Kimco Realty Corporation (KIM), a real estate investment trust (REIT), recently announced a public offering of $300 million medium-term notes due 2018 at a coupon of 4.3% to repay its outstanding debt.
 
The notes were priced at 99.7% to yield 4.4%. Kimco would utilize the net proceeds of approximately $297.1 million to repay a $100 million 5.3% medium-term note due February 2011 and a $150 million 7.8% note due April 2011.
 
Kimco expects a prepayment charge of approximately $10 million – $12 million or 3 cents per share related to the public offering. However, the company reiterated its earlier fiscal 2010 FFO (fund from operations) guidance at $1.14 – $1.18 per share. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
 
Together with its subsidiaries, Kimco is the largest publicly traded owner and operator of neighborhood and community shopping centers in the U.S., with interests in 1,465 properties spanning 150 million square feet of space in 45 states across the country, along with Puerto Rico, Canada, Mexico, Chile, Brazil and Peru. The company also operates complementary businesses that include merchant buildings, private preferred equity and real estate capital and advisory services.
 
Kimco generally signs long-term leases with strong creditworthy tenants, which limits the downside risk and provides a steady source of income. Given the current uncertainty in the capital markets, Kimco has also modified its business strategy to focus on core retail competencies. The company intends to concentrate its future investments on the neighborhood and community shopping center segment, primarily focusing on the North American market. This provides a strong upside potential for the top line growth of the company.
 
The rating on Kimco is currently “Neutral” with a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1−3 months.
 
 
KIMCO REALTY CO (KIM): Free Stock Analysis Report
 
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