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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------ EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2002
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------ EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-10899
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Kimco Realty Corporation
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(Exact name of registrant as specified in its charter)
Maryland 13-2744380
- ---------------------------- -------------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
3333 New Hyde Park Road, New Hyde Park, NY 11042-0020
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (516)869-9000 Securities
registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, par value $.01 per share. New York Stock Exchange
- --------------------------------------- ------------------------
Depositary Shares, each representing one-
tenth of a share of 7-3/4% Class A
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
- -------------------------- ------------------------
Depositary Shares, each representing one-
tenth of a share of 8-1/2% Class B
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
- -------------------------- ------------------------
Depositary Shares, each representing one-
tenth of a share of 8-3/8% Class C
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
- -------------------------- -------------------------
Securities registered pursuant to Section 12(g) of the Act:
None
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Indicate by check mark whether the Registrant (i) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (ii) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. X
----
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in rule 12b-2 of the Act.) Yes X No
---- ----
The aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $2.8 billion based upon the
closing price on the New York Stock Exchange for such stock on January 31, 2003.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable date.
104,651,866 shares as of January 31, 2003.
1
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates certain information by reference to the Registrant's
definitive proxy statement to be filed with respect to the Annual Meeting of
Stockholders expected to be held on May 15, 2003.
Index to Exhibits begins on page 48.
2
TABLE OF CONTENTS
Form
10-K
Report
Item No. Page
- -------- -----------
PART I
1. Business ................................................................. 4
2. Properties ............................................................... 17
3. Legal Proceedings ........................................................ 19
4. Submission of Matters to a Vote of Security Holders ...................... 19
Executive Officers of the Registrant ..................................... 29
PART II
5. Market for the Registrant's Common Equity
and Related Shareholder Matters .......................................... 31
6. Selected Financial Data .................................................. 32
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations .................................................... 34
7A. Quantitative and Qualitative Disclosures About Market Risk ............... 45
8. Financial Statements and Supplementary Data .............................. 45
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure ..................................................... 45
PART III
10. Directors and Executive Officers of the Registrant ....................... 46
11. Executive Compensation ................................................... 46
12. Security Ownership of Certain Beneficial Owners and Management ........... 46
13. Certain Relationships and Related Transactions ........................... 46
14. Controls and Procedures .................................................. 46
PART IV
15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K ........ 47
3
PART I
FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K, together with other statements and information
publicly disseminated by Kimco Realty Corporation (the "Company" or "Kimco")
contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 and
include this statement for purposes of complying with these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe the Company's future plans, strategies and expectations, are
generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project" or similar expressions. You should not rely
on forward-looking statements since they involve known and unknown risks,
uncertainties and other factors which are, in some cases, beyond the Company's
control and which could materially affect actual results, performances or
achievements. Factors which may cause actual results to differ materially from
current expectations include, but are not limited to, (i) general economic and
local real estate conditions, (ii) the inability of major tenants to continue
paying their rent obligations due to bankruptcy, insolvency or general downturn
in their business, (iii) financing risks, such as the inability to obtain equity
or debt financing on favorable terms, (iv) changes in governmental laws and
regulations, (v) the level and volatility of interest rates (vi) the
availability of suitable acquisition opportunities and (vii) increases in
operating costs. Accordingly, there is no assurance that the Company's
expectations will be realized.
SHARE SPLIT
As of December 21, 2001, the Company effected a three-for-two split (the "Stock
Split") of the Company's common stock in the form of a stock dividend paid to
stockholders of record on December 10, 2001. All common share and per common
share data included in this annual report on Form 10-K and the accompanying
Consolidated Financial Statements and Notes thereto have been adjusted to
reflect this Stock Split.
Item 1. Business
General Kimco Realty Corporation, a Maryland corporation, is one of the nation's
largest owners and operators of neighborhood and community shopping centers. The
Company is a self-administered real estate investment trust ("REIT") and manages
its properties through present management, which has owned and operated
neighborhood and community shopping centers for over 35 years. The Company has
not engaged, nor does it expect to retain, any REIT advisors in connection with
the operation of its properties. As of February 7, 2003, the Company's portfolio
was comprised of 607 property interests including 538 neighborhood and community
shopping center properties, two regional malls, 41 retail store leases, 22
ground-up development projects and four parcels of undeveloped land totaling
approximately 90 million square feet of leasable space located in 41 states,
Canada and Mexico. The Company's ownership interests in real estate consist of
its consolidated portfolio and in portfolios where the Company owns an economic
interest, such as; Kimco Income REIT ("KIR"), the RioCan Venture ("RioCan
Venture"), Kimco Retail Opportunity Portfolio ("KROP") and other properties or
portfolios where the Company also retains management (See Recent Developments -
Operating Real Estate Joint Venture Investments and Note 6 of the Notes to
Consolidated Financial Statements included in this annual report on Form 10-K).
The Company believes its portfolio of neighborhood and community shopping center
properties is the largest (measured by gross leasable area ("GLA")) currently
held by any publicly-traded REIT.
The Company's executive offices are located at 3333 New Hyde Park Road, New Hyde
Park, New York 11042-0020 and its telephone number is (516) 869-9000. Unless the
context indicates otherwise, the term the "Company" as used herein is intended
to include subsidiaries of the Company.
Our Web site is located at http://www.Kimcorealty.com. On our Web site you can
obtain, free of charge, a copy of our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange
Act of 1934, as amended, as soon as reasonably practicable after we file such
material electronically with, or furnish it to, the Securities and Exchange
Commission (the "SEC").
4
History The Company began operations through its predecessor, The Kimco
Corporation, which was organized in 1966 upon the contribution of several
shopping center properties owned by its principal stockholders. In 1973, these
principals formed the Company as a Delaware corporation, and in 1985, the
operations of The Kimco Corporation were merged into the Company. The Company
completed its initial public stock offering (the "IPO") in November 1991, and
commencing with its taxable year which began January 1, 1992, elected to qualify
as a REIT in accordance with Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the "Code"). In 1994, the Company reorganized as a
Maryland corporation.
The Company's growth through its first 15 years resulted primarily from the
ground-up development and construction of its shopping centers. By 1981, the
Company had assembled a portfolio of 77 properties that provided an established
source of income and positioned the Company for an expansion of its asset base.
At that time, the Company revised its growth strategy to focus on the
acquisition of existing shopping centers and creating value through the
redevelopment and re-tenanting of those properties. As a result of this
strategy, substantially all of the operating shopping centers added to the
Company's portfolio since 1981 have been through the acquisition of existing
shopping centers.
During 1998, the Company, through a merger transaction, completed the
acquisition of The Price REIT, Inc., a Maryland corporation, (the "Price REIT").
Prior to the merger, Price REIT was a self-administered and self-managed equity
REIT that was primarily focused on the acquisition, development, management and
redevelopment of large retail community shopping center properties concentrated
in the western part of the United States. In connection with the merger, the
Company acquired interests in 43 properties, located in 17 states. With the
completion of the Price REIT merger, the Company expanded its presence in
certain western states including California, Arizona and Washington. In
addition, Price REIT had strong ground-up development capabilities. These
development capabilities, coupled with the Company's own construction management
expertise, provides the Company, on a selective basis, the ability to pursue
ground-up development opportunities.
Also, during 1998, the Company formed KIR, an entity in which the Company held a
99.99% limited partnership interest. KIR was established for the purpose of
investing in high quality properties financed primarily with individual
non-recourse mortgages. The Company believes that these properties are
appropriate for financing with greater leverage than the Company traditionally
uses. At the time of formation, the Company contributed 19 properties to KIR,
each encumbered by an individual non-recourse mortgage. During 1999, KIR sold a
significant interest in the partnership to institutional investors. As of
December 31, 2002, the Company holds a 43.3% non-controlling limited partnership
interest in KIR and accounts for its investment in KIR under the equity method
of accounting (See Recent Developments - Operating Real Estate Joint Venture
Investments and Note 6 of the Notes to Consolidated Financial Statements
included in this annual report on Form 10-K).
