Kimco Announces Key Strategic Initiatives to Further Strengthen the Company’s Long-Term Financial
Outlook
Early Repayment of CAD $350 Million and USD $428 Million of Debt
Merger with Taxable REIT Subsidiary
Kimco Realty Corp. (NYSE: KIM) today announced the implementation of several strategic initiatives to enhance the company’s
capital structure while improving both its growth profile and tax efficiency. The plans include: 1) Redeeming two outstanding
series of Canadian-dollar-denominated notes totaling CAD $350 million due in 2018 and 2020; 2) Prepaying $428 million of secured
and unsecured U.S. debt due in 2017; and 3) Merging the company’s primary taxable REIT subsidiary into Kimco.
As a result of these planned transactions, Kimco expects to realize recurring annualized cost savings of approximately $29
million, including approximately $9.5 million during 2016. The company further anticipates it will incur one-time charges against
Net Income available to common stockholders (Net Income) of approximately $114 million, which includes $66 million of non-cash
charges, and approximately $89 million related to NAREIT-defined Funds From Operations (FFO). The one-time charges are expected to
reduce Net Income and FFO by approximately $0.27 per diluted share and $0.21 per diluted share, respectively, in the third quarter
of 2016. The difference of $0.06 per diluted share between Net Income and FFO is attributable to the tax impact from impairment
charges previously recognized on operating properties which were excluded from FFO. There will be no impact to FFO as Adjusted
(which excludes the effects of non-operating impairments and transactional income and expenses) as a result of these one-time
charges.
“Consistent with our 2020 Vision to strengthen our balance sheet and exit Canada, now is an optimal time to proactively address
the company’s upcoming 2017 debt maturities, prepay our outstanding Canadian bonds and reduce the company’s overall leverage,” said
Conor Flynn, President and Chief Executive Officer of Kimco. “Additionally, the merger of our primary taxable REIT subsidiary is
expected to produce ongoing tax efficiencies and reduce administrative costs in the coming years.”
Canadian Bond Redemption
Continuing its announced exit from Canada, Kimco sold 22 assets during the second quarter of 2016, including a 17-property
portfolio. The company currently has CAD $285 million in cash as a result of these and prior Canadian property sales, and an
associated withholding receivable in excess of CAD $100 million, which is expected to be collected over the next several
quarters.
Specifically, Kimco intends to use its Canadian dollars on hand together with its USD $1.75 billion revolving credit facility to
redeem the CAD $350 million of bonds outstanding (CAD $150 million at 5.99% due 2018 and CAD $200 million at 3.855% due 2020) on
August 26, 2016. The company expects to incur a one-time prepayment charge of approximately USD $26 million in the third quarter of
2016. Kimco plans to repay borrowings under the revolving credit facility from the collection of the withholding receivable and the
sale of the six remaining Canadian shopping centers in 2016.
Prepayment of U.S. Bond and Mortgage Debt
Kimco plans to simultaneously extend its debt maturity profile and improve its fixed charge and debt service coverages, while
increasing its unencumbered asset pool. The company expects to prepay $428 million of secured and unsecured debt due in 2017 by
redeeming its $291 million of 5.70% senior notes due 2017 on August 26, 2016 and through the defeasance of $137 million of mortgage
debt at a rate of 6.32%. The company expects to incur a prepayment charge of approximately $22 million in the third quarter of
2016. These actions will address nearly half of the company’s 2017 debt maturities and unencumber ten properties.
Kimco anticipates funding the prepayment of debt by utilizing its $1.75 billion revolving credit facility as well as through the
sale of additional assets and, depending on market conditions, an unsecured bond offering during 2016.
Taxable REIT Subsidiary (TRS) Merger
The company plans to merge Kimco Realty Services, Inc. (the “TRS”) into Kimco (the “REIT”) which will effectively transfer
ownership of certain desirable long-term shopping center assets, as well as the company’s investment in Albertsons, to the REIT.
Any non-REIT qualifying assets or activities would reside in a newly formed taxable REIT subsidiary. The transaction will provide
greater tax efficiency and reduce ongoing administrative costs.
In conjunction with the merger, Kimco will establish a valuation allowance against certain deferred tax assets currently on the
balance sheet, resulting in a one-time non-cash charge against Net Income and FFO of $66 million and $41 million, respectively, in
the third quarter of 2016.
About Kimco
Kimco Realty Corp. (NYSE: KIM) is a real estate investment trust (REIT) headquartered in New Hyde Park, N.Y., that is North
America’s largest publicly traded owner and operator of open-air shopping centers. As of June 30, 2016, the company owned interests
in 537 U.S. shopping centers comprising 86 million square feet of leasable space across 36 states and Puerto Rico. Publicly traded
on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center acquisitions,
development and management for more than 50 years. For further information, please visit www.kimcorealty.com, the company’s blog at blog.kimcorealty.com, or follow Kimco on Twitter at www.twitter.com/kimcorealty.
Safe Harbor Statement
The statements in this news release state the company’s and management’s intentions, beliefs, expectations or projections of the
future and are forward-looking statements. It is important to note that the company’s actual results could differ materially from
those projected in such forward-looking statements. Factors which may cause actual results to differ materially from current
expectations include, but are not limited to, (i) general adverse economic and local real estate conditions, (ii) the inability of
major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business,
(iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms
to the company, (iv) the company’s ability to raise capital by selling its assets, (v) changes in governmental laws and
regulations, (vi) the level and volatility of interest rates and foreign currency exchange rates and management’s ability to
estimate the impact thereof, (vii) risks related to the company’s international operations, (viii) the availability of suitable
acquisition and disposition opportunities, and risks related to acquisitions not performing in accordance with our expectations,
(ix) valuation and risks related to the company’s joint venture and preferred equity investments, (x) valuation of marketable
securities and other investments, (xi) increases in operating costs, (xii) changes in the dividend policy for the company’s common
stock, (xiii) the reduction in the company’s income in the event of multiple lease terminations by tenants or a failure by multiple
tenants to occupy their premises in a shopping center, (xiv) impairment charges and (xv) unanticipated changes in the company’s
intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity. Additional information
concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from
time to time in the company’s SEC filings. Copies of each filing may be obtained from the company or the SEC.
The company refers you to the documents filed by the company from time to time with the SEC, specifically the section titled
“Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2015, as it may be updated or
supplemented in the company’s Quarterly Reports on Form 10-Q and the company’s other filings filed with the SEC, which discuss
these and other factors that could adversely affect the company’s results.
Kimco Realty Corp.
Senior Vice President, Investor Relations and Strategy
David F. Bujnicki, 1-866-831-4297
dbujnicki@kimcorealty.com
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