Dear Fellow Shareholders and Associates:
When Marty Kimmel and I developed our first shopping center in 1958, our primary focus was on the cash flow that could be generated from tenant leases; this would amortize the mortgage loan and provide our investors with stable and predictable cash distributions. The investment thesis was simple: Construct a building where a retailer wanted to serve its customers and lease it at a rate that would pay the investors a safe and reasonable return over the life of the lease. We could earn money while we slept.
During the ‘70s and ‘80s, we shifted to acquiring properties with the same characteristics low rent relative to the anchor tenant‘s sales, strong locations in densely populated markets and a steady cash flow providing distributions to the investors.
In 1991, when we completed our initial public offering, we provided investors access to ownership of shopping centers in a new public vehicle for the first time in a very long time. Our shareholders enjoyed a safe and growing dividend and growth in cash flow from retail real estate, along with a vehicle to opportunistically capitalize on the needs of distressed, real-estate rich retailers.
Fast forward to Kimco‘s Investor Day in September 2010 when, after the worst recession since the Great Depression, we made a commitment to our
shareholders to simplify our strategy and once again focus on recurring cash flow from high-quality shopping centers. We are making excellent progress fulfilling that commitment. To put this transformation in perspective, in 2008 our non-retail investment balance was $1.1 billion. After the impending sale of the InTown Suites extended-stay portfolio, that balance is expected to be below $300 million.
Since our Investor Day, we‘ve also shed shopping centers that didn‘t fit our criteria, generating proceeds to Kimco of more than $500 million.
We have used these proceeds, together with those generated from our non-retail dispositions, to reduce debt and acquire higher-quality shopping centers in welllocated areas.
The table on the next page illustrates our transformation.
Today, the demand for space for our type of retail property continues to improve. Absorptions are forecast to outpace completions of new construction for the foreseeable future. Despite prevailing economic uncertainties, planned store openings are at a multiyear high.
Our tenants are generally strong credits, including discounters, off-price retailers, drugstores, supermarkets and warehouse clubs, supplying everyday