UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-10899
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Kimco Realty Corporation
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(Exact name of registrant as specified in its charter)
Maryland 13-2744380
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3333 New Hyde Park Road, New Hyde Park, NY 11042
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(Address of principal executive offices - zip code)
(516) 869-9000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
-------------------------------------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
63,556,574 shares outstanding as of April 30, 2001.
1 of 19
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Financial Statements -
Condensed Consolidated Balance Sheets as of March 31, 2001 and December
31, 2000.
Condensed Consolidated Statements of Income for the Three Months Ended
March 31, 2001 and 2000.
Condensed Consolidated Statements of Comprehensive Income for the Three
Months Ended March 31, 2001 and 2000.
Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2001 and 2000.
Notes to Condensed Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
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.
Results of Operations
- ---------------------
Revenues from rental property increased $9.2 million or 8.2% to $121.6
million for the three months ended March 31, 2001, as compared with $112.4
million for the corresponding quarter ended March 31, 2000. This increase
resulted primarily from the combined effect of (i) acquisitions throughout
calendar year 2000 (12 shopping center properties) providing incremental
revenues of $3.7 million, as compared to the corresponding three month period in
2000 and (ii) the completion of certain development and redevelopment projects,
new leasing and re-tenanting within the portfolio at improved rental rates,
offset by sales of certain properties throughout 2000 and 2001, providing net
incremental revenues of approximately $5.5 million.
2
Rental property expenses, including depreciation and amortization,
increased approximately $6.6 million or 9.7% to $74.2 million for the three
months ended March 31, 2001, as compared with $67.6 million for the
corresponding quarter ended March 31, 2000. The rental property expense
components of real estate taxes, operating and maintenance, and depreciation and
amortization increased $1.3 million, $3.6 million and $1.1 million,
respectively, for the three month period ended March 31, 2001, as compared with
the corresponding quarter in the preceding year. These rental property expense
increases are primarily due to property acquisitions, renovations within the
existing portfolio and increased snow removal costs.
The Company has a non-controlling limited partnership interest in Kimco
Income REIT ("KIR"), a limited partnership established to invest in high quality
retail properties financed primarily through the use of individual non-recourse
mortgages. Equity in income of KIR increased $0.6 million to $2.9 million for
the three months ended March 31, 2001, as compared with $2.3 million for the
corresponding period in 2000. This increase is primarily due to the Company's
increased capital investment in KIR. The additional capital investments received
by KIR from the Company and its other institutional partners were used to
purchase additional shopping center properties throughout calendar year 2000 and
during the three months ended March 31, 2001.
Other income, net increased $1.9 million for the three months ended
March 31, 2001, as compared to the same period in 2000. The net increase is
primarily the result of higher interest and dividend income related to the
Company's investment in certain marketable equity and debt securities.
Operating and administrative expenses increased approximately $1.6
million for the three months ended March 31, 2001, as compared to the same
period in 2000. The increase is due primarily to an increase in senior
management and staff levels and other personnel costs in connection with the
growth of the Company, including the issuance of a stock grant award to a
newly-appointed executive officer of the Company valued at approximately $1.1
million.
Effective January 1, 2001, the Company has elected taxable REIT
subsidiary status for its wholly-owned development subsidiary ("KDI"). KDI is
primarily engaged in the ground-up development of neighborhood and community
shopping centers and the subsequent sale thereof upon completion. During January
2001, KDI sold its recently completed project in Chandler, AZ for approximately
$32.5 million, which resulted in a net gain of approximately $3.5 million after
provision for income taxes of approximately $1.9 million.
3
Net income for the three months ended March 31, 2001 and 2000 was $56.1
million and $48.7 million, respectively. On a diluted per share basis, net
income improved $0.09 for the three month period ended March 31, 2001, after
adjusting for the gain on sale of operating property during the three months
ended March 31, 2000. This improved performance reflects the combined effect of
property acquisitions, profits from KDI and internal growth from leasing
activity and the completion of certain redevelopment projects which strengthened
operating profitability.
Liquidity and Capital Resources
- -------------------------------
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.
