-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UJF5Vi0DJm4YDlN9Yj7RQaGs/io6IlZJf+jP/Lr7+mK38jBdQWNoL7O8NqmUln6R pDjJsOt1KuLcpZSStKWH9A== /in/edgar/work/0001125282-00-000471/0001125282-00-000471.txt : 20001114 0001125282-00-000471.hdr.sgml : 20001114 ACCESSION NUMBER: 0001125282-00-000471 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIMCO REALTY CORP CENTRAL INDEX KEY: 0000879101 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 132744380 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10899 FILM NUMBER: 758261 BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PARK RD STREET 2: PO BOX 5020 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5168699000 MAIL ADDRESS: STREET 1: 3333 NEW HYDE PARK ROAD STREET 2: PO BOX 5020 CITY: NEW HYDE PARKQ STATE: NY ZIP: 11042 10-Q 1 0001.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 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 (I.R.S. Employer Identification No.) incorporation or organization) 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) - -------------------------------------------------------------------------------- (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 /X/ No / / APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 63,056,799 shares outstanding as of October 31, 2000 1 of 17 PART I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Financial Statements - Condensed Consolidated Balance Sheets as of September 30, 2000 and December 31, 1999. Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2000 and 1999. Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2000 and 1999. Notes to Condensed Consolidated Financial Statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto. These unaudited financial statements include 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. Results of Operations Revenues from rental property increased $9.7 million or 9.1% to $115.7 million for the three months ended September 30, 2000, as compared with $106.0 million for the corresponding quarter ended September 30, 1999. Similarly, revenues from rental property increased $17.9 million or 5.5% to $342.9 million for the nine months ended September 30, 2000, as compared with $325.0 million for the corresponding nine month period ended September 30, 1999. These increases resulted primarily from the combined effect of (i) the acquisition of 11 shopping center properties providing revenues of $2.1 million and $3.7 million for the three and nine month periods ended September 30, 2000, respectively, (ii) acquisitions throughout calendar year 1999 (35 shopping center properties) providing incremental revenues of $2.7 million and $12.4 million as compared to the corresponding three and nine month periods in 1999, respectively, and (iii) the completion of certain development and redevelopment projects, new leasing and re-tenanting within the portfolio at improved rental rates providing incremental revenues of approximately $4.9 million and $18.1 million as compared to the corresponding three and nine month periods in 1999, respectively. The nine month increase was reduced as a result of the deconsolidation of 23 shopping center properties, as of April 28, 1999, in connection with the sale of a controlling interest in Kimco Income REIT ("KIR"). Revenues from these 23 properties totaled approximately $16.3 million for the nine month period ended September 30, 1999. 2 Rental property expenses, including depreciation and amortization, increased approximately $5.3 million or 8.4% to $68.7 million for the three months ended September 30, 2000, as compared with $63.4 million for the corresponding quarter ended September 30, 1999. The rental property expense components of operating and maintenance and depreciation and amortization increased $0.5 million and $1.8 million, respectively, for the three months ended September 30, 2000 as compared to the same quarter last year. These rental property expense increases are primarily due to property acquisitions during 1999 and the nine months ended September 30, 2000. Real estate taxes decreased $0.7 million for the three months ended September 30, 2000 as compared to the three months ended September 30, 1999. This decrease is the result of successful real estate tax appeals offset by additional real estate taxes in connection with property acquisitions during 1999 and 2000. Interest expense increased $3.8 million for the three months ended September 30, 2000 as compared to the same quarter last year due to higher average outstanding borrowings. Rental property expenses, including depreciation and amortization, increased $6.8 million or 3.4% to $205.3 million for the nine months ended September 30, 2000, as compared with $198.5 million for the corresponding period in the preceding year. These net increases