<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): January 29, 1999
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 21
<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 the fourth quarter of 1998 and January 1999, certain
subsidiaries of the Company acquired, in separate transactions, 9 neighborhood
and community shopping center properties comprising approximately 1.4 million
square feet of gross leasable area ("GLA") in five states (the "New Acquired
Properties"). The New Acquired Properties were purchased for an aggregate price
of $135.2 million, $30.6 million of which was financed with mortgage
indebtedness encumbering two of the acquisitions. The New Acquired Properties
include:
Property Name Location
------------- --------
Vista Ridge Plaza Lewisville, Texas
Westgate Plaza Amarillo, Texas
North Point Shopping Center Joplin, Missouri
Santee Town Center Promenade Santee, California
Village Commons Shopping Center Talahassee, Florida
The Piers Shopping Center Port Richey, Florida
Magnolia Square San Ramon, California
Palm Plaza Temecula, California
Riverwalk Plaza South Charleston, West Virginia
2
<PAGE>
More specific information with respect to each of the New Acquired Properties is
as follows:
In October 1998, the Company acquired Vista Ridge Plaza, located in
Lewisville, Texas for a purchase price of approximately $11.4 million. Vista
Ridge Plaza is anchored by Drug Emporium and Designer Shoe Warehouse and
contains approximately 94,000 square feet of GLA.
During November 1998, the Company acquired Westgate Plaza and North
Point Shopping Center, in separate transactions, for an aggregate purchase price
of approximately $33.0 million, $22.1 million of which was financed with
mortgage debt on one of the properties. Westgate Plaza, located in Amarillo,
Texas, is anchored by Builders Square and Kmart, and contains approximately
342,000 square feet of GLA. North Point Shopping Center, located in Joplin,
Missouri, is anchored by Hollywood Video and Hobby Lobby, and contains
approximately 147,000 square feet of GLA.
During December 1998, the Company acquired three properties, in
separate transactions, for an aggregate purchase price of approximately $32.2
million. Santee Town Center Promenade, located in Santee, California, is
anchored by Office Depot and Ross Stores, and contains approximately 97,000
square feet of GLA. Village Commons Shopping Center, located in Tallahassee,
Florida, is anchored by Stein Mart and Ben Franklin and contains approximately
106,000 square feet of GLA. The Piers Shopping Center, located in Port Richey,
Florida, is anchored by Staples and Circuit City and contains approximately
103,000 square feet of GLA.
During January 1999, the Company acquired three properties, in two
separate transactions, for an aggregate purchase price of approximately $58.6
million including the assumption of approximately $8.5 million of mortgage debt
encumbering one of the properties. Palm Plaza, located in Temecula, California,
and Magnolia Square, located in San Ramon, California, were acquired in a single
transaction for an aggregate purchase price of approximately $45.1 million. Palm
Plaza contains approximately 340,000 square feet of GLA and is anchored by Kmart
and Food-4-Less. Magnolia Square contains approximately 42,000 square feet of
GLA and is anchored by Super Crown Foods. Riverwalk Plaza, located in South
Charleston, West Virginia contains approximately 135,000 square feet of GLA and
is anchored by Kroger and T.J. Maxx.
Management believes that the current annualized net cash flow generated
by the New Acquired Properties provides a weighted average annualized yield of
approximately 10% on the Company's investment in such properties.
3
<PAGE>
Although none of the above New 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 certain of the New Acquired Properties and pro forma financial information
for (i) the New Acquired Properties, (ii) all previously reported 1998
acquisitions, which include the purchase of 15 shopping centers, 3 shopping
centers and 3 shopping centers which were previously reported on Current Reports
on Form 8-K filed May 22, 1998, August 10, 1998 and December 4, 1998,
respectively, and 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 (collectively, the "1998 Previously Reported Acquisitions") and (iii) the
effects of the Merger.
4
<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.................................................7
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..........................................8
Notes to Combined Historical Summary of Revenues and Certain
Operating Expenses of Certain Acquired Properties.................................9
Estimates of Net Income and Funds from Operations of Certain
Acquired Properties...............................................................10
Notes to Estimates of Net Income and Funds from Operations of
Certain Acquired Properties...................................................... 11
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1998..........13
Pro Forma Condensed Consolidated Statements of Income for the Year
Ended December 31, 1997 and the Nine Months Ended September 30, 1998.............14
Notes to Pro Forma Condensed Consolidated Financial Statements...................16
</TABLE>
(c) Exhibits:
* 23.1 Consent of PricewaterhouseCoopers LLP
----------
*Filed herewith.
