Realty • 2012 Annual Report

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Realty • 2012 Annual Report Kimco Realty • 2012 Annual Report REALTY REALTY 3333 New Hyde Park Road New Hyde Park, NY 11042 Tel: 516-869-9000 blog.kimcorealty.com / kimcorealty.com 2012 Annual Report REALTY 247947KIM_Cvr_R1.indd 1 REALTY 3/12/13 1:42 PM Corporate Directory REALTY Board of Directors v Milton Cooper Philip E. Coviello (1)(2)(3) Richard G. Dooley (1)(2)(3 ) Executive Chairman Partner * Lead Independent Director Kimco Realty Corporation Latham & Watkins LLP Executive Vice President & Chief Investment Officer * Massachusetts Mutual Life Insurance Company Joe Grills (1)(2v)(3) David B. Henry F. Patrick Hughes (1v)(2)(3) Chief Investment Officer * Vice Chairman, President President IBM Retirement Fund & Chief Executive Officer Hughes & Associates LLC * Retired Kimco Realty Corporation (1) Audit Committee (2) Executive Compensation Committee Frank Lourenso Colombe M. Nicholas (2)(3) Richard Saltzman (2)(3) (3) Nominating and Corporate Executive Vice President Consultant President Governance Committee v JPMorgan Chase & Co. Financo Global Consulting Colony Capital LLC Chairman REALTY Executive Management Milton Cooper David B. Henry Michael V. Pappagallo Glenn G. Cohen Executive Chairman Vice Chairman, President Executive Vice President Executive Vice President, & Chief Executive Officer & Chief Operating Officer Chief Financial Officer & Treasurer Corporate Management David F. Bujnicki Adam M. Cohen Raymond Edwards Fredrick Kurz Leah Landro Vice President, Vice President, Vice President, Vice President Vice President, Investor Relations & Tax Retailer Services & General Manager, Human Resources Corporate Communications Risk Management Scott G. Onufrey Bruce Rubenstein Thomas R. Taddeo Paul Westbrook Senior Vice President, Senior Vice President, Vice President, Vice President, Acquisitions & Investment General Counsel & Chief Information Officer Chief Accounting Officer Management Secretary U.S. Regional Management ABOUT THE CompanY Conor Flynn Robert Nadler Paul D. Puma Wilbur “Tom” Simmons III President, President, President, President, Kimco Realty Corporation (NYSE: KIM) is a real estate investment Western Region Central Region Florida/Southeast Region Mid-Atlantic/Northeast Region LETTER from THE CHAIRMAN 2 trust (REIT) headquartered in New Hyde Park, N.Y., that owns 2012 Operating REVIEW 14 and operates North America’s largest portfolio of neighborhood and community shopping centers. As of December 31, 2012, FORM 10-K 21 International Management the company owned interests in 896 shopping centers comprising SHAREHOLDER Information 119 131 million square feet of leasable space across 44 U.S. states, Michael Melson Kelly Smith Corporate DirectorY IBC Puerto Rico, Canada, Mexico and South America. Managing Director, Managing Director, Latin America Canada 247947_KIM_Cvr_R3.indd 2 3/12/13 11:28 PM FOCUSED From our first shopping center in Miami in 1958, to our nearly 900 shopping centers across North America today, growth has always been a part of Kimco’s DNA. It still is. But as we enter the next chapter in our history, our path to growth is becoming even more focused – on top markets, quality and value, serving retailers and, as always, on results. We’re paying close attention to what really matters, with one goal in mind: to be the best neighborhood and community shopping center company in North America. We will achieve that goal by staying FOCUSED... ON TOP MARKETS ................ 6 ON QUALITY AND VALUE .... 8 ON RETAILERS ...................... 10 ON RESULTS ......................... 12 247947Kimco_NARR_2012_R2.indd 1 3/19/13 6:34 PM CHAIRMAN’S LETTER Dear Fellow Shareholders and Associates: shareholders to simplify our strategy and once again focus on recurring cash flow from high-quality When Marty Kimmel and I developed our first shopping centers. We are making excellent progress shopping center in 1958, our primary focus was on the fulfilling that commitment. To put our transformation cash flow that could be generated from tenant leases; in perspective, in 2008 our non-retail investment this would amortize the mortgage loan and provide our balance was $1.1 billion. After the impending sale of investors with stable and predictable cash distributions. the InTown Suites extended-stay portfolio, that balance The investment thesis was simple: Construct a is expected to be below $300 million. building where a retailer wanted to serve its customers and lease it at a rate that would pay the investors a safe Since our Investor Day, we’ve also shed shopping and reasonable return over the life of the lease. We centers that didn’t fit our criteria, generating proceeds could earn money while we slept. to Kimco of more than $500 million. During the ’70s and ’80s, we shifted to acquiring We have used these proceeds, together with those properties with the same characteristics – low rent generated from our non-retail dispositions, to reduce relative to the anchor tenant’s sales, strong locations debt and acquire