UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022March 31, 2023
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:file number: 1-10899 (Kimco Realty Corporation)
Commission file number: 333-269102-01 (Kimco Realty OP, LLC)
KIMCO REALTY CORPORATION
KIMCO REALTY OP, LLC
(Exact name of registrant as specified in its charter)
Maryland (Kimco Realty Corporation) Delaware (Kimco Realty OP, LLC) |
| 13-2744380 92-1489725 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
500 North Broadway, Suite 201, Jericho, NY 11753
(Address of principal executive offices) (Zip Code)
(516) 869-9000
(Registrant’s telephone number, including area code)
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:
Kimco Realty Corporation
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 |
Kimco Realty OP, LLC
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
None | N/A | N/A |
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.
Kimco Realty Corporation Yes ☒☑ No ☐ Kimco Realty OP, LLC Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Kimco Realty Corporation Yes ☒☑ No ☐ Kimco Realty OP, LLC 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-212b-2 of the Exchange Act.
Kimco Realty Corporation:
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| Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ Kimco Realty OP, LLC: Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☑ Smaller reporting company ☐ Emerging growth company ☐ |
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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.
Kimco Realty Corporation ☐ Kimco Realty OP, LLC ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Kimco Realty Corporation Yes ☐ No ☒☑ Kimco Realty OP, LLC Yes ☐ No ☑
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
As of JulyApril 20, 2022, the registrant2023, Kimco Realty Corporation had 618,481,988619,891,809 shares of common stock outstanding.
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2023, of Kimco Realty Corporation (the “Company”) and Kimco Realty OP, LLC (“Kimco OP”). Prior to January 1, 2023, the Company’s business was conducted through a predecessor entity also known as Kimco Realty Corporation (the “Predecessor”). On December 14, 2022, the Predecessor’s Board of Directors approved the entry into an Agreement and Plan of Merger (the “UPREIT Merger”) with the company formerly known as New KRC Corp., which was a Maryland corporation and wholly owned subsidiary of the Predecessor (the “Parent Company”), and KRC Merger Sub Corp., which was a Maryland corporation and wholly owned subsidiary of the Parent Company (“Merger Sub”), to effect the reorganization (the “Reorganization”) of the Predecessor’s business into an umbrella partnership real estate investment trust, or “UPREIT”.
On January 1, 2023, pursuant to the UPREIT Merger, Merger Sub merged with and into the Predecessor, with the Predecessor continuing as the surviving entity and a wholly-owned subsidiary of the Parent Company, and each outstanding share of capital stock of the Predecessor was converted into one equivalent share of capital stock of the Parent Company (each of which has continued to trade under their respective existing ticker symbol with the same rights, powers and limitations that existed immediately prior to the Reorganization).
In connection with the Reorganization, the Parent Company changed its name to Kimco Realty Corporation, and replaced the Predecessor as the New York Stock Exchange-listed public company. Effective as of January 3, 2023, the Predecessor converted into a limited liability company, organized in the State of Delaware, known as Kimco Realty OP, LLC, the entity we refer to herein as “Kimco OP”.
Following the Reorganization, substantially all of the Company’s assets are held by, and substantially all of the Company’s operations are conducted through, Kimco OP (either directly or through its subsidiaries), as the Company’s operating company, and the Company is the managing member of Kimco OP. The officers and directors of the Company are the same as the officers and directors of the Predecessor immediately prior to the Reorganization.
The Parent Company is a real estate investment trust ("REIT") and is the sole member and managing member of Kimco OP. As of March 31, 2023, the Parent Company owned 100% of the outstanding limited liability company interests (the "OP Units") in Kimco OP.
Stockholders' equity and members’ capital are the primary areas of difference between the unaudited Condensed Consolidated Financial Statements of the Parent Company and those of Kimco OP. Kimco OP’s capital currently includes OP Units owned solely by the Parent, and may in the future include non-controlling OP Units owned by third parties. OP Units owned by third parties, if any, will be accounted for within capital on Kimco OP’s financial statements and in non-controlling interests in the Parent Company’s financial statements.
The Parent Company consolidates Kimco OP for financial reporting purposes, and the Parent Company does not have significant assets other than its investment in Kimco OP. Therefore, while stockholders’ equity and members’ capital differ as discussed above, the assets and liabilities of the Parent Company and Kimco OP are the same on their respective financial statements.
The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and Kimco OP into this single report provides the following benefits:
● | Enhances investors' understanding of the Parent Company and Kimco OP by enabling investors to view the businesses as a whole in the same manner as management views and operates the business; |
● | Eliminates duplicative disclosure and provides a more concise and readable presentation because a substantial portion of the disclosure applies to both the Parent Company and Kimco OP; and |
● | Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
In order to highlight the differences between the Parent Company and Kimco OP, there are sections in this Quarterly Report that separately discuss the Parent Company and Kimco OP, including separate financial statements (but combined footnotes), separate controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and Kimco OP, unless context otherwise requires, this Quarterly Report refers to actions or holdings of Parent Company and/or Kimco OP as being the actions or holdings of the Company (either directly or through its subsidiaries, including Kimco OP).
Throughout this Quarterly Report, unless the context requires otherwise:
● | The “Company,” “we,” “our” or “us” refer to: |
o | for the period prior to January 1, 2023 (the period preceding the UPREIT Merger), the Predecessor and its business and operations conducted through its directly or indirectly owned subsidiaries; |
o | for the period on or after January 1, 2023, (the period from and following the UPREIT Merger), the Parent Company and its business and operations conducted through its directly or indirectly owned subsidiaries, including Kimco OP; and |
o | in statements regarding qualification as a real estate investment trust (“REIT”), such terms refer solely to the Predecessor or Parent Company, as applicable. |
● | “Kimco OP” refers to Kimco Realty OP, LLC, our operating company following the UPREIT Merger. |
● | References to “shares” and “shareholders” refer to the shares and shareholders of the Predecessor prior to January 1, 2023 and of the Parent Company on or after January 1, 2023, and not the limited liability company interests of Kimco OP. |
PART I - FINANCIAL INFORMATION
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(unaudited)
(in thousands, except share information)
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||
Assets: | ||||||||||||||||
Real estate, net of accumulated depreciation and amortization of $3,238,079 and $3,010,699, respectively | $ | 14,837,685 | $ | 15,035,900 | ||||||||||||
Real estate under development | 5,672 | 5,672 | ||||||||||||||
Real estate, net of accumulated depreciation and amortization of $3,523,503 and $3,417,414, respectively | $ | 15,108,018 | $ | 15,039,828 | ||||||||||||
Investments in and advances to real estate joint ventures | 1,083,509 | 1,006,899 | 1,092,477 | 1,091,551 | ||||||||||||
Other investments | 101,680 | 122,015 | 132,935 | 107,581 | ||||||||||||
Cash and cash equivalents | 296,798 | 334,663 | 329,177 | 149,829 | ||||||||||||
Marketable securities | 1,073,706 | 1,211,739 | 451,583 | 597,732 | ||||||||||||
Accounts and notes receivable, net | 260,140 | 254,677 | 303,063 | 304,226 | ||||||||||||
Operating lease right-of-use assets, net | 144,092 | 147,458 | 132,020 | 133,733 | ||||||||||||
Other assets | 394,287 | 340,176 | 411,956 | 401,642 | ||||||||||||
Total assets (1) | $ | 18,197,569 | $ | 18,459,199 | $ | 17,961,229 | $ | 17,826,122 | ||||||||
Liabilities: | ||||||||||||||||
Notes payable, net | $ | 7,056,644 | $ | 7,027,050 | $ | 6,778,050 | $ | 6,780,969 | ||||||||
Mortgages payable, net | 346,461 | 448,652 | 374,285 | 376,917 | ||||||||||||
Accounts payable and accrued expenses | 203,053 | 207,815 | ||||||||||||||
Dividends payable | 5,326 | 5,366 | 5,322 | 5,326 | ||||||||||||
Operating lease liabilities | 121,434 | 123,779 | 112,413 | 113,679 | ||||||||||||
Other liabilities | 682,697 | 730,690 | 609,266 | 601,574 | ||||||||||||
Total liabilities | 8,212,562 | 8,335,537 | 8,082,389 | 8,086,280 | ||||||||||||
Redeemable noncontrolling interests | 13,270 | 13,480 | 92,933 | 92,933 | ||||||||||||
Commitments and Contingencies (Footnote 17) | ||||||||||||||||
Stockholders' equity: | ||||||||||||||||
Preferred stock, $1.00 par value, authorized 7,054,000 shares; Issued and outstanding (in series) 19,435 and 19,580 shares, respectively; Aggregate liquidation preference $485,868 and $489,500, respectively | 19 | 20 | ||||||||||||||
Common stock, $.01 par value, authorized 750,000,000 shares; Issued and outstanding 618,483,648 and 616,658,593 shares, respectively | 6,185 | 6,167 | ||||||||||||||
Preferred stock, $1.00 par value, authorized 7,054,000 shares; Issued and outstanding (in series) 19,421 and 19,435 shares, respectively; Aggregate liquidation preference $485,536 and $489,868, respectively | 19 | 19 | ||||||||||||||
Common stock, $.01 par value, authorized 750,000,000 shares; Issued and outstanding 619,891,809 and 618,483,565 shares, respectively | 6,199 | 6,185 | ||||||||||||||
Paid-in capital | 9,605,163 | 9,591,871 | 9,614,913 | 9,618,271 | ||||||||||||
Retained earnings | 163,210 | 299,115 | ||||||||||||||
Retained earnings/(cumulative distributions in excess of net income) | 21,390 | (119,548 | ) | |||||||||||||
Accumulated other comprehensive income | 6,476 | 2,216 | 10,581 | 10,581 | ||||||||||||
Total stockholders' equity | 9,781,053 | 9,899,389 | 9,653,102 | 9,515,508 | ||||||||||||
Noncontrolling interests | 190,684 | 210,793 | 132,805 | 131,401 | ||||||||||||
Total equity | 9,971,737 | 10,110,182 | 9,785,907 | 9,646,909 | ||||||||||||
Total liabilities and equity | $ | 18,197,569 | $ | 18,459,199 | $ | 17,961,229 | $ | 17,826,122 |
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(1) Total assets include restricted assets of consolidated variable interest entities (“VIEs”) at March 31, 2023 and December 31, 2022 of $435,118 and $436,605, respectively. Total liabilities include non-recourse liabilities of consolidated VIEs at March 31, 2023 and December 31, 2022 of $198,959 and $199,132, respectively. See Footnote 12 of the Notes to Condensed Consolidated Financial Statements. |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSINCOME
(Unaudited)(unaudited)
(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Revenues from rental properties, net | $ | 423,273 | $ | 285,732 | $ | 845,927 | $ | 564,603 | $ | 438,338 | $ | 422,654 | ||||||||||||
Management and other fee income | 3,925 | 3,284 | 8,520 | 6,721 | 4,554 | 4,595 | ||||||||||||||||||
Total revenues | 427,198 | 289,016 | 854,447 | 571,324 | 442,892 | 427,249 | ||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||
Rent | (4,070 | ) | (2,993 | ) | (8,151 | ) | (6,028 | ) | (4,013 | ) | (4,081 | ) | ||||||||||||
Real estate taxes | (56,075 | ) | (39,594 | ) | (110,389 | ) | (78,530 | ) | (57,506 | ) | (54,314 | ) | ||||||||||||
Operating and maintenance | (69,784 | ) | (46,897 | ) | (139,009 | ) | (93,417 | ) | (75,242 | ) | (69,225 | ) | ||||||||||||
General and administrative | (27,981 | ) | (24,754 | ) | (57,929 | ) | (49,232 | ) | (34,749 | ) | (29,948 | ) | ||||||||||||
Impairment charges | (14,419 | ) | (104 | ) | (14,691 | ) | (104 | ) | (11,806 | ) | (272 | ) | ||||||||||||
Merger charges | 0 | (3,193 | ) | 0 | (3,193 | ) | ||||||||||||||||||
Depreciation and amortization | (124,611 | ) | (72,573 | ) | (254,905 | ) | (147,449 | ) | (126,301 | ) | (130,294 | ) | ||||||||||||
Total operating expenses | (296,940 | ) | (190,108 | ) | (585,074 | ) | (377,953 | ) | (309,617 | ) | (288,134 | ) | ||||||||||||
Gain on sale of properties | 2,944 | 18,861 | 7,137 | 28,866 | 39,206 | 4,193 | ||||||||||||||||||
Operating income | 133,202 | 117,769 | 276,510 | 222,237 | 172,481 | 143,308 | ||||||||||||||||||
Other income/(expense) | ||||||||||||||||||||||||
Special dividend income | 194,116 | - | ||||||||||||||||||||||
Other income, net | 6,642 | 1,782 | 12,625 | 5,139 | 3,132 | 5,983 | ||||||||||||||||||
(Loss)/gain on marketable securities, net | (261,467 | ) | 24,297 | (139,703 | ) | 85,382 | (10,144 | ) | 121,764 | |||||||||||||||
Interest expense | (56,466 | ) | (46,812 | ) | (113,485 | ) | (94,528 | ) | (61,306 | ) | (57,019 | ) | ||||||||||||
Early extinguishment of debt charges | (57 | ) | 0 | (7,230 | ) | 0 | - | (7,173 | ) | |||||||||||||||
(Loss)/income before income taxes, net, equity in income of joint ventures, net, and equity in income from other investments, net | (178,146 | ) | 97,036 | 28,717 | 218,230 | |||||||||||||||||||
Income before income taxes, net, equity in income of joint ventures, net, and equity in income from other investments, net | 298,279 | 206,863 | ||||||||||||||||||||||
(Provision)/benefit for income taxes, net | (96 | ) | (1,275 | ) | 57 | (2,583 | ) | (30,829 | ) | 153 | ||||||||||||||
Equity in income of joint ventures, net | 44,130 | 16,318 | 67,700 | 34,070 | 24,204 | 23,570 | ||||||||||||||||||
Equity in income of other investments, net | 3,385 | 5,039 | 8,758 | 8,826 | 2,122 | 5,373 | ||||||||||||||||||
Net (loss)/income | (130,727 | ) | 117,118 | 105,232 | 258,543 | |||||||||||||||||||
Net income | 293,776 | 235,959 | ||||||||||||||||||||||
Net loss/(income) attributable to noncontrolling interests | 11,226 | (421 | ) | 12,569 | (3,904 | ) | ||||||||||||||||||
Net (income)/loss attributable to noncontrolling interests | (4,013 | ) | 1,343 | |||||||||||||||||||||
Net (loss)/income attributable to the Company | (119,501 | ) | 116,697 | 117,801 | 254,639 | |||||||||||||||||||
Net income attributable to the Company | 289,763 | 237,302 | ||||||||||||||||||||||
Preferred dividends, net | (6,250 | ) | (6,354 | ) | (12,604 | ) | (12,708 | ) | (6,251 | ) | (6,354 | ) | ||||||||||||
Net (loss)/income available to the Company's common shareholders | $ | (125,751 | ) | $ | 110,343 | $ | 105,197 | $ | 241,931 | |||||||||||||||
Net income available to the Company's common shareholders | $ | 283,512 | $ | 230,948 | ||||||||||||||||||||
Per common share: | ||||||||||||||||||||||||
Net (loss)/income available to the Company's common shareholders: | ||||||||||||||||||||||||
Net income available to the Company's common shareholders: | ||||||||||||||||||||||||
-Basic | $ | (0.21 | ) | $ | 0.25 | $ | 0.17 | $ | 0.56 | $ | 0.46 | $ | 0.37 | |||||||||||
-Diluted | $ | (0.21 | ) | $ | 0.25 | $ | 0.17 | $ | 0.56 | $ | 0.46 | $ | 0.37 | |||||||||||
Weighted average shares: | ||||||||||||||||||||||||
-Basic | 615,642 | 431,011 | 615,207 | 430,769 | 616,489 | 614,767 | ||||||||||||||||||
-Diluted | 615,642 | 432,489 | 616,943 | 432,430 | 619,628 | 616,758 |
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)(unaudited)
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net (loss)/income | $ | (130,727 | ) | $ | 117,118 | $ | 105,232 | $ | 258,543 | |||||||
Other comprehensive income: | ||||||||||||||||
Change in unrealized gains related to defined benefit plan | 4,260 | 0 | 4,260 | 0 | ||||||||||||
Other comprehensive income | 4,260 | 0 | 4,260 | 0 | ||||||||||||
Comprehensive (loss)/income | (126,467 | ) | 117,118 | 109,492 | 258,543 | |||||||||||
Comprehensive loss/(income) attributable to noncontrolling interests | 11,226 | (421 | ) | 12,569 | (3,904 | ) | ||||||||||
Comprehensive (loss)/income attributable to the Company | $ | (115,241 | ) | $ | 116,697 | $ | 122,061 | $ | 254,639 |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net income | $ | 293,776 | $ | 235,959 | ||||
Other comprehensive income: | ||||||||
Change in unrealized gains related to defined benefit plan | - | - | ||||||
Other comprehensive income | - | - | ||||||
Comprehensive income | 293,776 | 235,959 | ||||||
Comprehensive (income)/loss attributable to noncontrolling interests | (4,013 | ) | 1,343 | |||||
Comprehensive income attributable to the Company | $ | 289,763 | $ | 237,302 |
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 Three Months Ended June 30,March 31, 2023 and 2022 and 2021
(Unaudited)(unaudited)
(in thousands)
Retained Earnings/ | Accumulated | Preferred Stock | Common Stock | Paid-in | Retained Earnings/ (Cumulative Distributions in Excess | Accumulated Other Comprehensive | Total Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Cumulative | Other | Total | Issued | Amount | Issued | Amount | Capital | of Net Income) | Income | Equity | Interests | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions in Excess | Comprehensive | Preferred Stock | Common Stock | Paid-in | Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2022 | 20 | $ | 20 | 616,659 | $ | 6,167 | $ | 9,591,871 | $ | 299,115 | $ | 2,216 | $ | 9,899,389 | $ | 210,793 | $ | 10,110,182 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interests | - | - | - | - | - | - | - | - | 891 | 891 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income/(loss) | - | - | - | - | - | 237,302 | - | 237,302 | (1,343 | ) | 235,959 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | - | - | - | - | - | - | - | - | (333 | ) | (333 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to preferred shares | - | - | - | - | - | (6,354 | ) | - | (6,354 | ) | - | (6,354 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to common shares | - | - | - | - | - | (117,404 | ) | - | (117,404 | ) | - | (117,404 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | - | - | - | - | - | - | - | - | (4,340 | ) | (4,340 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | - | - | 1,712 | 17 | (17 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrender of restricted common stock | - | - | (570 | ) | (6 | ) | (13,438 | ) | - | - | (13,444 | ) | - | (13,444 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | - | - | 128 | 1 | 2,567 | - | - | 2,568 | - | 2,568 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of equity awards | - | - | - | - | 7,437 | - | - | 7,437 | - | 7,437 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption/conversion of noncontrolling interests | - | - | 73 | 1 | 1,535 | - | - | 1,536 | (1,536 | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | 20 | $ | 20 | 618,002 | $ | 6,180 | $ | 9,589,955 | $ | 412,659 | $ | 2,216 | $ | 10,011,030 | $ | 204,132 | $ | 10,215,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
