Correspondence 0001140361-24-040601 from KIMCO REALTY CORP (KIM, KIM-PL, KIM-PM, KIM-PN) (CIK 0000879101) (KIM)
KIMCO REALTY CORP (KIM, KIM-PL, KIM-PM, KIM-PN) (CIK 0000879101)
Date: Sept. 9, 2024 · CIK: 0000879101 · Accession: 0001140361-24-040601
AI Filing Summary & Sentiment
Letter
VIA EDGAR Office of Mergers & Acquisitions Re: KIMCO REALTY CORP Schedule TO-C filed August 22, 2024 SEC File No. 5-42000
Dear Ms. Chalk:
Kimco Realty Corporation (the “Company”) has filed with the U.S. Securities and Exchange Commission (the “Commission”)
on the date hereof Amendment No. 1 to the Company’s Schedule TO-C (“Amendment No. 1”), initially filed with the Commission on August 22, 2024 (the “TO-C”). Amendment No. 1 has been revised to reflect the Company’s responses to the comment letter to the TO-C received on August 30, 2024 from the staff of the Commission (the “Staff”), and we are hereby providing the Company’s responses to the Staff’s letter.
For ease of review, we have set forth below each of the numbered comments of the Staff’s letter in bold type followed by the Company’s responses thereto. Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Company’s Offer to Purchase filed with the TO-C.
Schedule TO-C filed August 22, 2024
Cover Page
1.
We note the following statement on the cover page: “The consideration for each Security tendered and accepted for purchase will equal $, plus accrued and unpaid dividends, if any, for the period from and including the last dividend payment date, to, but not including, the Settlement Date (the ‘Offer Price’).” The term “Settlement Date” is defined on page 7 of the Offer to Purchase to mean the date the Company pays for tendered securities. Thus, it appears that dividends that may accrue after the Expiration Date and through the Settlement Date could result in a change to the Offer consideration. Please revise the disclosure here and throughout the Offer to Purchase, consistent with our view that any change to the Offer Price can occur only before the Expiration Date, and may require an extension of the offering period under Rule 14e-1(b), or advise.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that the Company believes that in the context of an issuer tender offer for fixed income securities (whether debt, including convertible debt, or preferred equity), such as the Securities, it is common practice for the offer consideration to be structured such that the holder receives for his or her securities (1) a fixed price plus (2) accrued and unpaid interest (in the case of debt, including convertible debt) or accrued and unpaid dividends (in the case of preferred equity) that the holder would have received had the holder owned the securities through the next relevant record date. The Company believes that the market expectation for an issuer tender offer is that the holder will receive the “accrued and unpaid interest” or “accrued and unpaid dividend,” as applicable. In addition, in analogous situations where holders of the Securities cease to be holders of the Securities (such as through the payment of the liquidation preference to the holders of the Securities), the terms of the Securities described in the Charter entitle holders of the Securities to receive accrued and unpaid dividends through, but not including, the date of the liquidation payment (in this case, by analogy, the settlement date of the Offer). Should the Offer and Consent Solicitation consideration not include the payment of accrued and unpaid dividends, tendering holders would be deprived of the payment to which they are entitled.
September 9, 2024
Page 2
Where settlement of an issuer tender offer falls between the relevant interest (or dividend) record date and the interest (or dividend) payment date, the Company believes that it is common practice for the tender offer consideration to be structured to include a fixed price, without the payment of accrued interest (or accrued dividends). This is because, in addition to receiving the payment of the fixed tender offer price at settlement of the tender offer, holders of the subject securities at the close of business on the relevant record date that tender their securities in the tender offer will receive the payment of accrued and unpaid interest (or dividends) through, but not including, the interest (or dividend) payment date on the relevant payment date. Furthermore, consistent with market practice, should any trades be made in the subject securities between the record date and the relevant payment date, investors purchasing the securities will do so with the expectation that they will not be paid the next dividend payment (and the purchase price for the securities would typically be adjusted to account for any accrued on unpaid interest the investor would have otherwise been owed for the period from the date of purchase of the securities through, but not including, the relevant interest (or dividend) payment date).
