Joint Venture Acquisition
Dulles Town Crossing, Sterling, VA

KIMCO'S PATHS TO GROWTH



Our growth strategy, summed up in three letters and one symbol: TSR+, continues to transform our business and create additional shareholder value.


TRANSFORM

Trading up to higher-quality properties in top markets

SIMPLIFY

Focusing on retail real estate in the U.S.

REDEVELOP

Getting the most value out of our strongly situated shopping centers

PLUS

Taking advantage of opportunistic retail investments


These four parallel paths to growth all lead to another TSR:

TOTAL SHAREHOLDER RETURN





CHAIRMAN'S LETTER



Kimco had an excellent year in terms of financial results, occupancy gains, and executing on our “Transform, Simplify, Redevelop, Plus” strategy, designed to
generate Total Shareholder Return.


Dear Fellow Shareholders and Associates:

Kimco has always been about people. So much of Kimco’ s rich history and success is due to the vision, leadership and work ethic of key individuals who have joined with me to make Kimco what it is today; namely, the premier owner of retail shopping centers in the United States. From time to time over the years, I have extolled the virtues of some of these individuals who have played such a large role at Kimco. Marty Kimmel, Mike Flynn and David Samber immediately come to mind, but there are many others. With Dave Henry’s announced retirement and Conor Flynn’s appointment by the Board of Directors to succeed Dave as our next CEO, I thought it appropriate to focus my remarks on these two unique individuals.

Dave’s retirement is bittersweet for me. On the one hand, I am saddened that Dave’s smile, upbeat personality and calm demeanor will no longer be part of our day at Kimco. In his 14 years at Kimco, Dave has been a trusted partner, mentor and friend, and was instrumental in guiding our transformation over the last few years. He will be sorely missed. On the other hand, I smile with thoughts that Dave will now finally have the time that he has rightfully earned to do all the things in life that he enjoys, but has put off for so long. He leaves us with wonderful memories of his time here, and we wish him nothing but the best. And we look forward to his continued assistance and advice as we call upon him to serve from time to time in the future.

And now Conor. I am thrilled with the Board’s selection of Conor to succeed Dave. Kimco is part of Conor’s DNA as he follows in his father’s footsteps. Conor’s father, Mike, has been a Kimco officer, advisor and friend of mine for many, many years. And Conor brings the same energy and passion for our business that his father brought. He is bright, analytical and articulate. Conor is a wonderful motivator and has an innate leadership ability that is both rare and refreshing. I believe the company will thrive under his leadership, and I look forward to joining him as he takes Kimco to higher and higher levels.

In addition to Conor, Kimco is blessed with a group of talented professionals that are smart, dedicated and committed to Kimco’s future success. Conor has assembled a young team that is limited only by their own imagination. At the same time, Conor is also surrounded by some very seasoned and respected managers and advisors, including Glenn Cohen, our CFO, Bruce Rubenstein, our General Counsel, and a slate of regional presidents who are second to none, and who each manage portfolios that could easily stand alone as separate companies.

Finally, no letter of mine would be complete without a word about our portfolio. A particularly unique source of value creation in our business has excited me from the very beginning of my career, and still does today. By their nature, shopping centers require a very high ratio of land to total value. The typical shopping center is comprised of a one-story building and five times as much land as the square footage of the building’s footprint. The land component often exceeds the parking requirements, and thus, becomes an additional asset. In a growing economy, land is one of the best and least risky long-term investments. It is irreplaceable, indestructible, and a natural hedge against inflation. And as the land increases in value, it allows the center’s extra land to be set aside, or land banked, as I like to say, for additional investment opportunities. In the meantime, the revenue generated from the improvements covers the real estate taxes and other carrying costs.

Today, the opportunities that land banking affords us can take many forms, including the expansion of existing centers, development of outparcels, sales to third parties, and possibly mixed-use development. As markets change and evolve, it is incumbent upon us to make sure that we are maximizing each asset’s value, in order to maximize total shareholder return. In addition to our redevelopment projects spearheaded by Conor, we have, on occasion, drawn down from our land bank to unlock additional value with a mixed-use concept. Where the opportunities for mixed-use projects exist, we are careful to make sure that any non-retail component enhances the primary retail component; it is this synergy that increases the overall asset’s value.

