UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 1-10899
Kimco Realty Corporation
(Exact name of registrant as specified in its charter)
Maryland 13-2744380
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No)
3333 New Hyde Park Road, New Hyde Park, NY 11042
(Address of principal executive offices - Zip Code)
(516)869-9000
(Registrant's telephone number, including area code)
(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 ____
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.
36,060,594 shares outstanding as of April 30, 1996.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1996 and December
31, 1995.
Condensed Consolidated Statements of Income for the Three Months Ended
March 31, 1996 and 1995.
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995.
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 $7.2 million or 20.9% to $41.7 million
for the three months ended March 31, 1996, as compared with $34.5 million for
the corresponding quarter ended March 31, 1995. This net increase is primarily
attributable to (i) property acquisitions during the first quarter of 1996 (19
properties) and throughout calendar year 1995 (18 properties), and (ii) new
leasing and re-tenanting within the portfolio at improved rental rates.
Rental property expenses, including depreciation and amortization, increased
$3.8 million or 17.4% to $25.4 million for the three months ended March 31,
1996, as compared with $21.6 million for the corresponding quarter ended March
31, 1995. Real estate taxes, operating and maintenance and depreciation and
amortization charges contributed significantly to this net increase in rental
property expenses (increasing $3.1 million, or 20.6%, for the three months ended
March 31, 1996, as compared with the corresponding period in the preceding
year), primarily due to property acquisitions, renovations within the existing
portfolio and increased snow removal costs. Interest expense increased $.7
million or 10.6% for the quarter ended March 31, 1996, as compared to the
corresponding period in the previous year, reflecting higher outstanding
borrowings during 1996 as compared with 1995.
During July 1995, certain subsidiaries of the Company obtained interests in 60
retail store leases relating to the anchor store premises in neighborhood and
community shopping centers. These premises have been substantially sublet to
retailers which lease the stores pursuant to net lease agreements. Income from
the investment in retail store leases for the quarter ended March 31, 1996 was
$.9 million.
Net income for the three months ended March 31, 1996 and 1995, was $15.9 million
and $12.0 million, respectively. This represents an increase of $.06 per share.
This improvement is primarily attributable to both property acquisitions and
increased leasing activity which strengthened operating profitability.
Liquidity and Capital Resources
Since the Company's initial public stock offering in November 1991, the Company
has completed additional offerings of its public unsecured debt and equity
raising in the aggregate in excess of $850 million for the purposes of repaying
secured indebtedness, acquiring neighborhood and community shopping centers and
for expanding and improving properties in the portfolio. Management believes the
public debt and equity markets will be the Company's principal source of capital
for the future. A $100 million, unsecured revolving credit facility established
in June 1994, which is scheduled to expire in June 1998, replaced the Company's
$50 million secured acquisition line and has made available funds to both
finance the purchase of properties and meet any short-term working capital
requirements. The Company has also implemented a $150 million medium-term notes
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
and redevelopment costs and (ii) better managing the Company's debt maturities,
including its mortgage maturities beginning in 1996.
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, debt reduction, the acquisition of interests
in new properties 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 or debt
financing in a manner consistent with its intention to operate with a
conservative debt capitalization policy.
The Company anticipates that adequate cash will be available from operations 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.
