* Q2 FFO $113.8 mln, 31 cents per share
* Analysts estimate 32 cents
* Cuts top of forecast range
* Stock rises 5.6 pct (Adds analyst comment, updates stock activity, byline)
By Ilaina Jonas
NEW YORK, July 30 (Reuters) - Kimco Realty Corp (KIM.N), the largest owner and operator of U.S. strip malls, said on Thursday second-quarter funds from operations (FFO) fell as shopping center occupancy slipped.
Still, the stock rose 5.6 percent as its forecast and fundamentals and rent increases were better than some if its peers.
FFO, excluding impairment charges, declined to $113.8 million, or 31 cents per share, missing analysts' estimates by a penny. A year earlier, FFO was $171.6 million, or 66 cents per share, before charges.
FFO, a measure of performance of real estate investment trusts (REITs), removes the profit-reducing effect of depreciation, a noncash accounting item, on earnings.
It recorded $176.5 million in impairment charges, including $126 million related to the lower value of non-core assets such as marketable securities, urban development projects and nonretail properties, and investments in third-party projects. About $51 million of the total related to its core shopping center business.
After impairment charges, FFO was a loss of 17 cents per share.
Kimco's core shopping center portfolio includes 915 operating properties, including 808 in the United States, 51 in Canada, 47 in Mexico and nine in Chile, as well as 21 development properties, consisting of five assets in the U.S., 10 in Mexico and six in South America.
Occupancy at its shopping centers fell 3.5 percentage points to 92.1 percent.
In the U.S. portfolio, the decline was steeper, down 3.7 percentage points to 91.8 percent.
For U.S. property opened at least a year, net operating income (NOI), which reflects cash flow the properties generate, fell 1.8 percentage points.
During the commercial real estate boom from 2004 through 2007, Kimco expanded by acquisitions, taking on debt and complex property ownerships. But the credit crisis forced management to focus its strategy back to investing in North American shopping center and strengthening its balance sheet.
Last quarter, Chairman and Chief Executive Milton Cooper said the company's leverage goal would be 25 percent debt.
Kimco netted $718 million by selling 105.2 million shares during the quarter and cut its dividend to retain cash.
New Hyde Park, New York-based Kimco said it expects to return to a normalized quarterly dividend in January.
Kimco also lowered the top end of its forecast for the current year. It now sees 2009 FFO in the range of $1.33 to $1.38 per share, down from its previous forecast of $1.33 to $1.45 per share.
It sees NOI for properties it has operated at least a year to be down 1 percent to 3 percent, from its prior forecast of flat to down 2 percent.
Analysts had expected $1.36 per share.
"The reduction in NOI growth forecasts and earnings guidance was not a shocker following a much more meaningful reduction in guidance from shopping center REIT peer Regency Centers (REG.N)," Oppenheimer & Co analyst Mark Biffert said in a research note.
Kimco shares rose 51 cents to trade at $9.58 on the New York Stock Exchange. (Reporting by Ilaina Jonas, additional reporting by Christopher Kaufman; editing by Derek Caney and Jeffrey Benkoe )