STERN & CO.
MEDIA COMMUNICATIONS - INVESTOR RELATIONS
551 Madison Avenue
New York, NY 10022
Tel: (212) 888-0044 Fax: (212) 758-8994
World Wide Web: http://www.sternco.com
For Immediate Release: Contact: Michael V. Pappagallo, Kimco Realty
January 14, 1998 516-869-7185
Joseph Kornwasser, Price REIT
213-937-8200
Or
Christine Davies, Stern & Co.
212-888-0044
KIMCO REALTY AND PRICE REIT ANNOUNCE STRATEGIC
Merger Expands Kimco's Reach Nationally, Creates One of the Nation's
Largest Retail Shopping Center REITs
January 14 -- Kimco Realty Corporation (NYSE: KIM) and The Price REIT, Inc.
(NYSE: RET) today announced that their respective boards have approved a
strategic merger, creating one of the nation's largest retail shopping center
REITs with a market capitalization of nearly $3 billion.
Under the terms of the definitive agreement entered into yesterday, Kimco will
acquire all the outstanding shares of Price REIT for aggregate consideration
having a value of at least $45 a share, for a total of approximately $535
million in stock. Price REIT's shares closed at $42.19 yesterday.
Price REIT will merge into a newly formed Kimco subsidiary and each share of
Price REIT common stock will be converted, on a tax-free basis to Price REIT
shareholders, into at least one share of Kimco common stock, which Kimco and
Price REIT mutually valued at $35 a share, and $10 of depositary shares of a new
issue of Kimco 7.5% Class D Cumulative Convertible Preferred Stock. (See Details
of the Merger Terms below.)
Kimco will also assume all of Price REIT's outstanding liabilities, including
approximately $300 million of Price REIT debt, resulting in a total transaction
value of $835 million. The transaction is subject to customary conditions,
including the receipt of Kimco and Price REIT stockholder approvals.
"The strategic combination of Kimco Realty and price REIT will create a company
with the skills and resources to pursue a wide variety of growth opportunities
by expanding our presence in key markets nationally, diversifying our tenant
base and giving us even greater management depth and breadth," said Kimco
Chairman and Chief Executive Officer Milton Cooper.
"Price REIT is a successful pioneer in the development of retail power centers
anchored by large national tenants, which complements our historical focus on
neighborhood and community shopping centers," Cooper said. "In addition, Price
REIT's expertise in property development combined with our construction
management capabilities will create new opportunities." He said the merger is
expected to close in the first half of 1998. Cooper indicated that the merger is
expected to be accretive to Kimco's funds from operations in 1998.
Price REIT's holdings will expand Kimco's presence in important western states,
including California, Arizona and Washington. The combined company will have
more than 50 million square feet under management. Price REIT's centers are
anchored by major national tenants, including its two largest tenants The Home
Depot and Costco.
Price REIT President and Chief Executive Officer Joseph Kornwasser said the
merger offers significant benefits to shareholders of both REITs. "With the
history of success and strong growth enjoyed by Kimco and Price REIT, we believe
shareholders will have an extraordinary opportunity to participate in the future
of a powerful combined company with excellent prospects for continued growth,"
Kornwasser said.
Senior management of Price REIT, including Kornwasser, Senior Executive Vice
President and Chief Operating Officer Jerald Friedman and Executive Vice
President of Finance Lawrence Kronenberg, will join Kimco's senior management
team. Cooper said that Kornwasser will become a member of Kimco's board as well
as senior executive vice president of Kimco and Friedman will become executive
vice president of Kimco.
Price REIT shareholders would also have the opportunity to participate in
Kimco's planned leveraged income REIT. Kimco previously announced its intention
to create a new REIT that would invest in properties characterized by
high-credit quality tenants under long-term leases and finance such investments
through non-recourse mortgages. The new REIT is expected to be established after
the merger is completed, Cooper said.
Cooper said that Kornwasser is expected to become chairman of the planned REIT
and Kronenberg the new REIT's chief financial officer.
