales of properties within various joint venture investments and the acquisition of partnership interests in joint ventures by the Company during 2017 and 2016, partially offset by (iv) a decrease in impairment charges of $6.1 million recognized during 2017, as compared to 2016.
During the nine months ended September 30, 2017, the Company acquired, in separate transactions, a controlling interest in three operating properties from certain joint venture partners in which the Company had noncontrolling interests. As a result of these transactions, the Company recorded an aggregate gain on change in control of interests of $71.2 million related to the fair value adjustments associated with its previously held equity interest in the operating properties.
During the nine months ended September 30, 2016, the Company acquired six operating properties and one development project from a joint venture in which the Company had a noncontrolling interest. As a result of these transactions, the Company recorded an aggregate gain on change in control of interests of $53.1 million related to the fair value adjustments associated with its previously held equity interest in the operating properties.
Equity in income of other real estate investments, net increased $16.1 million for the three months ended September 30, 2017, as compared to the corresponding period in 2016. This increase is primarily due to (i) the recognition of cumulative foreign currency translation gain of $14.8 million as a result of the substantial liquidation of the Company’s investments in Canada during 2017 and (ii) an increase in earnings and profit participation from capital transactions within the Company’s Preferred Equity Program of $1.3 million during the three months ended September 30, 2017, as compared to the corresponding period in 2016.
Equity in income of other real estate investments, net increased $39.4 million for the nine months ended September 30, 2017, as compared to the corresponding period in 2016. This increase is primarily due to (i) an increase of $34.6 million in equity in income from the Albertsons joint venture resulting from cash distributions received in excess of the Company’s carrying basis during the nine months ended September 30, 2017, and (ii) the recognition of cumulative foreign currency translation gain of $14.8 million as a result of the substantial liquidation of the Company’s investments in Canada during 2017, partially offset by (iii) a decrease in earnings and profit participation from capital transactions within the Company’s Preferred Equity Program of $10.0 million during the nine months ended September 30, 2017, as compared to the corresponding period in 2016.
During the nine months ended September 30, 2017, the Company disposed of 15 consolidated operating properties and eight parcels, in separate transactions, for an aggregate sales price of $230.2 million. These transactions resulted in (i) an aggregate gain of $62.1 million and (ii) aggregate impairment charges of $13.0 million.
During the nine months ended September 30, 2016, the Company disposed of 26 consolidated operating properties and one out-parcel, in separate transactions, for an aggregate sales price of $334.9 million. These transactions resulted in (i) an aggregate gain of $75.9 million, after income tax expense, and (ii) aggregate impairment charges of $7.8 million, before noncontrolling interest expense of $0.2 million.
Net income attributable to noncontrolling interests increased $9.1 million for the nine months ended September 30, 2017, as compared to the corresponding period in 2016. This increase is primarily due to an increase in equity in income attributable to the Company’s noncontrolling partners in the Albertsons joint venture during 2017.
Net income available to the Company's common shareholders was $102.0 million for the three months ended September 30, 2017, as compared to a net loss of $55.1 million for the three months ended September 30, 2016.2021. On a diluted per common share basis, net income available to the Company’s common shareholders for the three months ended September 30, 2017,March 31, 2022 was $0.24 per share,$0.37, as compared to a$0.30 for the comparable period in 2021.
The following describes the changes of certain line items included on the Company’s Condensed Consolidated Statements of Income that the Company believes changed significantly and affected Net income available to the Company's common shareholders during the three months ended March 31, 2022, as compared to the corresponding period in 2021:
Revenues from rental properties, net loss–
The increase in Revenues from rental properties, net of $0.13 per share$143.8 million for the three months ended September 30, 2016. These changes areMarch 31, 2022, as compared to the corresponding period in 2021, is primarily attributablefrom (i) an increase in revenues of $133.2 million due to (i)properties acquired during 2022 and 2021, including the impact of the Merger, (ii) a net increase in revenues from tenants of $10.0 million primarily due to an increase in leasing activity and net growth in the current portfolio, (iii) an increase in net straight-line rental income of $5.2 million primarily due to an increase in leasing activity and a decrease in provisionreserves and (iv) a net decrease in credit losses from tenants of $2.5 million primarily due to increased collections, partially offset by (v) a decrease in lease termination fee income of $5.1 million and (vi) a decrease in revenues of $2.0 million due to dispositions during 2022 and 2021.
Real estate taxes –
The increase in Real estate taxes of $15.4 million for income taxes, net, (ii)the three months ended March 31, 2022, as compared to the corresponding period in 2021, is primarily due to properties acquired during 2022 and 2021, including the impact of the Merger.
Operating and maintenance –
The increase in Operating and maintenance expense of $22.7 million for the three months ended March 31, 2022, as compared to the corresponding period in 2021 is primarily due to properties acquired during 2022 and 2021, including the impact of the Merger.
General and administrative –
The increase in General and administrative expense of $5.5 million is primarily due to an increase in gainsemployee-related expenses resulting from additional employees hired in connection with the Merger.
Depreciation and amortization –
The increase in Depreciation and amortization of $55.4 million for the three months ended March 31, 2022, as compared to the corresponding period in 2021, is primarily due to (i) an increase of $58.8 million resulting from properties acquired during 2022 and 2021, including the impact of the Merger, partially offset by (ii) a decrease of $3.4 million due to write-offs of depreciable assets primarily due to tenant vacates and property dispositions.
Gain on sale of properties –
During the three months ended March 31, 2022, the Company disposed of four land parcels, in separate transactions, for an aggregate sales price of $8.7 million, which resulted in aggregate gains of $4.2 million. During the three months ended March 31, 2021, the Company disposed of an operating properties, (iii) a decreaseproperty and four land parcels, in earlyseparate transactions, for an aggregate sales price of $23.0 million, which resulted in aggregate gains of $10.0 million.
Gain on marketable securities, net –
The increase in Gain on marketable securities, net of $60.7 million for the three months ended March 31, 2022, as compared to the corresponding period in 2021, is primarily the result of mark-to-market fluctuations of the shares of Albertsons Companies, Inc. “ACI” common stock held by the Company.
Interest expense –
The increase in Interest expense of $9.3 million for the three months ended March 31, 2022, as compared to the corresponding period in 2021, is primarily due (i) increased levels of borrowings resulting from the assumptions of unsecured notes and mortgages in connection with the Merger and public debt offerings, partially offset by (ii) the repayment of unsecured notes and mortgages during 2022 and 2021.
Early extinguishment of debt charges (iv)–
During the three months ended March 31, 2022, the Company redeemed its $500.0 million 3.40% senior unsecured notes, which were scheduled to mature in November 2022. As a result, the Company incurred a prepayment charge of $6.5 million and $0.7 million in write-off of deferred financing costs during the three months ended March 31, 2022.
Equity in income of joint ventures, net –
The increase in Equity in income of joint ventures, net of $5.8 million for the three months ended March 31, 2022, as compared to the corresponding period in 2021, is primarily due to (i) an increase in equity in income of other real estate$5.3 million within various joint venture investments net, (v)during 2022, as compared to the corresponding period in 2021, primarily resulting from a decrease in impairment charges of operating properties, (vi) a decrease in depreciation and amortization expense, (vii) incremental earningscredit losses due to the acquisition of operating properties during 2017 and 2016 as well as increased profitabilitycollections from the Company’s operating properties, partially offset by (viii) an increase in preferred stock redemption costs and (ix) a decrease from gain on change of control of interests.
Nettenants, including straight-line rental income, available to the Company's common shareholders was $299.0 million for the nine months ended September 30, 2017, as compared to $265.9 million for the nine months ended September 30, 2016. On a diluted per share basis, net income available to the Company’s common shareholders for the nine months ended September 30, 2017, was $0.70 as compared to $0.63 for the nine months ended September 30, 2016. These changes are primarily attributable to (i) a decrease in provision for income taxes, net, (ii) a decrease in early extinguishment of debt charges, (iii) an increase in equity in income of other real estate investments, net, (iv)$2.3 million from ownership interests acquired in unconsolidated joint ventures in connection with the Merger and (iii) a decrease in impairment charges of operating properties, (v)$0.5 million recognized during 2022, as compared to the corresponding period in 2021, partially offset by (iv) a decrease in interest expense, (vi) an increase from gain on changenet gains of control of interests and (vii) incremental earnings due to the acquisition of operating properties during 2017 and 2016 as well as increased profitability from the Company’s operating properties, partially offset by (viii) a decrease in equity in income of joint ventures, net,$2.3 million resulting from the salessale of properties within various joint venture investments andduring 2022, as compared to the acquisitioncorresponding period in 2021.
