Kimco Shares Rise On Balance Sheet Positive Measures
April 03 2009 - 2:16PM
Dow Jones News
Despite inflicting short-term pain on shareholders, key measures
announced by shopping center developer Kimco Realty Corp. (KIM) is
receiving kudos from Wall Street as balance-sheet friendly.
The company's share price rose 22% to $9.16 in recent trading
after Kimco said late Thursday it had cut its dividend 86% to 6
cents in the third and fourth quarters. In addition, the company
priced Friday 91.5 million shares of common stock at $7.10 per
share. Such a deal is commonly dilutive to shareholders and could
be expensive for companies, particularly in weak market
conditions.
"While dilutive to earnings per share, it's very stabilizing to
the balance sheet," said Rich Moore, an analyst at RBC Capital
Markets.
The real-estate investment trust's shares have declined about
50% year-to-date amid fears the highly leveraged company will
struggle to refinance upcoming debt maturities over the next couple
of years.
"For all REITs, balance sheet (issues) are front and center,"
said Jim Sullivan, an analyst at Green Street Advisors.
Sullivan said while Kimco's equity sale was painful and
dilutive, the market saw the transaction as "necessary to ensure
the survival of this company well past" 2011.
Kimco also reduced the top end of its projected range for 2009
funds from operations, a key measure of REIT profitability. It now
estimates FFO of $1.70 to $1.85 a share, compared with $1.70 to
$1.90 a share in February. That forecast was far below Wall
Street's then-expected $2.22.
Analysts last estimated $1.73, according to a poll by Thomson
Reuters.
The company also said it is marketing a new $200 million
unsecured term loan with a group of banks.
-By A.D. Pruitt, Dow Jones Newswires, 201-938-2269,
angela.pruitt@dowjones.com