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,

recover lost rents, and generate new revenue streams from services and ancillary income programs.

Our growing occupancy levels tell the tale of strong retailer demand for quality space, while also reflecting the success of portfolio recycling program. For the year, occupancy in our combined portfolio was 93.8 percent, up 70 basis points from 2011. In the U.S., the level was 93.9 percent, an increase of 80 basis points.

Occupancy in our U.S. anchor space (over 10,000 square feet) climbed 50 basis points, to 96.9 percent, fueled by increased demand from national and regional chains. Meanwhile, our small-shop occupancy jumped 170 basis points, to 84.2 percent ­ a strong indicator of the improving health of the economy.

During 2012, the company signed 2,678 new leases, renewals and options for a total of 10 million square feet ­ a 25 percent increase in pro-rata square footage over the previous year. Available space from bankruptcies such as Room Store, Syms and A&P, or end-of-term vacancies from such retailers as Kmart, were absorbed very quickly at higher rents, underscoring the value of those spaces.

Overall, our leasing spreads ­ the difference between old and new rents on the same space ­ continue to widen, another sign of strong demand. In the U.S., the spread was 9.8 percent. Rents on new leases were 27.8 percent higher; on renewals and options, they rose 4.5 percent.

Progress in Canada and Mexico
Our portfolio in Canada continues to enjoy high occupancy, at 97 percent, amid strong demand. High-quality space is at a premium, with more and more U.S. retailers seeking to expand into Canada.

In 2013, the big expansion story is Target. The retailer soon will be opening its first Canadian store in our Danforth center in Toronto, the first of 125 openings they have planned ­ a real transformational move for the Canadian retailing industry. In all, nine Target stores are set to open in our joint-venture properties over the next two years.

In 2012, we strengthened our presence in Canada by acquiring shopping centers in Ottawa and Edmonton. We also increased our ownership in one shopping center and converted our preferred equity interest into a pari-passu joint venture in another, both in British Columbia.

We‘re also pleased with our progress in Mexico, where occupancy rose to nearly 90 percent in our fully operational centers, reaching the target we established last year. In all, Mexico contributed more than $57 million to our NOI last year, up 16 percent before currency impacts.

Demand for quality space in Mexico is on the rise, with the economy expected to grow nearly 4 percent in 2013. Many major U.S. retailers have their sights set on Mexico, including Petco, American Eagle and Old Navy, among others.

Mexico‘s real estate capital market is suddenly very vibrant as well, thanks to recent offerings from several Mexican REITs. With the flow of investment money into real estate driving property values higher, we will look to sell certain assets to optimize our portfolio composition.

At the end of 2012, we also made a decision to monetize, over time, our South America portfolio ­ two projects in Brazil, two in Peru, and 11 in Chile. Even though GDP growth rates are projected to remain strong in these markets, we don‘t have the scale or the efficient tax structure to continue expanding in South America. Instead, we‘ll take our profits and reinvest the proceeds to help fund our U.S. growth strategy.

OUR MODEL: INCOME PLUS
Since our Investor Day in September 2010, we have been focused on executing against four strategic imperatives: active portfolio management, value creation through redevelopment and re-tenanting, opportunistic retail investments, and maintaining a strong balance sheet.

These activities all contribute to our "Income Plus" model. The "income" comes from a continuously improving portfolio of stable shopping centers that generates reliable and growing cash flows. The "plus" comes from the opportunistic investments we‘re able to make because of our strong financial position and longstanding relationships with major retailers and investment partners. Added together, they produce outstanding results for our shareholders.

Active Portfolio Management
Thirty months ago, we decided to get back to basics, concentrating on our core competency of owning and operating stable, high-quality neighborhood and community shopping centers. It‘s how we got our start in 1958, and what we know best.

After a painstaking review process, we decided to sell those shopping centers that were outside our core operating markets, didn‘t fit our desired asset profile, or had limited

opportunity for growth or repositioning. In addition, we decided to exit substantially all of our non-retail investments.

In the last two and a half years, we have made tremendous progress rebalancing our portfolio for greater growth and value. Last year alone, we sold 68 properties in the U.S., more than double the pace of the previous year, while purchasing 24 higher-quality shopping centers.

In all, we have sold 108 U.S. retail properties since September 2010, for gross proceeds of $825 million, while buying 59 higher-quality properties for a gross price of a $1.3 billion. The measure of success: our newly acquired centers have occupancy of 96 percent, average base rent of $13.92 a square foot, and average household income of $89,000. Those we sold: occupancy of 85 percent, rent of $8.75, and income of $65,000.

Despite the progress we‘ve made, we‘re not finished yet. We‘re now looking to optimize our remaining portfolio by refining and deepening our presence in top U.S. markets.

Going forward, our portfolio will be concentrated in key markets, encompassing the top 25 Metropolitan Statistical Areas (MSAs) of the U.S., areas that have the strongest demographics, limited retail per capita, high barriers to entry, and the greatest population density.

Our plan is to acquire larger, higher-value retail properties in these key territories, funding our investments through an active portfolio recycling program, both within and outside these markets. At the same time, we‘ll keep an eye on a handful of areas in other parts of the country that we think have the highest future growth potential.

In the end, we want to have a national platform that allows us to take advantage of scale and operating efficiencies, that enables us to serve as a top landlord to most national retailers, and that is broad enough to maintain the spread of financial risk, while having enough depth to capture new opportunities. This is our core investment proposition.

That model leaves little room for non-retail assets. After we complete the impending sale of our InTown Suites portfolio, our non-retail holdings are expected to comprise only 2.5 percent of our asset base, down from 10 percent at the peak.

