<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 March 31, 1997
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.
36,243,075 shares outstanding as of
April 30, 1997.
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Financial Statements -
Condensed Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996.
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 1997 and 1996.
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996.
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 $3.5 million or 8.5% to $45.2 million
for the three months ended March 31, 1997, as compared with $41.7 million for
the corresponding quarter ended March 31, 1996. This net increase is primarily
attributable to (i) the acquisition of 39 property interests throughout calendar
year 1996, and (ii) new leasing, property redevelopments and re-tenanting within
the portfolio at improved rental rates.
Rental property expenses decreased $.5 million or 1.8% to $24.9 million for the
three months ended March 31, 1997, as compared with $25.4 million for the
corresponding quarter ended March 31, 1996. This net decrease in rental property
expenses is primarily due to (i) a decrease of $1.1 million in snow removal
costs between periods, (ii) a decrease of $.5 million in interest expense
resulting from the repayment of secured indebtedness aggregating approximately
$16 million during the three months ended March 31, 1997 and throughout calendar
year 1996, offset by (iii) increases in depreciation and amortization expenses
and real estate taxes of $.4 million and $.7 million, respectively, due to
property acquisitions during 1996.
Net income for the three months ended March 31, 1997 and 1996 was $20.6 million
and $15.9 million, respectively. This increase of $.06 per common share is
primarily attributable to property acquisitions, property redevelopments 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 $900 million for the purposes of acquiring
interests in neighborhood and community shopping center properties, repaying
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
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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.
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 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
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.
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<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------------- ----------------
<S> <C> <C>
Assets:
Real estate, net of accumulated depreciation
of $186,444,006 and $180,552,647 $900,829,772 $891,503,339
Investment in retail store leases 18,470,556 18,994,321
Cash and cash equivalents 26,486,562 37,425,206
Accounts and notes receivable 15,717,209 13,986,138
Other assets 62,169,715 61,123,557
----------------- --------------------
$1,023,673,814 $1,023,032,561
================= ====================
Liabilities:
Notes payable $310,250,000 $310,250,000
Mortgages payable 49,443,842 54,404,939
Other liabilities, including minority interests
in partnerships 57,343,681 52,606,653
---------------- ----------------
417,037,523 417,261,592
---------------- ----------------
Stockholders' Equity:
Preferred stock, $1.00 par value, authorized 930,000 shares
Class A Preferred Stock, $1.00 par value, authorized 345,000 shares
Issued and outstanding 300,000 shares 300,000 300,000
Aggregate liquidation preference $75,000,000
Class B Preferred Stock, $1.00 par value, authorized 230,000 shares
Issued and outstanding 200,000 shares 200,000 200,000
Aggregate liquidation preference $50,000,000
Class C Preferred Stock, $1.00 par value, authorized 460,000 shares
Issued and outstanding 400,000 shares 400,000 400,000
Aggregate liquidation preference $100,000,000
Common stock, $.01 par value, authorized 50,000,000 shares
Issued and outstanding 36,238,075 and 36,215,055 362,381 362,151
shares, respectively
Paid-in capital 720,052,126 719,601,956
Cumulative distributions in excess of net income (114,678,216) (115,093,138)
---------------- ----------------
606,636,291 605,770,969
---------------- ----------------
$1,023,673,814 $1,023,032,561
================= =====================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months ended March 31, 1997 and 1996
------------------------------------
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
Revenues from rental property $45,195,317 $41,662,070
--------------- ---------------
Rental property expenses:
Rent 427,948 342,349
Real estate taxes 5,394,520 4,677,563
Interest 6,295,604 6,864,598
Operating and maintenance 5,886,499 7,022,213
Depreciation and amortization 6,899,248 6,449,400
--------------- ---------------
24,903,819 25,356,123
