10-Q 1 kim20220930_10q.htm FORM 10-Q kim20220930_10q.htm
0000879101 KIMCO REALTY CORP false --12-31 Q3 2022 3,336,473 3,010,699 1.00 1.00 7,054,000 7,054,000 19,435 19,435 19,580 19,580 485,868 489,500 0.01 0.01 750,000,000 750,000,000 618,462,620 618,462,620 616,658,593 6,955 0 445 482 854.3 828.3 1.35 1.34 3.2 1 0 The amounts represent adjustments associated with potentially uncollectible revenues and disputed amounts primarily due to the COVID-19 pandemic. Includes restricted assets of consolidated variable interest entities (“VIEs”) at September 30, 2022 and December 31, 2021 of $88,949 and $227,858, respectively. See Footnote 13 of the Notes to Condensed Consolidated Financial Statements. Includes partial repayments during May and June 2022. The Company determined that its valuation of its mortgages payable were classified within Level 3 of the fair value hierarchy. Representing 112 property interests and 22.6 million square feet of GLA, as of September 30, 2022, and 120 property interests and 24.7 million square feet of GLA, as of December 31, 2021. Includes minimum base rents, expense reimbursements, ancillary income and straight-line rent adjustments. The pro forma earnings for the three and nine months ended September 30, 2021 were adjusted to exclude $47.0 million and $50.2 million of merger costs, respectively. Includes $19.7 million of Internal Revenue Code 26 U.S.C. §1031 proceeds held in escrow through sale of real estate interests for the nine months ended September 30, 2022. During the nine months ended September 30, 2022, the Prudential Investment Program recognized an impairment charge on a property of $15.1 million, of which the Company’s share was $2.3 million. There was no prepayment charge associated with this early repayment. Consists of the fair value of the assets acquired which exceeded the purchase price upon closing. The transaction was a sale-leaseback with the seller which resulted in the recognition of a prepayment of rent of $17.7 million in accordance with ASC 842, Leases at closing. The prepayment of rent will amortize over the initial term of the lease through Revenues from rental properties, net on the Company's Condensed Consolidated Statements of Operations. See Footnote 12 of the Company's Condensed Consolidated Financial Statements for additional discussion regarding fair value allocation of partnership interest for noncontrolling interests. Includes extension options During the nine months ended September 30, 2022, the Company purchased additional ownership interests for $55.1 million, including the General Partner's ownership interest from Milton Cooper, Executive Chairman of the Board of Directors of the Company, for $0.1 million. There was no change in control as a result of these transactions. Includes minimum base rents, expense reimbursements, percentage rent, lease termination fee income and ancillary income. Gross leasable area ("GLA") The Company determined the estimated fair value of the Credit Facility and mortgages payable using a discounted cash flow model using a rate that reflects the average yield of similar market participants. The effect of the assumed conversion of certain convertible units had an anti-dilutive effect upon the calculation of Net income available to the Company’s common shareholders per share. Accordingly, the impact of such conversions has not been included in the determination of diluted earnings per share calculations. Additionally, there were 0.3 million and 0.5 million stock options that were not dilutive as of September 30, 2022 and 2021, respectively. Relates to interest expense on finance lease liabilities, which were acquired in connection with the Merger. The Company incurred a prepayment charge of $6.5 million and $0.7 million in write-off of deferred financing costs resulting from this early repayment, which are included in Early extinguishment of debt charges on the Company's Condensed Consolidated Statements of Income. The Company determined that the valuation of its senior unsecured notes were classified within Level 2 of the fair value hierarchy and its Credit Facility was classified within Level 3 of the fair value hierarchy. The estimated fair value amounts classified as Level 2, as of September 30, 2022 and December 31, 2021, were $5.7 billion and $7.3 billion, respectively. The estimated fair value amounts classified as Level 3, as of September 30, 2022, was $126.7 million. Includes non-recourse liabilities of consolidated VIEs at September 30, 2022 and December 31, 2021 of $100,291 and $153,924, respectively. See Footnote 13 of the Notes to Condensed Consolidated Financial Statements. 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Table of Contents



 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

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 of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

500 North Broadway, Suite 201, Jericho, NY 11753

(Address of principal executive offices) (Zip Code)

 

(516) 869-9000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on

which registered

Common Stock, par value $.01 per share.