Effects of Inflation
Substantially all of the Company's leases contain provisions designed to
mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rents based on tenants' gross sales,
which generally increase as prices rise, and/or escalation clauses, which
generally increase rental rates during the terms of the leases. Such escalation
clauses are often related to increases 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,
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 interest rate protection agreements which mitigate, but
do not eliminate, the effect of changes in interest rates on its floating-rate
loans.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- -------------
<S> <C> <C>
Assets:
Real estate, net of accumulated depreciation
of $162,105,746 and $156,131,718(Notes 3 and 4) $ 838,535,015 $ 776,258,543
Investment in retail store leases (Note 5) 21,570,102 22,127,786
Cash and cash equivalents 15,859,090 16,164,666
Accounts and notes receivable 15,152,115 16,146,808
Other assets 53,869,074 53,544,331
------------- -------------
$ 944,985,396 $ 884,242,134
============= =============
Liabilities:
Notes payable $ 325,250,000 $ 325,250,000
Mortgages payable 63,545,833 63,972,735
Other liabilities, including minority interests
in partnerships 52,709,226 47,868,939
------------- -------------
441,505,059 437,091,674
------------- -------------
Stockholders' Equity (Notes 2 and 7):
Preferred stock, $1.00 par value, authorized 1,850,000 shares
Class A Preferred Stock, authorized 345,000 shares
Issued and outstanding 300,000 shares 300,000 300,000
Aggregate liquidation preference $75,000,000
Class B Preferred Stock, authorized 230,000 shares
Issued and outstanding 200,000 shares 200,000 200,000
Aggregate liquidation preference $50,000,000
Common stock, $.01 par value, authorized 50,000,000 shares
Issued and outstanding 36,018,219 and 33,731,348 360,182 337,313
shares, respectively
Paid-in capital 619,209,491 562,311,822
Cumulative distributions in excess of net income (115,300,178) (114,665,183)
Notes receivable from officer stockholders (1,289,158) (1,333,492)
------------- -------------
503,480,337 447,150,460
------------- -------------
$ 944,985,396 $ 884,242,134
============= =============
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Revenues from rental property $ 41,662,070 $ 34,447,776
------------ ------------
Rental property expenses:
Rent 342,349 331,558
Real estate taxes 4,677,563 4,372,108
Interest 6,864,598 6,208,520
Operating and maintenance 7,022,213 4,540,511
Depreciation and amortization 6,449,400 6,139,243
------------ ------------
25,356,123 21,591,940
------------ ------------
Income from rental property 16,305,947 12,855,836
Income from investment in retail store leases (Note 5) 918,913 --
------------ ------------
17,224,860 12,855,836
Management fee income 759,450 982,993
General and administrative expenses (2,420,546) (2,112,061)
Other income (expenses), net 363,971 278,816
------------ ------------
Net income $ 15,927,735 $ 12,005,584
============ ============
Net income applicable to common shares $ 13,412,110 $ 10,552,459
============ ============
Net income per common share (Note 6) $0.38 $0.32
===== =====
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flow provided by operations $ 27,122,138 $ 15,339,400
------------ ------------
Cash flow from investing activities:
Acquisition of and improvements to real estate (68,250,500) (13,836,544)
Investment in marketable securities -- (903,156)
Proceeds from disposition of real estate -- 4,975,582
Construction advance to real estate joint venture -- (1,723,505)
------------ ------------
Net cash flow used for investing activities (68,250,500) (11,487,623)
------------ ------------
Cash flow from financing activities:
Principal payments on debt, excluding
normal amortization of rental
property debt -- (20,812,150)
Principal payments on rental property
debt, net (426,902) (386,817)
Change in notes payable -- (34,200,000)
Dividends paid (15,670,850) (12,303,125)
Proceeds from issuance of stock 56,920,538 69,768,842
------------ ------------
Net cash flow provided by financing activities 40,822,786 2,066,750
------------ ------------
Change in cash and cash equivalents (305,576) 5,918,527
Cash and cash equivalents, beginning of period 16,164,666 10,944,226
------------ ------------
Cash and cash equivalents, end of period $ 15,859,090 $ 16,862,753
============ ============
Interest paid during the period $ 4,512,109 $ 4,819,231
============ ============
Supplemental schedule of noncash investing/ financing activity:
Acquisition of real estate interests by issuance of common stock
and assumption of debt -- $ 38,714,717
============ ============
Declaration of dividends paid in succeeding period $ 15,109,605 $ 12,078,600
============ ============
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Financial Statements
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 majority-owned
partnerships. 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.
2. Public Stock Offering
On February 2, 1996, the Company completed a primary public stock
offering of 2,200,000 shares of Common Stock at $26.50 per share. The proceeds
from this sale of Common Stock, net of related transaction costs of
approximately $3.4 million, totaling approximately $55.0 million, have been used
primarily for the acquisition of neighborhood and community shopping centers.
3. Sale-Leaseback Transactions
During January 1996, the Company entered into two sale-leaseback
transactions pursuant to which it acquired fee title to 16 retail properties
located in Texas, Iowa, Oklahoma, Illinois and Kansas for a purchase price of
$40 million. Simultaneously, the Company executed two long-term net leases
covering the 16 locations pursuant to which the seller/tenant may remain in
occupancy and continue to conduct business in these premises.
4. Property Acquisitions
During the three months ended March 31, 1996, the Company acquired
3 shopping center properties in Kissimmee and Orlando, FL and Durham, NC through
separate transactions for an aggregate purchase price of approximately $18.8
million.
