<PAGE>
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
Date of Report (Date of earliest event reported): November 16, 1998
(January 23, 1998)
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 telelphone,
including area code
Not Applicable
- -------------------------------------------------------------------------------
(former name or former address, if changed since last report.)
Page 1 of 19
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CURRENT REPORT
ON
FORM 8-K
Item 2. Acquisition or Disposition of Assets
As previously reported on Current Report on Form 8-K dated June 24,
1998, on June 19, 1998, Kimco Realty Corporation (the "Company") and The
Price REIT, Inc. ("Price REIT") consummated a merger (the "Merger") whereby
the Company acquired control of Price REIT pursuant to an Agreement and Plan
of Merger, dated as of January 13, 1998, as amended as of March 5, 1998 and
May 14, 1998 (the "Merger Agreement"), among the Company, REIT Sub, Inc., a
wholly owned subsidiary of the Company ("Merger Sub"), and Price REIT.
Pursuant to the Merger, Price REIT was merged with and into Merger Sub,
whereupon the separate existence of Price REIT ceased.
Item 5. Other Events
Shopping Center Acquisitions -
During September and October 1998, certain subsidiaries of the
Company acquired, in separate transactions, 3 neighborhood and community
shopping center properties comprising approximately 417,000 square feet of
gross leasable area ("GLA") in three states (the "September and October 1998
Acquired Properties"). The September and October 1998 Acquired Properties
were purchased for an aggregate price of $54.7 million, including the
assumption of $28.4 million of mortgage debt in connection with two of the
acquisitions. These properties include (i) Northwest Square located in
Columbus, Ohio, (ii) Oak Park Commons, located in Plainfield, New Jersey and
(iii) Trolley Station, located in Memphis, Tennessee.
More specific information with respect to each of the September and October
1998 Acquired Properties is as follows:
Northwest Square, located on Sawmill Road in Columbus, Ohio, is
anchored by Borders and contains approximately 113,000 square feet of GLA.
Oak Park Commons, located on Route 17 North in Plainfield, New Jersey, is
anchored by A & P Supermarkets and Sears, and contains approximately 137,000
square feet of GLA. Trolley Station, located on South Perkins Road in
Memphis, Tennessee, is anchored by Toys "R" Us and Office Max, and contains
approximately 167,000 square feet of GLA.
Management believes that the current annualized net cash flow
generated by the September and October 1998 Acquired Properties provides a
weighted average annualized yield of approximately 10% on the Company's
investment in such properties.
2
<PAGE>
Although none of the above September and October 1998 Acquired
Properties individually represent a "significant acquisition" pursuant to
the rules governing the reporting of transactions under this Current Report
on Form 8-K, this report has been filed for the purpose of providing certain
historical financial information for the September and October 1998 Acquired
Properties and updated pro forma financial information for (i) the September
and October 1998 Acquired Properties, (ii) all previously reported 1998
acquisitions, which include the purchase of 15 shopping centers which were
previously reported on Current Report on Form 8-K dated May 22, 1998, the
purchase of 30 fee and leasehold positions acquired by the Company from the
Metropolitan Life Insurance Company ("the "Met Life Acquisition") as
previously reported on Current Report on Form 8-K dated July 9, 1998 and the
purchase of 3 additional shopping centers acquired as previously reported on
Current Report on Form 8-K dated August 10, 1998 (collectively, the "1998
Previously Reported Acquisitions") and (iii) the effects of the Merger.
3
<PAGE>
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:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.................................................................6
Combined Historical Summary of Revenues and Certain Operating Expenses
of Certain Acquired Properties for the Year Ended December 31, 1997 and
the Nine Months Ended September 30, 1998..........................................................7
Notes to Combined Historical Summary of Revenues 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, 1998...........................12
Pro Forma Condensed Consolidated Statements of Income for the Year
Ended December 31, 1997 and the Nine Months Ended September 30, 1998..............................13
Notes to Pro Forma Condensed Consolidated Financial Statements....................................15
(c) Exhibits:
* 23.1 Consent of PricewaterhouseCoopers LLP
</TABLE>
---------------
*Filed herewith.
4
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
COMBINED HISTORICAL SUMMARY OF REVENUES AND
CERTAIN OPERATING EXPENSES
FOR THE
YEAR ENDED DECEMBER 31, 1997
5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Kimco Realty Corporation:
In our opinion, the accompanying Combined Historical Summary of Revenues and
Certain Operating Expenses of Certain Acquired Properties, as defined in the
accompanying Note 1, presents fairly in all material respects, the revenues
and certain operating expenses of certain acquired properties for the year
ended December 31, 1997 in accordance with generally accepted accounting
principles. 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 which
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,
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 Revenues 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 representation of the revenues and expenses of the Certain Acquired
Properties.
