kim20151103_10q.htm 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 September 30, 2015

 

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.)

 

3333 New Hyde Park Road, New Hyde Park, NY 11042

(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)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files.)    Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12-b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

(Do not check if a smaller reporting company)

  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange Act). Yes ☐ No ☒

 

As of October 21, 2015, the registrant had 413,310,301 shares of common stock outstanding.

 



 
 

Table Of Contents
 

 

PART I FINANCIAL INFORMATION

     

Item 1.

Financial Statements of Kimco Realty Corporation and Subsidiaries (Unaudited)

  

  

  

  

  Condensed Consolidated Financial Statements -  

  

  

  

  

Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014

3

  

  

  

  

Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2015 and 2014

4

  

  

  

  

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2015 and 2014

5

  

  

  

  

Condensed Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2015 and 2014

6

  

  

  

  

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014

7

  

  

  

  Notes to Condensed Consolidated Financial Statements 8

  

  

  

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

  

  

  

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

  

  

  

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 6.

Exhibits

36

  

  

Signatures

37

 

 

 
2

Table Of Contents
 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share information) 

 

   

September 30,

   

December 31,

 
   

2015

   

2014

 

Assets:

               

Operating real estate, net of accumulated depreciation of 2,092,375 and $1,955,406, respectively

  $ 9,256,277     $ 7,930,489  

Investments and advances in real estate joint ventures

    833,650       1,037,218  

Real estate under development

    157,970       132,331  

Other real estate investments

    214,253       266,157  

Mortgages and other financing receivables

    26,207       74,013  

Cash and cash equivalents

    180,913       187,322  

Marketable securities

    12,189       90,235  

Accounts and notes receivable

    172,758       172,386  

Other assets

    559,767       371,249  

Total assets

  $ 11,413,984     $ 10,261,400  
                 
                 

Liabilities:

               

Notes payable

  $ 3,852,640     $ 3,171,742  

Mortgages payable

    1,645,946       1,424,228  

Dividends payable

    111,480       111,143  

Other liabilities

    621,521       561,042  

Total liabilities

    6,231,587       5,268,155  

Redeemable noncontrolling interests

    92,739       91,480  
                 

Stockholders' equity:

               

Preferred stock, $1.00 par value, authorized 5,959,100 shares 102,000 shares issued and outstanding (in series) Aggregate liquidation preference $975,000

    102       102  

Common stock, $.01 par value, authorized 750,000,000 shares issued and outstanding 413,222,609 and 411,819,818 shares, respectively

    4,132       4,118  

Paid-in capital

    5,770,970       5,732,021  

Cumulative distributions in excess of net income

    (832,746 )     (1,006,578 )

Accumulated other comprehensive income

    (14,744 )     45,122  

Total stockholders' equity

    4,927,714       4,774,785  

Noncontrolling interests

    161,944       126,980  

Total equity

    5,089,658       4,901,765  

Total liabilities and equity

  $ 11,413,984     $ 10,261,400  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 
3

Table Of Contents
 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) 

(in thousands, except per share data) 

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2015

   

2014

   

2015

   

2014

 
                                 

Revenues

                               

Revenues from rental properties

  $ 283,387     $ 246,555     $ 847,973     $ 703,139  

Management and other fee income

    4,995       8,679       17,926       26,245  
                                 

Total revenues

    288,382       255,234       865,899       729,384  
                                 

Operating expenses

                               

Rent

    2,913       3,559       9,479       10,362  

Real estate taxes

    36,571       31,470       109,343       91,542  

Operating and maintenance

    34,915       30,561       104,926       85,618  

General and administrative expenses

    27,310       28,632       89,322       94,525  

Provision for doubtful accounts

    1,920       901       5,324       4,094  

Impairment charges

    6,058       2,591       27,908       28,388  

Depreciation and amortization

    103,708       67,130       258,432       185,307  

Total operating expenses

    213,395       164,844       604,734       499,836  
                                 

Operating income

    74,987       90,390       261,165       229,548  
                                 

Other income/(expense)

                               

Mortgage financing income

    445       417       2,497       2,544  

Interest, dividends and other investment income

    5,692       264       38,011       643  

Other income/(expense), net

    615       (1,397 )     100       (4,307 )

