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Kimco Realty Inks $4Bln Merger Deal With Pan Pacific Retail - Update

Monday, July 10, 2006; Posted: 01:27 PM

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(RTTNews) - Monday, real estate giant, Kimco Realty Corp. (KIM | charts | news | PowerRating), which holds the nations largest portfolio of local shopping centers, signed a definitive merger agreement to acquire Pan Pacific Retail Properties Inc. (PNP | charts | news | PowerRating).

Under the terms of the deal, Kimco will acquire all the outstanding shares of Pan Pacific for a total merger consideration of $70.00 per share in cash. Kimco may elect to issue up to $10 per share of the total purchase price in the form of common stock.

The terms of the transaction also calls for Kimco to assume Pan Pacific's outstanding debt totaling around $1.1 billion. Including Pan Pacific's outstanding debt and $2.9 billion in equity, the transaction is valued at $4 billion.

The San Diego-based Kimco said that it has received financing commitments of up to $3.0 billion, which it may use to fund the acquisition.

Pan Pacific also headquartered in San Diego holds a portfolio of 138 properties, encompassing about 22.6 million square feet.

Kimco expects the merger to fit well with its strategy of owning the highest quality shopping center portfolio and generating solid investment returns for its partners and shareholders while conserving its own equity capital.

The merger has been unanimously approved by both companies' board of directors. The merger, which is subject to customary closing conditions, including approval by the Pan Pacific stockholders is expected to close during the fourth quarter of 2006.

Kimco, which was added to the Standard & Poor's Index on March 31, 2006, has seized every opportunity to expand into new geographical regions. The company acquired Atlantic Realty Trust (ATLRS | charts | news | PowerRating) in April, in a stock deal worth $81.8 million. In March, Kimco acquired interests in two shopping centers and agreed to purchase stakes in five additional shopping centers located in Puerto Rico for an aggregate value of $448 million.

The company's Puerto Rican acquisitions were effective in boosting its first quarter results. For the first quarter Kimco's Funds From Operations (FFO | charts | news | PowerRating) jumped 14.8% to $124.61 million from $108.54 million in the prior year quarter. On a per share basis, FFO rose 12.8% to $0.53 from $0.47 in the comparable period last year, topping analysts' estimate of $0.52 per share for the quarter.

Revenues from rental property rose to $142.71 million from $129.31 million in the year-ago period. Wall Street analysts had a consensus revenue estimate of $146.28 million.

Kimco, which has grown by acquisitions, joined Supervalu Inc., CVS Corp and others to buy Albertsons stores in January in a $17.4 billion cash and stock deal. The transaction was completed in June.

The company, while reporting its first-quarter results on April 25 reaffirmed its full year per share Funds From Operations outlook range of $2.12 - $2.16. Wall Street analysts expect the company to earn $2.17 per share for the year.

KIM is currently up 1.36% or $0.50 trading at $37.37 on a volume of 481,400 shares. PNP is down $0.52 trading at $69.48 on a volume of 693,700 shares.

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posted by AshleyAlissa @ 3:01 PM