In connection with the Tax Relief Extension Act of 1999 (the "RMA") which became
effective January 1, 2001, the Company is now permitted to participate in
activities which it was precluded from previously in order to maintain its
qualification as a REIT, so long as these activities are conducted in entities
which elect to be treated as taxable subsidiaries under the Code, subject to
certain limitations. As such, the Company, through its taxable REIT
subsidiaries, is engaged in various retail real estate related opportunities,
including (i) merchant building through its wholly owned taxable REIT
subsidiary, Kimco Developers, Inc. ("KDI"), which is primarily engaged in the
ground-up development of neighborhood and community shopping centers and
subsequent sale thereof upon completion (see Recent Developments - Kimco
Developers, Inc. ("KDI")), (ii) retail real estate advisory and disposition
services which primarily focus on leasing and disposition strategies for real
estate property interests of both healthy and distressed retailers and (iii)
acting as an agent or principal in connection with tax deferred exchange
transactions. The Company will consider other investments through taxable REIT
subsidiaries should suitable opportunities arise.
During October 2001, the Company continued its geographical expansion by forming
the RioCan Venture with RioCan Real Estate Investment Trust ("RioCan", Canada's
largest publicly traded REIT measured by GLA) in which the Company has a
non-controlling 50% interest, to acquire retail properties and development
projects in Canada. The Company has committed a total equity investment of up to
$250.0 million Canadian dollars ("CAD") and accounts for this investment under
the equity method of accounting (see Recent Developments - Operating Real Estate
Joint Venture Investments and Note 6 of the Notes to Consolidated Financial
Statements included in this annual report on Form 10-K).
In addition, the Company continues to capitalize on its established expertise in
retail real estate by establishing other ventures in which the Company owns a
smaller equity interest and provides management, leasing and operational support
for those properties, including KROP.
5
Investment and Operating Strategy The Company's investment objective has been to
increase cash flow, current income and, consequently, the value of its existing
portfolio of properties, and to seek continued growth through (i) the strategic
re-tenanting, renovation and expansion of its existing centers and (ii) the
selective acquisition of established income-producing real estate properties and
properties requiring significant re-tenanting and redevelopment, primarily in
neighborhood and community shopping centers in geographic regions in which the
Company presently operates. The Company will consider investments in other real
estate sectors and in geographic markets where it does not presently operate
should suitable opportunities arise.
The Company's neighborhood and community shopping center properties are designed
to attract local area customers and typically are anchored by a discount
department store, a supermarket or drugstore tenant offering day-to-day
necessities rather than high-priced luxury items. The Company may either
purchase or lease income-producing properties in the future, and may also
participate with other entities in property ownership through partnerships,
joint ventures or similar types of co-ownership. Equity investments may be
subject to existing mortgage financing and/or other indebtedness. Financing or
other indebtedness may be incurred simultaneously or subsequently in connection
with such investments. Any such financing or indebtedness will have priority
over the Company's equity interest in such property. The Company may make loans
to joint ventures in which it may or may not participate in the future.
In addition to property or equity ownership, the Company provides property
management services for fees relating to the management, leasing, operation,
supervision and maintenance of real estate properties.
While the Company has historically held its properties for long-term investment,
and accordingly has placed strong emphasis on its ongoing program of regular
maintenance, periodic renovation and capital improvement, it is possible that
properties in the portfolio may be sold, in whole or in part, as circumstances
warrant, subject to REIT qualification rules.
The Company seeks to reduce its operating and leasing risks through
diversification achieved by the geographic distribution of its properties and a
large tenant base. At December 31, 2002, the Company's single largest
neighborhood and community shopping center, accounted for only 1.2% of the
Company's annualized base rental revenues and only 0.8% of the Company's total
shopping center GLA. At December 31, 2002, the Company's five largest tenants,
include Kmart Corporation (see Recent Developments - Kmart Bankruptcy), The Home
Depot, Kohl's, TJX Companies and Wal-Mart, which represent approximately 4.5%,
2.8%, 2.7%, 2.5% and 1.9%, respectively, of the Company's annualized base rental
revenues, including the proportionate share of base rental revenues from
properties in which the Company has less than a 100% economic interest.
In connection with the RMA, which became effective January 1, 2001, the Company
has expanded its investment and operating strategy to include new retail real
estate related opportunities which the Company was precluded from previously in
order to maintain its qualification as a REIT. As such, the Company, has
established a merchant building business through its KDI subsidiary. KDI makes
selective acquisitions of land parcels for the ground-up development of
neighborhood and community shopping centers and subsequent sale thereof upon
completion. Additionally, the Company has developed a retail property solutions
business which specializes in real estate advisory and disposition services of
real estate controlled by both healthy and distressed and/or bankrupt retailers.
These services may include assistance with inventory and fixture liquidation in
connection with going-out-of-business sales. The Company may participate with
other entities in providing these advisory services through partnerships, joint
ventures or other co-ownership arrangements. The Company, as a regular part of
its investment strategy, will continue to actively seek investments for its
taxable REIT subsidiaries.
The Company emphasizes equity real estate investments including preferred equity
investments, but may, at its discretion, invest in mortgages, other real estate
interests and other investments. The mortgages in which the Company may invest
may be either first mortgages, junior mortgages or other mortgage-related
securities. The Company provides mortgage financing to retailers with
significant real estate assets, in the form of lease-hold interests or fee
owned properties, where the Company believes the underlying value of the real
estate collateral is in excess of its loan balance. In addition, the Company
will acquire debt instruments at a discount in the secondary market where the
Company believes the real estate value of the enterprise is substantially
greater than the current value.
6
The Company may legally invest in the securities of other issuers, for the
purpose, among others, of exercising control over such entities, subject to the
gross income and asset tests necessary for REIT qualification. The Company may,
on a selective basis, acquire all or substantially all securities or assets of
other REITs or similar entities where such investments would be consistent with
the Company's investment policies. In any event, the Company does not intend
that its investments in securities will require it to register as an "investment
company" under the Investment Company Act of 1940.
The Company has authority to offer shares of capital stock or other senior
securities in exchange for property and to repurchase or otherwise reacquire its
common stock or any other securities and may engage in such activities in the
future. At all times, the Company intends to make investments in such a manner
as to be consistent with the requirements of the Code, to qualify as a REIT
unless, because of circumstances or changes in the Code (or in Treasury
Regulations), the Board of Directors determines that it is no longer in the best
interests of the Company to qualify as a REIT.
The Company's policies with respect to the aforementioned activities may be
reviewed and modified from time to time by the Company's Board of Directors
without the vote of the Company's stockholders.
Capital Strategy and Resources The Company intends to operate with and maintain
a conservative capital structure with a level of debt to total market
capitalization of approximately 50% or less. As of December 31, 2002, the
Company's level of debt to total market capitalization was 31%. In addition, the
Company intends to maintain strong debt service coverage and fixed charge
coverage ratios as part of its commitment to maintaining its investment-grade
debt ratings.
Since the completion of the Company's IPO in 1991, the Company has utilized the
public debt and equity markets as its principal source of capital for its
expansion needs. Since the IPO, the Company has completed additional offerings
of its public unsecured debt and equity, raising in the aggregate over $2.7
billion for the purposes of, among other things, repaying indebtedness,
acquiring interests in neighborhood and community shopping centers, funding
ground-up development projects, expanding and improving properties in the
portfolio and other investments.
The Company has a $250.0 million, unsecured revolving credit facility, which is
scheduled to expire in August 2003. This credit facility has made available
funds to both finance the purchase of properties and meet any short-term working
capital requirements. As of December 31, 2002, there was $40.0 million
outstanding under this unsecured revolving credit facility. The Company intends
to renew this revolving credit facility prior to the maturity date.
The Company also has a $200.0 million medium-term notes program (the "MTN
program") pursuant to which it may from time to time offer for sale its senior
unsecured debt for any general corporate purposes, including (i) funding
specific liquidity requirements in its business, including property
acquisitions, development and redevelopment costs, and (ii) managing the
Company's debt maturities. As of December 31, 2002, $98.0 million was available
for issuance under the MTN program. (See Note 10 of the Notes to Consolidated
Financial Statements included in this annual report on Form 10-K.)
In addition to the public debt and equity markets as capital sources, the
Company may, from time to time, obtain mortgage financing on selected
properties. As of December 31, 2002, the Company had over 380 unencumbered
property interests in its portfolio representing over 89% of the Company's net
operating income.
