10-Q 1 kim20220630_10q.htm FORM 10-Q kim20220630_10q.htm
0000879101 KIMCO REALTY CORP false --12-31 Q2 2022 3,238,079 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 0.01 750,000,000 750,000,000 618,483,648 618,483,648 616,658,593 616,658,593 6,527 0 277 417 1 0 The amounts represent adjustments associated with potentially uncollectible revenues and disputed amounts primarily due to the COVID-19 pandemic. Represents partial repayments. As of June 30, 2022, these notes had an outstanding principal of $313.9 million The Company incurred a prepayment charge of $6.5 million and $0.7 million in write-off of deferred financing costs resulting from the early repayment. Represents partial repayments. As of June 30, 2022, these notes had an outstanding principal of $288.4 million. The Company determined that its valuation of its mortgages payable were classified within Level 3 of the fair value hierarchy. During the six months ended June 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. Representing 114 property interests and 23.1 million square feet of GLA, as of June 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. Includes extension options Represents partial repayments. As of June 30, 2022, these notes had an outstanding principal of $313.9 million. During the six months ended June 30, 2022, the Company purchased additional ownership interests for $55.0 million. Also, during the six months ended June 30, 2022, the Company purchased the General Partner ownership interest from Milton Cooper, Chairman of the Board for the Company for $125,000. 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. 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 June 30, 2022 and December 31, 2021, were $6.4 billion and $7.3 billion, respectively. Includes non-recourse liabilities of consolidated VIEs at June 30, 2022 and December 31, 2021 of $148,130 and $153,924, respectively. See Footnote 12 of the Notes to Condensed Consolidated Financial Statements. Relates to interest expense on finance lease liabilities, which were acquired in connection with the Merger. The effect of the assumed conversion of certain convertible units had an anti-dilutive effect upon the calculation of Net (loss)/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 0.5 million stock options that were not dilutive as of June 30, 2021. Before noncontrolling interests of $3.1 million and taxes of $2.1 million, after utilization of net operating loss carryforwards, for the six months ended June 30, 2021. Includes restricted assets of consolidated variable interest entities (“VIEs”) at June 30, 2022 and December 31, 2021 of $201,644 and $227,858, respectively. 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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 June 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

Name of each exchange on

 Symbol(s)

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 July 20, 2022, the registrant had 618,481,988 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 June 30, 2022 and December 31, 2021

3

 

 

 

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021

4
     
 

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

5
     

 

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

6

 

   

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 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. 21
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 34
     
Item 4. Controls and Procedures. 34

 

 

 
PART II - OTHER INFORMATION
     
Item 1. Legal Proceedings. 35
     
Item 1A. Risk Factors.  35
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.  35
     
Item 3. Defaults Upon Senior Securities. 36
     
Item 4. Mine Safety Disclosures.  36
     
Item 5. Other Information.  36
     
Item 6. Exhibits.  36
     
Signatures 37

 

  

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share information)

 

 

  

June 30, 2022

  

December 31, 2021

 

Assets:

        

Real estate, net of accumulated depreciation and amortization of $3,238,079 and $3,010,699, respectively

 $14,837,685  $15,035,900 

Real estate under development

  5,672   5,672 

Investments in and advances to real estate joint ventures

  1,083,509   1,006,899 

Other investments

  101,680   122,015 

Cash and cash equivalents

  296,798   334,663 

Marketable securities

  1,073,706   1,211,739 

Accounts and notes receivable, net

  260,140   254,677 

Operating lease right-of-use assets, net

  144,092   147,458 

Other assets

  394,287   340,176 

Total assets (1)

 $18,197,569  $18,459,199 
         

Liabilities:

        

Notes payable, net

 $7,056,644  $7,027,050 

Mortgages payable, net

  346,461   448,652 

Dividends payable

  5,326   5,366 

Operating lease liabilities

  121,434   123,779 

Other liabilities

  682,697   730,690 

Total liabilities (2)

  8,212,562   8,335,537 

Redeemable noncontrolling interests

  13,270   13,480 
         

Commitments and Contingencies (Footnote 17)

          
         

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 618,483,648 and 616,658,593 shares, respectively

  6,185   6,167 

Paid-in capital

  9,605,163   9,591,871 

Retained earnings

  163,210   299,115 

Accumulated other comprehensive income

  6,476   2,216 

Total stockholders' equity

  9,781,053   9,899,389 

Noncontrolling interests

  190,684   210,793 

Total equity

  9,971,737   10,110,182 

Total liabilities and equity

 $18,197,569  $18,459,199 

 

(1)

Includes restricted assets of consolidated variable interest entities (“VIEs”) at June 30, 2022 and December 31, 2021 of $201,644 and $227,858, respectively. See Footnote 12 of the Notes to Condensed Consolidated Financial Statements.

