Kimco Realty Prices $425M Notes, To Redeem Preferred Stock
Zacks Investment Research | Aug 15, 2019 09:18PM ET
Kimco Realty Corp. (NYSE:KIM) recently announced the pricing of its public offering of 3.70% notes with aggregate principal amount of $350 million aggregate principal amount. The notes carry an effective yield of 3.765% and are slated to mature on Oct 1, 2049. Settlement of the offering, anticipated to occur on Aug 29, 2019, is subject to the fulfillment of customary closing terms.
Notably, net proceeds of the offering, along with the company’s borrowings under its revolving credit facility, will be used to fund the redemption of its class I and class K cumulative redeemable preferred stock with an aggregate liquidation value of $175 million each.
On account of this redemption, the company will recognize a non-cash charge of approximately $11.4 million equating to 3 cents per share in third-quarter 2019. This will impact net income and NAREIT funds from operations (FFO) per share by the same amount. Nonetheless, FFO as adjusted per share will remain unaffected.
Pending such redemption, Kimco expects to use net proceeds for general corporate purposes, including reduction of outstanding balances under the company’s revolving credit facility. Notably, as of Jun 30, 2019, $135 million remained outstanding.
By paying down its debt obligations and credit facility, this offering is anticipated to provide flexibility to the company. In addition, it highlights Kimco’s focus to address its financial obligations in an efficient way.
These efforts will likely boost Kimco’s balance sheet and substantial liquidity position. In fact, it maintains a strong liquidity profile with more than $2.2 billion of immediate liquidity. Further, the company’s weighted average debt maturity profile now stands at 9.9 years.
Shares of this Zacks Rank #3 (Hold) company have gained 2.3% over the past three months as against the Original post
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