Value Creation through Redevelopment and Re-tenanting
Acquiring high-quality properties in top markets is one avenue to growth. Another way we‘re adding value for the long term is to redevelop, re-tenant and expand the strongly situated shopping centers we already have.

After spending more than $40 million on redevelopment in 2012, we‘re ramping up our activity and targeting nearly $400 million in spending over the next few years.

In Staten Island, N.Y., we‘re redeveloping our Richmond shopping center, converting an empty box formerly occupied by Kmart into a new, higher-income space for Target. Similarly, in Pompano, Fla., we‘re taking a former Kmart location and turning it into new space for Whole Foods and The Sports Authority, at higher rents.

These are just two examples of how we‘re benefiting from turnover in leases signed more than 20 years ago at what are now below-market rents. We still have more than 1,000 such leases in our portfolio, so there‘s plenty of upside remaining to be captured.

Opportunistic Retail Investments
Our longstanding relationships with major retailers and investment partners, coupled with our strong balance sheet, put us in great position to make opportunistic retail investments that add value to our portfolio.

A recent example is our participation in an investment consortium that is buying five grocery banners ­ Albertsons, Acme, Jewel-Osco, Shaw‘s and Star Market – encompassing 877 stores, from Supervalu Inc.

Kimco was part of the original consortium that purchased more than 600 stores from Albertsons in 2006. As with our initial investment, we expect this latest transaction will result in a substantial return on our investment of up to $76.5 million, adding to our long history of success with retailer-owned real estate opportunities.

Joint ventures provide Kimco with another attractive source of acquisitions as our partners look to monetize their investments and we seek to simplify our ownership

structure. We currently have about $10 billion of assets in such partnerships.

During the year, Kimco acquired from joint-venture partners full interests in seven U.S. shopping centers. Most recently, we acquired our partner‘s 55 percent ownership interest in the Santee Trolley Square shopping center in the affluent San Diego market. We‘ll also look to increase our ownership in other joint ventures. For example, we recently increased our interest in the Kimco Income Fund I from 14.6 percent to 29.8 percent, and reached preliminary agreement with a new institutional investor to raise our stake from 18 percent to 33 percent in an existing institutional joint venture.

Maintaining a Strong Balance Sheet
During 2012, we took every opportunity to maintain and strengthen our healthy balance sheet and our liquidity position by accessing lower-cost money in the capital markets.

In all, we issued $800 million of perpetual preferred stock, at a blended coupon of 5.78 percent, and redeemed $635 million of such debt with a blended coupon of 7.45 percent. We also paid off approximately $199 million in senior unsecured notes with a coupon of 6.0 percent. Although we reported one-time non-cash charges of approximately $22 million, or $0.05 per diluted share, as a result of these transactions, we will benefit by approximately $13 million a year, or $0.03 per diluted share, in real cash savings and reduced fixed charges year after year.

Our immediate liquidity position remains very strong, at more than $1.4 billion, and over the course of the year, we improved our net-debt-to-recurring EBITDA ratio to 5.7 times, a level better than the 6 times to which we had committed at our 2010 Investor Day.

ACCELERATING OUR PROGRESS IN 2013

In 2013, we expect the pace of our activities will accelerate in response to improving market conditions and new opportunities. We have four main strategic objectives to guide us, but only one real focus: to maximize the value we create for Kimco shareholders, partners and associates.

Here is how we see the year shaping up:

• Portfolio Recycling ­ We will continue to recycle our portfolio for quality and growth, selling 60-75 retail properties that no longer meet our criteria, while re-investing the proceeds to acquire higher-value shopping centers that deepen and refine our presence in our key U.S. territories. In addition, we will substantially complete the sale of our non-retail assets, take initial steps to monetize our South American portfolio and select assets in Mexico, and continue to invest in redevelopment projects that improve the value of our U.S. portfolio.

• Shopping Center Performance ­ We‘re focused, as always, on extracting maximum value and cash flow from our shopping centers by increasing occupancy levels and rents, lowering costs and finding new revenue streams. We closed out 2012 with a streak of 11 consecutive quarters of same-site net operating income growth and we intend to keep that streak going in 2013. We also expect to increase our combined portfolio occupancy.

• Financial Strength ­ We will continue to maintain a healthy balance sheet and employ a conservative capital structure to achieve our business objectives. Our ongoing target for consolidated net-debt-to-recurring-EBITDA ratio is between 5.5 and 6.0 times, with a fixed-charge coverage ratio of at least 2.5 times.

FOCUSED ON VALUE

The true value of retail real estate comes from people. The people who finance, build and maintain shopping centers; the people who realize retail success in them, and the people who shop, enjoy dining and entertainment, or find a sense of community in them.

Behind them all, are the people of Kimco ­ the men and women who are focused every day on creating value for retailers, consumers, investors and communities alike. And they do a great job of it.

They work closely with retailers of all sizes to understand their business plans and help them find the right real estate to maximize their performance.

They give entrepreneurs and first-time business owners a helping hand through programs like KEYS, which offers training and incentives to start new businesses, and FastTRACK Franchise, which connects aspiring and experienced franchise owners with pre-approved locations.

They create, renew and maintain attractive shopping environments that enhance the consumer experience,

improve property values, and keep shoppers coming back for more.

They help protect the environment through sustainability initiatives like utility and waste management, lighting and irrigation efficiency, rooftop solar-power production, and low-impact materials and design ­ efforts that also reduce operating costs and create new revenue streams.

They improve our internal efficiency with technology, creating lease management and integrated financial planning systems; business intelligence tools, and mobile property management applications.

In the end, as they focus on creating value for those around them, the people of Kimco create value for themselves, building careers and a company with almost unlimited potential and opportunity.

We thank all Kimco associates for their many contributions to our success in 2012, and look forward to what their energy, creativity, drive and determination will mean to us in the years ahead.