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Kimco Realty • 2015 Annual Report Kimco 2020 VISION 2020 VISION PM S 2945 REALTY RGB REALTY CMYK REALTY PM S 2945 REALTY 3333 New Hyde Park Road New Hyde Park, NY 11042 RGB Tel: 516-869-9000 2015 ANNUAL REPORTREALTY kimcorealty.com / blog.kimcorealty.com CMYK 299287_Kimco_CVR_R2.indd 1 3/16/16 2:43 AM REALTY Corporate Directory Board of Directors Executive Management Corporate Management Milton Cooper Milton Cooper James J. Bruin Executive Chairman Executive Chairman Senior Vice President Kimco Realty Corporation Portfolio Management Conor C. Flynn Philip E. Coviello (1v)(2)(3) President & Chief Executive Officer David F. Bujnicki Partner * Senior Vice President Latham & Watkins LLP Investor Relations & Glenn G. Cohen Corporate Communications Executive Vice President Richard G. Dooley (1)(2)(3v) Chief Financial Officer & Treasurer Lead Independent Director Raymond Edwards Executive Vice President Vice President & Chief Investment Officer * Ross Cooper Retailer Services Massachusetts Mutual Life Executive Vice President Insurance Company Chief Investment Officer Geoff Glazer Senior Vice President (1)(2v)(3) Joe Grills David Jamieson National Development Chief Investment Officer * Executive Vice President IBM Retirement Fund Asset Management and Operations Leah Landro ABOUT THE COMPANY Vice President Conor C. Flynn Bruce Rubenstein Human Resources President & Chief Executive Vice President Executive Officer General Counsel and Secretary Kimco Realty Corporation (NYSE: KIM) is a real estate investment Kimco Realty Corporation Thomas Taddeo Senior Vice President trust (REIT) headquartered in New Hyde Park, N.Y., that is North U.S. Regional Management Chief Information Officer Frank Lourenso (1)(2)(3) America’s largest publicly traded owner and operator of open-air Executive Vice President * Robert Nadler shopping centers. As of December 31, 2015, the company owned JPMorgan Chase & Co. President Dana Valenti Central Region Vice President interests in 564 open-air shopping centers comprising 90 million Risk Management Colombe M. Nicholas (2)(3) square feet of leasable space across 38 U.S. states and Puerto Rico. Consultant Paul D. Puma Financo Global Consulting President Harvey Weinreb Southern Region Vice President Tax Richard Saltzman (2)(3) Chief Executive Wilbur “Tom” Simmons III Officer, President & President Paul Westbrook member of the Mid-Atlantic Region Vice President Board of Directors Chief Accounting Officer Colony Capital, Inc. Armand Vasquez President Western Region * Retired (1) Audit Committee (2) Executive Compensation Josh Weinkranz Committee (3) Nominating and Corporate President Governance Committee Northeast Region (v) Chairman Letter from the Chairman 2 2015 Operating Review 4 Form 10-K 21 Shareholder Information 128 Corporate Directory IBC 299287_Kimco_CVR_R2.indd 2 3/16/16 2:43 AM Dania Pointe, Dania Beach, FL MSA: Miami - Fort Lauderdale - West Palm Beach (FL) KIMCO’S 2020 VISION Over the past five years, Kimco has transformed its business and created additional shareholder value by successfully executing on the Company’s Back to Basics and TSR+ (Transform, Simplify, Redevelop, Plus) strategies. As we look ahead to the next five years, Kimco’s 2020 Vision is focused on three key objectives: QUALITY Major Metro Focused SIMPLICITY Transparent and Efficient STRENGTH Balance Sheet 1 CHAIRMAN’S LETTER Our talented team has managed the successful transformation of our business with a clear and focused vision on future growth. Dear Fellow Shareholders and Associates During this past winter when a record-breaking storm ren- resiliency. Many of our top tenants are grocers and off-price So when you combine quality grocers and off-price retail- dered me snowbound for a few days, I had a chance to retailers, and over 85% of our Annualized Base Rent comes ers with many of our service-oriented tenant businesses reflect on our sector and our Company. I loved the open air from sites anchored by one or more of these operators. including medical services, restaurants, fitness centers shopping center business when I started Kimco in the 1950s Why is this so critical? As a basic necessity, the grocer has and other e-commerce resistant uses, you have a winning with Marty Kimmel and I still love it today with my new part- by definition an advantage over a traditional retailer of dis- formula. Our 2020 Vision continues this theme with an ner Conor Flynn. When I look at all that has transpired over cretionary items. This advantage translates into drawing even greater focus on major metro markets, simplicity and the last five years, it is clear that when it comes to retail power for the center, and a quality grocer will generate con- financial strength. real estate, our transformation back to our bread and but- sistent traffic in any economic cycle. Similarly, off-price ter neighborhood and community shopping center business retailers, with their constantly changing merchandise and Years ago, we