<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):
August 5, 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 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 22
<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 -
As previously reported on Current Report on Form 8-K dated May 22,
1998, during May 1998, certain subsidiaries of the Company acquired, in separate
transactions, Lafayette Marketplace in Lafayette, Indiana and Bayshore Gardens
Shopping Center in Bradenton, Florida for an aggregate purchase price of $33.3
million, which included the issuance of partnership units valued at
approximately $5.0 million in connection with the Bayshore Gardens acquisition
(the "May 1998 Shopping Center Acquisitions"). During July 1998, the Company
acquired 3 neighborhood and community shopping center properties comprising
approximately 384,000 square feet of gross leasable area ("GLA") in 3 states
(the "July 1998 Acquisitions" and collectively, with the May 1998 Shopping
Center Acquisitions, "the Certain Acquired Properties"). The July 1998
Acquisitions, acquired in separate transactions, for an aggregate purchase price
of approximately $35.3 million, include: (i) Shoppes at Rivergate in
Goodlettsville, Tennessee, (ii) Center of the Hills in Austin, Texas and (iii)
Juan Tabo Plaza in Albuquerque, New Mexico.
More specific information with respect to each of the Certain Acquired
Properties is as follows:
Lafayette Marketplace, located on State Road 38 in Lafayette, Indiana,
is anchored by Michaels and contains approximately 214,000 square feet of GLA.
Bayshore Gardens Shopping Center, located on Flamingo Boulevard in Bradenton,
Florida, is anchored by Publix and TJ Maxx, and contains approximately 163,000
square feet of GLA.
2
<PAGE>
Shoppes at Rivergate, located on Gallatin Park in Goodlettsville,
Tennessee, is anchored by Uptons Department Store and Stein Mart and contains
approximately 171,000 square feet of GLA. Center of the Hills, located on Route
71 West in Austin, Texas, is anchored by H.E.B. Grocery and Future Firm and
contains approximately 153,000 square feet of GLA. Juan Tabo Plaza, located on
Montgomery Boulevard in Albuquerque, New Mexico, is anchored by Walgreens and
Page One Cellular and contains approximately 60,000 square feet of GLA.
Management believes that the current annualized net cash flow generated
by the July 1998 Acquisitions provides a weighted average annualized yield of
approximately 10.1% on the Company's investment in such properties.
Although none of the above Certain 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 Certain Acquired Properties and pro forma financial information for (i)
the July 1998 Acquisitions, (ii) all previously reported 1998 acquisitions,
which include the purchase of 15 shopping centers acquired during 1998 which
were previously reported on Current Report on Form 8-K dated May 22, 1998 and
the purchase of 30 fee and leasehold positions acquired by the Company from the
Metropolitan Life Insurance Company ("the "Met Life Acquisition") on July 1,
1998 as previously reported on Current Report on Form 8-K dated July 9, 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 Three Months Ended March 31, 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 March 31, 1998...............13
Pro Forma Condensed Consolidated Statements of Income for the Year
Ended December 31, 1997 and the Three Months Ended March 31, 1998.................14
Notes to Pro Forma Condensed Consolidated Financial Statements....................16
</TABLE>
(c) Exhibits:
* 23.1 Consent of PricewaterhouseCoopers LLP
----------------
*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
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 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
July 24, 1998
6
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
COMBINED HISTORICAL SUMMARY OF REVENUES
AND CERTAIN OPERATING EXPENSES
Three Months
Year Ended Ended March 31,
December 31, 1998
1997 (Unaudited)
------------ ---------------
Revenues:
Base rentals $7,295,886 $1,798,178
Operating reimbursements and other income 1,118,339 331,684
---------- ----------
8,414,225 2,129,862
---------- ----------
Certain operating expenses:
Real estate taxes 837,169 209,292
Repairs and maintenance 477,675 129,806
Other operating expenses 283,769 59,560
---------- ----------
1,598,613 398,658
---------- ----------
Excess of revenues over certain
operating expenses $6,815,612 $1,731,204
========== ==========
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
- ------------- --------
Lafayette Marketplace Lafayette, Indiana
Bayshore Gardens Shopping Center Bradenton, Florida
Shoppes at Rivergate Goodlettsville, Tennessee
Center of the Hills Austin, Texas
Juan Tabo Plaza Albuquerque, New Mexico
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 $7,053,000
1999 $6,823,000
2000 $6,455,000
2001 $5,903,000
2002 $5,394,000
Thereafter $23,143,000
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 $ 6,815,612
Less: Estimated depreciation (Note 1) (1,408,615)
=============
Estimated net income $ 5,406,997
=============
Estimated Funds from Operations
Estimated net income $ 5,406,997
Add: Estimated depreciation (Note 1) 1,408,615
-------------
Estimated funds from operations $ 6,815,612
=============
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.