Interest expense

    (54,031 )     (51,225 )     (162,739 )     (153,936 )
                                 

Income from continuing operations before income taxes, equity in income of joint ventures, gain on change in control of interests and equity in income from other real estate investments

    27,708       38,449       139,034       74,492  
                                 

Provision for income taxes, net

    (2,844 )     (5,252 )     (11,933 )     (14,693 )

Equity in income of joint ventures, net

    10,894       51,787       130,808       150,073  

Gain on change in control of interests, net

    6,342       14,431       146,143       83,773  

Equity in income of other real estate investments, net

    11,319       6,036       31,236       16,404  
                                 

Income from continuing operations

    53,419       105,451       435,288       310,049  
                                 

Discontinued operations

                               

Income/(loss) from discontinued operating properties, net of tax

    -       6,715       (15 )     31,552  

Impairment/loss on operating properties, net of tax

    -       (4,116 )     (60 )     (75,675 )

Gain on disposition of operating properties, net of tax

    -       89,259       -       118,804  

Income/(loss) from discontinued operations

    -       91,858       (75 )     74,681  
                                 

Gain on sale of operating properties, net of tax

    27,665       -       86,219       389  
                                 

Net income

    81,084       197,309       521,432       385,119  
                                 

Net income attributable to noncontrolling interests

    (3,512 )     (2,601 )     (6,518 )     (13,899 )
                                 

Net income attributable to the Company

    77,572       194,708       514,914       371,220  
                                 

Preferred dividends

    (14,573 )     (14,573 )     (43,719 )     (43,720 )
                                 

Net income available to the Company's common shareholders

  $ 62,999     $ 180,135     $ 471,195     $ 327,500  
                                 

Per common share:

                               

Income from continuing operations:

                               

-Basic

  $ 0.15     $ 0.21     $ 1.14     $ 0.63  

-Diluted

  $ 0.15     $ 0.21     $ 1.14     $ 0.63  

Net income attributable to the Company:

                               

-Basic

  $ 0.15     $ 0.44     $ 1.14     $ 0.80  

-Diluted

  $ 0.15     $ 0.44     $ 1.14     $ 0.80  
                                 

Weighted average shares:

                               

-Basic

    411,487       409,326       411,202       408,868  

-Diluted

    412,686       411,101       413,262       410,687  
                                 

Amounts attributable to the Company's common shareholders:

                               

Income from continuing operations

  $ 62,999     $ 88,275     $ 471,270     $ 260,246  

Income/(loss) from discontinued operations

    -       91,860       (75 )     67,254  

Net income

  $ 62,999     $ 180,135     $ 471,195     $ 327,500  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
4

Table Of Contents
 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2015

   

2014

   

2015

   

2014

 
                                 

Net income

  $ 81,084     $ 197,309     $ 521,432     $ 385,119  

Other comprehensive income:

                               

Change in unrealized gain on marketable securities, net

    (5,871 )     5,869       (44,418 )     13,980  

Change in unrealized loss on interest rate swaps

    (530 )     -       (475 )     -  

Change in foreign currency translation adjustment, net

    (6,437 )     (14,912 )     (14,973 )     (17,807 )

Other comprehensive loss

    (12,838 )     (9,043 )     (59,866 )     (3,827 )
                                 

Comprehensive income

    68,246       188,266       461,566       381,292  
                                 

Comprehensive income attributable to noncontrolling interests

    (3,512 )     (2,586 )     (6,518 )     (13,710 )
                                 

Comprehensive income attributable to the Company

  $ 64,734     $ 185,680     $ 455,048     $ 367,582  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 
5

Table Of Contents
 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 

For the Nine Months Ended September 30, 2015 and 2014

(Unaudited)

(in thousands)

 

    Cumulative Distributions in Excess of     Accumulated Other Comprehensive     Preferred Stock     Common Stock     Paid-in     Total Stockholders'     Noncontrolling     Total  
   

Net Income

   

 Income

   

Issued

   

Amount

   

 Issued

   

Amount

   

Capital

   

 Equity

   