in rental property expenses are the result of the combined effect of (i) increased expenses relating to new property acquisitions made throughout calendar year 1999 and during the nine months ended September 30, 2000, offset by (ii) the reduction of rental property expenses relating to the deconsolidation of 23 shopping center properties as of April 28, 1999, in connection with the sale of a controlling interest in KIR and (iii) the reduction of real estate taxes on certain properties due to successful real estate tax appeals. Interest expense increased $5.7 million for the nine month period ended September 30, 2000, reflecting higher average outstanding borrowings as compared to the corresponding period in 1999 resulting from (i) the issuance of an additional $150.0 million of unsecured debt and the assumption of mortgage debt during 1999 and 2000 in connection with certain property acquisitions, offset by (ii) the deconsolidation of $252.4 million of mortgage debt on 19 properties as of April 28, 1999, in connection with the sale of a controlling interest in KIR. During 1998, the Company formed KIR, a limited partnership established to invest in high quality retail properties financed primarily through the use of individual non-recourse mortgages. At the time of formation, the Company contributed 19 property interests to KIR. On April 28, 1999, KIR sold a significant interest in the partnership to an institutional investor. As a result, the Company holds a non-controlling limited partnership interest in KIR and accounts for its investment in KIR under the equity method of accounting. The Company's equity in income of KIR for the three and nine month periods ended September 30, 2000 was approximately $2.3 million and $6.9 million, respectively. 3 Other income, net increased $1.9 million and $7.7 million for the three and nine month periods ended September 30, 2000, respectively, as compared to the same periods in 1999. The increases are primarily the result of higher interest and dividend income related to the Company's investment in certain marketable equity and debt securities. During the nine months ended September 30, 2000 the Company, in separate transactions, disposed of eight shopping center properties comprising 1.1 million square feet of gross leasable area for an aggregate sales price of approximately $19.7 million, including the assignment of $2.6 million of mortgage debt. Net gains on sales of these properties was approximately $2.1 million. During the nine months ended September 30, 1999, the Company disposed of four shopping center properties. Cash proceeds from three of these dispositions aggregated approximately $5.9 million, which approximated their aggregate net book value. During July 1999, the Company disposed of a shopping center property in New Port Richey, Florida. Cash proceeds from the disposition totaling $0.5 million, together with an additional $5.5 million cash investment, were used to acquire an exchange shopping center property located in Greensboro, North Carolina during September 1999. Net income for the three and nine months ended September 30, 2000 was $51.5 million and $151.2 million, respectively. Net income for the three and nine months ended September 30, 1999 was $45.6 million and $127.5 million, respectively. On a diluted per share basis, net income improved $0.07 and $0.32 for the three and nine month periods ended September 30, 2000, respectively, after adjusting for the gains on sales of certain shopping center properties in the respective periods in 2000 and 1999. This improved performance reflects the effect of property acquisitions, internal growth from strong leasing activity and the completion of certain development and redevelopment projects which strengthened operating profitability. Liquidity and Capital Resources Since the completion of the Company's IPO in 1991, the Company has utilized the public debt and equity markets as its principal source of capital. Since the IPO, the Company has completed additional offerings of its public unsecured debt and equity, raising in the aggregate over $2.2 billion for the purposes of repaying indebtedness, acquiring interests in neighborhood and community shopping centers and for expanding and improving properties in the portfolio. During August 2000, the Company established a $250 million, unsecured revolving credit facility (the "Credit Facility"), which is scheduled to expire in August 2003. This Credit Facility, which replaced the Company's $215 million unsecured revolving credit facility, has made available funds to both finance the purchase of properties and meet any short-term working capital requirements. As of September 30, 2000 there was no amount outstanding under the Credit Facility. 