SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
January 15, 1997
Date of Report (Date of earliest event reported)
Kimco Realty Corporation
(Exact name of registrant as specified in its charter)
Maryland 1-10899 13-2744380
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3333 New Hyde Park Road
New Hyde Park, New York 11042-0020
- ---------------------------- -------------------
(Address of principal (zip code)
executive offices)
516/869-9000
----------------------------
Registrant's telephone,
including area code
Not Applicable
- -------------------------------------------------------------------------------
(former name or former address, if changed since last report.)
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KIMCO REALTY CORPORATION AND SUBSIDIARIES
CURRENT REPORT
ON
FORM 8-K
Item 5. Other Events
Shopping Center Acquisitions -
Certain subsidiaries of Kimco Realty Corporation (the "Company")
acquired 14 neighborhood and community shopping center properties (the "Shopping
Center Acquisitions") comprising approximately 2.0 million square feet of gross
leasable area ("GLA") in 8 states. These shopping center properties, acquired in
separate transactions throughout 1997, for an aggregate purchase price of
approximately $141.7 million including the assumption of approximately $14.0
million of mortgage debt include:
o Target Shopping Center, Lafayette, Indiana
o Carrollwood Commons, Tampa, Florida
o Shady Oaks Shopping Center, Ocala, Florida
o Woodforest Shopping Center, Houston, Texas
o Hammond Aire Plaza, Baton Rouge, Louisiana
o Crossroads Center, Florence, South Carolina
o Maplewood Plaza, Coral Springs, Florida
o Mountainside Plaza, Phoenix, Arizona
o Acadiana Square Shopping Center, Lafeyette, Louisiana
o The Festival at Manassas, Manassas, Virginia
o The Gallery Shopping Center, Greenville, South Carolina
o Tri-Cities Square Shopping Center, Mount Dora, Florida
o Greenridge Shopping Center, Staten Island, New York
o North Rivers Market, North Charleston, South Carolina
Although none of the above Shopping Center Acquisitions, individually
represent a "significant acquisition" pursuant to the rules governing the
reporting of transactions under this Current Report on Form 8-K, the Company
considers these acquisitions in the aggregate to be material in relation to its
overall financial position and results of operations. Consequently, this report
has been filed for the purpose of providing certain historical financial
information for certain acquired properties and pro forma financial information
for the Shopping Center Acquisitions.
More specific information with respect to each of these properties acquired is
as follows:
In January 1997, the Company purchased the Target Shopping Center
located on Sagamore Parkway North in Lafayette, IN. This 177,000 square foot
center is anchored by Target Stores and was acquired for approximately $4.1
million.
2
In April 1997, the Company acquired the Carrollwood Commons shopping
center located at Ehrlich Road and North Dale Mabry Highway, in Tampa, FL for
approximately $14.1 million. This shopping center has 110,000 square feet of GLA
and is anchored by Staples and Ross Stores.
In June 1997, the Company purchased Shady Oaks Shopping Center,
Woodforest Shopping Center and Hammond Aire Plaza located in Ocala, FL, Houston,
TX and Baton Rouge, LA, respectively. These properties were acquired in separate
transactions for an aggregate purchase price of approximately $34.6 million.
Shady Oaks Shopping Center, located at the intersection of S.R. 200 and Shady
Oaks Road comprises 251,000 square feet of GLA and is anchored by Kmart
Corporation, Service Merchandise and Kash N' Karry. Woodforest Shopping Center,
which comprises 113,000 square feet of GLA at the intersection of Wood Forest
Boulevard and Uvalde Road, is anchored by HEB Pantry Food and Palais Royal.
Tenants at Hammond Aire Plaza, which comprises 264,000 square feet of GLA at the
intersection of Old Hammond Highway and Airline Highway, include Marshall's,
Steinmart and Taylor Office Supply.
In September 1997, the Company acquired the Crossroads Center located
on Frontage Road in Florence, SC for approximately $7.3 million. This 114,000
square foot shopping center is anchored by Staples and Hamricks.