So, for example, in two quality centers in Washington, DC and Boca Raton, Florida, we are working with best-in-class developers to build residential developments on excess land that we believe will create more demand for our centers’ tenants, and overall, create more value and a better asset for the long term. Let me be specific: in Pentagon Plaza just outside Washington, DC, a 750-apartment project is under consideration. And in Boca Raton, we are looking at 300 residential units to complement our shopping center. We are also considering a smaller residential project in Columbia, Maryland, which we believe will further enhance our existing retail center. In another instance, in the Bronx, in a shopping center that lies in the shadows of Yankee Stadium, adjacent to the Bronx County Courthouse and Bronx Municipal Building and in one of the densest parts of New York City, we built, with a partner, on excess land that we own behind the retail center, a five-story, 67,000- square-foot office building. Our ability to unlock additional value in our current portfolio will play an important part in our future growth. And given the size of our portfolio and the length of ownership of many of our properties, some of which have been owned for more than 50 years, I am confident that we will continue to find value-creation opportunities within our portfolio.

Joe Namath, the iconic New York Jets quarterback of the late sixties once wrote a book titled, “I Can’t Wait Until Tomorrow…’Cause I Get Better-Looking Every Day.” While I can’t say the same about myself, I can say the same about Kimco and its future. We have great people, great assets and great opportunities ahead of us. We get better every day.

2014 OPERATING REVIEW



Our results reflect our best efforts to reposition the portfolio to a vibrant collection of high-quality, high-growth assets located in dense, core major metropolitan markets with the highest growth in population, wages and employment.


Dear Fellow Shareholders and Associates:

These are momentous times at Kimco on so many fronts. The company’s Transform, Simplify, Redevelop, Plus (TSR+) strategy has been a resounding success. Our 2014 financial perfomance exceeded our high expect-ations. And while Dave Henry will be greatly missed following his retirement at the end of the year, the appointment of Conor Flynn as CEO to succeed Dave, and our other executive promotions, have been enthusiastically received both within and outside the company.

Overall, Kimco had an excellent year in 2014 in terms of financial results, operating performance, and executing on our TSR+ strategy. This strategy, which is designed to drive Total Shareholder Return (TSR), produced a TSR of 32.4 percent in 2014.

Funds from operations (FFO) as adjusted (excluding transaction gains and losses) grew to $576.9 million, or $1.40 per diluted share, a 5.3 percent per share increase in 2014. Same-site net operating income (NOI) in our portfolio was up 3.3 percent for 2014, excluding the impact of foreign-currency. U.S. same-site NOI has shown strong, consistent growth for 19 consecutive quarters and was up by 3.3 percent for the full year 2014. Occupancy(1) in our portfolio reached 95.8 percent, up 130 basis points from 4Q 2013. In the U.S., occupancy(1) was 95.7 percent, an increase of 80 basis points. We take pride in our 16 straight quarters of solid positive leasing spreads for both new leases and renewals, and in the fact that our efforts in small shop space leasing have been gaining significant traction. As small local and national tenants begin to grow again, current small shop occupancy(1) is 88.0 percent, a 280 basis point increase since 4Q 2013. We are targeting small shop occupancy to reach 90 percent by 2016.

(1)Pro-rata share


UPGRADING OUR PORTFOLIO



Transforming our portfolio

Simply put, the reason for our excellent performance in 2014 is that our transformation efforts have produced a portfolio of high-quality properties in strong markets that benefit from positive macro-economic factors and are more resilient to economic downturns.

In 2014, we purchased interests in 60 retail properties, including 33 acquired from existing joint ventures, based on a gross purchase price of $1.4 billion. In keeping with our overall transformation strategy, we are concentrating our acquisition efforts on core major metrop-olitan areas where Kimco has scale, physical presence, long standing relationships and properties with strong demographics. In these markets, we seek larger properties with potential for additional redevelopment and future value creation.