(2)

Includes non-recourse liabilities of consolidated VIEs at June 30, 2022 and December 31, 2021 of $148,130 and $153,924, respectively. See Footnote 12 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 OPERATIONS

(Unaudited)

(in thousands, except per share data)

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Revenues

                               

Revenues from rental properties, net

  $ 423,273     $ 285,732     $ 845,927     $ 564,603  

Management and other fee income

    3,925       3,284       8,520       6,721  

Total revenues

    427,198       289,016       854,447       571,324  
                                 

Operating expenses

                               

Rent

    (4,070 )     (2,993 )     (8,151 )     (6,028 )

Real estate taxes

    (56,075 )     (39,594 )     (110,389 )     (78,530 )

Operating and maintenance

    (69,784 )     (46,897 )     (139,009 )     (93,417 )

General and administrative

    (27,981 )     (24,754 )     (57,929 )     (49,232 )

Impairment charges

    (14,419 )     (104 )     (14,691 )     (104 )

Merger charges

    -       (3,193 )     -       (3,193 )

Depreciation and amortization

    (124,611 )     (72,573 )     (254,905 )     (147,449 )

Total operating expenses

    (296,940 )     (190,108 )     (585,074 )     (377,953 )
                                 

Gain on sale of properties

    2,944       18,861       7,137       28,866  
                                 

Operating income

    133,202       117,769       276,510       222,237  
                                 

Other income/(expense)

                               

Other income, net

    6,642       1,782       12,625       5,139  

(Loss)/gain on marketable securities, net

    (261,467 )     24,297       (139,703 )     85,382  

Interest expense

    (56,466 )     (46,812 )     (113,485 )     (94,528 )

Early extinguishment of debt charges

    (57 )     -       (7,230 )     -  
                                 

(Loss)/income before income taxes, net, equity in income of joint ventures, net, and equity in income from other investments, net

    (178,146 )     97,036       28,717       218,230  
                                 

(Provision)/benefit for income taxes, net

    (96 )     (1,275 )     57       (2,583 )

Equity in income of joint ventures, net

    44,130       16,318       67,700       34,070  

Equity in income of other investments, net

    3,385       5,039       8,758       8,826  
                                 

Net (loss)/income

    (130,727 )     117,118       105,232       258,543  
                                 

Net loss/(income) attributable to noncontrolling interests

    11,226       (421 )     12,569       (3,904 )
                                 

Net (loss)/income attributable to the Company

    (119,501 )     116,697       117,801       254,639  
                                 

Preferred dividends, net

    (6,250 )     (6,354 )     (12,604 )     (12,708 )
                                 

Net (loss)/income available to the Company's common shareholders

  $ (125,751 )   $ 110,343     $ 105,197     $ 241,931  
                                 

Per common share:

                               

Net (loss)/income available to the Company's common shareholders:

                               

-Basic

  $ (0.21 )   $ 0.25     $ 0.17     $ 0.56  

-Diluted

  $ (0.21 )   $ 0.25     $ 0.17     $ 0.56  
                                 

Weighted average shares:

                               

-Basic

    615,642       431,011       615,207       430,769  

-Diluted

    615,642       432,489       616,943       432,430  

 

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 June 30,

   

Six Months Ended June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Net (loss)/income

  $ (130,727 )   $ 117,118     $ 105,232     $ 258,543  

Other comprehensive income:

                               

Change in unrealized gains related to defined benefit plan

    4,260       -       4,260       -  

Other comprehensive income

    4,260       -       4,260       -  
                                 

Comprehensive (loss)/income

    (126,467 )     117,118       109,492       258,543  
                                 

Comprehensive loss/(income) attributable to noncontrolling interests

    11,226       (421 )     12,569       (3,904 )
                                 