5
<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
6
<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
presentation of the revenues and expenses of the Certain Acquired Properties.
PricewaterhouseCoopers LLP
New York, New York
January 26, 1999
7
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
CERTAIN ACQUIRED PROPERTIES
COMBINED HISTORICAL SUMMARY OF REVENUES
AND CERTAIN OPERATING EXPENSES
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended September
December 31, 30, 1998
1997 (Unaudited)
------------------- ------------------
<S> <C> <C>
Revenues:
Base rentals $ 10,774,567 $ 8,680,776
Operating reimbursements and other income 2,105,411 1,754,834
------------------ ------------------
12,879,978 10,435,610
------------------ ------------------
Certain operating expenses:
Real estate taxes 1,043,103 934,170
Repairs and maintenance 573,721 460,423
Other operating expenses 759,231 537,993
------------------ ------------------
2,376,055 1,932,586
------------------ ------------------
Excess of revenues over certain
operating expenses $ 10,503,923 $ 8,503,024
================== ==================
</TABLE>
8
<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
------------- --------
Westgate Plaza Amarillo, Texas
North Point Shopping Center Joplin, Missouri
Village Commons Shopping Center Talahassee, Florida
The Piers Shopping Center Port Richey, Florida
Magnolia Square San Ramon, California
Palm Plaza Temecula, California
Riverwalk Plaza South Charleston, West Virginia
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 $11,600,000
1999 $12,064,000
2000 $11,609,000
2001 $10,533,000
2002 $ 9,529,000
Thereafter $71,500,000
9
<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.
<TABLE>
<CAPTION>
Estimated Net Income
<S> <C>
Excess of revenues over certain operating expenses $ 10,503,923
Less: Estimated depreciation (Note 1) (2,310,462)
==================
Estimated net income $ 8,193,461
==================
Estimated Funds from Operations
Estimated net income $ 8,193,461
Add: Estimated depreciation (Note 1) 2,310,462
------------------
Estimated funds from operations $ 10,503,923
==================
</TABLE>
10
<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 97.6% 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.
11
<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 (i) the purchase of two shopping centers acquired by
the Company in October 1998 (the "October 1998 Acquisitions") as previously
reported on Form 8-K filed December 4, 1998 and (ii) the purchase of the New
Acquired Properties 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
New 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 one of the October 1998 Acquisitions, 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 New
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 is
included in the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1998) and the accompanying notes thereto.
12
<PAGE>
KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
-----------------
(Unaudited)
<TABLE>
<CAPTION>
Previously Reported
--------------------
Kimco October 1998
Historical Acquisitions
---------------------- --------------------
<S> <C> <C>
Assets:
Real estate, net of accumulated depreciation $ 2,650,747,449 $ 39,658,000
Investments in and advances to real estate joint ventures 58,780,260 -
Investment in retail store leases 15,570,543 -
Cash and cash equivalents 30,780,884 (11,244,000)
Accounts and notes receivable 24,117,472 -
Other assets 94,589,966 -
---------------------- --------------------
$ 2,874,586,574 $ 28,414,000
====================== ====================
Liabilities:
Notes payable $ 975,250,000 -
Mortgages payable 156,906,342 $ 28,414,000
Other liabilities, including minority interests
in partnerships 182,567,371 -
---------------------- --------------------
1,314,723,713 28,414,000
---------------------- --------------------
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 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 55,446,111 shares 575,677 -
Paid-in capital 1,675,767,238 -
Cumulative distributions in excess of net income (117,874,213) -
---------------------- --------------------
1,559,862,861 -
---------------------- --------------------
$ 2,874,586,574 $ 28,414,000
====================== ====================
<CAPTION>
New Acquired
Properties Pro Forma
-------------------- ----------------------
<S> <C> <C>
Assets:
Real estate, net of accumulated depreciation $ 135,200,000 $ 2,825,605,449
Investments in and advances to real estate joint ventures - 58,780,260
Investment in retail store leases - 15,570,543
Cash and cash equivalents (19,500,000) 36,884
Accounts and notes receivable - 24,117,472
Other assets - 94,589,966
-------------------- ----------------------
$ 115,700,000 $ 3,018,700,574
==================== ======================
Liabilities:
Notes payable $ 45,000,000 $ 1,020,250,000
Mortgages payable 70,700,000 256,020,342
Other liabilities, including minority interests
in partnerships - 182,567,371