KIM

New York Stock Exchange

Depositary Shares, each representing one-thousandth of a share of 5.125% Class L Cumulative Redeemable, Preferred Stock, $1.00 par value per share.

KIMprL

New York Stock Exchange

Depositary Shares, each representing one-thousandth of a share of 5.250% Class M Cumulative Redeemable, Preferred Stock, $1.00 par value per share.

KIMprM

New York Stock Exchange

 

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 ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

Non-accelerated filer

Smaller reporting company

Emerging growth company

   

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No ☒

 

As of October 19, 2022, the registrant had 618,460,829 shares of common stock outstanding.

 



 

 
 

PART I - FINANCIAL INFORMATION

 

Item 1.  Financial Statements.

 

 

 

Condensed Consolidated Financial Statements of Kimco Realty Corporation and Subsidiaries (Unaudited) -

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

3

 

 

Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2022 and 2021

4

   

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021

5

   

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2022 and 2021

6

   

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021

8

   
Notes to Condensed Consolidated Financial Statements. 9
   

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

24

   

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

37

   

Item 4.  Controls and Procedures.

37

   

PART II - OTHER INFORMATION

 
   

Item 1.  Legal Proceedings.

38

   

Item 1A.  Risk Factors.

38

   

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

38

   

Item 3.  Defaults Upon Senior Securities.

38

   

Item 4.  Mine Safety Disclosures.

39

   

Item 5.  Other Information.

39

   

Item 6.  Exhibits.

39

   

Signatures

40

 

 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share information)

 

  

September 30, 2022

  

December 31, 2021

 

Assets:

        

Real estate, net of accumulated depreciation and amortization of $3,336,473 and $3,010,699, respectively

 $14,748,910  $15,035,900 

Real estate under development

  5,672   5,672 

Investments in and advances to real estate joint ventures

  1,092,351   1,006,899 

Other investments

  105,984   122,015 

Cash and cash equivalents

  123,531   334,663 

Marketable securities

  999,094   1,211,739 

Accounts and notes receivable, net

  269,887   254,677 

Operating lease right-of-use assets, net

  135,429   147,458 

Other assets

  434,711   340,176 

Total assets (1)

 $17,915,569  $18,459,199 
         

Liabilities:

        

Notes payable, net

 $6,909,382  $7,027,050 

Mortgages payable, net

  300,739   448,652 

Dividends payable

  5,326   5,366 

Operating lease liabilities

  114,923   123,779 

Other liabilities

  732,081   730,690 

Total liabilities (2)

  8,062,451   8,335,537 

Redeemable noncontrolling interests

  13,270   13,480 
         

Commitments and Contingencies (Footnote 18)

          
         

Stockholders' equity:

        

Preferred stock, $1.00 par value, authorized 7,054,000 shares; Issued and outstanding (in series) 19,435 and 19,580 shares, respectively; Aggregate liquidation preference $485,868 and $489,500, respectively

  19   20 

Common stock, $.01 par value, authorized 750,000,000 shares; Issued and outstanding 618,462,620 and 616,658,593 shares, respectively

  6,185   6,167 

Paid-in capital

  9,611,382   9,591,871 

Retained earnings

  78,790   299,115 

Accumulated other comprehensive income

  6,688   2,216 

Total stockholders' equity

  9,703,064   9,899,389 

Noncontrolling interests

  136,784   210,793 

Total equity

  9,839,848   10,110,182 

Total liabilities and equity

 $17,915,569  $18,459,199 

 

(1)

Includes restricted assets of consolidated variable interest entities (“VIEs”) at September 30, 2022 and December 31, 2021 of $88,949 and $227,858, respectively. See Footnote 13 of the Notes to Condensed Consolidated Financial Statements.

