Kimco Makes $175M Stock Offering

NEW HYDE PARK, NY- Kimco Realty Corp. said late Monday afternoon it’s issuing seven million shares of preferred stock worth $175 million. The locally based retail REIT, led by president and CEO David Henry, said it would use net proceeds to repay $150 million worth of mortgage loans and for general corporate purposes.

Banc of America Securities, Morgan Stanley, UBS Securities and Wells Fargo Securities are the joint book-running managers. Morgan Keegan, Piper Jaffray, RBC Capital Markets and Stifel, Nicolaus & Co. are the co-managers for the offering. The stock offering is expected to be completed on August 30, according to Kimco.

Kimco says its preferred stock issuance is rated BBB- by both Standard & Poor’s and Fitch Ratings, with a Baa2 rating by Moody’s. In a separate release, Fitch says its rating is based on Kimco’s “solid track record as the leading owner of community and neighborhood shopping centers, its large and diversified pool of retail properties, its experienced leasing and management team and its high quality and diversified tenant mix with a well laddered lease expiration schedule.” The REIT currently has a portfolio of 904 retail properties in 43 states as well as Canada and Mexico.

The ratings agency adds, however, that “the current weaknesses in the retail sector” will likely continue to result in weak same-store property performance in the near term. Fitch’s recent ratings of Kimco, including an issuer default rating issued on August 11, also factor in “the higher risk associated with the company’s existing portfolio of non-retail assets, which is targeted for sale over the coming years.” That portfolio, though, represented “a fairly low” 7.3% of total undepreciated assets as of June 30, “and continued to generate healthy FFO returns.”