of Net Income) | Income | Issued | Amount | Issued | Amount | Capital | Equity | Interests | Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 1, 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, 2023 | 19 | $ | 19 | 618,484 | $ | 6,185 | $ | 9,618,271 | $ | (119,548 | ) | $ | 10,581 | $ | 9,515,508 | $ | 131,401 | $ | 9,646,909 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 116,697 | 0 | - | 0 | - | 0 | 0 | 116,697 | 421 | 117,118 | - | - | - | - | - | 289,763 | - | 289,763 | 4,013 | 293,776 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (7 | ) | (7 | ) | - | - | - | - | - | - | - | - | (1,546 | ) | (1,546 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to common and preferred shares | (80,053 | ) | 0 | - | 0 | - | 0 | 0 | (80,053 | ) | 0 | (80,053 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (622 | ) | (622 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrender of common stock | 0 | 0 | 0 | 0 | (27 | ) | 0 | (154 | ) | (154 | ) | 0 | (154 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | 0 | 0 | 0 | 0 | 96 | 1 | 1,809 | 1,810 | 0 | 1,810 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of equity awards | 0 | 0 | - | 0 | - | 0 | 5,656 | 5,656 | 0 | 5,656 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | (68,265 | ) | $ | 0 | 20 | $ | 20 | 433,517 | $ | 4,335 | $ | 5,771,179 | �� | $ | 5,707,269 | $ | 64,946 | $ | 5,772,215 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 1, 2022 | $ | 412,659 | $ | 2,216 | 20 | $ | 20 | 618,002 | $ | 6,180 | $ | 9,589,955 | $ | 10,011,030 | $ | 204,132 | $ | 10,215,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | (119,501 | ) | 0 | - | 0 | - | 0 | 0 | (119,501 | ) | (11,226 | ) | (130,727 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in unrealized gains related to defined benefit plan | 0 | 4,260 | - | 0 | - | 0 | 0 | 4,260 | 0 | 4,260 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (201 | ) | (201 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to common and preferred shares | (130,012 | ) | 0 | - | 0 | - | 0 | 0 | (130,012 | ) | 0 | (130,012 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to preferred shares | - | - | - | - | - | (6,251 | ) | - | (6,251 | ) | - | (6,251 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared to common shares | - | - | - | - | - | (142,574 | ) | - | (142,574 | ) | - | (142,574 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of preferred stock | 64 | 0 | (1 | ) | (1 | ) | 0 | 0 | (3,505 | ) | (3,442 | ) | 0 | (3,442 | ) | - | - | - | - | (320 | ) | - | - | (320 | ) | - | (320 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (1,718 | ) | (1,718 | ) | - | - | - | - | - | - | - | - | (1,063 | ) | (1,063 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | 0 | 0 | 0 | 0 | 450 | 5 | 11,276 | 11,281 | 0 | 11,281 | - | - | 1,988 | 20 | (20 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrender of restricted common stock | - | - | (753 | ) | (8 | ) | (16,089 | ) | - | - | (16,097 | ) | - | (16,097 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | 0 | 0 | 0 | 0 | 46 | 0 | 989 | 989 | 0 | 989 | - | - | 173 | 2 | 3,725 | - | - | 3,727 | - | 3,727 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Surrender of common stock | 0 | 0 | 0 | 0 | (15 | ) | 0 | (101 | ) | (101 | ) | 0 | (101 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of equity awards | 0 | 0 | - | 0 | - | 0 | 6,472 | 6,472 | 0 | 6,472 | - | - | - | - | 9,346 | - | - | 9,346 | - | 9,346 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption/conversion of noncontrolling interests | 0 | 0 | 0 | 0 | 0 | 0 | 77 | 77 | (303 | ) | (226 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | 163,210 | $ | 6,476 | 19 | $ | 19 | 618,483 | $ | 6,185 | $ | 9,605,163 | $ | 9,781,053 | $ | 190,684 | $ | 9,971,737 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | 19 | $ | 19 | 619,892 | $ | 6,199 | $ | 9,614,913 | $ | 21,390 | $ | 10,581 | $ | 9,653,102 | $ | 132,805 | $ | 9,785,907 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYCASH FLOWS
For the Six Months Ended June 30, 2022 and 2021
(Unaudited)(unaudited)
(in thousands)
Retained Earnings/ | Accumulated | |||||||||||||||||||||||||||||||||||||||
(Cumulative | Other | Total | ||||||||||||||||||||||||||||||||||||||
Distributions 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 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 | 254,639 | 0 | - | 0 | - | 0 | 0 | 254,639 | 3,904 | 258,543 | ||||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (176 | ) | (176 | ) | ||||||||||||||||||||||||||||
Dividends declared to common and preferred shares | (160,092 | ) | 0 | - | 0 | - | 0 | 0 | (160,092 | ) | 0 | (160,092 | ) | |||||||||||||||||||||||||||
Distributions to noncontrolling interests | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (992 | ) | (992 | ) | ||||||||||||||||||||||||||||
Issuance of common stock | 0 | 0 | 0 | 0 | 1,442 | 14 | (14 | ) | 0 | 0 | 0 | |||||||||||||||||||||||||||||
Surrender of common stock | 0 | 0 | 0 | 0 | (548 | ) | (5 | ) | (9,241 | ) | (9,246 | ) | 0 | (9,246 | ) | |||||||||||||||||||||||||
Exercise of common stock options | 0 | 0 | 0 | 0 | 104 | 1 | 1,969 | 1,970 | 0 | 1,970 | ||||||||||||||||||||||||||||||
Amortization of equity awards | 0 | 0 | - | 0 | - | 0 | 11,954 | 11,954 | 0 | 11,954 | ||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | (68,265 | ) | $ | 0 | 20 | $ | 20 | 433,517 | $ | 4,335 | $ | 5,771,179 | $ | 5,707,269 | $ | 64,946 | $ | 5,772,215 | |||||||||||||||||||||
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) | 117,801 | 0 | - | 0 | - | 0 | 0 | 117,801 | (12,569 | ) | 105,232 | |||||||||||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||
Change in unrealized gains related to defined benefit plan | 0 | 4,260 | - | 0 | - | 0 | 0 | 4,260 | 0 | 4,260 | ||||||||||||||||||||||||||||||
Redeemable noncontrolling interests income | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (534 | ) | (534 | ) | ||||||||||||||||||||||||||||
Dividends declared to common and preferred shares | (253,770 | ) | 0 | - | 0 | - | 0 | 0 | (253,770 | ) | 0 | (253,770 | ) | |||||||||||||||||||||||||||
Repurchase of preferred stock | 64 | 0 | (1 | ) | (1 | ) | 0 | 0 | (3,505 | ) | (3,442 | ) | 0 | (3,442 | ) | |||||||||||||||||||||||||
Distributions to noncontrolling interests | 0 | 0 | - | 0 | - | 0 | 0 | 0 | (6,058 | ) | (6,058 | ) | ||||||||||||||||||||||||||||
Issuance of common stock | 0 | 0 | 0 | 0 | 2,162 | 22 | 11,259 | 11,281 | 0 | 11,281 | ||||||||||||||||||||||||||||||
Surrender of common stock | 0 | 0 | 0 | 0 | (585 | ) | (6 | ) | (13,539 | ) | (13,545 | ) | 0 | (13,545 | ) | |||||||||||||||||||||||||
Exercise of common stock options | 0 | 0 | 0 | 0 | 174 | 1 | 3,556 | 3,557 | 0 | 3,557 | ||||||||||||||||||||||||||||||
Amortization of equity awards | 0 | 0 | - | 0 | - | 0 | 13,909 | 13,909 | 0 | 13,909 | ||||||||||||||||||||||||||||||
Redemption/conversion of noncontrolling interests | 0 | 0 | 0 | 0 | 73 | 1 | 1,612 | 1,613 | (1,839 | ) | (226 | ) | ||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | 163,210 | $ | 6,476 | 19 | $ | 19 | 618,483 | $ | 6,185 | $ | 9,605,163 | $ | 9,781,053 | $ | 190,684 | $ | 9,971,737 |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 293,776 | $ | 235,959 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 126,301 | 130,294 | ||||||
Impairment charges | 11,806 | 272 | ||||||
Straight-line rental income adjustments, net | (7,701 | ) | (7,935 | ) | ||||
Amortization of above-market and below-market leases, net | (2,989 | ) | (4,297 | ) | ||||
Amortization of deferred financing costs and fair value debt adjustments, net | (2,313 | ) | (7,021 | ) | ||||
Early extinguishment of debt charges | - | 7,173 | ||||||
Equity award expense | 9,333 | 7,513 | ||||||
Gain on sale of properties | (39,206 | ) | (4,193 | ) | ||||
Loss/(gain) on marketable securities, net | 10,144 | (121,764 | ) | |||||
Equity in income of joint ventures, net | (24,204 | ) | (23,570 | ) | ||||
Equity in income of other investments, net | (2,122 | ) | (5,373 | ) | ||||
Distributions from joint ventures and other investments | 13,428 | 25,925 | ||||||
Change in accounts and notes receivable, net | 8,887 | 8,925 | ||||||
Change in accounts payable and accrued expenses | (30,597 | ) | (14,897 | ) | ||||
Change in other operating assets and liabilities, net | (19,310 | ) | (32,460 | ) | ||||
Net cash flow provided by operating activities | 345,233 | 194,551 | ||||||
Cash flow from investing activities: | ||||||||
Acquisition of operating real estate and other related net assets | (98,546 | ) | (18,671 | ) | ||||
Improvements to operating real estate | (40,202 | ) | (29,435 | ) | ||||
Investment in marketable securities | (2,202 | ) | (1,469 | ) | ||||
Proceeds from sale of marketable securities | 138,207 | 100 | ||||||
Investment in cost method investment | - | (3,000 | ) | |||||
Investments in and advances to real estate joint ventures | (12,848 | ) | (13,116 | ) | ||||
Reimbursements of investments in and advances to real estate joint ventures | 5,446 | 8,569 | ||||||
Investments in and advances to other investments | (6,326 | ) | (8,445 | ) | ||||
Reimbursements of investments in and advances to other investments | 199 | 24,398 | ||||||
Investment in mortgage and other financing receivables | (11,211 | ) | (3,000 | ) | ||||
Collection of mortgage and other financing receivables | 59 | 43 | ||||||
Proceeds from sale of properties | 70,983 | 8,410 | ||||||
Net cash flow provided by/(used for) investing activities | 43,559 | (35,616 | ) | |||||
Cash flow from financing activities: | ||||||||
Principal payments on debt, excluding normal amortization of rental property debt | (37,187 | ) | (85,683 | ) | ||||
Principal payments on rental property debt | (2,794 | ) | (2,600 | ) | ||||
Proceeds from mortgage loan financings | - | 19,000 | ||||||
Proceeds from issuance of unsecured notes | - | 600,000 | ||||||
Repayments of unsecured notes | - | (500,000 | ) | |||||
Financing origination costs | (6,026 | ) | (10,165 | ) | ||||
Payment of early extinguishment of debt charges | - | (6,470 | ) | |||||
Contributions from noncontrolling interests | - | 891 | ||||||
Redemption/distribution of noncontrolling interests | (2,609 | ) | (4,673 | ) | ||||
Dividends paid | (148,882 | ) | (123,758 | ) | ||||
Proceeds from issuance of stock, net | 3,727 | 2,568 | ||||||
Repurchase of preferred stock | (268 | ) | - | |||||
Shares repurchased for employee tax withholding on equity awards | (16,085 | ) | (13,428 | ) | ||||
Change in tenants' security deposits | 680 | 1,038 | ||||||
Net cash flow used for financing activities | (209,444 | ) | (123,280 | ) | ||||
Net change in cash, cash equivalents and restricted cash | 179,348 | 35,655 | ||||||
Cash, cash equivalents and restricted cash, beginning of the period | 149,829 | 334,663 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 329,177 | $ | 370,318 | ||||
Interest paid during the period, including payment of early extinguishment of debt charges of $0 and $6,470, respectively (net of capitalized interest of $198 and $102, respectively) | $ | 54,847 | $ | 60,213 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY OP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except unit information)
March 31, 2023 | December 31, 2022 | |||||||
Assets: | ||||||||
Real estate, net of accumulated depreciation and amortization of $3,523,503 and $3,417,414, respectively | $ | 15,108,018 | $ | 15,039,828 | ||||
Investments in and advances to real estate joint ventures | 1,092,477 | 1,091,551 | ||||||
Other investments | 132,935 | 107,581 | ||||||
Cash and cash equivalents | 329,177 | 149,829 | ||||||
Marketable securities | 451,583 | 597,732 | ||||||
Accounts and notes receivable, net | 303,063 | 304,226 | ||||||
Operating lease right-of-use assets, net | 132,020 | 133,733 | ||||||
Other assets | 411,956 | 401,642 | ||||||
Total assets (1) | $ | 17,961,229 | $ | 17,826,122 | ||||
Liabilities: | ||||||||
Notes payable, net | $ | 6,778,050 | $ | 6,780,969 | ||||
Mortgages payable, net | 374,285 | 376,917 | ||||||
Accounts payable and accrued expenses | 203,053 | 207,815 | ||||||
Dividends payable | 5,322 | 5,326 | ||||||
Operating lease liabilities | 112,413 | 113,679 | ||||||
Other liabilities | 609,266 | 601,574 | ||||||
Total liabilities (1) | 8,082,389 | 8,086,280 | ||||||
Redeemable noncontrolling interests | 92,933 | 92,933 | ||||||
Commitments and Contingencies (Footnote 17) | ||||||||
Members' capital: | ||||||||
Preferred units; Issued and outstanding 19,421 and 19,435 units, respectively | 468,707 | 469,027 | ||||||
Common units; Issued and outstanding 619,891,809 and 618,483,565 units, respectively | 9,173,814 | 9,035,900 | ||||||
Accumulated other comprehensive income | 10,581 | 10,581 | ||||||
Total members' capital | 9,653,102 | 9,515,508 | ||||||
Noncontrolling interests | 132,805 | 131,401 | ||||||
Total equity | 9,785,907 | 9,646,909 | ||||||
Total liabilities and equity | $ | 17,961,229 | $ | 17,826,122 |
(1) Total assets include restricted assets of consolidated variable interest entities (“VIEs”) at March 31, 2023 and December 31, 2022 of $435,118 and $436,605, respectively. Total liabilities include non-recourse liabilities of consolidated VIEs at March 31, 2023 and December 31, 2022 of $198,959 and $199,132, respectively. See Footnote 12 of the Notes to Condensed Consolidated Financial Statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATIONOP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSINCOME
(Unaudited)(unaudited)
(in thousands)thousands, except per unit data)
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 105,232 | $ | 258,543 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 254,905 | 147,449 | ||||||
Impairment charges | 14,691 | 104 | ||||||
Early extinguishment of debt charges | 7,230 | 0 | ||||||
Equity award expense | 13,994 | 12,271 | ||||||
Gain on sale of properties | (7,137 | ) | (28,866 | ) | ||||
Loss/(gain) on marketable securities, net | 139,703 | (85,382 | ) | |||||
Equity in income of joint ventures, net | (67,700 | ) | (34,070 | ) | ||||
Equity in income of other real estate investments, net | (8,758 | ) | (8,826 | ) | ||||
Distributions from joint ventures and other investments | 45,775 | 37,080 | ||||||
Change in accounts and notes receivable, net | (1,204 | ) | 19,127 | |||||
Change in accounts payable and accrued expenses | (12,636 | ) | 5,587 | |||||
Change in other operating assets and liabilities, net | (41,762 | ) | (29,346 | ) | ||||
Net cash flow provided by operating activities | 442,333 | 293,671 | ||||||
Cash flow from investing activities: | ||||||||
Acquisition of operating real estate | (29,282 | ) | (84,312 | ) | ||||
Improvements to operating real estate | (78,958 | ) | (66,342 | ) | ||||
Investment in marketable securities | (1,870 | ) | 0 | |||||
Proceeds from sale of marketable securities | 201 | 201 | ||||||
Investment in cost method investment | (3,000 | ) | 0 | |||||
Investments in and advances to real estate joint ventures | (72,947 | ) | (5,698 | ) | ||||
Reimbursements of investments in and advances to real estate joint ventures | 22,865 | 3,368 | ||||||
Investments in and advances to other investments | (9,473 | ) | (55,713 | ) | ||||
Reimbursements of investments in and advances to other investments | 29,104 | 32,780 | ||||||
Investment in other financing receivable | (53,063 | ) | (397 | ) | ||||
Collection of mortgage loans receivable | 63 | 93 | ||||||
Proceeds from sale of properties | 41,224 | 130,138 | ||||||
Net cash flow used for investing activities | (155,136 | ) | (45,882 | ) | ||||
Cash flow from financing activities: | ||||||||
Principal payments on debt, excluding normal amortization of rental property debt | (115,166 | ) | (136,222 | ) | ||||
Principal payments on rental property debt | (4,827 | ) | (5,011 | ) | ||||
Proceeds from mortgage loan financings | 19,000 | 0 | ||||||
Proceeds from issuance of unsecured notes | 600,000 | 0 | ||||||
Repayments of unsecured notes | (547,063 | ) | 0 | |||||
Financing origination costs | (10,281 | ) | 0 | |||||
Payment of early extinguishment of debt charges | (6,527 | ) | 0 | |||||
Contributions from noncontrolling interests | 891 | 0 | ||||||
Redemption/distribution of noncontrolling interests | (7,029 | ) | (3,225 | ) | ||||
Dividends paid | (253,809 | ) | (160,092 | ) | ||||
Proceeds from issuance of stock, net | 14,838 | 1,970 | ||||||
Repurchase of preferred stock | (3,441 | ) | 0 | |||||
Shares repurchased for employee tax withholding on equity awards | (13,521 | ) | (9,225 | ) | ||||
Change in tenants' security deposits | 1,873 | 890 | ||||||
Net cash flow used for financing activities | (325,062 | ) | (310,915 | ) | ||||
Net change in cash, cash equivalents and restricted cash | (37,865 | ) | (63,126 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of the period | 334,663 | 293,188 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 296,798 | $ | 230,062 | ||||
Interest paid during the period including payment of early extinguishment of debt charges of $6,527 and $0, respectively (net of capitalized interest of $277 and $417, respectively) | $ | 132,912 | $ | 96,097 |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Revenues | ||||||||
Revenues from rental properties, net | $ | 438,338 | $ | 422,654 | ||||
Management and other fee income | 4,554 | 4,595 | ||||||
Total revenues | 442,892 | 427,249 | ||||||
Operating expenses | ||||||||
Rent | (4,013 | ) | (4,081 | ) | ||||
Real estate taxes | (57,506 | ) | (54,314 | ) | ||||
Operating and maintenance | (75,242 | ) | (69,225 | ) | ||||
General and administrative | (34,749 | ) | (29,948 | ) | ||||
Impairment charges | (11,806 | ) | (272 | ) | ||||
Depreciation and amortization | (126,301 | ) | (130,294 | ) | ||||
Total operating expenses | (309,617 | ) | (288,134 | ) | ||||
Gain on sale of properties | 39,206 | 4,193 | ||||||
Operating income | 174,481 | 143,308 | ||||||
Other income/(expense) | ||||||||
Special dividend income | 194,116 | - | ||||||
Other income, net | 3,132 | 5,983 | ||||||
(Loss)/gain on marketable securities, net | (10,144 | ) | 121,764 | |||||
Interest expense | (61,306 | ) | (57,019 | ) | ||||
Early extinguishment of debt charges | - | (7,173 | ) | |||||
Income before income taxes, net, equity in income of joint ventures, net, and equity in income from other investments, net | 298,279 | 206,863 | ||||||
(Provision)/benefit for income taxes, net | (30,829 | ) | 153 | |||||
Equity in income of joint ventures, net | 24,204 | 23,570 | ||||||
Equity in income of other investments, net | 2,122 | 5,373 | ||||||
Net income | 293,776 | 235,959 | ||||||
Net (income)/loss attributable to noncontrolling interests | (4,013 | ) | 1,343 | |||||
Net income attributable to the Company | 289,763 | 237,302 | ||||||
Preferred distributions, net | (6,251 | ) | (6,354 | ) | ||||
Net income available to the Company's common unitholders | $ | 283,512 | $ | 230,948 | ||||
Per common unit: | ||||||||
Net income available to the Company's common unitholders: | ||||||||
-Basic | $ | 0.46 | $ | 0.37 | ||||
-Diluted | $ | 0.46 | $ | 0.37 | ||||
Weighted average units: | ||||||||
-Basic | 616,489 | 614,767 | ||||||
-Diluted | 619,628 | 616,758 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY OP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net income | $ | 293,776 | $ | 235,959 | ||||
Other comprehensive income: | ||||||||
Change in unrealized gains related to defined benefit plan | - | - | ||||||
Other comprehensive income | - | - | ||||||
Comprehensive income | 293,776 | 235,959 | ||||||
Comprehensive (income)/loss attributable to noncontrolling interests | (4,013 | ) | 1,343 | |||||
Comprehensive income attributable to the Company | $ | 289,763 | $ | 237,302 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY OP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
For the Three Months Ended March 31, 2023 and 2022
(unaudited)
(in thousands)
Accumulated | ||||||||||||||||||||||||||||||
Other | Total | |||||||||||||||||||||||||||||
Preferred Units | Common Units | Comprehensive | Members' | Noncontrolling | Total | |||||||||||||||||||||||||
Issued | Amount | Issued |
| Amount | Income | Capital | Interests | Capital | ||||||||||||||||||||||
Balance at January 1, 2022 | 20 | $ | 472,533 | 616,659 | $ | 9,424,640 | $ | 2,216 | $ | 9,899,389 | $ | 210,793 | $ | 10,110,182 | ||||||||||||||||
Contributions from noncontrolling interests | - | - | - | - | - | - | 891 | 891 | ||||||||||||||||||||||
Net income/(loss) | - | 6,354 | - | 230,948 | - | 237,302 | (1,343 | ) | 235,959 | |||||||||||||||||||||
Redeemable noncontrolling interests income | - | - | - | - | - | - | (333 | ) | (333 | ) | ||||||||||||||||||||
Distributions declared to preferred unitholders | - | (6,354 | ) | - | - | - | (6,354 | ) | - | (6,354 | ) | |||||||||||||||||||