PricewaterhouseCoopers LLP
New York, New York
October 30, 1998
6
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
COMBINED HISTORICAL SUMMARY OF REVENUES
AND CERTAIN OPERATING EXPENSES
Nine Months
Ended
Year Ended September
December 31, 30, 1998
1997 (Unaudited)
---------- ----------
Revenues:
Base rentals $2,570,204 $3,157,683
Operating reimbursements and other income 542,156 419,524
---------- ----------
3,112,360 3,577,207
---------- ----------
Certain operating expenses:
Real estate taxes 339,360 299,214
Repairs and maintenance 215,632 184,043
Other operating expenses 53,272 71,150
---------- ----------
608,264 554,407
---------- ----------
Excess of revenues over certain
operating expenses $2,504,096 $3,022,800
========== ==========
7
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
NOTES TO COMBINED HISTORICAL SUMMARY OF REVENUES
AND CERTAIN OPERATING EXPENSES
1. Certain Acquired Properties
The Combined Historical Summary of Revenues and Certain Operating Expenses
for the year ended December 31, 1997 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
- ------------- --------
Northwest Square Columbus, Ohio
Trolley Station Memphis, Tennessee
Oak Park Commons Plainfield, New Jersey (commenced operations in
May 1998)
2. Basis of Presentation
The Combined Historical Summary has been prepared on the accrual method of
accounting. Certain operating expenses of the Certain Acquired Properties
include operating and maintenance costs, real estate taxes, and insurance
expense. In accordance with the regulations of the Securities and Exchange
Commission, mortgage interest, depreciation and general and administrative
expenses have been excluded as such costs are dependent upon a particular
owner, purchase price or other financial arrangements.
3. 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:
1998 $ 3,208,000
1999 $ 3,190,000
2000 $ 3,060,000
2001 $ 2,965,000
2002 $ 2,828,000
Thereafter $19,209,000
8
<PAGE>
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 Revenues
and Certain Operating Expenses of Certain Acquired Properties for the year
ended December 31, 1997. 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 $ 2,504,096
Less: Estimated depreciation (Note 1) (641,129)
-----------
Estimated net income $ 1,862,967
===========
Estimated Funds from Operations
Estimated net income $ 1,862,967
Add: Estimated depreciation (Note 1) 641,129
-----------
Estimated funds from operations $ 2,504,096
===========
9
<PAGE>
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 of 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
("REIT") under the provisions of the Internal Revenue Code (the "Code").
Accordingly, the Company generally will not pay Federal income taxes
provided that distributions to its stockholders equal at least the amount of
its REIT taxable income as defined under the Code.
The accompanying calculation of Estimated Net Income and Funds From
Operations exclude the impact of financing costs related to mortgage debt
assumed in connection with the acquisition of the Certain Acquired
Properties.
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 97.4% on the dates of acquisition, the terms of the
mortgage debt assumed, 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 Revenues and Certain Operating Expenses and Estimates of Net
Income and Funds from Operations of Certain Acquired Properties to be
misleading.
10
<PAGE>
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, 1998 gives effect to the purchase of two shopping centers
acquired by the Company in October 1998 (the "October 1998 Acquisitions") as
if these properties had been acquired as of September 30, 1998.
The accompanying Pro Forma Condensed Consolidated Statements of Income for
the year ended December 31, 1997 and the nine months ended September 30,
1998 reflect the historical results of the Company adjusted to give effect
to (i) the September and October 1998 Acquired Properties and the 1998
Previously Reported Acquisitions, as if these transactions had been
completed as of January 1, 1997 except for the acquisition of Oak Park
Commons, which has been reflected as of May 1, 1998, the date the property
commenced operations and (ii) the Merger as if it had occurred as of
January 1, 1997 and been accounted for under the purchase method of accounting
in accordance with Accounting Principles Board Opinion No. 16.
The Pro Forma Condensed Consolidated Balance Sheet and 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 September and October 1998 Acquired Properties, the 1998
Previously Reported Acquisitions and the Merger had been in effect on the
dates 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 and Price REIT's audited financial statements as of December
31, 1997 and for the year then ended (which are included in each of the
Companys' Annual Report on Form 10-K for the year ended December 31, 1997),
and the unaudited condensed consolidated financial statements as of
September 30, 1998 and for the nine months then ended (which are included in
the Company's Quarterly Report on Form 10-Q for the period ended September
30, 1998) and the accompanying notes thereto.