5. Investment in Retail Store Leases
During July 1995, certain subsidiaries of the Company obtained
interests in 60 retail store leases relating to approximately 5.4 million square
feet of anchor store premises in neighborhood and community shopping centers for
an aggregate price of approximately $23 million. These premises have been
substantially sublet to retailers which lease the stores pursuant to net lease
agreements. Income from the investment in these retail store leases for the
quarter ended March 31, 1996 was approximately $.9 million. This amount
represents sublease revenues of approximately $5.1 million less related expenses
of $3.6 million and an amount which, in management's estimation, reasonably
provides for the recovery of the $23 million investment over a ten-year period.
6. Net Income Per Common Share
Net income per common share is based upon weighted average numbers
of common shares outstanding of 35,224,170 and 32,607,072 for the three months
ended March 31, 1996 and 1995, respectively.
7. Subsequent Event:
On April 10, 1996, the Company completed a public offering of
4,000,000 Depositary Shares (the "Class C Depositary Shares") at $25.00 per
share, each such Class C Depositary Share representing 1/10 of a share of the
Company's 8-3/8% Class C Cumulative Redeemable Preferred Stock (the "Class C
Preferred Stock"), par value $1.00 per share. The cash proceeds to the Company,
net of related transaction costs of approximately $3.4 million, totaling
approximately $96.6 million, will be used for general corporate purposes,
including the acquisition of interests in neighborhood and community shopping
centers, and the redevelopment, expansion and improvement of properties in the
Company's portfolio.
Dividends on the Class C Depositary Shares are cumulative and
payable quarterly in arrears at the rate of 8-3/8% per annum based on the $25
per share initial offering price, or $2.0938 per share. The Class C Depositary
Shares are redeemable for cash, in whole or in part, on or after April 15, 2001
at the option of the Company at a redemption price of $25 per share, plus any
accrued and unpaid dividends thereon. The redemption price of the Class C
Preferred Stock may be paid solely from the sale proceeds of other capital stock
of the Company, which may include other classes or series of preferred stock.
The Class C Depositary Shares are not convertible or exchangeable for any other
property or securities of the Company. The Class C Preferred Stock (represented
by the Class C Depositary Shares outstanding) ranks pari passu with the
Company's 7-3/4% Class A Cumulative Redeemable Preferred Stock and 8-1/2% Class
B Cumulative Redeemable Preferred Stock as to voting rights, priority for
receiving dividends and liquidation preferences.
8. Pro Forma Financial Information
As discussed in Note 4, the Company and certain of its
subsidiaries acquired interests in shopping center properties during the three
months ended March 31, 1996. The pro forma financial information set forth below
is based upon the Company's historical, Consolidated Statement of Income for the
year ended December 31, 1995, and the Condensed Consolidated Statement of Income
for the three months ended March 31, 1996, adjusted to give effect to these
transactions as of January 1, 1995.
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 transactions occurred as of January 1, 1995, nor does it
purport to represent the results of future operations. (Amounts presented in
millions, except per share figures.)
1996 1995
----- ------
Revenues from rental property $42.2 $146.0
Net income $16.2 $53.6
Net income per common share $.39 $1.38
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 -
None
Form 8-K -
A Current Report on Form 8-K was filed by the Company on January
25, 1996, to disclose that certain subsidiaries of the Company were
acquiring fee title to 16 retail properties comprising 1.6 million
square feet of gross leasable area located in 5 states from a
family value department store operator for a purchase price of $40
million. Simultaneously, the Company's subsidiaries were to execute
two long-term net leases covering all 16 properties pursuant to
which this seller/tenant may remain in occupancy and continue to
conduct business in these premises. This transaction was completed
in January 1996.
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
05/6/96 s/s Milton Cooper
(Date) Milton Cooper
Chairman of the Board
05/6/96 s/s Louis J. Petra
(Date) Louis J. Petra
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 15,859,090
<SECURITIES> 8,505,225
<RECEIVABLES> 16,502,115
<ALLOWANCES> 1,350,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,000,640,761
<DEPRECIATION> 162,105,746
<TOTAL-ASSETS> 944,985,396
<CURRENT-LIABILITIES> 0
<BONDS> 388,795,833
0
500,000
<COMMON> 360,182
<OTHER-SE> 502,620,155
<TOTAL-LIABILITY-AND-EQUITY> 944,985,396
<SALES> 41,662,070
<TOTAL-REVENUES> 41,662,070
<CGS> 12,042,125
<TOTAL-COSTS> 12,042,125
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,864,598
<INCOME-PRETAX> 15,927,735
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,927,735
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,927,735
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
<FN>
Financial Data Schedule information has been extracted from the Registrant's
Condensed Consolidated Balance Sheet (non-classified) as of March 31, 1996, and
the Condensed Consolidated Statement of Income for the three months then ended.
</TABLE>
