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Note 1 - Interim Financial Statements | 6 Months Ended
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Jun. 30, 2016
Notes to Financial Statements |
Significant Accounting Policies [Text Block] | 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”) 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 2015 Annual Report on Form 10-K for the year ended December 31, 2015 (the “10-K”), as certain disclosures in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016, 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 Footnote 8). 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, with respect to each taxable year, the Company must distribute at least 90 percent of its taxable income (excluding capital gain) and will not pay federal income taxes on the amount distributed to its shareholders. The Company is not generally 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 (“TRSs”), which permit the Company to engage in certain business activities which the REIT may not conduct directly. The Company’s TRSs include Kimco Realty Services Inc. ("KRS"), Kimco Insurance Company (“KIC,” and together with KRS, “KRS Consolidated”) and the consolidated entity, Blue Ridge Real Estate Company/Big Boulder Corporation. A TRS is subject to federal and state income taxes on its income, 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 subsidiaries. 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. As part of the Company’s overall strategy to simplify its business model and transfer ownership of desirable long-term shopping center assets as well as the Company’s investment in Albertsons to the REIT, the Company, effective August 1, 2016, will merge KRS into a wholly-owned Limited Liability Company (“LLC”) of the Company (the “Merger”). The Company analyzed the individual assets of KRS and determined that substantially all of KRS’s assets constitute real estate assets and investments that can be directly owned by the Company without adversely affecting the Company’s status as a REIT. Any non-REIT qualifying assets or activities will be transferred to and would reside in a newly formed TRS. Under generally accepted accounting principles in the United States of America a reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if, based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. As a result of the Merger, the realization of the Company’s net deferred tax asset is not deemed likely and as such, the Company will be required to record a full valuation allowance on the net deferred tax asset that exists at the time of the Merger. As of June 30, 2016, the Company had a net deferred tax asset of $66.4 million. The Company has also analyzed each investment within KRS to determine which assets the Company intends to hold as long- term investments and which assets the Company would consider disposing of in the short term. As a result of this evaluation, the Company has identified four KRS operating properties which will be marketed for sale over the next 12 months and for which the book basis exceeded the estimated fair value. Due to the re-evaluation of the anticipated hold period for these four assets the Company has recorded an aggregate impairment charge of $50.7 million, before income taxes of $21.1 million, for the three months ended June 30, 2016 (see Footnote 2). In connection with the Merger, the Company has also prepared an analysis of the estimated built-in tax gains and built-in tax losses inherent in each asset. Property that becomes REIT property in a merger transaction is subject to tax during a recognition period, and, as a result, the REIT is subject to corporate-level taxation up to the net built-in gain amount resulting from the sale of KRS investments within five years from the merger date (the recognition period). The Company compared estimated values to tax basis for each property to determine the built-in tax gain (value over basis) or the built-in tax loss (basis over value) and determined KRS’s share based on its ownership percentage, which could be subject to corporate level taxes if the Company disposes of any assets previously held by KRS during the five years following the Merger date. 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 June 30, |  |  | Six Months Ended June 30, |
|  | 201 6 |  |  | 2015 |  |  | 201 6 |  |  | 2015 |
Computation of Basic Earnings Per Share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 165,578 |  |  | $ | 101,110 |  |  | $ | 280,836 |  |  | $ | 381,869 |
Gain on sale of operating properties, net of tax |  |  | 39,268 |  |  |  | 26,499 |  |  |  | 66,164 |  |  |  | 58,554 |
Net income attributable to noncontrolling interests |  |  | (1,437 | ) |  |  | (609 | ) |  |  | (2,878 | ) |  |  | (3,006 | )
Preferred stock dividends |  |  | (11,555 | ) |  |  | (14,573 | ) |  |  | (23,110 | ) |  |  | (29,146 | )
Income from continuing operations available to the common shareholders |  |  | 191,854 |  |  |  | 112,427 |  |  |  | 321,012 |  |  |  | 408,271 |
Earnings attributable to participating securities |  |  | (1,067 | ) |  |  | (458 | ) |  |  | (1,701 | ) |  |  | (1,940 | )