Net loss/(income) attributable to noncontrolling interests –
The change in joint ventures byNet loss/(income) attributable to noncontrolling interests of $4.8 million for the Company during 2017 and 2016, (ix)three months ended March 31, 2022, as compared to the corresponding period in 2021, is primarily due to (i) a decrease in gainsnet gain on sale of operating properties (x)within consolidated joint ventures during 2022, as compared to the corresponding period in 2021, partially offset by (ii) an increase in preferred stock redemption costs and (xi) an increasenet income attributable to noncontrolling interests recognized in depreciation and amortization expense.connection with consolidated joint ventures acquired in the Merger.
Tenant Concentration
The Company seeks to reduce its operating and leasing risks through diversification achieved by the geographic distribution of its properties avoiding dependence on any single property, and a large tenant base. As of March 31, 2022, the Company had interests in 537 U.S. shopping center properties, aggregating 92.7 million square feet of gross leasable area (“GLA”), located in 29 states. At September 30, 2017,March 31, 2022, the Company’s five largest tenants were TJX Companies, The Home Depot, Ahold Delhaize, Bed Bath & BeyondAlbertsons, Ross Stores and Albertsons,Amazon/Whole Foods, which represented 3.7%, 2.5%2.2%, 2.1%1.9%, 1.9% and 1.7%1.9%, respectively, of the Company’s annualized base rental revenues, including the proportionate share of base rental revenues from properties in which the Company has less than a 100% economic interest.
Liquidity and Capital Resources
The Company’sCompany’s capital resources include accessing the public debt and equity capital markets, mortgageunsecured term loans, mortgages and construction loan financing, borrowings under term loans and immediate access to anthe Company’s unsecured revolving credit facility (the “Credit Facility”) with bank commitments of $2.25$2.0 billion which can be increased to $2.75 billion through an accordion feature.
The Company’s cash flow activitiesACI, which are summarized as follows (in millions):
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Net cash flow provided by operating activities | $ | 493.8 | $ | 444.5 | ||||
Net cash flow (used for)/provided by investing activities | $ | (278.3 | ) | $ | 248.2 | |||
Net cash flow used for financing activities | $ | (201.4 | ) | $ | (711.8 | ) | ||
Operating Activitiessubject to certain contractual lock-up provisions that are scheduled to expire on June 25, 2022.
The Company anticipates that cash on hand, net cash flow provided by operating activities, borrowings under its Credit Facility and the issuance of equity, and public debt, as well as other debt and equity alternatives, and the sale of marketable equity securities, will provide the necessary capital required by the Company. Cash flowsThe Company will continue to evaluate its capital requirements for both its short-term and long-term liquidity needs, which could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part I, Item 1A. Risk Factors of our 10-K.
The Company’s cash flow activities are summarized as follows (in thousands):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash, cash equivalents and restricted cash, beginning of the period | $ | 334,663 | $ | 293,188 | ||||
Net cash flow provided by operating activities | 194,551 | 148,371 | ||||||
Net cash flow used for investing activities | (35,616 | ) | (83,924 | ) | ||||
Net cash flow used for financing activities | (123,280 | ) | (103,783 | ) | ||||
Net change in cash, cash equivalents and restricted cash | 35,655 | (39,336 | ) | |||||
Cash, cash equivalents and restricted cash, end of the period | $ | 370,318 | $ | 253,852 | ||||
Operating Activities
Net cash flow provided by operating activities for the ninethree months ended September 30, 2017, were $493.8March 31, 2022 was $194.6 million, as compared to $444.5$148.4 million for the comparable period in 2016. This2021. The increase of $49.3$46.2 million is primarily attributable to (i) an increaseto:
● | the acquisition of operating properties during 2022 and 2021, including those acquired from the Merger; |
● | new leasing, expansion and re-tenanting of core portfolio properties; and |
● | an increase in distributions from the Company’s joint ventures programs, partially offset by |
● | changes in assets and liabilities due to timing of receipts and payments; and |
● | the disposition of operating properties in 2022 and 2021. |
Investing Activities
Net cash flow due to new leasing, expansion, re-tenanting of core portfolio properties and a decrease in interest expense, (ii) changes in operating assets and liabilities due to timing of receipts and payments and (iii) a change in Canadian withholding tax receivables related to the sale of various Canadian investments during 2016, partially offset by (iv) a decrease in operational distributions from the Company’s joint venture programs, due to the sale of certain joint ventures during 2017 and 2016.
Investing Activities
Cash flows used for investing activities was $35.6 million for the ninethree months ended September 30, 2017, were $278.3 million,March 31, 2022, as compared to cash flows provided by investing activities of $248.2$83.9 million for the comparable period in 2016. This change of $526.5 million resulted primarily from (i) a decrease in return of investment and distributions from liquidation of real estate joint ventures of $325.8 million, primarily due to the liquidation of certain Canadian joint ventures in 2016, (ii) a decrease in proceeds from the sale of operating properties and development properties of $190.4 million, (iii) an increase in improvements to real estate under development of $79.7 million, (iv) a decrease of $53.1 million in reimbursements of investments in and advances to real estate joint ventures and (v) an increase in improvements to operating real estate of $34.5 million, partially offset by (vi) a decrease in acquisition of operating real estate and other related net assets of $70.7 million, (vii) a decrease in acquisition of real estate under development of $41.6 million, (viii) an increase in reimbursements of investments and advances to other real estate investments of $29.0 million and (ix) a decrease in investments in and advances to real estate joint ventures of $23.3 million.2021.
Investing activities during the three months ended March 31, 2022 primarily consisted of:
Cash inflows:
● | $33.0 million in reimbursements of investments in and advances to real estate joint ventures and other investments; and |
● | $8.4 million in proceeds from the sale of four land parcels. |
Cash outflows:
● | $29.4 million for improvements to operating real estate primarily related to tenant improvements and the Company’s active redevelopment pipeline; |
● | $21.6 million for investments in and advances to real estate joint ventures, primarily related to a redevelopment project within the Company’s joint venture portfolio and partner buyouts, and investments in other investments, primarily related to funding commitments for certain investments; |
● | $18.7 million for the acquisition of two parcels; |
● | $3.0 million for investment in other financing receivable; and |
● | $3.0 million for investment in cost method investment. |
Investing activities during the three months ended March 31, 2021 primarily consisted of:
Cash inflows:
● | $22.2 million in proceeds from the sale of a consolidated operating property and four parcels. |
Cash outflows:
● | $84.3 million for the acquisition of two consolidated operating properties; |
● | $20.6 million for improvements to operating real estate primarily related to the Company’s active redevelopment pipeline; and |
● | $2.2 million for investments in and advances to real estate joint ventures, primarily related to a redevelopment project within the Company's joint venture portfolio, and investments in other real estate investments, primarily related to repayment of a mortgage within the Company's Preferred Equity Program. |
AcquisitionsAcquisition of Operating Real Estate and Other Related Net Assets-–
During the nine three months ended September 30, 2017March 31, 2022 and 2016,2021, the Company expended $110.8$18.7 million and $181.5$84.3 million, respectively, towards the acquisition of operating real estate properties. The Company continues to transform its operating portfolio through its capital recycling program by acquiring what the Company believes are high quality U.S. retail properties and disposing of lesser quality assets. The Company anticipates acquiringspending approximately $140.0$100.0 million to $165.0$200.0 million towards the acquisition of operating properties duringfor the remainder of 2017.2022. The Company intends to fund these acquisitions with proceeds from property dispositions,cash on hand, cash flow from operating activities, assumption of mortgage debt, if applicable, andproceeds from property dispositions and/or availability under the Company’s revolving line of credit.its Credit Facility.
