"In the US we have a number of good stores, and we don't expect them to reject those leases," said David Henry, Kimco's vice chairman and CIO, during its first-quarter conference call. The leases that are rejected will likely get snatched up by other growing retailers, and Henry pointed out, Linens' Canadian stores that Kimco leases have strong sales.
Observers expect Linens to file for bankruptcy protection at any time as its management seeks to repair the company's capital structure. The 589-store chain posted a fourth-quarter net loss of $62 million and a $242.1-million plunge for all of 2007.
Meanwhile, Kimco's first-quarter funds from operations came in at $164.4 million, down from $202.8 million during the same year-ago period. Occupancy at the end of the quarter in its portfolio of nearly 2,000 shopping centers was 96%, up 20 basis points from the first quarter of 2007.
But the company is having occupancy issues in markets impacted by the housing slump, such as Florida and Southern California, executives said. "There is certainly a correlation between where retailers are having trouble and where we see occupancy declines," said CFO Michael Pappagallo.
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