In October 1997, the Company purchased Mountainside Plaza and Maplewood
Plaza located in Phoenix, AZ and Coral Springs, FL, respectively. These
properties were acquired in separate transactions for an aggregate purchase
price of approximately $20.5 million, including the assumption of approximately
$8.1 million of mortgage debt encumbering the Mountainside Plaza property.
Mountainside Plaza which comprises 124,000 square feet of GLA at the
intersection of Chandler Boulevard and 40th Street, is anchored by Safeway and
Walgreen's. Tenants at Maplewood Plaza, which comprises 86,000 square feet of
GLA at the intersection of Ramblewood Drive and University Drive, include TJ
Maxx and Blockbuster Video.
In November 1997, the Company acquired The Festival at Manassas and
Acadiana Square Shopping Center located in Manassas, VA and Lafeyette, LA,
respectively, in separate transactions for an aggregate purchase price of
approximately $19.5 million. The Festival at Manassas is a 118,000 square foot
center located at the intersection of Sudley Road and Portsmouth Drive and is
anchored by Super Fresh Food Markets and Blockbuster Video. Acadiana Square
Shopping Center is a 148,000 square foot center located at the intersection of
U.S. Highway 167 and Ambassador Caffery Parkway and is anchored by SteinMart, TJ
Maxx and Office Max.
In December 1997, the Company acquired The Gallery Shopping Center,
Tri-Cities Square Shopping Center, Greenridge Shopping Center and North Rivers
Market located in Greenville, SC, Mount Dora, FL, Staten Island, NY, and North
Charleston, SC, respectively. These properties were acquired in separate
transactions for an aggregate purchase price of approximately $41.6 million,
including the assumption of approximately $5.9 million of mortgage debt
encumbering the Greenridge Shopping
3
Center property. The Gallery Shopping Center which comprises 91,000 square feet
of GLA on Haywood Road is anchored by Baby Superstore. Tri-Cities Square
Shopping Center located on Eurora Road and US Highway 441 comprises 111,000
square feet of GLA and is anchored by Kmart. The Greenridge Shopping Center
which comprises 101,000 square feet of GLA at the intersection of Arthurkill
Road and Richmond Avenue is anchored by Waldbaums Supermarket and CVS Drug
Stores. North Rivers Market which comprises 196,000 square feet of GLA at the
intersection of Rivers Avenue and Northbrook Boulevard is anchored by TJ Maxx,
Marshall's and Phar-Mor.
Management believes that the current annualized net cash flow generated
by these recently acquired properties provides an annualized yield of 10% or
more on the Company's investment in such properties.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a)(b) Financial Statements and Pro Forma Financial Information
The financial statements and pro forma financial information
filed herewith is as follows:
Page
----
Report of Independent Accountants 6
Combined Historical Summary of Revenue and Certain Operating
Expenses for the Year Ended December 31, 1996 of
Certain Acquired Properties 7
Notes to Combined Historical Summary of Revenue and Certain
Operating Expenses of Certain Acquired Properties 8
Estimates of Net Income and Funds from Operations of Certain
Acquired Properties 9
Notes to Estimates of Net Income and Funds from Operations of
Certain Acquired Properties 10
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1997 12
Pro Forma Condensed Consolidated Statements of Income for
the Year Ended December 31, 1996 and the Nine Months Ended September 30, 1997 13
Notes to Pro Forma Condensed Consolidated Statements of Income 15
(c) Exhibits:
* 23.1 Consent of Coopers & Lybrand L.L.P.
--------------
*Filed herewith.
4
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
COMBINED HISTORICAL SUMMARY OF REVENUE AND
CERTAIN OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Kimco Realty Corporation:
We have audited the accompanying Combined Historical Summary of Revenue and
Certain Operating Expenses of Certain Acquired Properties, as defined in the
accompanying Note 1, for the year ended December 31, 1996. This combined
historical summary is the responsibility of the management of Kimco Realty
Corporation. Our responsibility is to express an opinion on the combined
historical summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined historical summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined historical summary. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the combined
historical summary. We believe that our audit provides a reasonable basis for
our opinion.