had the highest multiple in our sector and a was the right decision at the right time. I like to say that we appeal to treasure hunting consumers, dominate the retail very simple business model. And that is why simplification are in the sweet spot in the ownership of retail real estate. landscape today and drive traffic to our centers. Traffic was at the core of our Back to Basics strategy. Shopping centers anchored by grocers and/or national dis- drives sales for the other tenants in the center, particularly Simplification has made us more transparent and easier to counters, complemented by value and service-oriented ten- the small shops, which in turn allows us to demand higher value. First off, we have fewer properties overall. These ants and located in high-quality demographic markets make rents. And when it comes to generating traffic, off-price properties are of higher quality, are located in major U.S. us ideally situated to implement our 2020 Vision over the retailers and grocers often have higher per square foot metro markets and are managed by Kimco. Moreover, by next five years. sales than department stores. And the good news is that reducing both the number of joint ventures and assets many of our top grocers and off-price retailers are seeking under JV control, we have unlocked considerable value in Let me be a little more specific. History teaches us that in to expand their operations. properties that some analysts and investors viewed as the retail real estate space a critical component of success “encumbered” and ascribed discounts to their value. By is the ability to withstand economic change and downturns. TJX Companies (“TJX”) and Ross Stores are two of our larg- either acquiring the interests of our partners, selling our As a result of our Back to Basics and TSR+ (Transformation, est tenants. When you compare the market cap of TJX and interests, or selling the entire asset, we have created sim- Simplification, Redevelopment and Plus business) strate- Ross Stores from 10 years ago and today, the increase of plicity and transparency that enhances our Net Asset Value. gies, we have become a resilient, safe, opportunistic retail 4-5x is nothing short of astonishing. In contrast, the mar- Finally, our former holdings in Mexico, South America and real estate company. First, our real estate. We have trans- ket cap of traditional department store retailers during the Canada further complicated valuation models as these non- formed and simplified the footprint of our portfolio, trim- same period experienced either a dramatic decline or managed assets were subject to currency and other risks. ming the number of assets from over 900 down to 600 (564 remained stagnant. And today, the market cap of TJX alone in the US, the remaining assets either under contract or is greater than the combined market cap of many major Our 2020 Vision of quality markets, resilient tenants and earmarked for sale). These assets are predominantly department stores. As for resiliency over varying economic simplified operations will unlock considerable value in our located in major US metro markets with wonderful popula- cycles, TJX produced positive annual comp stores sales portfolio. In order to capitalize on this transformation we tion and income demographics. They are simple and effi- through the last four recessions. And in a slow growth envi- need to ensure that the portfolio enjoys growth commensu- cient to operate. This enables us to keep our operating ronment for many retailers, TJX and Ross Stores recently rate with its quality. To this end, in addition to solid organic costs down and pass these efficiencies on to our tenants. reported comparable store sales of 5% and 4%, respectively, growth and mark to market upside opportunities built into over the previous year. We believe our continued focus on our leases, our selective development and redevelopment Second, our tenants. Let’s take a closer look at our tenant top-quality operators such as Royal Ahold, Albertson’s, pipelines continue to create growth and value. And in those base, and how that base drives traffic and contributes to our Kroger, Sprouts Farmers Market, Trader Joe’s, Home Depot, unique opportunities where we can upgrade our assets and TJX, Ross Stores and Burlington Coat will continue to set us maximize growth by adding a complementary mixed-use apart from our peers. component, we will do so judiciously. 2 $60 50.5 50 40 32.2 Market Cap 30 (in billions) 20 13.9 9.8 10 3.4 1.8 3.2 0 TJX Sears Dillard's JC Penney Nordstrom Macy's Combined Department Source: Bloomberg, March 11, 2016 Stores resiliency. Many of our top tenants are grocers and off-price So when you combine quality grocers and off-price retail- Our Plus business, led by Ray Edwards and me, is another retailers, and over 85% of our Annualized Base Rent comes ers with many of our service-oriented tenant businesses source of value creation. As we wait to monetize our from sites anchored by one or more of these operators.