Kimco, based in New Hyde Park, New York, is the nation's largest publicly traded
owner and operator of neighborhood and community shopping centers with real
estate assets of $1.4 billion. The company has interests in 330 properties,
comprising approximately 40.6 million square feet of leasable area located in 37
states, primarily in Florida, Ohio, Pennsylvania and Illinois, and manages
additional properties with approximately 4 million square feet of
leasable area. Kimco, which went public in 1991, has specialized in shopping
center acquisitions, development and management for more than 30 years. In 1997,
Kimco completed acquisitions totaling $276 million.
Price REIT, based in San Diego, is one of the nation's largest power center
REITs. The company focuses on the acquisition, development and management and
redevelopment of retail power centers and community shopping centers. The
company currently has interests in 37 properties consisting of 33 power and
community centers, one stand-alone retail warehouse, one project under
development and two undeveloped parcels. Its properties are located in 15 states
with a total of about 7.3 million square feet of leasable area and an overall
occupancy rate of approximately 98 percent. In 1997, Price REIT completed
acquisitions of 14 shopping centers totaling 2.3 million square feet for $225
million.
Kimco's financial adviser on the merger was Jefferies & Company Inc. Price REIT
was advised by Merrill Lynch & Co.
Details of the Merger Terms
---------------------------
The merger agreement provides for a pre-closing adjustment to the number of
shares of Kimco common stock and depositary shares issuable per share of Price
Reit common stock in order to ensure that Price REIT stockholders will receive
at least, and possibly more than, $45 in Kimco securities per Price REIT share.
Specifically, in the event that the 20-day average closing price of Kimco common
stock ending on and including the third day prior to Kimco's special meeting of
stockholders (the Average Price) plus $10 is less than $45, the amount of
depositary shares will be increased up to a maximum of $11.25 of depositary
shares (based on a liquidation preference of $25 per depositary share) to arrive
at a value of $45. To the extent that the issuance of $11.25 of depositary
shares would still result in less than $45 of combined value, the number of
shares of Kimco common stock issuable per Price REIT share will be increased in
order to arrive at a total value of $45 delivered in Kimco securities. However,
Kimco may elect to terminate the merger agreement in the event its average price
during a specified calculation period or the closing price on the scheduled
closing date or on either of the two days prior to the scheduled closing date is
less than $32.
In the event that the Average Price plus $10 is greater than $45, each share of
Price REIT common stock would continue to be converted into one share of Kimco
common stock and the amount of depositary shares will be decreased by 50% of the
amount by which the average closing price referred to above plus $10 exceeds
$45. However, Price REIT stockholders will never receive less than $9 of
depositary shares. Thus, as a result of the merger, Price REIT stockholders will
obtain the benefit of 50% of the increase in
value of Kimco common stock as reflected in the Average Price between $35 and
$37, and 100% of any increase above $37.
The dividend rate on the depositary shares will be 7.5% per annum or, if
greater, the dividend on the shares of Kimco common stock into which a
depositary share is convertible plus $0.0275 quarterly. The depositary shares
will be convertible into Kimco common stock at a conversion price of $40.25 per
share at any time by the holder and may be redeemed by Kimco at the conversion
price in shares of Kimco common stock at any time after the third anniversary of
the merger if for any 20 trading days during a rolling 30-day consecutive
trading-day period the Kimco common stock closing price exceeds $48.30 subject
to customary adjustments. The depositary shares will be listed on the NYSE.
The merger agreement also provides that each party will be entitled to a
Break-Up Fee in the amount of $12,500,000 or reimbursement of expenses up to
$2,000,000 in the event the agreement is terminated under various circumstances.
Kimco has also agreed that if it elects to terminate the merger agreement
because its stock closes below $32 under circumstances described above, Price
REIT will be entitled to receive $6,250,000.
The Kimco Board has received the opinion of Jefferies & Company, Inc., its
financial adviser with respect to the merger, to the effect that the
consideration to be paid by Kimco pursuant to the merger, taken as a whole, is
fair to Kimco shareholders from a financial point of view. Similarly, the Price
REIT Board has received the opinion of Merrill Lynch & Co., its financial
adviser, to the effect that the consideration to be received by Price REIT
shareholders pursuant to the merger is fair to such shareholders from a
financial point of view.