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 96.5% 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
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 March 31,
1998 gives effect to (i) the purchase of four shopping center properties
acquired by the Company during April and May 1998 which were previously reported
on Form 8-K dated May 22, 1998 (the "Second Quarter 1998 Acquisitions") and the
Met Life Acquisition on July 1, 1998 which was previously reported on Form 8-K
dated July 9, 1998 (collectively, the "Second Quarter 1998 and Met Life
Acquisitions"), (ii) the purchase of three shopping centers acquired by the
Company in July 1998 (the "July 1998 Acquisitions"), (iii) the issuance of
partnership units valued at approximately $5.0 million in connection with one of
the Second Quarter 1998 Acquisitions, (iv) the borrowing of $67.5 million under
the Company's unsecured revolving credit facility, and (v) the issuance of an
aggregate $100.0 million and $30.0 million of unsecured medium-term notes
bearing interest at 6.73% and 6.93%, respectively, as if these properties had
been acquired, the partnership units and medium-term notes issued and the
borrowings completed as of March 31, 1998.
Additionally, the accompanying Pro Forma Condensed Consolidated Balance Sheet as
of March 31, 1998 gives effect to the Merger with Price REIT as if the Merger
had occurred on March 31, 1998 and had been accounted for under the purchase
method of accounting in accordance with Accounting Principles Board Opinion No.
16.
The Company, in four transactions during April 1998, issued an aggregate
2,259,020 shares of the Company's common stock for net proceeds of approximately
$77.6 million. These transactions have also been reflected in the Pro Forma
Condensed Consolidated Balance Sheet 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 reflect
the historical results of the Company adjusted to give effect to (i) the 1998
Previously Reported Acquisitions and (ii) the July 1998 Acquisitions as if these
transactions had been completed as of January 1, 1997 and (iii) the Merger as if
it had occured as of January 1, 1997 and accounted for under the purchase method
of accounting in accordance with Accounting Principles Board Opinion No. 16.
11
<PAGE>
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
1998 Previously Reported Acquisitions, the July 1998 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 March 31, 1998 and for the three months then ended (which are
included in each of the Companys' Quarterly Report on Form 10-Q for the period
ended March 31, 1998) and the accompanying notes thereto.