4 The Company has also implemented a medium-term notes ("MTN") program pursuant to which it may, from time to time, offer for sale its senior unsecured debt for any general corporate purposes, including (i) funding specific liquidity requirements in its business, including property acquisitions, development and redevelopment costs and (ii) managing the Company's debt maturities. In addition to the public equity and debt markets as capital sources, the Company may, from time to time, obtain mortgage financing on selected properties. As of September 30, 2000, the Company had over 350 unencumbered property interests in its portfolio. During 1998, the Company filed a shelf registration statement on Form S-3 for up to $750 million of debt securities, preferred stock, depositary shares, common stock and common stock warrants. The Company has approximately $106.7 million available for issuance under this shelf registration statement. In connection with its intention to continue to qualify as a REIT for Federal income tax purposes, the Company expects to continue paying regular dividends to its stockholders. These dividends will be paid from operating cash flows which are expected to increase due to property acquisitions and growth in rental revenues in the existing portfolio and from other sources. Since cash used to pay dividends reduces amounts available for capital investment, the Company generally intends to maintain a conservative dividend payout ratio, reserving such amounts as it considers necessary for the expansion and renovation of shopping centers in its portfolio, repayment of debt, the acquisition of interests in new properties as suitable opportunities arise, and such other factors as the Board of Directors considers appropriate. It is management's intention that the Company continually have access to the capital resources necessary to expand and develop its business. Accordingly, the Company may seek to obtain funds through additional equity offerings, unsecured debt financings and/or mortgage financings in a manner consistent with its intention to operate with a conservative debt capitalization policy. The Company anticipates that cash flows from operations will continue to provide adequate capital to fund its operating and administrative expenses, regular debt service obligations and the payment of dividends in accordance with REIT requirements in both the short-term and long-term. In addition, the Company anticipates that cash on hand, availability under its revolving credit facility, issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company. Cash flows from operations increased to $206.7 million for the nine months ended September 30, 2000 as compared to $179.8 million for the corresponding period ended September 30, 1999. 5 Effects of Inflation Many of the Company's leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive payment of additional rent calculated as a percentage of tenants' gross sales above pre-determined thresholds, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses often include increases based upon changes in the consumer price index or similar inflation indices. In addition, many of the Company's leases are for terms of less than 10 years, which permits the Company to seek to increase rents to market rates upon renewal. Most of the Company's leases require the tenant to pay an allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. The Company periodically evaluates its exposure to short-term interest rates and will, from time to time, enter into interest rate protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate debt. New Accounting Pronouncements During December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB 101") which, among other things, provides further guidance as to the recognition of contingent rents (i.e. additional rents based on tenants' sales volumes). The Company has elected early adoption of SAB 101 effective January 1, 2000. The management of the Company believes the implementation of SAB 101 will not have a material impact on the Company's financial position or result of operations. Forward-looking Statements This quarterly report on Form 10-Q, together with other statements and information publicly disseminated by the Company contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, (i) general economic and local real estate conditions, (ii) financing risks, such as the inability to obtain equity or debt financing on 6 favorable terms, (iii) changes in governmental laws and regulations, (iv) the level and volatility of interest rates (v) the availability of suitable acquisition opportunities and (vi) increases in operating costs. Accordingly, there is no assurance that the Company's expectations will be realized. Item 3. Quantitative and Qualitative Disclosures about