Distributions declared to common unitholders | - | - | - | (117,404 | ) | - | (117,404 | ) | - | (117,404 | ) | |||||||||||||||||||
Distributions to noncontrolling interests | - | - | - | - | - | - | (4,340 | ) | (4,340 | ) | ||||||||||||||||||||
Issuance of common units | - | - | 1,712 | - | - | - | - | - | ||||||||||||||||||||||
Surrender of restricted common units | - | - | (570) | (13,444 | ) | - | (13,444 | ) | - | (13,444 | ) | |||||||||||||||||||
Exercise of common stock options | - | - | 128 | 2,568 | - | 2,568 | - | 2,568 | ||||||||||||||||||||||
Amortization of equity awards | - | - | - | 7,437 | - | 7,437 | - | 7,437 | ||||||||||||||||||||||
Redemption/conversion of noncontrolling interests | - | - | 73 | 1,536 | - | 1,536 | (1,536 | ) | - | |||||||||||||||||||||
Balance at March 31, 2022 | 20 | $ | 472,533 | 618,002 | $ | 9,536,281 | $ | 2,216 | $ | 10,011,030 | $ | 204,132 | $ | 10,215,162 | ||||||||||||||||
Balance at January 1, 2023 | 19 | $ | 469,027 | 618,484 | $ | 9,035,900 | $ | 10,581 | $ | 9,515,508 | $ | 131,401 | $ | 9,646,909 | ||||||||||||||||
Net income | - | 6,251 | - | 283,512 | - | 289,763 | 4,013 | 293,776 | ||||||||||||||||||||||
Redeemable noncontrolling interests income | - | - | - | - | - | - | (1,546 | ) | (1,546 | ) | ||||||||||||||||||||
Distributions declared to preferred unitholders | - | (6,251 | ) | - | - | - | (6,251 | ) | - | (6,251 | ) | |||||||||||||||||||
Distributions declared to common unitholders | - | - | - | (142,574 | ) | - | (142,574 | ) | - | (142,574 | ) | |||||||||||||||||||
Repurchase of preferred units | - | (320 | ) | - | - | - | (320 | ) | - | (320 | ) | |||||||||||||||||||
Distributions to noncontrolling interests | - | - | - | - | - | - | (1,063 | ) | (1,063 | ) | ||||||||||||||||||||
Issuance of common units | - | - | 1,988 | - | - | - | - | - | ||||||||||||||||||||||
Surrender of restricted common units | - | - | (753) | (16,097 | ) | - | (16,097 | ) | - | (16,097 | ) | |||||||||||||||||||
Exercise of common stock options | - | - | 173 | 3,727 | - | 3,727 | - | 3,727 | ||||||||||||||||||||||
Amortization of equity awards | - | - | - | 9,346 | - | 9,346 | - | 9,346 | ||||||||||||||||||||||
Balance at March 31, 2023 | 19 | $ | 468,707 | 619,892 | $ | 9,173,814 | $ | 10,581 | $ | 9,653,102 | $ | 132,805 | $ | 9,785,907 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY OP, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 293,776 | $ | 235,959 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 126,301 | 130,294 | ||||||
Impairment charges | 11,806 | 272 | ||||||
Straight-line rental income adjustments, net | (7,701 | ) | (7,935 | ) | ||||
Amortization of above-market and below-market leases, net | (2,989 | ) | (4,297 | ) | ||||
Amortization of deferred financing costs and fair value debt adjustments, net | (2,313 | ) | (7,021 | ) | ||||
Early extinguishment of debt charges | - | 7,173 | ||||||
Equity award expense | 9,333 | 7,513 | ||||||
Gain on sale of properties | (39,206 | ) | (4,193 | ) | ||||
Loss/(gain) on marketable securities, net | 10,144 | (121,764 | ) | |||||
Equity in income of joint ventures, net | (24,204 | ) | (23,570 | ) | ||||
Equity in income of other investments, net | (2,122 | ) | (5,373 | ) | ||||
Distributions from joint ventures and other investments | 13,428 | 25,925 | ||||||
Change in accounts and notes receivable, net | 8,887 | 8,925 | ||||||
Change in accounts payable and accrued expenses | (30,597 | ) | (14,897 | ) | ||||
Change in other operating assets and liabilities, net | (19,310 | ) | (32,460 | ) | ||||
Net cash flow provided by operating activities | 345,233 | 194,551 | ||||||
Cash flow from investing activities: | ||||||||
Acquisition of operating real estate and other related assets | (98,546 | ) | (18,671 | ) | ||||
Improvements to operating real estate | (40,202 | ) | (29,435 | ) | ||||
Investment in marketable securities | (2,202 | ) | (1,469 | ) | ||||
Proceeds from sale of marketable securities | 138,207 | 100 | ||||||
Investment in cost method investment | - | (3,000 | ) | |||||
Investments in and advances to real estate joint ventures | (12,848 | ) | (13,116 | ) | ||||
Reimbursements of investments in and advances to real estate joint ventures | 5,446 | 8,569 | ||||||
Investments in and advances to other investments | (6,326 | ) | (8,445 | ) | ||||
Reimbursements of investments in and advances to other investments | 199 | 24,398 | ||||||
Investment in mortgage and other financing receivables | (11,211 | ) | (3,000 | ) | ||||
Collection of mortgage and other financing receivables | 59 | 43 | ||||||
Proceeds from sale of properties | 70,983 | 8,410 | ||||||
Net cash flow provided by/(used for) investing activities | 43,559 | (35,616 | ) | |||||
Cash flow from financing activities: | ||||||||
Principal payments on debt, excluding normal amortization of rental property debt | (37,187 | ) | (85,683 | ) | ||||
Principal payments on rental property debt | (2,794 | ) | (2,600 | ) | ||||
Proceeds from mortgage loan financings | - | 19,000 | ||||||
Proceeds from issuance of unsecured notes | - | 600,000 | ||||||
Repayments of unsecured notes | - | (500,000 | ) | |||||
Financing origination costs | (6,026 | ) | (10,165 | ) | ||||
Payment of early extinguishment of debt charges | - | (6,470 | ) | |||||
Contributions from noncontrolling interests | - | 891 | ||||||
Redemption/distribution of noncontrolling interests | (2,609 | ) | (4,673 | ) | ||||
Distributions to common and preferred unitholders | (148,882 | ) | (123,758 | ) | ||||
Proceeds from issuance of stock, net | 3,727 | 2,568 | ||||||
Repurchase of preferred units | (268 | ) | - | |||||
Shares repurchased for employee tax withholding on equity awards | (16,085 | ) | (13,428 | ) | ||||
Change in tenants' security deposits | 680 | 1,038 | ||||||
Net cash flow used for financing activities | (209,444 | ) | (123,280 | ) | ||||
Net change in cash, cash equivalents and restricted cash | 179,348 | 35,655 | ||||||
Cash, cash equivalents and restricted cash, beginning of the period | 149,829 | 334,663 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 329,177 | $ | 370,318 | ||||
Interest paid during the period, including payment of early extinguishment of debt charges of $0 and $6,470, respectively (net of capitalized interest of $198 and $102, respectively) | $ | 54,847 | $ | 60,213 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES AND KIMCO REALTY OP, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Business and Organization
Kimco Realty Corporation (the “Parent Company”) is a real estate investment trust ("REIT"), of which substantially all of the Parent Company’s assets are held by, and substantially all of the Parent Company’s operations are conducted through, Kimco Realty OP, LLC (“Kimco OP”), either directly or through its subsidiaries, as the Parent Company’s operating company. The Parent Company is the sole managing member and exercises exclusive control over Kimco OP. As of March 31, 2023, the Parent Company owned 100% of the outstanding limited liability company interests (the "OP Units") in Kimco OP. The term "the Company", means the Parent Company and Kimco OP, collectively.
The Company, a Maryland corporation, is North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers includingand a growing portfolio of 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, 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 generallyprimarily by grocery stores, off-price retailers, home improvement centers, discounters and/or service-oriented tenants. Additionally, the Company provides complementary services that capitalize on the Company’s established retail real estate expertise. 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 elected status as a Real Estate Investment Trust (a “REIT”)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. AsTo qualify as a REIT, with respect to each taxable year, the Company must meet several organizational and operational requirements, and is required to annually distribute at least 9090% percent of its net taxable income, (excludingdetermined without regard to the dividends paid deduction and excluding any net capital gain) and does not pay federal income taxes ongain. In addition, the amount distributed to its shareholders. The Company is not generallywill be subject to federal income taxes iftax at regular corporate rates to the extent that it distributes less than 100100% percent of its net taxable income. Most states where income, including any net capital gains. In January 2023, the Company holds investmentsconsummated the Reorganization into an UPREIT structure as described in real estate conformthe Explanatory Note at the beginning of this Quarterly Report on Form 10-Q. If, as the Company believes, it is organized and operates in such a manner so as to qualify and remain qualified as a REIT under the Code, the Company, generally will not be subject to U.S. federal rules recognizing REITs. Certainincome tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income, as defined in the Code. The Company maintains certain subsidiaries that have made a joint electionelections with the Company to be treated as taxable REIT subsidiaries (“TRSs”), whichthat permit the Company to engage through such TRSs in certain business activities whichthat 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:
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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 PandemicEconomic Conditions
The coronavirus disease 2019 (“COVID-19”) pandemiceconomy continues to face several issues including inflation risk, bank failures and liquidity constraints, lack of qualified employees, tenant bankruptcies and supply chain issues, which could impact the retail real estate industry for both landlordsCompany and its tenants. The extentIn response to which the COVID-19 pandemic impactsrising rate of inflation the Company’s financial condition, results of operationsFederal Reserve has steadily increased interest rates, and cash flows, in the near term, will may continue to depend on future developments, which are uncertain at this time. The Company’sincrease interest rates, until the rate of inflation begins to decrease. These increases in interest rates could adversely impact the business operations and financial results will dependof the Company and its tenants. In addition, slower economic growth and the potential for a recession could have an adverse effect on numerous evolving factors,the Company and its tenants. This could negatively affect the overall demand for retail space, including the duration and scope of the pandemic, governmental, business and individual actions that have been and continue to be takendemand for leasable space 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 properties. As a result, the Company could feel pricing pressure on rents that it is able to charge to new or renewing tenants, such that future rents and their businesses and the ability of tenants to make their rental payments.rent spreads could be negatively impacted. 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. However, the economyCompany continues to face several issues including the lack of qualified employees, inflation risk, supply chain issues and new COVID-19 variants, which could impact the Company and its tenants. 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
PrinciplesBasis of ConsolidationPresentation
This report combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2023, of the Parent Company and Kimco OP into this single report. The accompanying Condensed Consolidated Financial Statements include the accounts of the Company.Parent Company and Kimco OP and their consolidated subsidiaries. The Reorganization resulted in a merger of entities under common control in accordance with accounting principles generally accepted in the United States ("GAAP"). Accordingly, the accompanying consolidated financial statements including the notes thereto, are presented as if the Reorganization had occurred at the earliest period presented. The Company’s subsidiaries include subsidiaries which are wholly owned or which the Company has a controlling interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity (“VIE”) in accordance with the consolidation 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 Annual Report on Form 10-K for the year ended December 31, 2022, as certain disclosures in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 that would duplicate those included in thesuch Annual Report on Form 10-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 its Condensed Consolidated Financial Statements (see Footnote 106 of the Notes to the Company’s Condensed Consolidated Financial Statements).
Reclassifications
Certain amounts in the prior period have been reclassified in order to conform to the current period’s presentation. For comparative purposes, for the three months ended March 31, 2022, the Company reclassified certain cash flows (used for)/provided by operating activities on the Company’s Condensed Consolidated Statements of Cash Flows as follows (in millions):
Three Months Ended March 31, 2022 | ||||
Operating activities: | ||||
Straight-line rental income adjustments, net | $ | (7.9 | ) | |
Amortization of above-market and below-market leases, net | $ | (4.3 | ) | |
Amortization of deferred financing costs and fair value debt adjustments, net | $ | (7.0 | ) | |
Change in accounts and notes receivable, net | $ | 7.9 | ||
Change in other operating assets and liabilities, net | $ | 11.3 |
New Accounting Pronouncements
The following table represents an Accounting Standards Update (“ASU”) to the FASB’s ASCs that, as of June 30, 2022,March 31, 2023, areis 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 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions | This ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and provides new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. | January 1, 2024; Early adoption permitted | The Company is |
The following ASUs to the FASB’s ASCs have been adopted by the Company as of the date listed:
ASU | Description | Adoption Date | Effect on the financial statements or other significant matters |
ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | The amendments in this update require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination rather than at fair value on the acquisition date required by Topic 805. | January 1,
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The following ASU to the FASB’s ASC has been adopted by the Company as of the date listed:
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3. Real Estate
Acquisitions
During the sixthree months ended June 30,March 31, 2023, the Company acquired the following operating properties, through direct asset purchases or consolidation due to change in control resulting from the purchase of additional interests in certain operating properties held in an unconsolidated joint venture (in thousands):
Purchase Price | ||||||||||||||||||||||
Property Name | Location | Month Acquired | Cash | Debt | Other | Total | GLA* | |||||||||||||||
Portfolio (2 properties) (1) | Various | Jan-23 | $ | 69,130 | $ | 19,637 | $ | 13,019 | $ | 101,786 | 342 | |||||||||||
Crossroads Plaza Parcel | Cary, NC | Jan-23 | 2,173 | - | - | 2,173 | 5 | |||||||||||||||
Northridge Shopping Center Parcel | Arvada, CO | Jan-23 | 728 | - | - | 728 | 57 | |||||||||||||||
Stafford Marketplace Parcel (2) | Stafford, VA | Feb-23 | - | - | 12,527 | 12,527 | 87 | |||||||||||||||
Tustin Heights (1) | Tustin, CA | Mar-23 | 26,501 | 17,550 | 4,910 | 48,961 | 137 | |||||||||||||||
$ | 98,532 | $ | 37,187 | $ | 30,456 | $ | 166,175 | 628 |
* Gross leasable area ("GLA")
(1) | Other includes the Company’s previously held equity investments in the Prudential Investment Program and net gains on change in control. The Company evaluated these transactions pursuant to the FASB’s Consolidation guidance and as a result, recognized gains on change in control of interest of $7.7 million, in aggregate, resulting from the fair value adjustments associated with the Company’s previously held equity interests, which are included in Equity in income of joint ventures, net on the Company’s Condensed Consolidated Statements of Income. The Company previously held an ownership interest of 15.0% in these property interests. See Footnote 4 of the Notes to the Company's Condensed Consolidated Financial Statements. |
(2) | During the three months ended March 31, 2023, the Company received a land parcel as consideration resulting from the exercise of a termination option of an operating lease. |
Included in the Company’s Condensed Consolidated Statements of Income is $2.9 million in total revenues from the date of acquisition through March 31, 2023, for operating properties acquired/consolidated during the three months ended March 31, 2023.
The purchase price for these acquisitions was allocated to real estate and related intangible assets and liabilities acquired, as applicable, in accordance with our accounting policies for asset acquisitions. The purchase price allocation for properties acquired/consolidated during the three months ended March 31, 2023, is as follows (in thousands):
Allocation as of March 31, 2023 | Weighted Average | |||||||
Land | $ | 51,116 | n/a | |||||
Building | 99,947 | 50.0 | ||||||
Building improvements | 10,125 | 45.0 | ||||||
Tenant improvements | 8,320 | 4.1 | ||||||
In-place leases | 11,080 | 4.1 | ||||||
Above-market leases | 1,329 | 5.7 | ||||||
Below-market leases | (16,551 | ) | 23.6 | |||||
Other assets | 1,777 | n/a | ||||||
Other liabilities | (968 | ) | n/a | |||||
Net assets acquired | $ | 166,175 |
During the three months ended March 31, 2022, the Company acquired 4 parcels for an aggregate purchase price of $23.2 million, in separate transactions.the following operating properties, through direct asset purchases (in thousands):
Property Name | Location | Month Acquired | Purchase Price | GLA | ||||||
Rancho San Marcos Parcel | San Marcos, CA | Jan-22 | $ | 2,407 | 6 | |||||
Columbia Crossing Parcel | Columbia, MD | Feb-22 | 16,239 | 60 | ||||||
$ | 18,646 | 66 |
Dispositions
The table below summarizes the Company’s disposition activity relating to consolidated operating properties and parcels for the three months ended March 31, 2023 and 2022(dollars in millions):
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Aggregate sales price | $ | 43.3 | $ | 132.2 | ||||||||||||
Aggregate sales price/gross fair value (1) (2) | $ | 117.6 | $ | 8.7 | ||||||||||||
Gain on sale of properties | $ | 7.1 | $ | 28.9 | $ | 39.2 | $ | 4.2 | ||||||||
Number of properties sold | 1 | 3 | 3 | - | ||||||||||||
Number of parcels sold | 8 | 7 | ||||||||||||||
Number of parcels sold/(deconsolidated) (1) | 3 | 4 |
(1) | During 2023, the Company contributed a land parcel and related entitlements, located in Admore, PA, into a preferred equity investment with a gross value of $19.6 million. As a result, the Company no longer consolidates this land parcel and has a non-controlling interest in this investment. See Footnote 5 of the Notes to the Company's Condensed Consolidated Financial Statements for preferred equity investment disclosure. |
(2) | During 2023, the Company provided as a lender seller financing of $25.0 million related to the sale of an operating property located in Gresham, OR. See Footnote 9 of the Notes to the Company's Condensed Consolidated Financial Statements for mortgage receivable loan disclosure. |
(3) | Before noncontrolling interests of |
Impairments
During the three months ended March 31, 2023, the Company recognized aggregate impairment charges of $11.8 million related to adjustments to property carrying values for properties which the Company is marketing for sale as part of its select capital recycling program and as such, has adjusted the anticipated hold period for such properties. The Company’s estimated fair values of these properties were primarily based upon estimated sales prices from signed contracts or letters of intent from third party offers. See Footnote 13 to the Notes to the Company’s Condensed Consolidated Financial Statements for fair value disclosure.
