<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): July 8, 1998 (July 1, 1998)
Kimco Realty Corporation
(Exact name of registrant as specified in its charter)
Maryland 1-10899 13-2744380
- ------------------------------- ------------------------ -------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
3333 New Hyde Park Road
New Hyde Park, New York 11042-0020
- ------------------------------- -------------------
(Address of principal executive (zip code)
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 16
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CURRENT REPORT
ON
FORM 8-K
Item 5. Other Events
Metropolitan Life / Venture Properties Acquisition
On July 1, 1998, certain subsidiaries of Kimco Realty
Corporation (the "Company") acquired from Metropolitan Life Insurance
Company ("Metropolitan") 30 fee and leasehold positions consisting of 29
neighborhood and community shopping center properties and 1
office/distribution facility (the "Properties"). The Properties,
comprising approximately 3.8 million square feet of gross leasable area
("GLA") in 5 states, were acquired for an aggregate purchase price of
$167.5 million. The Properties are currently leased to Venture Stores,
Inc. ("Venture") under a single master lease agreement. In accordance with the
master lease, all operating expenses and obligations of the Properties
are the responsibility of Venture.
In January 1998, Venture filed for protection under Chapter 11
of the United States Bankruptcy Code. In April 1998, the Company entered
into an agreement with Venture to purchase Venture's leasehold position
in the Properties and other properties in which the Company has an
interest. The acquisition of the Properties from Metropolitan was
contingent upon bankruptcy court approval of the Company's purchase of
Venture's leasehold positions. The bankruptcy court approved that
agreement in June 1998. Additionally, on May 1, 1998, the Company entered
into an agreement to lease certain of these locations to Kmart
Corporation, subject to the completion of the Company's purchase of
Venture's leasehold positions.
This acquisition represents a "significant acquisition" pursuant
to Rule 3-14 of Regulation S-X. Accordingly, the Company is filing this report
to provide certain historical financial information and pro forma financial
information for these Properties.
2
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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>
Page
----
<CAPTION>
<S> <C>
Report of Independent Accountants..................................................5
Historical Summary of Revenues of Certain Acquired Metropolitian Life Properties
for the Year Ended December 31, 1997 and for the Three Months
Ended March 31, 1998...............................................................6
Notes to Historical Summary of Revenues of Certain Acquired Metropolitian Life
Properties.........................................................................7
Estimates of Net Income and Funds from Operations of Certain
Acquired Metropolitian Life Properties.............................................8
Notes to Estimates of Net Income and Funds from Operations of
Certain Acquired Metropolitian Life Properties.....................................9
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998...............11
Pro Forma Condensed Consolidated Statements of Income for the Year
Ended December 31, 1997 and the Three Months Ended March 31, 1998.................12
Notes to Pro Forma Condensed Consolidated Financial Statements....................14
</TABLE>
(c) Exhibits:
* 23.1 Consent of PricewaterhouseCoopers LLP
--------------
*Filed herewith.
3
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED METROPOLITIAN LIFE PROPERTIES
HISTORICAL SUMMARY OF REVENUES
FOR THE
YEAR ENDED DECEMBER 31, 1997
4
<PAGE>
Report of Independent Accountants
To the Board of Directors and
Kimco Realty Corporation:
In our opinion, the accompanying Historical Summary of Revenues of Certain
Acquired Metropolitan Life Properties, as defined in the accompanying Note 1,
presents fairly in all material respects, the revenues of certain acquired
Metropolitan Life properties for the year ended December 31, 1997 in conformity
with generally accepted accounting principles. This historical summary is the
responsibility of the management of Kimco Realty Corporation; our responsibility
is to express an opinion on this historical summary based on our audit. We
conducted our audit of this historical summary in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the historical summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the historical summary, assessing the
accounting priciples used and significant estimates made by management, and
evaluating the overall presentation of the historical summary. We believe that
our audit provides a reasonable basis for the opinion expressed above.