Interests

   

Equity

 
                                                                                 

Balance, January 1, 2014

  $ (996,058 )   $ (64,982 )     102     $ 102       409,731     $ 4,097     $ 5,689,258     $ 4,632,417     $ 137,109     $ 4,769,526  
                                                                                 

Contributions from noncontrolling interests

    -       -       -       -       -       -       -       -       3,098       3,098  
                                                                                 

Comprehensive income:

                                                                               

Net income

    371,220       -       -       -       -       -       -       371,220       13,899       385,119  

Other comprehensive income, net of tax:

                                                            -                  

Change in unrealized gain on marketable securities

    -       13,980       -       -       -       -       -       13,980       -       13,980  

Change in foreign currency translation adjustment

    -       (17,618 )     -       -       -       -       -       (17,618 )     (189 )     (17,807 )
                                                              -                  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (4,779 )     (4,779 )

Dividends ($0.675 per common share; $1.2938 per

                                                            -                  

Class H Depositary Share and $1.1250 per

                                                            -                  

Class I Depositary Share, and $1.0313 per

                                                            -                  

Class J Depositary Share. and $1.0547 per

                                                            -                  

Class K Depositary Share, respectively)

    (321,111 )     -       -       -       -       -       -       (321,111 )     -       (321,111 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (25,150 )     (25,150 )

Issuance of common stock

    -       -       -       -       805       8       13,827       13,835       -       13,835  

Surrender of restricted stock

    -       -       -       -       (187 )     (2 )     (3,979 )     (3,981 )     -       (3,981 )

Exercise of common stock options

    -       -       -       -       989       10       16,077       16,087       -       16,087  

Acquisition of noncontrolling interests

    -       -       -       -       -       -       (53 )     (53 )     (766 )     (819 )

Amortization of equity awards

    -       -       -       -       -       -       7,699       7,699       -       7,699  

Balance, September 30, 2014

  $ (945,949 )   $ (68,620 )     102     $ 102       411,338     $ 4,113     $ 5,722,829     $ 4,712,475     $ 123,222     $ 4,835,697  
                                                                                 

Balance, January 1, 2015

  $ (1,006,578 )   $ 45,122       102     $ 102       411,820     $ 4,118     $ 5,732,021     $ 4,774,785     $ 126,980     $ 4,901,765  
                                                                                 

Contributions from noncontrolling interests

    -       -       -       -       -       -       -       -       66,163       66,163  
                                                                                 

Comprehensive income:

                                                                               

Net income

    514,914       -       -       -       -       -       -       514,914       6,518       521,432  

Other comprehensive income, net of tax:

                                                            -                  

Change in unrealized gain on marketable securities

    -       (44,418 )     -       -       -       -       -       (44,418 )     -       (44,418 )

Change in unrealized loss on interest rate swaps

    -       (475 )     -       -       -       -       -       (475 )     -       (475 )

Change in foreign currency translation adjustment

    -       (14,973 )     -       -       -       -       -       (14,973 )     -       (14,973 )
                                                              -                  

Redeemable noncontrolling interests income

    -       -       -       -       -       -       -       -       (5,822 )     (5,822 )

Dividends ($0.72 per common share; $1.2938 per

                                                                               

Class H Depositary Share and $1.1250 per

                                                                               

Class I Depositary Share, and $1.0313 per

                                                                               

Class J Depositary Share. and $1.0547 per

                                                                               

Class K Depositary Share, respectively)

    (341,082 )                                                     (341,082 )     -       (341,082 )

Distributions to noncontrolling interests

    -       -       -       -       -       -       -       -       (6,706 )     (6,706 )

Issuance of common stock

    -       -       -       -       784       8       480       488       -       488  

Surrender of restricted stock

    -       -       -       -       (227 )     (2 )     (5,602 )     (5,604 )     -       (5,604 )

Exercise of common stock options

    -       -       -       -       846       8       15,559       15,567       -       15,567  

Sale of interests in investments, net of tax of $16 million

    -       -       -       -       -       -       23,993       23,993       -       23,993  

Acquisition of noncontrolling interests

                                                    (6,437 )     (6,437 )     (25,189 )     (31,626 )