It is management's intention that the Company continually have access to the
capital resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings, unsecured
debt financings and/or mortgage financings and other capital alternatives in a
manner consistent with its intention to operate with a conservative debt
capitalization policy.
During May 2001, the Company filed a shelf registration on Form S-3 for up to
$750.0 million of debt securities, preferred stock, depositary shares, common
stock and common stock warrants. As of January 31, 2003, the Company had
approximately $288.7 million available for issuance under this shelf
registration statement.
The Company anticipates that cash flows from operations will continue to provide
adequate capital to fund its operating and administrative expenses, regular debt
service obligations and the payment of dividends in accordance with REIT
requirements in both the short-term and long-term. In addition, the Company
anticipates that cash on hand, free cash flow generated by the operating
business, availability under its revolving credit facility, issuance of equity
and public debt, as well as other debt and equity alternatives, will provide the
necessary capital required by the Company. Cash flow from operations was $278.9
million for the year ended December 31, 2002, as compared to $287.4 million for
the year ended December 31, 2001.
7
Competition As one of the original participants in the growth of the shopping
center industry and one of the nation's largest owners and operators of
neighborhood and community shopping centers, the Company has established close
relationships with a large number of major national and regional retailers and
maintains a broad network of industry contacts. Management is associated with
and/or actively participates in many shopping center and REIT industry
organizations. Notwithstanding these relationships, there are numerous regional
and local commercial developers, real estate companies, financial institutions
and other investors who compete with the Company for the acquisition of
properties and in seeking tenants who will lease space in the Company's
properties.
Inflation and Other Business Issues Many of the Company's leases contain
provisions designed to mitigate the adverse impact of inflation. Such provisions
include clauses enabling the Company to receive payment of additional rent
calculated as a percentage of tenants' gross sales above predetermined
thresholds ("Percentage Rents"), which generally increase as prices rise, and/or
escalation clauses, which generally increase rental rates during the terms of
the leases. Such escalation clauses include increases in the consumer price
index or similar inflation indices. In addition, many of the Company's leases
are for terms of less than 10 years, which permits the Company to seek to
increase rents upon renewal to market rates. Most of the Company's leases
require the tenant to reimburse the Company for their allocable share of
operating expenses, including common area maintenance costs, real estate taxes
and insurance, thereby reducing the Company's exposure to increases in costs and
operating expenses resulting from inflation. The Company periodically evaluates
its exposure to short-term interest rates and fluctuations in foreign currency
exchange rates and will, from time to time, enter into interest rate protection
agreements and foreign currency hedge agreements which mitigate, but do not
eliminate, the effect of changes in interest rates on its floating-rate debt and
changes in foreign currency exchange rates.
Risk Factors Set forth below are the material risks associated with the purchase
and ownership of the securities of the Company. As an owner of real estate, the
Company is subject to certain business risks arising in connection with the
underlying real estate, including, among other factors, (i)defaults of major
tenants due to bankruptcy, insolvency and/or general downturn in their business
which could reduce the Company's cash flow, (ii) major tenants not renewing
their leases as they expire or renew at lower rental rates which could reduce
the Company's cash flow, (iii) changes in retailing trends which could reduce
the need for shopping centers, (iv) potential liability for future or unknown
environmental issues, (v) changes in real estate and zoning laws and competition
from other real estate owners which could make it difficult to lease or develop
properties, and (vi) the inability to acquire capital, either in the form of
debt or equity, on satisfactory terms to fund the Company's cash requirements.
The success of the Company also depends upon trends in the economy, including,
but not limited to, interest rates, income tax laws, governmental regulations
and legislation and population trends. Additionally, the Company is subject to
complex regulations related to its status as a REIT and would be adversely
affected if it failed to maintain its qualification as a REIT.
Operating Practices Nearly all operating functions, including leasing, legal,
construction, data processing, maintenance, finance and accounting, are
administered by the Company from its executive offices in New Hyde Park, New
York. The Company believes it is critical to have a management presence in its
principal areas of operation and accordingly, the Company maintains regional
offices in Hartford, Connecticut; Margate, Orlando and Tampa, Florida; Albany,
New York; Philadelphia, Pennsylvania; Dallas, Texas; Dayton and Cleveland, Ohio;
Lisle and Chicago, Illinois; Charlotte and Cary, North Carolina; Phoenix,
Arizona; Jonesboro, Georgia; Woodbridge, Virginia; Los Angeles, San Francisco
and Sacramento, California and Baltimore, Maryland. A total of 324 persons are
employed at the Company's executive and regional offices.
The Company's regional offices are generally staffed by a manager and the
support personnel necessary to both function as local representatives for
leasing and promotional purposes and to complement the corporate office efforts
to ensure that property inspection and maintenance objectives are achieved. The
regional offices are important in reducing the time necessary to respond to the
needs of the Company's tenants. Leasing and maintenance personnel from the
corporate office also conduct regular inspections of each shopping center.
The Company also employs a total of 51 persons at several of its larger
properties in order to more effectively administer its maintenance and security
responsibilities.
Management Information Systems Virtually all operating activities are supported
by a sophisticated computer software system designed to provide management with
operating data necessary to make informed business decisions on a timely basis.
These systems are continually expanded and enhanced by the Company and reflect a
commitment to quality management and tenant relations. The Company has
integrated an advanced mid-range computer with personal computer technology,
creating a management information system that facilitates the development of
property cash flow budgets, forecasts and related management information.
8
Qualification as a REIT The Company has elected, commencing with its taxable
year which began January 1, 1992, to qualify as a REIT under the Code. If, as
the Company believes, it is organized and operates in such a manner so as to
qualify and remain qualified as a REIT under the Code, the Company generally
will not be subject to federal income tax, provided that distributions to its
stockholders equal at least the amount of its REIT taxable income as defined
under the Code.
In connection with the RMA, which became effective January 1, 2001, the Company
is now permitted to participate in activities which the Company was precluded
from previously in order to maintain its qualification as a REIT, so long as
these activities are conducted in entities which elect to be treated as taxable
subsidiaries under the Code, subject to certain limitations. The primary
activities conducted by the Company in its taxable REIT subsidiaries during 2002
include, but are not limited to, (i) the ground-up development of shopping
center properties and subsequent sale thereof upon completion (see Recent
Developments - Kimco Developers, Inc. ("KDI")) and (ii) real estate advisory and
disposition services provided in connection with asset designation rights and
assistance with inventory and furniture liquidations in connection with
going-out-of-business sales by certain bankrupt retailers. As such, the Company
was subject to federal and state income taxes on the income from these
activities.
Recent Developments
Kmart Bankruptcy -
On January 22, 2002, Kmart Corporation ("Kmart") filed for protection under
Chapter 11 of the U.S. Bankruptcy Code. As of the filing date, Kmart occupied 69
locations (excluding the KIR portfolio which included six Kmart locations),
representing 12.6% of the Company's annualized base rental revenues and 13.3% of
the Company's total shopping center GLA as of the filing date. During 2002,
Kmart rejected its leases at 31 locations, representing approximately $30.8
million of annualized base rental revenues and approximately 3.2 million square
feet of GLA. As of December 31, 2002, Kmart represented 4.5% of annualized base
rents and 6.9% of leased GLA.
During December 2002, the Company disposed of, in separate transactions, seven
former Kmart sites, comprised of approximately 1.0 million square feet of GLA,
for an aggregate sales price of approximately $40.8 million.
The Company has currently leased or is under agreement to lease 11 of the
rejected locations, has terminated four ground lease locations and has received
offers to purchase three of these sites. The Company is reviewing the offers
received and is actively marketing the remaining six locations to prospective
tenants, however, no assurances can be provided that these locations will be
leased in the near term or at comparable rents previously paid by Kmart.
The Company had previously encumbered seven of these rejected locations with
individual non-recourse mortgage loans totaling approximately $70.8 million.
Annualized interest expense on these loans was approximately $5.6 million.
