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21 Sep 2010
Approximately $ 3.6 Billion of Securities Affected.
New York, September 21, 2010 -- Moody's Investors Service has affirmed the ratings of Kimco Realty Corporation
(senior debt at Baa1) and revised the outlook to stable, from negative.
The Baa1 senior debt ratings reflect the REIT's solid franchise in the
community and shopping center business, large and well-diversified
portfolio, good liquidity position with moderate leverage,
and excellent property management and leasing platform. The REIT
has re-aligned its business strategy and is concentrating on substantially
reducing the non-core businesses such as merchant building and
other ancillary businesses in order to re-focus on its core operations.
The revision to a stable outlook reflects Moody's view that Kimco has
made good progress in working through the pressures they faced due to
the challenging retail and economic environment, and improving its
credit metrics. Moody's believes that Kimco's metrics will continue
Kimco's has a good liquidity profile with access to two revolving credit
facilities (US$1.5 billion and CAD$250 million) that
provide liquidity to its US and Canadian retail real estate operations.
As of 2Q10, there was 91% available on the facilities.
Kimco's liquidity position was strengthened even further when it raised
proceeds of approximately $475 million from a $300 million
unsecured note offering and a $175 preferred stock offering in
August 2010. Kimco's debt maturity schedule is well-laddered
with only $10 million outstanding currently in 2010. The
unencumbered asset base of the REIT's core portfolio is good at 77%
of its total assets on a gross book basis. The REIT's FFO payout
ratio is modest at 50%, enhancing its financial flexibility.
Kimco's overall effective and secured leverage profile, including
pro-rata share of joint ventures and fixed charge coverage,
has shown improvement. The REIT's consolidated effective leverage,
which includes preferred stock, is 43.2% (without
JV interests) as of 2Q10, down from 44.1% at YE09
and 49.2% at YE08. Secured debt comprises a modest
portion of the REIT's capital structure at 11.3% of gross
assets at cost (without JV interests) at 2Q10, down from 12.5%
at YE09. Fixed charge coverage has improved to 2.1x at 2Q10,
up from 2x at YE09, but is still low for the Baa1 range.
EBITDA margins remain healthy at 65%, but are still lower
than historical standards when the REIT enjoyed margins of over 70%.
Kimco has a strong and diverse franchise in the US and Canadian retail
real estate business, focused principally on owning and operating
a portfolio of high quality necessity-based neighborhood and community
shopping centers comprising 150 million square feet. Portfolio
occupancy for its total shopping portfolio at 2Q10 was 92.7%.
Kimco's portfolio is well-diversified with minimal geographic or
tenant concentrations. As of 2Q10, the REIT derived approximately
14% of its annualized base rent from core portfolio properties
located in California, 10% in Florida, 8% in
New York, and 8% in Canada. Kimco's top 25 tenants,
national retail and supermarket chains, accounted for approximately
33% of annualized based rent. Moody's also has a very high
regard for Kimco's management team, which possesses a strong expertise
in both the retail sector and retail real estate, and has a long
and successful track record managing the REIT's diverse business lines.
Upward rating movement would be challenging as Kimco needs to further
improve its credit metrics within the Baa1 rating range. A downgrade
of Kimco's ratings would be prompted by fixed charge coverage (not including
JVs) falling below 2.1x, net debt to EBITDA (not including
JVs) above 7.0x, and prolonged deterioration in NOI (three-plus
quarters of negative growth). Any pressure on the REIT's liquidity
position would also result in a downgrade.
The last rating action for Kimco was taken on August 12, 2009,
at which time Moody's affirmed Kimco's Baa1 ratings and changed the outlook
to negative, from stable.
The following ratings were affirmed with a stable outlook:
Kimco Realty Corporation -- Senior unsecured debt at Baa1;
senior unsecured debt shelf at (P)Baa1; preferred stock at Baa2;
preferred stock shelf at (P)Baa2.
Kimco North Trust III -- Senior unsecured guaranteed Canadian
debentures at Baa1.
Pan Pacific Retail Properties, Inc. -- Senior
unsecured debt at Baa1.
Kimco Realty Corporation [NYSE: KIM], headquartered in
New Hyde Park, New York, USA, is a real estate investment
trust (REIT) that owns and operates North America's largest portfolio
of neighborhood and community shopping centers, with interests in
1,465 retail properties comprising approximately 150 million square
feet of leasable space located across 45 US states, Puerto Rico,
Canada, Mexico and South America. At June 30, 2010,
Kimco had book assets of $9.9 billion and total equity of
The principal methodology used in rating Kimco Realty Corporation was
the Global Rating Methodology for REITs and Other Commercial Property
Firms published in July 2010. Other methodologies and factors that
may have been considered in the process of rating this issuer can also
be found on Moody's website.
Merrie S. Frankel
VP - Senior Credit Officer
Commercial Real Estate Finance
Moody's Investors Service
Commercial Real Estate Finance
Moody's Investors Service
Moody's Investors Service
Moody's revises Kimco's outlook to stable
250 Greenwich Street
New York, NY 10007
No Related Data.
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