11
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
-----------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Adjustments
---------------
Kimco October 1998
Historical Acquisitions Pro Forma
--------------- --------------- ---------------
<S> <C> <C> <C>
Assets:
Real estate, net of accumulated depreciation $ 2,650,747,449 $ 39,658,000 $ 2,690,405,449
Investments in and advances to real estate joint ventures 58,780,260 -- 58,780,260
Investment in retail store leases 15,570,543 -- 15,570,543
Cash and cash equivalents 30,780,884 (11,244,000) 19,536,884
Accounts and notes receivable 24,117,472 -- 24,117,472
Other assets 94,589,966 -- 94,589,966
--------------- --------------- ---------------
$ 2,874,586,574 $ 28,414,000 $ 2,903,000,574
=============== =============== ===============
Liabilities:
Notes payable $ 975,250,000 $ -- $ 975,250,000
Mortgages payable 156,906,342 28,414,000 185,320,342
Other liabilities, including minority interests
in partnerships 182,567,371 -- 182,567,371
--------------- --------------- ---------------
1,314,723,713 28,414,000 1,343,137,713
--------------- --------------- ---------------
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
Class D Convertible Preferred Stock, $1.00 par value, authorized
700,000 shares Issued and outstanding 429,159 shares 429,159 -- 429,159
Aggregate liquidation preference $107,289,750
Class E Preferred Stock, $1.00 par value,
Authorized, issued and outstanding 65,000 shares 65,000 -- 65,000
Aggregate liquidation preference $65,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 55,446,111 shares 575,677 -- 575,677
Paid-in capital 1,675,767,238 -- 1,675,767,238
Cumulative distributions in excess of net income (117,874,213) -- (117,874,213)
--------------- --------------- ---------------
1,559,862,861 -- 1,559,862,861
--------------- --------------- ---------------
$ 2,874,586,574 $ 28,414,000 $ 2,903,000,574
=============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
12
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
---------------------------------
1998 Previously
Kimco Price REIT Reported
Historical Merger Acquisitions
--------------------------------- -------------
<S> <C> <C> <C>
Revenues from rental property $ 198,929,403 $ 77,787,000 $ 40,828,526
------------- ------------- -------------
Rental property expenses:
Rent 4,873,200 -- --
Real estate taxes 26,345,685 8,483,000 2,500,967
Interest 31,744,762 15,757,000 16,165,408
Operating and maintenance 22,194,628 6,668,000 2,553,608
Depreciation and amortization 30,052,714 18,749,154 7,103,854
------------- ------------- -------------
115,210,989 49,657,154 28,323,837
------------- ------------- -------------
Income from rental property 83,718,414 28,129,846 12,504,689
Income from investment in retail store leases 3,571,946 -- --
------------- ------------- -------------
87,290,360 28,129,846 12,504,689
Management fee income 3,276,152 299,000 --
General and administrative expenses (11,651,341) (2,691,000) --
Other income (expenses), net 6,677,279 2,623,000 (1,042,856)
------------- ------------- -------------
Income before gain on sale of shopping center 85,592,450 28,360,846 11,461,833
Gain on sale of shopping center property 243,995 2,787,000 --
------------- ------------- -------------
Net income $ 85,836,445 $ 31,147,846 $ 11,461,833
============= ============= =============
Net income applicable to common shares $ 67,398,745 $ 18,109,115 $ 11,461,833
============= ============= =============
Per share:
Basic $1.80
=====
Diluted $1.78
=====
<CAPTION>
Pro Forma
Adjustments
-------------
September &
October 1998
Acquired
Properties Pro Forma
------------- -------------
<S> <C> <C>
Revenues from rental property $ 3,112,360 $ 320,657,289
------------- -------------
Rental property expenses:
Rent -- 4,873,200
Real estate taxes 339,360 37,669,012
Interest 290,000 63,957,170
Operating and maintenance 268,904 31,685,140
Depreciation and amortization 641,128 56,546,850
------------- -------------
1,539,392 194,731,372
------------- -------------
Income from rental property 1,572,968 125,925,917
Income from investment in retail store leases -- 3,571,946
------------- -------------
1,572,968 129,497,863
Management fee income -- 3,575,152
General and administrative expenses -- (14,342,341)
Other income (expenses), net (1,152,460) 7,104,963
------------- -------------
Income before gain on sale of shopping center 420,508 125,835,637
Gain on sale of shopping center property -- 3,030,995
------------- -------------
Net income $ 420,508 $ 128,866,632
============= =============
Net income applicable to common shares $ 420,508 $ 97,390,201
============= =============
Per share:
Basic $1.98
=====
Diluted $1.96
=====
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