Amortization of equity awards

    -       -       -       -       -       -       10,956       10,956       -       10,956  

Balance, September 30, 2015

  $ (832,746 )   $ (14,744 )     102     $ 102       413,223     $ 4,132     $ 5,770,970     $ 4,927,714     $ 161,944     $ 5,089,658  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 
6

Table Of Contents
 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

   

Nine Months Ended September 30

 
   

2015

   

2014

 

Cash flow from operating activities:

               

Net income

  $ 521,432     $ 385,119  

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

               

Depreciation and amortization

    258,432       199,914  

Impairment charges

    27,989       107,034  

Equity award expense

    15,312       14,465  

Gain on sale of operating properties

    (88,497 )     (130,052 )

Gain on sale of marketable securities

    (38,488 )     -  

Gains on change in control of interests

    (146,143 )     (83,773 )

Equity in income of joint ventures, net

    (130,808 )     (150,073 )

Equity in income from other real estate investments, net

    (31,236 )     (16,404 )

Distributions from joint ventures and other real estate investments

    149,141       186,629  

Change in accounts and notes receivable

    (372 )     3,168  

Change in accounts payable and accrued expenses

    38,703       35,289  

Change in other operating assets and liabilities

    (58,181 )     (41,311 )

Net cash flow provided by operating activities

    517,284       510,005  
                 

Cash flow from investing activities:

               

Acquisition of operating real estate and other related net assets

    (619,622 )     (382,128 )

Improvements to operating real estate

    (111,740 )     (93,733 )

Acquisition of real estate under development

    (3,074 )     -  

Improvements to real estate under development

    (8,922 )     (154 )

Investment in marketable securities

    (257 )     (4,556 )

Proceeds from sale of marketable securities

    71,562       3,780  

Investments and advances to real estate joint ventures

    (87,953 )     (59,602 )

Reimbursements of investments and advances to real estate joint ventures

    98,741       144,359  

Investment in other real estate investments

    (545 )     (3,851 )

Reimbursements of investments and advances to other real estate investments

    40,556       12,981  

Collection of mortgage loans receivable

    52,963       7,707  

Investment in other investments

    (190,278 )     -  

Proceeds from sale of operating properties

    238,444       303,104  

Net cash flow used for investing activities

    (520,125 )     (72,093 )
                 

Cash flow from financing activities:

               

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

    (444,150 )     (298,264 )

Principal payments on rental property debt

    (22,452 )     (17,098 )

Proceeds from mortgage loan financings

    -       15,700  

Proceeds under unsecured revolving credit facility, net

    325,000       55,646  

Proceeds from issuance of unsecured term loan/notes

    1,000,000       500,000  

Repayments under unsecured term loan/notes

    (600,000 )     (370,842 )

Financing origination costs

    (9,132 )     (11,911 )

Contributions from noncontrolling interests

    106,154       1,133  

Redemption/distribution of noncontrolling interests

    (33,810 )     (2,192 )

Dividends paid

    (340,745 )     (320,749 )

Proceeds from issuance of stock

    15,567       16,087  

Net cash flow provided by/(used for) financing activities

    (3,568 )     (432,490 )
                 

Change in cash and cash equivalents

    (6,409 )     5,422  
                 

Cash and cash equivalents, beginning of period

    187,322       148,768  

Cash and cash equivalents, end of period

  $ 180,913     $ 154,190  
                 

Interest paid during the period (net of capitalized interest of $3,784 and $1,288, respectively)

  $ 150,625     $ 135,706  
                 

Income taxes paid during the period

  $ 5,985     $ 12,944  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 
7

Table Of Contents
 

 

KIMCO REALTY CORPORATION AND SUBSIDIARIES

 

NOTES TO CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

                                          

 

1. Interim Financial Statements

 

Principles of Consolidation -

 

The accompanying Condensed Consolidated Financial Statements include the accounts of Kimco Realty Corporation and subsidiaries, (the “Company”). The Company’s subsidiaries include subsidiaries which are wholly-owned, and all entities in which the Company has a controlling financial interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity (“VIE”) or meets certain criteria of a sole general partner or managing member 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 2014 Annual Report on Form 10-K for the year ended December 31, 2014 (the “10-K”), as certain disclosures in this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, 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 the condensed consolidated financial statements (see Footnotes 4, 9 and 12).