Since the IPO, the Company has completed additional offerings of its public
unsecured debt and equity, raising in the aggregate over $2.2 billion for the
purposes of, among other things, repaying indebtedness, acquiring interests in
neighborhood and community shopping centers, funding ground-up development
projects and for expanding and improving properties in the portfolio.
During August 2000, the Company established a $250.0 million unsecured
revolving credit facility, which is scheduled to expire in August 2003. This
credit facility, which replaced the Company's $215.0 million unsecured revolving
credit facility has made available funds to both finance the purchase of
properties and meet any short-term working capital requirements. As of March 31,
2001, there was $55.0 million outstanding under the credit facility.
The Company has also implemented a medium-term notes ("MTN") program
pursuant to which it may from time to time offer for sale its senior unsecured
debt for any general corporate purposes, including (i) funding specific
liquidity requirements in its business, including property acquisitions,
development and redevelopment costs and (ii) managing the Company's debt
maturities.
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. As of March 31, 2001, the Company had over 350 unencumbered property
interests in its portfolio.
During 1998, the Company filed a shelf registration statement on Form
S-3 for up to $750 million of debt securities, preferred stock, depositary
shares, common stock and common stock warrants. As of March 31, 2001, the
Company had approximately $106.7 million available for issuance under this shelf
registration statement.
4
In connection with its intention to continue to qualify as a REIT for
Federal income tax purposes, the Company expects to continue paying regular
dividends to its stockholders. These dividends will be paid from operating cash
flows which are expected to increase due to property acquisitions and growth in
rental revenues in the existing portfolio and from other sources. Since cash
used to pay dividends reduces amounts available for capital investment, the
Company generally intends to maintain a conservative dividend payout ratio,
reserving such amounts as it considers necessary for the expansion and
renovation of shopping centers in its portfolio, repayment of debt, 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.
It is management's intention that the Company continually have access
to the capital resources necessary to expand and develop its business.
Accordingly, the Company may seek to obtain funds through additional equity
offerings, unsecured debt financings and/or mortgage financings in a manner
consistent with its intention to operate with a conservative debt capitalization
policy.
The Company anticipates that cash flows from operations will continue
to provide adequate capital to fund its operating and administrative expenses,
regular debt service obligations and the payment of dividends in accordance with
REIT requirements in both the short-term and long-term. In addition, the Company
anticipates that cash on hand, availability under its revolving credit facility,
issuance of equity and public debt, as well as other debt and equity
alternatives, will provide the necessary capital required by the Company. Cash
flows from operations increased to $73.2 million for the three months ended
March 31, 2001 as compared to $63.8 million for the corresponding period ended
March 31, 2000.
Effects of Inflation
- --------------------
Many of the Company's 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 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. Most of the Company's leases require the tenant to pay an allocable
share of operating expenses, including common area maintenance costs, real
estate taxes and insurance, thereby reducing the Company's exposure to increases
in costs and operating expenses resulting from inflation. The Company
periodically evaluates its exposure to short-term interest rates and will, from
time to time, enter into
5
interest rate protection agreements which mitigate, but do not eliminate, the
effect of changes in interest rates on its floating-rate debt.
New Accounting Pronouncement
- ----------------------------
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("FASB No. 133"), as amended. In accordance with the provisions of
FASB No. 133, the Company's interest-rate swap agreement on its $110.0 million
floating-rate MTN has been designated and qualified as a cash flow hedge. The
Company has determined that this swap agreement is highly effective in
offsetting future variable interest cash flows related to the Company's debt
portfolio. The fair value of the swap agreement was recorded on the balance
sheet in other liabilities in the amount of approximately $3.2 million with a
corresponding amount to accumulated other comprehensive loss, a component of
stockholders' equity. The Company does not anticipate any reclassifications to
earnings from accumulated other comprehensive loss over the next 12 months, with
adjustments during the year related to changes in the fair value of the related
swap agreement. Currently, the Company does not have any other financial
contracts, which contain embedded derivatives or fair value hedge relationships,
which are within the scope of FASB No. 133.
