Note 3 - Weingarten Merger

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Business Combination Disclosure [Text Block]

3. Weingarten Merger

Overview

On August 3, 2021, the Company completed the Merger with Weingarten, under which Weingarten merged with and into the Company, with the Company continuing as the surviving public company. The total purchase price of the Merger was $4.1 billion, which consists primarily of shares of the Company’s common stock issued in exchange for Weingarten common shares, plus $281.1 million of cash consideration. The total purchase price was calculated based on the closing price of the Company’s common stock on August 3, 2021, which was $20.78 per share. At the effective time of the Merger, each Weingarten common share, issued and outstanding immediately prior to the effective time of the Merger (other than any shares owned directly by the Company or Weingarten and in each case not held on behalf of third parties) was converted into 1.408 shares of newly issued shares of the Company’s common stock.  The number of Weingarten common shares outstanding as of August 3, 2021 converted to shares of the Company’s common stock was determined as follows:

Weingarten common shares outstanding as of August 3, 2021	127,784,006
Exchange ratio	1.408
Kimco common stock issued	179,919,880

The following table presents the purchase price and the total value of stock consideration paid by Kimco at the close of the Merger (in thousands except share price of Kimco common stock):

	Price of Kimco Common Stock		Equity Consideration Given (Kimco Shares to be Issued)		Calculated Value of Weingarten Consideration		Cash Consideration *		Total Value of Consideration
As of August 3, 2021	$	20.78		179,920	$	3,738,735	$	320,424	$	4,059,159

* Amounts include additional consideration of $39.1 million relating to reimbursements paid by the Company to Weingarten at the closing of the Merger for transaction costs incurred by Weingarten.

As a result of the Merger, Kimco acquired 149 properties, including 30 held through joint venture programs. The consolidated net assets and results of operations of Weingarten are included in the consolidated financial statements from the closing date, August 3, 2021.

Provisional Purchase Price Allocation

In accordance with ASC 805-10, Business Combinations, the Company accounted for the Merger as a business combination using the acquisition method of accounting. Based on the value of the common shares issued and cash consideration paid, the total fair value of the assets acquired and liabilities assumed in the Merger was $4.1 billion. The following table summarizes the provisional purchase price allocation based on the Company's initial valuation, including estimates and assumptions of the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed (in thousands):

	Provisional Allocation as of September 30, 2021
Land	$	1,166,922
Building and improvements		4,041,244
In-place leases		374,281
Above-market leases		42,260
Real estate assets		5,624,707
Investments in and advances to real estate joint ventures		586,248
Cash, accounts receivable and other assets		242,399
Total assets acquired		6,453,354
Notes payable		(1,497,632	)
Mortgages payable		(317,671	)
Accounts payable and other liabilities		(279,414	)
Below-market leases		(120,441	)
Noncontrolling interests		(179,037	)
Total liabilities assumed		(2,394,195	)
Total purchase price	$	4,059,159

The provisional fair market value of the acquired properties is based upon a valuation prepared by the Company with assistance of a third-party valuation specialist. The Company and valuation specialist are still in the process of reviewing the inputs used by the third-party specialist to ensure reasonableness and that the procedures are performed in accordance with management's policy. Therefore, the final acquisition accounting adjustments, including the purchase price and its allocation, are not yet complete as of this filing. Once the purchase price and allocation are complete, an adjustment to the provisional purchase price or allocation may occur. Additionally, any excess purchase price, which could differ materially, may result in the recognition of goodwill, the amount of which may be significant.

The following table details the provisional weighted average amortization periods, in years, of the purchase price provisionally allocated to real estate and related intangible assets and liabilities acquired arising from the Merger:

	Weighted Average Amortization Period (in Years)
Land		n/a
Building		50.0
Building improvements		45.0
Tenant improvements		4.0
Fixtures and leasehold improvements		7.0
In-place leases		2.5
Above-market leases		5.2
Below-market leases		16.9
Operating right-of-use intangible assets		24.2
Fair market value of debt adjustment		3.8

Revenues from rental properties, net and Net income/(loss) available to the Company’s common shareholders in the Company’s Condensed Consolidated Statements of Operations includes revenues of $73.5 million and net income of $9.9 million (excluding $50.2 million of merger related charges), respectively, resulting from the Merger during the nine months ended September 30, 2021.

Pro forma Information

The pro forma financial information set forth below is based upon the Company’s historical Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020, adjusted to give effect to these properties acquired as of January 1, 2020.  The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it purport to represent the results of income for future periods. (Amounts presented in millions, except per share figures). 

		Three Months Ended September 30,			Nine Months Ended September 30,
		2021		2020	2021		2020
Revenues from rental properties, net	$	401.4	$	366.8	$	1,186.4	$	1,109.1
Net income/(loss) (1)	$	561.4	$	(21.9)	$	854.3	$	797.6
Net income/(loss) available to the Company’s common shareholders	$	553.4	$	(29.8)	$	828.3	$	775.1
Net income/(loss) available to the Company’s common shareholders per common share:
Basic (1)	$	0.91	$	(0.05)	$	1.35	$	1.27
Diluted (1)	$	0.90	$	(0.05)	$	1.34	$	1.27

(1) The pro forma earnings for the three and nine months ended September 30, 2021 were adjusted to exclude $47.0 million and $50.2 million of merger costs, respectively, while the pro forma earnings for the nine months ended September 30, 2020 were adjusted to include $50.2 million of merger costs incurred.