Improvements to Operating Real Estate-Estate –
During the nine three months ended September 30, 2017March 31, 2022 and 2016,2021, the Company expended $136.5$29.4 million and $102.1$20.6 million, respectively, towards improvements to operating real estate. These amounts consist of the following (in thousands):
Nine Months Ended September 30, | Three Months Ended March 31, | |||||||||||||||
2017 | 2016 | 2022 | 2021 | |||||||||||||
Redevelopment and renovations | $ | 116,577 | $ | 58,984 | $ | 12,274 | $ | 12,908 | ||||||||
Tenant improvements and tenant allowances | 12,324 | 37,237 | 17,161 | 7,661 | ||||||||||||
Other | 7,633 | 5,863 | ||||||||||||||
Total (1) | $ | 136,534 | $ | 102,084 | ||||||||||||
Total improvements (1) | $ | 29,435 | $ | 20,569 | ||||||||||||
(1) | During the |
During the nine months ended September 30, 2017 and 2016, the Company capitalized personnel costs of $10.0 million and $9.8 million, respectively, relating to deferred leasing costs.
The Company has an ongoing program to redevelop and re-tenant its properties to maintain or enhance its competitive position in the marketplace. The Company is actively pursuing redevelopment opportunities within its operating portfolio which it believes will increase the overall value by bringing in new tenants and improving the assets’assets’ value. The Company has identified three categories of redevelopment, (i) large scale redevelopment, which involves demolishing and building new square footage, (ii) value creation redevelopment, which includes the subdivision of large anchor spaces into multiple tenant layouts, and (iii) creation of out-parcels and pads which are located in the front of the shopping center properties. The Company anticipates its capital commitment toward these redevelopment projects and re-tenanting efforts duringfor the remainder of 20172022 will be approximately $75.0$125.0 million to $100.0$175.0 million. The funding of these capital requirements will be provided by proceeds from property dispositions, net cash flow fromprovided by operating activities andand/or availability under the Company’s revolving line of credit.Credit Facility.
Real Estate UnderFinancing Activities Development-
The Company is engaged in select real estate development projects, which are expected to be held as long-term investments. As of September 30, 2017, the Company had in progress a total of five active real estate development projects and two additional projects held for future development. The Company anticipates the total remaining costs to complete these projects to be approximately $225.0 million to $275.0 million. The Company anticipates its capital commitment toward these development projects during the remainder of 2017 will be approximately $75.0 million to $100.0 million. The funding of these capital requirements will be provided byNet cash flow from operating activities and availability under the Company’s revolving line of credit.
Financing Activities
Cash flows used for financing activities was $123.3 million for the ninethree months ended September 30, 2017, were $201.4 million,March 31, 2022, as compared to $711.8$103.8 million for the comparable period in 2016. This change2021.
Financing activities during the three months ended March 31, 2022 primarily consisted of:
Cash inflows:
● | $600.0 million in proceeds from issuance of 3.20% senior unsecured notes due in 2032; and |
● | $19.0 million in proceeds from mortgage loan financing. |
Cash outflows:
● | $500.0 million for repayment of its 3.40% senior unsecured notes; |
● | $123.8 million of dividends paid; |
● | $88.3 million in principal payment on debt, including normal amortization of rental property debt; |
● | $13.4 million in shares repurchased for employee tax withholding on equity awards; |
● | $10.2 million in financing origination costs, in connection with the Company’s issuance of $600.0 million 3.20% senior unsecured notes; |
● | $6.5 million for payment of early extinguishment of debt charges; and |
● | $4.7 million in redemption/distribution of noncontrolling interests. |
Financing activities during the three months ended March 31, 2021 primarily from (i) an increase in proceeds from issuance of unsecured notes of $600.0 million, (ii) a decrease in repayments under unsecured term loan/notes of $400.9 million, (iii) an increase in proceeds from mortgage loan financings of $206.0 million and (iv) a decrease in payment of early extinguishment of debt charges of $43.2 million, partially offset by (v) a decrease in proceeds from unsecured revolving Credit Facility, net of $226.5 million, (vi) an increase in redemption of preferred stock of $225.0 million, (vii) an increase in conversion/distribution of noncontrolling interests of $92.2 million, (viii) a decrease in proceeds from issuance of stock, net of $88.1 million, (ix) an increase in principal payments on debt of $73.1 million and (x) an increase in dividends paid of $27.1 million.consisted of:
Cash outflows:
● | $80.0 million of dividends paid; |
● | $14.9 million in principal payment on debt, including normal amortization of rental property debt; and |
● | $9.1 million in shares repurchased for employee tax withholding on equity awards. |
The Company continually evaluates its debt maturities, and, based on management’smanagement’s current assessment, believes it has viable financing and refinancing alternatives that will not materially adversely impact its expected financial results. The Company continues to pursue borrowing opportunities with large commercial U.S. and global banks, select life insurance companies and certain regional and local banks. The Company has noticed a continuing trend that, although pricing remains dependent on specific deal terms, spreads for non-recourse mortgage financing stabilized, the unsecured debt markets are functioning well and credit spreads are at manageable levels.
Debt maturities for the remainder of 20172022 consist of $12.4of: $333.5 million of consolidated debt which relatesand $101.2 million of unconsolidated joint venture debt, assuming the utilization of extension options where available. The 2022 consolidated debt maturities are anticipated to a non-recourse mortgage that is currentlybe repaid with operating cash flows, borrowings from the Credit Facility and public debt offerings, as deemed appropriate. The 2022 debt maturities on properties in default for which the Company is working withCompany’s unconsolidated joint ventures are anticipated to be repaid through operating cash flows, debt refinancing, unsecured credit facilities, proceeds from sales of the special servicer on a resolution.respective entities and partner capital contributions, as deemed appropriate.
The Company intends to maintain strong debt service coverage and fixed charge coverage ratios as part of its commitment to maintain or improve its investment-gradeunsecured debt ratings. The Company may, from time-to-time,time to time, seek to obtain funds through additional common and preferred equity offerings, unsecured debt financings and/or mortgage/construction loan financings and other capital alternatives.
Since the completion of the Company’sCompany’s IPO in 1991, the Company has utilized the public debt and equity markets as its principal source of capital for its expansion needs. Since the IPO, the Company has completed additional offerings of its public unsecured debt and equity, raising in the aggregate over $13.6$16.8 billion. Proceeds from public capital market activities have been used for the purposes of, among other things, repaying indebtedness, acquiring interests in open-air, grocery anchored shopping centers funding real estate development projects,and mixed-use assets, expanding and improving properties in the portfolio and other investments.
During February 2015,August 2021, the Company filed a shelf registration statement on Form S-3, which is effective for a term of three years, for the future unlimited offerings, from time-to-time,time to time, of debt securities, preferred stock, depositary shares, common stock and common stock warrants. The Company, pursuant to this shelf registration statement may, from time-to-time,time to time, offer for sale its senior unsecured debt securities for any general corporate purposes, including (i) funding specific liquidity requirements in its business, including property acquisitions and development and redevelopment costs and (ii) managing the Company’sCompany’s debt maturities.
Preferred Stock-
During August 2017, the Company issued 9,000,000 Depositary Shares (the "Series L Depositary Shares"), each representing a one-thousandth fractional interest in a share of the Company's 5.125% Series L Cumulative Redeemable Preferred Stock, $1.00 par value per share. Dividends on the Series L Depositary Shares are cumulative and payable quarterly in arrears at the rate of 5.125% per annum based on the $25.00 per share initial offering price, or $1.28125 per annum. The Series L Depositary Shares are redeemable, in whole or part, for cash on or after August 16, 2022, at the option of the Company, at a redemption price of $25.00 per depositary share, plus any accrued and unpaid dividends thereon. The Series L Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The net proceeds received from this offering of $217.6 million were used for general corporate purposes, including the reduction of borrowings outstanding under the Company’s revolving credit facility and the redemption of shares of the Company’s preferred stock.
On August 7, 2017, the Company called for the partial redemption of 9,000,000 of its outstanding depositary shares of the Company’s 6.00% Series I Cumulative Redeemable Preferred Stock, $1.00 par value per share (the "Series L Preferred Stock"), representing 56.25% of the issued and outstanding Series I Preferred Stock. The aggregate redemption amount of $225.0 million plus accumulated and unpaid dividends of $1.9 million, was paid on September 6, 2017. Upon partial redemption, the Company recorded a charge of $7.0 million resulting from the difference between the redemption amount and the carrying amount of the Series I Preferred Stock on the Company’s Condensed Consolidated Balance Sheets in accordance with the FASB’s guidance on Distinguishing Liabilities from Equity. This $7.0 million charge was subtracted from net income/(loss) attributable to the Company to arrive at net income/(loss) available to the Company's common shareholders and used in the calculation of earnings per share for the nine months ended September 30, 2017.