(2)

Includes non-recourse liabilities of consolidated VIEs at September 30, 2022 and December 31, 2021 of $100,291 and $153,924, respectively. See Footnote 13 of the Notes to Condensed Consolidated Financial Statements.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share data)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2022

   

2021

   

2022

   

2021

 

Revenues

                               

Revenues from rental properties, net

  $ 429,042     $ 364,694     $ 1,274,969     $ 929,297  

Management and other fee income

    4,361       3,913       12,881       10,634  

Total revenues

    433,403       368,607       1,287,850       939,931  
                                 

Operating expenses

                               

Rent

    (3,703 )     (3,678 )     (11,854 )     (9,706 )

Real estate taxes

    (55,578 )     (50,594 )     (165,967 )     (129,124 )

Operating and maintenance

    (71,457 )     (52,063 )     (210,466 )     (145,480 )

General and administrative

    (29,677 )     (25,904 )     (87,606 )     (75,136 )

Impairment charges

    (7,067 )     (850 )     (21,758 )     (954 )

Merger charges

    -       (46,998 )     -       (50,191 )

Depreciation and amortization

    (125,419 )     (114,238 )     (380,324 )     (261,687 )

Total operating expenses

    (292,901 )     (294,325 )     (877,975 )     (672,278 )
                                 

Gain on sale of properties

    3,821       1,975       10,958       30,841  
                                 

Operating income

    144,323       76,257       420,833       298,494  
                                 

Other income/(expense)

                               

Other income, net

    6,226       6,696       18,851       11,834  

(Loss)/gain on marketable securities, net

    (75,491 )     457,127       (215,194 )     542,510  

Interest expense

    (52,391 )     (52,126 )     (165,876 )     (146,654 )

Early extinguishment of debt charges

    (428 )     -       (7,658 )     -  
                                 

Income before income taxes, net, equity in income of joint ventures, net, and equity in income from other investments, net

    22,239       487,954       50,956       706,184  
                                 

Benefit/(provision) for income taxes, net

    1,039       (314 )     1,096       (2,897 )

Equity in income of joint ventures, net

    26,360       20,025       94,060       54,095  

Equity in income of other investments, net

    6,733       1,539       15,491       10,365  
                                 

Net income

    56,371       509,204       161,603       767,747  
                                 

Net loss/(income) attributable to noncontrolling interests

    1,583       (1,465 )     14,152       (5,369 )
                                 

Net income attributable to the Company

    57,954       507,739       175,755       762,378  
                                 

Preferred dividends, net

    (6,307 )     (6,354 )     (18,911 )     (19,062 )
                                 

Net income available to the Company's common shareholders

  $ 51,647     $ 501,385     $ 156,844     $ 743,316  
                                 

Per common share:

                               

Net income available to the Company's common shareholders:

                               

-Basic

  $ 0.08     $ 0.91     $ 0.25     $ 1.57  

-Diluted

  $ 0.08     $ 0.91     $ 0.25     $ 1.56  
                                 

Weighted average shares:

                               

-Basic

    615,832       546,842       615,417       469,885  

-Diluted

    618,018       548,766       617,856       474,452  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2022

   

2021

   

2022

   

2021

 

Net income

  $ 56,371     $ 509,204     $ 161,603     $ 767,747  

Other comprehensive income:

                               

Change in unrealized gains related to defined benefit plan

    212       -       4,472       -  

Other comprehensive income

    212       -       4,472       -  
                                 

Comprehensive income

    56,583       509,204       166,075       767,747  
                                 

Comprehensive loss/(income) attributable to noncontrolling interests

    1,583       (1,465 )     14,152       (5,369 )
                                 

Comprehensive income attributable to the Company

  $ 58,166     $ 507,739     $ 180,227     $ 762,378  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Three Months Ended September 30, 2022 and 2021

(Unaudited)

(in thousands)

 

    Retained Earnings/ (Cumulative

Distributions in Excess

   

 

Accumulated Other

Comprehensive

   

Preferred Stock

   

Common Stock

   

Paid-in

   

 

Total

Stockholders'

   

Noncontrolling

   

Total

 
   

of Net Income)

   

Income

   

Issued

   

Amount

   

Issued

   

Amount

   

Capital

   

Equity

   

Interests

   

Equity

 

Balance at July 1, 2021

  $ (68,265 )   $ -       20     $ 20       433,517     $ 4,335     $ 5,771,179     $ 5,707,269     $ 64,946     $ 5,772,215  

Net income

    507,739       -       -       -       -       -       -       507,739       1,465       509,204  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (353 )     (353 )

Dividends declared to common and preferred shares

    (110,865 )     -       -       -       -       -       -       (110,865 )     -       (110,865 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (887 )     (887 )

Issuance of common stock, net of issue costs

    -       -       -       -       3,516       35       76,893       76,928       -       76,928  

Issuance of common stock for merger

    -       -       -       -       179,920       1,799       3,736,936       3,738,735       -       3,738,735  