The accompanying Historical Summary of Revenues of Certain Acquired Metropolitan
Life 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 Metropolitan Life Properties.
PricewaterhouseCoopers LLP
New York, New York
July 7, 1998
5
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED METROPOLITAN LIFE PROPERTIES
HISTORICAL SUMMARY OF REVENUES
Three Months
Year Ended Ended March
December 31, 31, 1998
1997 (Unaudited)
-------------- --------------
Revenues:
Base rentals $ 19,044,050 $ 4,761,013
============== ==============
The accompanying notes are an integral part of this financial statement.
6
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED METROPOLITAN LIFE PROPERTIES
NOTES TO HISTORICAL SUMMARY OF REVENUES
1. Certain Acquired Metropolitan Life Properties
The Historical Summary of Revenues relates to the operations of the
certain acquired properties as described below, while under ownership
previous to Kimco Realty Corporation and Subsidiaries (the "Company").
On July 1, 1998, the Company acquired from Metropolitan Life Insurance
Company ("Metropolitan") 30 fee and leasehold positions consisting of 29
neighborhood and community shopping center properties and 1
office/distribution facility (the "Certain Acquired Metropolitan Life
Properties").
The Certain Acquired Metropolitan Life Properties are subject to a single
master lease agreement between Metropolitan and Venture Stores, Inc.
("Venture"). The lease is an absolute net lease pursuant to which Venture paid
all operating expenses and obligations of the Certain Acquired Metropolitan Life
Properties. In accordance with the master lease, rental payments in the amount
of $1,587,000 per month are due through July 2010.
2. Basis of Presentation
The historical summary has been prepared on the accrual method of accounting.
Operating expenses, including operating and maintenance costs, real estate taxes
and insurance relating to the operation of the Certain Acquired Metropolitan
Life Properties were paid directly by the tenant pursuant to the master lease
and, accordingly, have not been presented in the historical summary. In
accordance with the regulations of the Securities and Exchange Commission,
depreciation and any general and administrative expenses have been excluded from
the historical summary, as such costs are dependent upon a particular owner,
purchase price or other financial agreements.
3. Venture Bankruptcy
In January 1998, Venture filed for protection under Chapter 11 of the
United States Bankruptcy Code. The Company has not received notice that
Venture will be delinquent in the payment of any rents due. There can be,
however, no assurance that Venture will continue to pay rents as they
become due or that the trustee in bankruptcy will not reject the leases
under which Venture is bound.
In April 1998, the Company entered into an agreement with Venture to purchase
Venture's leasehold position in the Certain Acquired Metropolitan Life
Properties. The acquisition of the Certain Acquired Metropolitan Life Properties
was contingent upon bankruptcy court approval of the Company's purchase of
Venture's leasehold positions. The bankruptcy court approved that agreement in
June 1998. The Company has also entered into an agreement to lease certain of
these locations to another retailer, subject to the completion of the Company's
purchase of Venture's leasehold positions.
7
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
ESTIMATES OF NET INCOME AND
FUNDS FROM OPERATIONS
OF
CERTAIN ACQUIRED METROPOLITAN LIFE PROPERTIES
(Unaudited)
The following represents an estimate of the net income and funds from operations
related to the operation of the Certain Acquired Metropolitan Life Properties
based upon the Historical Summary of Revenues of Certain Acquired Metropolitan
Life 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
Revenues $ 19,044,050
Less: Estimated depreciation (Note 1) (3,582,460)
-------------
Estimated net income $ 15,461,590
=============
Estimated Funds from Operations
Estimated net income $ 15,461,590
Add: Estimated depreciation (Note 1) 3,582,460
-------------
Estimated funds from operations $ 19,044,050
=============
8
<PAGE>
KIMCO REALTY COPRORATION AND SUBSIDIARIES
NOTES TO ESTIMATES OF NET INCOME AND
FUNDS FROM OPERATIONS
OF
CERTAIN ACQUIRED METROPOLITAN LIFE PROPERTIES
1. Basis of Presentation
Depreciation has been estimated based upon an allocation of the purchase price
for the Certain Acquired Metropolitan Life Properties to land (20%) and building
(80%) for the fee simple properties and to building (100%) for the properties
subject to ground leases and assumes 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
("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.
