We delivered outstanding results, while improving the quality, value and growth potential of our shopping center portfolio.
Dear Fellow Shareholders and Associates:
In many ways, 2012 was a banner year for Kimco. Focused on both the present and the future, we delivered outstanding financial and operating results, while strengthening our balance sheet and making significant strides toward improving the quality, value and growth potential of our shopping center portfolio for the long term.
Our reported funds from operations (FFO) as adjusted came in at $514.2 million, or $1.26 per diluted share, up 5 percent from $489.8 million, or $1.20 per diluted share, in 2011.
For this solid performance, shareholders were rewarded with a total return of nearly 24 percent, continuing a long history of sector- and market-beating returns enjoyed by Kimco investors (see chart on page 12).
Dividends, of course, make up a significant portion of Kimco‘s total return. In October, the Board approved a 10.5 percent increase in our quarterly dividend, to an annualized rate of $0.84 per common share, reflecting our strong results and confidence in our future growth prospects.
FUNDAMENTALS LOOKING UP
We have good reason to be confident in the future. While economic uncertainty persists, the leading indicators in our industry continue to trend upward.
Demand for quality retail space is steadily increasing, with store openings hitting multiyear highs as retailers expand their store counts, population and consumer spending continue to rise, unemployment eases, and the housing recovery, fueled by low interest rates, gains momentum.
Yet available supply remains tight, with virtually no new development on the drawing boards. That translates into accelerating growth in effective rents and occupancy rates.
Kimco is well positioned to capitalize on these trends. The quality of our shopping center portfolio is strong and improving, our national platform is geographically diverse and increasingly focused on top markets, and our credit-worthy tenant base is very stable, generating reliable and growing cash flows.
Vital Signs Show Strength and Stability
Our 2012 operating metrics provide further evidence of our strength and stability.
Same-site net operating income (NOI) in our combined portfolio has grown now for 11 consecutive quarters a terrific winning streak. In the fourth quarter, it rose 3.4 percent the highest quarterly increase since the end of 2007. In all, our same-site NOI grew 2.3 percent in 2012, including a negative 60 basis-point impact from currency changes.
Much of the improvement in our NOI came from a rise in effective rents, but was also helped by efforts to reduce operating expenses, improve occupancy and retain tenants,