Surrender of common stock for taxes

    -       -       -       -       (567 )     (5 )     (11,575 )     (11,580 )     -       (11,580 )

Exercise of common stock options

    -       -       -       -       28       -       534       534       -       534  

Amortization of equity awards

    -       -       -       -       -       -       5,550       5,550       -       5,550  

Noncontrolling interests assumed from the merger

    -       -       -       -       -       -       -       -       179,037       179,037  

Redemption/conversion of noncontrolling interests

    -       -       -       -       -       -       -       -       (3,094 )     (3,094 )

Balance at September 30, 2021

  $ 328,609     $ -       20     $ 20       616,414     $ 6,164     $ 9,579,517     $ 9,914,310     $ 241,114     $ 10,155,424  
                                                                                 

Balance at July 1, 2022

  $ 163,210     $ 6,476       19     $ 19       618,483     $ 6,185     $ 9,605,163     $ 9,781,053     $ 190,684     $ 9,971,737  

Net income/(loss)

    57,954       -       -       -       -       -       -       57,954       (1,583 )     56,371  

Other comprehensive income:

                                                                               

Change in unrealized gains related to defined
benefit plan

    -       212       -       -       -       -       -       212       -       212  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (192 )     (192 )

Dividends declared to common and preferred shares

    (142,374 )     -       -       -       -       -       -       (142,374 )     -       (142,374 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (52,125 )     (52,125 )

Surrender of common stock

    -       -       -       -       (24 )     -       (115 )     (115 )     -       (115 )

Exercise of common stock options

    -       -       -       -       4       -       88       88       -       88  

Amortization of equity awards

    -       -       -       -       -       -       6,261       6,261       -       6,261  

Redemption/conversion of noncontrolling interests

    -       -       -       -       -       -       (15 )     (15 )     -       (15 )

Balance at September 30, 2022

  $ 78,790     $ 6,688       19     $ 19       618,463     $ 6,185     $ 9,611,382     $ 9,703,064     $ 136,784     $ 9,839,848  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Nine Months Ended September 30, 2022 and 2021

(Unaudited)

(in thousands)

 

    Retained Earnings/ (Cumulative

Distributions in Excess

   

 

Accumulated Other

Comprehensive

   

Preferred Stock

   

Common Stock

   

Paid-in

   

 

Total

Stockholders'

   

Noncontrolling

   

Total

 
   

of Net Income)

   

Income

   

Issued

   

Amount

   

Issued

   

Amount

   

Capital

   

Equity

   

Interests

   

Equity

 

Balance at January 1, 2021

  $ (162,812 )   $ -       20     $ 20       432,519     $ 4,325     $ 5,766,511     $ 5,608,044     $ 62,210     $ 5,670,254  

Net income

    762,378       -       -       -       -       -       -       762,378       5,369       767,747  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (529 )     (529 )

Dividends declared to common and preferred shares

    (270,957 )     -       -       -       -       -       -       (270,957 )     -       (270,957 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (1,879 )     (1,879 )

Issuance of common stock, net of issuance costs

    -       -       -       -       4,958       49       76,879       76,928       -       76,928  

Issuance of common stock for merger

    -       -       -       -       179,920       1,799       3,736,936       3,738,735       -       3,738,735  

Surrender of common stock for taxes

    -       -       -       -       (1,115 )     (10 )     (20,816 )     (20,826 )     -       (20,826 )

Exercise of common stock options

    -       -       -       -       132       1       2,503       2,504       -       2,504  

Amortization of equity awards

    -       -       -       -       -       -       17,504       17,504       -       17,504  

Noncontrolling interests assumed from the merger

    -       -       -       -       -       -       -       -       179,037       179,037  

Redemption/conversion of noncontrolling interests

    -       -       -       -       -       -       -       -       (3,094 )     (3,094 )

Balance at September 30, 2021

  $ 328,609     $ -       20     $ 20       616,414     $ 6,164     $ 9,579,517     $ 9,914,310     $ 241,114     $ 10,155,424  
                                                                                 

Balance at January 1, 2022

  $ 299,115     $ 2,216       20     $ 20       616,659     $ 6,167     $ 9,591,871     $ 9,899,389     $ 210,793     $ 10,110,182  

Contributions from noncontrolling interests

    -       -       -       -       -       -       -       -       891       891  

Net income/(loss)