12
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
---------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------------------
Second Quarter 1998
and Met Life
Kimco Acquisitions July 1998
Historical (previously reported) Acquisitions
-------------------- --------------------- ---------------
<S> <C> <C> <C>
Assets:
Real estate, net of accumulated depreciation $ 1,311,322,749 $ 215,485,000 $ 35,325,000
Investment in retail store leases 15,539,477 - -
Cash and cash equivalents 34,377,395 34,551,891 (5,325,000)
Accounts and notes receivable 18,304,186 - -
Other assets 91,573,797 - -
-------------------- ------------------ -----------------
$ 1,471,117,604 $ 250,036,891 $ 30,000,000
==================== ================== =================
Liabilities:
Notes payable $ 510,250,000 167,500,000 $ 30,000,000
Mortgages payable 141,192,853 - -
Other liabilities, including minority interests
in partnerships 74,341,707 4,973,196 -
-------------------- ------------------ -----------------
725,784,560 172,473,196 30,000,000
Stockholders' Equity:
Preferred stock, $1.00 par value, authorized 5,000,000 shares
and 3,470,000 shares on a proforma basis
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
Class D Convertible Preferred Stock, $1.00 par value, authorized
700,000 shares
Issued and outstanding 429,159 shares - - -
Aggregate liquidation preference $107,289,750
Class E Floating Rate Cumulative Preferred Stock, $1.00 par value,
Authorized, issued and outstanding 65,000 shares - - -
Aggregate liquidation preference $65,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 40,419,440 and 54,600,452 shares
on a pro forma basis, 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 $ 250,036,891 $ 30,000,000
==================== ================== =================
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------------------
Second Quarter
Price REIT Price REIT Merger
Historical Acquisitions Adjustments
------------------ ------------------ ------------------
<S> <C> <C> <C>
Assets:
Real estate, net of accumulated depreciation $ 617,657,000 $ 42,605,000 $ 263,690,422
Investment in retail store leases - - -
Cash and cash equivalents 4,112,000 (4,000,000) (15,800,000)
Accounts and notes receivable 16,397,000 - -
Other assets 33,156,000 - (1,653,701)
------------------ ------------------ ------------------
$ 671,322,000 $ 38,605,000 $ 246,236,721
================== ================== ==================
Liabilities:
Notes payable $ 293,000,000 $ (48,073,000) $ -
Mortgages payable 37,381,000 22,978,000 -
Other liabilities, including minority interests
in partnerships 15,772,000 - 2,746,299
------------------ ------------------ ------------------
346,153,000 (25,095,000) 2,746,299
------------------ ------------------ ------------------
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 - - -
Aggregate liquidation preference $75,000,000
Class B Preferred Stock, $1.00 par value, authorized 230,000 shares
Issued and outstanding 200,000 shares - - -
Aggregate liquidation preference $50,000,000
Class C Preferred Stock, $1.00 par value, authorized 460,000 shares
Issued and outstanding 400,000 shares - - -
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
Aggregate liquidation preference $107,289,750
Class E Floating Rate Cumulative Preferred Stock, $1.00 par value,
Authorized, issued and outstanding 65,000 shares - 65,000 -
Aggregate liquidation preference $65,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 40,419,440 and 54,600,452 shares
on a pro forma basis, respectively 117,000 - 2,220
Paid-in capital 356,026,000 63,635,000 212,085,043
Cumulative distributions in excess of net income (30,974,000) - 30,974,000
------------------ ------------------ ------------------
325,169,000 63,700,000 243,490,422
------------------ ------------------ ------------------
$ 671,322,000 $ 38,605,000 $ 246,236,721
================== ================== ==================
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
-------------------
<S> <C>
Assets:
Real estate, net of accumulated depreciation $ 2,486,085,171
Investment in retail store leases 15,539,477
Cash and cash equivalents 47,916,286
Accounts and notes receivable 34,701,186
Other assets 123,076,096
-------------------
$ 2,707,318,216
===================
Liabilities:
Notes payable $ 952,677,000
Mortgages payable 201,551,853
Other liabilities, including minority interests
in partnerships 97,833,202
