Form: 8-K

Current report

August 19, 1998

8-K: Current report

Published on August 19, 1998





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 18, 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 (IRS Employer
incorporation) Number) 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 10


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 and on Current Report on Form 8-K dated August 5, 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, certain subsidiaries of the Company acquired, in separate transactions, 15
shopping center properties comprising approximately 1.7 million square feet of
gross leasable area ("GLA") in eight states for an aggregate purchase price of
approximately $136.3 million, including the assumption of approximately $20.8
million in mortgage debt (the "15 Shopping Center Acquisitions"). Additionally,
as previously reported on Current Report on Form 8-K dated July 8, 1998, on July
1, 1998 the Company acquired from Metropolitan Life Insurance Company 30 fee and
leasehold positions consisting of 29 neighborhood and community shopping center
properties and 1 office/distribution facility comprising approximately 3.8
million square feet of GLA in five states for an aggregate purchase price of
$167.5 million (the "Met Life Acquisition"). Also, as previously reported on
Current Report on Form 8-K dated August 5, 1998, during July 1998 the Company
acquired 3 neighborhood and community shopping center properties comprising
approximately 384,000 square feet of GLA in three states for an aggregate
purchase price of approximately $35.3 million (the "July 1998 Acquisitions" and
collectively, with the 15 Shopping Center Acquisitions and the Met Life
Acquisition, the "1998 Previously Reported Acquisitions")

This report has been filed for the purpose of providing updated pro
forma financial information for (i) the 1998 Previously Reported Acquisitions
and (ii) the effects of the Merger.


2

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

(a) (b) Financial Statements and Pro Forma Financial Information

The pro forma financial information filed herewith is as follows:

Page

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1998....5
Pro Forma Condensed Consolidated Statement of Income for the Six
Months Ended June 30, 1998............................................6
Notes to Pro Forma Condensed Consolidated Financial Statements........7


3

KIMCO REALTY CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

The accompanying Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1998 gives effect to (i) the Met Life Acquisition on July 1, 1998 and (ii) the
purchase of three shopping centers acquired by the Company in July 1998 (the
"July 1998 Acquisitions"), as if these acquisitions had occurred as of June 30,
1998.

The accompanying Pro Forma Condensed Consolidated Statement of Income for the
six months ended June 30, 1998 reflects the historical results of the Company
adjusted to give effect to (i) the 1998 Previously Reported Acquisitions, which
include the 15 Shopping Center Acquisitions, the Met Life Acquisition and the
July 1998 Acquisitions, and (ii) the Merger, which was accounted for under the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16, as if these transactions had occurred as of January 1, 1998.

The Pro Forma Condensed Consolidated Financial Statements have been prepared by
the management of the Company. These pro forma financial statements may not be
indicative of the results that would have actually occurred if 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 financial statements should be read in conjunction with the
Company's unaudited condensed consolidated financial statements as of June 30,
1998 and for the six months then ended (which are included in the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 1998) and the
accompanying notes thereto.


4


KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 1998

-----------------
(Unaudited)



Pro Forma Adjustments
---------------------
Met Life and
Kimco July 1998
Historical Acquisitions Pro Forma
--------------- ---------------- ---------------

Assets:

Real estate, net of accumulated depreciation $ 2,311,122,932 $ 202,825,000 $ 2,513,947,932
Investment in retail store leases 15,220,823 - 15,220,823
Cash and cash equivalents 33,921,947 (5,325,000) 28,596,947
Accounts and notes receivable 24,806,498 - 24,806,498
Other assets 143,714,737 - 143,714,737
--------------- --------------- ---------------
$ 2,528,786,937 $ 197,500,000 $ 2,726,286,937
=============== =============== ===============

Liabilities:

Notes payable $ 715,250,000 $ 197,500,000 $ 912,750,000
Mortgages payable 215,236,686 - 215,236,686
Other liabilities, including minority interests
in partnerships 112,506,756 - 112,506,756

--------------- --------------- ---------------
1,042,993,442 197,500,000 1,240,493,442
--------------- --------------- ---------------

Stockholders' Equity:

Preferred stock, $1.00 par value, authorized 5,000,000 shares
Class A Preferred Stock, $1.00 par value, authorized 345,000 shares
Issued and outstanding 300,000 shares 300,000 - 300,000
Aggregate liquidation preference $75,000,000
Class B Preferred Stock, $1.00 par value, authorized 230,000 shares
Issued and outstanding 200,000 shares 200,000 - 200,000
Aggregate liquidation preference $50,000,000
Class C Preferred Stock, $1.00 par value, authorized 460,000 shares
Issued and outstanding 400,000 shares 400,000 - 400,000
Aggregate liquidation preference $100,000,000
Class D Convertible Preferred Stock, $1.00 par value, authorized
700,000 shares
Issued and outstanding 429,159 shares 429,159 - 429,159
Aggregate liquidation preference $107,289,750
Class E Preferred Stock, $1.00 par value,
Authorized, issued and outstanding 65,000 shares 65,000 - 65,000
Aggregate liquidation preference $65,000,000
Common stock, $.01 par value, authorized 100,000,000 shares
Issued and outstanding 55,446,111 shares 554,461 - 554,461
Paid-in capital 1,597,131,335 - 1,597,131,335
Cumulative distributions in excess of net income (113,286,460) - (113,286,460)

--------------- --------------- ---------------
1,485,793,495 - 1,485,793,495

--------------- --------------- ---------------
$ 2,528,786,937 $ 197,500,000 $ 2,726,286,937
=============== =============== ===============




The accompanying notes are an integral part of these pro forma
condensed consolidated financial statements.