-------------------- ----------------------
115,700,000 1,458,837,713
-------------------- ----------------------
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
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 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 55,446,111 shares - 575,677
Paid-in capital - 1,675,767,238
Cumulative distributions in excess of net income - (117,874,213)
-------------------- ----------------------
- 1,559,862,861
-------------------- ----------------------
$ 115,700,000 $ 3,018,700,574
==================== ======================
</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 New
Kimco Reported Acquired
Historical Acquisitions Properties
------------------- -------------------- ---------------------
<S> <C> <C> <C>
Revenues from rental property $ 198,929,403 $ 43,940,886 $ 15,392,386
------------------- -------------------- ---------------------
Rental property expenses:
Rent 4,873,200 - -
Real estate taxes 26,345,685 2,840,327 1,300,103
Interest 31,744,762 16,455,408 7,380,594
Operating and maintenance 22,194,628 2,822,512 1,549,213
Depreciation and amortization 30,052,714 7,744,982 2,776,594
------------------- -------------------- ---------------------
115,210,989 29,863,229 13,006,504
------------------- -------------------- ---------------------
Income from rental property 83,718,414 14,077,657 2,385,882
Income from investment in retail store leases 3,571,946 -
------------------- -------------------- ---------------------
87,290,360 14,077,657 2,385,882
Management fee income 3,276,152 - -
General and administrative expenses (11,651,341) - -
Other income (expenses), net 6,677,279 (2,195,316) (975,000)
------------------- -------------------- ---------------------
Income before gain on sale of shopping center 85,592,450 11,882,341 1,410,882
Gain on sale of shopping center property 243,995 - -
------------------- -------------------- ---------------------
Net income $ 85,836,445 $ 11,882,341 $ 1,410,882
=================== ==================== =====================
Net income applicable to common shares $ 67,398,745 $ 11,882,341 $ 1,410,882
=================== ==================== =====================
Per share:
Basic $1.80
======
Diluted $1.78
======
<CAPTION>
Pro Forma Adjustments
---------------------------------------------
Price REIT
Merger Pro Forma
------------------- -----------------------
<S> <C> <C>
Revenues from rental property $ 77,787,000 $ 336,049,675
------------------- -----------------------
Rental property expenses:
Rent - 4,873,200
Real estate taxes 8,483,000 38,969,115
Interest 15,757,000 71,337,764
Operating and maintenance 6,668,000 33,234,353
Depreciation and amortization 18,749,154 59,323,444
------------------- -----------------------
49,657,154 207,737,876
------------------- -----------------------
Income from rental property 28,129,846 128,311,799
Income from investment in retail store leases - 3,571,946
------------------- -----------------------
28,129,846 131,883,745
Management fee income 299,000 3,575,152
General and administrative expenses (2,691,000) (14,342,341)
Other income (expenses), net 2,623,000 6,129,963
------------------- -----------------------
Income before gain on sale of shopping center 28,360,846 127,246,519
Gain on sale of shopping center property 2,787,000 3,030,995
------------------- -----------------------
Net income $ 31,147,846 $130,277,514
=================== =======================
Net income applicable to common shares $ 18,109,115 $98,801,083
=================== =======================
Per share:
Basic $2.00
=====
Diluted $1.98
=====
</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 NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
----------------------------------------
1998 Previously New
Kimco Reported Acquired
Historical Acquisitions Properties
------------------ ------------------ -------------------
<S> <C> <C> <C>
Revenues from rental property $ 230,537,696 $ 19,530,578 $ 12,214,008
------------------ ------------------ -------------------
Rental property expenses:
Rent 9,019,514 - -
Real estate taxes 31,572,123 875,689 1,127,170
Interest 42,987,028 8,334,157 5,535,445
Operating and maintenance 23,143,929 1,109,031 1,117,303
Depreciation and amortization 34,433,287 3,609,956 2,082,446
------------------ ------------------ -------------------
141,155,881 13,928,833 9,862,364
------------------ ------------------ -------------------
Income from rental property 89,381,815 5,601,745 2,351,644
Income from investment in retail store leases 2,729,684 - -
------------------ ------------------ -------------------
92,111,499 5,601,745 2,351,644
Management fee income 2,530,342 - -
General and administrative expenses (12,493,986) - -
Other income (expenses), net 6,071,472 (1,334,007) (731,250)
------------------ ------------------ -------------------
Income before gain on sale of shopping center 88,219,327 4,267,738 1,620,394
Gain on sale of shopping center property 901,249 - -
------------------ ------------------ -------------------