-------------------
1,252,062,055
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
Class D Convertible Preferred Stock, $1.00 par value, authorized
700,000 shares
Issued and outstanding 429,159 shares 429,159
Aggregate liquidation preference $107,289,750
Class E Floating Rate Cumulative Preferred Stock, $1.00 par value,
Authorized, issued and outstanding 65,000 shares 65,000
Aggregate liquidation preference $65,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 40,419,440 and 54,600,452 shares
on a pro forma basis, respectively 546,004
Paid-in capital 1,567,484,820
Cumulative distributions in excess of net income (114,168,822)
-------------------
1,455,256,161
-------------------
$ 2,707,318,216
===================
</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 YEAR ENDED DECEMBER 31, 1997
-------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------------------
1998 Previously
Kimco Reported July 1998 Price REIT
Historical Acquisitions Acquisitions Historical
------------------ --------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Revenues from rental property $ 198,929,403 $ 36,235,732 $ 4,592,794 $ 69,335,000
------------------ --------------- ------------------ ----------------
Rental property expenses:
Rent 4,873,200 - - -
Real estate taxes 26,345,685 2,069,241 431,726 7,671,000
Interest 31,744,762 14,086,408 2,079,000 15,667,000
Operating and maintenance 22,194,628 2,163,488 390,120 5,890,000
Depreciation and amortization 30,052,714 6,379,239 724,615 15,752,000
------------------ --------------- ------------------ ----------------
115,210,989 24,698,376 3,625,461 44,980,000
------------------ --------------- ------------------ ----------------
Income from rental property 83,718,414 11,537,356 967,333 24,355,000
Income from investment in retail store leases 3,571,946 - - -
------------------ --------------- ------------------ ----------------
87,290,360 11,537,356 967,333 24,355,000
Management fee income 3,276,152 - - 299,000
General and administrative expenses (11,651,341) - - (4,191,000)
Other income (expenses), net 6,677,279 (777,856) (265,000) 3,004,000
------------------ --------------- ------------------ ----------------
Income before gain on sale of shopping center 85,592,450 10,759,500 702,333 23,467,000
Gain on sale of shopping center property 243,995 - - 2,787,000
------------------ --------------- ------------------ ----------------
Net income $85,836,445 $10,759,500 $702,333 $26,254,000
================== =============== ================== ================
Net income applicable to common shares $67,398,745 $10,759,500 $702,333 $26,254,000
=================== =============== ================== ================
Net income per common share
Basic $1.80
======
Diluted $1.78
======
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------------------------------------
1998
Price REIT Merger
Acquisitions Adjustments Pro Forma
----------------- ---------------- ----------------
<S> <C> <C> <C>
Revenues from rental property $ 8,452,000 $ - $ 317,544,929
----------------- ---------------- ----------------
Rental property expenses:
Rent - - 4,873,200
Real estate taxes 812,000 - 37,329,652
Interest 90,000 - 63,667,170
Operating and maintenance 778,000 - 31,416,236
Depreciation and amortization 1,522,154 1,475,000 55,905,722
----------------- ---------------- ----------------
3,202,154 1,475,000 193,191,980
----------------- ---------------- ----------------
Income from rental property 5,249,846 (1,475,000) 124,352,949
Income from investment in retail store leases - - 3,571,946
----------------- ---------------- ----------------
5,249,846 (1,475,000) 127,924,895
Management fee income - - 3,575,152
General and administrative expenses - 1,500,000 (14,342,341)
Other income (expenses), net (381,000) 8,257,423
----------------- ---------------- ----------------
Income before gain on sale of shopping center 4,868,846 25,000 125,415,129
Gain on sale of shopping center property - - 3,030,995
----------------- ---------------- ----------------
Net income $4,868,846 $25,000 $128,446,124
================= ================ ================
Net income applicable to common shares $4,868,846 ($13,013,731) $96,969,693
================= ================ ================
Net income per common share
Basic $1.97
=====
Diluted $1.95
=====
</TABLE>
The accompanying notes are an integral part of these pro forma
condensed consolidated financial statements.