Market Risk As of September 30, 2000, the Company had approximately $228.8 million of floating-rate debt outstanding. The interest rate risk on $110.0 million of such debt has been mitigated through the use of an interest rate swap agreement (the "Swap") with a major financial institution. The Company is exposed to credit risk in the event of non-performance by the counter-party to the Swap. The Company believes it mitigates its credit risk by entering into this Swap with a major financial institution. The Company believes the interest rate risk represented by the remaining $118.8 million of floating-rate debt is not material to the Company or its overall capitalization. The Company has not, and does not plan to, enter into any derivative financial instruments for trading or speculative purposes. As of September 30, 2000, the Company had no other material exposure to market risk. 7 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share information)
September 30, December 31, 2000 1999 ----------- ----------- Assets: Real estate, net of accumulated depreciation of $376,097 and $323,738, respectively $ 2,707,886 $ 2,627,312 Investment and advances in KIR 123,403 114,217 Investments and advances in other real estate joint ventures 63,086 68,553 Investment in retail store leases 11,690 12,709 Cash and cash equivalents 43,790 28,076 Accounts and notes receivable 41,603 31,689 Other assets 154,523 124,920 ----------- ----------- $ 3,145,981 $ 3,007,476 =========== =========== Liabilities: Notes payable $ 1,035,250 $ 1,037,250 Mortgages payable 253,016 212,321 Other liabilities, including minority interests in partnerships 157,863 152,470 ----------- ----------- 1,446,129 1,402,041 ----------- ----------- Stockholders' Equity: Preferred stock, $1.00 par value, authorized 5,000,000 shares Class A Preferred Stock, $1.00 par value, authorized 345,000 shares Issued and outstanding 300,000 shares 300 300 Aggregate liquidation preference $75,000 Class B Preferred Stock, $1.00 par value, authorized 230,000 shares Issued and outstanding 200,000 shares 200 200 Aggregate liquidation preference $50,000 Class C Preferred Stock, $1.00 par value, authorized 460,000 shares Issued and outstanding 400,000 shares 400 400 Aggregate liquidation preference $100,000 Class D Convertible Preferred Stock, $1.00 par value, authorized 700,000 shares Issued and outstanding 418,278 and 428,514 shares, respectively 418 429 Aggregate liquidation preference $104,569 and $107,129, respectively Common stock, $.01 par value, authorized 200,000,000 shares Issued and outstanding 63,040,983 and 60,795,593 shares, respectively 630 608 Paid-in capital 1,816,451 1,730,278 Cumulative distributions in excess of net income (114,944) (122,959) ----------- ----------- 1,703,455 1,609,256 Notes receivable from officer stockholders (3,603) (3,821) ----------- ----------- 1,699,852 1,605,435 ----------- ----------- $ 3,145,981 $ 3,007,476 =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements. 8 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three and Nine Months ended September 30, 2000 and 1999 (in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30, 2000 1999 2000 1999 -------- -------- -------- -------- Revenues from rental property $115,726 $106,044 $342,949 $324,992 -------- -------- -------- -------- Rental property expenses: Rent 3,328 3,536 10,110 10,531 Real estate taxes 13,896 14,579 41,575 42,147 Interest 23,352 19,506 68,575 62,872 Operating and maintenance 9,985 9,440 32,191 32,014 Depreciation and amortization 18,098 16,294 52,852 50,959 -------- -------- -------- -------- 68,659 63,355 205,303 198,523 -------- -------- -------- -------- Income from rental property 47,067 42,689 137,646 126,469 Income from investment in retail store leases 998 1,087 3,035 3,067 -------- -------- -------- -------- 48,065 43,776 140,681 129,536 Management fee income 1,404 1,576 4,313 3,719 Operating and administrative expenses (6,405) (5,950) (19,067) (17,801) Equity in income of KIR 2,266 2,128 6,899 3,275 Other income, net 5,750 3,837 16,232 8,567 -------- -------- -------- -------- Income before gain on sale of shopping center properties 51,080 45,367 149,058 127,296 Gain on sale of shopping center properties, net 432 247 2,109 247 -------- -------- -------- -------- Net income $ 51,512 $ 45,614 $151,167 $127,543 ======== ======== ======== ======== Net income applicable to common shares $ 44,942 $ 38,996 $131,409 $107,683 ======== ======== ======== ======== Per common share: Net income Basic $0.72 $0.64 $2.14 $1.78 ----- ----- ----- ----- Diluted $0.71 $0.64 $2.12 $1.77 ----- ----- ----- -----
The accompanying notes are an integral part of these condensed consolidated financial statements. 9 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months ended September 30, 2000 and 1999 (in thousands)