13
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
---------------------------------
1998 Previously
Kimco Price REIT Reported
Historical Merger Acquisitions
--------------------------------- -------------
<S> <C> <C> <C>
Revenues from rental property $ 230,537,696 $ 45,526,846 $ 15,988,979
------------- ------------- -------------
Rental property expenses:
Rent 9,019,514 820,546 --
Real estate taxes 31,572,123 4,906,401 576,475
Interest 42,987,028 10,863,396 7,099,157
Operating and maintenance 23,143,929 3,512,059 854,818
Depreciation and amortization 34,433,287 9,492,014 2,878,987
------------- ------------- -------------
141,155,881 29,594,416 11,409,437
------------- ------------- -------------
Income from rental property 89,381,815 15,932,430 4,579,542
Income from investment in retail store leases 2,729,684 -- --
------------- ------------- -------------
92,111,499 15,932,430 4,579,542
Management fee income 2,530,342 338,085 --
General and administrative expenses (12,493,986) (1,743,065) --
Other income (expenses), net 6,071,472 871,211 (460,428)
------------- ------------- -------------
Income before gain on sale of shopping center
property and extraordinary items 88,219,327 15,398,661 4,119,114
Gain on sale of shopping center property 901,249 -- --
------------- ------------- -------------
Income before extraordinary items 89,120,576 15,398,661 4,119,114
Extraordinary items (4,851,528) -- --
------------- ------------- -------------
Net income $ 84,269,048 $ 15,398,661 $ 4,119,114
============= ============= =============
Net income applicable to common shares $ 66,717,893 $ 9,313,919 $ 4,119,114
============= ============= =============
Per common share:
Income before extraordinary items
Basic $1.52
=====
Diluted $1.50
=====
Net income
Basic $1.42
=====
Diluted $1.40
=====
<CAPTION>
Pro Forma
Adjustments
-------------
September &
October 1998
Acquired
Properties Pro Forma
------------- -------------
<S> <C> <C>
Revenues from rental property $ 3,541,599 $ 295,595,120
------------- -------------
Rental property expenses:
Rent -- 9,840,060
Real estate taxes 299,214 37,354,213
Interest 1,235,000 62,184,581
Operating and maintenance 254,213 27,765,019
Depreciation and amortization 730,969 47,535,257
------------- -------------
2,519,396 184,679,130
------------- -------------
Income from rental property 1,022,203 110,915,990
Income from investment in retail store leases -- 2,729,684
------------- -------------
1,022,203 113,645,674
Management fee income -- 2,868,427
General and administrative expenses -- (14,237,051)
Other income (expenses), net (873,579) 5,608,676
------------- -------------
Income before gain on sale of shopping center
property and extraordinary items 148,624 107,885,726
Gain on sale of shopping center property -- 901,249
------------- -------------
Income before extraordinary items 148,624 108,786,975
Extraordinary items -- (4,851,528)
------------- -------------
Net income $ 148,624 $ 103,935,447
============= =============
Net income applicable to common shares $ 148,624 $ 80,299,550
============= =============
Per common share:
Income before extraordinary items
Basic $1.56
=====
Diluted $1.54
=====
Net income
Basic $1.47
=====
Diluted $1.46
=====
</TABLE>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1998 gives effect to the October 1998 Acquisitions as if these
properties had been acquired as of September 30, 1998.
The accompanying Pro Forma Condensed Consolidated Statements of Income for
the year ended December 31, 1997 and the nine months ended September 30,
1998 reflect the historical results of the Company adjusted to give effect
to (i) the September and October 1998 Acquired Properties and the 1998
Previously Reported Acquisitions, as if these transactions had been
completed as of January 1, 1997 except for the acquisition of Oak Park
Commons, which has been reflected as of May 1, 1998, the date the property
commenced operations and (ii) the Merger as if it had occurred as of January
1, 1997 and been accounted for under the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16.
2. Pro Forma Adjustments
(i) With respect to the September and October 1998 Acquired Properties:
A. The adjustments to cash, real estate, net of accumulated
depreciation and mortgages payable relate to the cash used and the
mortgage debt assumed in connection with the October 1998
Acquisitions.
B. 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.
C. The adjustment to interest expense relates to the assumption of
mortgage debt in connection with the October 1998 Acquisitions.
D. 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, 1997 in connection with the acquisitions
of Northwest Square and Trolley Station and May 1, 1998 in
connection with Oak Park Commons.