Forward-looking Statements
- --------------------------
This quarterly report on Form 10-Q, together with other statements and
information publicly disseminated by the Company contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The Company intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 and include this statement for
purposes of complying with these 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," "anticipate," "estimate," "project" or
similar expressions. You should not rely on forward-looking statements since
they involve known and unknown risks, uncertainties and other factors which are,
in some cases, beyond the Company's control and which 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 economic and local real estate conditions, (ii)
financing risks, such as the inability to obtain equity or debt financing on
favorable terms, (iii) changes in governmental laws and regulations, (iv) the
level and volatility of interest rates (v) the availability of suitable
acquisition opportunities and (vi) increases in
6
operating costs. Accordingly, there is no assurance that the Company's
expectations will be realized.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As of March 31, 2001, the Company had approximately $276.9 million of
floating-rate debt outstanding, including $55.0 million on its unsecured line of
credit. The interest rate risk on $110.0 million of such debt has been mitigated
through the use of an interest rate swap agreement (the "Swap") with a major
financial institution. The Company is exposed to credit risk in the event of
non-performance by the counter party to the Swap. The Company believes it
mitigates its credit risk by entering into the Swap with a major financial
institution.
The Company believes the interest rate risk represented by the
remaining $166.9 million of floating-rate debt is not material to the Company or
its overall capitalization.
The Company has not, and does not plan to, enter into any derivative
financial instruments for trading or speculative purposes. As of March 31, 2001,
the Company had no other material exposure to market risk.
7
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)
March 31, December 31,
2001 2000
------------- ---------------
Assets:
Operating real estate, net of accumulated depreciation
of $404,892 and $391,946, respectively $ 2,584,337 $ 2,594,872
Real estate under development 132,537 127,685
Investment and advances in KIR 141,962 142,437
Investments and advances in other real estate joint ventures 69,603 61,601
Investments in retail store leases 10,950 11,316
Cash and cash equivalents 25,363 19,097
Accounts and notes receivable 49,099 44,673
Other assets 192,455 169,667
----------- -----------
$ 3,206,306 $ 3,171,348
=========== ===========
Liabilities:
Notes payable $ 1,090,250 $ 1,080,250
Mortgages payable 239,425 245,413
Other liabilities, including minority interests in partnerships 156,432 141,346
----------- -----------
1,486,107 1,467,009
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Stockholders' Equity:
Preferred stock, $1.00 par value, authorized 5,000,000 shares
Class A Preferred Stock, $1.00 par value, authorized 345,000 shares
Issued and outstanding 300,000 shares 300 300
Aggregate liquidation preference $75,000
Class B Preferred Stock, $1.00 par value, authorized 230,000 shares
Issued and outstanding 200,000 shares 200 200
Aggregate liquidation preference $50,000
Class C Preferred Stock, $1.00 par value, authorized 460,000 shares
Issued and outstanding 400,000 shares 400 400
Aggregate liquidation preference $100,000
Class D Convertible Preferred Stock, $1.00 par value, authorized 700,000 shares
Issued and outstanding 418,218 and 418,254 shares, respectively 418 418
Aggregate liquidation preference $104,555 and $104,564, respectively
Common stock, $.01 par value, authorized 200,000,000 shares
Issued and outstanding 63,501,577 and 63,144,859 shares, respectively 635 631
Paid-in capital 1,830,553 1,819,446
Cumulative distributions in excess of net income (109,365) (113,110)
----------- -----------
1,723,141 1,708,285
Accumulated other comprehensive loss (1,122) -
Notes receivable from officer stockholders (1,820) (3,946)
----------- -----------
1,720,199 1,704,339
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$ 3,206,306 $ 3,171,348
=========== ===========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
8
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months ended March 31, 2001 and 2000
(in thousands, except per share data)
2001 2000
--------- --------
Revenues from rental property $ 121,601 $ 112,356
--------- ---------
Rental property expenses:
Rent 3,456 3,415
Real estate taxes 14,375 13,027
Interest 22,775 22,284
Operating and maintenance 15,376 11,801
Depreciation and amortization 18,210 17,074
--------- ---------
74,192 67,601
--------- ---------
Income from rental property 47,409 44,755
Income from investment in retail store leases 972 1,013
--------- ---------
48,381 45,768
Equity in income of KIR 2,913 2,348
Management fee income 2,165 1,520
Other income, net 6,930 4,991
Operating and administrative expenses (7,791) (6,221)
--------- ---------
Income before gain on sale of shopping center
properties and income taxes 52,598 48,406
Gain on sale of development property 5,392 -
Gain on sale of operating property - 303
--------- ---------
Income before income taxes 57,990 48,709
Provision for income taxes (1,937) -
--------- ---------
Net income $ 56,053 $ 48,709
======== ========
Net income applicable to common shares $ 49,484 $ 42,091
======== ========
Net income per common share:
Basic $0.78 $0.69
----- -----
Diluted $0.77 $0.69
----- -----
The accompanying notes are an integral part of these
condensed consolidated financial statements.