2000 1999 --------- --------- Cash flow provided by operations $ 206,661 $ 179,774 --------- --------- Cash flow from investing activities: Acquisition of and improvements to real estate (117,880) (169,075) Investment in marketable securities (28,039) (12,814) Proceeds from sale of marketable securities 8,744 11,443 Investments and advances to affiliated companies (5,266) (950) Investments and advances to joint ventures -- (17,276) Construction advances to real estate joint ventures -- (436) Collection of mortgage loans receivable 2,967 4,545 Investment in real estate joint ventures (500) -- Reimbursement of advances to real estate joint ventures -- 7,500 Investment in KIR (10,066) -- Net proceeds from sale of interest in KIR -- 68,179 Proceeds from sale of real estate properties 21,196 6,365 --------- --------- Net cash flow used for investing activities (128,844) (102,519) --------- --------- Cash flow from financing activities: Principal payments on debt, excluding normal amortization of rental property debt (17,024) (61,098) Principal payments on rental property debt (3,407) (3,467) Proceeds from mortgage financing 44,396 28,424 Payment of unsecured obligation (18,172) (20,984) Proceeds from issuance of medium-term notes 110,000 -- Repayment of medium-term notes (60,000) -- Repayment of borrowings under senior term loan (52,000) -- Proceeds from issuance of senior notes -- 130,000 Repayment of senior notes -- (100,000) Borrowings under revolving credit facility 45,000 95,000 Repayment of borrowings under revolving credit facility (45,000) (35,000) Dividends paid (140,458) (126,657) Repurchase and retirement of preferred stock (2,505) -- Proceeds from issuance of stock 77,067 5,539 --------- --------- Net cash flow used for financing activities (62,103) (88,243) --------- --------- Change in cash and cash equivalents 15,714 (10,988) Cash and cash equivalents, beginning of period 28,076 43,920 --------- --------- Cash and cash equivalents, end of period $ 43,790 $ 32,932 ========= ========= Interest paid during the period $ 56,499 $ 52,234 ========= ========= Supplemental schedule of noncash investing/financing activities: Acquisition of real estate interests by issuance of stock and/or assumption of mortgage debt $ 30,986 $ 81,402 ========= ========= Disposition of real estate interest by assignment of mortgage debt $ 2,633 $ -- ========= ========= Declaration of dividends paid in succeeding period $ 47,985 $ 41,597 ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements. 10 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ---------- 1. Interim Financial Statements The accompanying Condensed Consolidated Financial Statements include the accounts of Kimco Realty Corporation (the "Company"), its subsidiaries, all of which are wholly-owned, and all partnerships in which the Company has a controlling interest. The information furnished 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 financial statements included in the Company's Annual Report on Form 10-K. During December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB 101") which, among other things, provides further guidance as to the recognition of contingent rents (i.e. additional rents based on tenants' sales volumes). The Company has elected early adoption of SAB 101 effective January 1, 2000. The management of the Company believes the implementation of SAB 101 will not have a material impact on the Company's financial position or results of operations. 2. Property Acquisitions During the three months ended March 31, 2000, the Company acquired interests in three neighborhood and community shopping center properties, in separate transactions, comprising approximately 0.4 million square feet of gross leasable area ("GLA") in three states for an aggregate purchase price of approximately $26.7 million, including the assumption of approximately $16.5 million in mortgage debt encumbering two of the properties. In addition, the Company acquired fee title to a shopping center property in which the Company held a leasehold interest for an aggregate purchase price of approximately $2.5 million. During 1998, in connection with the Company's merger with The Price REIT, Inc., the Company acquired a 50% interest in a joint venture in Houston, TX. During March 2000, the Company acquired the remaining 50% interest in such partnership for $5.0 million and now accounts for its investment under the consolidation method of accounting. 