    175,755       -       -       -       -       -       -       175,755       (14,152 )     161,603  

Other comprehensive income

                                                                               

Change in unrealized gains related to
defined benefit plan

    -       4,472       -       -       -       -       -       4,472       -       4,472  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (726 )     (726 )

Dividends declared to common and preferred shares

    (396,144 )     -       -       -       -       -       -       (396,144 )     -       (396,144 )

Repurchase of preferred stock

    64             (1 )     (1 )     -       -       (3,505 )     (3,442 )     -       (3,442 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (58,183 )     (58,183 )

Issuance of common stock

    -       -       -       -       2,162       22       11,259       11,281       -       11,281  

Surrender of common stock

    -       -       -       -       (609 )     (6 )     (13,654 )     (13,660 )     -       (13,660 )

Exercise of common stock options

    -       -       -       -       178       1       3,644       3,645       -       3,645  

Amortization of equity awards

    -       -       -       -       -       -       20,170       20,170       -       20,170  

Redemption/conversion of noncontrolling interests

    -       -       -       -       73       1       1,597       1,598       (1,839 )     (241 )

Balance at September 30, 2022

  $ 78,790     $ 6,688       19     $ 19       618,463     $ 6,185     $ 9,611,382     $ 9,703,064     $ 136,784     $ 9,839,848  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

  

Nine Months Endeds September 30,

 
  

2022

  

2021

 
         

Cash flow from operating activities:

        

Net income

 $161,603  $767,747 

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation and amortization

  380,324   261,687 

Impairment charges

  21,758   954 

Early extinguishment of debt charges

  7,658   - 

Equity award expense

  20,185   17,971 

Gain on sale of properties

  (10,958)  (30,841)

Loss/(gain) on marketable securities, net

  215,194   (542,510)

Equity in income of joint ventures, net

  (94,060)  (54,095)

Equity in income of other investments, net

  (15,491)  (10,365)

Distributions from joint ventures and other investments

  66,875   54,188 

Change in accounts and notes receivable, net

  (10,950)  (3,644)

Change in accounts payable and accrued expenses

  33,534   (55,569)

Change in other operating assets and liabilities, net

  (69,916)  11,747 

Net cash flow provided by operating activities

  705,756   417,270 
         

Cash flow from investing activities:

        

Acquisition of operating real estate

  (161,171)  (102,682)

Improvements to operating real estate

  (128,592)  (112,792)

Acquisition of Weingarten Realty Investors, net of cash acquired of $56,465

  -   (263,973)

Investment in marketable securities

  (3,348)  - 

Proceeds from sale of marketable securities

  800   339 

Investment in cost method investment

  (4,497)  - 

Investments in and advances to real estate joint ventures

  (80,496)  (7,546)

Reimbursements of investments in and advances to real estate joint ventures

  31,540   9,113 

Investments in and advances to other investments

  (12,669)  (59,504)

Reimbursements of investments in and advances to other investments

  29,444   48,420 

Investment in other financing receivable

  (75,063)  (26,897)

Collection of mortgage loans receivable

  38,232   3,742 

Proceeds from sale of properties

  146,218   154,017 

Net cash flow used for investing activities

  (219,602)  (357,763)
         

Cash flow from financing activities:

        

Principal payments on debt, excluding normal amortization of rental property debt

  (157,928)  (136,222)

Principal payments on rental property debt

  (7,244)  (7,481)

Proceeds from mortgage loan financings

  19,000   - 

Proceeds from issuance of unsecured notes

  1,250,000   500,000 

Proceeds from unsecured revolving credit facility, net

  128,000   - 

Repayments of unsecured notes

  (1,449,060)  - 

Financing origination costs

  (19,273)  (7,017)

Payment of early extinguishment of debt charges

  (6,955)  - 

Contributions from noncontrolling interests

  891   - 

Redemption/distribution of noncontrolling interests

  (59,361)  (7,558)

Dividends paid

  (396,182)  (270,956)

Proceeds from issuance of stock, net

  14,926   79,433 

Repurchase of preferred stock

  (3,441)  - 

Shares repurchased for employee tax withholding on equity awards

  (13,549)  (20,787)

