Kimco cuts staff, to sell non-core assets
Kimco Realty, a New Hyde Park, L.I.-based real estate investment trust, announced today that it has gotten rid of around 90 employees and would dispose of all non-essential businesses in a plan to restructure the company around its core neighborhood shopping center business.
The firm said it had cut 89 jobs during the first quarter of this year and reduced the salaries of top executives, part of an effort to save an average of $20 million per year.
“Today it is critical to have a strong, well-capitalized landlord,” David Henry, president of Kimco, said on a quarterly conference call with analysts. “There is more turmoil to come in the real estate and financial markets.”
Kimco owns more than 30 area shopping malls, including Concourse Plaza in the Bronx, Centereach Mall, in Long Island and Woodbury Centre, in Harriman, N.Y. Kimco also acquired a strip of Harlem retail stores in 2007.
In July 2008, five Harlem business owners settled a nasty legal fight with Kimco and investment partner Sigfeld Group, over plans to evict the shop owners to make way for a major redevelopment near West 125th Street.
Nearly a year before the city officially approved the rezoning of 125th Street, Kimco and Sigfeld paid a record $1,430 per square foot, or $50 million, for a strip of 16 retail stores along Frederick Douglass Boulevard, before raising their rents to record levels and launching eviction proceedings against the group.
It was not immediately clear whether Kimco plans to keep its Harlem investment, or include the property in the asset sales. Kimco officials did say, however, that they plan to keep assets that they manage and dispose of several urban mixed-use properties, mortgages on non-retail properties and other assets.
Kimco said that funds from operations, a commonly used income measurement for REITs, fell to 43 cents a share, or $117.8 million in the first quarter, from 64 cents a share, or $164.4 million, in first-quarter 2008.
Net income fell to $26.6 million, or 10 cents a share in the quarter, compared with $86.6 million, or 34 cents, a year ago, and quarter-over-quarter, revenue rose in the first three months of the year to $193.8 million from $188.8 million.
Kimco officials said they were impacted primarily by the bankruptcies of Circuit City and Value City.
Kimco shares, which were up 6.8 percent at $12.10 late this afternoon, have fallen sharply from a high of $47.80 to as low as $6.33 over the past 12 months.
In early April, Kimco announced that it would slash its dividend to 6 cents a share in the third and fourth quarters from 44 cents during the first two quarters. The move was designed to help Kimco preserve cash.
Kimco lowered its 2009 estimates for funds from operations to between $1.33 and $1.45 per share, compared with prior estimates of $1.70 to $1.85 per share. The new estimates are based on a projected year-end occupancy rate of 90 percent and a same-store net operating income ranging from flat to negative 2 percent.
As of March 31, the company owned or held stakes in 1,476 properties in the U.S., Canada, Mexico, Puerto Rico and South America, 814 of which are in the U.S. and Puerto Rico.