At the Market Continuous Offering ProgramCommon Stock (“ATM program”) –
During February 2015,August 2021, the Company established an ATMat-the-market continuous offering program which is effective for a term of three years, (the “ATM program”) pursuant to which the Company may offer and sell from time-to-time shares of its common stock, par value $0.01 per share, with an aggregate gross sales price of up to $500.0 million through a consortium of banks acting as sales agents. Sales of the shares of common stock may be made, as needed, from time to time in “at the market” offerings as defined in Rule 415 of the Securities Act of 1933, including by means of ordinary brokers’ transactions on the NYSENew York Stock Exchange or otherwise (i) at market prices prevailing at the time of sale, (ii) at prices related to prevailing market prices or (iii) as otherwise agreed to with the applicable sales agent. In addition, the Company may from time to time enter into separate forward sale agreements with one or more banks. The Company did not offer for saleissue any shares of common stock under the ATM program during the ninethree months ended September 30, 2017.March 31, 2022. As of September 30, 2017,March 31, 2022, the Company had $211.9$422.4 million available under this ATM program.
Medium Term Notes (“MTN”) and Senior Notes –
The Company’s supplemental indentures has a share repurchase program, which is scheduled to expire on February 29, 2024. Under this program, the Company may repurchase shares of its common stock, par value $0.01 per share, with an aggregate gross purchase price of up to $300.0 million. The Company did not repurchase any shares under the share repurchase program during the three months ended March 31, 2022. As of March 31, 2022, the Company had $224.9 million available under this share repurchase program.
Senior Notes –
In February 2022, the Company issued $600.0 million of senior unsecured notes, which are scheduled to mature in April 2032 and accrue interest at a rate of 3.20% per annum. Proceeds from this issuance were used for general corporate purposes, including the early redemption of the Company’s $500.0 million 3.40% senior unsecured notes outstanding, which were scheduled to mature in November 2022. As a result of this redemption, the Company incurred a prepayment charge of $6.5 million and $0.7 million in write-off of deferred financing costs during the three months ended March 31, 2022.
The Company’s indenture governing its MTN and senior notes contains the following covenants, all of which the Company is compliant with:
Covenant | Must Be | As of
| |||
Consolidated Indebtedness to Total Assets | < |
| |||
Consolidated Secured Indebtedness to Total Assets | <40% |
| |||
Consolidated Income Available for Debt Service to Maximum Annual Service Charge | >1.50x |
| |||
Unencumbered Total Asset Value to Consolidated Unsecured Indebtedness | >1.50x |
|
For a full description of the various indenture covenants refer to the Indenture dated September 1, 1993; the First Supplemental Indenture dated August 4, 1994; the Second Supplemental Indenture dated April 7, 1995; the Third Supplemental Indenture dated June 2, 2006; the Fourth Supplemental Indenture dated April 26, 2007; the Fifth Supplemental Indenture dated as of September 24, 2009; the Sixth Supplemental Indenture dated as of May 23, 2013; and the Seventh Supplemental Indenture dated as of April 24, 2014, each as filed with the SEC. In connection with the Merger, the Company assumed senior unsecured notes which have covenants that are similar to the Company’s existing debt covenants for its senior unsecured notes. Please refer to the Indenture dated May 1, 1995 filed with Weingarten’s Form S-3 to the Registration Statement, with the Securities and Exchange Commission on May 1, 1995, the First Supplemental Indenture, dated as of August 2, 2006 filed with Weingarten’s Current Report on Form 8-K dated August 2, 2006, and the Second Supplemental Indenture, dated as of October 9, 2012 filed with Weingarten’s Current Report on Form 8-K dated October 9, 2012. See the Exhibits Index to our Annual Report on Form 10-K for the year ended December 31, 20162021 for specific filing information.
During March 2017, the Company issued $400.0 million of Senior Unsecured Notes at an interest rate of 3.80% payable semi-annually in arrears which are scheduled to mature in April 2027. The Company used the net proceeds from the issuance of $395.5 million, after the underwriting discount and related offering costs, for general corporate purposes including to pre-fund near-term debt maturities and to reduce borrowings under the Company’s revolving Credit Facility.
During August 2017, the Company issued $500.0 million of Senior Unsecured Notes at an interest rate of 3.30% payable semi-annually in arrears which are scheduled to mature in February 2025. In addition, the Company issued $350.0 million of Senior Unsecured Notes at an interest rate of 4.45% payable semi-annually in arrears which are scheduled to mature in September 2047. The Company used the aggregate net proceeds from these issuances of $840.0 million, after the underwriting discounts and related offering costs, for general corporate purposes including to pre-fund near-term debt maturities and to reduce borrowings under the Company’s revolving Credit Facility.
On August 1, 2017, the Company made a tender offer to purchase any and all of its $300.0 million 4.30% MTN notes outstanding. As a result, the Company accepted the tender of $211.0 million of its $300.0 million outstanding MTN notes on August 10, 2017. In connection with this tender offer, the Company recorded a tender premium of $1.8 million resulting from the partial repayment of this note. Subsequently, in October 2017, the Company announced its intention to redeem the remaining $89.0 million outstanding on November 1, 2017.
Credit Facility -–
In February 2017,2020, the Company closed onobtained a $2.25$2.0 billion unsecured revolving Credit Facility with a group of banks, whichbanks. The Credit Facility is scheduled to expire in March 2021,2024, with two additional six monthsix-month options to extend the maturity date, at the Company’s discretion, to March 2022. This2025. The Credit Facility is a green credit facility tied to sustainability metric targets, as described in the agreement. The Company achieved such targets, which effectively reduced the rate on the Credit Facility by one basis point. The Credit Facility, which accrues interest at a rate of LIBOR plus 87.576.5 basis points (2.10%(1.22% as of September 30, 2017)March 31, 2022), can be increased to $2.75 billion through an accordion feature. The Credit Facility replacedPursuant to the Company’s $1.75 billion unsecured revolving credit facility that was scheduled to mature in March 2018. In addition,terms of the Credit Facility, includes a $500.0 million sub-limit which provides the companyCompany, among other things, is subject to covenants requiring the opportunity to borrow in alternative currencies including Canadian Dollars, British Pounds Sterling, Japanese Yen or Euros.maintenance of (i) maximum indebtedness ratios and (ii) minimum interest and fixed charge coverage ratios. As of September 30, 2017,March 31, 2022, the Credit Facility had ano outstanding balance of $25.0 million outstanding and $0.5 million appropriatedappropriations for letters of credit.credit of $1.9 million.
Pursuant to the terms of the Credit Facility, the Company, among other things, is subject covenants requiring theto maintenance of (i) maximum leverage ratios on both unsecured and secured debt and (ii) minimum interest and fixed coverage ratios.various covenants. The Company is currently in compliance with these covenants. The financial covenants for the Credit Facility are as follows:
Covenant | Must Be | As of | |||
Total Indebtedness to Gross Asset Value (“GAV”) | <60% |
| |||
Total Priority Indebtedness to GAV | <35% |
| |||
Unencumbered Asset Net Operating Income to Total Unsecured Interest Expense | >1.75x |
| |||
Fixed Charge Total Adjusted EBITDA to Total Debt Service | >1.50x |
|
For a full description of the Credit Facility’sFacility’s covenants, refer to the Amended and Restated Credit Agreement dated as of February 1, 2017,27, 2020, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 30, 2017.
Term Loan –
The Company had a $650.0 million unsecured term loan (“Term Loan’) which was scheduled to mature in January 2017, with three one-year extension options at the Company’s discretion. The Term Loan accrued interest at LIBOR plus 95 basis points. During November 2016, the Company repaid $400.0 million of borrowings under the Company’s Term Loan and in January 2017, the Company repaid the remaining $250.0 million balance and terminated the agreement.February 28, 2020.
Mortgages Payable –
During the ninethree months ended September 30, 2017,March 31, 2022, the Company (i) consolidated $212.2issued $19.0 million of individual non-recoursein mortgage debt (including a fair market value adjustment of $6.2 million) relating to a consolidated joint venture operating property which the Company now controls,and (ii) paid off $684.6repaid $85.9 million of maturing mortgage debt (including fair market value adjustmentsadjustment of $5.7$0.2 million) that encumbered 25four operating properties and (iii) obtained a $206.0 million non-recourse mortgage relating to one operating property.properties.