14
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
-------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------------------------------------------------------
1998 Previously
Kimco Reported July 1998 Price REIT
Historical Acquisitions Acquisitions Historical
------------------ --------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Revenues from rental property $ 63,111,632 $ 7,947,839 $ 1,174,504 $ 23,237,000
------------------ --------------- ------------------ ----------------
Rental property expenses:
Rent 2,752,135 - - -
Real estate taxes 8,876,999 265,551 107,932 2,355,000
Interest 11,039,207 3,083,816 519,750 5,646,000
Operating and maintenance 6,936,109 529,202 96,535 2,400,000
Depreciation and amortization 8,899,764 1,409,994 181,154 4,961,000
------------------ --------------- ------------------ ----------------
38,504,214 5,288,563 905,371 15,362,000
------------------ --------------- ------------------ ----------------
Income from rental property 24,607,418 2,659,276 269,133 7,875,000
Income from investment in retail store leases 916,171 - - -
------------------ --------------- ------------------ ----------------
25,523,589 2,659,276 269,133 7,875,000
Management fee income 801,708 - - 68,000
General and administrative expenses (3,180,653) - - (1,314,000)
Other income (expenses), net 1,437,863 (228,464) (66,250) -
------------------ --------------- ------------------ ----------------
Income before gain on sale of shopping center 24,582,507 2,430,812 202,883 6,629,000
Gain on sale of shopping center property 901,249 - - -
------------------ --------------- ------------------ ----------------
Net income $25,483,756 $ 2,430,812 $202,883 $6,629,000
================== =============== ================== ================
Net income applicable to common shares $20,874,331 $ 2,430,812 $202,883 $ 6,629,000
================== =============== ================== ================
Net income per common share
Basic $0.52
======
Diluted $0.51
======
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------------------------------------
1998
Price REIT Merger
Acquisitions Adjustments Pro Forma
----------------- ---------------- -----------------
<S> <C> <C> <C>
Revenues from rental property 2,038,000 $ - $ 97,508,975
------------------ ---------------- -----------------
Rental property expenses:
Rent - - 2,752,135
Real estate taxes 216,998 - 11,822,480
Interest (477,551) - 19,811,222
Operating and maintenance 142,002 - 10,103,848
Depreciation and amortization 380,538 (655,000) 15,177,450
----------------- ---------------- -----------------
261,987 (655,000) 59,667,135
----------------- ---------------- -----------------
Income from rental property 1,776,013 655,000 37,841,840
Income from investment in retail store leases - - 916,171
----------------- ---------------- -----------------
1,776,013 655,000 38,758,011
Management fee income - - 869,708
General and administrative expenses - 375,000 (4,119,653)
Other income (expenses), net (60,000) - 1,083,149
----------------- ---------------- -----------------
Income before gain on sale of shopping center 1,716,013 1,030,000 36,591,215
Gain on sale of shopping center property - - 901,249
----------------- ---------------- -----------------
Net income $1,716,013 $1,030,000 $37,492,464
================= ================ =================
Net income applicable to common shares $ 1,716,013 $ (2,229,683) $29,623,356
================= ================ =================
Net income per common share
Basic $0.57
=====
Diluted $0.56
=====
</TABLE>
The accompanying notes are an integral part of these pro forma
condensed consolidated financial statements.
15
<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 March 31,
1998 gives effect to (i) the purchase of four shopping center properties
acquired by the Company during April and May 1998 which were previously reported
on Form 8-K dated May 22, 1998 (the "Second Quarter 1998 Acquisitions") and the
Met Life Acquisition on July 1, 1998 which was previously reported on Form 8-K
dated July 9, 1998 (collectively, the "Second Quarter 1998 and Met Life
Acquisitions"), (ii) the purchase of three shopping centers acquired by the
Company in July 1998 (the "July 1998 Acquisitions"), (iii) the issuance of
partnership units valued at approximately $5.0 million in connection with one of
the Second Quarter 1998 Acquisitions, (iv) the borrowing of $67.5 million under
the Company's unsecured revolving credit facility, and (v) the issuance of an
aggregate $100.0 million and $30.0 million of unsecured medium-term notes
bearing interest at 6.73% and 6.93%, respectively, as if these properties had
been acquired, the partnership units and medium-term notes issued and the
borrowings completed as of March 31, 1998.
Additionally, the accompanying Pro Forma Condensed Consolidated Balance Sheet as
of March 31, 1998 gives effect to the Merger with Price REIT as if the Merger
had occurred on March 31, 1998 and had been accounted for under the purchase
method of accounting in accordance with Accounting Principles Board Opinion No.
16.
