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Kimco Realty says Toys R Us closing impact on earnings was minor

Kimco Realty Corp. owns about 30 shopping centers

Kimco Realty Corp. owns about 30 shopping centers on Long Island, including Airport Plaza in East Farmingdale. Credit: Kimco Realty

Kimco Realty Corp., a New Hyde Park-based real estate investment trust, reported vacancies at former Toys R Us locations had a minor impact on the company’s occupancy numbers.

Kimco, one of the largest publicly traded owners of shopping centers in the country, said Thursday in an earnings filing that occupancy was reduced by 0.4 percentage point by vacancies at seven former Toys R Us locations. Kimco reported occupancy of 95.8 percent acrosss it's properties. Excluding the impact of Toys R Us stores, the company would have had occupancy of 96.2 percent, said David Bujnicki, senior vice president of investor relations and strategy at Kimco.

“We're so large and diversified in our tenant base that the impact of Toys R Us' bankruptcy has had a very minimal effect,” Bujnicki said. The company has been able to find suitable tenants that will bring in greater foot traffic to the former Toys R Us locations and is in the process of negotiating other leases, he said. 

"We were able to re-lease a lot of space fairly quickly,” he said. 

The 70-year-old toy retailer filed for bankruptcy in September 2017 and began announcing store closures in January. The shopping center owner had 22 Toys R Us locations in its portfolio, executives said.

Kimco also announced the company had posted lower revenue and net income for the quarter ended Sept. 30.

Net income attributable to Kimco fell to $100.2 million in the third quarter from $121 million in the same quarter last year. 

A contributing factor to the drop in net income, Bujnicki said, has been the smaller pool of shopping centers the company has in its portfolio. The company has been selling off weaker performing shopping centers in recent years to focus more on "core, major markets that have strong demographics, great growth profiles and limited credit risk." 

Kimco sold 10 shopping centers and two parcels of land for $156.8 million during the quarter.

Funds from operations, an industry measure of earnings that excludes gains and losses on property sales, fell to $144.4 million, or 34 cents per share, from $165.3 million — 39 cents per share — in the year earlier period.

Revenue for the recent quarter was $283.1 million, down from $295 million last year.

Real estate investment trusts, or REITs, must return most of their profits to investors. Kimco shares rose 93 cents Thursday to close at $15.85 on the New York Stock Exchange.

The company owns about 30 shopping centers on Long Island, including Airport Plaza in East Farmingdale.

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