5

KIMCO REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 1998

-------------------------------
(Unaudited)



Pro Forma Adjustments
-----------------------------
1998 Previously
Kimco Reported Price REIT
Historical Acquisitions Acquisition Pro Forma
------------- ---------------- ----------- ------------

Revenues from rental property $ 132,452,630 $ 15,722,647 $ 45,526,846 $ 193,702,123
------------- ------------- ------------- -------------

Rental property expenses:
Rent 5,558,711 - 820,546 6,379,257
Real estate taxes 18,309,425 545,052 4,906,401 23,760,878
Interest 23,411,176 7,000,982 10,863,396 41,275,554
Operating and maintenance 13,920,139 800,805 3,512,059 18,233,003
Depreciation and amortization 18,890,684 2,819,346 9,492,014 31,202,044
------------- ------------- ------------- -------------
80,090,135 11,166,185 29,594,416 120,850,736
------------- ------------- ------------- -------------
Income from rental property 52,362,495 4,556,462 15,932,430 72,851,387
Income from investment in retail store leases 1,828,248 - - 1,828,248
------------- ------------- ------------- -------------
54,190,743 4,556,462 15,932,430 74,679,635

Management fee income 1,531,293 - 338,085 1,869,378
General and administrative expenses (7,004,659) - (1,743,065) (8,747,724)
Other income (expenses), net 3,395,054 (460,428) 871,211 3,805,837
------------- ------------- ------------- -------------
Income before gain on sale of shopping center 52,112,431 4,096,034 15,398,661 71,607,126

Gain on sale of shopping center property 901,249 - - 901,249
------------- ------------- ------------- -------------
Net income $ 53,013,680 $ 4,096,034 $ 15,398,661 $ 72,508,375
============= ============= ============= =============
Net income applicable to common shares $ 43,360,206 $ 4,096,034 $ 9,313,919 $ 56,770,159
============= ============= ============= =============
Net income per common share
Basic $1.03 $1.06
====== =====
Diluted $1.01 $1.05
====== =====



The accompanying notes are an integral part of these pro forma
condensed consolidated financial statements.


6


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 June 30,
1998 gives effect to (i) the Met Life Acquisition on July 1, 1998 and (ii) the
purchase of three shopping centers acquired by the Company in July 1998 (the
"July 1998 Acquisitions"), as if these acquisitions had occurred as of June 30,
1998.

The accompanying Pro Forma Condensed Consolidated Statement of Income for the
six months ended June 30, 1998 reflects the historical results of the Company
adjusted to give effect to (i) the 1998 Previously Reported Acquisitions, which
include the 15 Shopping Center Acquisitions, the Met Life Acquisition and the
July 1998 Acquisitions, and (ii) the Merger, which was accounted for under the
purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16, as if these transactions had occurred as of January 1, 1998.

2. Pro Forma Adjustments

(i) With respect to the 1998 Previously Reported Acquisitions:

A. The adjustment to interest expense relates to the issuance of the
$130.0 million medium-term notes and the additional borrowings of $67.5
million 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, 1998 and (ii) the preferred return applicable to the
partnership unitholders in connection with one of the 1998 Previously
Reported 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.


7

(ii) With respect to the Price REIT Merger:

The Price REIT Acquisition column in the accompanying Pro Forma Condensed
Consolidated Statement of Income includes the results of Price REIT for
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, 1998. Additionally, the Price REIT Acquisitions
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 the acquired
Price REIT 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 six months
ended June 30, 1998 are as follows:



Six Months Ended
June 30, 1998
(000's)
----------------

Depreciation expense based upon an estimated useful life of
39 years $9,286
Less: Price REIT depreciation of real estate owned based
upon an estimated useful life of 15 to 25 years (9,722)
------
Depreciation and amortization Pro Forma adjustment ($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:



Six Months Ended
June 30, 1998
(000's)
----------------

Net reduction in salary and benefit costs $ 350
Net reduction in duplication of public company expenses 300
Net reduction in directors and officers' insurance and
directors fees 100
-----
General and administrative Pro Forma adjustment $ 750
-----


8

C. During April 1996, the Company and Price REIT formed a partnership to
purchase a property in Phoenix, AZ. The Company had consolidated this
partnership for financial reporting purposes and Price REIT had
recorded their interest using the equity method. The adjustments of
$35,858 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 six months
ended June 30, 1998.

D. Weighted average number of shares outstanding-

The pro forma weighted average number of common shares outstanding for
the six months ended June 30, 1998 are computed as follows:



Six Months Ended
June 30, 1998
(000's)
----------------

Kimco's historical weighted average number of shares
outstanding 42,279
Add: Incremental weighted average number of shares assumed
to be issued and outstanding in connection with the Merger
as if the Merger had occurred January 1, 1998 11,132
------
Pro Forma weighted average number of Kimco common shares
outstanding (Basic) 53,411
Effect of Dilutive Securities- Stock options 561
------
Pro Forma weighted average number of Kimco common shares
outstanding (Diluted) 53,972
------


The effect of the conversion of the Company's Class D Convertible Preferred
Stock would have an anti-dilutive effect upon net income per common share.
Accordingly, the impact of such conversion has not been included in the
determination of diluted earnings per common share.


9

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 15, 1998

By: /s/ Michael V. Pappagallo
-------------------------
Michael V. Pappagallo
Chief Financial Officer



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