In addition to the public equity and debt markets as capital sources, the Company may, from time-to-time,time to time, obtain mortgage financing on selected properties and construction loans to partially fund the capital needs of its real estate developmentre-development and re-tenanting projects. As of September 30, 2017,March 31, 2022, the Company had over 380480 unencumbered property interests in its portfolio.
Other –
In connection with the construction of its development and redevelopment projects and related infrastructure, certain public agencies require posting of performance and surety bonds to guarantee that the Company’s obligations are satisfied. These bonds expire upon the completion of the improvements and infrastructure. As of March 31, 2022, there were $12.3 million in performance and surety bonds outstanding.
In connection with the Merger, the Company now provides a guaranty for the payment of any debt service shortfalls on the Sheridan Redevelopment Agency issued Series A bonds which are tax increment revenue bonds issued in connection with a development project in Sheridan, Colorado. These tax increment revenue bonds have a balance of $49.7 million outstanding at March 31, 2022. The bonds are to be repaid with incremental sales and property taxes and a public improvement fee ("PIF") to be assessed on current and future retail sales and, to the extent necessary, any amounts we may have to provide under a guaranty. The revenue generated from incremental sales, property taxes and PIF have satisfied the debt service requirements to date. The incremental taxes and PIF are to remain intact until the earlier of the payment of the bond liability in full or 2040.
COVID-19 –
As the COVID-19 pandemic continues to evolve, uncertainty remains regarding the long-term economic impact it will have. As a result, the Company has focused on creating a strong liquidity position, including, but not limited to, maintaining availability under its Credit Facility, cash and cash equivalents on hand and having access to unencumbered property interests.
The Company continues to monitor the impact of COVID-19 on the Company’s business, tenants and industry as a whole. The magnitude and duration of the COVID-19 pandemic and its impact on the Company’s operations and liquidity remains uncertain as this pandemic continues to evolve globally and within the United States. However, if the COVID-19 pandemic continues, such impacts could grow, become material and materially disrupt the Company’s business operations and materially adversely affect the Company’s liquidity.
Dividends–
In connection with its intention to continue to qualify as a REIT for U.S. federal income tax purposes, the Company expects to continue paying regular dividends to its stockholders. These dividends will be paid from operating cash flows. The Company’sCompany’s Board of Directors will continue to evaluate the Company’s dividend policy on a quarterly basis as the Board of Directors monitorsthey monitor sources of capital and evaluatesevaluate the impact of the economy and capital markets availability on operating fundamentals. Since cash used to pay dividends reduces amounts available for capital investment, the Company generally intends to maintain a conservative dividend payout ratio reservingthat reserves such amounts as it considers necessary for the expansion and renovation of shopping centers in its portfolio, debt reduction, the acquisition of interests in new properties and other investments as suitable opportunities arise and such other factors as the Board of Directors considers appropriate. Cash dividends paid for common and preferred issuances of stock for the ninethree months ended September 30, 2017March 31, 2022 and 20162021 were $381.2$123.8 million and $354.1$80.0 million, respectively.
Although the Company receives substantially all of its rental payments on a monthly basis, it generally intends to continue paying dividends quarterly. Amounts accumulated in advance of each quarterly distribution will be invested by the Company in short-term money market or other suitable instruments. The Company’s objective is to establish a dividend level that maintains compliance with the Company’s REIT taxable income distribution requirements. On July 25, 2017,February 1, 2022, the Company’s Board of Directors declared a quarterly dividend with respect to the Company’s classes of cumulative redeemable preferred shares (Classes L and M) which were paid on April 15, 2022 to shareholders of record on April 1, 2022. In addition, the Company’s Board of Directors declared a quarterly cash dividend of $0.27$0.19 per common share, payable to shareholders of record on October 4, 2017,March 10, 2022, which was paid on October 16, 2017. Additionally, on OctoberMarch 24, 2017,2022.
On April 26, 2022, the Company’s Board of Directors declared an increased quarterly cash dividend of $0.28 per common share, an annualized increase of 3.7%, payable to shareholders of record on January 2, 2018, which is scheduled to be paid on January 16, 2018.
The Board of Directors also declared quarterly dividends with respect to the Company’s various seriesclasses of cumulative redeemable preferred shares (Series I, Series J, Series K(Classes L and Series L). All dividends on the preferred sharesM), which are scheduled to be paid on January 16, 2018,July 15, 2022, to shareholders of record on January 2, 2018.July 1, 2022. Additionally, on April 26, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per common share, representing a 5.3% increase from the prior quarterly dividend of $0.19, payable on June 23, 2022 to shareholders of record on June 9, 2022.
Hurricane Impact -
The impact of Hurricanes Harvey, which hit Texas on August 25, 2017, and Irma, which hit Florida on September 10, 2017, resulted in minimal damage to the Company’s properties located in Texas and Florida.
With respect to Hurricane Maria, which hit the island of Puerto Rico on September 20, 2017, the Company is currently assessing damages at its seven operating properties located throughout Puerto Rico, aggregating 2.2 million square feet of GLA. Two of these operating properties, located in the southern region of the island were less impacted and most tenants have resumed operations, while the remaining five operating properties in the northern region sustained varying amounts of damage. Initial repairs are in progress, however, a final assessment and recovery plan will require additional time. The Company maintains a comprehensive property insurance policy on these properties with total coverage of up to $62.0 million, as well as business interruption insurance with coverage up to $39.3 million in the aggregate, subject to a collective deductible of $1.2 million. The Company anticipates that all damages and any loss of operations sustained will be covered under these existing policies. As further detailed information becomes available, the Company expects to recognize a charge, which it believes will not have a material effect on the Company’s financial position and/or results of operations. This charge will result from the write-down of the undepreciated portion of the property that has been permanently damaged, which would be less than the replacement costs and offset by insurance proceeds received by the Company.
Other -
The Company is subject to taxes on its activities in Canada, Puerto Rico and Mexico. In general, under local country law applicable to the structures the Company has in place and applicable treaties, the repatriation of cash to the Company from its subsidiaries and joint ventures in Canada, Puerto Rico and Mexico generally is not subject to withholding tax. The Company is subject to and also includes in its tax provision non-U.S. income taxes on certain investments located in jurisdictions outside the U.S. These investments are held by the Company at the REIT level and not in the Company’s taxable REIT subsidiary. Accordingly, the Company does not expect a U.S. income tax impact associated with the repatriation of undistributed earnings from the Company’s foreign subsidiaries.
Funds FromFrom Operations
Funds From Operations (“FFO”) is a supplemental non-GAAP financial measure utilized to evaluate the operating performance of real estate companies. The National Association of Real Estate Investment Trusts (“NAREIT”)NAREIT defines FFO as net income/(loss) available to the Company’s common shareholders computed in accordance with generally accepted accounting principles in the United States (“GAAP”), excluding (i) depreciation and amortization related to real estate, (ii) gains or losses from sales of operatingcertain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and changeinvestments in control of interests, plus (ii) depreciation and amortization of operating properties and (iii)entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and in substance real estate equity investments and (iv)(v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis. The Company also made an election to exclude from its calculation of FFO (i) gains and losses on the sale of assets and impairments of assets incidental to its main business and (ii) mark-to-market changes in the value of its equity securities. As such, the Company does not include gains/impairments on land parcels, gains/losses (realized or unrealized) from marketable securities, allowance for credit losses on mortgage receivables or gains/impairments on preferred equity participations in NAREIT defined FFO.
The Company presents FFO available to the Company’s common shareholders as it considers it an important supplemental measure of our operating performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO available to the Company’s common shareholders when reporting results. Comparison of our presentation of FFO available to the Company’s common shareholders to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.
The Company also presents FFO available to the Company’s common shareholders as adjusted as an additional supplemental measure as it believes it is more reflective of its core operating performance and provides investors and analysts an additional measure to compare the Company’s performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. FFO available to the Company’s common shareholders as adjusted is generally calculated by the Company as FFO available to the Company’s common shareholders excluding certain transactional income and expenses and non-operating impairments which management believes are not reflective of the results within the Company’s operating real estate portfolio.
