UPDATE 2-Kimco invests $182 mln Australia's Valad Property

(Adds share price, fund manager comment)

By Denny Thomas and Ilaina Jonas

SYDNEY/NEW YORK, Feb 5 (Reuters) - Kimco Realty Corp (KIM.N: Quote, Profile, Research, Stock Buzz), one of the largest U.S. owners of shopping centres, said it had invested A$200 million ($182 million) in Australia's Valad Property Group (VPG.AX: Quote, Profile, Research, Stock Buzz), the latest consolidation in a sector hit by the subprime mortgage crisis.

Shares in shares Valad tumbled as much as 20.1 percent when they resumed trade on Tuesday, as analysts saw a takeover of Valad as less likely after the Kimco capital infusion.

"It's harder to take over (Valad) today than it was last week. You can't rule it out but it is more difficult because you've got to deal with two parties rather than one," said Ashton Reid, a fund manager with Legg Mason Asset Management, which owns Valad shares.

Kimco said on Monday it had purchased convertible notes issued by a subsidiary of Valad, with a coupon rate of 9.5 percent payable semi-annually and an option to convert them into Valad shares at A$1.33 compared with Valad's last traded price of A$1.005. The A$200 million investment represents about 13 percent of Valad's current market value of A$1.5 billion.

Speculation of a possible takeover fired a 15 percent rally in Valad's shares last Friday.

Analysts have said that Australia's property sector is ripe for consolidation as investors shy away given the troubles several companies have faced and the possibility of falling property prices as a fallout from the subprime debacle.

"The positive is that (Valad) are now de-leveraged and have capacity to act in a vulture-like way should the opportunities arise. But those opportunities need to be higher returning given this cost of capital is high," Reid added.