The accompanying Combined Historical Summary of Revenue and Certain Operating
Expenses of Certain Acquired Properties has been prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission as described in Note 2, and is not intended to be a complete
presentation of the revenue and expenses of the Certain Acquired Properties.
In our opinion, the combined historical summary referred to above presents
fairly, in all material respects, the revenue and certain operating expenses of
the Certain Acquired Properties described in Notes 2 and 3 for the year ended
December 31, 1996, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
January 20, 1998
6
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
COMBINED HISTORICAL SUMMARY OF REVENUE
AND CERTAIN OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
Revenue:
Base rentals $8,999,395
Operating reimbursements and other income 2,267,338
----------
11,266,733
----------
Certain operating expenses:
Real estate taxes 1,022,303
Repairs and maintenance 1,264,876
Other operating expenses 498,328
----------
2,785,507
----------
Excess of revenue over certain
operating expenses $8,481,226
==========
The accompanying notes are an integral part of this combined financial
statement.
7
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
NOTES TO COMBINED HISTORICAL SUMMARY OF REVENUE
AND CERTAIN OPERATING EXPENSES
1. Certain Properties Acquired
---------------------------
The Combined Historical Summary of Revenue and Certain Operating Expenses
relates to the operations of the following certain acquired properties (the
"Certain Acquired Properties"), while under ownership previous to Kimco Realty
Corporation and Subsidiaries:
Property Name Location
- ------------- --------
Carrollwood Commons Tampa, FL
Crossroads Center Florence, SC
Maplewood Plaza Coral Springs, FL
Mountainside Plaza Phoenix, AZ
Acadiana Square Shopping Center Lafeyette, LA
The Festival at Manassas Manassas, VA
The Gallery Shopping Center Greenville, SC
Tri-Cities Square Shopping Center Mount Dora, FL
North Rivers Market North Charleston, SC
2. Basis of Presentation
---------------------
The Combined Historical Summary has been prepared on the accrual method of
accounting. Certain operating expenses include operating and maintenance costs,
real estate taxes, and insurance expenses relating to the operation of the
Certain Acquired Properties. In accordance with the regulations of the
Securities and Exchange Commission, mortgage interest, depreciation and general
and administrative expenses have been excluded from Certain operating expenses,
as such costs are dependent upon a particular owner, purchase price or other
financial agreement.
2. Revenue Recognition
-------------------
Minimum revenues from rental property are recognized on a straight-line basis
over the terms of the related leases.
The future minimum revenues from rental property under the terms of all
noncancellable tenant leases are approximately as follows:
1997 $9,326,000
1998 8,553,000
1999 7,753,000
2000 6,617,000
2001 5,976,000
Thereafter 22,654,000
8
KIMCO REALTY CORPORATION AND SUBSIDIARIES
ESTIMATES OF NET INCOME AND
FUNDS FROM OPERATIONS
OF
CERTAIN ACQUIRED PROPERTIES
(Unaudited)
The following represents an estimate of the net income and funds from operations
expected to be generated from the operation of the Certain Acquired Properties
based upon the Combined Historical Summary of Revenue and Certain Operating
Expenses for the year ended December 31, 1996. These estimated results do not
purport to represent results of operations for these properties in the future
and were prepared on the basis described in the accompanying notes which should
be read in conjunction herewith.
Estimated Net Income
Excess of revenues over certain operating expenses $8,481,226
Less: Estimated depreciation (Note 1) 1,818,859
----------
Estimated net income $6,662,367
==========
Estimated Funds from Operations
Estimated net income $6,662,367
Add: Estimated depreciation (Note 1) 1,818,859
----------
Estimated funds from operations $8,481,226
==========
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KIMCO REALTY COPRORATION AND SUBSIDIARIES
NOTES TO ESTIMATES OF NET INCOME AND
FUNDS FROM OPERATIONS
OF
CERTAIN ACQUIRED PROPERTIES
1. Basis of Presentation
Depreciation has been estimated based upon an allocation of the purchase prices
for the Certain Acquired Properties to land (20%) and building (80%) and
assuming a 39 year useful life applied on a straight-line method.
