Here is a quick analysis on your shareholders equity, which will be diluted by 41% after consideration of the two recent stock offerings.
KIM has shares outstanding of approximately 287 Million Shares. 90 Million were added (thats the shares for $7 bucks) this year and another 25 Million are planned for this offering, plus an over allotment (whatever that is) of approximately 4 Million shares. Thats adding 90 plus 25 plus 4 for a total of 119 Million additional shares in less than a year. On a beginning basis of 287 Million shares, divide 119 into that number and you are diluted by 41% in less than one year. I didn't read the news today, so my prior post, I was not aware of the additional shares being sold. You can now see that the dividend will never be at the levels that we experienced before everything went bust. In fact, the KIM prediction of a normalized dividend on January 1st, you can forget about it, in fact you can probably forget about it for about 10 years, assuming things get better by that time. The interest expense saved by retiring a little debt will be minimal, you can prove that by running a few numbers. I wouldn't blow a lot of time on it. The short end of this is that by the time these shares hit the market, the market will adjust itself downward to about 10, in my opinion, then look for it to drop into the 8 range. At that point I would be a buyer, but not before. Additionally, you have to questions managements decisions over the last year or two and the fact that they failed to track what was going on in the economy. That is what they are paid very well to do, know what is going on and act accordingly. Instead, KIM is in the same bucket with everyone else. We are no longer different and better, we are just the same as any other Reit that is languishing and in need of capital to operate and stay out of default. I rate this stock as a strong sell, buying back in at $8 per share and trading on the upswings, and dips. Thats what I will be doing.
Hmm, COST is major tenant of KIM. How were their December SSS numbers. Look, beat the street. Tons of retailers did likewise. Better not stay too focused on the rear view mirror.
OK, I am outta cliches.
KIM isn't cheap at these levels, so I won't bang the table for any "greater fools" to buy my shares, but I don't try to time things too much, and KIM is certainly levered to any kind of sunshine in retail.
A fair enough analysis. However, clearly the problem is not with their decisions in the last year or 2. At that point their hands were forced by events and decisions they made before the last year or so.
It would have been great not to sell a ton of equity at $7. But at that point what else could they do.
That being said, if dilution on a massive scale at that time automatically led to a price adjustment as you suggest now for dilution, why did the stock go up on that dilution?
I suppose the answer is exogenous events. And the current dilution isn't to avert an imminent default, but debt due 2 years down the road, so I guess there is no "phew, they raised some equity and can survive" rally.
Having dealt with KIM in the real world, they always seemed like smart guys, but a lot of smart people got caught with their pants down in the credit collapse.
Don't know if $8 is in the offing but I don't blame you for waiting or saying if I don't get that price I will pass. But you and/or your alter ego staocker sure had an abrupt about-face.
My point is that management could have sold stock at 40 or 35 or 30 as they should have seen this mess coming. Just my opinion. At 40, in May of 08, they could have retired all of the debt for the same dilution. Whether or not I would still be complaining, I don't know. But the proportion of dilution to debt being reduced is not acceptable to me. I got into this company through the Price Reit. The Price Reit was set up get cash to the Price's, I am assuming, or get cash into Price Club. At the time the dividend was 12%. I was thinking, this is a no brainer, owning real estate in the hottest retail environment. So KIM buys them and things seem to move along, although my 12% was gone, I think I still made 7 or 8 times my investment when I sold it all in May of 08. So I am not as smart as the KIM guys, but I have to think that they are missing some common sense to balance their "brain power". And we all buy KIM because we think that there are smart people running the company.