Comprehensive (loss)/income attributable to the Company

  $ (115,241 )   $ 116,697     $ 122,061     $ 254,639  

 

 

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 June 30, 2022 and 2021

(Unaudited)

(in thousands)

 

   

Retained Earnings/

   

Accumulated

                                                                 
   

(Cumulative

   

Other

                                           

Total

                 
   

Distributions in Excess

   

Comprehensive

   

Preferred Stock

   

Common Stock

   

Paid-in

   

Stockholders'

   

Noncontrolling

   

Total

 
   

of Net Income)

   

Income

   

Issued

   

Amount

   

Issued

   

Amount

   

Capital

   

Equity

   

Interests

   

Equity

 

Balance at April 1, 2021

  $ (104,909 )   $ -       20     $ 20       433,448     $ 4,334     $ 5,763,868     $ 5,663,313     $ 65,154     $ 5,728,467  

Net income

    116,697       -       -       -       -       -       -       116,697       421       117,118  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (7 )     (7 )

Dividends declared to common and preferred shares

    (80,053 )     -       -       -       -       -       -       (80,053 )     -       (80,053 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (622 )     (622 )

Surrender of common stock

    -       -       -       -       (27 )     -       (154 )     (154 )     -       (154 )

Exercise of common stock options

    -       -       -       -       96       1       1,809       1,810       -       1,810  

Amortization of equity awards

    -       -       -       -       -       -       5,656       5,656       -       5,656  

Balance at June 30, 2021

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

Balance at April 1, 2022

  $ 412,659     $ 2,216       20     $ 20       618,002     $ 6,180     $ 9,589,955     $ 10,011,030     $ 204,132     $ 10,215,162  

Net loss

    (119,501 )     -       -       -       -       -       -       (119,501 )     (11,226 )     (130,727 )

Other comprehensive income:

                                                                               

Change in unrealized gains related to defined benefit plan

    -       4,260       -       -       -       -       -       4,260       -       4,260  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (201 )     (201 )

Dividends declared to common and preferred shares

    (130,012 )     -       -       -       -       -       -       (130,012 )     -       (130,012 )

Repurchase of preferred stock

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

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (1,718 )     (1,718 )

Issuance of common stock

    -       -       -       -       450       5       11,276       11,281       -       11,281  

Exercise of common stock options

    -       -       -       -       46       -       989       989       -       989  

Surrender of common stock

    -       -       -       -       (15 )     -       (101 )     (101 )     -       (101 )

Amortization of equity awards

    -       -       -       -       -       -       6,472       6,472       -       6,472  

Redemption/conversion of noncontrolling interests

    -       -       -       -       -       -       77       77       (303 )     (226 )

Balance at June 30, 2022

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

 

 

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 Six Months Ended June 30, 2022 and 2021

(Unaudited)

(in thousands)

 

   

Retained Earnings/

   

Accumulated

                                                                 
   

(Cumulative

   

Other

                                           

Total

                 
   

Distributions in Excess

   

Comprehensive

   

Preferred Stock

   

Common Stock

   

Paid-in

   

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

    254,639       -       -       -       -       -       -       254,639       3,904       258,543  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (176 )     (176 )

Dividends declared to common and preferred shares

    (160,092 )     -       -       -       -       -       -       (160,092 )     -       (160,092 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (992 )     (992 )

Issuance of common stock

    -       -       -       -       1,442       14       (14 )     -       -       -  

Surrender of common stock

    -       -       -       -       (548 )     (5 )     (9,241 )     (9,246 )     -       (9,246 )

Exercise of common stock options

    -       -       -       -       104       1       1,969       1,970       -       1,970  

Amortization of equity awards

    -       -       -       -       -       -       11,954       11,954       -       11,954  

Balance at June 30, 2021

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

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)

    117,801       -       -       -       -       -       -       117,801       (12,569 )     105,232  

Other comprehensive income

                                                                               

Change in unrealized gains related to defined benefit plan

    -       4,260       -       -       -       -       -       4,260       -       4,260  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (534 )     (534 )

Dividends declared to common and preferred shares

    (253,770 )     -       -       -       -       -       -       (253,770 )     -       (253,770 )

Repurchase of preferred stock

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

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (6,058 )     (6,058 )