During July 2002, the Company suspended debt service payments on these loans and
was actively negotiating with the respective lenders. During December 2002, the
Company reached agreement with certain lenders in connection with four of these
locations. The Company paid approximately $24.2 million in full satisfaction of
the loans encumbering these properties which aggregated $46.5 million. As a
result of these transactions, the Company recognized a gain on early
extinguishment of debt of approximately $22.3 million. Also, during December
2002, the Company re-tenanted one location and brought the mortgage loan
encumbering this property current.
Additionally, during February 2003, the Company reached agreement with the
lender in connection with the two remaining encumbered locations. The Company
paid approximately $8.3 million in full satisfaction of these loans which
aggregated approximately $14.7 million. As a result of this transaction, the
Company will recognize a gain on early extinguishment of debt of approximately
$6.2 million during the first quarter of 2003.
On January 14, 2003, Kmart announced it would be closing an additional 326
locations of which nine of these locations (excluding the KIR portfolio which
includes three additional locations and Kimsouth (as defined below) which
includes two additional locations) are leased from the Company. The annualized
base rental revenues from these nine locations are approximately $4.3 million.
The Company had previously encumbered one of these properties with an individual
non-recourse mortgage loan. The annualized interest expense for the one
encumbered property is approximately $0.8 million. As of the date of this filing
of this annual report on Form 10-K, the Company has not been notified directly
by Kmart as to the timing of these store closings or whether the leases will be
assigned or rejected. Until such time as the leases are rejected in accordance
with the bankruptcy proceedings, Kmart remains obligated for payments of rent
and operating expenses at these locations and all other remaining locations.
9
Effective May 1, 2003, the Company has agreed to a five-year rent reduction at
six Kmart locations, consisting of approximately 0.6 million square feet of GLA.
The average rent was reduced from $8.01 per square foot to $5.57 per square
foot, or approximately $1.5 million of annualized base rent.
The Company generally will have the right to file claims in connection with
rejected leases for lost rent equal to three years of rental obligations as well
as other amounts related to obligations under the leases. Actual amounts to be
received in satisfaction of these claims will be subject to Kmart's final plan
of reorganization and the availability of funds to pay creditors such as the
Company.
Operating Properties -
Acquisitions -
During the year ended December 31, 2002, the Company acquired 13 wholly owned
operating properties located in seven states and Mexico, comprising
approximately 1.8 million square feet of GLA for an aggregate purchase price of
approximately $258.7 million including the issuance of approximately 2.4 million
downREIT units valued at $80.0 million in connection with the acquisition of one
of the properties and the assumption of approximately $3.5 million in mortgage
debt encumbering one of the properties. Details of these transactions are as
follows:
During April 2002, the Company acquired three operating properties located in
Columbia, MD, comprising approximately 0.2 million square feet of GLA, for an
aggregate purchase price of approximately $15.4 million.
During May 2002, the Company acquired a property located in Springfield, MO for
an aggregate purchase price of approximately $4.3 million including the
assumption of approximately $3.5 million in mortgage debt.
During July 2002, the Company acquired a property located in East Windsor, NJ
comprising approximately 0.2 million square feet of GLA, for an aggregate
purchase price of approximately $26.5 million. During November 2002, the Company
sold this property for a purchase price, which approximated net book value. The
Company retained a minor interest in the property, which allows for the
participation of Net Cash Flows, as defined. Effective with the sale, the
Company entered into a property management agreement with the purchaser to
provide services relating to the management, leasing, operation, supervision and
maintenance of the property.
During October 2002, the Company acquired an interest in a shopping center
property, comprising approximately 0.6 million square feet of GLA, located in
Daly City, CA. The property was valued at a purchase price of approximately
$80.0 million and was acquired by issuing approximately 2.4 million downREIT
units which are convertible at a ratio of 1:1 into the Company's common stock
(see Note 16 of the Notes to Consolidated Financial Statements included in this
annual report on Form 10-K).
During October 2002, the Company, in separate transactions, purchased two
properties located in Monterrey, Mexico comprising approximately 0.3 million
square feet of GLA for an aggregate purchase price of approximately $368.5
million pesos ("MXN")(USD $35.7 million). One of these sites consists of a
portion under development of approximately 0.1 million square feet of GLA with
total development costs budgeted at approximately MXN $29.3 million (USD $5.8
million). The scheduled completion of this project is during the fourth quarter
of 2003. The Company has entered into several foreign currency hedge
transactions to reduce its exposure to fluctuations in foreign currency exchange
rates.
During December 2002, the Company acquired four operating properties, in
separate transactions, comprising approximately 0.6 million square feet of GLA
located in three states for an aggregate purchase price of approximately $96.3
million.
10
Dispositions -
During 2002, the Company, (i) disposed of, in separate transactions, 12
operating properties for an aggregate sales price of approximately $74.5
million, including the assignment/repayment of approximately $22.6 million of
mortgage debt encumbering three of the properties and (ii) terminated five
leasehold positions in locations where a tenant in bankruptcy had rejected its
lease. These transactions resulted in net gains of approximately $12.8 million.
Details of these transactions are as follows:
During April 2002, the Company disposed of an operating property located in
Massapequa, NY for a sales price of approximately $4.1 million, including the
assignment of approximately $2.7 million of mortgage debt. Cash proceeds from
this disposition were used to acquire an exchange shopping center property
located in Springfield, MO during May 2002.
During July 2002, the Company disposed of an operating property located in
Columbus, OH for a sales price of approximately $1.4 million.
During September 2002, the Company disposed of an operating property located in
Corsicana, TX for a sales price of approximately $11.5 million including the
assignment of approximately $8.4 million of mortgage debt.
During October 2002, the Company, in separate transactions, disposed of two
operating properties for an aggregate sales price of approximately $6.3 million.
Cash proceeds from one of these dispositions was used to acquire an exchange
shopping center property in December 2002.
During November 2002, the Company disposed of an operating property located in
Chicago, IL. Net proceeds from this sale of approximately $8.0 million were
accepted by a lender in full satisfaction of an outstanding mortgage loan of
approximately $11.5 million. The Company recognized a gain on early
extinguishment of debt of approximately $3.2 million.
During December 2002, the Company, in separate transactions, disposed of six
operating properties for an aggregate sales price of approximately $39.7
million. Proceeds from two of these sales will be used to purchase exchange
shopping center properties.
Redevelopments -
The Company has an ongoing program to reformat and re-tenant its properties to
maintain or enhance its competitive position in the marketplace. During 2002,
the Company substantially completed the redevelopment and re-tenanting of
various operating properties. The Company expended approximately $44.4 million
in connection with these major redevelopments and re-tenanting projects during
2002. The Company is currently involved in redeveloping several other shopping
centers in the existing portfolio. The Company anticipates its capital
commitment toward these and other redevelopment projects will be approximately
$30.0 million to $50.0 million during 2003.
Kimco Developers, Inc. ("KDI") -
Effective January 1, 2001, the Company elected taxable REIT subsidiary status
for its wholly-owned subsidiary, KDI. KDI is primarily engaged in the ground-up
development of neighborhood and community shopping centers and the subsequent
sale thereof upon completion. As of December 31, 2002, KDI had in progress 19
ground-up development projects located in eight states. These projects had
substantial pre-leasing prior to the commencement of construction. During 2002,
KDI expended approximately $148.6 million in connection with the purchase of
land and construction costs related to these projects. These projects are
currently proceeding on schedule and in line with the Company's budgeted costs.
The Company anticipates its capital commitment toward these and other
development projects will be approximately $160.0 million to $200.0 million
during 2003. The proceeds from the sales of the completed ground-up development
projects during 2003 and proceeds from construction loans are expected to be
sufficient to fund these anticipated capital requirements.
KDI Acquisitions -
During the year ended December 31, 2002, KDI acquired five land parcels, in
separate transactions, for the ground-up development of shopping centers and
subsequent sales thereof upon completion for an aggregate purchase price of
approximately $21.3 million, as follows:
During January 2002, KDI acquired two land parcels, in separate transactions,
for an aggregate purchase price of approximately $6.2 million.
11
During April 2002, KDI acquired a land parcel located in Beaumont, TX for an
aggregate purchase price of approximately $2.2 million.
During May 2002, KDI acquired a land parcel located in Panama City, FL for an
aggregate purchase price of approximately $2.0 million.