higher-quality shopping centers in in densely populated markets and a steady cash flow well-located areas. providing distributions to the investors. The table on the next page illustrates our trans- In 1991, when we completed our initial public formation. offering, we provided investors access to ownership of shopping centers in a new public vehicle for the first Today, the demand for space for our type of retail time in a very long time. Our shareholders enjoyed property continues to improve. Absorptions are a safe and growing dividend and growth in cash forecast to outpace completions of new construction flow from retail real estate, along with a vehicle to for the foreseeable future. Despite prevailing opportunistically capitalize on the needs of distressed, economic uncertainties, planned store openings are at real-estate rich retailers. a multiyear high. Fast forward to Kimco’s Investor Day in September Our tenants are generally strong credits, including 2010 when, after the worst recession since the discounters, off-price retailers, drugstores, super- Great Depression, we made a commitment to our markets and warehouse clubs, supplying everyday 2 247947Kimco_NARR_2012_R2.indd 2 3/19/13 6:34 PM Our Quality Trade-Up: U.S. Shopping Center Acquisitions & Dispositions Since Investor Day 2010 (as of 12/31/12) Acquired Disposed Sites Sites Variance Number of properties 59 108 -45.4% Gross Price (000’s) $1,290,868 $825,250 56.4% Gross Leaseable Area in square feet (000’s)* 6,459 8,527 -24.3% Occupancy* 95.8% 85.4% 10.4% Average Base Rent per square foot* $13.92 $8.75 59.1% Estimated Population† 91,621 76,329 20.0% Household Density per square mile† 1,273 1,064 19.6% Median Household Income† $74,390 $58,458 27.3% Average Household Income† $88,935 $65,328 36.1% * Represents Kimco’s pro-rata interest † Within a three-mile radius necessities. Many of our leases were entered into Like other retail property owners, we are still navigating decades ago, and contain very low contract rents. Very through some headwinds. Many consumers are feeling few public companies have entered into leases 40 years the impact from the end of the payroll tax holiday, and ago; these legacy contract rents are obviously below gasoline prices are up. And yet some major economic market, and they form a basis for future rental growth indicators are pointing in the right direction. as the leases expire. A recent illustration of this was a 41-year-old lease with a major retailer that provided us The unemployment rate, while still too high, is slowly with annual rental revenues of $315,000. When the improving, and home prices continue to recover. lease expired in the first quarter of 2012, we entered Interest rates remain low. We remain focused on leasing into a new ground lease with a credit tenant for over our space to smart retailers who will benefit from better six times that rent. There are more such leases in our economic conditions in the years ahead. portfolio, which should result in additional rental growth as the leases expire. 3 247947Kimco_NARR_2012_R2.indd 3 3/19/13 6:34 PM Having evolved from that first shopping center many to our portfolio and acquired 10 properties from years ago, there are three aspects of Kimco’s business that partners in which we had a minority interest stake distinguish us today. and a management role. For example, during the year, we acquired Towson Marketplace in 1. We have a very large operating platform – 896 Towson, Maryland. This is a wonderful shopping shopping centers with approximately 8,400 tenants – center anchored by both Target and Walmart, that enables us to service the needs of major national with a full-line Weis Market on site. This property and regional retailers. Having this breadth of should provide stable and growing cash flows to locations provides us with access to most, if not all, our shareholders for many years to come. Another of the retailers that are experiencing the most rapid recent example is Santee Trolley Square in Santee, growth today. Among our peers, we are the largest California, where we increased our ownership from landlord to Costco, TJX Companies (T.J. Maxx, 45 percent to 100 percent. This 98-percent-occupied, Marshalls, etc.), Royal Ahold (Stop & Shop, Giant, 311,000-square-foot shopping center is anchored etc.) and others. Home Depot and Walmart, two of by several prominent national retailers such as T.J. the most creditworthy companies in America today, Maxx, PetSmart, Party City, Bed Bath & Beyond, 24 are among our largest tenants. Given our scale, Hour Fitness and Old Navy, and shadow-anchored we are afforded a seat at the table when a retailer is by Target. looking to expand or open a new store. In the retail real estate industry, size matters. 3. We have a long-term track record of capturing retail- related opportunities. Our history is illuminated 2. We are a manager and owner in joint ventures that by profitable transactions with Venture Stores, hold approximately $10 billion of retail real estate.
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