On July 30, 2024, the board of directors of the Company authorized a quarterly dividend (the “October Dividend”) on the Class N Preferred Stock underlying the Securities payable on October 15, 2024 (the “October Dividend Payment Date”) to holders of record of the Class N Preferred Stock at the close of business on October 1, 2024 (the “October Dividend Record Date”) for distribution to the holders of the Securities, which dividend was declared by the Company on August 1, 2024. As a result, in the event the Offer settles following the close of business on the October Dividend Record Date, but before the October Dividend Payment Date, holders of record of the Securities at the close of business on the October Dividend Record Date will receive the October Dividend for the Securities regardless of whether they participate in the Offer, since the October Dividend Record Date will occur prior to the consummation of the Offer. In this scenario, the total per-share consideration that holders who tender their Securities will receive will equal the stated dollar amount in the Offer to Purchase for each Security, without any amount to be paid with respect to dividends, including the October Dividend; however, holders of the Securities at the close of business on the October Dividend Record Date that tender their Securities in the Offer will receive both the October Dividend and the Offer Price for the Securities.
In the alternative scenario, where the Offer will settle on or following the October Dividend Payment Date, the total per-share consideration that holders who tender their Securities will receive will equal (i) the stated dollar amount in the Offer to Purchase for each Security plus (ii) an amount equal to the amount of accrued and unpaid dividends that would otherwise be payable for a period beginning on, and including, the October Dividend Payment Date and ending with, but not including, the Settlement Date, as if such dividends had otherwise been declared and paid in accordance with the Charter. In this scenario, in the event of a delay in the expected Settlement Date, security holders who validly tendered their Securities would continue to receive an amount equal to dividends that would have accrued up to, but not including, such delayed Settlement Date as if such dividends had otherwise been declared and paid.
On the basis of the foregoing, the Company believes that the Offer to Purchase complies with the Company’s obligations under Rule 14e-1(b) because the Company will provide security holders with the disclosure of the type and amount of consideration offered and the total consideration payable for each Security. Furthermore, the Company believes that the Offer Price of a base amount plus accrued and unpaid dividends (in the context of preferred equity securities) or interest (in the context of debt securities, including convertible debt instruments) is common practice for issuer tender offers for fixed income securities. The Company believes that such formulation is commonly viewed as not involving a “change” in the offer price requiring an extension of ten business days under Rule 14e-1(b).
Purpose of and Reasons for the Offer and Consent Solicitation, page 9
2.
Please explain the reasons for the timing of the Offer and Consent Solicitation. See Item 7 of Schedule 13E-3 and Item 1013(c) of Regulation M-A.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on pages 9 and 10 of Amendment No. 1. The Company advises the Staff that the Offer and Consent Solicitation constitute post-closing optimization of the Company’s capital structure following the Company’s acquisition of RPT in January of 2024. The Company was required to issue the Securities to holders of similar securities of RPT in connection with the acquisition. The terms of the Securities are not consistent with the terms of similar securities issued by the Company or other investment-grade issuers in the REIT industry. For instance, it would be unusual for the Company or any other investment grade issuer in the REIT industry to issue perpetual convertible preferred equity securities without an optional redemption provision. Consequently, the Company is seeking to conduct a tender offer for any and all of the outstanding Securities (and, potentially, to redeem any Securities that remain outstanding following consummation of the Offer and Consent Solicitation). This Offer and Consent Solicitation is intended to rationalize and optimize the Company’s capital structure as soon as practicable following the acquisition of RPT.
September 9, 2024
Page 3
Potential Effects on Holders of Securities, page 10
3.
The first paragraph in this section lists as a potential effect of the Offer and the Consent Solicitation that “tendering holders of Securities will receive a purchase price that represents a premium... over recent market prices.” Revise to note that since the redemption may not occur until at least mid-2025, if at all, there is no guarantee that the purchase price in the redemption will represent a premium to the market price at that time. If you do not believe this is likely, explain the basis for your belief in the revised Offer to Purchase.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on page 10 of Amendment No. 1 accordingly. Given potential timing for redemption of the Securities (assuming the Company’s receipt of the Requisite Approvals and, thereafter, that the Company elects to conduct a redemption of the Securities), there is no guarantee that the redemption price will represent a premium to the market price for the Securities at the time of the redemption, or that there will even be an established market price for the Securities at such time.