During December 2002, KDI acquired a land parcel located in Woodlands, TX for an
aggregate purchase price of approximately $10.9 million.
The estimated project costs for these newly acquired parcels is approximately
$131.2 million with completion dates ranging from March 2003 to June 2005.
During 2002, the Company obtained individual construction loans on eight
ground-up development properties. Total loan commitments aggregate $119.8
million of which approximately $38.9 million has been funded as of December 31,
2002. These loans have maturities ranging from 18 to 36 months and bear interest
at rates averaging 4.38% at December 31, 2002.
KDI Dispositions -
During the year ended December 31, 2002, KDI sold four of its recently completed
projects and eight out-parcels for approximately $128.7 million, including the
assignment of approximately $17.7 million in mortgage debt encumbering one of
the properties. These sales resulted in pre-tax gains of approximately $15.9
million. Details are as follows:
During January 2002, KDI disposed of, in separate transactions, Mallwoods
Center, a completed ground-up development project located in Miamisburg, OH and
an out-parcel located in Hillsborough, NJ for an aggregate sales price of
approximately $12.6 million.
During August 2002, KDI disposed of Wakefield Crossing, a completed ground-up
development project located in Raleigh, NC, for a sales price of approximately
$10.7 million.
During September 2002, KDI disposed of Cedar Hill Crossing, a completed
ground-up development project located in Cedar Hills, TX, for a sales price of
approximately $23.7 million including the assignment of approximately $17.7
million of mortgage debt. Effective with the sale, the Company entered into a
property management agreement with the purchaser of this property. In addition
to a property management fee, the Company is entitled to certain fees which are
based on Net Cash Flows and Capital Transactions, as defined.
During December 2002, KDI disposed of an out-parcel located in Henderson, NV for
approximately $1.3 million. The property was owned through a joint venture in
which KDI has a 50% interest.
During 2002, KDI disposed of two out-parcels, located in Chandler, AZ for an
aggregate sales price of approximately $1.6 million.
During 2002, KDI disposed of, in separate transactions, Phase I and four
out-parcels of Forum at Olympia, a ground-up development project located in San
Antonio, TX, for an aggregate sales price of approximately $78.8 million.
Operating Real Estate Joint Venture Investments -
Kimco Income REIT ("KIR") -
During 1998, the Company formed KIR, an entity that was established for the
purpose of investing in high quality real estate properties financed primarily
with individual non-recourse mortgages. These properties include, but are not
limited to, fully developed properties with strong, stable cash flows from
credit-worthy retailers with long-term leases. The Company originally held a
99.99% limited partnership interest in KIR. Subsequent to KIR's formation, the
Company sold a significant portion of its original interest to an institutional
investor and admitted three other limited partners. As of December 31, 2002, KIR
has received total capital commitments of $569.0 million, of which the Company
subscribed for $247.0 million and the four limited partners subscribed for
$322.0 million. The Company has a 43.3% non-controlling limited partnership
interest in KIR and accounts for its investment under the equity method of
accounting.
During 2002, the limited partners in KIR contributed $55.0 million towards their
respective capital commitments, including $23.8 million by the Company. As of
December 31, 2002, KIR had unfunded capital commitments of $129.0 million,
including $55.9 million from the Company.
12
During 2002, KIR purchased five shopping center properties, in separate
transactions, aggregating approximately 1.8 million square feet of GLA for
approximately $213.5 million, including the assumption of approximately $63.1
million of mortgage debt encumbering two of the properties.
During July 2002, KIR disposed of a shopping center property in Aurora, IL for
an aggregate sales price of approximately $2.4 million, which represented the
approximate book value of the property.
As of December 31, 2002, the KIR portfolio was comprised of 68 shopping center
properties aggregating approximately 14.0 million square feet of GLA located in
21 states.
During 2002, KIR obtained individual non-recourse, non-cross collateralized
fixed-rate ten year mortgages aggregating approximately $170.3 million on seven
of its previously unencumbered properties with rates ranging from 5.95% to 7.38%
per annum. The net proceeds were used to finance the acquisition of various
shopping center properties.
KIR maintains a secured revolving credit facility with a syndicate of banks,
which is scheduled to expire in November 2003. This facility is collateralized
by the unfunded subscriptions of certain partners, including those of the
Company. The facility has an aggregate availability of up to $100.0 million
based upon the amount of unfunded subscription commitments of certain partners.
During January 2003, the aggregate availability under the credit facility was
reduced to $90.0 million. Under the terms of the facility, funds may be borrowed
for general corporate purposes including the acquisition of institutional
quality properties. Borrowings under the facility accrue interest at LIBOR plus
0.80%. As of December 31, 2002, there was $15.0 million outstanding under this
facility.
RioCan Investments -
During October 2001, the Company formed the RioCan Venture in which the Company
has a 50% non-controlling interest, to acquire retail properties and development
projects in Canada. The acquisition and development projects are to be sourced
and managed by RioCan and are subject to review and approval by a joint
oversight committee consisting of RioCan management and the Company's management
personnel. During 2002, the RioCan venture acquired 24 shopping center
properties and four development properties, in separate transactions, comprising
approximately 5.7 million square feet of GLA for an aggregate purchase price of
approximately CAD $683.7 million (approximately USD $435.8 million) including
the assumption of approximately CAD $321.5 million (approximately USD $203.1
million) in mortgage debt encumbering 13 of the properties. The Company has
committed a total equity investment of up to CAD $250.0 million for the
acquisition of retail properties and development projects. Capital contributions
will only be required as suitable opportunities arise and are agreed to by the
Company and RioCan. As of December 31, 2002, the RioCan Venture was comprised of
28 operating properties and four development properties, consisting of
approximately 6.7 million square feet of GLA.
Kimco / G.E. Joint Venture -
During 2001, the Company formed a joint venture (the "Kimco Retail Opportunity
Portfolio" or "KROP") with GE Capital Real Estate ("GECRE"), in which the
Company has a 20% non-controlling interest and manages the portfolio. The
purpose of this joint venture is to acquire established, high-growth potential
retail properties in the United States. Total capital commitments to KROP from
GECRE and the Company are for $200.0 million and $50.0 million, respectively,
and such commitments are funded proportionately as suitable opportunities arise
and are agreed to by GECRE and the Company. The Company accounts for its
investment in KROP under the equity method of accounting.
During 2002, GECRE and the Company contributed approximately $39.0 million and
$9.8 million, respectively, towards their capital commitments. Additionally,
GECRE and the Company provided short-term interim financing for all acquisitions
made by KROP without a mortgage in place at the time of acquisition. All such
financing bears interest at rates ranging from LIBOR plus 4.0% to 4.25% and have
maturities of less than one year. As of December 31, 2002, KROP had outstanding
short-term interim financing to GECRE and the Company totaling $17.3 million
each.
During 2002, KROP purchased 16 shopping centers aggregating 1.6 million square
feet of GLA for approximately $177.8 million, including the assumption of
approximately $29.5 million of mortgage debt encumbering three of the
properties.
During October 2002, KROP disposed of a shopping center in Columbia, MD for an
aggregate sales price of approximately $2.9 million, which resulted in a gain of
approximately $0.7 million.
13
During 2002, KROP obtained a cross-collateralized mortgage with a five-year term
aggregating $73.0 million on eight properties with an interest rate of LIBOR
plus 1.8%. Upon the sale of one of the collateralized properties during 2002,
$1.9 million was repaid. In order to mitigate the risks of interest rate
fluctuations associated with this variable rate obligation, KROP entered into an
interest rate cap agreement for the notional value of this mortgage.
Other Real Estate Joint Ventures -
The Company and its subsidiaries have investments in and advances to various
other real estate joint ventures. These joint ventures are engaged primarily in
the operation of shopping centers which are either owned or held under long-term
operating leases.
During 2002, the Company acquired seven former Service Merchandise locations, in
separate transactions, through a venture in which the Company has a 42.5%
non-controlling interest. These properties were purchased for an aggregate
purchase price of approximately $20.9 million. In November 2002, the joint
venture obtained mortgages on two of these locations for approximately $7.0
million. The venture has signed leases for six of these locations and is
actively negotiating with other retailers to lease the remaining location.