15
<PAGE>
(ii) With respect to the 1998 Previously Reported Acquisitions:
A. The adjustment to interest expense relates to (i) the assumption of
mortgage debt encumbering four of the properties acquired and (ii)
the issuance of $130.0 million medium-term notes and the
additional borrowings under the Company's unsecured revolving
credit facility.
B. 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 for
the fee simple properties and to building (100%) for the properties
subject to ground leases.
C. The adjustments to other income (expenses), net relates to (i) the
elimination of interest earned on funds assumed to have been
expended as of January 1, 1997 and (ii) the preferred return
applicable to the partnership unitholders in connection with one of
the 1998 Previously Reported Acquisitions.
(iii) With respect to the Price REIT Merger:
The Price REIT Merger column in the accompanying Pro Forma Condensed
Consolidated Statements of Income include the results of Price REIT for the
year ended December 31, 1997 and the period from January 1, 1998 to June 19,
1998 adjusted for the results of Price REIT's 1998 pre-merger acquisitions
as if those acquisitions had occurred at January 1, 1997. Additionally, the
Price REIT Merger column has been adjusted for the following:
A. The adjustment to depreciation and amortization results from the
net increase in real estate owned as a result of recording Price
REIT's real estate assets at fair value versus historical cost.
Depreciation is computed on the straight-line method based upon an
estimated useful life of 39 years and an allocation of the
stepped-up basis to land and building of 20% and 80%, respectively.
Pro forma adjustments to depreciation of real estate for the year
ended December 31, 1997 and the nine months ended September 30,
1998 are as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
1997 1998
(000's) (000's)
-------------------------------
<S> <C> <C>
Depreciation expense based upon an estimated useful life
of 39 years $ 18,337 $ 9,286
Less: Price REIT depreciation of real estate owned based
upon an estimated useful life of 15 to 25 years (16,862) (9,722)
-------- --------
Depreciation and amortization Pro Forma adjustment $ 1,475 ($436)
-------- --------
</TABLE>
16
<PAGE>
B. The adjustment to general and administrative expenses reflects the
net estimated reduction of those costs which are anticipated to be
eliminated or reduced as a result of the Merger, as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, 1997 September 30, 1998
(000's) (000's)
------------------------------------------
<S> <C> <C>
Net reduction in salary and benefit costs $ 700 $ 350
Net reduction in duplication of public company expenses 600 300
Net reduction in directors and officers' insurance and
directors fees 200 100
------ ------
General and administrative Pro Forma adjustment $1,500 $ 750
------ ------
</TABLE>
C. During April 1996, the Company and Price REIT formed a partnership
to purchase a property in Phoenix, AZ. The Company has consolidated
this partnership for financial reporting purposes and Price REIT
has recorded their interest using the equity method. The
adjustments to Equity in income of real estate joint ventures, net
and Minority interest in partnerships both included in Other income
(expenses), net reflect the elimination of the partnership
accounting for this partnership as a result of the Merger, for the
nine months ended September 30, 1998 and the year ended December
31, 1997, respectively.
D. Weighted average number of shares outstanding-
The pro forma weighted average number of common shares outstanding
for the year ended December 31, 1997 and the nine months ended
September 30, 1998 are computed as follows:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, 1997 September 30, 1998
(000's) (000's)
--------------------------------------
<S> <C> <C>
Kimco's historical weighted average number of shares outstanding 37,388 47,138
Less: amount of historical weighted average number of shares
outstanding that relate to the Merger -- (4,542)
Issuance of Kimco common stock at 9 one for one exchange ratio
for all Price REIT common stock outstanding in connection
with the Merger 11,746 11,746
Add: Conversion of Price REIT stock options to Kimco common
stock in connection with the Merger 176 176
------- -------
Pro Forma weighted average number of Kimco common shares
outstanding (Basic) 49,310 54,518
Effect of Dilutive Securities- Stock Options 462 565
------- -------
Pro Forma weighted average number of Kimco common shares
outstanding (Diluted) 49,772 55,083
------- -------
</TABLE>
The effect of the conversion of the Class D Convertible 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 share.
17
<PAGE>
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: November 16, 1998
By: /s/ Michael V. Pappagallo
---------------------------
Michael V. Pappagallo
Chief Financial Officer
18
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Kimco Realty Corporation on Form S-3, of our report dated October 30,
1998 on our audit of the Combined Historical Summary of Revenues and Certain
Operating Expenses of Certain Acquired Properties as of December 31, 1997,
which report is included in this Current Report on Form 8-K.
PricewaterhouseCoopers LLP
New York, New York
December 3, 1998
19