The Company, in four transactions during April 1998, issued an aggregate
2,259,020 shares of the Company's common stock for net proceeds of approximately
$77.6 million. These transactions have also been reflected in the Pro Forma
Condensed Consolidated Balance Sheet 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 reflect
the historical results of the Company adjusted to give effect to (i) the 1998
Previously Reported Acquisitions and (ii) the July 1998 Acquisitions as if these
transactions had been completed as of January 1, 1997 and (iii) the Merger as if
it had occured as of January 1, 1997 and accounted for under the purchase method
of accounting in accordance with Accounting Principles Board Opinion No. 16.
16
<PAGE>
2. Pro Forma Adjustments
(i) 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 (ii) the
issuance of the $100.0 million medium-term notes and the additional
borrowings under the Company's unsecured revolving credit facility.
B. 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 acquisitions.
C. 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.
(ii) With respect to the July 1998 Acquisitions:
A. The adjustment to cash relates to proceeds from the issuance of $30.0
million medium-term notes offset by the cash used to acquire these
properties.
B. The adjustment to interest expense relates to the issuance of the
medium-term notes.
C. The adjustments to other income (expenses), net relate to the
elimination of interest earned on funds assumed to have been expended
as of January 1, 1997.
D. 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.
(iii) With respect to the 1998 Second Quarter Price REIT Acquisitions (as
presented on the Pro Forma Condensed Consolidated Balance Sheet) and the
1998 Price REIT Acquisitions (as presented on the Pro Forma Condensed
Consolidated Statements of Income for the year ended December 31, 1997 and
the three months ended March 31, 1998):
The adjustments represent the acquisition by Price REIT of 3 shopping
centers with respect to the 1998 Second Quarter Price REIT Acquisitions
and 6 shopping centers with respect to the 1998 Price REIT Acquisitions
which were acquired during 1998 prior to the Merger, on a pro forma basis
as though the acquisitions has occurred at March 31, 1998 with respect to
the 1998 Second Quarter Price REIT Acquisitions and as of January 1, 1997
with respect to the 1998 Price REIT Acquisitions.
17
<PAGE>
(iv) With respect to the Price REIT Merger:
A. The adjustment to Real estate, net of accumulated depreciation,
reflects the increase in book value of Price REIT's real estate assets
based upon (i) an exchange ratio of one share of Price REIT common
stock for one share of Kimco Common Stock (assumed value of $38.59 per
share of Kimco Common Stock) and 0.36 Kimco Class D Depositary shares
("Kimco Class D Depositary Shares") (assumed value of $25.00 per
depositary share), each representing a one-tenth fractional interest
in a new issue of Kimco 7.5% Class D Cumulative Convertible Preferred
Stock ("Kimco Class D Preferred Stock") and (ii) an exchange ratio of
one share of Price REIT Class A Floating Rate Cumulative Preferred
Stock for one share of Kimco Class E Floating Rate Cumulative
Preferred Stock (assumed value $1,000 per share) as follows:
Issuance of:
<TABLE>
<CAPTION>
000's
--------
<S> <C>
i. 11,921,992 shares of Kimco Common Stock (assumed
value of $38.59 per share) based on an exchange
ratio of one for one, $460,069
ii. 429,159 shares of Kimco Class D Preferred Stock
(represented by 4,291,590 Kimco Class D Depositary Shares) based
on an exchange ratio of 0.036 shares of Kimco
Class D Preferred Stock (represented by .36 Kimco Class D
depositary Shares) for one share of Price Reit common stock
in exchange for 11,921,992 shares of Price REIT common stock and 107,290
iii. 65,000 shares of Kimco Class E Floating Rate Cumulative
Preferred Stock (represented by 650,000 Kimco Class E Depositary
Shares) based on an exchange ratio of one for one for 65,000
shares of Price REIT Class A Floating Rate Cumulative Preferred
Stock 65,000
iv. Assumption of Price REIT liabilities 4,400
v. Merger costs 15,800
--------
Total purchase price to be allocated 652,559
Less: book basis of Price REIT's net assets
acquired (after Second Quarter Price REIT
Acquisitions pro forma adjustments) 388,869
--------
Pro Forma adjustment to real estate $263,690
--------
--------
</TABLE>
B. The adjustment to cash and cash equivalents reflects the estimated fees
and other expenses relating to the Merger, including, but not limited
to, investment banking fees, legal and accounting fees, printing,
filing and other related costs.