4. Investments in and Advances to Real Estate Joint Ventures
The Company has 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 June 30, 2022March 31, 2023 and December 31, 20212022 (dollars in millions):
Noncontrolling | The Company’s Investment | ||||||||||
Joint Venture | As of June 30, 2022 | June 30, 2022 | December 31, 2021 | ||||||||
Prudential Investment Program | 15.0% | $ | 153.4 | $ | 163.0 | ||||||
Kimco Income Opportunity Portfolio (“KIR”) (1) | 52.1% | 271.9 | 186.0 | ||||||||
Canada Pension Plan Investment Board (“CPP”) | 55.0% | 178.7 | 165.1 | ||||||||
Other Institutional Joint Ventures | Various | 268.4 | 281.8 | ||||||||
Other Joint Venture Programs | Various | 211.1 | 211.0 | ||||||||
Total* | $ | 1,083.5 | $ | 1,006.9 |
* Representing 114 property interests and 23.1 million square feet of GLA, as of June 30, 2022, and 120 property interests and 24.7 million square feet of GLA, as of December 31, 2021.
Noncontrolling Ownership Interest | The Company’s Investment | |||||||||||
Joint Venture | As of March 31, 2023 | March 31, 2023 | December 31, 2022 | |||||||||
Prudential Investment Program | 15.0% | $ | 144.4 | $ | 153.6 | |||||||
Kimco Income Opportunity Portfolio (“KIR”) | 52.1% | 283.3 | 281.5 | |||||||||
Canada Pension Plan Investment Board (“CPP”) | 55.0% | 196.7 | 190.8 | |||||||||
Other Institutional Joint Ventures | Various | 253.5 | 256.8 | |||||||||
Other Joint Venture Programs | Various | 214.6 | 208.9 | |||||||||
Total* | $ | 1,092.5 | $ | 1,091.6 |
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The table below presents the Company’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 sixmonths ended June 30, 2022March 31, 2023 and 20212022 (in millions):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Joint Venture | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Prudential Investment Program (1) | $ | 2.3 | $ | 2.6 | $ | 4.7 | $ | 5.3 | ||||||||
KIR | 32.0 | 9.1 | 45.5 | 17.8 | ||||||||||||
CPP | 2.6 | 2.0 | 5.7 | 4.1 | ||||||||||||
Other Institutional Joint Ventures | 4.1 | 0 | 5.6 | 0 | ||||||||||||
Other Joint Venture Programs | 3.1 | 2.6 | 6.2 | 6.9 | ||||||||||||
Total | $ | 44.1 | $ | 16.3 | $ | 67.7 | $ | 34.1 |
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Three Months Ended March 31, | ||||||||
Joint Venture | 2023 | 2022 | ||||||
Prudential Investment Program | $ | 9.8 | $ | 2.4 | ||||
KIR | 9.3 | 13.4 | ||||||
CPP | 2.7 | 3.1 | ||||||
Other Institutional Joint Ventures | 0.7 | 1.5 | ||||||
Other Joint Venture Programs | 1.7 | 3.2 | ||||||
Total | $ | 24.2 | $ | 23.6 |
During the sixthree months ended June 30,March 31, 2023, the Company acquired the remaining 85% interest in three operating properties from KimPru Portfolio, in separate transactions, with an aggregate gross fair value of $150.7 million. The Company evaluated these transactions pursuant to the FASB’s Consolidation guidance and as a result, recognized net gains on change in control of interests of $7.7 million, in aggregate, resulting from the fair value adjustments associated with the Company’s previously held equity interests. See Footnote 3 of the Notes to Condensed Consolidated Financial Statements for the operating properties acquired by the Company.
During the three months ended March 31, 2022, certain of the Company’s real estate joint ventures disposed of 6three properties, and a land parcel, in separate transactions, for an aggregate sales price of $268.6$81.5 million. These transactions resulted in an aggregate net gain to the Company of $29.8$2.6 million for the sixthree months ended June 30,March 31, 2022.
During the six months ended June 30, 2021, certain of the Company’s real estate joint ventures disposed of 2 properties, in separate transactions, for an aggregate sales price of $53.7 million. These transactions resulted in an aggregate net gain to the Company of $4.2 million for the six months ended June 30, 2021.
The table below presents debt balances within the Company’s unconsolidated joint venture investments for which the Company held noncontrolling ownership interests at June 30, 2022March 31, 2023 and December 31, 20212022 (dollars in millions):
As of June 30, 2022 | As of December 31, 2021 | As of March 31, 2023 | As of December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||
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)* | 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 | $ | 381.8 | 3.35 | % | 39.1 | $ | 426.9 | 2.02 | % | 45.6 | $ | 342.3 | 5.61 | % | 30.6 | $ | 380.1 | 5.20 | % | 33.1 | ||||||||||||||||||||||||||||
KIR | 425.6 | 2.88 | % | 38.8 | 492.6 | 2.55 | % | 27.9 | 273.0 | 5.82 | % | 48.2 | 297.9 | 5.46 | % | 47.2 | ||||||||||||||||||||||||||||||||
CPP | 83.6 | 3.54 | % | 49.1 | 84.2 | 1.85 | % | 55.0 | 82.8 | 5.70 | % | 40.1 | 83.1 | 6.14 | % | 43.0 | ||||||||||||||||||||||||||||||||
Other Institutional Joint Ventures | 233.2 | 3.34 | % | 53.8 | 232.9 | 1.65 | % | 59.7 | 233.6 | 5.76 | % | 44.7 | 233.5 | 4.30 | % | 47.7 | ||||||||||||||||||||||||||||||||
Other Joint Venture Programs | 400.4 | 3.80 | % | 77.2 | 402.1 | 3.58 | % | 83.0 | 376.7 | 4.34 | % | 68.0 | 388.8 | 4.10 | % | 71.8 | ||||||||||||||||||||||||||||||||
Total | $ | 1,524.6 | $ | 1,638.7 | $ | 1,308.4 | $ | 1,383.4 |
* Includes extension options
5. Other Investments
The Company has provided capital to owners and developers of real estate properties and loans through its Preferred Equity Program.program. The Company’s maximum exposure to losses associated with its preferred equity investments is primarily limited to its net investment. As of June 30, 2022,March 31, 2023, the Company’s net investment under the Preferred Equity Programprogram was $69.9 million relating to 16 properties.$94.1 million. During the sixthree months ended June 30, 2022March 31, 2023 and 2021,2022, the Company recognized net income of $8.1$2.4 million and $7.7$5.9 million from its preferred equity investments, respectively. These amounts are included in Equity in income of other investments, net on the Company’s Condensed Consolidated Statements of Operations.Income.
During 2023, the Company contributed a land parcel and related entitlements, located in Admore, PA, into a preferred equity investment with a gross value of $19.6 million. As a result, the Company no longer consolidates this land parcel and has a non-controlling interest in this investment. As of March 31, 2023, the Company’s investment was $24.3 million.
6. Marketable Securities
The amortized cost and unrealized gains, net of marketable securities as of June 30, 2022March 31, 2023 and December 31, 2021,2022, are as follows (in thousands):
As of June 30, 2022 | As of December 31, 2021 | As of March 31, 2023 | As of December 31, 2022 | |||||||||||||
Marketable securities: | ||||||||||||||||
Amortized cost | $ | 115,862 | $ | 114,159 | $ | 70,290 | $ | 87,411 | ||||||||
Unrealized gains, net | 957,844 | 1,097,580 | 381,293 | 510,321 | ||||||||||||
Total fair value | $ | 1,073,706 | $ | 1,211,739 | $ | 451,583 | $ | 597,732 |
During the three months ended June 30, 2022March 31, 2023 and 2021,2022, the Company recognized net unrealized losses on marketable securities of $261.5$10.1 million and net unrealized gains on marketable securities of $24.3 million, respectively. During the six months ended June 30, 2022 and 2021, the Company recognized net unrealized losses on marketable securities of $139.7 million and net unrealized gains on marketable securities of $85.4$121.8 million, respectively. These net unrealized gains and losses are included in (Loss)/gain on marketable securities, net on the Company’s Condensed Consolidated Statements of Operations.Income.
During the three months ended March 31, 2023, the Company received $194.1 million representing its share of the ACI special dividend payment and recognized this as Special dividend income on the Company’s Condensed Consolidated Statements of Income. As a result, the Company anticipates it may need to make a special dividend payment to maintain its compliance with REIT distribution requirements. The payment of this special dividend may be in the form of cash, common stock or some combination thereof. The Company’s determination regarding any such special dividend and the form thereof will be announced during the year ended December 31, 2023.
Also during the three months ended March 31, 2023, the Company sold 7.1 million shares of Albertsons Companies Inc. (“ACI”) held by the Company, generating net proceeds of $137.4 million. For tax purposes, the Company recognized a long-term capital gain of $115.4 million. The Company anticipates retaining the proceeds from this stock sale for general corporate purposes and will pay federal and state taxes of $30.0 million on the taxable gain. As of March 31, 2023, the Company held 21.2 million shares of ACI, which had a value of $440.8 million.
In April 2023, the Company sold an additional 7.0 million shares of ACI held by the Company, generating net proceeds of $144.9 million. For tax purposes, the Company will recognize a long-term capital gain of $125.9 million during the three months ended June 30, 2023. The Company anticipates retaining the proceeds from this stock sale for general corporate purposes and will pay estimated corporate taxes of $32.7 million on the taxable gain.
7. Accounts and Notes Receivable
The components of accounts and notes receivable, net of potentially uncollectible amounts as of June 30, 2022March 31, 2023 and December 31, 2021,2022, are as follows (in thousands):
As of June 30, 2022 | As of December 31, 2021 | As of March 31, 2023 | As of December 31, 2022 | |||||||||||||
Billed tenant receivables | $ | 21,595 | $ | 20,970 | $ | 39,736 | $ | 33,801 | ||||||||
Unbilled common area maintenance, insurance and tax reimbursements | 38,033 | 55,283 | 40,862 | 56,001 | ||||||||||||
Deferred rent receivables | 3,383 | 5,029 | 1,401 | 1,905 | ||||||||||||
Defined benefit plan receivable | 14,553 | 14,421 | ||||||||||||||
Other receivables | 22,175 | 15,725 | 9,066 | 8,361 | ||||||||||||
Straight-line rent receivables | 174,954 | 157,670 | 197,445 | 189,737 | ||||||||||||
Total accounts and notes receivable, net | $ | 260,140 | $ | 254,677 | $ | 303,063 | $ | 304,226 |
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 Operations,Income, as either fixed or variable lease income based on the criteria specified in ASC 842, for the three and sixmonths ended June 30, 2022March 31, 2023 and 2021,2022, is as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Lease income: | ||||||||||||||||||||||||
Fixed lease income (1) | $ | 336,370 | $ | 223,259 | $ | 668,368 | $ | 436,263 | $ | 348,338 | $ | 331,998 | ||||||||||||
Variable lease income (2) | 81,514 | 55,683 | 164,961 | 115,995 | 90,071 | 83,447 | ||||||||||||||||||
Above-market and below-market leases amortization, net | 2,683 | 3,231 | 6,980 | 8,933 | 2,989 | 4,297 | ||||||||||||||||||
Adjustments for potentially uncollectible revenues and disputed amounts (3) | 2,706 | 3,559 | 5,618 | 3,412 | (3,060 | ) | 2,912 | |||||||||||||||||
Total lease income | $ | 423,273 | $ | 285,732 | $ | 845,927 | $ | 564,603 | $ | 438,338 | $ | 422,654 |
(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 |
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 less than one to 6462.8 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 June 30, 2022March 31, 2023 were as follows:
Operating Leases | Finance Leases | Operating Leases | Finance Leases | |||||||||||||
Weighted-average remaining lease term (in years) | 25.5 | 1.5 | 24.6 | 0.8 | ||||||||||||
Weighted-average discount rate | 6.63 | % | 4.44 | % | 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 OperationsIncome for the three and sixmonths ended June 30, 2022March 31, 2023 and 2021,2022, were as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Lease cost: | ||||||||||||||||||||||||
Finance lease cost | $ | 250 | $ | 0 | $ | 576 | $ | 0 | $ | 319 | $ | 327 | ||||||||||||
Operating lease cost | 3,268 | 2,795 | 6,251 | 5,624 | 3,701 | 2,983 | ||||||||||||||||||
Variable lease cost | 1,188 | 649 | 2,596 | 1,332 | 561 | 1,407 | ||||||||||||||||||
Total lease cost | $ | 4,706 | $ | 3,444 | $ | 9,423 | $ | 6,956 | $ | 4,581 | $ | 4,717 |
9. Other Assets
Assets Held-For-Sale
At June 30, 2022,March 31, 2023, the Company had a property and land parcel classified as held-for-sale at a net carrying amount of $2.9 million (including accumulated depreciation and amortization of $1.1 million).$4.0 million.
Mortgages and Other Financing Receivables
During the sixthree months ended June 30, 2022,March 31, 2023, the Company provided as a lender the following mortgage loans and other financing receivables (dollars in millions):
Date Issued | Face Amount | Interest Rate | Maturity Date | |||||||
Jun-22 | $ | 16.5 | 9.00 | % | June-25 | |||||
Jun-22 | $ | 19.6 | 10.00 | % | June-29 | |||||
May-22 | $ | 14.0 | 8.00 | % | May-29 | |||||
Jan-22 | $ | 3.0 | 8.00 | % | July-22 |
Date Issued | Face Amount | Interest Rate | Maturity Date | ||||||
Feb-23 | $ | 11.2 | 14.00 | % | Dec-24 | ||||
Mar-23 | $ | 25.0 | 8.00 | % | Apr-24 |
10. Notes and Mortgages Payable
Notes Payable
TheIn February 2023, the Company hasobtained a new $2.0 billion unsecured revolving credit facility (the “Credit Facility”) with a group of banks, which replaced the Company’s existing $2.0 billion unsecured revolving credit facility which was scheduled to mature in March 2024. The Credit Facility is scheduled to expire in March 2024,2027 with two additional six-month options to extend the maturity date, at the Company’s discretion, to March 2025.2028. The Credit Facility is guaranteed by the Parent Company. The Credit Facility could be increased to $2.75 billion through an accordion feature. 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 LIBORAdjusted Term SOFR, as defined in the terms of the Credit Facility, plus 76.577.5 basis points (2.55%and fluctuates in accordance with the Company’s credit ratings. The interest rate can be further adjusted upward or downward by four basis points (as of March 31, 2023, a two-basis point reduction was achieved) based on the sustainability metric targets, as defined in the agreement (5.66% as of June 30, 2022),March 31, 2023). can be increased to $2.75 billion through an accordion feature. Pursuant to the terms of the Credit Facility, the Company among other things, iscontinues to be subject to the same covenants requiringunder the maintenanceCompany's prior unsecured revolving credit facility. For a full description of (i) maximum indebtedness ratiosthe Credit Facility’s covenants refer to the Amended and (ii) minimum interest and fixed charge coverage ratios. Restated Credit Agreement dated as of February 23, 2023, filed as Exhibit 10.20 in our Annual Report on Form 10-K for the year ended December 31, 2022. As of June 30, 2022,March 31, 2023, the Credit Facility had 0no outstanding balance, no appropriations for letters of credit of $1.2 million and the Company was in compliance with its covenants.
During
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 repayment of certain senior unsecured notes.
During the six months ended June 30, 2022, the Company repaid or partially repaid the following notes (dollars in millions):
Type | Date Paid | Amount Repaid | Interest Rate | Maturity Date | ||||||||
Senior unsecured notes (1) | Mar-22 | $ | 500.0 | 3.400 | % | Nov-22 | ||||||
Senior unsecured notes (2) | May-22 & Jun-22 | $ | 36.1 | 3.125 | % | Jun-23 | ||||||
Senior unsecured notes (3) | Jun-22 | $ | 11.0 | 3.375 | % | Oct-22 |
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Mortgages Payable
During the sixthree months ended June 30, 2022,March 31, 2023, the Company (i) obtained a $19.0 million mortgage relating to a consolidated joint venture operating property and (ii) repaid $115.3assumed $37.2 million of individual non-recourse mortgage debt (including fair market value adjustmentthrough the acquisition of $0.2 million) that encumberedtwo operating properties, which it subsequently repaid in sixMarch 2023. operating properties.
11. 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 Operations.Income.
During the six months ended June 30, 2022, the Company recognized impairment charges of $14.0 million relating to 5 properties held in a consolidated joint venture, before partners’ $13.0 million noncontrolling interests share of the impairment.
The following table presents the change in the redemption value of the Redeemable noncontrolling interests for the sixthree months ended June 30, 2022March 31, 2023 and 20212022 (in thousands):
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Balance at January 1, | $ | 13,480 | $ | 15,784 | $ | 92,933 | $ | 13,480 | ||||||||
Fair value allocation to partnership interest | 0 | 2,068 | ||||||||||||||
Net income | 534 | 176 | 1,546 | 333 | ||||||||||||
Distributions | (535 | ) | (2,244 | ) | (1,546 | ) | (333 | ) | ||||||||
Redemption/conversion of noncontrolling interests | (209 | ) | 0 | |||||||||||||
Balance at June 30, | $ | 13,270 | $ | 15,784 | ||||||||||||
Balance at March 31, | $ | 92,933 | $ | 13,480 |
12. Variable Interest Entities (“VIE”)
Consolidated Operating Properties
Included within the Company’s consolidated operating properties at June 30, 2022March 31, 2023 and December 31, 20212022 are 33 and 3432 consolidated 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 because the unrelated investors do not have substantive 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 June 30,March 31, 2023, total assets of these VIEs were $1.8 billion and total liabilities were $199.0 million. At December 31, 2022, total assets of these VIEs were $1.6$1.8 billion and total liabilities were $148.1 million. At December 31, 2021, total assets of these VIEs were $1.6 billion and total liabilities were $153.9$199.1 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.