Transforming our U.S. portfolio also means exiting non-core properties located in secondary and tertiary markets, and becoming more urban-focused over time. That’s why we sold 91 U.S. shopping centers totaling 9.6 million square feet, for a gross sales price of $1.0 billion, in 2014. We now have about 17 percent fewer U.S. properties than we did at the end of 2010, but they are higher quality, as evidenced by our 330 basis point improvement in occupancy (1) and 17.8 percent higher annualized base rent (ABR) per square foot (1).

middle:
Joint Venture Acquisition
Webster Square, Nashua, NH

above:
Joint Venture Acquisition
Towson Place, Towson, MD

TRANSFORM


•  Acquire high-quality assets

•  Exit non-core markets and lower-quality, “at risk” assets


Recent Boston Portfolio Acquisition
Memorial Plaza, Cambridge, MA



Keeping it simple

Simplifying our business model is part of our deliberate approach to becoming a more focused company. In 2014, we sold 41 properties in Latin America, totaling approximately 7.5 million square feet, for a gross sales price of $622.3 million. With the consummation of these sales, the company has substantially liquidated its portfolio in Mexico and South America.

We are also reducing the number of partners and properties that are part of joint ventures by either selectively buying out partner interests and acquiring properties owned by the joint ventures, or through the outright sale of these assets.

Simplifying our portfolio by acquiring joint venture properties managed and leased by Kimco for many years is beneficial to both the company and our joint venture partners. The benefits include minimal due diligence costs and time to close; quick execution; less cost to assume mortgage debt on the properties; no brokerage commi-ssions; and no additional overhead required.




SIMPLIFYING OUR BUSINESS



In 2014, we acquired 33 joint venture properties for a gross price of $994.9 million. And it’s a trend we are continuing in 2015 with the acquisition of Blackstone’s interest in the 39-property Kimstone portfolio. The portfolio comprises 5.6 million square feet, is approx-imately 96 percent occupied, and consists of a mix of well-located, grocery-anchored shopping centers and dominant power centers in areas with strong demo-graphics and high barriers to entry. All told, we reduced the number of properties in our joint venture portfolio by 29 percent in the past 15 months and 47 percent since we initiated this strategy in 2010.

top:
Joint Venture Acquisition
Stanford Ranch, Roseville, CA

above:
Joint Venture Acquisition
Woodbury Center, Harriman, NY



SIMPLIFY

•  Monetize Latin American assets

•  Reduce joint venture platform
    (number of partners and properties)


Joint Venture Acquisition
Stafford Marketplace, Stafford, VA



Redevelopment yields strong returns on invested capital, produces higher residual net asset values, and creates operational efficiencies with modern technological advancements.


Adding value through redevelopment

Aggressively pursuing redevelopment opportunities within our portfolio is one way we leverage our proven operational excellence to create value and increase earnings over time. That’s why we will demolish and rebuild; divide anchor spaces and create new storefronts; make room for and build stand-alone stores; and add attra-ctive new facades, shopper amenities and landscaping to existing properties. At the end of 2014, we had a redevelopment and value creation pipeline of $1.2 billion, which should generate an incremental NOI of approximately $100 million and will add over $625 million in net asset value over a five-year period.

One of these redevelopment opportunities is the ideally located Pompano Beach Shopping Center in Pompano Beach, Florida. We took advantage of an opportunity and terminated our Kmart lease early to redevelop the property which is along the major retail corridor in Pompano Beach. Build-to-suit leases were then secured with Whole Foods (45,000 SF) and Sports Authority (35,000 SF). In addition, a vacant outparcel restaurant was demolished and a new PDQ restaurant was built in its place. All three tenants recently opened for business generating a return on investment (ROI) of 11 percent and incremental value of $9.4 million.


INCREASING PROPERTY VALUES

Taking advantage of development opportunities

For the first time in many years, we are also seeing some limited and select opportunities for ground-up development. This includes our Dania Pointe development located in Dania Beach (Ft. Lauderdale), Florida, which comprises 95 acres located along I-95 with excellent visibility. Dania Pointe will likely consist of over 1 million square feet of retail, a hotel, a potential multi-family component and multiple retail/restaurant outparcels. Dania Pointe will become the most dominant retail center and development in Broward County and is already enjoying extremely strong tenant interest. Phase I will be developed on a total of 35 acres and construction will commence in mid-2016. Phase II will be developed on the remaining 60 acres and construction is expected to commence in 2017.

The center will pull from a 10+ mile trade area with over 1.1 million people and more than 570,000 employees. Over 270,000 cars drive past the site daily on I-95 with another 90,000 cars per day driving along I-595 just to the north of Dania Pointe. The Fort Lauderdale Airport is just 3 miles northeast of the project. Within 5 miles to the east is the Port Everglades Cruise Port with more than 80,000 passengers per week.

