* Strong demand prompts company to boost offering

* Shares rise 25.5 percent

* REIT Index up 9.1 percent. (Recasts first sentence, adds sector stock, updates share closing price, adds analysts comments, byline)

By Ilaina Jonas

NEW YORK, April 3 (Reuters) - Shares of shopping center owner Kimco Realty Corp (KIM.N: Quote, Profile, Research) closed up 25.5 percent on Friday after strong demand for its stock offering prompted the company to increase the number of shares offered, lifting the badly beaten real estate investment trust (REIT) sector.

Kimco sold 91.5 million shares, up from the previously expected 70 million, after demand was stronger than expected. The shares were offered at $7.10 each.

After the close of the market, the company said its underwriters exercised an option to sell an additional 13.725 million shares, up from the previously planned 10.5 million over-allotment,

The credit crisis has pummeled REIT stocks, with investors concerned that the companies may not be able to refinance their sizable debts when they mature.

After falling 41.5 percent last year, the benchmark MSCI U.S. REIT Index .RMZ was down another 29.9 percent before Friday's pop of 9.1 percent.