--------------- ----------------
Income from rental property 20,291,498 16,305,947
Income from investment in retail store leases 915,939 918,913
--------------- ----------------
21,207,437 17,224,860
Management fee income 788,351 759,450
General and administrative expenses (2,754,691) (2,420,546)
Other income, net 1,363,176 363,971
--------------- ---------------
Net income $20,604,273 $15,927,735
=============== ===============
Net income applicable to common shares $15,994,848 $13,412,110
=============== ===============
Net income per common share $0.44 $0.38
===== =====
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March 31, 1997 and 1996
----------------------------------
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
<S> <C> <C>
Cash flow provided by operations $29,939,986 $27,122,138
------------------ ------------------
Cash flow from investing activities:
Acquisition of and improvements to real estate (15,217,792) (68,250,500)
Investment in marketable securities (976,197) -
------------------ ------------------
Net cash flow investing activities (16,193,989) (68,250,500)
------------------ ------------------
Cash flow from financing activities:
Principal payments on debt, excluding
normal amortization of rental
property debt (4,650,000) -
Principal payments on rental property
debt, net (311,097) (426,902)
Dividends paid (20,173,944) (15,670,850)
Proceeds from issuance of stock 450,400 56,920,538
------------------ ------------------
Net cash flow provided by financing activities (24,684,641) 40,822,786
------------------ ------------------
Change in cash and cash
equivalents (10,938,644) (305,576)
Cash and cash equivalents, beginning of period 37,425,206 16,164,666
------------------ ------------------
Cash and cash equivalents, end of period $26,486,562 $15,859,090
================== ==================
Interest paid during the period $3,641,774 $4,512,109
================== ==================
Supplemental financing activity:
Declaration of dividends paid in succeeding period $18,736,226 $15,109,605
================== ==================
</TABLE>
[S]The accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
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.
Certain account balances in the accompanying Condensed
Consolidated Balance sheet as of December 31, 1996 have been reclassified so as
to conform with the current year presentation.
2.Property Acquisitions
During the three months ended March 31, 1997, the Company and its
affiliates acquired 2 property interests in Indiana and Pennsylvania through
separate transactions for an aggregate purchase price of approximately $8.5
million.
3.Investment in Retail Store Leases
Income from the investment in retail store leases for the three
months ended March 31, 1997 and 1996 represents sublease revenues of
approximately $5.4 million and $5.1 million, respectively, less related expenses
of $4.0 million and $3.6 million, respectively, and amounts, which in
management's estimation, reasonably provide for the recovery of the investment
over a ten-year period.
4.Net Income Per Common Share
Net income per common share is based upon weighted average numbers
of common shares outstanding of 36,229,366 and 35,224,170 for the three months
ended March 31, 1997 and 1996, respectively.
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<PAGE>
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 -
None
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<PAGE>
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
05/12/97 /s/ Milton Cooper
- ------------- ---------------------------
(Date) Milton Cooper
Chairman of the Board
05/12/97 /s/ Louis J. Petra
- ------------ --------------------------
(Date) Louis J. Petra
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 26,486,562
<SECURITIES> 8,754,506
<RECEIVABLES> 17,067,209
<ALLOWANCES> 1,350,000
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,087,273,778
<DEPRECIATION> 186,444,006
<TOTAL-ASSETS> 1,023,673,814
<CURRENT-LIABILITIES> 0
<BONDS> 359,693,842
0
900,000
<COMMON> 362,381
<OTHER-SE> 605,373,910
<TOTAL-LIABILITY-AND-EQUITY> 1,023,673,814
<SALES> 45,195,317
<TOTAL-REVENUES> 45,195,317
<CGS> 11,708,967
<TOTAL-COSTS> 11,708,967
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,295,604
<INCOME-PRETAX> 20,604,273
<INCOME-TAX> 0
<INCOME-CONTINUING> 20,604,273
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,604,273
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
<FN>
Financial Data Schedule information has been extracted from the Registrant's
Condensed Consolidated Balance Sheet (non-classified) as of March 31, 1997 and
the Condensed Consolidated Statement of Income for the three months then ended.
</FN>
</TABLE>