Dania Pointe is adjacent to our 900,000 square foot, 100 percent leased Oakwood Plaza shopping center.

As Milton described in his letter, another way we’re continuing to increase value is to add mixed-use opportunities where appropriate. This approach produces the highest and best use for existing real estate, benefits the surrounding community and increases the value of the primary retail component of the project. We look to mitigate risk by either ground leasing the mixed-use component or working with best-in-class developers. Mixed-use redevel-opment creates value for shareholders while retaining the ownership of the fee position. In addition to Dania Pointe and some of the mixed-use projects mentioned by Milton, of particular note is our unique asset in Cupertino, California.

•  Redeveloping 90% of the shopping center to improve traffic
    and pedestrian circulation

•  Adding seven junior anchor and two anchor tenants, as well
    as 38,000 square feet of small shop space

•  Executed leases with LA Fitness, Sports Authority, Ross Dress
    for Less and Petco

REDEVELOP

•  Evaluate highest and best property use to drive value creation

•  Focus on dense, core major metros and highly productive centers


Recently Completed Redevelopment
Pompano Beach Shopping Center,
Pompano Beach, FL



We are proud that our TSR+ strategy delivered a TSR, total shareholder return, of 32.4% for 2014.


Cupertino Village, located directly across from the planned Apple Campus 2, which is expected to be com-pleted in 2016, is undergoing a major redevelopment that will add new buildings, parking, landscaping and high-tech touches befitting a neighbor of Apple. The center, to be completed by mid-2015, will make Cupertino Village an even more attractive shopping destination for city residents and the 14,000 Apple employees expected to work next door.

How we put the Plus in TSR+


Working with the Kimco regional teams, Milton and Ray Edwards, Vice President, Retailer Services, continue to find value creation opportunities through investments with retailers who own large portions of their real estate. We call this the “Plus” in TSR+. Our 50 years of retail property experience and financial acumen have resulted in a solid track record of unlocking real estate value for retailers. We believe the current economic environment, coupled with our strong retail relationships, will yield profitable investment opportunities as we help real estate rich retailers unlock the value in those assets. We work directly with retailers on sale leasebacks, bankruptcy transactions, repositioning underperforming retail locations, and retail real estate financing.

As an example of the Plus at work, in 2014, we announced that we would be participating in a consortium to purchase grocery chain Safeway Inc. This transaction, which closed in the beginning of 2015, builds on the momentum of our Albertsons and SUPERVALU investments and fits with our strategy of creating additional value through opportunistic investments with real estate rich retailers. It’s a strategy that we have successfully applied for 25 years with retailers such as Gold Circle, Woolco, Venture Stores, Hechinger, Montgomery Ward, Shopko, Ames, and Save Mart. The Plus business has also been involved in many smaller, lower-profile sale/leasebacks and other investments. The company, however, is committed to keeping the size of the Plus business modest in relation to our total size.


CORPORATE SUSTAINABILITY PROGRAM



Kimco is focused on building a thriving and sustainable business – one that succeeds by delivering long-term value for stakeholders. We take pride in how we conduct business, including the positive contribution we make to our communities and our initiatives to safeguard the environment. In 2014, we produced our inaugural corporate responsibility report, based on the Global Reporting Initiative’s G-4 Guidelines. The report spells out our key corporate responsibility program priorities which are to:

• Openly engage our key stakeholders.
• Lead by example in our operations.
• Positively influence our tenants and partners.
• Enhance our communities.
• Build and retain a quality team.

We’re honored that our work in this important area has been singled out for recognition. Kimco was named to the S&P 500 Climate Disclosure Leadership Index (CDLI) by the non-profit CDP, a leading global environmental disclosure system, for the depth and quality of information we disclosed to investors and the global marketplace this year. We were also named a Green Star Company by the Global Real Estate Sustainability Benchmark (GRESB).

left: Community connection, employees are encouraged to volunteer in their communities
as a means of multiplying their impact.

above: Improved lighting
quality and increased efficiency

PLUS

•  Create value via opportunistic retail activities

•  Work directly with retailers on sale leasebacks, bankruptcy,
   retail real estate financing



Recent Acquisition
Crossroads Plaza, Cary, NC


Our financial picture is excellent


Our consolidated market cap at year end was $16.1 billion, and our ratios of consolidated net debt to EBITDA as adjusted; debt to equity and fixed charge coverage collectively demonstrate a strong balance sheet profile. We completed 2014 with over $1.6 billion of immediate liquidity, positioning us to be able to take advantage of opportunities that arise.

