Kimco's Huge Stock Offering (KIM)

Kimco Realty Corporation (NYSE: KIM) has priced its huge secondary offering of common stock.  The size was a lofty 91,500,000 shares at a price of $7.10 per share.  Shares closed yesterday at $7.49 and the 52-week trading range is $6.33 to $47.80.  What is interesting is that the shares of this community and shopping center REIT are not trading at any discount so far.  They are trading at a premium.

Merrill Lynch, Deutsche Bank Securities, and UBS are the joint book-running managers; Citigroup, RBC Capital Markets, Scotia Capital, and Wachovia are listed as the joint lead managers; and the co-managers are listed as Barclays Capital, CIBC World Markets, and Morgan Keegan & Company.  Kimco granted the underwriters an option to purchase up to an additional 13,725,000 shares to cover over-allotments, and if these pre-maket indications stick then the size of the offering would be north of 105 million shares.

The $623.6 million in approximate net proceeds from the offering (before underwriting fees) will be used for the repayment of debt obligations and for general corporate purposes.

Kimco’s market cap before this offering was $2.03 billion.  It had already warned of lower results as well.  This will act as a buffer against debt maturities and against credit facility gaps that would have been there otherwise.  Stocks usually slide on secondary offerings, but Kimco is up over 5% at $7.92 in pre-market trading on active trading volume.

JON C. OGG
April 3, 2009