9
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months ended March 31, 2001 and 2000
(in thousands)
2001 2000
--------- --------
Net income $ 56,053 $ 48,709
-------- --------
Other comprehensive loss:
Unrealized gains on marketable securities 2,054 -
Unrealized loss on interest rate swap (3,176) -
-------- --------
Other comprehensive loss (1,122) -
-------- --------
Comprehensive income $ 54,931 $ 48,709
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
10
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March 31, 2001 and 2000
(in thousands)
2001 2000
-------- -------
Cash flow provided by operations $ 73,182 $ 63,802
-------- --------
Cash flow from investing activities:
Acquisition of and improvements to operating real estate (9,674) (23,782)
Acquisition of and improvements to real estate under development (34,257) (14,600)
Investment in marketable securities (4,250) (12,656)
Proceeds from sale of marketable securities 9,761 3,200
Investments and advances to joint ventures, net (24,824) -
Investments and advances to real estate joint ventures (4,635) -
Redemption of minority interests in real estate partnerships (1,600) -
Investments and advances to affiliated companies (100) (2,466)
Collection of mortgage loans receivable - 2,517
Proceeds from sale of operating properties 2,910 390
Proceeds from sale of development properties 35,300 -
-------- --------
Net cash flow used for investing activities (31,369) (47,397)
-------- --------
Cash flow from financing activities:
Principal payments on debt, excluding normal
amortization of rental property debt (4,587) -
Principal payments on rental property debt (1,401) (1,252)
Proceeds from mortgage financing - 191
Payment of unsecured obligation - (3,250)
Borrowings under revolving credit facility 10,000 45,000
Dividends paid (52,023) (46,743)
Proceeds from issuance of stock 12,464 137
-------- --------
Net cash flow used for financing activities (35,547) (5,917)
-------- --------
Change in cash and cash equivalents 6,266 10,488
Cash and cash equivalents, beginning of period 19,097 28,076
-------- --------
Cash and cash equivalents, end of period $ 25,363 $ 38,564
======== ========
Interest paid during the period $ 13,009 $ 12,125
======== ========
Supplemental schedule of noncash investing/financing activity:
Acquisition of real estate interests by assumption of mortgage debt $ - $ 16,498
======== ========
Investment in real estate joint venture by issuance of stock $ 820 $ -
======= ========
Declaration of dividends paid in succeeding period $ 50,856 $ 45,295
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
11
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
----------------
1. Interim Financial Statements
Principles of Consolidation -
The accompanying Condensed Consolidated Financial Statements include
the accounts of Kimco Realty Corporation (the "Company"), its subsidiaries, all
of which are wholly owned, and all partnerships in which the Company has a
controlling interest. The information furnished 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 financial statements
included in the Company's Annual Report on Form 10-K.
Certain 2000 amounts have been reclassified to conform to the 2001
financial statement presentation.
