FOR IMMEDIATE RELEASE                          

February 11, 2004                                                               

 

 

KIMCO REALTY REPORTS FOURTH QUARTER AND FULL YEAR OPERATING RESULTS FOR 2003 - Achieves Record Full Year FFO Per Diluted Common Share of $3.23; Fourth Quarter FFO Per Diluted Common Share Increases to $0.85

 

 

NEW HYDE PARK, NY February 11, 2004 -- Kimco Realty Corporation (NYSE: KIM), the nation’s largest owner and operator of neighborhood and community shopping centers, today announced that fourth quarter net income for the period ended December 31, 2003, increased 33.5 percent to $84.1 million from $63.0 million for the same period last year.  Fourth quarter net income per diluted common share was $0.72, an increase of 28.6 percent from $0.56 a year ago.

 

Funds from operations (FFO) rose 33.9 percent to $96.3 million, from $71.9 million for the same period last year.  On a diluted per common share basis, FFO increased 25.0 percent to $0.85 from $0.68 for the same period last year. Previously reported FFO for the fourth quarter and year ended 2002 has been reduced by approximately $10.8 million, or $0.10 per diluted common share to reflect clarifications with The National Association of Real Estate Investment Trusts’ (NAREIT) definition of FFO.  The prior year adjustments are attributable to the inclusion in FFO of gains from the early extinguishment of debt and non-cash adjustments to asset carrying values. The Company’s growth in FFO per share on the previously reported fourth quarter 2002 per share amount of $0.78 would have been 10.3 percent on a comparable basis.

 

Funds from operations continues to exclude gains and losses from sales of operating properties.  For the fourth quarter 2003, FFO excludes gains on dispositions of operating properties of approximately $20.4 million, or $0.18 per diluted common share.  FFO for the fourth quarter 2002 excludes gains on dispositions of approximately $11.3 million, or $0.10 per diluted common share. 

 

FFO is a supplemental non-GAAP financial measurement used as a standard in the real estate industry to measure and compare the operating performance of real estate companies.  A complete reconciliation containing adjustments from GAAP net income to FFO is included in this release.

 

For the year ended December 31, 2003, net income increased 25.3 percent to $307.9 million from $245.7 million for the same period last year.  Net income per diluted common share increased to $2.62 from $2.16 for the same period in the previous year.  Funds from operations rose 14.3 percent to $353.1 million for the year ended 2003 from $308.9 million in the year earlier period.  On a diluted per common share basis, FFO increased 10.2 percent to $3.23 from $2.93 a year ago. Full year 2002 FFO has also been adjusted for NAREIT’s definition as noted above.  Prior to taking into account the adjustments, Kimco’s FFO per share growth would have been 5.0 percent on a comparable basis.

 

Funds from operations for the full year 2003 excludes gains on dispositions of operating properties of approximately $50.8 million, or $0.46 per diluted common share. For the full year 2002, FFO excludes gains on dispositions of operating properties of $12.8 million, or $0.12 per diluted common share. 

 

During the quarter, Kimco increased the occupancy of its parent shopping center portfolio to 90.7 percent from 89.5 percent at September 30, 2003 and 87.8 percent a year ago.  For the quarter, Kimco signed 98 new leases totaling 723,000 square feet bringing the full year total leases signed in the parent portfolio to 427 or 3.3 million square feet, an increase of 12 percent above the 380 leases signed in the parent portfolio during 2002. 

 

In addition to the leases signed during the year in the Company’s parent portfolio, 71 new leases were signed totaling 477,000 square feet in the Kimco Income REIT (KIR), 164 leases totaling 883,000 square feet in the Company’s merchant building business, Kimco Developers, Inc. (KDI), and 28 new leases totaling 117,000 square feet were signed in the Kimco Retail Opportunity Portfolio (KROP). For the Company’s entire property portfolio, which is comprised of interests in approximately 103 million square feet, the Company signed 690 new leases totaling 4.8 million square feet.

 

Investment Activity

 

During the quarter, Kimco acquired interests in seven shopping centers in the U.S. aggregating $71.2 million in addition to the 52 properties the Company acquired in the previously announced $700 million Mid-Atlantic transaction.    Company wide, Kimco completed approximately $1.5 billion in shopping center acquisitions totaling 12.4 million square feet during 2003. Subsequent to year end, Kimco acquired interests in three additional shopping centers and a parcel of land for an additional $91.7 million.

 

Kimco acquired its third shopping center investment in Mexico for $9.9 million during the fourth quarter. Also during the quarter, the Company formed a 50/50 joint venture with G.E. Real Estate to acquire additional shopping centers in Mexico.  Kimco transferred two previously acquired shopping centers located in Monterrey and Saltillo, Mexico, to the venture.  Kimco and G.E Real Estate intend to selectively grow the portfolio of shopping centers in Mexico over the next few years. 