All liabilities of these consolidated VIEs are non-recourse to the Company (“VIE Liabilities”). The assets of the unencumbered VIEs are not restricted for use to settle only the obligations of these VIEs. The remaining VIE assets are encumbered by third-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 as follows (dollars in millions):
As of June 30, 2022 | As of December 31, 2021 | As of March 31, 2023 | As of December 31, 2022 | |||||||||||||
Number of unencumbered VIEs | 30 | 30 | 29 | 29 | ||||||||||||
Number of encumbered VIEs | 3 | 4 | 3 | 3 | ||||||||||||
Total number of consolidated VIEs | 33 | 34 | 32 | 32 | ||||||||||||
Restricted Assets: | ||||||||||||||||
Real estate, net | $ | 193.2 | $ | 222.9 | $ | 421.2 | $ | 425.5 | ||||||||
Cash and cash equivalents | 5.2 | 2.0 | 8.7 | 7.9 | ||||||||||||
Accounts and notes receivable, net | 1.5 | 2.0 | 2.9 | 1.7 | ||||||||||||
Other assets | 1.7 | 1.0 | 2.3 | 1.5 | ||||||||||||
Total Restricted Assets | $ | 201.6 | $ | 227.9 | $ | 435.1 | $ | 436.6 | ||||||||
VIE Liabilities: | ||||||||||||||||
Mortgages payable, net | $ | 74.5 | $ | 78.9 | $ | 109.7 | $ | 109.7 | ||||||||
Accounts payable and accrued expenses | 12.3 | 11.8 | 11.4 | 10.9 | ||||||||||||
Operating lease liabilities | 6.6 | 6.7 | 5.2 | 5.2 | ||||||||||||
Other liabilities | 54.7 | 56.5 | 72.7 | 73.3 | ||||||||||||
Total VIE Liabilities | $ | 148.1 | $ | 153.9 | $ | 199.0 | $ | 199.1 |
Unconsolidated Redevelopment Investment
Included in the Company’s preferred equity investments at March 31, 2023, is an unconsolidated development project which is a VIE for which the Company is not the primary beneficiary. This preferred equity investment was primarily established to develop real estate property for long-term investment and was deemed a VIE primarily based on the fact that the equity investment at risk was not sufficient to permit the entity to finance its activities without additional financial support. The initial equity contributed to this entity was not sufficient to fully finance the real estate construction as development costs are funded by the partners over the construction period. The Company determined that it was not the primary beneficiary of this VIE based on the fact that the Company has shared control of this entity along with the entity’s partners and therefore does not have a controlling financial interest.
As of March 31, 2023, the Company’s investment in this VIE was $24.3 million, which is included in Other investments on the Company’s Condensed Consolidated Balance Sheets. The Company’s maximum exposure to loss as a result of its involvement with this VIE is estimated to be $34.3 million, which is the capital commitment obligation. The Company has not provided financial support to this VIE that it was not previously contractually required to provide. All future costs of development will be funded with capital contributions from the Company and the outside partner in accordance with their respective ownership percentages and construction loan financing.
13. 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. The fair value for embedded derivative liability is based on using the “with-and-without” method. 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’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 estimated fair value differs from the carrying value (in thousands):
June 30, 2022 | December 31, 2021 | March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
Notes payable, net (1) | $ | 7,056,644 | $ | 6,420,439 | $ | 7,027,050 | $ | 7,330,723 | $ | 6,778,050 | $ | 5,870,915 | $ | 6,780,969 | $ | 5,837,401 | ||||||||||||||||
Mortgages payable, net (2) | $ | 346,461 | $ | 319,813 | $ | 448,652 | $ | 449,758 | $ | 374,285 | $ | 316,139 | $ | 376,917 | $ | 311,659 |
(1) | The Company determined that the valuation of its senior unsecured notes were classified within Level 2 of the fair value |
(2) | The Company determined that its valuation of its mortgages payable were classified within Level 3 of the fair value hierarchy. |
The Company has certain financial instruments that must be measured under the FASB’s Fair Value Measurements and Disclosures guidance, including available for sale securities.securities and embedded derivative liabilities. 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.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level of the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The tableCompany’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The tables below presentspresent the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2022March 31, 2023 and December 31, 2021,2022, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
Balance at June 30, 2022 | Level 1 | Level 2 | Level 3 | |||||||||||||
Marketable equity securities | $ | 1,073,706 | $ | 1,073,706 | $ | 0 | $ | 0 |
Balance at March 31, 2023 | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Marketable equity securities | $ | 451,583 | $ | 451,583 | $ | - | $ | - | ||||||||
Liabilities: | ||||||||||||||||
Embedded derivative liability | $ | 56,000 | $ | - | $ | - | $ | 56,000 |
Balance at December 31, 2021 | Level 1 | Level 2 | Level 3 | |||||||||||||
Marketable equity securities | $ | 1,211,739 | $ | 1,211,739 | $ | 0 | $ | 0 |
Balance at December 31, 2022 | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Marketable equity securities | $ | 597,732 | $ | 597,732 | $ | - | $ | - | ||||||||
Liabilities: | ||||||||||||||||
Embedded derivative liability | $ | 56,000 | $ | - | $ | - | $ | 56,000 |
The table below presentssignificant unobservable input (Level 3 inputs) used in measuring the Company’s assetsembedded derivative liability, which is categorized with Level 3 of the fair value hierarchy as of March 31, 2023, is the discount rate of 8.00%.
Assets measured at fair value on a non-recurring basis at June 30, 2022March 31, 2023 and December 31, 2021 (inare as follows (in thousands):
Balance at June 30, 2022 | Level 1 | Level 2 | Level 3 | |||||||||||||
Real estate | $ | 110,503 | $ | 0 | $ | 0 | $ | 110,503 |
Balance at December 31, 2021 | Level 1 | Level 2 | Level 3 | |||||||||||||
Other investments | $ | 9,834 | $ | 0 | $ | 0 | $ | 9,834 |
Balance at March 31, 2023 | Level 1 | Level 2 | Level 3 | |||||||||||||
Real estate | $ | 15,479 | $ | - | $ | - | $ | 15,479 |
During the sixthree months ended June 30, 2022,March 31, 2023, the Company recognized impairment charges related to adjustments to property carrying values of $14.7 million, before noncontrolling interests of $13.0$11.8 million. The Company’s estimated fair values of these assets were primarily based upon estimated sales prices from signed contracts or letters of intent from third-party offers, 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 offers. Based on these inputs, the Company determined that its valuation of these investments was classified within Level 3 of the fair value hierarchy.
14. Incentive Plans
In 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 deferred stock awards. At June 30, 2022,March 31, 2023, the Company had 6.94.9 million shares of common stock available for issuance under the 2020 Plan.
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 OperationsIncome 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 $14.0$9.3 million and $12.3$7.5 million for the sixthree months ended June 30, 2022March 31, 2023 and 2021,2022, respectively. As of June 30, 2022,March 31, 2023, the Company had $56.2$75.4 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 3.13.2 years.
15. Stockholders’ Equity
Preferred Stock
The Company’s Board of Director’s authorized the repurchase of up to 900,000894,000 depositary shares of Class L preferred stock and 1,058,0001,048,000 depositary shares of Class M preferred stock, representing up to 1,9581,942 shares of the Company’s preferred stock, par value $1.00 per share, through December 31, 2022.2023. During the sixthree months ended June 30, 2022,March 31, 2023, the Company repurchased the following preferred stock:
Class of Preferred Stock | Depositary Shares Repurchased | Purchase Price (in millions) | Depositary Shares Repurchased | Purchase Price (in thousands) | ||||||||||||
Class L | 54,508 | $ | 1.3 | 5,540 | $ | 111.0 | ||||||||||
Class M | 90,760 | $ | 2.1 | 7,741 | $ | 157.0 |
The Company’s outstanding Preferred Stock is detailed below:below (in thousands, except share data and par values):
As of June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
As of March 31, 2023 | As of March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Class of | Shares | Shares | Liquidation (in thousands) | Dividend | Annual Depositary | Par | Optional | Shares Authorized | Shares Issued and Outstanding | Liquidation Preference | Dividend Rate | Annual Dividend per Depositary Share | Par Value | Optional Redemption Date | ||||||||||||||||||||||||||||||||||||
Class L | 10,350 | 8,946 | $ | 223,637 | 5.125 | % | $ | 1.28125 | $ | 1.00 | 8/16/2022 | 10,350 | 8,940 | $ | 223,499 | 5.125 | % | $ | 1.28125 | $ | 1.00 | 8/16/2022 | ||||||||||||||||||||||||||||
Class M | 10,580 | 10,489 | 262,231 | 5.250 | % | $ | 1.31250 | $ | 1.00 | 12/20/2022 | 10,580 | 10,481 | 262,037 | 5.250 | % | $ | 1.31250 | $ | 1.00 | 12/20/2022 | ||||||||||||||||||||||||||||||
19,435 | $ | 485,868 | 19,421 | $ | 485,536 |
As of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2022 | As of December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||
Class of | Shares | Shares | Liquidation (in thousands) | Dividend Rate | Annual Depositary | Par Value | Optional | Shares Authorized | Shares Issued and Outstanding | Liquidation Preference | 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 | 10,350 | 8,946 | $ | 223,637 | 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 | 10,580 | 10,489 | 262,231 | 5.250 | % | $ | 1.31250 | $ | 1.00 | 12/20/2022 | ||||||||||||||||||||||||||||||
19,580 | $ | 489,500 | 19,435 | $ | 485,868 |
Common Stock
The Company has a common 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 common share repurchase program during the sixthree months ended June 30, 2022.March 31, 2023. As of June 30, 2022,March 31, 2023, the Company had $224.9 million available under this common share repurchase program.
During August 2021, the Company established an at-the-market continuous offering program (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 New 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. During the six months ended June 30, 2022, the Company issued 450,000 shares and received net proceeds after commissions of $11.3 million. As of June 30, 2022, the Company had $411.0 million available under this ATM program.
Dividends Declared
The following table provides a summary of the dividends declared per share:
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Common Shares | $ | 0.20000 | $ | 0.17000 | $ | 0.39000 | $ | 0.34000 | $ | 0.23000 | $ | 0.19000 | ||||||||||||
Class L Depositary Shares | $ | 0.32031 | $ | 0.32031 | $ | 0.64062 | $ | 0.64062 | $ | 0.32031 | $ | 0.32031 | ||||||||||||
Class M Depositary Shares | $ | 0.32813 | $ | 0.32813 | $ | 0.65626 | $ | 0.65626 | $ | 0.32813 | $ | 0.32813 |
16. Supplemental Schedule of Non-Cash Investing / Financing Activities
The following schedule summarizes the non-cash investing and financing activities of the Company for the sixthree months ended June 30, 2022March 31, 2023 and 20212022 (in thousands):
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Acquisition of real estate interests from a lease modification | $ | 12,527 | $ | - | ||||||||||||
Disposition of real estate interests through the issuance of mortgage receivables | $ | 25,000 | $ | - | ||||||||||||
Deconsolidation of real estate interests through contribution to other investments | $ | 19,618 | $ | - | ||||||||||||
Surrender of common stock | $ | 13,545 | $ | 9,246 | $ | 16,085 | $ | 13,444 | ||||||||
Declaration of dividends paid in succeeding period | $ | 5,326 | $ | 5,366 | $ | 5,322 | $ | 5,366 | ||||||||
Capital expenditures accrual | $ | 23,225 | $ | 37,269 | $ | 35,819 | $ | 33,885 | ||||||||
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 | $ | 1,613 | $ | 0 | $ | - | $ | 1,536 | ||||||||
Purchase price fair value adjustment to prepaid rent | $ | 0 | $ | 15,620 | ||||||||||||
Consolidation of Joint Ventures: | ||||||||||||||||
Increase in real estate and other net assets | $ | 54,345 | $ | - | ||||||||||||
Increase in mortgage payables | $ | 37,187 | $ | - |
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 June 30, 2022 | As of December 31, 2021 | As of March 31, 2023 | As of December 31, 2022 | |||||||||||||
Cash and cash equivalents | $ | 293,863 | $ | 325,631 | $ | 326,210 | $ | 146,970 | ||||||||
Restricted cash | 2,935 | 9,032 | 2,967 | 2,859 | ||||||||||||
Total cash, cash equivalents and restricted cash | $ | 296,798 | $ | 334,663 | $ | 329,177 | $ | 149,829 |
17. 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 June 30, 2022,March 31, 2023, these letters of credit aggregated $42.6$39.8 million.
Funding Commitments
The Company has an investmentinvestments with a funding commitmentcommitments of $25.0$64.7 million, of which $10.1$41.7 million has been funded as of June 30, 2022.March 31, 2023.
Other
The Parent Company guarantees the debt securities of Kimco OP. These guarantees by the Parent Company are full, irrevocable, unconditional and absolute joint and several guarantees to the holders of each series of such guaranteed debt securities.
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 June 30, 2022,March 31, 2023, there were $27.7$17.4 million in performance and surety bonds outstanding.
In connection with the Merger, theThe 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$45.5 million outstanding at June 30, 2022.March 31, 2023. The bonds are to be repaid with incremental sales and property taxes and a public improvement fee ("PIF"(“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 June 30, 2022.
18.Defined Benefit Plan
As part of the Merger, the Company assumed sponsorship of Weingarten’s noncontributory qualified cash balance retirement plan (“the Benefit Plan”). At the date of the Merger, the Benefit Plan was frozen and as a result no new benefits will be offered to employees who were not already part of the Benefit Plan on the Merger date. The Benefit Plan was terminated as of DecemberMarch 31, 2021. In connection with the termination, the Benefit Plan maintains a separate account for each participant. Annual additions to each participant’s account includes an interest credit of 4.5% as the service credit was suspended upon the freeze. The participant data used in determining the liabilities and costs for the Benefit Plan was determined as of June 30,2022.
The following table summarizes the measurement changes in the Benefit Plan’s projected benefit obligation, plan assets and funded status, as well as the components of net periodic benefit costs, including key assumptions, from January 1, 2022 through June 30, 2022 (in thousands):
2022 | ||||
Change in Projected Benefit Obligation: | ||||
Benefit obligation at January 1 | $ | 36,995 | ||
Interest cost | 435 | |||
Actuarial gain | (6,028 | ) | ||
Benefit payments | (1,093 | ) | ||
Benefit obligation at June 30 | $ | 30,309 | ||
Change in Plan Assets: | ||||
Fair value of plan assets at January 1 | $ | 43,653 | ||
Actual return on plan assets | (1,343 | ) | ||
Benefit payments | (1,093 | ) | ||
Fair value of plan assets at June 30 | $ | 41,217 | ||
Funded status at June 30 (included in Other assets) | $ | 10,908 | ||
Accumulated benefit obligation | $ | 30,309 | ||
Net gain recognized in other comprehensive income | $ | 6,476 |
The weighted-average assumptions used to determine the benefit obligation as of June 30, 2022 are as follows:
|
| |||
|
|
The selection of the discount rate is made after comparison to yields based on cash investments. The long-term rate of return is a composite rate for the Benefit Plan. It is derived as the sum of the percentages invested in each principal asset class included in the portfolio multiplied by their respective expected rates of return. The Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the Benefit Plan portfolio. This analysis resulted in the selection of 1.00% as the long-term rate of return assumption for the six months ended June 30, 2022.
NaN contributions have been made and none are anticipated to be made to the Benefit Plan during 2022.2023.
19.Accumulated Other Comprehensive Income (“AOCI”)
The following table displays the change in the components of AOCI for the six months ended June 30, 2022:
Unrealized Gains | ||||
Balance as of January 1, 2022 | $ | 2,216 | ||
Other comprehensive income before reclassifications | 4,260 | |||
Amounts reclassified from AOCI | 0 | |||
Net current-period other comprehensive income | 4,260 | |||
Balance as of June 30, 2022 | $ | 6,476 |
20.18. Earnings Per Share
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 June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Computation of Basic and Diluted Earnings Per Share: | ||||||||||||||||
Net (loss)/income available to the Company's common shareholders | $ | (125,751 | ) | $ | 110,343 | $ | 105,197 | $ | 241,931 | |||||||
Earnings attributable to participating securities | (533 | ) | (672 | ) | (1,000 | ) | (1,475 | ) | ||||||||
Net (loss)/income available to the Company’s common shareholders for basic earnings per share | (126,284 | ) | 109,671 | 104,197 | 240,456 | |||||||||||
Distributions on convertible units | 0 | 9 | 0 | 18 | ||||||||||||
Net (loss)/income available to the Company’s common shareholders for diluted earnings per share | $ | (126,284 | ) | $ | 109,680 | $ | 104,197 | $ | 240,474 | |||||||
Weighted average common shares outstanding – basic | 615,642 | 431,011 | 615,207 | 430,769 | ||||||||||||
Effect of dilutive securities (1): | ||||||||||||||||
Equity awards | 0 | 1,356 | 1,689 | 1,528 | ||||||||||||
Assumed conversion of convertible units | 0 | 122 | 47 | 133 | ||||||||||||
Weighted average common shares outstanding – diluted | 615,642 | 432,489 | 616,943 | 432,430 | ||||||||||||
Net (loss)/income available to the Company's common shareholders: | ||||||||||||||||
Basic earnings per share | $ | (0.21 | ) | $ | 0.25 | $ | 0.17 | $ | 0.56 | |||||||
Diluted earnings per share | $ | (0.21 | ) | $ | 0.25 | $ | 0.17 | $ | 0.56 |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Computation of Basic and Diluted Earnings Per Share: | ||||||||
Net income available to the Company’s common shareholders | $ | 283,512 | $ | 230,948 | ||||
Earnings attributable to participating securities | (1,766 | ) | (1,360 | ) | ||||
Net income available to the Company’s common shareholders for basic earnings per share | 281,746 | 229,588 | ||||||
Distributions on convertible units | 1,118 | 11 | ||||||
Net income available to the Company’s common shareholders for diluted earnings per share | $ | 281,864 | $ | 229,599 | ||||
Weighted average common shares outstanding – basic | 616,489 | 614,767 | ||||||
Effect of dilutive securities (1): | ||||||||
Equity awards | 584 | 1,874 | ||||||
Assumed conversion of convertible units | 2,555 | 117 | ||||||
Weighted average common shares outstanding – diluted | 619,628 | 616,758 | ||||||
Net income available to the Company's common shareholders: | ||||||||
Basic earnings per share | $ | 0.46 | $ | 0.37 | ||||
Diluted earnings per share | $ | 0.46 | $ | 0.37 |
(1) | The effect of the assumed conversion of certain convertible units had an anti-dilutive effect upon the calculation of Net |
The Company'sCompany’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'shares’ participation rights in undistributed earnings.
