<PAGE>
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 June 30, 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.
36,148,757 shares outstanding as of
July 31, 1996.
1 of 11
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Financial Statements -
Condensed Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995.
Condensed Consolidated Statements of Income for the Three
Months and Six Months Ended June 30, 1996 and 1995.
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 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 $6.0 million or 16.4% to $42.4
million for the three months ended June 30, 1996, as compared with $36.4
million for the corresponding quarter ended June 30, 1995. Similarly,
revenues from rental property increased $13.2 million or 18.6% to $84.1
million for the six months ended June 30, 1996, as compared with $70.9
million for the corresponding six-month period ended June 30, 1995.
These net increases are primarily attributable to (i) property
acquisitions during the six months ended June 30, 1996 (21 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 $2.3 million or 10.3% to $24.7 million for the three months
ended June 30, 1996, as compared with $22.4 million for the
corresponding quarter ended June 30, 1995. Similarly, rental property
expenses increased $6.1 million or 13.8% to $50.0 million for the six
months ended June 30, 1996, as compared with $43.9 million for the six
month period ended June 30, 1995. Real estate taxes, operating and
maintenance and depreciation and amortization charges contributed
significantly to this net increase in rental property expenses
(increasing $1.9 million and $5.0 million, or 12.4% and 16.4%,
respectively, for the three and six month periods ended June 30, 1996,
as compared with the corresponding periods in the preceding year),
primarily due to property acquisitions, renovations within the existing
portfolio and increased snow removal costs. Interest expense increased
$.3 million or 5.3% and $1.0 million or 7.9% for the three and six month
periods ended June 30, 1996, respectively, as compared with the
corresponding periods in the preceding year, reflecting higher
outstanding borrowings during 1996 as compared with the corresponding
periods in 1995.
2
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During July 1995, certain subsidiaries of the Company obtained interests
in various 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 three and six months ended June 30, 1996 was $.9 million and $1.8
million, respectively.
Other income (expenses), net for the three and six months ended June 30,
1996 increased $1.0 million and $1.1 million, respectively, as compared
with the corresponding periods in the preceding year, as the 1996
amounts include interest earned on funds raised through public equity
offerings and held in short-term income producing investments pending
the acquisition of neighborhood and community shopping center
properties.
Net income for the three and six months ended June 30, 1996 was $18.4
million, and $34.4 million, respectively. Net income for the three and
six months ended June 30, 1995 was $12.9 million and $24.9 million,
respectively. Net income improved $.04 and $.10 per share for the three
and six month periods ended June 30, 1996, respectively, as compared
with the corresponding periods in the preceding year, primarily due to
property acquisitions, the investment in retail store leases 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 acquiring interests in neighborhood and community shopping
center properties, repaying secured indebtedness 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
1999, has made available funds to both finance property acquisitions 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 during 1996 and succeeding
years.
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
3
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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.
4
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<TABLE>
<CAPTION>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
----------------
June 30, December 31,
1996 1995
--------------- ---------------
<S> <C> <C>
Assets:
Real estate, net of accumulated depreciation
of $167,809,208 and $156,131,718(Notes 3 and 4) $ 846,202,628 $ 776,258,543
Investment in retail store leases (Note 5) 19,967,747 22,127,786
Cash and cash equivalents 95,031,112 16,164,666
Accounts and notes receivable 15,893,826 16,146,808
Other assets 53,717,236 53,544,331
--------------- ---------------
$ 1,030,812,549 $ 884,242,134
=============== ===============
Liabilities:
Notes payable $ 310,250,000 $ 325,250,000
Mortgages payable 63,219,142 63,972,735
Other liabilities, including minority interests
in partnerships 55,597,096 47,868,939
--------------- ---------------
429,066,238 437,091,674
--------------- ---------------
Stockholders' Equity (Note 2):
Preferred stock, $1.00 par value, authorized
930,000 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
Class C Preferred Stock, authorized 460,000
shares
Issued and outstanding 400,000 shares 400,000 --
Aggregate liquidation preference $100,000,000
Common stock, $.01 par value, authorized
50,000,000 shares
Issued and outstanding 36,097,609 and
33,731,348 shares, respectively 360,976 337,313
Paid-in capital 717,063,582 562,311,822
Cumulative distributions in excess of net income (115,339,562) (114,665,183)
Loans receivable from officer stockholders (1,238,685) (1,333,492)
--------------- ---------------
601,746,311 447,150,460
--------------- ---------------
$ 1,030,812,549 $ 884,242,134
=============== ===============
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
5
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<TABLE>
<CAPTION>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues from rental property $ 42,444,247 $ 36,453,666 $ 84,106,317 $ 70,901,442
------------ ------------ ------------ ------------
Rental property expenses:
Rent 339,448 318,234 681,797 649,792
Real estate taxes 5,150,190 4,309,017 9,827,753 8,681,125
Interest 6,713,770 6,374,776 13,578,368 12,583,296
Operating and maintenance 5,612,858 4,983,131 12,635,071 9,523,642
Depreciation and amortization 6,864,396 6,385,443 13,313,796 12,524,686
------------ ------------ ------------ ------------
24,680,662 22,370,601 50,036,785 43,962,541
------------ ------------ ------------ ------------
Income from rental property 17,763,585 14,083,065 34,069,532 26,938,901
Income from investment in retail store leases 900,451 -- 1,819,364 --