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
Investments and advances in real estate joint ventures and Minority
interests in partnerships, included in Other assets and Other
liabilities, respectively, reflect the elimination of the partnership
accounting for this partnership as a result of the Merger.
18
<PAGE>
D. The adjustments to stockholders' equity reflect the issuance of (i)
11,921,992 shares of Kimco Common Stock, par value $.01 per share (ii)
429,159 shares of Kimco Class D Preferred Stock (represented by
4,291,590 Kimco Class D Depositary Shares) based on the exchange ratio
of one share of Price REIT Common Stock for one share of Kimco Common
Stock and 0.036 shares of Kimco Class D Preferred Stock (represented by
0.36 Kimco Class D Depositary Shares), and (iii) an exchange of 65,000
shares of Price REIT Class A Floating Rate Cumulative Preferred Stock
for 65,000 shares of a new issue of Kimco Class E Floating Rate
Cumulative Preferred Stock, par value $1.00 (represented by 650,000
Class E Depositary Shares) as follows:
<TABLE>
<CAPTION>
Cumulative
Distributions
Common Preferred Paid in in Excess of
Stock Stock Capital Net Income
(000's) (000's) (000's) (000's)
--------------------------------------------------
<S> <C> <C> <C> <C>
Issuance of Kimco Common Stock $ 119 $ - $ 459,950 $ -
Issuance of Kimco Class D
Preferred Stock 429 106,861
Issuance of Kimco Class E
Floating Rate Cumulative
Preferred Stock 65 64,935
Price REIT's historical
Stockholders' equity (117) (65) (419,661) 30,974
------------------------------------------------
Stockholders' equity Pro Forma
adjustments $ 2 $ 429 $ 212,085 $ 30,974
================================================
</TABLE>
E. 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 three months ended March 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, 1997 March 31, 1998
(000's) (000's)
--------------------------------------
<S> <C> <C>
Depreciation expense based upon an estimated useful life
of 39 years $ 18,337 $ 4,584
Less: Price REIT depreciation of real estate owned based
upon an estimated useful life of 15 to 25 years (16,862) (5,239)
-------- --------
Depreciation and amortization Pro Forma adjustment $ 1,475 ($655)
-------- --------
</TABLE>
19
<PAGE>
F. 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 Three Months Ended
December 31, 1997 March 31, 1998
(000's) (000's)
----------------- ------------------
<S> <C> <C>
Net reduction in salary and benefit costs $ 700 $ 175
Net reduction in duplication of public company expenses 600 150
Net reduction in directors and officers' insurance and
directors fees 200 50
------ -------
General and administrative Pro Forma adjustment $1,500 $ 375
------ ------
</TABLE>
G. 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 of
$15,248 and $168,000 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
three months ended March 31, 1998 and the year ended December 31, 1997,
respectively.
H. 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 three months ended March 31,
1998 are computed as follows:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
December 31, 1997 March 31, 1998
(000's) (000's)
----------------- ------------------
<S> <C> <C>
Kimco's historical weighted average number of shares
outstanding 37,388 40,409
Issuance of Kimco common stock at an exchange ratio of one
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 52,331
Effect of Dilutive Securities- Stock Options 462 509
------ ------
Pro Forma weighted average number of Kimco common shares
outstanding (Diluted) 49,772 52,840
------ ------
The effect of the conversion of the Class D Convertible Preferred Stock would have an anti-dilutive effect.
Accordingly, the impact of such conversion has not been included in the determination of diluted earnings per
share.
</TABLE>
20
<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: August 5, 1998
By: /s/ Michael V. Pappagallo
-------------------------
Michael V. Pappagallo
Chief Financial Officer
21
<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 24, 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
August 4, 1998
22
