Kimco’s Q3 earnings: Positioning Kimco for continued growth
Kimco’s Q3 was another step forward in our 2020 Vision. This quarter we demonstrated our belief in the opportunity represented by quality open-air shopping centers in key metro areas and with strong demographics, where our redevelopment pipeline remains a source of strength and future value. But our work behind the scenes is what has truly distinguished Kimco as we prepare for the future.
Here’s a quick overview of some of the key metrics in our Q3 results.
- Sharing their confidence in our strategy and performance, the Board of Directors increased the quarterly common stock cash dividend 5.9 percent to $0.27 per share.
- U.S. same-property net operating income (NOI) increased 3.3 percent compared to the third quarter of 2015; through Sept. 30, same-property NOI increased 2.9 percent compared to the same period in 2015.
- U.S. leasing spreads increased 26.6 percent for new leases and 7.8 percent for renewals/options. Combined leasing spreads increased 12.9 percent.
- FFO as adjusted, which excludes the effects of non-operating impairments and transactional income and expenses, was $160.6 million, or $0.38 per diluted share, for the third quarter of 2016 compared to $150.5 million, or $0.36 per diluted share, for the third quarter of 2015.
- Kimco reported a net loss available to the common shareholders of $55.1 million, or $0.13 per diluted share, compared to net income available to common shareholders of $63.0 million, or $0.15 per diluted share, for the third quarter of 2015. Results in the current quarter include $45.7 million in one-time charges for the early extinguishment of debt and a $63.5 million non-cash charge associated with the merger of the company’s taxable REIT subsidiary.
Growth opportunities and anchors
Our Q3 transactions illustrate our strategy to capitalize on owning high-quality properties in core markets offering redevelopment opportunities. We completed the acquisition of Kentlands Market Square, a 221,000-square-foot open-air shopping center in the Washington, D.C. suburbs. This property provides significant near-term leasing opportunities, enabling us to capture D.C.’s large and diverse population; the center is anchored by a Whole Foods Market and includes PetSmart, Michaels, and Starbucks Coffee.
Kimco increased our ownership share in Gateway Shopping Center, a center in the Seattle-Bellevue-Everett MSA, to 98.9 percent. Gateway Shopping Center has incredible potential and is a prime candidate for redevelopment.
We completed The Shoppes at Wynnewood, a Whole Foods Market-anchored center, in the “Main Line” Philadelphia suburbs. The Shoppes at Wynnewood is an exciting opportunity and the first of several new “Kimco Signature Series” development projects that continue to progress with encouraging results.
The company sold interests in five of its six remaining Canadian shopping centers; that puts the number of Canadian shopping centers we’ve disposed of this year at 34, for $571.5 million.
In the three months ending September 30, 2016, Kimco had the strongest quarterly anchor leasing volume of this fiscal year, with 19 anchor deals fully executed. Small shop occupancy remains steady. Overall, U.S. pro-rata occupancy sits at healthy 95.1 percent.
A note about Albertsons
As we entered into the fourth quarter, Kimco’s leadership made the decision to remove any contribution to our 2016 net income and NAREIT defined FFO from a partial monetization of our Albertsons investment. We remain highly confident that our investment in Albertsons will provide long-term shareholder value within our 2020 Vision and we’ll watch the markets for the right opportunity.
Positioned for the future
Over the past several years, we’ve strategically positioned our open-air shopping center portfolio in major U.S. metro markets. Q3 offers more evidence that the strategy is paying off, as the fundamentals of our portfolio remain strong.
We’re full steam ahead with our 2020 Vision strategy. Our redevelopment pipeline and Kimco’s Signature Series of development projects offer great growth potential. These strategies, as well as other financial initiatives, will enhance Kimco’s future profitability.
We’ll see you again in early 2017 for Q4 earnings. Thank you for reading all of this year’s earnings blog posts.