------------ ------------ ------------ ------------
18,664,036 14,083,065 35,888,896 26,938,901
Management fee income 987,886 696,961 1,747,336 1,679,954
General and administrative expenses (2,520,937) (2,180,050) (4,941,483) (4,292,111)
Other income (expenses), net 1,307,698 259,529 1,671,669 538,345
------------ ------------ ------------ ------------
Net income $ 18,438,683 $ 12,859,505 $ 34,366,418 $ 24,865,089
============ ============ ============ ============
Net income applicable to common shares $ 14,038,683 $ 11,406,380 $ 27,450,793 $ 21,958,839
============ ============ ============ ============
Net income per common share (Note 6) $0.39 $0.35 $0.77 $0.67
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
6
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<TABLE>
<CAPTION>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months ended June 30, 1996 and 1995
----------------
1996 1995
------------- -------------
<S> <C> <C>
Cash flow provided by operations $ 55,660,772 $ 33,908,327
------------- -------------
Cash flow from investing activities:
Acquisition of and improvements to real estate (81,621,575) (44,968,023)
Investment in marketable securities (2,361,001) (1,149,495)
Proceeds from disposition of real estate -- 4,975,582
Construction advance to real estate joint venture -- 6,794,928
------------- -------------
Net cash flow used for investing activities (83,982,576) (34,347,008)
------------- -------------
Cash flow from financing activities:
Principal payments on debt, excluding
normal amortization of rental
property debt -- (24,210,728)
Principal payments on rental property
debt, net (753,593) (638,074)
Change in notes payable (15,000,000) (18,950,000)
Dividends paid (32,233,580) (25,834,850)
Proceeds from issuance of stock 155,175,423 71,018,831
------------- -------------
Net cash flow provided by financing activities 107,188,250 1,385,179
------------- -------------
Change in cash and cash
equivalents 78,866,446 946,498
Cash and cash equivalents, beginning of period 16,164,666 10,944,226
------------- -------------
Cash and cash equivalents, end of period $ 95,031,112 $ 11,890,724
============= =============
Interest paid during the period $ 13,182,286 $ 12,416,159
============= =============
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 $ 17,024,943 $ 12,096,964
============= =============
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
7
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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 Equity Offerings
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.
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 $3.6 million, totaling approximately $96.4 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, in whole or in part, for cash
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.
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.
8
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4.Property Acquisitions
During the six months ended June 30, 1996, the Company
acquired interests in 5 shopping center properties in Florida, North
Carolina, Texas and Arizona through separate transactions for an
aggregate purchase price of approximately $21.5 million.
5.Investment in Retail Store Leases
During July 1995, certain subsidiaries of the Company obtained
interests in various 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 these
retail store leases for the six months ended June 30, 1996 was
approximately $1.8 million. This amount represents sublease revenues of
approximately $10.2 million less related expenses of $7.2 million and an
amount which, in management's estimation, reasonably provides for the
recovery of the 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 36,060,662 and 35,642,416 for
the three and six month periods ended June 30, 1996, respectively, and
33,587,463 and 33,099,977 for the three and six month periods ended June
30, 1995, respectively.
7.Pro Forma Financial Information
As discussed in Note 4, the Company and certain of its
subsidiaries acquired interests in shopping center properties during the
six months ended June 30, 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 six months ended June
30, 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.)
Six Months
Ended Year Ended
June 30, December 31,
1996 1995
--------- ------------
Revenues from rental property $85.0 $147.0
Net income $34.7 $53.9
Net income per common share $.78 $1.39
9
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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.
In connection with the Annual Meeting of Stockholders held on
May 22, 1996, stockholders were asked to vote with respect to
the election of Directors to serve for the ensuing year.
A total of 31,818,938 votes were cast regarding the election
of each of Messrs. Cooper, Dooley, Flynn, Kimmel, Lourenso and
Samber as follows:
Nominee Votes For Against
------- ----- --- -------
Milton Cooper 31,818,938 31,767,095 51,843
Richard G. Dooley 31,818,938 31,777,745 41,193
Michael J. Flynn 31,818,938 31,778,195 40,743
Martin S. Kimmel 31,818,938 31,766,633 52,305
Frank Lourenso 31,818,938 31,769,995 48,943
David M. Samber 31,818,938 31,771,595 47,343
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
Exhibits -
None
Form 8-K -
None
10
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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
08/12/96 s/s Milton Cooper
(Date) Milton Cooper
Chairman of the Board
08/12/96 s/s Louis J. Petra
(Date) Louis J. Petra
Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 95,031,112
<SECURITIES> 10,827,150
<RECEIVABLES> 17,243,826
<ALLOWANCES> 1,350,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,014,011,836
<DEPRECIATION> 167,809,208
<TOTAL-ASSETS> 1,030,812,549
<CURRENT-LIABILITIES> 0
<BONDS> 373,469,142
0
900,000
<COMMON> 360,976
<OTHER-SE> 600,485,335
<TOTAL-LIABILITY-AND-EQUITY> 1,030,812,549
<SALES> 84,106,317
<TOTAL-REVENUES> 84,106,317
<CGS> 23,144,621
<TOTAL-COSTS> 23,144,621
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,578,368
<INCOME-PRETAX> 34,366,418
<INCOME-TAX> 0
<INCOME-CONTINUING> 34,366,418
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,366,418
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
<FN>
Financial Data Schedule information has been extracted from the Registrant's
Condensed Consolidated Balance Sheet (non-classified) as of June 30, 1996 and
the Condensed Consolidated Statement of Income for the six months then ended.
</TABLE>