Safe Harbor Statement: The statements in this release state the company's and
management's hopes, intentions, beliefs, expectations or projections of the
future and are forward-looking statements. It is important to note that the
company's actual results could differ materially from those projected in such
forward-looking statements. Factors that could cause actual results to differ
materially from current expectations include general economic conditions, local
real estate conditions, increases in interest rates, increases in operating
costs and real estate taxes. Additional information concerning factors that
could cause actual results to differ materially from those forward-looking
statements is contained from time to time in the company's SEC filings,
including but not limited to the company's report on Form 10K for the year ended
December 31, 1996. Copies of each filing may be obtained from the company or the
SEC.
###
(See next page for Companies at a Glance)
Companies at a Glance
---------------------
Kimco Realty Corp.
- ------------------
Description: The largest publicly traded owner and operator of
neighborhood and community shopping centers, which
are generally anchored by discount department stores,
supermarkets or drugstores.
Financial Highlights:
o Market Capitalization of $2.2 Billion
o Real Estate assets (before depreciation) of $1.4
billion.
o Revenue from rental property: $141.3 million for
first nine months of 1997; $168.1 million for
full-year 1996.
o Funds from Operations: In the third quarter, FFO rose
11.4% to $24.1 million, or $0.66 a share, from the
same quarter in 1996.
o Net Income: In the third quarter, net income rose to
$20.6 million, or $0.44 a share, from $19.8 million,
or $0.42 a share a year earlier.
Operations: o Number of property interests: 330.
o Gross leasable area (square feet):
o 40.6 million.
o Occupancy rate: 90%.
o Number of leases: 2700. Tenants include: Kohl's
Department Stores, Kmart, Wall-Mart Stores, TJX
o Cos., Kroger, Winn-Dixie Stores and CVS.
Locations: 37 states; Alabama, Arizona, Arkansas,
California, Colorado, Connecticut, Delaware, Florida,
Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Montana, Nebraska,
New Hampshire, New Jersey, New York, North Carolina,
Ohio, Oklahoma, Pennsylvania, South Carolina,
Tennessee, Texas, Utah, Virginia, West Virginia,
Wisconsin.
Management:
Chairman and CEO: Milton Cooper
Vice Chairman, President and COO: Michael J. Flynn
Michael V. Pappagallo
Chief Financial Officer:
Headquarters:
New Hyde Park, New York
The Price REIT
Description: A pioneer in developing, managing, acquiring and
redeveloping retail power centers -- destination
shopping centers that are generally anchored by large
national warehouse or "category killer" tenants.
Financial Highlights:
o Market Capitalization of $789 million
o Real Estate assets (before depreciation) of
approximately $641
o million.
Revenue from rental property: $17.7 million in the
third quarter of 1997;
o $51.3 million for full-year 1996. Funds from
Operations: Third-quarter FFO rose 42.7% to $10.4
million, or
o $0.93 a share, from the same quarter in 1996.
Net income. Third quarter net income rose to $5.99
million, or $0.53 a share, from $4.10 million, or
$0.48 a share, in the third quarter of 1996. The
average number of shares rose 32% to 11.2 million.
Operations:
o Number of property interests: 37.
o Gross leasable area (square feet):
o 7.3 million.
o Occupancy rate: 98%.
o Number of leases: 540.
Tenants include: The Home Depot, Costco, Home Base,
the Sports
o Authority, Office Max and Target.
Locations: 15 states; Arizona, California,
Connecticut, Florida, Illinois, Kansas, Maryland,
Minnesota, New Jersey, New York, North Carolina,
Oklahoma, Texas, Virginia, Washington.
Management:
Chairman: Raymond E. Peet
President and CEO: Joseph K. Kornwasser
Sr. Executive VP and COO: Jerald Friedman
Executive VP of Finance: Lawrence M. Kronenberg
Headquarters:
San Diego, California