 

The Company recently completed five new preferred equity investments, providing $22.7 million of capital to shopping center developers and owners.  During the quarter, two investments were prepaid generating an internal rate of return in excess of 20.0 percent.  Since January 2003, Kimco has completed 16 preferred equity transactions totaling $53.1 million bringing the Company’s existing portfolio up to 21 preferred equity transactions representing approximately $84.6 million of investment.  

 

Shopping Center Dispositions

 

Kimco, as part of its stated strategy for the MART portfolio, sold the Harford Mall and Annex for approximately $71.0 million in December.  In addition, Kimco sold five properties during the quarter from its parent portfolio in separate transactions for a total of $71.1 million.  Since January 2003, Kimco has sold $264.4 million of properties from the parent portfolio, primarily reinvesting the proceeds in new investments.

 

Kimsouth, a joint portfolio investment that the Company is liquidating, sold five shopping centers during the quarter.  Aggregate sales price of the properties was $39.7 million bringing total sales for the year to $83.3 million from 14 property sales.  Subsequent to year end, Kimsouth sold two additional properties from this portfolio for proceeds of $21.4 million. 

 

Kimco Developers Inc. (KDI)

 

KDI, the Company’s merchant building subsidiary, recognized gains on sales of development properties during the quarter of $1.3 million, net of tax.  KDI sold portions of three ongoing development projects; Gateway Station in Burleson, Texas; Forum at Olympia Parkway in San Antonio, Texas and Four Peaks Plaza in Fountain Hills, Arizona.  In addition, KDI recognized a gain on the sale of Riggs Marketplace, which had been structured as a participating financing.  For the year, KDI sold properties of approximately $126.6 million.

 

KDI also invested an aggregate amount of $30.9 million in four new projects during the quarter.  The projects are as follows:

 

-               Cypress Town Center in Cypress, Texas

-               South Towne Center in Burleson, Texas

-               Lake Worth Town Crossing in Lake Worth, Florida

-               Shoppes at Amelia Concourse in Nassau County, Florida

 

For the year, KDI commenced 12 new development projects totaling $80.2 million of investment plus an additional  $128.7 million of investment in its development pipeline.

 

Earnings Guidance

 

Kimco’s management increased its earnings guidance for FFO per share in 2004 to between $3.41 and $3.46 per share, from the previously issued range of $3.39 to $3.45.

 

Kimco, a publicly-traded real estate investment trust, has specialized in shopping center acquisitions, development and management for over 40 years. Kimco owns and operates the nation’s largest portfolio of neighborhood and community shopping centers with interests in 699 properties comprising approximately 103 million square feet of leasable space located throughout 41 states, Canada and Mexico.  For further information refer to the Company’s web site at www.kimcorealty.com.

 

Safe Harbor Statement:  The statements in this release state the Company’s and management’s hopes, intentions, beliefs, expectations or projections of the future and are forward-looking statements.  It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements.  Factors that could cause actual results to differ materially from current expectations include general economic conditions, local real estate conditions, increases in interest rates, increases in operating costs and real estate taxes.  Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company’s SEC filings, including but not limited to the Company’s report on Form 10-K for the year ended December 31, 2002.  Copies of each filing may be obtained from the Company or the SEC.

 

Contact:

Kimco Realty Corporation

Scott Onufrey

(516) 869-7190

sonufrey@kimcorealty.com

 

 

 

 

Kimco Realty Corporation

Consolidated Statements of Income

 (in thousands, except per share data)

 

 

 

	Three Months Ended December 31,		Year Ended December 31,
	2003	2002	2003	2002
Real Estate Operations:
Revenues from rental property	$ 126,575	$ 111,355	$ 479,664	$ 432,777
Rental property expenses:
Rent	2,882	2,830	11,240	11,300
Real estate taxes	15,882	15,673	61,276	60,248
Operating and maintenance	13,739	12,105	53,979	44,525
	32,503	30,608	126,495	116,073
Net Operating Income	94,072	80,747	353,169	316,704
Income from other real estate investments	7,021	2,348	22,828	16,038
Mortgage financing income	2,814	6,658	18,587	19,412
Management and other fee income	4,493	3,009	15,315	12,069
Depreciation and amortization	(25,990)	(18,289)	(86,237)	(70,894)
	82,410	74,473	323,662	293,329
Interest, dividends and other investment income	6,070	3,096	19,464	18,565
Other income/(expense), net	(2,965)	(3,725)	(3,792)	2,532
	3,105	(629)	15,672	21,097
Interest expense	(28,844)	(20,814)	(102,709)	(85,323)
General and administrative expenses	(9,933)	(8,539)	(38,657)	(31,605)
Gain on early extinguishment of debt	--	19,033	2,921	19,033
Adjustment of property carrying values	--	(11,000)	--	(11,000)
	46,738	52,524	200,889	205,531
Benefit/(Provision) for income taxes	2,170	(130)	(1,516)	(6,552)
Equity in income of real estate joint ventures, net	11,817	13,282	42,276	37,693
Minority interests in income of partnerships, net	(2,125)	(1,691)	(7,868)	(2,430)
Income from continuing operations	58,600	63,985	233,781	234,242