Income Taxes -
The Company and its qualified REIT subsidiaries file a consolidated
federal income tax return. The Company has made an election to qualify, and
believes it is operating so as to qualify, as a Real Estate Investment Trust (a
"REIT") for federal income tax purposes. Accordingly, the Company generally will
not be subject to federal income tax, provided that distributions to its
stockholders equal at least the amount of its REIT taxable income as defined
under the Code. However, in connection with the Tax Relief Extension Act of
1999, which became effective January 1, 2001, the Company is now permitted to
participate in certain activities which it was previously precluded from in
order to maintain its qualification as a REIT, so long as these activities are
conducted in entities which elect to be treated as taxable REIT subsidiaries
under the Code. As such, the Company will be subject to federal and state income
taxes on the income from these activities. During the three months ended March
31, 2001, the Company's provision for federal and state income taxes was
approximately $1.9 million relating to activities conducted in its taxable REIT
subsidiaries.
12
New Accounting Pronouncement -
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("FASB No. 133"), as amended. In accordance with the provisions of
FASB No. 133, the Company's interest-rate swap agreement on its $110.0 million
floating-rate medium-term note ("MTN") has been designated and qualified as a
cash flow hedge. The Company has determined that this swap agreement is highly
effective in offsetting future variable interest cash flows related to the
Company's debt portfolio. The adoption of FASB No. 133 as of January 1, 2001,
resulted in a cumulative transition adjustment of $1.5 million to other
comprehensive loss, a component of stockholders' equity ("OCL") and a
corresponding liability of the same amount. For the three months ended March 31,
2001, the change in the fair market value of the interest rate swap was $1.7
million and was recorded in OCL. The Company does not anticipate any
reclassifications to earnings from accumulated other comprehensive loss over the
next 12 months, with adjustments during the year related to changes in the fair
value of the related agreement. Currently, the Company does not have any other
financial contracts, which contain embedded derivatives or fair value hedge
relationships, which are within the scope of FASB No. 133.
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
March 31, 2001 March 31, 2000
-------------- --------------
Computation of Basic Earnings Per Share:
Net income applicable to common shares $49,484 $42,091
Weighted average common shares outstanding 63,306 60,796
-------- --------
Basic Earnings Per Share $ 0.78 $ 0.69
======== ========
Computation of Diluted Earnings Per Share:
Net income applicable to common shares $49,484 $42,091
Dividends on Class D Convertible Preferred
Stock 1,960 - (a)
-------- --------
Net income for diluted earnings per share $51,444 $42,091
-------- --------
Weighted average common shares outstanding - Basic 63,306 60,796
Effect of dilutive securities:
Stock options 692 455
Assumed conversion of Class D Preferred
Stock to common stock 2,598 - (a)
-------- --------
Shares for diluted earnings per share 66,596 61,251
-------- --------
Diluted Earnings Per Share $ 0.77 $ 0.69
======== ========
(a) In 2000, the effect of the assumed conversion of the Class D Preferred Stock
had an anti-dilutive effect upon the calculation of net income per common share.
Accordingly, the impact of such conversion has not been included in the
determination of diluted earnings per common share.
13
2. Property Acquisitions / Other Investments
Property Acquisitions -
During the three months ended March 31, 2001, the Company, through its
development subsidiary ("KDI"), acquired three land parcels for the ground-up
development of shopping centers and subsequent sales thereof upon completion, in
separate transactions, for an aggregate purchase price of approximately $12.1
million.
On March 1, 2001, the Company exercised its option to acquire a 50%
interest in a joint venture from KC Holdings, Inc. ("KC Holdings"), an entity
formed in connection with the Company's initial public stock offering in
November 1991. This joint venture consists of three shopping center properties
located in Buffalo, NY comprising approximately 0.4 million square feet of gross
leasable area. The joint venture was acquired for an aggregate option price of
approximately $3.5 million, paid approximately $2.7 million in cash and $0.8
million in shares of the Company's common stock (19,759 shares valued at $41.50
per share). The members of the Company's Board of Directors who are not also
shareholders of KC Holdings, unanimously approved the Company's purchase of this
joint venture investment.