During July 2002, the Company acquired a property located in Kalamazoo, MI,
through a joint venture in which the Company has a 50% non-controlling interest.
The property was purchased for an aggregate purchase price of approximately $6.0
million.
During December 2002, the Company acquired an out-parcel of an existing property
located in Tampa, FL, through a joint venture in which the Company has a 50%
interest. The property was purchased for an aggregate purchase price of
approximately $4.9 million.
Other Real Estate Investments -
Montgomery Ward Asset Designation Rights -
During March 2001, the Company, through a taxable REIT subsidiary, formed a
joint venture (the "Ward Venture") in which the Company has a 50% interest, for
purposes of acquiring asset designation rights for substantially all of the real
estate property interests of the bankrupt estate of Montgomery Ward LLC and its
affiliates. These asset designation rights have provided the Ward Venture the
ability to direct the ultimate disposition of the 315 fee and leasehold
interests held by the bankrupt estate. The asset designation rights expired in
August 2002 for the leasehold positions and are scheduled to expire in December
2004 for the fee owned locations. During the marketing period, the Ward Venture
will be responsible for all carrying costs associated with the properties until
the property is designated to a user.
For the year ended December 31, 2002, the Ward Venture has completed
transactions on 32 properties and the Company has recognized pre-tax profits of
approximately $11.3 million. As of December 31, 2002, there were 12 properties
which continue to be marketed.
Leveraged Lease -
During June 2002, the Company acquired a 90% equity participation interest in an
existing leveraged lease of 30 properties. The properties are leased under a
long-term bond-type net lease whose primary term expires in 2016, with the
lessee having certain renewal option rights. The Company's cash equity
investment was approximately $4.0 million. This equity investment is reported as
a net investment in leveraged lease in accordance with the Financial Accounting
Standards Board's ("FASB") issue of statement of Financial Accounting Standard
("SFAS") No. 13 (as amended). The net investment in leveraged lease reflects the
original cash investment adjusted by remaining net rentals, estimated
unguaranteed residual value, unearned and deferred income, and deferred taxes
relating to the investment.
During 2002, four of these properties were sold whereby the proceeds from the
sales were used to reduce the mortgage debt by approximately $9.6 million. As of
December 31, 2002, the remaining 26 properties were encumbered by third party
non-recourse debt of approximately $86.0 million that is scheduled to fully
amortize during the primary term of the lease from a portion of the periodic net
rents receivable under the net lease. As an equity participant in the leveraged
lease, the Company has no general obligation for principal or interest payments
on the debt, which is collateralized by a first mortgage lien on the properties
and a collateral assignment of the lease. Accordingly, this obligation has been
offset against the related net rental receivable under the lease.
14
Kmart Venture -
During July 2002, the Company, through a taxable REIT subsidiary, formed a
venture (the "Kmart Venture") in which the Company has a 60% controlling
participation for purposes of acquiring asset designation rights for 54 former
Kmart locations. The total commitment to Kmart by the Kmart Venture, prior to
the profit sharing arrangement commencing, is approximately $43.0 million. As of
December 31, 2002, the Kmart Venture has completed transactions on 35 properties
and has funded the total commitment of approximately $43.0 million to Kmart.
Kimsouth -
During November 2002, the Company, through its taxable REIT subsidiary, together
with Prometheus Southeast Retail Trust, completed the merger and privatization
of Konover Property Trust, which has been renamed Kimsouth Realty, Inc.,
("Kimsouth"). The Company acquired 44.5% of the common stock of Kimsouth, which
consisted primarily of 38 retail shopping center properties comprising
approximately 17.4 million square feet of GLA. Total acquisition value was
approximately $280.9 million including approximately $216.2 million in mortgage
debt. The Company's investment strategy with respect to Kimsouth includes
re-tenanting, repositioning and disposition of the properties. During December
2002, Kimsouth sold its joint venture interest in one property to its joint
venture partner for net proceeds of approximately $4.6 million and disposed of a
single property for net proceeds of approximately $2.9 million.
Preferred Equity Capital -
During 2002, the Company established a preferred equity program, which provides
capital to developers and owners of shopping centers. During 2002, the Company
provided, in separate transactions, an aggregate of approximately $25.6 million
in investment capital to developers and owners of nine shopping centers.
Mortgages and Other Financing Receivables -
During August 2001, the Company, through a joint venture in which the Company
had a 50% interest, provided $27.5 million of debtor-in-possession financing
(the "Ames Loan") to Ames Department Stores, Inc. ("Ames"), a retailer in
bankruptcy. This loan which was collateralized by all of Ames' real estate
interests, bore interest at prime plus 6.0%, and was scheduled to mature in
August 2003.
During September 2002, the Ames Loan was restructured as a two-year $100 million
secured revolving loan of which the Company has a 40.0% interest. This revolving
loan is collateralized by all of Ames' real estate interests. The loan bears
interest at 8.5% per annum and provides for contingent interest upon the
successful disposition of the Ames properties. The outstanding balance on the
revolving loan at December 31, 2002 was approximately $4.1 million.
During March 2002, the Company provided a $15.0 million three-year loan to
Gottchalks, Inc., at an interest rate of 12.0% per annum collateralized by
three properties. The Company receives interest and principal payments on a
monthly basis. As of December 31, 2002, the outstanding loan balance was
approximately $14.3 million.
During March 2002, the Company provided a $50.0 million ten-year loan to Shopko
Stores, Inc., at an interest rate of 11.0% per annum collateralized by 15
properties. The Company receives principal and interest payments on a monthly
basis. As of December 31, 2002, the outstanding loan balance was approximately
$49.8 million.
During May 2002, the Company provided a $15.0 million three-year loan to Frank's
Nursery & Crafts, Inc. ("Frank's"), at an interest rate of 10.25% per annum
collateralized by 40 real estate interests. Interest is payable quarterly in
arrears. An additional $7.5 million revolving loan at an interest rate of 10.25%
per annum was also established. As of December 31, 2002, there were no
borrowings outstanding on the additional revolving loan. As an inducement to
make these loans, Frank's issued the Company approximately 4.4 million warrants
with an exercise price of $1.15 per share.
Financing Transactions -
Unsecured Debt -
During July 2002, the Company issued an aggregate $102.0 million of unsecured
debt under its medium-term notes ("MTN") program. These issuances consisted of
(i) an $85.0 million floating-rate MTN which matures in August 2004 and bears
interest at LIBOR plus 0.50% per annum and (ii) a $17.0 million fixed-rate MTN
which matures in July 2012 and bears interest at 5.98% per annum. The proceeds
from these MTN issuances were used toward the repayment of a $110.0 million
floating-rate MTN which matured in August 2002. In addition, the Company entered
into an interest rate swap agreement on the $85.0 million floating-rate MTN
which effectively fixed the interest rate at 2.3725% per annum until November
2003.
15
During November 2002, the Company issued $35 million of 4.961% fixed-rate Senior
Notes due 2007 (the "2007 Notes"). Interest on the 2007 Notes is payable
semi-annually in arrears. Net proceeds from the issuance totaling approximately
$34.9 million, after related transaction costs of approximately $0.1 million,
were primarily used to repay outstanding borrowings on the Company's unsecured
credit facilities.
Additionally, during November 2002, the Company issued $200 million of 6.0%
fixed-rate Senior Notes due 2012 (the "2012 Notes"). Interest on the 2012 Notes
is payable semi-annually in arrears. The 2012 Notes were sold at 99.79% of par
value. Net proceeds from the issuance totaling approximately $198.3 million,
after related transaction costs of approximately $1.3 million, were primarily
used to repay outstanding borrowings on the Company's unsecured credit
facilities.
Construction Loans -
During 2002, the Company obtained construction financing on eight ground-up
development projects for an aggregate loan amount of up to $119.8 million, of
which approximately $38.9 million has been funded as of December 31, 2002. These
loans have maturities ranging from 18 to 36 months and a weighted average
interest rate of 4.38% at December 31, 2002.