Change in tenants' security deposits

  2,890   1,364 

Net cash flow (used for)/provided by financing activities

  (697,286)  130,776 
         

Net change in cash, cash equivalents and restricted cash

  (211,132)  190,283 

Cash, cash equivalents and restricted cash, beginning of the period

  334,663   293,188 

Cash, cash equivalents and restricted cash, end of the period

 $123,531  $483,471 
         

Interest paid during the period, including payment of early extinguishment of debt charges of $6,955 and $0, respectively (net of capitalized interest of $445 and $482, respectively)

 $186,193  $122,297 

 

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. Business and Organization

 

Kimco Realty Corporation, a Maryland corporation, is North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers, including mixed-use assets. The terms “Kimco,” the “Company,” “we,” “our” and “us” each refers to Kimco Realty Corporation and our subsidiaries, unless the context indicates otherwise. The Company, its affiliates and related real estate joint ventures are engaged principally in the ownership, management, development and operation of open-air shopping centers, including mixed-use assets which are anchored generally by grocery stores, off-price retailers, home improvement centers, discounters and/or service-oriented tenants. Additionally, the Company provides complementary services that capitalize on the Company’s established retail real estate expertise.

 

The Company elected status as a Real Estate Investment Trust (a “REIT”) for federal income tax purposes beginning in its taxable year ended December 31, 1991 and operates in a manner that enables the Company to maintain its status as a REIT. As a REIT, with respect to each taxable year, the Company must distribute at least 90 percent of its taxable income (excluding capital gain) and does not pay federal income taxes on the amount distributed to its shareholders. The Company is not generally subject to federal income taxes if it distributes 100 percent of its taxable income. Most states where the Company holds investments in real estate conform to the federal rules recognizing REITs. Certain subsidiaries have made a joint election with the Company to be treated as taxable REIT subsidiaries (“TRSs”), which permit the Company to engage in certain business activities which the REIT may not conduct directly. A TRS is subject to federal and state income taxes on its income, and the Company includes, when applicable, a provision for taxes in its condensed consolidated financial statements. The Company is subject to and also includes in its tax provision non-U.S. income taxes on certain investments located in jurisdictions outside the U.S. These investments are held by the Company at the REIT level and not in the Company’s taxable REIT subsidiaries. Accordingly, the Company does not expect a U.S. income tax impact associated with the repatriation of undistributed earnings from the Company’s foreign subsidiaries.

 

Weingarten Merger

 

On August 3, 2021, Weingarten Realty Investors (“Weingarten”) merged with and into the Company, with the Company continuing as the surviving public company (the “Merger”), pursuant to the definitive merger agreement (the “Merger Agreement”) between the Company and Weingarten, entered into on April 15, 2021. Under the terms of the Merger Agreement, each Weingarten common share was entitled to 1.408 newly issued shares of the Company’s common stock plus $2.20 in cash, subject to certain adjustments specified in the Merger Agreement.

 

See Footnote 3 of the Company’s Condensed Consolidated Financial Statements for further disclosure regarding the Merger transaction.

 

Economic Conditions and the COVID-19 Pandemic

 

The economy continues to face several issues including the lack of qualified employees, inflation risk, supply chain issues and new coronavirus disease 2019 (“COVID-19”) variants, which could impact the Company and its tenants. In response to the rising rate of inflation the Federal Reserve has steadily increased interest rates, and may continue to increase interest rates, until the rate of inflation begins to decrease. These increases in interest rates could adversely impact the business and financial results of the Company and its tenants. In addition to the rising rate of inflation, slower economic growth and the potential for a recession could have an adverse effect on the Company and its tenants. This could negatively affect the overall demand for retail space, including the demand for leasable space in the Company’s properties. As a result, the Company could feel pricing pressure on rents that it is able to charge to new or renewing tenants, such that future rents and rent spreads could be negatively impacted. The Company continues to monitor economic, financial, and social conditions, including the effects of the COVID-19 pandemic, and will assess its asset portfolio for any impairment indicators.

 

 

2. Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company. The Company’s subsidiaries include subsidiaries which are wholly owned or which the Company has a controlling interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity (“VIE”) in accordance with the consolidation guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). All inter-company balances and transactions have been eliminated in consolidation. The information presented in the accompanying Condensed Consolidated Financial Statements 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 Company's 10-K, as certain disclosures in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022 that would duplicate those included in the 10-K are not included in these Condensed Consolidated Financial Statements.

