REIT Report Card Pt. II
Sep 1, 2007 12:00 PM, Elaine Misonzhnik
The results are in and shopping center REITs largely bucked pessimistic expectations and posted strong operating results for the second quarter despite the massive sell-off that has swept through REIT stocks in recent months.
REITs that own and operate neighborhood centers and community centers, such as Kimco Realty Corp., Developers Diversified Realty Corp. and Weingarten Realty Investors, have delivered strong operating results in the second quarter. Analysts and investors were pleased to see the strong FFO and NOI figures, but there are lingering concerns about troubles in the debt market and lackluster retail sales and how both trends might affect REITs in the coming months.
“The consumer continuing to spend has certainly helped the REITs,” says Akash Dave, an analyst with Morningstar. “Whether that will continue, we'll have to see.”
Of the eleven REITs in the group, the majority posted positive FFO and NOI growth, outperforming NAREIT's estimates for the shopping center sector, which forecasted FFO growth of 6.91 percent from February 2007 to February 2008.
New Hyde Park, N.Y.-based Kimco, the largest shopping center REIT with a 174-million-square-foot portfolio, reported FFO of $0.71 per share, representing a 31.5 percent growth compared to the second quarter of 2006.
However, Kimco posted same-store NOI growth of 4 percent, down slightly from the 4.6 percent the company averaged during the past eight quarters.
A star within the grocery-anchored sector, Kimco, which has been diversifying its revenue sources through merchant building, joint ventures and preferred equity, has withstood the volatile fluctuations in the real estate market, wrote A. G. Edwards analyst Mark Hoffmeister. The company beat analysts' expectations by $0.11 for the quarter.
| Company | Q2 '07 FFO/Sh. | Q2 '06 FFO/Sh. | Percent Change |
|---|---|---|---|
| Urstadt Biddle Properties | $0.55 | $0.28 | 96 |
| Kimco Realty Corp. | 0.71 | 0.54 | 31.5 |
| Developers Diversified Realty Corp. | 1.26 | 0.99 | 27.3 |
| Weingarten Realty Investors | 0.75 | 0.68 | 10.3 |
| Federal Realty Investment Trust | 0.91 | 0.83 | 9.7 |
| Inland Real Estate Corp. | 0.35 | 0.33 | 6.1 |
| Regency Centers | 0.94 | 0.93 | 1.1 |
| Ramco-Gershenson Properties Trust | 0.60 | 0.63 | -4.8 |
| Cedar Shopping Centers | 0.28 | 0.31 | -9.7 |
| Acadia Realty Trust | 0.26 | 0.30 | -13.3 |
| Equity One Inc. | 0.34 | 0.41 | -17.1 |
| Source: Company reports | |||
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