FFO is a supplemental non-GAAP financial measure of real estate companies’companies’ operating performances, which does not represent cash generated from operating activities in accordance with GAAP and therefore, should not be considered an alternative for net income or cash flows from operations as a measure of liquidity. Our method of calculating FFO available to the Company’s common shareholders and FFO available to the Company’s common shareholders as adjusted may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The Company’sCompany’s reconciliation of netNet income available to the Company’s common shareholders to FFO available to the Company’s common shareholders and FFO available tois reflected in the Company’s common shareholders as adjusted for the three and nine months ended September 30, 2017 and 2016, is as followstable below (in thousands, except per share data):.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income/(loss) available to the Company’s common shareholders | $ | 101,957 | $ | (55,100 | ) | $ | 298,996 | $ | 265,912 | |||||||
Gain on disposition of operating property | (40,533 | ) | (9,773 | ) | (61,394 | ) | (81,874 | ) | ||||||||
Gain on disposition of joint venture operating properties and change in control of interests | - | (9,852 | ) | (72,185 | ) | (202,939 | ) | |||||||||
Depreciation and amortization - real estate related | 87,262 | 94,814 | 272,232 | 257,839 | ||||||||||||
Depreciation and amortization - real estate joint ventures | 9,562 | 10,719 | 29,413 | 35,621 | ||||||||||||
Impairment of operating properties | 8,651 | 16,857 | 32,294 | 77,803 | ||||||||||||
Provision/(benefit) for income taxes (2) | - | 29,005 | (39 | ) | 40,797 | |||||||||||
Noncontrolling interests (2) | (1,613 | ) | (264 | ) | (3,895 | ) | (427 | ) | ||||||||
FFO available to the Company’s common shareholders | 165,286 | 76,406 | 495,422 | 392,732 | ||||||||||||
Transactional (income)/expense: | ||||||||||||||||
Profit participation from other real estate investments | - | (3 | ) | (34,573 | ) | (10,053 | ) | |||||||||
Gain from land sales | - | (1,086 | ) | (1,060 | ) | (2,352 | ) | |||||||||
Acquisition and demolition costs | 633 | 2,347 | 1,097 | 3,890 | ||||||||||||
Impairment of other investments | 1,635 | - | 11,343 | 1,058 | ||||||||||||
Early extinguishment of debt charges | 1,753 | 45,674 | 1,753 | 45,674 | ||||||||||||
Gain on liquidation of a foreign entity | (14,822 | ) | - | (14,822 | ) | - | ||||||||||
Preferred stock redemption charge | 7,014 | - | 7,014 | - | ||||||||||||
Provision for income taxes (3) | - | 36,524 | 8 | 38,176 | ||||||||||||
Noncontrolling interests (3) | - | 285 | 11,338 | 285 | ||||||||||||
Other, net | (160 | ) | 461 | 324 | (424 | ) | ||||||||||
Total transactional (income)/expense, net | (3,947 | ) | 84,202 | (17,578 | ) | 76,254 | ||||||||||
FFO available to the Company’s common shareholders as adjusted | $ | 161,339 | $ | 160,608 | $ | 477,844 | $ | 468,986 | ||||||||
Weighted average shares outstanding for FFO calculations: | ||||||||||||||||
Basic | 423,688 | 420,073 | 423,574 | 416,829 | ||||||||||||
Units | 973 | - | 854 | 821 | ||||||||||||
Dilutive effect of equity awards | 513 | 1,442 | 556 | 1,405 | ||||||||||||
Diluted | 425,174 | (1) | 421,515 | (1) | 424,984 | (1) | 419,055 | (1) | ||||||||
FFO per common share – basic | $ | 0.39 | $ | 0.18 | $ | 1.17 | $ | 0.94 | ||||||||
FFO per common share – diluted | $ | 0.39 | (1) | $ | 0.18 | (1) | $ | 1.17 | (1) | $ | 0.94 | (1) | ||||
FFO as adjusted per common share – basic | $ | 0.38 | $ | 0.38 | $ | 1.13 | $ | 1.13 | ||||||||
FFO as adjusted per common share – diluted | $ | 0.38 | (1) | $ | 0.38 | (1) | $ | 1.13 | (1) | $ | 1.12 | (1) | ||||
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Net income available to the Company’s common shareholders | $ | 230,948 | $ | 131,588 | ||||
Gain on sale of properties | (4,193 | ) | (10,005 | ) | ||||
Gain on sale of joint venture properties | (2,986 | ) | (5,283 | ) | ||||
Depreciation and amortization - real estate related | 129,461 | 74,113 | ||||||
Depreciation and amortization - real estate joint ventures | 16,885 | 10,007 | ||||||
Impairment charges | 700 | 1,068 | ||||||
Profit participation from other investments, net | (3,663 | ) | 195 | |||||
Gain on marketable securities, net | (121,764 | ) | (61,085 | ) | ||||
(Benefit)/provision for income taxes (1) | (11 | ) | 1,046 | |||||
Noncontrolling interests (1) | (4,730 | ) | 2,626 | |||||
FFO available to the Company’s common shareholders (3) | $ | 240,647 | $ | 144,270 | ||||
Weighted average shares outstanding for FFO calculations: | ||||||||
Basic | 614,767 | 430,524 | ||||||
Units | 2,546 | 654 | ||||||
Dilutive effect of equity awards | 1,874 | 1,606 | ||||||
Diluted (2) | 619,187 | 432,784 | ||||||
FFO per common share – basic | $ | 0.39 | $ | 0.34 | ||||
FFO per common share – diluted (2) | $ | 0.39 | $ | 0.33 | ||||
(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, which would have a dilutive effect on FFO available to the Company’s common shareholders. FFO available to the Company’s common shareholders would be increased by |
|
|
(3) |
|
Same Property Net Operating Income(“Same (“Same property NOI”)
SameSame property NOI is a supplemental non-GAAP financial measure of real estate companies’ operating performance and should not be considered an alternative to net income in accordance with GAAP or cash flows from operations as a measure of liquidity. The Company considers Same property NOI as an important operating performance measure because it is frequently used by securities analysts and investors to measure only the net operating income of properties that have been owned by the Company for the entire current and prior year reporting periods including those properties under redevelopment.periods. It excludes properties under redevelopment, development and pending stabilization; properties are deemed stabilized at the earlier of (i) reaching 90% leased or (ii) one year following a project’s inclusion in operating real estate. Same property NOI assists in eliminating disparities in net income due to the development, acquisition or disposition of properties during the particular period presented, and thus provides a more consistent performance measure for the comparison of the Company's properties.
the adjustment relating to Weingarten Same property NOI for the three months ended March 31, 2021, included in the table below, represents the Same property NOI from Weingarten properties prior to the Merger, which is not included in the Company's Net income available to the Company’s common shareholders for the corresponding period.