 

9

 

Subsequent Events

 

The Company has evaluated subsequent events and transactions for potential recognition or disclosure in its Condensed Consolidated Financial Statements (see Footnote 22 of the Company’s Condensed Consolidated Financial Statements).

 

New Accounting Pronouncements

 

The following table represents an Accounting Standards Update (“ASU”) to the FASB’s ASCs that, as of  September 30, 2022, are not yet effective for the Company and for which the Company has not elected early adoption, where permitted:

 

ASU

Description

Effective

Date

Effect on the financial

statements or other

significant matters

ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

This ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and provides new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

 

January 1, 2024; Early adoption permitted

The Company is assessing the impact this ASU will have on the Company’s financial position and/or results of operations.

ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

 

The amendments in this update require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination rather than at fair value on the acquisition date required by Topic 805.

January 1, 2023; Early adoption permitted

 

The adoption of this ASU is not expected to have a material impact on the Company’s financial position and/or results of operations.

 

The following ASU to the FASB’s ASC has been adopted by the Company as of the date listed:

 

ASU

Description

Adoption

Date

Effect on the financial

statements or other

significant matters

ASU 2021-05, Lessors – Certain Leases with Variable Lease Payments (Topic 842)

This ASU amends the lessor lease classification in ASC 842 for leases that include variable lease payments that are not based on an index or rate. Under the amended guidance, lessors will classify a lease with variable payments that do not depend on an index or rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease under the previous ASU 842 classification criteria and sales-type or direct financing lease classification would result in a Day 1 loss.

 

January 1, 2022

The adoption of this ASU did not impact the Company’s financial position and/or results of operations.

 

 

 

3. Weingarten Merger

 

On August 3, 2021, Weingarten merged with and into the Company, with the Company continuing as the surviving public company. Under the terms of the Merger Agreement, each Weingarten common share was entitled to 1.408 newly issued shares of the Company’s common stock plus $2.20 in cash, subject to certain adjustments specified in the Merger Agreement.

 

The following highlights the Company’s significant activity upon completion of the $4.1 billion strategic Merger with Weingarten on August 3, 2021:

 

Acquired 149 properties, including 30 held through joint venture programs.

 

Assumed senior unsecured notes of $1.5 billion (including $95.6 million in fair market value adjustments) and mortgage debt of $317.7 million (including $11.0 million in fair market value adjustments) encumbering 16 operating properties.

 

Issued 179.9 million shares of common stock valued at $3.8 billion and paid cash consideration of $0.3 billion.

 

Revenues from rental properties, net and Net income available to the Company's common shareholders in the Company's Condensed Consolidated Statements of Income includes revenues of $73.5 million and net income of $9.9 million (excluding $50.2 million of merger related charges), respectively, resulting from the Merger during the nine months ended September 30, 2021.

 

10

 

Pro forma Information

 

The pro forma financial information set forth below is based upon the Company’s historical Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2021, adjusted to give effect as if the Merger occurred as of January 1, 2020. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it purport to represent the results of income for future periods. (Amounts presented in millions, except per share figures). 

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30, 2021

  

September 30, 2021

 

Revenues from rental properties, net

 $401.4  $1,186.4 

Net income (1)

 $561.4  $854.3 

Net income available to the Company’s common shareholders (1)

 $553.4  $828.3 

Net income available to the Company’s common shareholders per common share:

        

Basic (1)

 $0.91  $1.35 

Diluted (1)

 $0.90  $1.34 
         

 

(1)

The pro forma earnings for the three and nine months ended September 30, 2021 were adjusted to exclude $47.0 million and $50.2 million of merger costs, respectively.

 

 

4. Real Estate

 

Acquisitions

 

During the nine months ended September 30, 2022, the Company acquired the following operating properties, through direct asset purchases (in thousands):

 

Property Name

Location

Month Acquired

 

Purchase Price

  

GLA*

 

Ranchos San Marcos Parcel

San Marcos, CA

Jan-22

 $2,407   6 

Columbia Crossing Parcel

Columbia, MD

Feb-22

  16,239   60 

Oak Forest Parcel

Houston, TX

Jun-22

  3,846   4 

Devon Village (1)

Devon, PA

Jun-22

  733   - 

Fishtown Crossing

Philadelphia, PA

Jul-22

  39,291   133 

Carman’s Plaza