Item 2. Management'sManagement’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 Kimco Realty Corporation (the “Company”)the Company contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended.amended (the “Exchange Act”). 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,” “plan”, “forecast” or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which, 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 impact of competition, including the availability of acquisition or development opportunities and the costs associated with purchasing and maintaining assets; (iii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (iii)(iv) 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)(v) the potential impact of e-commerce and other changes in consumer buying practices, and changing trends in the retail industry and perceptions by retailers or shoppers, including safety and convenience, (vi) the availability of suitable acquisition, disposition, development and redevelopment opportunities, and risks related to acquisitions not performing in accordance with our expectations, (v)(vii) the Company’s ability to raise capital by selling its assets, (vi)(viii) disruptions and increases in operating costs due to inflation and supply chain issues, (vii)(ix) risks related to future opportunitiesassociated with the development of mixed-use commercial properties, including risks associated with the development, and plans for the combined company, including the uncertaintyownership 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)non-retail real estate, (x) changes in governmental laws and regulations, including, but not limited to changes in data privacy, environmental (including climate change), safety and health laws, and management’s ability to estimate the impact of such changes, (x)(xi) valuation and risks related to the Company’s joint venture and preferred equity investments (xi)and other investments, (xii) valuation of marketable securities and other investments, including the shares of Albertsons Companies, Inc. common stock held by the Company, (xii)(xiii) impairment charges, (xiii)(xiv) criminal cybersecurity attacks disruption, data loss or other security incidents and breaches, (xv) impact of natural disasters and weather and climate-related events, (xvi) pandemics or other health crises, such as coronavirus disease 2019 (“COVID-19”), (xiv)(xvii) our ability to attract, retain and motivate key personnel, (xviii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms to the Company, (xv)(xix) the level and volatility of interest rates and management’s ability to estimate the impact thereof, (xvi)(xx) changes in the dividend policy for the Company’s common and preferred stock and the Company’s ability to pay dividends at current levels, (xvii)(xxi) unanticipated changes in the Company’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity, and (xviii)(xxii) the Company’s ability to continue to maintain its status as a REIT for federal income tax purposes and potential risks and uncertainties in connection with its UPREIT structure, and (xxiii) 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, 2021.2022. 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 in the Current Reports on Form 8-K that the Company filesother filings 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 Overview
Kimco Realty Corporation is a REIT, of which substantially all of the Company’s assets are held by, and substantially all of the Company’s operations are conducted through, Kimco OP, either directly or through its subsidiaries, as the Company’s operating company. The Company is the sole managing member and exercises exclusive control over Kimco OP. As of March 31, 2023, the Parent Company owned 100% of the outstanding limited liability company interests (the “OP Units”) in Kimco OP.
The Company, a Maryland corporation, is North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers includingand a growing portfolio of 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 June 30, 2022,March 31, 2023, the Company had interests in 533529 U.S. shopping center properties, aggregating 91.790.2 million square feet of gross leasable area (“GLA”), located in 2928 states. In addition, the Company had 2722 other property interests, primarily through the Company’s preferred equity investments and other investments, totaling 6.15.7 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 Company’s primary business objective is to be the premier owner and operator of open-air, grocery-anchored shopping centers, includingand a growing portfolio of mixed-use assets, in the U.S. The Company believes it can achieve this objective 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, with the Company continuing as the surviving public company, pursuant to the definitive merger agreement (the “Merger Agreement”) between the Company and Weingarten which was 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 U.S. As a result of the Merger, the Company acquired 149 properties, including 30 held through joint venture programs. 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 PandemicEconomic Conditions
The COVID-19 pandemic has resulted in a widespread health crisis that adversely affected businesses, economies and financial markets worldwide. The COVID-19 pandemic significantly impacted the retail sector in which the Company operates. The majority of the Company’s tenants 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 some period of time. The development and distribution of COVID-19 vaccines has assisted in allowing many restrictions to be lifted, providing a path to recovery. However, the economy continues to face several issues including inflation risk, bank failures and liquidity restraints, the lack of qualified employees, inflation risk,tenant bankruptcies and supply chain issues, and new COVID-19 variants, which could impact the Company and its tenants. In response to the rising rate of inflation the Federal Reserve has steadily increased interest rates, and may continue to increase interest rates, until the rate of inflation begins to decrease. These increases in interest rates could adversely impact the business and financial results of the Company and its tenants. In addition, slower economic growth and the potential for a recession could have an adverse effect on the Company and its tenants. This could negatively affect the overall demand for retail space, including the demand for leasable space in the Company’s properties. As a result, the Company could feel pricing pressure on rents that it is able to charge to new or renewing tenants, such that future rents and rent spreads could be negatively impacted.
Any of these events could materially adversely impact the Company’s business, financial condition, results of operations or stock price. The Company continues to monitor the impact of COVID-19, and responses thereto, on the Company’s business, its tenants’ industries and general economic, financial, and social conditions. The magnitudeconditions and duration of the COVID-19 pandemic andwill assess its impact on the Company’s operations and liquidity remains uncertain as the pandemic continues to evolve globally and within the United States.asset portfolio for any impairment indicators. If the Company determines that any of its assets are impaired, as a result of the COVID-19 pandemic, the Company would be required to take impairment charges, and such amounts could be material. The
Effects of Inflation
Many of the Company’s long-term leases contain provisions designed to help mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company did not incur any impairment chargesto 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 six months ended June 30, 2022 relatingterms 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 COVID-19.seek to increase rents to market rates upon renewal. To assist in partially 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.
Results of Operations
Comparison of the three and six months ended June 30,March 31, 2023 and 2022 and 2021
The following table presents the comparative results from the Company’s Condensed Consolidated Statements of OperationsIncome for the three and six months ended June 30, 2022,March 31, 2023, as compared to the corresponding periodsperiod in 20212022 (in thousands, except per share data):
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | 2023 | 2022 | Change | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Revenues from rental properties, net | $ | 423,273 | $ | 285,732 | $ | 137,541 | $ | 845,927 | $ | 564,603 | $ | 281,324 | $ | 438,338 | $ | 422,654 | $ | 27,084 | ||||||||||||||||||
Management and other fee income | 3,925 | 3,284 | 641 | 8,520 | 6,721 | 1,799 | 4,554 | 4,595 | (41 | ) | ||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||||||
Rent (1) | (4,070 | ) | (2,993 | ) | (1,077 | ) | (8,151 | ) | (6,028 | ) | (2,123 | ) | (4,013 | ) | (4,081 | ) | 68 | |||||||||||||||||||
Real estate taxes | (56,075 | ) | (39,594 | ) | (16,481 | ) | (110,389 | ) | (78,530 | ) | (31,859 | ) | (57,506 | ) | (54,314 | ) | (3,192 | ) | ||||||||||||||||||
Operating and maintenance (2) | (69,784 | ) | (46,897 | ) | (22,887 | ) | (139,009 | ) | (93,417 | ) | (45,592 | ) | (75,242 | ) | (69,225 | ) | (6,017 | ) | ||||||||||||||||||
General and administrative (3) | (27,981 | ) | (24,754 | ) | (3,227 | ) | (57,929 | ) | (49,232 | ) | (8,697 | ) | (34,749 | ) | (29,948 | ) | (4,801 | ) | ||||||||||||||||||
Impairment charges | (14,419 | ) | (104 | ) | (14,315 | ) | (14,691 | ) | (104 | ) | (14,587 | ) | (11,806 | ) | (272 | ) | (11,534 | ) | ||||||||||||||||||
Merger charges | - | (3,193 | ) | 3,193 | - | (3,193 | ) | 3,193 | ||||||||||||||||||||||||||||
Depreciation and amortization | (124,611 | ) | (72,573 | ) | (52,038 | ) | (254,905 | ) | (147,449 | ) | (107,456 | ) | (126,301 | ) | (130,294 | ) | 3,993 | |||||||||||||||||||
Gain on sale of properties | 2,944 | 18,861 | (15,917 | ) | 7,137 | 28,866 | (21,729 | ) | 39,206 | 4,193 | 35,013 | |||||||||||||||||||||||||
Other income/(expense) | ||||||||||||||||||||||||||||||||||||
Special dividend income | 194,116 | - | 194,116 | |||||||||||||||||||||||||||||||||
Other income, net | 6,642 | 1,782 | 4,860 | 12,625 | 5,139 | 7,486 | 3,132 | 5,983 | (2,851 | ) | ||||||||||||||||||||||||||
(Loss)/gain on marketable securities, net | (261,467 | ) | 24,297 | (285,764 | ) | (139,703 | ) | 85,382 | (225,085 | ) | (10,144 | ) | 121,764 | (131,908 | ) | |||||||||||||||||||||
Interest expense | (56,466 | ) | (46,812 | ) | (9,654 | ) | (113,485 | ) | (94,528 | ) | (18,957 | ) | (61,306 | ) | (57,019 | ) | (4,287 | ) | ||||||||||||||||||
Early extinguishment of debt charges | (57 | ) | - | (57 | ) | (7,230 | ) | - | (7,230 | ) | - | (7,173 | ) | 7,173 | ||||||||||||||||||||||
(Provision)/benefit for income taxes, net | (96 | ) | (1,275 | ) | 1,179 | 57 | (2,583 | ) | 2,640 | (30,829 | ) | 153 | (30,982 | ) | ||||||||||||||||||||||
Equity in income of joint ventures, net | 44,130 | 16,318 | 27,812 | 67,700 | 34,070 | 33,630 | 24,204 | 23,570 | 634 | |||||||||||||||||||||||||||
Equity in income of other investments, net | 3,385 | 5,039 | (1,654 | ) | 8,758 | 8,826 | (68 | ) | 2,122 | 5,373 | (3,251 | ) | ||||||||||||||||||||||||
Net loss/(income) attributable to noncontrolling interests | 11,226 | (421 | ) | 11,647 | 12,569 | (3,904 | ) | 16,473 | ||||||||||||||||||||||||||||
Net (income)/loss attributable to noncontrolling interests | (4,013 | ) | 1,343 | (5,356 | ) | |||||||||||||||||||||||||||||||
Preferred dividends, net | (6,250 | ) | (6,354 | ) | 104 | (12,604 | ) | (12,708 | ) | 104 | (6,251 | ) | (6,354 | ) | 103 | |||||||||||||||||||||
Net (loss)/ income available to the Company's common shareholders | $ | (125,751 | ) | $ | 110,343 | $ | (236,094 | ) | $ | 105,197 | $ | 241,931 | $ | (136,734 | ) | |||||||||||||||||||||
Net (loss)/income available to the Company's common shareholders: | ||||||||||||||||||||||||||||||||||||
Net income available to the Company's common shareholders | $ | 283,512 | $ | 230,948 | $ | 63,964 | ||||||||||||||||||||||||||||||
Net income available to the Company's common shareholders: | ||||||||||||||||||||||||||||||||||||
Diluted per common share | $ | (0.21 | ) | $ | 0.25 | $ | (0.46 | ) | $ | 0.17 | $ | 0.56 | $ | (0.39 | ) | $ | 0.46 | $ | 0.37 | $ | 0.10 |
(1) | Rent expense primarily relates to ground lease payments for which the Company is the lessee. |
(2) | Operating and maintenance expense consists of property related costs including repairs and maintenance costs, roof repair, landscaping, parking lot repair, snow removal, utilities, property insurance costs, security and various other property related expenses. |
(3) | General and administrative expense includes employee-related expenses (including salaries, bonuses, equity awards, benefits, severance costs and payroll taxes), professional fees, office rent, travel and entertainment costs and other company-specific expenses. |
Net loss available to the Company’s common shareholders was $125.8 million for the three months ended June 30, 2022, as compared to net income available to the Company’s common shareholders of $110.3 million for the comparable period in 2021. On a diluted per common share basis, net loss available to the Company’s common shareholders for the three months ended June 30, 2022 was $(0.21), as compared to net income available to the Company’s common shareholder of $0.25 for the comparable period in 2021.
Net income available to the Company’s common shareholders was $105.2$283.5 million for the sixthree months ended June 30, 2022,March 31, 2023, as compared to $241.9$230.9 million for the comparable period in 2021.2022. On a diluted per common share basis, net income available to the Company’s common shareholders for the sixthree months ended June 30, 2022March 31, 2023 was $0.17$0.46 as compared to $0.56$0.37 for the comparable period in 2021.2022.
The following describes the changes of certain line items included on the Company’s Condensed Consolidated Statements of OperationsIncome that the Company believes changed significantly and affected Net (loss)/income available to the Company'sCompany’s common shareholders during the three and six months ended June 30, 2022,March 31, 2023, as compared to the corresponding period in 2021:2022.
Revenues from rental properties, net –
The increase in Revenues from rental properties, net of $137.5$15.7 million for the three months ended June 30, 2022,March 31, 2023, as compared to the corresponding period in 2021,2022, is primarily from (i) an increase in revenues of $133.4 million due to properties acquired during 2022 and 2021, including the impact of the Merger, (ii) a net increase in revenues from tenants of $8.5$16.6 million primarily due to an increase in leasing activity and net growth in the current portfolio, (ii) an increase in revenues of $11.3 million due to properties acquired during 2023 and 2022 and (iii) an increase in net straight-line rentallease termination fee income of $4.7$1.3 million, primarily due to an increase in leasing activity and a decrease in reserves, partially offset by (iv) a net increasedecrease of $5.3$7.0 million due to changes in credit losses from tenants, (v) a decrease in revenues of $2.0$6.2 million due to dispositions during 20222023 and 20212022 and (vi) a decrease in lease termination fee income of $1.8 million.
The increase in Revenues from rental properties, net of $281.3 million for the six months ended June 30, 2022, as compared to the corresponding period in 2021, is primarily from (i) an increase in revenues of $266.5 million due to properties acquired during 2022 and 2021, including the impact of the Merger, (ii) a net increase in revenues from tenants of $18.7 million primarily due to an increase in leasing activity and net growth in the current portfolio and (iii) an increase in net straight-line rental income of $9.6$0.3 million, primarily due to an increase in leasing activity and a decrease in reserves, partially offset by (iv) a decrease in lease termination fee income of $6.8 million, (v) a decrease in revenues of $4.0 million due to dispositions during 2022 and 2021 and (vi) a net increase of $2.7 million due to changes in credit losses from tenants.reserves.
Real estate taxes –
The increase in Real estate taxes of $16.5 million and $31.9$3.2 million for the three and six months ended June 30, 2022,March 31, 2023, as compared to the corresponding periodsperiod in 2021, respectively,2022, is primarily due to properties acquired during 2023 and 2022, partially offset by dispositions during 2023 and 2021, including the impact of the Merger.2022.
Operating and maintenance –
The increase in Operating and maintenance expense of $22.9 million and $45.6$6.0 million for the three and six months ended June 30, 2022,March 31, 2023, as compared to the corresponding periodsperiod in 2021, respectively,2022, is primarily due to (i) properties acquired during 2023 and 2022 and 2021, including(ii) increases in repairs and maintenance, utilities and other operating costs throughout the impact of the Merger.Company’s operating properties, partially offset by (iii) dispositions during 2023 and 2022.
General and administrative –
The increase in General and administrative expense of $3.2$4.8 million for the three months ended June 30, 2022,March 31, 2023, as compared to the corresponding period in 2021, is primarily due to (i) an increase in professional and legal fees of $1.9 million and (ii) an increase in employee-related expenses of $1.5 million resulting from additional employees hired in connection with the Merger.
The increase in General and administrative expense of $8.7 million for the six months ended June 30, 2022, as compared to the corresponding period in 2021, is primarily due to (i) an increase in employee-related expenses of $6.4$2.8 million resulting from additional employees hired in connection with the Merger,and (ii) an increase in professional fees and legal feescorporate expenses of $2.7 million and (iii) an increase in travel and entertainment costs of $0.8 million, partially offset by (iv) a decrease of $1.4$2.0 million, primarily duerelated to the fluctuations in value of various directors’ deferred stock.Reorganization.
Impairment charges –
During the sixthree months ended June 30,March 31, 2023 and 2022, and 2021, the Company recognized impairment charges related to adjustments to property carrying values of $14.7$11.8 million and $0.1$0.3 million, respectively, for which the Company’s estimated fair values were primarily based upon signed contracts or letters of intent from third party offers. 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. Certain of the calculations to determine fair values utilized unobservable inputs and, as such, were classified as Level 3 of the FASB’s fair value hierarchy.
Merger charges –
During the three and six months ended June 30, 2021, the Company incurred costs of $3.2 million associated with the Merger. These charges are primarily comprised of professional and legal fees.
Depreciation and amortization –
The increasedecrease in Depreciation and amortization of $52.0$4.0 million for the three months ended June 30, 2022,March 31, 2023, as compared to the corresponding period in 2021,2022, is primarily due to (i) a net decrease of $10.0 million, primarily from fully depreciated assets, write-offs due to tenant vacates and dispositions during 2023 and 2022, partially offset by (ii) an increase of $55.0$6.0 million resulting from properties acquired during 20222023 and 2021, including the impact of the Merger, and (ii) an increase of $1.2 million due to depreciation commencing on certain redevelopment projects that were placed into service during 2022 and 2021, partially offset by (iii) a decrease of $4.2 million due to write-offs of depreciable assets primarily due to tenant vacates and property dispositions.2022.
The increase in Depreciation and amortization of $107.5 million for the six months ended June 30, 2022, as compared to the corresponding period in 2021, is primarily due to (i) an increase of $113.8 million resulting from properties acquired during 2022 and 2021, including the impact of the Merger, and (ii) an increase of $1.4 million due to depreciation commencing on certain redevelopment projects that were placed into service during 2022 and 2021, partially offset by (iii) a decrease of $7.7 million due to write-offs of depreciable assets primarily due to tenant vacates and property dispositions.
Gain on sale of properties –
During the sixthree months ended June 30, 2022,March 31, 2023, the Company disposed of anthree operating propertyproperties and eightthree land parcels, in separate transactions, for an aggregate sales price of $43.3$117.6 million, which resulted in aggregate gains of $7.1$39.2 million. During the sixthree months ended June 30, 2021,March 31, 2022, the Company disposed of three operating properties and sevenfour land parcels, in separate transactions, for an aggregate sales price of $132.2$8.7 million, which resulted in aggregate gains of $28.9$4.2 million.
OtherSpecial dividend income net –
The increase in Other income, net of $4.9 million forDuring the three months ended June 30, 2022, as compared to the corresponding period in 2021, is primarily due to (i) $2.3 million in lower costs associated with potential transactions for whichMarch 31, 2023, the Company is no longer pursuing, (ii) a net increase in mortgage and other financing incomereceived $194.1 million representing its share of $1.4 million primarily due to new loan financing provided by the Company during 2022 and 2021, and (iii) an increase inACI special dividend income of $0.8 million primarily from the shares of Albertsons Companies, Inc. “ACI” common stock held by the Company.
The increase in Other income, net of $7.5 million for the six months ended June 30, 2022, as compared to the corresponding period in 2021, is primarily due to (i) $3.1 million in lower costs associated with potential transactions for which the Company is no longer pursuing, (ii) a net increase in mortgage and other financing income of $2.6 million primarily due to new loans issued during 2022 and 2021 and (iii) an increase in dividend income of $1.6 million primarily from the shares of ACI common stock held by the Company.payment.
(Loss)/gain on marketable securities, net –
The change in (Loss)/gain on marketable securities, net of $285.8 million and $225.1$131.9 million for the three and six months ended June 30, 2022,March 31, 2023, as compared to the corresponding periodsperiod in 2021, respectively,2022, is primarily the result of mark-to-market fluctuations of the shares of ACI common stock held by the Company.Company and the sale of ACI shares during 2023.
Interest expense –
The increase in Interest expense of $9.7 million and $19.0$4.3 million for the three and six months ended June 30, 2022,March 31, 2023, as compared to the corresponding periodsperiod in 2021, respectively,2022, is primarily due (i) increased levels of borrowings resulting from the assumptions of unsecured notes and mortgagesto a decrease in connection with the Merger and public debt offerings, partially offset by (ii)fair market value amortization due to the repayment of senior unsecured notes and mortgages during 2022 and 2021.in 2022.