11 During May 2000, the Company, through an affiliated entity, acquired five neighborhood and community shopping centers comprising approximately 0.5 million square feet of GLA located in five states for approximately $18.9 million. These properties were formerly anchored by a retailer which filed for protection under Chapter 11 of the Bankruptcy Code in June 1999 and rejected these leases in January 2000. The Company acquired these properties with an occupancy level of approximately 43% (currently 74% occupied) and is actively negotiating with other retailers to lease the vacant space. On June 1, 2000, the Company exercised its option to acquire two shopping center properties comprising 0.4 million square feet of GLA from KC Holdings, Inc. ("KC Holdings"), an entity formed in connection with the Company's initial public stock offering in November 1991. The properties were acquired for an aggregate option price of approximately $12.2 million, paid approximately $11.6 million in shares of the Company's common stock (285,148 shares valued at $40.7625 per share at June 1, 2000) and $0.6 million through the assumption of mortgage debt encumbering one of the properties. The members of the Company's Board of Directors who are not also shareholders of KC Holdings, unanimously approved the Company's purchase of these two shopping center properties. During August 2000, the Company acquired a shopping center property comprising approximately 0.1 million square feet of GLA for an aggregate purchase price of approximately $3.7 million, including the assumption of approximately $2.3 million in mortgage debt. 3. Property Dispositions During the nine months ended September 30, 2000, the Company disposed of eight shopping center properties, in separate transactions, comprising approximately 0.6 million square feet of GLA, for aggregate proceeds of approximately $19.7 million, including the assignment of $2.6 million of mortgage debt. Gains on sales of these properties were approximately $2.1 million. In addition, the Company disposed of four land parcels, in separate transactions, for aggregate proceeds of approximately $4.1 million. 4. Debt Financing During August 2000, the Company issued $110.0 million of floating rate medium-term notes ("MTN") under its MTN program. This floating rate MTN was priced at 99.7661% of par, matures in August 2002, and bears interest at LIBOR plus .25%. The proceeds from this MTN issuance were used to repay a $60.0 million MTN that matured in August 2000 and to prepay a $52.0 million term loan that was due to mature in November 2000. 12 During the nine months ended September 30, 2000, the Company obtained individual non-recourse mortgage debt on five Kmart anchored shopping centers, providing aggregate proceeds to the Company of approximately $44.2 million. These ten-year loans mature in 2010 and have effective interest rates ranging from 7.91% to 8.15% per annum. 5. Common Stock Offering During August 2000, the Company completed a primary public stock offering of 1.8 million shares of common stock at $42.50 per share. The net proceeds from this sale of common stock, totaling approximately $72.4 million (after related transaction costs of $4.1 million) will be used for general corporate purposes, including (i) the investment of additional equity capital in KIR (ii) the acquisition of neighborhood and community shopping centers as suitable opportunities arise, and (iii) the development, redevelopment and expansion of properties in the Company's portfolio. 6. Investment and Advances in KIR During 1998, the Company formed KIR, a limited partnership established to invest in high quality retail properties financed primarily through the use of individual non-recourse mortgages. At the time of formation, the Company contributed 19 property interests to KIR. On April 28, 1999, KIR sold a significant interest in the partnership to an institutional investor. As a result, the Company holds a non-controlling limited partnership interest in KIR and accounts for its investment in KIR under the equity method of accounting. The Company's equity in income of KIR for the nine months ended September 30, 2000 and for the period April 28, 1999 to September 30, 1999, were approximately $6.9 million and $3.3 million, respectively. In addition, KIR entered into a master management agreement with the Company, whereby, the Company will perform services for fee relating to the management, operation, supervision and maintenance of the joint venture properties. For the nine months ended September 30, 2000, and for the period April 28, 1999 to September 30, 1999, the Company earned management fees of approximately $1.3 million and $0.5 million, respectively. 7. Investment in Retail Store Leases Income from the investment in retail store leases for the nine months ended September 30, 2000 and 1999 represents sublease revenues of approximately $14.3 million and $15.3 million, respectively, less related expenses of $10.2 million and $11.1 million, respectively, and amounts, which in management's estimation, reasonably provide for the recovery of the investment over a period representing the expected remaining term of the retail store leases. 13 8. Net Income Per Common Share The following table sets forth the basic and diluted weighted average numbers of common shares outstanding for each period used in the calculation of basic and diluted net income per common share:
Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, ------------ ------------ ------------ ------------ 2000 1999 2000 1999 ---- ---- ---- ---- Basic EPS - weighted average number of common shares outstanding 62,307,477 60,710,860 61,361,923 60,380,326 Effect of dilutive securities - stock options 784,775 495,199 700,219 563,420 ------------ ------------ ------------ ------------ Diluted EPS - weighted average number of common shares 63,092,252 61,206,059 62,062,142 60,943,746 ============ ============ ============ ============
The effect of the conversion of the Class D Preferred Stock would have an anti-dilutive effect upon the calculation of net income per common share. Accordingly, the impact of such conversion has not been included in the determination of diluted net income per common share. 9. Pro Forma Financial Information As discussed in Notes 2 and 3, the Company and certain of its affiliates acquired and disposed of interests in certain shopping center properties during the nine months ended September 30, 2000. The pro forma financial information set forth below is based upon the Company's historical Condensed Consolidated Statement of Income for the nine months ended September 30, 2000 and 1999, adjusted to give effect to these transactions as of January 1, 1999. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred as of January 1, 1999, nor does it purport to represent the results of future operations. (Amounts presented in millions, except per share figures). Nine Months Ended September 30, 2000 1999 ----------- ----------- Revenues from rental property $ 343.9 $ 332.1 Net income $ 149.6 $ 132.5 Net income per common share: Basic $ 2.11 $ 1.86 =========== =========== Diluted $ 2.09 $ 1.84 =========== =========== 14 10. Subsequent Events During October 2000, the Company issued an aggregate $100.0 million of senior fixed rate MTNs. These issuances consist of (i) a $50.0 million MTN which matures in November 2005 and bears interest at 7.68% per annum, and (ii) a $50.0 million MTN which matures in November 2007 and bears interest at 7.86% per annum. The proceeds from these MTN issuances were used to repay a $100.0 million senior note that matured in November 2000. 15 PART II OTHER INFORMATION Item 1. Legal Proceedings The Company is not presently involved in any litigation, nor to its knowledge is any litigation threatened against the Company or its subsidiaries, that in management's opinion, would result in any material adverse effect on the Company's ownership, management or operation of its properties, or which is not covered by the Company's liability insurance. Item 2. Changes in Securities None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K Exhibits - 4.1 Agreement to File Instruments Kimco Realty Corporation (the "Registrant") hereby agrees to file with the Securities and Exchange Commission, upon request of the Commission, all instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries, and for any of its unconsolidated subsidiaries for which financial statements are required to be filed, and for which the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. Form 8-K - A current report on Form 8-K was filed on August 8, 2000 to disclose the Underwriting Agreement and U.S. Terms Agreement dated August 1, 2000 between the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Paine Webber Incorporated, A.G. Edwards & Sons, Inc. and Edward D. Jones & Co., L.P. in connection with the Company's 1.8 million primary common stock offering during August 2000. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KIMCO REALTY CORPORATION November 10, 2000 /s/ Milton Cooper - ----------------- ------------------------------ (Date) Milton Cooper Chairman of the Board November 10, 2000 /s/ Michael V. Pappagallo - ----------------- ------------------------------ (Date) Michael V. Pappagallo Chief Financial Officer 17 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-2000 SEP-30-2000 43,790 52,193 45,453 3,850 0 0 3,083,983 376,097 3,145,981 0 1,288,266 0 1,318 630 1,697,904 3,145,981 342,949 342,949 83,876 83,876 0 0 68,575 151,167 0 151,167 0 0 0 151,167 2.14 2.12 Financial Data Schedule information has been extracted from the Registrant's Condensed Consolidated Balance Sheet (non-classified) as of September 30, 2000 and the Condensed Consolidated Statement of Income for the nine months then ended.
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