Early Extinguishment of Non-Recourse Mortgages -
As part of the Company's strategy to reduce its exposure to Kmart Corporation,
the Company had previously encumbered seven Kmart sites with individual
non-recourse mortgages aggregating approximately $70.8 million. As a result of
the Kmart bankruptcy filing in January 2002 and the subsequent rejection of
leases including leases at these encumbered sites, the Company, during July
2002, had suspended debt service payments on these loans and began active
negotiations with the respective lenders.
During December 2002, the Company reached agreement with certain lenders in
connection with four of these locations. The Company paid approximately $24.2
million in full satisfaction of these loans which aggregated $46.5 million. The
Company recognized a gain on the early extinguishment of debt of approximately
$22.3 million.
Additionally, during December 2002, the Company re-tenanted one location and has
brought the mortgage loan encumbering this property current.
During February 2003, the Company reached agreement with the lender in
connection with the two remaining encumbered locations. The Company paid
approximately $8.3 million in full satisfaction of these loans which aggregated
approximately $14.7 million. The Company will recognize a gain on early
extinguishment of debt of approximately $6.2 million in the first quarter of
2003.
Credit Facilities -
The Company maintains a $250.0 million unsecured revolving credit facility (the
"Credit Facility") with a group of banks. The Credit Facility is scheduled to
mature in August 2003. The Company intends to renew this facility prior to
maturity. Under the terms of the Credit Facility, funds may be borrowed for
general corporate purposes, including (i) funding property acquisitions, (ii)
funding development and redevelopment costs and (iii) funding any short-term
working capital requirements. Interest on borrowings under the Credit Facility
accrues at a spread (currently 0.65%) to LIBOR, which fluctuates in accordance
with changes in the Company's senior debt ratings. The Company's senior debt
ratings are currently A-/stable from Standard & Poors and Baa1/stable from
Moody's Investor Services. As part of the Credit Facility, the Company has a
competitive bid option where the Company may auction up to $100.0 million of its
requested borrowings to the bank group. This competitive bid option provides the
Company the opportunity to obtain pricing below the currently stated spread to
LIBOR of 0.65%. As of December 31, 2002, there was $40.0 million outstanding
under the Credit Facility.
During July 2002, the Company further enhanced its liquidity position by
establishing an additional $150.0 million unsecured revolving credit facility.
During December 2002, the Company repaid the outstanding balance and terminated
this facility.
16
Equity -
During November 2001, the Company announced the redemption of all outstanding
depositary shares of the Company's 7-1/2% Class D Cumulative Convertible
Preferred Stock (the "Class D Preferred Stock") in exchange for shares of the
Company's common stock. The Board of Directors set January 3, 2002 as the
mandatory redemption date on which all outstanding depositary shares of Class D
Preferred Stock were redeemed. Holders of the Class D Preferred Stock on the
redemption date received 0.93168 shares of the Company's common stock, as
adjusted for the Company's three-for-two common stock split, for each depositary
share redeemed. During 2001, 3,258,642 depositary shares of the Class D
Preferred Stock were voluntarily converted to common stock by the holders. On
January 3, 2002, the remaining 923,900 depositary shares of the Class D
Preferred Stock were redeemed for common stock by the Company and a final
dividend payment of 43.4680 cents per Class D Depositary share was paid on
January 15, 2002.
During 2002, the Company issued approximately 0.4 million shares of common stock
in connection with the exercise of common stock options by employees and through
the Company's dividend reinvestment plan.
During October 2002, the Company acquired an interest in a shopping center
property located in Daly City, CA valued at $80.0 million through the issuance
of approximately 2.4 million downREIT units (the "Units") which are convertible
at a ratio of 1:1 into the Company's common stock. The downREIT unit holder has
the right to convert the Units at anytime after one year. In addition, the
Company has the right to mandatorily require a conversion after ten years. If at
the time of conversion the common stock price for the 20 previous trading days
is less than $33.57 per share the unit holder would be entitled to additional
shares, however, the maximum number of additional shares is limited to 251,966
based upon a floor common stock price of $30.36. The Company has the option to
settle the conversion in cash. Dividends on the Units are paid quarterly at the
rate of the Company's common stock dividend multiplied by 1.1057.
Hedging Activities -
During 2002, the Company entered into two interest rate swap agreements on its
(i) $100.0 million remarketed reset notes, which fixed the interest rate at
3.03% from November 17, 2002 through August 17, 2003, and (ii) $85.0 million
floating-rate notes, which fixed the interest rate at 2.3725% from November 2,
2002 through November 2, 2003.
Additionally, during 2002, the Company entered into various foreign currency
forward contracts and a cross currency swap aggregating approximately CAD $210.7
million and MXN $383.7 million in connection with the Company's Canadian and
Mexican real estate investments and investment in stock of RioCan. (See Note 15
of the Notes to Consolidated Financial Statements included in this annual report
on Form 10-K.)
Exchange Listings
The Company's common stock, Class A Depositary Shares, Class B Depositary Shares
and Class C Depositary Shares are traded on the NYSE under the trading symbols
"KIM", "KIMprA", "KIMprB", and "KIMprC", respectively. Trading of the Class D
Depositary Shares ceased on January 3, 2002 in connection with the Company's
mandatory redemption of such shares.
Item 2. Properties
Real Estate Portfolio As of January 1, 2003, the Company's real estate portfolio
was comprised of interests in approximately 86.5 million square feet of GLA in
530 neighborhood and community shopping center properties, two regional malls,
41 retail store leases, four parcels of undeveloped land and 22 projects under
development, located in 41 states, Canada and Mexico. The Company's portfolio
includes a 43.3% interest in 68 shopping center properties comprising
approximately 14.0 million square feet of GLA relating to KIR, a 50% interest in
28 shopping center properties comprising approximately 6.7 million square feet
of GLA relating to the RioCan Venture and a 20% interest in 15 shopping center
properties comprising approximately 1.5 million square feet of GLA relating to
KROP. Neighborhood and community shopping centers comprise the primary focus of
the Company's current portfolio, representing approximately 98% of the Company's
total shopping center GLA. As of January 1, 2003, approximately 87.8% of the
Company's neighborhood and community shopping center space (excluding the KIR
and KROP portfolios) was leased, and the average annualized base rent per leased
square foot of the neighborhood and community shopping center portfolio
(excluding the KIR and KROP portfolios) was $8.31. As of January 1, 2003, the
KIR and KROP portfolios were 97.7% and 97.4% leased, respectively, with an
average annualized base rent per leased square foot of $11.64 and $12.78,
respectively.
17
The Company's neighborhood and community shopping center properties, generally
owned and operated through subsidiaries or joint ventures, had an average size
of approximately 149,000 square feet as of January 1, 2003. The Company
generally retains its shopping centers for long-term investment and consequently
pursues a program of regular physical maintenance together with major
renovations and refurbishing to preserve and increase the value of its
properties. These projects usually include renovating existing facades,
installing uniform signage, resurfacing parking lots and enhancing parking lot
lighting. During 2002, the Company capitalized approximately $7.0 million in
connection with these property improvements and expensed to operations
approximately $15.4 million.
The Company's neighborhood and community shopping centers are usually "anchored"
by a national or regional discount department store, supermarket or drugstore.
As one of the original participants in the growth of the shopping center
industry and one of the nation's largest owners and operators of shopping
centers, the Company has established close relationships with a large number of
major national and regional retailers. Some of the major national and regional
companies that are tenants in the Company's shopping center properties include
Kmart Corporation, The Home Depot, Kohl's, TJX Companies, Wal-Mart, Best Buy,
Toys R' Us, Royal Ahold, Office Max and Petsmart.
A substantial portion of the Company's income consists of rent received under
long-term leases. Most of the leases provide for the payment of fixed base
rentals monthly in advance and for the payment by tenants of an allocable share
of the real estate taxes, insurance, utilities and common area maintenance
expenses incurred in operating the shopping centers. Although many of the leases
require the Company to make roof and structural repairs as needed, a number of
tenant leases place that responsibility on the tenant, and the Company's
standard small store lease provides for roof repairs to be reimbursed by the
tenant as part of common area maintenance. The Company's management places a
strong emphasis on sound construction and safety at its properties.
Approximately 1,879 of the Company's 6,375 leases also contain provisions
requiring the payment of additional rent calculated as a percentage of tenants'
gross sales above predetermined thresholds. Percentage Rents accounted for
approximately 1% of the Company's revenues from rental property for the year
ended December 31, 2002.