Issuance of common stock

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

Surrender of common stock

    -       -       -       -       (585 )     (6 )     (13,539 )     (13,545 )     -       (13,545 )

Exercise of common stock options

    -       -       -       -       174       1       3,556       3,557       -       3,557  

Amortization of equity awards

    -       -       -       -       -       -       13,909       13,909       -       13,909  

Redemption/conversion of noncontrolling interests

    -       -       -       -       73       1       1,612       1,613       (1,839 )     (226 )

Balance at June 30, 2022

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

 

 

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)

 

  

Six Months Ended June 30,

 
  

2022

  

2021

 
         

Cash flow from operating activities:

        

Net income

 $105,232  $258,543 

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

        

Depreciation and amortization

  254,905   147,449 

Impairment charges

  14,691   104 

Early extinguishment of debt charges

  7,230   - 

Equity award expense

  13,994   12,271 

Gain on sale of properties

  (7,137)  (28,866)

Loss/(gain) on marketable securities, net

  139,703   (85,382)

Equity in income of joint ventures, net

  (67,700)  (34,070)

Equity in income of other real estate investments, net

  (8,758)  (8,826)

Distributions from joint ventures and other investments

  45,775   37,080 

Change in accounts and notes receivable, net

  (1,204)  19,127 

Change in accounts payable and accrued expenses

  (12,636)  5,587 

Change in other operating assets and liabilities, net

  (41,762)  (29,346)

Net cash flow provided by operating activities

  442,333   293,671 
         

Cash flow from investing activities:

        

Acquisition of operating real estate

  (29,282)  (84,312)

Improvements to operating real estate

  (78,958)  (66,342)

Investment in marketable securities

  (1,870)  - 

Proceeds from sale of marketable securities

  201   201 

Investment in cost method investment

  (3,000)  - 

Investments in and advances to real estate joint ventures

  (72,947)  (5,698)

Reimbursements of investments in and advances to real estate joint ventures

  22,865   3,368 

Investments in and advances to other investments

  (9,473)  (55,713)

Reimbursements of investments in and advances to other investments

  29,104   32,780 

Investment in other financing receivable

  (53,063)  (397)

Collection of mortgage loans receivable

  63   93 

Proceeds from sale of properties

  41,224   130,138 

Net cash flow used for investing activities

  (155,136)  (45,882)
         

Cash flow from financing activities:

        

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

  (115,166)  (136,222)

Principal payments on rental property debt

  (4,827)  (5,011)

Proceeds from mortgage loan financings

  19,000   - 

Proceeds from issuance of unsecured notes

  600,000   - 

Repayments of unsecured notes

  (547,063)  - 

Financing origination costs

  (10,281)  - 

Payment of early extinguishment of debt charges

  (6,527)  - 

Contributions from noncontrolling interests

  891   - 

Redemption/distribution of noncontrolling interests

  (7,029)  (3,225)

Dividends paid

  (253,809)  (160,092)

Proceeds from issuance of stock, net

  14,838   1,970 

Repurchase of preferred stock

  (3,441)  - 

Shares repurchased for employee tax withholding on equity awards

  (13,521)  (9,225)

Change in tenants' security deposits

  1,873   890 

Net cash flow used for financing activities

  (325,062)  (310,915)
         

Net change in cash, cash equivalents and restricted cash

  (37,865)  (63,126)

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

  334,663   293,188 

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

 $296,798  $230,062 
         

Interest paid during the period including payment of early extinguishment of debt charges of $6,527 and $0, respectively (net of capitalized interest of $277 and $417, respectively)

 $132,912  $96,097 

 

 

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.

 

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.

 

See the Company's audited Annual Report on Form 10-K for the year ended December 31, 2021 (the “10-K”) for further disclosure regarding the Merger transaction.