No income taxes have been provided because the Company is organized and operates
in such a manner so as to qualify as a Real Estate Investment Trust under the
provisions of the Internal Revenue Code ("Code"). Accordingly, the Company
generally will not pay Federal income tax provided that distributions to its
stockholders equal at least the amount of its real estate investment trust
taxable income as defined under the Code.
2. Acquisition Considerations
In assessing the properties acquired, the Company's management considered the
existing tenancies, which are the primary revenue source, the occupancy rates,
which averaged 97% on the dates of acquisition, the competitive nature of the
markets and comparative rental rates. Furthermore, current and anticipated
maintenance and repair costs, real estate taxes and capital improvement
requirements were evaluated. Management is not aware of any material factors
that would cause the reported financial information in the accompanying Combined
Historical Summary of Revenue and Certain Operating Expenses and Estimates of
Net Income and Funds from Operations of Certain Acquired Properties to be
misleading or not necessarily indicative of future operating results.
10
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME
The accompanying Pro Forma Condensed Consolidated Balance Sheet as of September
30, 1997 gives effect to the purchase of 8 shopping center properties acquired
by the Company in October, November and December 1997 as if these properties had
been acquired as of September 30, 1997.
The accompanying Pro Forma Condensed Consolidated Statements of Income for the
year ended December 31, 1996 and the nine months ended September 30, 1997 assume
the Shopping Center Acquisitions had occurred as of January 1, 1996. The pro
forma information is based on the historical statements of the Company after
giving effect to the acquisition of these properties.
The Pro Forma Condensed Consolidated Balance Sheet and the Statements of Income
have been prepared by the management of the Company. These pro forma statements
may not be indicative of the results that would have actually occurred if the
Shopping Center Acquisitions had been in effect on the date indicated. Also,
they may not be indicative of the results that may be achieved in the future.
The Pro Forma Condensed Consolidated Balance Sheet and Statements of Income
should be read in conjunction with Kimco Realty Corporation's audited financial
statements as of December 31, 1996 and for the year then ended (which are
contained in the Company's Form 10-K for the year ended December 31, 1996), and
the unaudited condensed consolidated financial statements as of September 30,
1997 and for the nine months then ended (which are contained in the Company's
Form 10-Q for the period ended September 30, 1997) and the accompanying notes
thereto.
11
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
-----------
(Unaudited)
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
--------------- --------------- ---------------
Assets:
Real estate, net of accumulated depreciation $ 1,103,340,060 $ 81,596,242 $ 1,184,936,302
Investment in retail store leases 16,408,989 -- 16,408,989
Cash and cash equivalents 122,645,949 (67,604,210) 55,041,739
Accounts and notes receivable 16,090,574 -- 16,090,574
Other assets 76,027,470 -- 76,027,470
--------------- --------------- ---------------
$ 1,334,513,042 $ 13,992,032 $ 1,348,505,074
=============== =============== ===============
Liabilities:
Notes payable $ 410,250,000 $ -- $ 410,250,000
Mortgages payable 108,129,377 13,992,032 122,121,409
Other liabilities, including minority interests --
in partnerships 72,450,843 -- 72,450,843
--
--------------- --------------- ---------------
590,830,220 13,992,032 604,822,252
--------------- --------------- ---------------
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 300,000 -- 300,000
Aggregate liquidation preference $75,000,000
Class B Preferred Stock, $1.00 par value, authorized 230,000 shares
Issued and outstanding 200,000 shares 200,000 -- 200,000
Aggregate liquidation preference $50,000,000
Class C Preferred Stock, $1.00 par value, authorized 460,000 shares
Issued and outstanding 400,000 shares 400,000 -- 400,000
Aggregate liquidation preference $100,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 40,390,889 shares 403,909 -- 403,909
Paid-in capital 857,568,979 -- 857,568,979
Cumulative distributions in excess of net income (115,190,066) -- (115,190,066)
--------------- --------------- ---------------
743,682,822 -- 743,682,822
--------------- --------------- ---------------
