Kimco Realty (KIM) Beats Q3 FFO Estimates, Raises 2021 Outlook
Kimco Realty (KIM) delivers better-than-expected revenue numbers in Q3 as well as raises 2021 guidance.
Kimco Realty Corp.’s KIM third-quarter 2021 NAREIT funds from operations (FFO) came in at 32 cents per share, topping the Zacks Consensus Estimate of 30 cents. This figure, which includes merger charges with Weingarten Realty of 8 cents per share, also compares favorably with the year-ago quarter tally of 25 cents.
Results reflect better-than-anticipated revenue numbers. Moreover, the retail REIT raised the guidance for 2021.
The retail REIT generated revenues of $368.6 million, exceeding the consensus mark of $283.3 million. Quarterly revenues increased 41.9% year one year.
According to Conor Flynn, Kimco’s CEO, “We are extremely proud to have completed another quarter where leasing volume exceeded two million square feet, bringing year-to-date leasing to 6.7 million square feet.”
Kimco completed the merger with Weingarten Realty Investors in August. This expanded the retail REIT’s grocery-anchored portfolio and its presence in fast growing Sunbelt markets with the addition of 149 properties aggregating 23.5 million square feet of gross leasable area.
Flynn noted that “With the strategic addition of the Weingarten portfolio and our highly desirable open-air, last-mile grocery-anchored centers in growing markets, we are excited to again raise our outlook for 2021 as we embrace the opportunity to create additional value for shareholders.”
Quarter in Detail
Pro-rata portfolio occupancy at the end of the third quarter was 94.1%, reflecting an expansion of 20 basis points (bps), sequentially. Pro-rata anchor occupancy was 96.9%, which is flat on a sequential basis. Pro-rata small shop occupancy ended the quarter at 87.3%, representing an uptick of 180 bps, quarter on quarter.
The company signed 411 leases, aggregating 2.1 million square feet of the gross leasable area, gaining from the Weingarten merger.
Pro-rata rental-rate spreads on comparable spaces increased 4.9%, with rental rates for new leases and renewals/options climbing 5% and 4.9%, respectively.
Same-property net operating income (NOI), including redevelopments, increased 12.1%, year over year.
During the third quarter, Kimco sold two single-tenant centers in Massachusetts and one land parcel in San Antonio for a total of $23.5 million.
Balance Sheet Position
Kimco exited third-quarter 2021 with cash and cash equivalents of $483.5 million, up from the $293.2 million recorded at the end of 2020. The retail REIT had more than $2.4 billion of immediate liquidity at the end of the reported quarter. This included full availability under its $2-billion unsecured revolving credit facility. In addition, at the end of the quarter, Kimco held more than $1.2 billion of Albertson’s common stock, subject to certain lock-up provisions.
Kimco raised the 2021 guidance ranges, projecting the NAREIT FFO per share at $1.36-$1.37 from the $1.29 - $1.33 estimated earlier. The Zacks Consensus Estimate for the same is currently pinned at $1.29.
Kimco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kimco Realty Corporation Price, Consensus and EPS Surprise
Performance of Other Retail REITs
Simon Property Group, Inc.’s (SPG) FFO per share of $3.13 exceeded the Zacks Consensus Estimate of $2.47 in the September-end quarter. This performance was backed by better-than-projected top-line growth. The retail REIT behemoth also raised the 2021 FFO per share outlook based on its results in the year so far and expectations for the rest of the year. It also announced a hike in the quarterly dividend.
Realty Income Corporation’s O third-quarter 2021 adjusted funds from operations (AFFO) per share of 89 cents missed the Zacks Consensus Estimate of 92 cents. However, the reported figure compared favorably with the prior-year quarter’s 82 cents, displaying better-than-expected improvement in revenues. The retail REIT also raised its 2021 AFFO per share guidance and increased the 2021 acquisition volume projection to more than $5 billion.
Macerich Company MAC delivered better-than-expected adjusted funds from operations (FFO) per share on solid top-line growth for the September-end quarter. The retail REIT reported FFO per share of 45 cents, excluding financing expenses in relation to Chandler Freehold and loss on extinguishment of debt, which exceeded the Zacks Consensus Estimate of 43 cents. It has also raised the 2021 FFO per share guidance.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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