Same property NOI is calculated using revenues from rental properties (excluding straight-line rent adjustments, lease termination fees, TIFs and amortization of above/below market rents) less charges for bad debt, operating and maintenance expense, real estate taxes and rent expense plus the Company’s proportionate share of Same property NOI from unconsolidated real estate joint ventures, calculated on the same basis. The Company’s method of calculating Same property NOI available to the Company’s common shareholders may differ from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The following is a reconciliation of Netnet income available to the Company’s common shareholders to Same property NOI (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2022 | 2021 | |||||||||||||||||||
Net income/(loss) available to the Company’s common shareholders | $ | 101,957 | $ | (55,100 | ) | $ | 298,996 | $ | 265,912 | |||||||||||||||
Net income available to the Company’s common shareholders | $ | 230,948 | $ | 131,588 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Management and other fee income | (3,926 | ) | (5,790 | ) | (12,456 | ) | (14,274 | ) | (4,595 | ) | (3,437 | ) | ||||||||||||
General and administrative | 28,588 | 27,983 | 86,395 | 89,840 | 29,948 | 24,478 | ||||||||||||||||||
Impairment charges | 2,944 | 10,073 | 34,280 | 68,126 | 272 | - | ||||||||||||||||||
Depreciation and amortization | 88,443 | 96,827 | 275,787 | 264,436 | 130,294 | 74,876 | ||||||||||||||||||
Gain on sale of properties | (4,193 | ) | (10,005 | ) | ||||||||||||||||||||
Interest and other expense, net | 47,910 | 87,868 | 137,770 | 191,980 | 58,209 | 44,359 | ||||||||||||||||||
Gain on marketable securities, net | (121,764 | ) | (61,085 | ) | ||||||||||||||||||||
(Benefit)/provision for income taxes, net | (697 | ) | 61,426 | (2,224 | ) | 73,292 | (153 | ) | 1,308 | |||||||||||||||
Gain on change in control of interests | - | (6,584 | ) | (71,160 | ) | (53,096 | ) | |||||||||||||||||
Equity in income of other real estate investments, net | (19,909 | ) | (3,774 | ) | (61,952 | ) | (22,532 | ) | ||||||||||||||||
Gain on sale of operating properties, net of tax | (40,533 | ) | (9,771 | ) | (62,102 | ) | (75,935 | ) | ||||||||||||||||
Net income attributable to noncontrolling interests | 1,186 | 1,997 | 13,926 | 4,875 | ||||||||||||||||||||
Preferred stock redemption charge | 7,014 | - | 7,014 | - | ||||||||||||||||||||
Preferred stock dividends | 12,059 | 11,555 | 35,169 | 34,665 | ||||||||||||||||||||
Equity in income of other investments, net | (5,373 | ) | (3,787 | ) | ||||||||||||||||||||
Net (loss)/income attributable to noncontrolling interests | (1,343 | ) | 3,483 | |||||||||||||||||||||
Preferred dividends | 6,354 | 6,354 | ||||||||||||||||||||||
Weingarten same property NOI (1) | - | 91,950 | ||||||||||||||||||||||
Non same property net operating income | (13,166 | ) | (12,834 | ) | (45,577 | ) | (74,466 | ) | (17,419 | ) | (17,422 | ) | ||||||||||||
Non-operational expense/(income) from joint ventures, net | 24,580 | 25,531 | 63,611 | (67,037 | ) | |||||||||||||||||||
Same property NOI | $ | 236,450 | $ | 229,407 | $ | 697,477 | $ | 685,786 | ||||||||||||||||
Non-operational expense from joint ventures, net | 19,684 | 11,963 | ||||||||||||||||||||||
Same property NOI | $ | 320,869 | $ | 294,623 | ||||||||||||||||||||
(1) | Amounts for the three months ended March 31, 2021, represent the Same property NOIs from Weingarten properties, not included in the Company's Net income available to the Company's common shareholders for the same period. |
SameSame property NOI increased by $7.0$26.2 million or 3.1%8.9% for the three months ended September 30, 2017,March 31, 2022, as compared to the corresponding period in 2016.2021. This increase is primarily the result of (i) an increase in net operating income of $3.2$21.6 million primarily related to lease-up and rent commencements in the portfolio, (ii) an increase in other property income of $3.3 millionleasing activity and (iii) a decrease of $0.5 million of credit losses.
Same property NOI increased by $11.7 million or 1.7% for the nine months ended September 30, 2017,in tenant rent abatements and vacancies as compared to the corresponding period in 2016. This increase is primarily thea result of (i) an increase of $8.2 million related to lease-upthe COVID-19 pandemic and rent commencements in the portfolio, (ii) a decrease of $2.8 million ofin credit losses andof $5.0 million due to increased collections, partially offset by (iii) an increase in other property incomenon-recoverable operating expenses of $0.7$0.4 million.
Effects of Inflation
Many of the Company's long-term leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive payment of additional rent calculated as a percentage of tenants' gross sales above pre-determined thresholds, which generally increase as prices rise, and/or as a result of escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses often include increases based upon changes in the consumer price index or similar inflation indices. In addition, many of the Company's leases are for terms of less than 10 years, which permits the Company to seek to increase rents to market rates upon renewal. To assist in mitigating the Company's exposure to increases in costs and operating expenses, including common area maintenance costs, real estate taxes and insurance, resulting from inflation the Company’s leases include provisions that either (i) require the tenant to pay an allocable share of these operating expenses or (ii) contain fixed contractual amounts, which include escalation clauses, to reimburse these operating expenses.
Leasing Activity
During the nine three months ended September 30, 2017,March 31, 2022, the Company executed 918532 leases totaling 7.1over 4.3 million square feet in the Company’s consolidated operating portfolio comprised of 330147 new leases and 588385 renewals and options. The leasing costs associated with these new leases are estimated to aggregate $58.0$37.3 million or $28.74$51.30 per square foot. These costs include $45.1$30.7 million of tenant improvements and $12.9$6.6 million of external leasing commissions. The average rent per square foot onfor (i) new leases was $18.53$22.62 and on(ii) renewals and options was $15.70.$15.92.
Tenant Lease Expirations
At March 31, 2022, the Company has a total of 8,226 leases in its consolidated operating portfolio. The following table sets forth the aggregate lease expirations for each of the next ten years, assuming no renewal options are exercised. For purposes of the table, the Total Annual Base Rent Expiring represents annualized rental revenue, excluding the impact of straight-line rent, for each lease that expires during the respective year. Amounts in thousands, except for number of lease data and percentages:data:
Year Ending December 31, | Number of Leases Expiring | Square Feet Expiring | Total Annual Base Rent Expiring | % of Gross Annual Rent | Number of Leases Expiring | Square Feet Expiring | Total Annual Base Rent Expiring | % of Gross Annual Rent | |||||||||||||||||||||||||
| (1) | 161 | 604 | $ | 12,972 | 1.5 | % | 205 | 492 | $ | 12,164 | 1.0 | % | |||||||||||||||||||||
2017 | 131 | 525 | $ | 10,830 | 1.3 | % | |||||||||||||||||||||||||||
2018 | 740 | 3,914 | $ | 67,353 | 7.8 | % | |||||||||||||||||||||||||||
2019 | 896 | 6,561 | $ | 99,195 | 11.5 | % | |||||||||||||||||||||||||||
2020 | 880 | 6,174 | $ | 97,607 | 11.3 | % | |||||||||||||||||||||||||||
2021 | 807 | 6,643 | $ | 98,950 | 11.4 | % | |||||||||||||||||||||||||||
2022 | 821 | 6,993 | $ | 106,062 | 12.3 | % | 632 | 2,617 | $ | 54,655 | 4.6 | % | |||||||||||||||||||||
2023 | 424 | 5,459 | $ | 76,807 | 8.9 | % | 1,223 | 7,631 | $ | 140,582 | 11.7 | % | |||||||||||||||||||||
2024 | 251 | 2,996 | $ | 48,414 | 5.6 | % | 1,193 | 7,841 | $ | 148,481 | 12.4 | % | |||||||||||||||||||||
2025 | 227 | 2,120 | $ | 35,463 | 4.1 | % | 1,078 | 7,970 | $ | 145,940 | 12.2 | % | |||||||||||||||||||||
2026 | 235 | 3,853 | $ | 51,910 | 6.0 | % | 1,036 | 9,368 | $ | 153,071 | 12.7 | % | |||||||||||||||||||||
2027 | 244 | 3,579 | $ | 54,942 | 6.4 | % | 840 | 8,566 | $ | 141,375 | 11.8 | % | |||||||||||||||||||||
2028 | 471 | 5,387 | $ | 95,382 | 7.9 | % | |||||||||||||||||||||||||||
2029 | 386 | 3,533 | $ | 64,759 | 5.4 | % | |||||||||||||||||||||||||||
2030 | 300 | 2,473 | $ | 54,829 | 4.6 | % | |||||||||||||||||||||||||||
2031 | 346 | 2,552 | $ | 55,965 | 4.7 | % | |||||||||||||||||||||||||||
2032 | 274 | 2,144 | $ | 40,630 | 3.4 | % | |||||||||||||||||||||||||||
(1) | Leases currently under |
ItemItem 3. Quantitative and Qualitative Disclosures About Market RiskRisk.
The Company’sCompany’s primary market risk exposures areexposure is interest rate riskrisk. The Company periodically evaluates its exposure to short-term interest rates and foreign currency exchangewill, from time-to-time, enter into interest rate risk.protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate debt. The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes. The following table presents the Company’s aggregate fixed rate and variable rate debt obligations outstanding, including fair market value adjustments and unamortized deferred financing costs, as of September 30, 2017,March 31, 2022, with corresponding weighted-average interest rates sorted by maturity date. The table does not include extension options where available. Amounts areavailable (amounts in millions.millions).