 

 

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Discontinued Operations:
Income from discontinued operating       properties	4,401	2,496	10,023	7,928
Gain on early extinguishment of debt	3,419	3,222	6,760	3,222
Adjustment of property carrying values	(4,016)	(22,030)	(4,016)	(22,030)
Gain on disposition of operating properties	17,192	11,266	47,657	12,778
Income/(Loss) from discontinued operations	20,996	(5,046)	60,424	1,898
Gain on sale of operating properties(1)	3,177	--	3,177	--
Gain on sale of development properties, net of tax of $864, $2,682, $6,998 and $6,352,     respectively (1)	1,296	4,023	10,497	9,528
Net income	84,069	62,962	307,879	245,668
Original issuance costs associated with     the redemption of preferred stock	--	--	(7,788)	--
Preferred stock dividends	(2,909)	(4,609)	(14,669)	(18,437)
Net income available to common        shareholders	$   81,160	$      58,353	$   285,422	$   227,231
Per common share:
Income from continuing operations:
- Basic	$        0.54	$        0.61	$        2.10	$       2.16
- Diluted	$       0.53	$       0.60(2)	$       2.07	$       2.14(2)
Net income:
- Basic	$       0.73	$       0.56	$       2.67	$       2.18
- Diluted	$       0.72	$       0.56(2)	$       2.62	$       2.16(2)
Weighted average share information:
- Basic	110,497	104,578	107,092	104,458
- Diluted	112,582	107,463(2)	108,770	105,969(2)

 

Reclassifications:  Certain amounts in the prior period have been reclassified in order to conform with the current period’s presentation.

         

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Kimco Realty Corporation

Funds From Operations

 (in thousands, except per share data)

 

	Three Months Ended December 31,		Year Ended December 31,
	2003	2002	2003	2002
Funds From Operations
Net income	$    84,069	$    62,962	$ 307,879	$ 245,668
Gain on disposition of operating properties	(20,369)	(11,266)	(50,834)	(12,778)
Depreciation and amortization	26,575	19,492	89,068	76,674
Depreciation and amortization -     real estate joint ventures	8,945	5,329	29,456	17,779
Redemption costs	--	--	(7,788)	--
Preferred stock dividends	(2,909)	(4,609)	(14,669)	(18,437)
Funds from operations	$     96,311	$      71,908(3)	$  353,112	$  308,906(3)
Per common share:
- Basic	$         0.87	$         0.69	$         3.30	$         2.96
- Diluted	$         0.85(2)	$         0.68(2,3)	$         3.23(2)	$        2.93(2,3)

 

 

 

Weighted Average Share Information             for FFO calculations	Three Months Ended December 31,		Year Ended December 31,
	2003	2002	2003	2002
Weighted average shares for FFO       calculations -
- Basic	110,497	104,578	107,092	104,458
- Diluted	114,965(2)	107,463(2)	111,168(2)	105,969(2)

 

(1)     Included in the calculation of income from continuing operations per share in accordance with SEC guidelines.

 

(2)     Reflects the potential impact if certain units were converted to common stock at the beginning of the period.  FFO would be increased by $1,502 and $5,771 for the three months and year ended December 31, 2003, respectively, and net income available to common shareholders and FFO would be increased by $1,423 for both the three months and year ended December 31, 2002, reflecting the distributions associated with the units.

 

(3)     2002 FFO was reduced from $3.03 to $2.93 for the year ended December 31, 2002 and from $0.78 to $0.68 for the three months ended December 31, 2002 to include gains on early extinguishment of debt of $22,255 and adjustments to property carrying values of ($33,030). 

 

 

NOTE: Most industry analysts and equity REITs, including the Company, generally consider funds from operations (“FFO”) to be an appropriate supplemental measure of the performance of an equity REIT.  FFO is defined as net income applicable to common shares before depreciation and amortization, extraordinary items, cumulative effect of accounting changes, gains or losses on sales of operating real estate, plus the pro-rata amount of depreciation and amortization of unconsolidated joint ventures determined on a consistent basis.  Given the nature of the Company’s business as a real estate owner and operator, the Company believes that FFO is helpful to investors as a measure of its operational performance.  FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and therefore should not be considered an alternative for net income as a measure of liquidity.  In addition, the comparability of the Company’s FFO with the FFO reported by other REITs may be affected by the differences that exist regarding certain accounting policies relating to expenditures for repairs and other recurring items.

 

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Kimco Realty Corporation

Consolidated Balance Sheets

 (in thousands, except per share data)