Income from continuing operations attributable to common shareholders |  |  | 190,787 |  |  |  | 111,969 |  |  |  | 319,311 |  |  |  | 406,331 |
Loss from discontinued operations attributable to the Company |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (75 | )
Net income attributable to the Company’s common shareholders for basic earnings per share |  |  | 190,787 |  |  | $ | 111,969 |  |  | $ | 319,311 |  |  | $ | 406,256 |
Weighted average common shares outstanding – basic |  |  | 417,748 |  |  |  | 411,317 |  |  |  | 415,189 |  |  |  | 411,057 |
Basic Earnings Per Share Attributable to the Company’s Common Shareholders: |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 0.46 |  |  | $ | 0.27 |  |  | $ | 0.77 |  |  | $ | 0.99 |
Loss from discontinued operations |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Net income |  | $ | 0.46 |  |  | $ | 0.27 |  |  | $ | 0.77 |  |  | $ | 0.99 |
Computation of Diluted Earnings Per Share: |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations attributable to common shareholders |  | $ | 190,787 |  |  | $ | 111,969 |  |  | $ | 319,311 |  |  | $ | 406,331 |
Loss from discontinued operations attributable to the Company |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (75 | )
Distributions on convertible units |  |  | 28 |  |  |  | 139 |  |  |  | 47 |  |  |  | 373 |
Net income attributable to the Company’s common shareholders for diluted earnings per share |  | $ | 190,815 |  |  | $ | 112,108 |  |  | $ | 319,358 |  |  | $ | 406,629 |
Weighted average common shares outstanding – basic |  |  | 417,748 |  |  |  | 411,317 |  |  |  | 415,189 |  |  |  | 411,057 |
Effect of dilutive securities (a): |  |  |  |  |  |  |  |  |  |  |  |  |
Equity awards |  |  | 1,457 |  |  |  | 1,103 |  |  |  | 1,450 |  |  |  | 1,281 |
Assumed conversion of convertible units |  |  | 97 |  |  |  | 666 |  |  |  | 93 |  |  |  | 810 |
Shares for diluted earnings per common share |  |  | 419,302 |  |  |  | 413,086 |  |  |  | 416,732 |  |  |  | 413,148 |
Diluted Earnings Per Share Attributable to the Company’s Common Shareholders: |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 0.46 |  |  | $ | 0.27 |  |  | $ | 0.77 |  |  | $ | 0.98 |
Loss from discontinued operations |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Net income attributable to the Company |  | $ | 0.46 |  |  | $ | 0.27 |  |  | $ | 0.77 |  |  | $ | 0.98 |
| (a) | For the three and six months ended June 30, 2016 and 2015, 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. At June 30, 2016 and 2015 the Company had outstanding stock options that were not dilutive of 5,108,530 and 6,802,560, 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 March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). The update simplifies several aspects of accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods, early adoption is permitted. The adoption of ASU 2016-09 is not expected to have a material effect on the Company’s financial position and/or results of operations. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASU 2016-02 supersedes the previous leases standard, Leases (Topic 840). The standard is effective for the Company on January 1, 2019, with early adoption permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on the Company’s financial position and/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. Legal entities are subject to reevaluation under the revised consolidation model. ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 did not have a material effect 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. Subsequently, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations”, which further clarifies the implementation guidance on principal versus agent considerations”, and in April 2016, the FASB issued ASU 2016-10, “Revenue from contracts with customers (Topic 606): Identifying performance obligations and licensing”, an update on identifying performance obligations and accounting for licenses of intellectual property. Additionally, in May 2016, the FASB issued ASU 2016-12, “Revenue from contracts with customers (Topic 606): Narrow-scope improvements and practical expedients”, which includes amendments for enhanced clarification of the guidance. 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 and/or results of operations. Re visions – In the fourth quarter of 2015, the Company changed the classification within the Company’s cash flow statement for certain transactions that occurred in the six months ended June 30, 2015, involving the sale of equity interests in entities owning real estate. This change of $53.5 million was reclassified for the six months ended June 30, 2015, for purposes of reflecting comparative periods. The Company believes the new classification is a more meaningful reflection of these transactions and changed the Company’s cash flow from the initially reported amounts to reduce Distributions from joint ventures and other real estate investments within its cash flow from operating activities and increase Distributions from liquidation of real estate joint ventures within its cash flow from investing activities by $53.5 million for the six months ended June 30, 2015.

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