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Kimco Realty recently announced a strategic move by partially selling its stake in Albertsons following the Kroger-Albertsons merger announcement. The transaction implied a 37% valuation increase for Kimco's holdings in Albertsons, valued at $34.10 per share. Kimco realized net proceeds of approximately $301.1 million from the sale of 11.5 million shares, retaining 28.3 million shares. To comply with REIT regulations, the company plans to issue a special dividend potentially in cash and/or stock by year-end.
Positive
Generated net proceeds of approximately $301.1 million from the sale of 11.5 million shares of Albertsons.
The partial stake sale aligns with Kimco's strategy to monetize investments at optimal times, enhancing financial flexibility.
Negative
Retained partial ownership may limit immediate capital generation if market conditions decline.
Market volatility and potential economic downturns could impact the valuation of the remaining stake in Albertsons.
– Announced Value of Transaction Consideration Would Imply 37% Valuation Lift for Kimco’s Albertsons Stake –
– Company Raises $300 Million in Partial Sale of Albertsons Ownership Stake to Maximize Value –
– Company Expects to Pay a Special 2022 Dividend for REIT Compliance Purposes –
JERICHO, N.Y.--(BUSINESS WIRE)--
Kimco Realty® (NYSE: KIM), North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers, including mixed-use assets, reported that, based on the announced value of the total consideration per share paid to shareholders in the Kroger-Albertsons merger (Merger Announcement), its existing stake in Albertsons Companies, Inc. (NYSE: ACI) has an implied valued of $34.10 per share representing a significant premium of over 37% to the closing share price on September 30, 2022. The Merger Announcement further specifies that part of the cash consideration will be paid in the form of a $6.85 per share special cash dividend on November 7, 2022.
Subsequent to the Merger Announcement, Kimco monetized 11.5 million of its 39.8 million shares in Albertsons, generating net proceeds of approximately $301.1 million. Kimco still retains 28.3 million shares of Albertsons.
“The proposed merger of Kroger and Albertsons implies a significant increase in the value of our stake and is further validation of our long term and profitable investment in Albertsons,” stated Conor Flynn, Kimco’s Chief Executive Officer. “Our sale of a portion of our investment is consistent with our stated goal to monetize our stake at the right time, and also provides a meaningful source of capital at a time when capital is at a premium for the industry. This investment is another key differentiator for the company and will not only further strengthen our already strong balance sheet but will also provide an additional capital source to fund new investments and unique opportunities, as we continue to create shareholder value.”
Kimco marks-to-market its investment in Albertsons with any respective gains and losses excluded from its calculation of funds from operations (FFO). The company expects to provide an update to its full year 2022 outlook for Net income and FFO when it reports its third quarter 2022 earnings on October 27, 2022.
In connection with the proposed transaction, Kimco agreed not to sell 28 million of its shares in Albertsons for a period of up to seven months. Upon the expiration of this lock-up, Kimco will have full flexibility over its Albertsons holdings including its ability to further monetize shares at its discretion subject to REIT compliance requirements.
Kimco’s common stock dividends paid in 2022 to date were based on projected REIT taxable income and did not include any potential gains from the sale or special dividend distributions from its Albertsons investment. As a result, the company anticipates it will make a special dividend to maintain its compliance with REIT distribution requirements. The payment of this special dividend may be in the form of cash, common stock or some combination thereof, which will be determined and announced by year end.
About Kimco
Kimco Realty® (NYSE:KIM) is a real estate investment trust (REIT) headquartered in Jericho, N.Y. that is North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers, including mixed-use assets. The company’s portfolio is primarily concentrated in the first-ring suburbs of the top major metropolitan markets, including those in high barrier-to-entry coastal markets and rapidly expanding Sun Belt cities, with a tenant mix focused on essential, necessity-based goods and services that drive multiple shopping trips per week. Kimco Realty is also committed to leadership in environmental, social and governance (ESG) issues and is a recognized industry leader in these areas. Publicly traded on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center ownership, management, acquisitions, and value enhancing redevelopment activities for more than 60 years. As of June 30, 2022, the company owned interests in 533 U.S. shopping centers and mixed-use assets comprising 92 million square feet of gross leasable space. For further information, please visit www.kimcorealty.com
The company announces material information to its investors using the company’s investor relations website (investors.kimcorealty.com), SEC filings, press releases, public conference calls, and webcasts. The company also uses social media to communicate with its investors and the public, and the information the company posts on social media may be deemed material information. Therefore, the company encourages investors, the media, and others interested in the company to review the information that it posts on the social media channels, including Facebook (www.facebook.com/kimcorealty), Twitter (www.twitter.com/kimcorealty), YouTube (www.youtube.com/kimcorealty) and LinkedIn (www.linkedin.com/company/kimco-realty-corporation). The list of social media channels that the company uses may be updated on its investor relations website from time to time.
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) the reduction in the Company's income in the event of multiple lease terminations by tenants or a failure of multiple tenants to occupy their premises in a shopping center, (iv) the availability of suitable acquisition, disposition, development and redevelopment opportunities, and risks related to acquisitions not performing in accordance with our expectations, (v) the Company's ability to raise capital by selling its assets, (vi) increases in operating costs due to inflation and supply chain issues, (vii) risks related to future opportunities and plans for the combined company, including the uncertainty of expected future financial performance and results of the combined company following the merger between Kimco Realty and Weingarten Realty Investors (the "Merger"), (viii) the possibility that, if the Company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial analysts or investors, the market price of the Company's common stock could decline, (ix) changes in governmental laws and regulations, including but not limited to changes in data privacy, environmental (including climate change), safety and health laws, and management's ability to estimate the impact of such changes, (x) valuation and risks related to the Company's joint venture and preferred equity investments, (xi) valuation of marketable securities and other investments, including the shares of Albertsons Companies, Inc. common stock held by the Company, (xii) impairment charges, (xiii) pandemics or other health crises, such as coronavirus disease 2019 ("COVID-19"), (xiv) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms to the Company, (xv) the level and volatility of interest rates and management's ability to estimate the impact thereof, (xvi) changes in the dividend policy for the Company's common and preferred stock and the Company's ability to pay dividends at current levels, (xvii) unanticipated changes in the Company's intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity, and (xviii) the other risks and uncertainties identified under Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by our subsequently filed reports with the SEC. Accordingly, there is no assurance that the Company's expectations will be realized. The Company disclaims any intention or obligation to update the forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to refer to any further disclosures the Company makes in the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that the Company files with the Securities and Exchange Commission.