2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | Fair Value | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | $ | 12.4 | $ | 73.7 | $ | 2.4 | $ | 101.0 | $ | 157.4 | $ | 403.9 | $ | 750.8 | $ | 752.8 | $ | 29.5 | $ | 55.5 | $ | 5.5 | $ | 54.4 | $ | - | $ | 214.8 | $ | 359.7 | $ | 343.2 | ||||||||||||||||||||||||||||||||
Average Interest Rate | 9.41 | % | 4.99 | % | 5.29 | % | 5.35 | % | 5.39 | % | 4.29 | % | 4.81 | % | 3.95 | % | 3.95 | % | 6.74 | % | 3.50 | % | - | 4.28 | % | 4.12 | % | |||||||||||||||||||||||||||||||||||||
Variable Rate | $ | - | $ | - | $ | 100.0 | $ | - | $ | - | $ | - | $ | 100.0 | $ | 99.4 | $ | - | $ | - | $ | - | $ | 18.9 | $ | - | $ | - | $ | 18.9 | $ | 18.5 | ||||||||||||||||||||||||||||||||
Average Interest Rate | - | - | 2.60 | % | - | - | - | 2.60 | % | - | - | - | 1.49 | % | - | - | 1.49 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Unsecured Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | $ | - | $ | 89.0 | $ | 299.4 | $ | - | $ | 497.4 | $ | 3,796.4 | $ | 4,682.2 | $ | 4,658.6 | $ | 304.0 | $ | 657.8 | $ | 660.0 | $ | 756.6 | $ | 787.9 | $ | 3,944.5 | $ | 7,110.8 | $ | 6,875.7 | ||||||||||||||||||||||||||||||||
Average Interest Rate | - | 4.30 | % | 6.88 | % | - | 3.20 | % | 3.52 | % | 3.72 | % | 3.38 | 3.30 | % | 3.37 | % | 3.48 | % | 3.06 | % | 3.35 | % | 3.33 | % | |||||||||||||||||||||||||||||||||||||||
Variable Rate | $ | - | $ | - | $ | - | $ | - | $ | 18.2 | $ | - | $ | 18.2 | $ | 18.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Interest Rate | - | - | - | - | 2.10 | % | - | 2.10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Based on the Company’sCompany’s variable-rate debt balances, interest expense would have increased by $0.9$0.1 million for the ninethree months ended September 30, 2017March 31, 2022 if short-term interest rates were 1%1.0% higher.
The following table presents the Company’s foreign investments in their respective local currencies and the U.S. dollar equivalents:
Foreign Investment (in millions) | ||||||||
Country | Local Currency | U.S. Dollars | ||||||
Mexican real estate investments | 53.5 | $ | 4.8 | |||||
Canadian real estate investments | 19.1 | $ | 15.4 | |||||
The Company has not, and does not plan to, enter into any derivative financial instruments for trading or speculative purposes.
Currency fluctuations between local currency and the U.S. dollar, for investments for which the Company has determined that the local currency is the functional currency, for the period in which the Company held its investment result in a cumulative translation adjustment (“CTA”). This CTA is recorded as a component of Accumulated other comprehensive income (“AOCI”) on the Company’s Condensed Consolidated Balance Sheets. The CTA amounts are subject to future changes resulting from ongoing fluctuations in the respective foreign currency exchange rates. Changes in exchange rates are impacted by many factors that cannot be forecasted with reliable accuracy. During the nine months ended September 30, 2017, the Company substantially liquidated its investments in Canada and as such, recognized a net cumulative foreign currency translation gain of $10.0 million. As of a result of the substantial liquidation of the Company’s foreign investments, any future currency changes, which could have a favorable or unfavorable impact, will be recognized as earnings in Other income/(expense), net in the Company’s Condensed Consolidated Statements of Operations.
Item 4.Controls and ProceduresProcedures.
The Company’sCompany’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.
There have not been any changes in the Company’sCompany’s internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
OTHER INFORMATION
Item 1.Legal ProceedingsProceedings.
The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2021.
The Company is not presently involved in any litigation nor, to its knowledge, is any litigation threatened against the Company or its subsidiaries that, in management's opinion, would result in any material adverse effect on the Company's ownership, management or operation of its properties taken as a whole, or which is not covered by the Company's liability insurance.
On January 28, 2013, the Company received a subpoena from the Enforcement Division of the SEC in connection with an investigation, In the Matter of Wal-Mart Stores, Inc. (FW-3678), that the SEC Staff is currently conducting with respect to possible violations of the Foreign Corrupt Practices Act. The Company has cooperated, and will continue to cooperate, with the SEC and the U.S. Department of Justice (“DOJ”), which is conducting a parallel investigation. At this point, we are unable to predict the duration, scope or result of the SEC or DOJ investigations.
There are no material changes fromto our risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016. 2021.
Item 2. Unregistered Sales of Equity Securities and Use of ProceedsProceeds.
Issuer Purchases of Equity Securities -
During the ninethree months ended September 30, 2017,March 31, 2022, the Company repurchased 229,436555,797 shares for an aggregate purchase price of $13.4 million (weighted average price of $24.16 per share) in connection with common shares surrendered or deemed surrendered to the Company to satisfy statutory minimum tax withholding obligations in connection with equity-based compensation plans.
The Company has a share repurchase program, which is scheduled to expire on February 29, 2024. Under this program, the vestingCompany may repurchase shares of restrictedits common stock, awardspar value $0.01 per share, with an aggregate gross purchase price of up to $300.0 million. The Company did not repurchase any shares under the Company’s equity-based compensation plans. Theshare repurchase program during the three months ended March 31, 2022. As of March 31, 2022, the Company expended approximately $5.6had $224.9 million toavailable under this share repurchase these shares.program.
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | ||||||||||||
January 1, 2017 – January 31, 2017 | 12,364 | $ | 25.34 | - | $ | - | ||||||||||
February 1, 2017 - February 28, 2017 | 186,397 | $ | 25.04 | - | - | |||||||||||
March 1, 2017 – March 31, 2017 | 452 | $ | 23.38 | - | - | |||||||||||
April 1, 2017 – April 30, 2017 | - | $ | - | - | - | |||||||||||
May 1, 2017 – May 31, 2017 | 15,625 | $ | 18.90 | - | - | |||||||||||
June 1, 2017 – June 30, 2017 | 1,544 | $ | 17.56 | - | - | |||||||||||
July 1, 2017 – July 31, 2017 | 1,824 | $ | 19.51 | - | - | |||||||||||
August 1, 2017 – August 31, 2017 | 10,314 | $ | 20.32 | - | - | |||||||||||
September 1, 2017 – September 30, 2017 | 916 | $ | 19.62 | - | - | |||||||||||
Total | 229,436 | $ | 24.31 | - | $ | - | ||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | ||||||||||||
January 1, 2022 – January 31, 2022 | 3,157 | $ | 24.68 | - | $ | 224.9 | ||||||||||
February 1, 2022 – February 28, 2022 | 552,640 | 24.16 | - | $ | 224.9 | |||||||||||
March 1, 2022 – March 31, 2022 | - | - | - | $ | 224.9 | |||||||||||
Total | 555,797 | $ | 24.16 | - | ||||||||||||
Item 3.Defaults Upon Senior SecuritiesSecurities.
None.None.
Item 4.Mine Safety DisclosuresDisclosures.
NotNot applicable.
None.
None.
Exhibits –
4.1 Agreement to File Instruments
Kimco Realty Corporation (the “Registrant”) hereby agrees to file with the Securities and Exchange Commission, upon request of the Commission, all instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries, and for any of its unconsolidated subsidiaries for which financial statements are required to be filed, and for which the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis.
| 10.1 |
| |
|
| |
31.1 | ||
31.2 | ||
| ||
101.INS | Inline XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
|
| |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
| KIMCO REALTY CORPORATION | |
|
|
| |
|
|
| |
|
|
| |
| April 29, 2022 |
| /s/ Conor C. Flynn |
(Date) |
| Conor C. Flynn | |
|
| Chief Executive Officer | |
|
|
| |
|
|
| |
| April 29, 2022 |
| /s/ Glenn G. Cohen |
(Date) |
| Glenn G. Cohen | |
|
| Chief Financial Officer |
36