Kimco Realty Earnings Call Nuggets: Financing Markets and Retail Portfolio Recycling

Kimco Realty Corp (NYSE:KIM) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.

Financing Markets

Christy McElroy – UBS: Glenn, can you discuss what your bond issue might have looked like if done today from a pricing standpoint. Can you provide some sort of general comments around the changes you’ve seen in the financing markets over the last two months and whether or not you’ve seen any impact on private market, transaction pricing? I know there is a couple questions in there.

Glenn G. Cohen – EVP, CFO and Treasurer: Well, certainly, the one big different for sure is just look at the base treasure rate. When we did our bond – we issued when the 10-year treasury was 196. Now you’re looking at a basically a 260 treasury and spreads have definitely widened out a little bit and our spread on that deal was 125 over. Today, we’d probably be around 140, 145, and if you asked me that two weeks ago, I probably would have told you it is about 160. So, markets moved pretty quickly on that side of the world, but it’s definitely gotten better and you are seeing more traction. But rates flowing coupons are definitely higher. The Canadian bond is a – it’s a different market. It’s a smaller market there. Those are done as private placement deal. So, again, we feel pretty good about what we were able to do. That market is probably around the same where it is today. So, we are probably on a 7-year deal somewhere around 180 over. As far as it relates to transactions, we really haven’t seen a drop-off in transactions because of it. We still have a pretty widespread between really where 10-year treasuries are in cap rates from a historic basis. So, it really hasn’t slowed things down. The CMBS market is open. The bank market is open. The bond market is open. So, right now it looks pretty healthy to be able to conduct and to transact.

 

Retail Portfolio Recycling

Craig Schmidt – Bank of America: While I recognize you never done with the (calling) of the portfolio. I wonder where you think you stand with the recycling of the retail portfolio at this point?

David B. Henry – Vice Chairmen, President & CEO: Craig. Again, it’s something that we continue to look at. Conor and I have, his two months here, we’ve spent a lot of time looking at the list, working through it and making further decisions about it. This is definitely normal that we want to sell, but the amount of ABR that those assets make up its pretty – getting to a level of point where it’s pretty modest, the assets are smaller, but you got to continue to see us sell assets. And I think as you look out two, three, four, five years it just become part of the fabric of the business. We are going to continue to analyze where property in our view have risk and if we see a declining NOI in the future, or where the population growth is going the wrong way, you’re going to see us market those assets, it’s just a different view and a different look at how we view the portfolio today.

Conor C. Flynn – EVP, COO: I would agree, I think that actively managing the portfolio is something that’s just become a fabric of our Company and going forward, we’re just going to continue to take a look at the shifts in retail nodes, the shifts in demographics, and continue to analyze each and every site individually and look to see if it’s opportunistic to exit.

Craig Schmidt – Bank of America: I’m just wondering, I’ve sort of got a sense that we may be shifting into a little bit heavier redevelopment mode as opposed to a buying and selling mode, but…

Conor C. Flynn – EVP, COO: That’s accurate. I think definitely you’re going to see us shift much more into reinvesting in our properties and taking the funds that we can generate from our dispositions and reinvesting into our existing portfolio and redevelopment pipeline.

David B. Henry – Vice Chairmen, President & CEO: Craig, we basically concluded, there is two wonderful ways to invest, one is in redevelopment where it’s so accretive and so incremental to our earnings, and secondly, buying out joint venture partners because we’re able to achieve better than average cap rates on those acquisitions because we are buying partial interests, we can assume the debt, there is no broker, it is negotiated off-market. So both of those are wonderful places for us to invest capital on and that’s where we’ve been concentrating.

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