2. Acquisition Considerations
In assessing the properties acquired, the Company's management
considered the existing tenancies, which are initially the primary
revenue source, the occupancy rates, which were 100% on the date 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.
During January 1998, the tenant in occupancy at the Certain
Acquired Metropolitan Life Properties filed for protection under Chapter 11 of
the United States Bankruptcy Code. In April 1998 the Company entered into an
agreement with the tenant to purchase its leasehold positions in these
properties. The acquisition of the Certain Acquired Metropolitan Life Properties
was contingent upon bankruptcy court approval of the Company' purchase of the
tenant's leasehold positions. In addition, the Company has entered into an
agreement with another retailer to lease certain of these locations, subject to
the completion of the Company's purchase of the current tenant's leasehold
positions.
Management is not aware of any material factors, except for the
effect of the Company's contemplated purchase of Venture's leasehold positions
and subsequent re-tenanting efforts, that would cause the reported financial
information in the accompanying Historical Summary of Revenues and Estimates of
Net Income and Funds from Operations of Certain Acquired Metropolitan Life
Properties to be misleading or not necessarily indicative of future operating
results.
9
<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
March 31, 1998 gives effect to (i) the purchase of four shopping centers
acquired during April and May 1998 which were previously reported on Form
8-K dated May 22, 1998 and (ii) the purchase of the Certain Acquired
Metropolitan Life Properties by the Company as if these properties had been
acquired as of March 31, 1998.
The accompanying Pro Forma Condensed Consolidated Statements of Income
for the year ended December 31, 1997 and the three months ended March 31,
1998 assume (i) the purchase of 15 shopping centers acquired during 1998
which were previously reported on Form 8-K dated May 22, 1998 (the
"Shopping Center Acquisitions") and (ii) the purchase of the Certain
Acquired Metropolitan Life Properties had occurred as of January 1, 1997. The
pro forma information is based on the historical statements of the Company after
giving effect to the acquisition of the Shopping Center Acquisitions and
the Certain Acquired Metropolitan Life 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
Certain Acquired Metropolitan Life Properties had been acquired 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, 1997 and for the year then ended (which
are contained in the Company's Annual Report on Form 10-K, as amended for the
year ended December 31, 1997), and the unaudited condensed consolidated
financial statements as of March 31, 1998 and for the three months then ended
(which are contained in the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1998) and the accompanying notes thereto.