Early extinguishment of debt charges –
DuringEarly extinguishment of debt charges of $7.2 million during the sixthree months ended June 30,March 31, 2022, is primarily due to the Company repaidredeeming 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 from thein write-off of deferred financing costs duringcosts.
(Provision)/benefit for income taxes, net –
The change in (Provision)/benefit for income taxes, net of $31.0 million for the sixthree months ended June 30, 2022.March 31, 2023, as compared to the corresponding period in 2022, is primarily due to the sale of 7.1 million shares of ACI held by the Company, which generated a taxable long-term capital gain. The Company plans to elect to retain the proceeds from the sale and, as a result, incurred federal and state income taxes aggregating $30.0 million on such gain.
Equity in income of joint ventures,other investments, net –
The increasedecrease in Equity in income of joint ventures,other investments, net of $27.8$3.3 million for the three months ended June 30, 2022,March 31, 2023, as compared to the corresponding period in 2021,2022, is primarily due to (i) net gains of $27.2 million resulting from the sale of properties within various joint venture investments during 2022, and (ii) an increase in equity in income of $2.5 million from ownership interests acquired in unconsolidated joint ventures in connection with the Merger, partially offset by (iii) impairment charges of $2.3 million recognizedCompany’s Preferred Equity Program during 2022.
The increase in Equity in income of joint ventures, net of $33.6 million for the six months ended June 30, 2022, as compared to the corresponding period in 2021, is primarily due to (i) an increase in net gains of $24.9 million resulting from the sale of properties within various joint venture investments during 2022, as compared to the corresponding period in 2021, (ii) an increase in equity in income of $5.6 million within various joint venture investments during 2022, as compared to the corresponding period in 2021, primarily resulting from a decrease in credit losses due to collections from tenants, including straight-line rental income and (iii) an increase in equity in income of $4.8 million from ownership interests acquired in unconsolidated joint ventures in connection with the Merger, partially offset by (iv) an increase in impairment charges of $1.7 million recognized during 2022, as compared to the corresponding period in 2021.
Net loss/(income)/loss attributable to noncontrolling interests –
The change in Net loss/(income)/loss attributable to noncontrolling interests of $11.6 million and $16.5$5.4 million for the three and six months ended June 30, 2022, respectively,March 31, 2023, as compared to the corresponding periodsperiod in 2021,2022, is primarily due to (i) impairment charges relating toan increase in net gain on sale of properties within consolidated joint ventures recognized during 2022, partially offset by (ii) an increase2023, as compared to the corresponding period in net income attributable to noncontrolling interests primarily related to consolidated joint ventures acquired in the Merger.2022.
Tenant Concentration
The Company seeks to reduce its operating and leasing risks through diversification achieved by the geographic distribution of its properties and a large tenant base. As of June 30, 2022,March 31, 2023, the Company had interests in 533529 U.S. shopping center properties, aggregating 91.790.2 million square feet of gross leasable area (“GLA”), located in 2928 states. At June 30, 2022,March 31, 2023, the Company’s five largest tenants were TJX Companies, The Home Depot, Ross Stores, Albertsons and Amazon/Whole Foods, which represented 3.7%, 2.2%2.1%, 1.9%, 1.9% and 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’s capital resources include accessing the public debt and equity capital markets, unsecured term loans, mortgages and construction loan financing, marketable securities (including 21.2 million shares of ACI common stock held by the Company, which had a value of $440.8 million at March 31, 2023) and immediate access to the Company’san unsecured revolving credit facility (the “Credit Facility”) with bank commitments of $2.0 billion, which can be increased to $2.75 billion through an accordion feature. In addition, the Company holds 39.8 million shares of ACI, which are subject to certain contractual lock-up provisions that are scheduled to expire on September 10, 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, 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. The 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, the current inflationinflationary environment, rising interest rates, 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):
Six Months Ended June 30, | Three Months Ended March31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Cash, cash equivalents and restricted cash, beginning of the period | $ | 334,663 | $ | 293,188 | $ | 149,829 | $ | 334,663 | ||||||||
Net cash flow provided by operating activities | 442,333 | 293,671 | 345,233 | 194,551 | ||||||||||||
Net cash flow used for investing activities | (155,136 | ) | (45,882 | ) | ||||||||||||
Net cash flow provided by/(used for) investing activities | 43,559 | (35,616 | ) | |||||||||||||
Net cash flow used for financing activities | (325,062 | ) | (310,915 | ) | (209,444 | ) | (123,280 | ) | ||||||||
Net change in cash, cash equivalents and restricted cash | (37,865 | ) | (63,126 | ) | 179,348 | 35,655 | ||||||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 296,798 | $ | 230,062 | $ | 329,177 | $ | 370,318 |
Operating Activities
Net cash flow provided by operating activities for the sixthree months ended June 30, 2022March 31, 2023 was $442.3$345.2 million, as compared to $293.7$194.6 million for the comparable period in 2021.2022. The increase of $148.6$150.6 million is primarily attributable to:
● | special dividend payment from ACI of $194.1 million during 2023; |
● | additional operating cash flow generated by operating properties acquired during |
● | new leasing, expansion and re-tenanting of core portfolio properties; |
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● | changes in assets and liabilities due to timing of receipts and payments; |
● | a decrease in distributions from the Company’s joint ventures programs; and |
● | the disposition of operating properties in |
Investing Activities
Net cash flow provided by investing activities was $43.6 million for the three months ended March 31, 2023, as compared to Net cash flow used for investing activities was $155.1 million for the six months ended June 30, 2022, as compared to $45.9of $35.6 million for the comparable period in 2021.2022.
Investing activities during the sixthree months ended June 30, 2022March 31, 2023 primarily consisted of:
Cash inflows:
● | $ |
● | $71.0 million in proceeds from the sale of three operating properties and three land parcels; and |
● | $5.6 million in reimbursements of investments in and advances to real estate joint ventures and other |
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Cash outflows:
● | $ |
● | $ |
● | $ |
● | $ |
● | $ |
Investing activities during the sixthree months ended June 30, 2021March 31, 2022 primarily consisted of:
Cash inflows:
● | $ |
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● | $ |
Cash outflows:
● | $ |
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● | $ |
● | $18.7 million for the |
● | $3.0 million for investment in |
● | $3.0 million for investment |
Acquisition of Operating Real Estate –
During the sixthree months ended June 30,March 31, 2023 and 2022, and 2021, the Company expended $29.3$98.5 million and $84.3$18.7 million, respectively, towards the acquisitionacquisition/consolidation of operating real estate properties. The Company anticipates spending approximately $150.0$75.0 million to $250.0$125.0 million towards the acquisition of or the purchase of additional interests in operating properties for the remainder of 2022.2023. The Company intends to fund these acquisitions with cash on hand, net cash flow fromprovided by operating activities, proceeds from property dispositions, proceeds from the sale of marketable securities and/or availability under its Credit Facility.
Improvements to Operating Real Estate –
During the sixthree months ended June 30,March 31, 2023 and 2022, and 2021, the Company expended $79.0$40.2 million and $66.3$29.4 million, respectively, towards improvements to operating real estate. These amounts consist of the following (in thousands):
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Redevelopment and renovations | $ | 42,784 | $ | 40,209 | $ | 22,056 | $ | 12,274 | ||||||||
Tenant improvements and tenant allowances | 36,174 | 26,133 | 18,146 | 17,161 | ||||||||||||
Total improvements | $ | 78,958 | $ | 66,342 | $ | 40,202 | $ | 29,435 |
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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’ value. The Company anticipates its capital commitment toward these redevelopment projects and re-tenanting efforts for the remainder of 20222023 will be approximately $90.0$180.0 million to $120.0$220.0 million. The funding of these capital requirements will be provided by cash on hand, proceeds from property dispositions, proceeds from net cash flow provided by operating activities, the sale of marketable securities, and/or availability under the Company’s Credit Facility.
Financing Activities
Net cash flow used for financing activities was $325.1$209.4 million for the sixthree months ended June 30, 2022,March 31, 2023, as compared to $310.9$123.3 million for the comparable period in 2021.2022.
Financing activities during the sixthree months ended June 30,March 31, 2023 primarily consisted of:
Cash inflows:
● | $3.7 million in proceeds from issuance of stock. |
Cash outflows:
● | $148.9 million of dividends paid; |
● | $40.0 million in principal payment on debt, including normal amortization of rental property debt; |
● | $16.1 million in shares repurchased for employee tax withholding on equity awards; |
● | $6.0 million in financing origination costs, in connection with the Company’s Credit Facility; and |
● | $2.6 million in redemption/distribution of noncontrolling interests. |
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 |
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Cash outflows:
● | $ |
● | $ |
● | $ |
● | $ |
● | $ |
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● | $6.5 million for payment of early extinguishment of debt charges; and |
● | $ |
Financing activities during the six months ended June 30, 2021 primarily consisted of:
Cash outflows:
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The Company continually evaluates its debt maturities, and, based on management’s current assessment, believes it has viable financing and refinancing alternatives that will not materially adversely impact its expected financial results. As of March 31, 2023, the Company had consolidated floating rate debt totaling $18.2 million, excluding deferred financing costs of $0.1 million. 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.
Debt maturities for the remainder of 20222023 consist of: $290.9$12.0 million of consolidated debt, and $100.4$13.0 million of unconsolidated joint venture debt and $32.2 million of debt included in the Company’s preferred equity program, assuming the utilization of extension options where available. The 20222023 consolidated debt maturities are anticipated to be repaid with cash on hand, operating cash flows, borrowings from the Credit Facility and public debt offerings, as deemed appropriate.flows. The 20222023 debt maturities on properties in the Company’s unconsolidated joint ventures are anticipated to be repaid through operating cash flows, debt refinancing, unsecured credit facilities, proceeds from sales of operating properties ofwithin the 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 unsecured debt ratings. The Company may, from 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’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 $16.8$17.4 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 and mixed-use assets, expanding and improving properties in the portfolio and other investments.
During August 2021,January 2023, 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, 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, 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’s debt maturities.
During January 2023, the Company filed a registration statement on Form S-8 for its 2020 Equity Participation Plan (the “2020 Plan”), which was previously approved by the Company’s stockholders and is a successor to the Restated Kimco Realty Corporation 2010 Equity Participation Plan 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 deferred stock awards. At March 31, 2023, the Company had 4.9 million shares of common stock available for issuance under the 2020 Plan
Preferred Stock –
The Company’s Board of Director’s authorized the repurchase of up to 900,000894,000 depositary shares of Class L preferred stock and 1,058,0001,048,000 depositary shares of Class M preferred stock representing up to 1,9581,942 shares the Company’s preferred stock, par value $1.00 per share, through December 31, 2022.2023. During the sixthree months ended June 30, 2022,March 31, 2023, the Company repurchased the following preferred stock:
Class of Preferred Stock | Depositary Shares Repurchased | Purchase Price (in millions) | ||
Class L | 54,508 | $ | 1.3 | |
Class M | 90,760 | $ | 2.1 |
Class of Preferred Stock | Depositary Shares Repurchased | Purchase Price (in thousands) | ||||||
Class L | 5,540 | $ | 111.0 | |||||
Class M | 7,741 | $ | 157.0 |
Common Stock –
During August 2021, the Company established an at-the-market continuous offering program (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 New 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. During the six months ended June 30, 2022, the Company issued 450,000 shares and received net proceeds after commissions of $11.3 million. As of June 30, 2022, the Company had $411.0 million available under this ATM program.
The Company has a common 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 common share repurchase program during the sixthree months ended June 30, 2022.March 31, 2023. As of June 30, 2022,March 31, 2023, the Company had $224.9 million available under this common share repurchase program.
Senior Unsecured 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 repayment of certain senior unsecured notes.
During the six months ended June 30, 2022, the Company repaid or partially repaid the following notes (dollars in millions):
Type | Date Paid | Amount Repaid | Interest Rate | Maturity Date | ||||||||
Senior unsecured notes (1) | Mar-22 | $ | 500.0 | 3.400 | % | Nov-22 | ||||||
Senior unsecured notes (2) | May-22 & Jun-22 | $ | 36.1 | 3.125 | % | Jun-23 | ||||||
Senior unsecured notes (3) | Jun-22 | $ | 11.0 | 3.375 | % | Oct-22 |
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The Company’sKimco OP’s indenture governing its senior unsecured notes contains the following covenants, all of which the CompanyKimco OP is compliant with:
Covenant | Must Be | As of | ||||
Consolidated Indebtedness to Total Assets | <60% | 37% | ||||
Consolidated Secured Indebtedness to Total Assets | <40% | 2% | ||||
Consolidated Income Available for Debt Service to Maximum Annual Service Charge | >1.50x |
| 4.2x | |||
Unencumbered Total Asset Value to Consolidated Unsecured Indebtedness | >1.50x |
| 2.5x |
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, 2014,2014; and the Eighth Supplemental Indenture dated as of January 3, 2023, each as filed with the SEC. In connection with the Merger,merger with Weingarten Realty Investors (“Weingarten”), the Company assumed senior unsecured notes which have covenants that are similar to the Company’sKimco OP’s existing debt covenants for its senior unsecured notes. Please refer to the form Indenture included in Weingarten’s Registration Statement on Form S-3, filed with the Securities and Exchange Commission on February 10, 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, 20212022 for specific filing information.
Credit Facility –
In February 2020,2023, the Company obtained a new $2.0 billion Credit Facilityunsecured revolving credit facility (the “Credit Facility”) with a group of banks.banks, which replaced the Company’s existing $2.0 billion unsecured revolving credit facility which was scheduled to mature in March 2024. The Credit Facility is scheduled to expire in March 2024,2027 with two additional six-month options to extend the maturity date, at the Company’s discretion, to March 2025.2028. The Credit Facility is guaranteed by the Parent Company. The Credit Facility could be increased to $2.75 billion through an accordion feature. 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 LIBORAdjusted Term SOFR, as defined in the terms of the Credit Facility, plus 76.577.5 basis points (2.55%and fluctuates in accordance with the Company’s credit ratings. The interest rate can be further adjusted upward or downward by four basis points (as of March 31, 2023, a two-basis point reduction was achieved) based on the sustainability metric targets, as defined in the agreement (5.66% as of June 30, 2022), can be increased to $2.75 billion through an accordion feature.March 31, 2023). Pursuant to the terms of the Credit Facility, the Company among other things, iscontinues to be subject to the same covenants requiringunder the maintenanceCompany’s prior unsecured revolving credit facility. For a full description of (i) maximum indebtedness ratiosthe Credit Facility’s covenants refer to the Amended and (ii) minimum interest and fixed charge coverage ratios.Restated Credit Agreement dated as of February 23, 2023, filed as Exhibit 10.20 in our Annual Report on Form 10-K for the year ended December 31, 2022. As of June 30, 2022,March 31, 2023, the Credit Facility had no outstanding balance and no appropriations for letters of credit of $1.2 million.
During July 2022, the Company amended the Credit Facility to (i) replace LIBOR borrowings with Secured Overnight Financing Rate (“SOFR”) borrowings, (ii) supplement the sustainability grid with an additional one basis point reduction of applicable margin if certain criteria as defined in the Credit Facility are met, (iii) add a leverage metric test which, if met, reduces the applicable margin by five basis points and (iv) obtain pre-approval of a possible organizational conversion to an UPREIT structure.credit.
Pursuant to the terms of the Credit Facility, the Company, among other things, is subject to maintenance of 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% |
| 37% | |||
Total Priority Indebtedness to GAV | <35% |
| 2% | |||
Unencumbered Asset Net Operating Income to Total Unsecured Interest Expense | >1.75x |
| 5.5x | |||
Fixed Charge Total Adjusted EBITDA to Total Debt Service | >1.50x |
| 4.7x |
For a full description of the Credit Facility’s covenants, refer to Amendment No. 2 dated July 12, 2022 to Amended and Restated Credit Agreement, dated February 27, 2020, filed herewith Exhibit 10.1 to this Quarterly Report on Form 10-Q dated July 29, 2022.
Mortgages Payable –
During the sixthree months ended June 30, 2022,March 31, 2023, the Company (i) obtained a $19.0 million mortgage relating to a consolidated joint venture operating property and (ii) repaid $115.3assumed $37.2 million of individual non-recourse mortgage debt (including fair market value adjustmentthrough the consolidation of $0.2 million) that encumbered sixtwo operating properties.properties which the Company subsequently repaid in March 2023.
In addition to the public equity and debt markets as capital sources, the Company may, from time to time, obtain mortgage financing on selected properties to partially fund the capital needs of its real estate re-development and re-tenanting projects. As of June 30, 2022,March 31, 2023, the Company had over 480485 unencumbered property interests in its portfolio.
Other –
During the three months ended March 31, 2023, the Company received $194.1 million representing its share of the ACI special dividend payment and recognized this as Special dividend income on the Company’s Condensed Consolidated Statements of Income. As a result, the Company anticipates it may need to make a special dividend payment to maintain its compliance with REIT distribution requirements. The payment of this special dividend may be in the form of cash, common stock or some combination thereof. The Company’s determination regarding any such special dividend and the form thereof will be announced during the year end December 31, 2023.
Also during the three months ended March 31, 2023, the Company sold 7.1 million shares of ACI held by the Company, generating net proceeds of $137.4 million. For tax purposes, the Company recognized a long-term capital gain of $115.4 million. The Company anticipates retaining the proceeds from this stock sale for general corporate purposes and will pay federal and state taxes of $30.0 million on the taxable gain. As of March 31, 2023, the Company holds 21.2 million shares of ACI, which had a value of $440.8 million.
In addition, in April 2023, the Company sold 7.0 million shares of ACI held by the Company, generating net proceeds of $144.9 million. For tax purposes, the Company will recognize a long-term capital gain of $125.9 million during the three months ended June 30, 2023. The Company anticipates retaining the proceeds from this stock sale for general corporate purposes and will pay estimated corporate taxes of $32.7 million on the taxable gain.
The Parent Company guarantees the debt securities of Kimco OP. These guarantees by the Parent Company are full, irrevocable, unconditional and absolute joint and several guarantees to the holders of each series of such guaranteed debt securities.
The Company has issued letters of credit in connection with 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, 2023, these letters of credit aggregated $39.8 million.
The Company has an investment with a funding commitment of $64.7 million, of which $41.7 million has been funded as of March 31, 2023.
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 June 30, 2022,March 31, 2023, there were $27.7$17.4 million in performance and surety bonds outstanding.
In connection with the Merger, the
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$45.5 million outstanding at June 30, 2022.March 31, 2023. 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’s Board of Directors will continue to evaluate the Company’s dividend policy on a quarterly basis as they monitorit monitors sources of capital and evaluate 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 dividend payout ratio that 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 sixthree months ended June 30,March 31, 2023 and 2022 and 2021 were $253.8$148.9 million and $160.1$123.8 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.instruments with high credit rated institutions. The Company’s objective is to establish a dividend level that maintains compliance with the Company’s REIT taxable income distribution requirements. On April 26, 2022,February 8, 2023, 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 July 15, 2022April 17, 2023 to shareholders of record on July 1, 2022.April 3, 2023. In addition, the Company’s Board of Directors declared a quarterly cash dividend of $0.20$0.23 per common share, which was paid on JuneMarch 23, 20222023 to shareholders of record on JuneMarch 9, 2022.2023.