Income before extraordinary items 89,120,576 4,267,738 1,620,394
Extraordinary items (4,851,528)
------------------ ------------------ -------------------
Net income $ 84,269,048 $ 4,267,738 $ 1,620,394
================== ================== ===================
Net income applicable to common shares $ 66,717,893 $ 4,267,738 $ 1,620,394
================== ================== ===================
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
---------------------
Price REIT
Merger Pro Forma
------------------- -------------------
<S> <C> <C>
Revenues from rental property $ 45,526,846 $ 307,809,128
------------------- -------------------
Rental property expenses:
Rent 820,546 9,840,060
Real estate taxes 4,906,401 38,481,383
Interest 10,863,396 67,720,026
Operating and maintenance 3,512,059 28,882,322
Depreciation and amortization 9,492,014 49,617,703
------------------- -------------------
29,594,416 194,541,494
------------------- -------------------
Income from rental property 15,932,430 113,267,634
Income from investment in retail store leases - 2,729,684
------------------- -------------------
15,932,430 115,997,318
Management fee income 338,085 2,868,427
General and administrative expenses (1,743,065) (14,237,051)
Other income (expenses), net 871,211 4,877,426
------------------- -------------------
Income before gain on sale of shopping center 15,398,661 109,506,120
Gain on sale of shopping center property - 901,249
------------------- -------------------
Income before extraordinary items 15,398,661 110,407,369
Extraordinary items (4,851,528)
------------------- -------------------
Net income $ 15,398,661 $ 105,555,841
=================== ===================
Net income applicable to common shares $ 9,313,919 81,919,944
=================== ===================
Per common share:
Income before extraordinary items
Basic $1.59
=====
Diluted $1.57
=====
Net income
Basic $1.50
=====
Diluted $1.49
=====
</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 September
30, 1998 gives effect to (i) the purchase of two shopping centers acquired by
the Company in October 1998 (the "October 1998 Acquisitions") as previously
reported on Form 8-K dated December 4, 1998 and (ii) the purchase of the New
Acquired Properties 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
New 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 one of the October 1998 Acquisitions, 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 New Acquired Properties:
A. The adjustments to (i) cash, (ii) real estate, net of accumulated
depreciation, (iii) notes payable and (iv) mortgages payable relate to the
cash used, borrowings on the Company's credit facility, mortgage debt
encumbering two of the New Acquired Properties and proceeds from mortgage
financings of other properties in the Company's portfolio used to fund the
purchase of the New Acquired Properties.
B. The adjustment to interest expense relates to (i) the additional
borrowings on the credit facility, (ii) the mortgage indebtedness
encumbering two of the New Acquired Properties and (iii) the additional
mortgage indebtedness incurred.
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.
D. The adjustments to other income (expenses), net relates to the elimination
of interest earned on funds assumed to have been expended as of January 1,
1997.
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<PAGE>
(ii) With respect to the 1998 Previously Reported Acquisitions:
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 to interest expense relates to (i) the assumption of
mortgage debt encumbering six 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.
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.
D. 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 (May 1, 1998 in connection with one of the October 1998
Acquired Properties) 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.
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<PAGE>
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, 1997 September 30, 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 )
-------- -------
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:
<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.
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<PAGE>
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 37,388 47,138
outstanding
Less: amount of historical weighted average number of shares
outstanding that relate to the Merger - (4,542)
Issuance of Kimco common stock at a 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.
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<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: January 28, 1999
By: /s/ Michael V. Pappagallo
-------------------------
Michael V. Pappagallo
Chief Financial Officer
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<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 January 26, 1999 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
January 28, 1999
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