We also benefited from recurring retail earnings growth, which grew by 4 percent in 2014. Recurring retail earnings had a 5 percent compound annual growth rate (CAGR) from 2010 to 2014. Our dividend grew at a CAGR of 9 percent from 2010 to 2014. We also maintain excellent dividend coverage, as illustrated by an FFO payout ratio of 62 percent.

Kimco is positioned to access capital at all times and in multiple forms. We continue to lower our cost of capital by replacing higher rate maturing debt at lower rates. In 2014, we issued a new seven-year unsecured note totaling $500 million at 3.20 percent. The proceeds were used to repay $294.6 million of unsecured notes at a blended rate of 5.20 percent and $97.6 million of mortgage debt with a weighted average interest rate of 6.14 percent, which matured in 2014.

Anaheim Plaza, Anaheim, CA


BUILDING ON SUCCESS



In early 2015, we refinanced our $400 million unsecured term loan, scheduled to mature in April 2015, with a new $650 million unsecured term loan scheduled to mature in 2020, with lower pricing provided by a conso-rtium of banks. In addition, we established a $500 million “At the Market” equity program which provides us an attractive, alternative low-cost way to source capital and greater flexibility in managing our balance sheet.

We are preserving our strong liquidity position, and during 2014, renewed our $1.75 billion unsecured revolving credit facility with better pricing. This line is scheduled to mature in March 2019.

We maintained strong balance sheet metrics in 2014, with Net Debt to EBITDA as adjusted of 5.5x, within our stated goal of 5.5x-6.0x range, and a fixed charge coverage of 3.2x. Finally, we maintain strong investment grade credit ratings in the upper 10 percent level of all U.S. REITs. Our unsecured debt ratings are as follows: S&P: BBB+; Moody’s: Baa1; and Fitch: BBB+.

Looking Ahead


We believe our results in 2014 demonstrate the effectiveness of our TSR+ strategy. We could not have achieved these results without the outstanding people of Kimco, who we believe are quite simply the best in the business. We look forward to leveraging our strategy to build on our successes and continue to drive Total Shareholder Return. In 2015, our emphasis will be on creating additional value within our existing portfolio through redevelopment, expansions and select new developments. We are excited about these plans, and to echo Milton, we have great people, great assets and great opportunities ahead of us. We get better every day.





DOWNLOADS


Click to download full annual report in PDF format.




Click to download Form 10K in PDF format.

This is an interactive version of Kimco Realty's 2014 Annual Report. It is qualified in its entirety by reference to the printed version, a reproduction of which is available in PDF format above.


© 2015 Kimco Realty Corporation







Kimco Realty Corporation (NYSE: KIM) is a real estate investment trust (REIT) headquartered in New Hyde Park, N.Y., that is North America’s largest publicly traded owner and operator of neighborhood and community shopping centers. As of December 31, 2014, the company owned interests in 754 shopping centers comprising 110 million square feet of leasable space across 39 U.S. states, Puerto Rico, Canada, Mexico and Chile.


> Kimco Realty website
> Kimco Realty blog

Kimco is focused on building a thriving and sustainable business – one that succeeds by delivering long-term value for stakeholders. We take pride in how we conduct business, including the positive contribution we make to our communities and our initiatives to safeguard the environment.

In 2014, we produced our inaugural corporate responsibility report, based on the Global Reporting Initiative’s G-4 Sustainability Guidelines. The report spells out our key corporate responsibility program priorities:
• Openly engage our key stakeholders.
• Lead by example in our operations.
• Positively influence our tenants and partners.
• Enhance our communities.
• Build and retain a quality team.

We’re honored that our work in this important area has been singled out for recognition. Kimco was named to the S&P 500 Climate Disclosure Leadership Index (CDLI) by the nonprofit CDP, the world’s global environmental disclosure system, for the depth and quality of information we disclosed to investors and the global marketplace this year. We were also named a Green Star Company by the Global Real Estate Sustainability Benchmark (GRESB).

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