On July 26, 2022,April 25, 2023, the Company’s Board of Directors declared quarterly dividends with respect to the Company’s classes of cumulative redeemable preferred shares (Classes L and M), which are scheduled to be paid on OctoberJuly 17, 2022,2023, to shareholders of record on OctoberJuly 3, 2022.2023. Additionally, on July 26, 2022,April 25, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.22$0.23 per common share, representing a 10.0% increase from the prior quarterly dividend of $0.20, payable on September 23, 2022June 22, 2023 to shareholders of record on September 9, 2022.June 8, 2023.
Funds From Operations
Funds From Operations (“FFO”) is a supplemental non-GAAP financial measure utilized to evaluate the operating performance of real estate companies. 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 certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated partnerships and joint ventures calculated to reflect FFO on the same basis. The Company also made an election, per the NAREIT Funds From Operations White Paper-2018 Restatement, 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, mark-to-market gains/losses (realized or unrealized) from marketable securities, allowance for credit losses on mortgage receivables or gains/impairments on preferred equity participationsother investments 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.
FFO is a supplemental non-GAAP financial measure of real estate 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.
The Company’s reconciliation of Net (loss)/income available to the Company’s common shareholders to FFO available to the Company’s common shareholders is reflected in the table below (in thousands, except per share data).
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Net (loss)/income available to the Company’s common shareholders | $ | (125,751 | ) | $ | 110,343 | $ | 105,197 | $ | 241,931 | |||||||||||||||
Net income available to the Company’s common shareholders | $ | 283,512 | $ | 230,948 | ||||||||||||||||||||
Gain on sale of properties | (2,944 | ) | (18,861 | ) | (7,137 | ) | (28,866 | ) | (39,206 | ) | (4,193 | ) | ||||||||||||
Gain on sale of joint venture properties | (27,198 | ) | - | (30,184 | ) | (5,283 | ) | (7,710 | ) | (2,986 | ) | |||||||||||||
Depreciation and amortization - real estate related | 123,672 | 71,781 | 253,133 | 145,894 | 125,278 | 129,461 | ||||||||||||||||||
Depreciation and amortization - real estate joint ventures | 16,616 | 10,234 | 33,501 | 20,241 | 16,547 | 16,885 | ||||||||||||||||||
Impairment charges (including real estate joint ventures) | 17,233 | 104 | 17,933 | 1,172 | 11,803 | 700 | ||||||||||||||||||
Profit participation from other investments, net | (1,988 | ) | (1,346 | ) | (5,651 | ) | (1,151 | ) | 31 | (3,663 | ) | |||||||||||||
Special dividend income | (194,116 | ) | - | |||||||||||||||||||||
Loss/(gain) on marketable securities, net | 261,467 | (24,297 | ) | 139,703 | (85,382 | ) | 10,144 | (121,764 | ) | |||||||||||||||
Provision/(benefit) for income taxes, net (1) | 3 | 1,096 | (8 | ) | 2,142 | 30,873 | (11 | ) | ||||||||||||||||
Noncontrolling interests (1) | (14,729 | ) | (271 | ) | (19,459 | ) | 2,355 | 931 | (4,730 | ) | ||||||||||||||
FFO available to the Company’s common shareholders (3) | $ | 246,381 | $ | 148,783 | $ | 487,028 | $ | 293,053 | $ | 238,087 | $ | 240,647 | ||||||||||||
Weighted average shares outstanding for FFO calculations: | ||||||||||||||||||||||||
Basic | 615,642 | 431,011 | 615,207 | 430,769 | 616,489 | 614,767 | ||||||||||||||||||
Units | 2,473 | 642 | 2,509 | 653 | 2,555 | 2,546 | ||||||||||||||||||
Dilutive effect of equity awards | 1,419 | 1,356 | 1,689 | 1,528 | 584 | 1,874 | ||||||||||||||||||
Diluted (2) | 619,534 | 433,009 | 619,405 | 432,950 | 619,628 | 619,187 | ||||||||||||||||||
FFO per common share – basic | $ | 0.40 | $ | 0.35 | $ | 0.79 | $ | 0.68 | $ | 0.39 | $ | 0.39 | ||||||||||||
FFO per common share – diluted (2) | $ | 0.40 | $ | 0.34 | $ | 0.79 | $ | 0.68 | $ | 0.39 | $ | 0.39 |
(1) | Related to gains, impairments, |
(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) | Includes Early extinguishment of debt charges of $7.2 million recognized during the |
Same Property Net Operating Income (“(“Same property NOI”NOI”)
Same 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. 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.
For the three and six months ended June 30, 2022, and 2021, the Company included Same property NOI from the Weingarten properties acquired through the Merger, as the Company owned these properties for the full three and six months ended June 30, 2022. The amount of the adjustment relating to Weingarten Same property NOI for the three and six months ended June 30, 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 (loss)/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,credit losses, 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 Net (loss)/income available to the Company’s common shareholders to Same property NOI (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net (loss)/income available to the Company’s common shareholders | $ | (125,751 | ) | $ | 110,343 | $ | 105,197 | $ | 241,931 | |||||||
Adjustments: | ||||||||||||||||
Management and other fee income | (3,925 | ) | (3,284 | ) | (8,520 | ) | (6,721 | ) | ||||||||
General and administrative | 27,981 | 24,754 | 57,929 | 49,232 | ||||||||||||
Impairment charges | 14,419 | 104 | 14,691 | 104 | ||||||||||||
Merger charges | - | 3,193 | - | 3,193 | ||||||||||||
Depreciation and amortization | 124,611 | 72,573 | 254,905 | 147,449 | ||||||||||||
Gain on sale of properties | (2,944 | ) | (18,861 | ) | (7,137 | ) | (28,866 | ) | ||||||||
Interest and other expense, net | 49,881 | 45,030 | 108,090 | 89,389 | ||||||||||||
Loss/(gain) on marketable securities, net | 261,467 | (24,297 | ) | 139,703 | (85,382 | ) | ||||||||||
Provision/(benefit) for income taxes, net | 96 | 1,275 | (57 | ) | 2,583 | |||||||||||
Equity in income of other investments, net | (3,385 | ) | (5,039 | ) | (8,758 | ) | (8,826 | ) | ||||||||
Net (loss)/income attributable to noncontrolling interests | (11,226 | ) | 421 | (12,569 | ) | 3,904 | ||||||||||
Preferred dividends, net | 6,250 | 6,354 | 12,604 | 12,708 | ||||||||||||
Weingarten same property NOI (1) | - | 93,855 | - | 185,639 | ||||||||||||
Non same property net operating income | (17,295 | ) | (14,159 | ) | (35,122 | ) | (31,578 | ) | ||||||||
Non-operational expense from joint ventures, net | (2,858 | ) | 14,606 | 16,826 | 26,568 | |||||||||||
Same property NOI | $ | 317,321 | $ | 306,868 | $ | 637,782 | $ | 601,327 |
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Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Net income available to the Company’s common shareholders | $ | 283,512 | $ | 230,948 | ||||
Adjustments: | ||||||||
Management and other fee income | (4,554 | ) | (4,595 | ) | ||||
General and administrative | 34,749 | 29,948 | ||||||
Impairment charges | 11,806 | 272 | ||||||
Depreciation and amortization | 126,301 | 130,294 | ||||||
Gain on sale of properties | (39,206 | ) | (4,193 | ) | ||||
Special dividend income | (194,116 | ) | - | |||||
Interest and other expense, net | 58,174 | 58,209 | ||||||
Loss/(gain) on marketable securities, net | 10,144 | (121,764 | ) | |||||
Provision/(benefit) for income taxes, net | 30,829 | (153 | ) | |||||
Equity in income of other investments, net | (2,122 | ) | (5,373 | ) | ||||
Net income/(loss) attributable to noncontrolling interests | 4,013 | (1,343 | ) | |||||
Preferred dividends, net | 6,251 | 6,354 | ||||||
Non same property net operating income | (15,613 | ) | (16,535 | ) | ||||
Non-operational expense from joint ventures, net | 16,039 | 19,684 | ||||||
Same property NOI | $ | 326,207 | $ | 321,753 |
Same property NOI increased by $10.5$4.5 million or 3.4%1.4% for the three months ended June 30, 2022,March 31, 2023, as compared to the corresponding period in 2021.2022. This increase is primarily the result of (i) ana net increase in net operating income of $20.1$13.4 million primarily related to an increase in rental revenue driven by strong leasing activity, and a decrease in tenant rent abatements and vacancies as a result of the COVID-19 pandemic, partially offset by (ii) a change in credit losslosses from tenants of $9.6$8.9 million.
Same property NOI increased by $36.5 million or 6.1% for the six months ended June 30, 2022, as compared to the corresponding period in 2021. This increase is primarily the result of (i) an increase in net operating income of $42.8 million primarily related to an increase in rental revenue driven by strong leasing activity and a decrease in tenant rent abatements and vacancies as a result of the COVID-19 pandemic, partially offset by (ii) a change in credit loss from tenants of $6.3 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 partially 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 sixthree months ended June 30, 2022,March 31, 2023, the Company executed 927474 leases totaling over 6.44.1 million square feet in the Company’s consolidated operating portfolio comprised of 275119 new leases and 652355 renewals and options. The leasing costs associated with these new leases are estimated to aggregate $59.8$27.9 million, or $42.95$37.31 per square foot. These costs include $47.5$21.7 million of tenant improvements and $12.3$6.2 million of external leasing commissions. The average rent per square foot for (i) new leases was $21.67$21.41 and (ii) renewals and options was $17.12.$17.77.
Tenant Lease Expirations
At June 30, 2022,March 31, 2023, the Company has a total of 8,2528,315 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 leaseleases data:
Year Ending | Number of Leases Expiring | Square Feet Expiring | Total Annual Base | % of Gross Annual Rent | Number of Leases Expiring | Square Feet Expiring | Total Annual Base Rent Expiring | % of Gross Annual Rent | ||||||||||||||||||||||||||
(1) | 204 | 623 | $ | 13,733 | 1.1 | % | 167 | 586 | $ | 13,068 | 1.0 | % | ||||||||||||||||||||||
2022 | 337 | 1,146 | $ | 27,428 | 2.3 | % | ||||||||||||||||||||||||||||
2023 | 1,184 | 6,966 | $ | 131,110 | 10.8 | % | 544 | 2,490 | $ | 52,771 | 4.2 | % | ||||||||||||||||||||||
2024 | 1,201 | 7,826 | $ | 148,738 | 12.3 | % | 1,168 | 7,415 | $ | 144,014 | 11.4 | % | ||||||||||||||||||||||
2025 | 1,117 | 8,098 | $ | 149,269 | 12.3 | % | 1,172 | 8,211 | $ | 155,610 | 12.4 | % | ||||||||||||||||||||||
2026 | 1,045 | 9,481 | $ | 155,052 | 12.8 | % | 1,105 | 9,535 | $ | 159,917 | 12.7 | % | ||||||||||||||||||||||
2027 | 984 | 9,361 | $ | 156,408 | 12.9 | % | 1,155 | 9,756 | $ | 177,434 | 14.1 | % | ||||||||||||||||||||||
2028 | 523 | 5,809 | $ | 102,154 | 8.4 | % | 940 | 9,281 | $ | 164,981 | 13.1 | % | ||||||||||||||||||||||
2029 | 399 | 3,630 | $ | 66,816 | 5.5 | % | 464 | 4,201 | $ | 77,960 | 6.2 | % | ||||||||||||||||||||||
2030 | 303 | 2,457 | $ | 54,913 | 4.5 | % | 326 | 2,620 | $ | 59,345 | 4.7 | % | ||||||||||||||||||||||
2031 | 333 | 2,484 | $ | 54,643 | 4.5 | % | 342 | 2,364 | $ | 54,924 | 4.4 | % | ||||||||||||||||||||||
2032 | 343 | 2,507 | $ | 49,437 | 4.1 | % | 384 | 2,783 | $ | 54,295 | 4.3 | % | ||||||||||||||||||||||
2033 | 298 | 2,519 | $ | 45,286 | 3.6 | % |
(1) | Leases currently under month-to-month lease or in process of renewal. |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
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The Company’s primary market risk exposure is interest rate risk. The Company periodically evaluates its exposure to short-term interest rates and will, from time-to-time, enter into interest rate 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 June 30, 2022,March 31, 2023, with corresponding weighted-average interest rates sorted by maturity date. The table does not include extension options where available (amounts in millions).
2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total | Fair Value | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
Secured Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | $ | - | $ | 55.1 | $ | 4.9 | $ | 53.9 | $ | - | $ | 213.9 | $ | 327.8 | $ | 301.6 | $ | 12.0 | $ | 14.3 | $ | 52.6 | $ | - | $ | 34.1 | $ | 243.2 | $ | 356.2 | $ | 298.4 | ||||||||||||||||||||||||||||||||
Average Interest Rate | - | 3.95 | % | 6.75 | % | 3.50 | % | - | 4.28 | % | 4.13 | % | 3.23 | % | 4.79 | % | 3.50 | % | - | 4.01 | % | 4.23 | % | 4.09 | % | |||||||||||||||||||||||||||||||||||||||
Variable Rate | $ | - | $ | - | $ | - | $ | 18.7 | $ | - | $ | - | $ | 18.7 | $ | 18.2 | $ | - | $ | - | $ | 18.1 | $ | - | $ | - | $ | - | $ | 18.1 | $ | 17.7 | ||||||||||||||||||||||||||||||||
Average Interest Rate | - | - | - | 2.35 | % | - | - | 2.35 | % | - | - | 5.97 | % | - | - | - | 5.97 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Unsecured Debt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Rate | $ | 290.9 | $ | 619.9 | $ | 658.1 | $ | 755.4 | $ | 787.0 | $ | 3,945.3 | $ | 7,056.6 | $ | 6,420.4 | $ | - | $ | 652.4 | $ | 751.7 | $ | 784.5 | $ | 436.6 | $ | 4,152.9 | $ | 6,778.1 | $ | 5,870.9 | ||||||||||||||||||||||||||||||||
Average Interest Rate | 3.38 | % | 3.31 | % | 3.37 | % | 3.48 | % | 3.06 | % | 3.35 | % | 3.33 | % | - | 3.37 | % | 3.48 | % | 3.06 | % | 4.03 | % | 3.47 | % | 3.45 | % |
Based on the Company’s variable-rate debt balances, interest expense would have increased by $0.1$0.05 million for the sixthree months ended June 30, 2022March 31, 2023 if short-term interest rates were 1.0% higher.
Item 4. Controls and Procedures.
Controls and Procedures (Kimco Realty Corporation)
The Parent Company’s management, with the participation of the Parent Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Parent 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 Parent Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Parent Company’s disclosure controls and procedures are effective.
There have not been any changes in the Parent Company’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.
Controls and Procedures (Kimco Realty OP, LLC)
Kimco OP’s management, with the participation of the Kimco OP’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Kimco OP’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, Kimco OP’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, Kimco OP’s disclosure controls and procedures are effective.
There have not been any changes in Kimco OP’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, Kimco OP’s internal control over financial reporting.
OTHER INFORMATION
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, 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.
There are no material changes to 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, 2021.2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
The Company’s Board of Director’sDirectors authorized the repurchase of up to 900,000894,000 depositary shares of Class L preferred stock and 1,058,0001,048,000 depositary shares of Class M preferred stock representing up to an aggregate of 1,9581,942 shares of the Company’s preferred stock, par value $1.00 per share, through December 31, 2022.2023.
During the three months ended June 30, 2022,March 31, 2023, the Company repurchased the following Class L depositary shares:
Period | Total Number | Average | Total Number of Shares Purchased Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | ||||||||||||||
April 1, 2022 | – | April 30, 2022 | - | $ | - | - | $ | n/a | ||||||||||
May 1, 2022 | – | May 31, 2022 | 49,336 | 23.75 | - | $ | n/a | |||||||||||
June 1, 2022 | – | June 30, 2022 | 5,172 | 23.82 | - | $ | n/a | |||||||||||
| Total | 54,508 | $ | 23.76 | - |
Period | Total Number of Depositary Shares Purchased | Average Price Paid per Depositary 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, 2023 – January 31, 2023 | - | $ | - | - | $ | n/a | ||||||||||
February 1, 2023 – February 28, 2023 | - | - | - | $ | n/a | |||||||||||
March 1, 2023 – March 31, 2023 | 5,540 | 20.02 | - | $ | n/a | |||||||||||
Total | 5,540 | $ | 20.02 | - |
During the three months ended June 30, 2022,March 31, 2023, the Company repurchased the following Class M depositary shares:
Period | Total Number | Average | Total Number of Shares Purchased Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | ||||||||||||||
April 1, 2022 | – | April 30, 2022 | - | $ | - | - | $ | n/a | ||||||||||
May 1, 2022 | – | May 31, 2022 | 78,661 | 23.59 | - | $ | n/a | |||||||||||
June 1, 2022 | – | June 30, 2022 | 12,099 | 23.81 | - | $ | n/a | |||||||||||
| Total | 90,760 | $ | 23.61 | - |
Period | Total Number of Depositary Shares Purchased | Average Price Paid per Depositary 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, 2023 – January 31, 2023 | - | $ | - | - | $ | n/a | ||||||||||
February 1, 2023 – February 28, 2023 | - | - | - | $ | n/a | |||||||||||
March 1, 2023 – March 31, 2023 | 7,741 | 20.26 | - | $ | n/a | |||||||||||
Total | 7,741 | $ | 20.26 | - |
The Company has a common 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 common share repurchase program during the sixthree months ended June 30, 2022.March 31, 2023. As of June 30, 2022,March 31, 2023, the Company had $224.9 million available under this common share repurchase program.
During the sixthree months ended June 30, 2022,March 31, 2023, the Company repurchased 559,887750,717 shares of the Company’s common stock for an aggregate purchase price of $13.5$16.1 million (weighted average price of $24.15$21.43 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.
Period | Total Number | Average | Total Number of Shares Purchased 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 | |||||||||||
April 1, 2022 | – | April 30, 2022 | - | - | - | $ | 224.9 | |||||||||||
May 1, 2022 | – | May 31, 2022 | 2,520 | 23.26 | - | $ | 224.9 | |||||||||||
June 1, 2022 | – | June 30, 2022 | 1,570 | 21.90 | - | $ | 224.9 | |||||||||||
Total | 559,887 | $ | 24.15 | - |
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, 2023 – January 31, 2023 | - | $ | - | - | $ | 224.9 | ||||||||||
February 1, 2023 – February 28, 2023 | 750,717 | 21.43 | - | $ | 224.9 | |||||||||||
March 1, 2023 – March 31, 2023 | - | - | - | $ | 224.9 | |||||||||||
Total | 750,717 | $ | 21.43 | - |
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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.
* 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.
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| KIMCO REALTY CORPORATION |
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| /s/ Conor C. Flynn |
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| Conor C. Flynn |
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| Chief Executive Officer |
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| /s/ Glenn G. Cohen |
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| Glenn G. Cohen |
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| Chief Financial Officer |
SIGNATURES
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 OP, LLC BY: KIMCO REALTY CORPORATION, managing member | |||
April 28, 2023 | /s/ Conor C. Flynn | ||
(Date) | Conor C. Flynn | ||
Chief Executive Officer | |||
April 28, 2023 | /s/ Glenn G. Cohen | ||
(Date) | Glenn G. Cohen | ||
Chief Financial Officer |