Fairness of the Offer and Consent Solicitation, page 13
4.
We note the disclosure in the first bullet point on page 14 that the Offer Price was “based on price discovery efforts conducted by the Company to determine indicative levels of interest in the Offer.” In an appropriate part of the Offer to Purchase, expand to discuss who conducted the price discovery efforts, including whether they were conducted by a financial advisor or other third party on the Company’s behalf, when they were conducted, and how.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that the Company does not intend to engage in price discovery efforts with investors, nor does it intend to engage any financial advisor or third party to do so on its behalf. The Company has revised the disclosure on page 14 of Amendment No. 1 accordingly.
Factors Considered, page 14
5.
The introductory paragraph of this section states that the Board of Directors has determined that both the Offer and the Consent Solicitation are fair to unaffiliated holders of the Securities. However, it is not clear how the factors that follow and that were considered by the Board support the fairness determination as it relates to the Consent Solicitation. For example, even if the Company receives the Requisite Approvals, it may choose not to redeem the Class N Preferred and any redemption will be delayed for a significant period, at which time the Offer Price may no longer represent a premium to the trading price of the Class N Preferred. Please revise to discuss more specifically how the Board considered and analyzed the fairness of the Consent Solicitation specifically.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on page 14 of Amendment No. 1.
The Company advises the Staff that the Board of Directors considered a number of factors in determining the fairness of the Offer and Consent Solicitation to the holders of the Securities, including unaffiliated holders. However, the Board of Directors did not consider the fairness of the Offer and Consent Solicitation separately, as it views the Offer and Consent Solicitation as part of the same transaction. The price offered to holders of the Securities is in return for both the tender of the holders’ Securities and their consent to the Proposed Amendments. The foregoing is consistent with the purpose of the Offer and Consent Solicitation, which, as part of a single transaction, are intended to rationalize and optimize the Company’s capital structure following the Company’s acquisition of RPT.
September 9, 2024
Page 4
6.
Refer to the condition listed in the seventh bullet point in this section on page 14 of the Offer to Purchase. Expand to identify the “various developments” and “certain selected market indices” to which the Board compared the year-to-date historical trading yields and prices of the Securities. Provide add
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September 9, 2024
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Ms. Christina Chalk, Esq.
Senior Special Counsel
Office of Mergers & Acquisitions
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-6010
Re:
KIMCO REALTY CORP
Schedule TO-C filed August 22, 2024
SEC File No. 5-42000
Dear Ms. Chalk:
Kimco Realty Corporation (the “Company”) has filed with the U.S. Securities and Exchange Commission (the “Commission”)
on the date hereof Amendment No. 1 to the Company’s Schedule TO-C (“Amendment No. 1”), initially filed with the Commission on August 22, 2024 (the “TO-C”). Amendment No. 1 has been revised to reflect the Company’s responses to the comment letter to the TO-C received on August 30, 2024 from the staff of the Commission (the “Staff”), and we are hereby providing the Company’s responses to the Staff’s letter.
For ease of review, we have set forth below each of the numbered comments of the Staff’s letter in bold type followed by the Company’s responses thereto. Capitalized terms not otherwise defined herein shall have the
meanings assigned to them in the Company’s Offer to Purchase filed with the TO-C.
Schedule TO-C filed August 22, 2024
Cover Page
1.
We note the following statement on the cover page: “The consideration for each Security tendered and accepted for purchase will equal $, plus accrued and unpaid dividends, if any, for the period
from and including the last dividend payment date, to, but not including, the Settlement Date (the ‘Offer Price’).” The term “Settlement Date” is defined on page 7 of the Offer to Purchase to mean the date the Company pays for tendered
securities. Thus, it appears that dividends that may accrue after the Expiration Date and through the Settlement Date could result in a change to the Offer consideration. Please revise the disclosure here and throughout the Offer to Purchase,
consistent with our view that any change to the Offer Price can occur only before the Expiration Date, and may require an extension of the offering period under Rule 14e-1(b), or advise.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that the Company believes
that in the context of an issuer tender offer for fixed income securities (whether debt, including convertible debt, or preferred equity), such as the Securities, it is common practice for the offer consideration to be structured such
that the holder receives for his or her securities (1) a fixed price plus (2) accrued and unpaid interest (in the case of debt, including convertible debt) or accrued and unpaid dividends (in the case of preferred equity) that the holder
would have received had the holder owned the securities through the next relevant record date. The Company believes that the market expectation for an issuer tender offer is that the holder will receive the “accrued and unpaid interest”
or “accrued and unpaid dividend,” as applicable. In addition, in analogous situations where holders of the Securities cease to be holders of the Securities (such as through the payment of the liquidation preference to the holders of the
Securities), the terms of the Securities described in the Charter entitle holders of the Securities to receive accrued and unpaid dividends through, but not including, the date of the liquidation payment (in this case, by analogy, the
settlement date of the Offer). Should the Offer and Consent Solicitation consideration not include the payment of accrued and unpaid dividends, tendering holders would be deprived of the payment to which they are entitled.