 

Income Taxes -

 

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, the Company must distribute at least 90 percent of its taxable income and will not pay federal income taxes on the amount distributed to its shareholders.  Therefore, the Company is not 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 (“TRS”), which permit the Company to engage in certain business activities in which the REIT may not conduct directly.  A TRS is subject to federal and state income taxes on the income from these activities and the Company includes 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 subsidiary. 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.

 

 

 
8

Table Of Contents
 

 

Earnings Per Share -

 

The following table sets forth the reconciliation of earnings and the weighted average number of shares used in the calculation of basic and diluted earnings per share (amounts presented in thousands except per share data):

 

   

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 
   

2015

   

2014

   

2015

   

2014

 

Computation of Basic Earnings Per Share:

                               

Income from continuing operations

  $ 53,419     $ 105,451     $ 435,288     $ 310,049  

Gain on sale of operating properties, net of tax

    27,665       -       86,219       389  

Net income attributable to noncontrolling interests

    (3,512 )     (2,601 )     (6,518 )     (13,899 )

Discontinued operations attributable to noncontrolling interests

    -       (2 )     -       7,427  

Preferred stock dividends

    (14,573 )     (14,573 )     (43,719 )     (43,720 )

Income from continuing operations available to the common shareholders

    62,999       88,275       471,270       260,246  

Earnings attributable to participating securities

    (405 )     (431 )     (2,178 )     (1,292 )

Income from continuing operations attributable to common shareholders

    62,594       87,844       469,092       258,954  

Income/(loss) from discontinued operations attributable to the Company

    -       91,860       (75 )     67,254  

Net income attributable to the Company’s common shareholders for basic earnings per share

  $ 62,594     $ 179,704     $ 469,017     $ 326,208  
                                 

Weighted average common shares outstanding

    411,487       409,326       411,202       408,868  
                                 

Basic Earnings Per Share Attributable to the Company’s Common Shareholders:

                               

Income from continuing operations

  $ 0.15     $ 0.21     $ 1.14     $ 0.63  

Income from discontinued operations

    -       0.23       -       0.17  

Net income attributable to the Company

  $ 0.15     $ 0.44     $ 1.14     $ 0.80  
                                 

Computation of Diluted Earnings Per Share:

                               

Income from continuing operations attributable to common shareholders

  $ 62,594     $ 87,844     $ 469,092     $ 258,954  

Income/(loss) from discontinued operations attributable to the Company

    -       91,860       (75 )     67,254  

Distributions on convertible units

    -       130       446       393  

Net income attributable to the Company’s common shareholders for diluted earnings per share

  $ 62,594     $ 179,834     $ 469,463     $ 326,601  
                                 

Weighted average common shares outstanding – basic

    411,487       409,326       411,202       408,868  

Effect of dilutive securities (a):

Equity awards

    1,199       1,052       1,337       1,092  

Assumed conversion of convertible units

    -       723       723       727  

Shares for diluted earnings per common share

    412,686       411,101       413,262       410,687  
                                 

Diluted Earnings Per Share Attributable to the Company’s Common Shareholders:

                               

Income from continuing operations

  $ 0.15     $ 0.21     $ 1.14     $ 0.63  

Income from discontinued operations

    -       0.23       -       0.17  

Net income attributable to the Company

  $ 0.15     $ 0.44     $ 1.14     $ 0.80  

 

  

(a)

For the three and nine months ended September 30, 2015 and 2014, the effect of certain convertible units would have an anti-dilutive effect upon the calculation of Income from continuing operations per share.  Accordingly, the impact of such conversion has not been included in the determination of diluted earnings per share calculations.  Additionally, there were 5,963,010 and 8,839,578 stock options that were not dilutive at September 30, 2015 and 2014, respectively.

 

The Company's unvested restricted share awards and convertible units (the “Participating securities”) contain non-forfeitable rights to distributions or distribution equivalents. The impact of the Participating securities on earnings per share has been calculated using the two-class method whereby earnings are allocated to the Participating securities based on dividends declared and the Participating securities rights in undistributed earnings.