$ 1,334,513,042 $ 13,992,032 $ 1,348,505,074
=============== =============== ===============
12
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
-------------------------------
(Unaudited)
Shopping Center
As Reported Acquisitions Pro Forma
----------------- ----------------- ----------------
Revenues from rental property $ 168,144,419 $ 19,659,352 $ 187,803,771
----------------- ----------------- ----------------
Rental property expenses-
Rent 1,417,263 37,500 1,454,763
Real estate taxes 19,815,808 2,135,405 21,951,213
Interest 27,019,283 4,263,144 31,282,427
Operating and maintenance 21,659,620 3,014,152 24,673,772
Depreciation and amortization 27,066,709 2,917,771 29,984,480
----------------- ----------------- ----------------
96,978,683 12,367,972 109,346,655
----------------- ----------------- ----------------
Income from rental property 71,165,736 7,291,380 78,457,116
Income from investment in retail store leases 3,631,845 - 3,631,845
----------------- ----------------- ----------------
74,797,581 7,291,380 82,088,961
Management fee income 3,447,577 - 3,447,577
General and administrative expenses (10,333,924) - (10,333,924)
Other income (expenses), net 5,113,704 (1,530,000) 3,583,704
----------------- ----------------- ----------------
Income before gain on sale of shopping center 73,024,938 5,761,380 78,786,318
Gain on sale of shopping center property 801,955 - 801,955
----------------- ----------------- ----------------
Net income $73,826,893 $5,761,380 $79,588,273
================= ================= ================
Net income applicable to common shares $57,692,418 $5,761,380 $63,453,798
================= ================= ================
Net income per common share $1.61 $1.77
===== =====
13
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------------
(Unaudited)
Shopping Center
As Reported Acquisitions Pro Forma
----------------- ------------------ ----------------
Revenues from rental property $ 141,294,177 $ 12,406,529 $ 153,700,706
----------------- ------------------ ----------------
Rental property expenses-
Rent 2,499,182 28,125 2,527,307
Real estate taxes 17,479,097 1,312,963 18,792,060
Interest 22,252,562 2,186,348 24,438,910
Operating and maintenance 16,687,602 1,938,028 18,625,630
Depreciation and amortization 21,737,600 1,784,133 23,521,733
----------------- ------------------ ----------------
80,656,043 7,249,597 87,905,640
----------------- ------------------ ----------------
Income from rental property 60,638,134 5,156,932 65,795,066
Income from investment in retail store leases 2,704,761 - 2,704,761
----------------- ------------------ ----------------
63,342,895 5,156,932 68,499,827
Management fee income 2,754,842 - 2,754,842
General and administrative expenses (8,526,158) - (8,526,158)
Other income (expenses), net 4,474,666 (725,000) 3,749,666
----------------- ------------------ ----------------
Income before gain on sale of shopping center 62,046,245 4,431,932 66,478,177
Gain on sale of shopping center property 243,995 - 243,995
----------------- ------------------ ----------------
Net income $62,290,240 $4,431,932 $66,722,172
================= ================== ================
Net income applicable to common shares $48,461,965 $4,431,932 $52,893,897
================= ================== ================
Net income per common share $1.33 $1.45
===== =====
14
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
1. Basis of Presentation
As Reported amounts have been adjusted based upon the historical results of the
Shopping Center Acquisitions for the year ended December 31, 1996. These
adjustments to the Pro Forma Condensed Consolidated Statements of Income have
the effect of presenting the results for the year ended December 31, 1996 and
the nine months ended September 30, 1997 as if the Shopping Center Acquisitions
had been completed as of January 1, 1996.
2. Pro Forma Adjustments
The adjustment to interest expense relates to the assumed mortgages and
additional borrowings related to the properties acquired.
The adjustment to other income (expenses), net relates to the elimination of
interest earned on funds assumed to have been expended as of January 1, 1996 for
property acquisitions.
The adjustment for depreciation was based upon an estimated useful life of 39
years using the straight-line method and purchase price allocations to land and
building of 20% and 80%, respectively.
15
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 hereunto duly authorized.
Kimco Realty Corporation
------------------------
Registrant
Date: January 21, 1998
By: /s/ Michael V. Pappagallo
----------------------------
Michael V. Pappagallo
Chief Financial Officer
16