September 9, 2024
Page 2
Where settlement of an issuer tender offer falls between the relevant interest (or dividend) record date and the interest (or dividend) payment date, the Company believes that it is common
practice for the tender offer consideration to be structured to include a fixed price, without the payment of accrued interest (or accrued dividends). This is because, in addition to receiving the payment of the fixed tender offer price at
settlement of the tender offer, holders of the subject securities at the close of business on the relevant record date that tender their securities in the tender offer will receive the payment of accrued and unpaid interest (or dividends)
through, but not including, the interest (or dividend) payment date on the relevant payment date. Furthermore, consistent with market practice, should any trades be made in the subject securities between the record date and the relevant
payment date, investors purchasing the securities will do so with the expectation that they will not be paid the next dividend payment (and the purchase price for the securities would typically be adjusted to account for any accrued on
unpaid interest the investor would have otherwise been owed for the period from the date of purchase of the securities through, but not including, the relevant interest (or dividend) payment date).
On July 30, 2024, the board of directors of the Company authorized a quarterly dividend (the “October Dividend”) on the Class N Preferred Stock underlying the Securities payable on October
15, 2024 (the “October Dividend Payment Date”) to holders of record of the Class N Preferred Stock at the close of business on October 1, 2024 (the “October Dividend Record Date”) for distribution to the holders of the Securities, which
dividend was declared by the Company on August 1, 2024. As a result, in the event the Offer settles following the close of business on the October Dividend Record Date, but before the October Dividend Payment Date, holders of record of the
Securities at the close of business on the October Dividend Record Date will receive the October Dividend for the Securities regardless of whether they participate in the Offer, since the October Dividend Record Date will occur prior to the
consummation of the Offer. In this scenario, the total per-share consideration that holders who tender their Securities will receive will equal the stated dollar amount in the Offer to Purchase for each Security, without any amount to be
paid with respect to dividends, including the October Dividend; however, holders of the Securities at the close of business on the October Dividend Record Date that tender their Securities in the Offer will receive both the October Dividend
and the Offer Price for the Securities.
In the alternative scenario, where the Offer will settle on or following the October Dividend Payment Date, the total per-share consideration that holders who tender their Securities will
receive will equal (i) the stated dollar amount in the Offer to Purchase for each Security plus (ii) an amount equal to the amount of accrued and unpaid dividends that would otherwise be payable for a period beginning on, and including, the
October Dividend Payment Date and ending with, but not including, the Settlement Date, as if such dividends had otherwise been declared and paid in accordance with the Charter. In this scenario, in the event of a delay in the expected
Settlement Date, security holders who validly tendered their Securities would continue to receive an amount equal to dividends that would have accrued up to, but not including, such delayed Settlement Date as if such dividends had otherwise
been declared and paid.
On the basis of the foregoing, the Company believes that the Offer to Purchase complies with the Company’s obligations under Rule 14e-1(b) because the Company will provide security holders with the disclosure of the type and amount of
consideration offered and the total consideration payable for each Security. Furthermore, the Company believes that the Offer Price of a base amount plus accrued and unpaid dividends (in the context of preferred equity securities) or
interest (in the context of debt securities, including convertible debt instruments) is common practice for issuer tender offers for fixed income securities. The Company believes that such formulation is commonly viewed as not involving a
“change” in the offer price requiring an extension of ten business days under Rule 14e-1(b).
Purpose of and Reasons for the Offer and Consent Solicitation, page 9
2.