 

COVID-19 Pandemic

 

The coronavirus disease 2019 (“COVID-19”) pandemic continues to impact the retail real estate industry for both landlords and tenants. The extent to which the COVID-19 pandemic impacts the Company’s financial condition, results of operations and cash flows, in the near term, will continue to depend on future developments, which are uncertain at this time. The Company’s business, operations and financial results will depend on numerous evolving factors, including the duration and scope of the pandemic, governmental, business and individual actions that have been and continue to be taken in response to the pandemic, the distribution and effectiveness of vaccines, impacts on economic activity from the pandemic and actions taken in response, the effects of the pandemic on the Company’s tenants and their businesses and the ability of tenants to make their rental payments. Any of these events could materially adversely impact the Company’s business, financial condition, results of operations or stock price. The development and distribution of COVID-19 vaccines has assisted in allowing many restrictions to be lifted, providing a path to recovery. However, the economy continues to face several issues including the lack of qualified employees, inflation risk, supply chain issues and new COVID-19 variants, which could impact the Company and its tenants. The Company will continue to monitor the economic, financial, and social conditions resulting from 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 June 30, 2022 that would duplicate those included in the 10-K are not included in these Condensed Consolidated Financial Statements.

 

Subsequent Events

 

The Company has evaluated subsequent events and transactions for potential recognition or disclosure in its Condensed Consolidated Financial Statements (see Footnote 10 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  June 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 still assessing the impact 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. Real Estate

 

Acquisitions

 

During the six months ended June 30, 2022, the Company acquired four parcels for an aggregate purchase price of $23.2 million, in separate transactions.

 

10

 

Dispositions

 

The table below summarizes the Company’s disposition activity relating to consolidated operating properties and parcels (dollars in millions):

 

   

Six Months Ended June 30,

 
   

2022

   

2021

 

Aggregate sales price

  $ 43.3     $ 132.2  

Gain on sale of properties (1)

  $ 7.1     $ 28.9  

Number of properties sold

    1       3  

Number of parcels sold

    8       7  

 

 

(1)

Before noncontrolling interests of $3.1 million and taxes of $2.1 million, after utilization of net operating loss carryforwards, for the six months ended June 30, 2021.

 

4. Investments in and Advances to Real Estate Joint Ventures

 

The Company has investments in and advances to various real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. The Company and the joint venture partners have joint approval rights for major decisions, including those regarding property operations. As such, the Company holds noncontrolling interests in these joint ventures and accounts for them under the equity method of accounting. The Company manages certain of these joint venture investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, asset management fees and construction management fees. The table below presents unconsolidated joint venture investments for which the Company held an ownership interest at June 30, 2022 and December 31, 2021 (dollars in millions):

 

  

Noncontrolling
Ownership Interest

  

The Companys Investment

 

Joint Venture

 

As of June 30, 2022

  

June 30, 2022

  

December 31, 2021

 

Prudential Investment Program

 15.0%  $153.4  $163.0 

Kimco Income Opportunity Portfolio (“KIR”) (1)

 52.1%   271.9   186.0 

Canada Pension Plan Investment Board (“CPP”)

 55.0%   178.7   165.1 

Other Institutional Joint Ventures

 

Various

   268.4   281.8 

Other Joint Venture Programs

 

Various

   211.1   211.0 

Total*

    $1,083.5  $1,006.9 

 

* Representing 114 property interests and 23.1 million square feet of GLA, as of June 30, 2022, and 120 property interests and 24.7 million square feet of GLA, as of December 31, 2021.

 

 

(1)

During the six months ended June 30, 2022, the Company purchased additional ownership interests for $55.0 million. Also, during the six months ended June 30, 2022, the Company purchased the General Partner 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.

 

The table below presents the Company’s share of net income for the above investments which is included in Equity in income of joint ventures, net on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021 (in millions):

 

  

Three Months Ended June 30,

  

Six Months Ended June 30,

 

Joint Venture

 

2022

  

2021

  

2022

  

2021

 

Prudential Investment Program (1)

 $2.3  $2.6  $4.7  $5.3 

KIR

  32.0   9.1   45.5   17.8 

CPP

  2.6   2.0   5.7   4.1 

Other Institutional Joint Ventures

  4.1   -   5.6   - 

Other Joint Venture Programs

  3.1   2.6   6.2   6.9 

Total

 $44.1  $16.3  $67.7  $34.1 

 

 

(1)

During the six months ended June 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.

 

During the six months ended June 30, 2022, certain of the Company’s real estate joint ventures disposed of six properties and a land parcel, in separate transactions, for an aggregate sales price of $268.6 million. These transactions resulted in an aggregate net gain to the Company of $29.8 million for the six months ended