10
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
---------------
(Unaudited)
<TABLE>
<CAPTION>
Shopping Center
As Reported Acquisitions
--------------- ---------------
<S> <C> <C>
Assets:
Real estate, net of accumulated depreciation $ 1,311,322,749 $ 47,985,000
Investment in retail store leases 15,539,477 -
Cash and cash equivalents 34,377,395 34,551,891
Accounts and notes receivable 18,304,186 -
Other assets 91,573,797 -
--------------- ---------------
$ 1,471,117,604 82,536,891
=============== ===============
Liabilities:
Notes payable $ 510,250,000 $ -
Mortgages payable 141,192,853 -
Other liabilities, including minority interests
in partnerships
74,341,707 4,973,196
--------------- ---------------
725,784,560 4,973,196
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 -
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 -
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 -
Aggregate liquidation preference $100,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 40,419,440 and 42,678,460 shares, respectively 404,194 22,590
Paid-in capital 858,197,672 77,541,105
Cumulative distributions in excess of net income (114,168,822) -
--------------- ---------------
745,333,044 77,563,695
--------------- ---------------
$ 1,471,117,604 $ 82,536,891
=============== ===============
<CAPTION>
Certain Acquired
Metropolitan Life
Properties Pro Forma
---------------------------- ---------------
<S> <C> <C>
Assets:
Real estate, net of accumulated depreciation $ 167,500,000 $ 1,526,807,749
Investment in retail store leases - 15,539,477
Cash and cash equivalents - 68,929,286
Accounts and notes receivable - 18,304,186
Other assets - 91,573,797
--------------- ---------------
$ 167,500,000 $ 1,721,154,495
=============== ===============
Liabilities:
Notes payable $ 167,500,000 $ 677,750,000
Mortgages payable - 141,192,853
Other liabilities, including minority interests
in partnerships
- 79,314,903
--------------- ---------------
167,500,000 898,257,756
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
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
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
Aggregate liquidation preference $100,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 40,419,440 and 42,678,460 shares, respectively - 426,784
Paid-in capital - 935,738,777
Cumulative distributions in excess of net income - (114,168,822)
--------------- ---------------
- 822,896,739
--------------- ---------------
$ 167,500,000 $ 1,721,154,495
=============== ===============
</TABLE>
The accompanying notes are an integral part of these pro forma
condensed consolidated financial statements.
11
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
-------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Certain Acquired
Shopping Center Metropolitan Life
As Reported Acquisitions Properties Pro Forma
------------- ------------- ---------------------------- ------------
<S> <C> <C> <C> <C>
Revenues from rental property $ 198,929,403 $ 17,191,682 $ 19,044,050 $ 235,165,135
------------- ------------- ------------- -------------
Rental property expenses:
Rent 4,873,200 - - 4,873,200
Real estate taxes 26,345,685 2,069,241 - 28,414,926
Interest 31,744,762 3,222,408 10,864,000 45,831,170
Operating and maintenance 22,194,628 2,163,488 - 24,358,116
Depreciation and amortization 30,052,714 2,796,779 3,582,460 36,431,953
------------- ------------- ------------- -------------
115,210,989 10,251,916 14,446,460 139,909,365
------------- ------------- ------------- -------------
Income from rental property 83,718,414 6,939,766 4,597,590 95,255,770
Income from investment in retail store leases 3,571,946 3,571,946
------------- ------------- ------------- -------------
87,290,360 6,939,766 4,597,590 98,827,716
Management fee income 3,276,152 - - 3,276,152
General and administrative expenses (11,651,341) - - (11,651,341)
Other income (expenses), net 6,677,279 (777,856) - 5,899,423
------------- ------------- ------------- -------------
Income before gain on sale of shopping center 85,592,450 6,161,910 4,597,590 96,351,950
Gain on sale of shopping center property 243,995 - - 243,995
------------- ------------- ------------- -------------
Net income $ 85,836,445 $ 6,161,910 $ 4,597,590 $ 96,595,945
============= ============= ============= =============
Net income applicable to common shares $ 67,398,745 $ 6,161,910 $ 4,597,590 $ 78,158,245
============= ============= ============= =============
Net income per common share
Basic $1.80 $2.09
====== =====
Diluted $1.78 $2.07
====== =====
</TABLE>
The accompanying notes are an integral part of these pro forma
condensed consolidated financial statements.