Other Investments -
During March 2001, the Company through a joint venture (the "Ward
Venture") in which the Company has a 50% interest, acquired asset designation
rights for substantially all of the real estate property interests of the
bankrupt estate of Montgomery Ward LLC and its affiliates. These asset
designation rights will enable the Ward Venture to direct the ultimate
disposition of the 315 fee and leasehold interests held by the bankrupt estate.
The Ward Venture acquired the asset designation rights for an initial purchase
price of $60.5 million, however, the price may ultimately exceed $435.5 million
under the terms of the designation rights agreement.
14
The asset designation rights expire in February 2002 for the leasehold
positions and December 2004 for the fee owned locations. During the marketing
period, the Ward Venture will be responsible for all carrying costs associated
with the properties until the site is designated to a user.
3. Property Dispositions
During January 2001, the Company disposed of an operating property in
Jennings, MO. Cash proceeds from this disposition totaled approximately $2.2
million, which approximated net book value.
Effective January 1, 2001, the Company has elected taxable REIT
subsidiary status for its wholly-owned development subsidiary, KDI. KDI is
primarily engaged in the ground-up development of neighborhood and community
shopping centers and the subsequent sale thereof upon completion. During January
2001, KDI sold its recently completed project in Chandler, AZ for approximately
$32.5 million, which resulted in a net gain of approximately $3.5 million after
provision for income taxes of approximately $1.9 million.
4. Investment and Advances in KIR
During 1998, the Company formed Kimco Income REIT ("KIR"), a limited
partnership established to invest in high quality retail properties financed
primarily through the use of individual non-recourse mortgages. The Company
holds a non-controlling limited partnership interest in KIR and accounts for its
investment in KIR under the equity method of accounting. The Company's equity in
income of KIR for the three months ended March 31, 2001 and 2000, was
approximately $2.9 million and $2.3 million, respectively.
In addition, KIR entered into a master management agreement with the
Company, whereby, the Company will perform services for fee relating to the
management, operation, supervision and maintenance of the joint venture
properties. For the three months ended March 31, 2001 and 2000, the Company
earned management fees of approximately $0.8 million and $0.4 million,
respectively.
15
5. Investment in Retail Store Leases
Income from the investment in retail store leases for the three months
ended March 31, 2001 and 2000 represents sublease revenues of approximately $4.5
million and $4.8 million, respectively, less related expenses of $3.1 million
and $3.4 million, respectively, and amounts, which in management's estimation,
reasonably provide for the recovery of the investment over a period representing
the expected remaining term of the retail store leases.
6. Pro Forma Financial Information
As discussed in Note 3, the Company and certain of its affiliates
disposed of an interest in an operating property during the three months ended
March 31, 2001. The pro forma financial information set forth below is based
upon the Company's historical Condensed Consolidated Statements of Income for
the three months ended March 31, 2001 and 2000, adjusted to give effect to this
transaction as of January 1, 2000.
The pro forma financial information is presented for informational
purposes only and may not be indicative of what actual results of operations
would have been had the transaction occurred as of January 1, 2000, nor does it
purport to represent the results of future operations. (Amounts presented in
millions, except per share figures).
Three Months Ended
March 31,
2001 2000
---- ----
Revenues from rental property $121.6 $112.3
Net income $ 56.2 $ 48.7
Net income per common share:
Basic $ 0.78 $ 0.69
====== ======
Diluted $ 0.78 $ 0.69
====== ======
16
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
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, or which is not
covered by the Company's liability insurance.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
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.
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10.11 Employment Agreement between Kimco Realty Corporation and Mr.
David B. Henry - the Company commenced a five-year employment agreement with Mr.
Henry pursuant to which Mr. Henry will serve as Chief Investment Officer and has
been nominated as Vice Chairman of the Board of Directors.
Form 8-K -
None.
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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 CORPORATION
May 10, 2001 /s/ Milton Cooper
- ------------- -----------------------------------
(Date) Milton Cooper
Chairman of the Board
May 10, 2001 /s/ Michael V. Pappagallo
- ------------- -----------------------------------
(Date) Michael V. Pappagallo
Chief Financial Officer
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