 

New Accounting Pronouncements

 

In September 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-16: Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”), which eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. ASU 2015-16 is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. The Company elected to early adopt ASU 2015-16 beginning in its third quarter ended September 30, 2015 (see Footnote 2). The adoption of ASU 2015-16 did not have a material impact on the Company’s financial position or results of operations.

 

 

 
9

Table Of Contents
 

 

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The amendments in ASU 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in ASU 2015-03 are effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. The Company elected to early adopt ASU 2015-03 beginning in its fiscal year 2015 (see Footnote 9). In August 2015, the FASB issued ASU 2015-15: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”) providing guidance regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance on this matter, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on that line-of-credit arrangement. The adoption of ASU 2015-03 and ASU 2015-15 did not have a material impact on the Company’s financial position or results of operations.

 

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 focuses to minimize situations under previously existing guidance in which a reporting entity was required to consolidate another legal entity in which that reporting entity did not have: (1) the ability through contractual rights to act primarily on its own behalf; (2) ownership of the majority of the legal entity's voting rights; or (3) the exposure to a majority of the legal entity's economic benefits. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 will be effective for periods beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company is currently in the process of evaluating the impact the adoption of ASU 2015-02 will have on the Company’s financial position or results of operations.

 

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter, early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have a material effect on the Company’s consolidated financial statements.

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 was anticipated to be effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption was not permitted. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”), which delayed the effective date of ASU 2014-09 by one year making it effective for the first interim period within annual reporting periods beginning after December 15, 2017. Early adoption is permitted as of the original effective date. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations.

 

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). The amendments in ASU 2014-08 change the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. The amendments in ASU 2014-08 are effective for fiscal years beginning after December 15, 2014. The Company adopted ASU 2014-08 beginning January 1, 2015 and appropriately applied the guidance prospectively to disposals of its operating properties. Prior to January 1, 2015, properties identified as held-for-sale and/or disposed of were presented in discontinued operations for all periods presented. The adoption and implementation of this ASU resulted in the operations of certain current period dispositions in the ordinary course of business to be classified within continuing operations on the Company’s Condensed Consolidated Statements of Income. The adoption did not have an impact on the Company’s financial position or cash flows. The disclosures required by this ASU have been incorporated in the notes included herein. 

 

 

 
10

Table Of Contents
 

 

2. Operating Property Activities

 

Acquisitions -

 

During the nine months ended September 30, 2015, the Company acquired the following properties, in separate transactions (in thousands):

 

<
           

Purchase Price

 

Property Name

 

Location

 

Month

Acquired

 

Cash*

   

Debt Assumed

   

Other

   

Total

   

GLA**

 

Elmont Plaza

 

Elmont, NY (1)

 

Jan-15

  $ 2,400     $ -     $ 3,358     $ 5,758       13  

Garden State Pavilion Parcel

 

Cherry Hill, NJ

 

Jan-15

    16,300       -       -       16,300       111  

Kimstone Portfolio (39 properties)

 

Various (2)

 

Feb-15

    513,513       637,976       236,011       1,387,500       5,631  

Copperfield Village

 

Houston, TX

 

Feb-15

    18,700       20,800       -       39,500       165  

Snowden Square Parcel

 

Columbia, MD

 

Mar-15

    4,868       -       -       4,868       25  

Dulles Town Crossing Parcel

 

Sterling, VA

 

Mar-15

    4,830       -       -       4,830       9  

Flagler Park S.C.

 

Miami, FL

 

Mar-15

    1,875       -       -       1,875       5  

West Farms Parcel

 

New Britain, CT

 

Apr-15

    6,200       -       -       6,200       24  

Milleridge Inn

 

Jericho, NY

 

Apr-15

    7,500       -       -       7,500       -  

Woodgrove Festival Parcels

 

Woodridge, IL

 

Jun-15

    5,611       -       -       5,611       12  

Montgomery Plaza

 

Fort Worth , TX (3)

 

Jul-15

    34,522       29,311       9,044