12
<PAGE>
KIMCO REALTY CORPORATION AND SUSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
-------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Certain Acquired
Shopping Center Metropolitan Life
As Reported Acquisitions Properties Pro Forma
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues from rental property $ 63,111,632 $ 3,186,827 $ 4,761,013 $ 71,059,472
------------ ------------ ------------ ------------
Rental property expenses:
Rent 2,752,135 - - 2,752,135
Real estate taxes 8,876,999 265,551 - 9,142,550
Interest 11,039,207 367,816 2,716,000 14,123,023
Operating and maintenance 6,936,109 529,202 - 7,465,311
Depreciation and amortization 8,899,764 514,380 895,615 10,309,759
------------ ------------ ------------ ------------
38,504,214 1,676,949 3,611,615 43,792,778
------------ ------------ ------------ ------------
Income from rental property 24,607,418 1,509,878 1,149,398 27,266,694
Income from investment in retail store leases 916,171 - - 916,171
------------ ------------ ------------ ------------
25,523,589 1,509,878 1,149,398 28,182,865
Management fee income 801,708 - - 801,708
General and administrative expenses (3,180,653) - - (3,180,653)
Other income (expenses), net 1,437,863 (228,464) - 1,209,399
------------ ------------ ------------ ------------
Income before gain on sale of shopping center 24,582,507 1,281,414 1,149,398 27,013,319
Gain on sale of shopping center property 901,249 - - 901,249
------------ ------------ ------------ ------------
Net income $ 25,483,756 $ 1,281,414 $ 1,149,398 $ 27,914,568
============ ============ ============ ============
Net income applicable to common shares $ 20,874,331 $ 1,281,414 $ 1,149,398 $ 23,305,143
============ ============ ============ ============
Net income per common share
Basic $0.52 $0.58
====== =====
Diluted $0.51 $0.57
====== =====
</TABLE>
The accompanying notes are an integral part of these pro forma
condensed consolidated financial statements.
13
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. Basis of Presentation
The Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998
gives effect to, with respect to the Shopping Center Acquisitions, (i)the
purchase of four shopping center properties acquired by the Company
during April and May 1998, (ii) the issuance of an aggregate 2,259,020
shares of the Company's common stock, and (iii) the issuance of
partnership units valued at approximately $5.0 million in connection with
one of the acquisitions and, with respect to the Certain Acquired Metropolitan
Life Properties, (i) the purchase of 30 fee and leasehold positions consisting
of 29 neighborhood and community shopping center properties and 1
office/distribution facility acquired by the Company on July 1, 1998, and (ii)
the issuance of an aggregate $100.0 million of unsecured medium-term notes
bearing interest at 6.73% and the borrowing of $67.5 million under the
Company's unsecured revolving credit facility, as if the Shopping Center
Acquisitions and the Certain Acquired Metropolitan Life Properties had been
acquired, the common shares and partnership units were issued and the financing
completed as of March 31, 1998.
As reported amounts have been adjusted based upon the historical results of the
Shopping Center Acquisitions and the Certain Acquired Metropolitan Life
Properties for the year ended December 31, 1997. These adjustments to the Pro
Forma Condensed Consolidated Statements of Income have the effect of presenting
the results for the year ended December 31, 1997 and the three months ended
March 31, 1998 as if the Shopping Center Acquisitions and the Certain Acquired
Metropolitan Life Properties had been acquired as of January 1, 1997.
2. Pro Forma Adjustments
The adjustment to interest expense relates to (i) the assumption of
mortgage debt encumbering four of the Shopping Center Acquisitions, (ii)
the issuance of the medium-term notes and the additional borrowings under
the Company's unsecured revolving credit facility.
The adjustments to other income (expenses), net relate to (i) the
elimination of interest earned on funds assumed to have been expended as
of January 1, 1997 for the Shopping Center Acquisitions and (ii) the
preferred return applicable to the partnership unitholders in connection
with one of the 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 for the fee simple
properties and to building (100%) for the properties subject to ground
leases.
14
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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: July 8, 1998
By: /s/ Michael V. Pappagallo
-------------------------
Michael V. Pappagallo
Chief Financial Officer
15
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Kimco Realty Corporation on Form S-3 (File No. 333-37285), of our report dated
July 7, 1998 on our audit of the Historical Summary of Revenues of Certain
Acquired Metropolitan Life Properties as of December 31, 1997, which report is
included in this Current Report on Form 8-K.
PricewaterhouseCoopers LLP
New York, New York
July 7, 1998
