Dear Friends and Associates:
What a roller coaster ride we´ve been on! The past eighteen months have surprised all of us by the speed of both the disintegration of the economic environment towards the latter part of 2008 and the resurgence beginning in late 2009.
Early last year, unemployment was hurtling toward 10%, the credit markets froze, banks could not lend (or refused to), and the stock market tumbled. In the world of retail real estate, Linens `n Things, Circuit City and Goody´s, among others, went out of business; a large and well-respected REIT filed for bankruptcy protection; many small mom and pop retailers were struggling; development became a dirty word; and the American consumer drastically curtailed shopping and spending.
Yet barely twelve months later, by the end of 2009, money was available at reasonable rates, the stock market rebounded, retail comp store sales improved dramatically, and we were hearing about “green shoots.”
“We are in an interesting cycle in retailing,
conspicious consumption is out... value and price are in”
And yet, things have changed. Consumers are uncharacteristically cautious, and the savings rate remains elevated. Conspicuous consumption is out, value and price are in. Retailers are controlling costs and are highly selective regarding expansion plans; property owners, including all of us at Kimco, are focused more than ever on the blocking and tackling of leasing; and indebtedness is being reduced everywhere.
Surprisingly, in retail real estate, the much anticipated fire-sale of distressed assets didn´t happen – in part, perhaps, because capital is again being cued up to invest in quality real estate. And, while certain properties across the country are suffering from tenant loss and excessive debt, the vast majority of assets owned by retail REITs remains resilient. We are watching the environment very, very closely.
For my part, I am proud of how all our associates at Kimco have worked together so well during these tumultuous times. I am most gratified by the team and leadership we have developed. I, along with my partners in the Office of the Chairman; Dave Henry, our new CEO; Mike Pappagallo, our CFO & CAO; and David Lukes our COO, are enthusiastically prepared to propel Kimco forward again and to create long-term value for our shareholders. Their letter that follows will review the recent past, explain our competitive advantages, and bring you up to date on Kimco´s strategy going forward.
Milton Cooper
Chairman of the Board