Please explain the reasons for the timing of the Offer and Consent Solicitation. See Item 7 of Schedule 13E-3 and Item 1013(c) of Regulation M-A.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on pages 9 and 10 of Amendment No. 1. The Company advises the Staff that the Offer and
Consent Solicitation constitute post-closing optimization of the Company’s capital structure following the Company’s acquisition of RPT in January of 2024. The Company was required to issue the Securities to holders of similar
securities of RPT in connection with the acquisition. The terms of the Securities are not consistent with the terms of similar securities issued by the Company or other investment-grade issuers in the REIT industry. For instance, it
would be unusual for the Company or any other investment grade issuer in the REIT industry to issue perpetual convertible preferred equity securities without an optional redemption provision. Consequently, the Company is seeking to
conduct a tender offer for any and all of the outstanding Securities (and, potentially, to redeem any Securities that remain outstanding following consummation of the Offer and Consent Solicitation). This Offer and Consent
Solicitation is intended to rationalize and optimize the Company’s capital structure as soon as practicable following the acquisition of RPT.
September 9, 2024
Page 3
Potential Effects on Holders of Securities, page 10
3.
The first paragraph in this section lists as a potential effect of the Offer and the Consent Solicitation that “tendering holders of Securities will receive a purchase price that represents a
premium... over recent market prices.” Revise to note that since the redemption may not occur until at least mid-2025, if at all, there is no guarantee that the purchase price in the redemption will represent a premium to the market price at
that time. If you do not believe this is likely, explain the basis for your belief in the revised Offer to Purchase.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on page 10 of Amendment No. 1 accordingly. Given potential timing for redemption of the
Securities (assuming the Company’s receipt of the Requisite Approvals and, thereafter, that the Company elects to conduct a redemption of the Securities), there is no guarantee that the redemption price will represent a premium to the
market price for the Securities at the time of the redemption, or that there will even be an established market price for the Securities at such time.
Fairness of the Offer and Consent Solicitation, page 13
4.
We note the disclosure in the first bullet point on page 14 that the Offer Price was “based on price discovery efforts conducted by the Company to determine indicative levels of interest in the
Offer.” In an appropriate part of the Offer to Purchase, expand to discuss who conducted the price discovery efforts, including whether they were conducted by a financial advisor or other third party on the Company’s behalf, when they were
conducted, and how.
Response: The Company respectfully acknowledges the Staff’s comment and advises the Staff that the Company does not intend to engage in price discovery efforts with investors, nor does it
intend to engage any financial advisor or third party to do so on its behalf. The Company has revised the disclosure on page 14 of Amendment No. 1 accordingly.
Factors Considered, page 14
5.
The introductory paragraph of this section states that the Board of Directors has determined that both the Offer and the Consent Solicitation are fair to unaffiliated holders of the Securities.
However, it is not clear how the factors that follow and that were considered by the Board support the fairness determination as it relates to the Consent Solicitation. For example, even if the Company receives the Requisite Approvals, it may
choose not to redeem the Class N Preferred and any redemption will be delayed for a significant period, at which time the Offer Price may no longer represent a premium to the trading price of the Class N Preferred. Please revise to discuss
more specifically how the Board considered and analyzed the fairness of the Consent Solicitation specifically.
Response: The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on page 14 of Amendment No. 1.
The Company advises the Staff that the Board of Directors considered a number of factors in determining the fairness of the Offer and Consent Solicitation to the holders of the Securities, including unaffiliated holders.
However, the Board of Directors did not consider the fairness of the Offer and Consent Solicitation separately, as it views the Offer and Consent Solicitation as part of the same transaction. The price offered to holders of the
Securities is in return for both the tender of the holders’ Securities and their consent to the Proposed Amendments. The foregoing is consistent with the purpose of the Offer and Consent Solicitation, which, as part of a single
transaction, are intended to rationalize and optimize the Company’s capital structure following the Company’s acquisition of RPT.
September 9, 2024
Page 4
6.
Refer to the condition listed in the seventh bullet point in this section on page 14 of the Offer to Purchase. Expand to identify the “various developments” and “certain selected market indices”
to which the Board compared the year-to-date historical trading yields and prices of the Securities. Provide add