Minimum base rental revenues and operating expense reimbursements accounted for
approximately 99% of the Company's total revenues from rental property for the
year ended December 31, 2002. The Company's management believes that the base
rent per leased square foot for many of the Company's existing leases is
generally lower than the prevailing market-rate base rents in the geographic
regions where the Company operates, reflecting the potential for future growth.
For the period January 1, 2002 to December 31, 2002, the Company increased the
average base rent per leased square foot in its portfolio of neighborhood and
community shopping centers (excluding the KIR and KROP portfolios) from $8.08 to
$8.31, an increase of $0.23. This increase primarily consists of a $0.26
increase relating to acquisitions and dispositions and a $0.13 increase relating
to new leases signed partially offset by a decrease of $0.16 relating primarily
to the impact of the Kmart bankruptcy filing and subsequent lease rejections.
The Company seeks to reduce its operating and leasing risks through geographic
and tenant diversity. No single neighborhood and community shopping center
accounted for more than 0.8% of the Company's total shopping center GLA or more
than 1.2% of total annualized base rental revenues as of December 31, 2002. The
Company's five largest tenants, include Kmart Corporation (see Recent
Developments - Kmart Bankruptcy), The Home Depot, Kohl's, TJX Companies and
Wal-Mart, which represent approximately 4.5%, 2.8%, 2.7%, 2.5% and 1.9%,
respectively, of the Company's annualized base rental revenues, including the
proportionate share of base rental revenues from properties in which the Company
has less than a 100% economic interest. The Company maintains an active leasing
and capital improvement program that, combined with the high quality of the
locations, has made, in management's opinion, the Company's properties
attractive to tenants.
The Company's management believes its experience in the real estate industry and
its relationships with numerous national and regional tenants gives it an
advantage in an industry where ownership is fragmented among a large number of
property owners.
18
Retail Store Leases In addition to neighborhood and community shopping centers,
as of January 1, 2003, the Company had interests in retail store leases totaling
approximately 3.8 million square feet of anchor stores in 41 neighborhood and
community shopping centers located in 22 states. As of January 1, 2003,
approximately 88.0% of the space in these anchor stores had been sublet to
retailers that lease the stores under net lease agreements providing for average
annualized base rental payments of $3.99 per square foot. The average annualized
base rental payments under the Company's retail store leases to the land owners
of such subleased stores is approximately $2.64 per square foot. The average
remaining primary term of the retail store leases (and, similarly, the remaining
primary terms of the sublease agreements with the tenants currently leasing such
space) is approximately 5 years, excluding options to renew the leases for terms
which generally range from 5 to 25 years. The Company's investment in retail
store leases are included in the caption Other Real Estate Investments on the
Company's Consolidated Balance Sheets.
Ground-Leased Properties The Company has interests in 60 shopping center
properties that are subject to long-term ground leases where a third party owns
and has leased the underlying land to the Company (or an affiliated joint
venture) to construct and/or operate a shopping center. The Company or the joint
venture pays rent for the use of the land and generally is responsible for all
costs and expenses associated with the building and improvements. At the end of
these long-term leases, unless extended, the land together with all improvements
revert to the land owner.
Ground-Up Development Properties As of January 1, 2003, the Company, through its
wholly-owned taxable REIT subsidiary, KDI, has currently in progress 19
ground-up development projects located in eight states which are held for sale
upon completion. These projects had substantial pre-leasing prior to the
commencement of construction. As of January 1, 2003, the average annual base
rent per leased square foot for the KDI portfolio was $12.68 and the average
annual base rent per leased square foot for new leases executed in 2002 was
$13.76.
Undeveloped Land The Company owns certain unimproved land tracts and parcels of
land adjacent to certain of its existing shopping centers that are held for
possible expansion. At times, should circumstances warrant, the Company may
develop or dispose of these parcels.
The table on pages 20 to 28 sets forth more specific information with respect to
each of the Company's property interests.
Item 3. Legal Proceedings
The Company is not presently involved in any litigation nor to its knowledge is
any litigation threatened against the Company or its subsidiaries that, in
management's opinion, would result in any material adverse effect on the
Company's ownership, management or operation of its properties, or which is not
covered by the Company's liability insurance.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
19
YEAR OWNERSHIP LAND LEASABLE PERCENT
DEVELOPED INTEREST/ AREA AREA LEASED
LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1)
- ---------------------------------------------------------------------------------------------------
ALABAMA
FAIRFIELD 2000 FEE 8.7 86,566 100.0
HOOVER 2000 FEE 11.5 115,347 100.0
MOBILE (9) 2002 JOINT VENTURE 52.6 525,505 71.6
ARIZONA
CHANDLER (4) 2002 JOINT VENTURE 8.4 71,000 96.0
FOUNTAIN HILLS (4) 2001 JOINT VENTURE 24.5 56,000 55.0
GILBERT (4) 2001 JOINT VENTURE 16.7 39,000 29.0
GLENDALE (7) 1998 FEE 40.5 333,388 100.0
GLENDALE 1998 JOINT VENTURE 48.2 111,825 97.0
MESA 1998 FEE 19.8 146,492 92.1
NORTH PHOENIX 1998 FEE 17.0 230,164 100.0
PEORIA (4) 2000 JOINT VENTURE 69.8 259,000 18.0
PHOENIX 1998 FEE 13.4 143,646 97.6
PHOENIX 1998 FEE 26.6 333,382 68.8
PHOENIX 1997 FEE 17.5 131,621 82.0
TEMPE 1998 JOINT VENTURE 21.1 236,015 48.2
TEMPE (5) 1998 JOINT VENTURE 20.0 - -
CALIFORNIA
ALHAMBRA 1998 FEE 18.4 200,634 77.3
ANAHEIM 1995 FEE 1.0 15,396 100.0
CARMICHAEL 1998 FEE 18.5 212,811 98.8
CHULA VISTA 1998 FEE 31.3 371,222 39.1
CORONA 1998 FEE 47.6 486,958 100.0
COVINA (7) 2000 GROUND LEASE (2024) 25.4 263,699 100.0
DALY CITY 2002 FEE 25.6 485,318 79.7
LA MIRADA 1998 FEE 31.2 288,471 84.4
MONTEBELLO (7) 2000 FEE 20.4 250,439 100.0
OXNARD (7) 1998 FEE 14.4 171,580 100.0
SAN DIEGO (7) 2000 FEE 11.2 117,410 100.0
SAN RAMON (7) 1999 FEE 5.3 42,066 100.0
SANTA ANA 1998 FEE 12.0 134,400 100.0
SANTEE 1998 FEE 10.4 103,903 96.0
SANTEE (4) 2002 JOINT VENTURE 44.0 272,000 -
STOCKTON 1999 FEE 14.6 152,919 31.2
TEMECULA (7) 1999 FEE 40.0 341,612 89.6
TORRANCE (7) 2000 FEE 26.7 266,917 97.0
COLORADO
AURORA 1998 FEE 13.8 145,754 99.4
AURORA 1998 FEE 9.9 44,174 95.1
AURORA 1998 FEE 13.9 152,981 98.6
COLORADO SPRINGS 1998 FEE 10.7 107,310 92.1
DENVER 1998 FEE 1.5 18,405 100.0
ENGLEWOOD 1998 FEE 6.5 80,330 100.0
FT. COLLINS 2000 FEE 11.8 117,862 89.8
LAKEWOOD 1998 FEE 7.6 82,581 93.5
CONNECTICUT
BRANFORD (7) 2000 FEE 19.1 191,496 96.2
ENFIELD (7) 2000 FEE 16.2 162,459 98.8
FARMINGTON 1998 FEE 16.9 184,572 100.0
HAMDEN 1967 JOINT VENTURE 31.7 341,502 95.1
NORTH HAVEN 1998 FEE 31.7 331,919 100.0
WATERBURY 1993 FEE 13.1 137,943 100.0
DELAWARE
ELSMERE 1979 GROUND LEASE (2076) 17.1 114,530 100.0
DOVER (5) 1999 JOINT VENTURE 89.0 - -
FLORIDA
ALTAMONTE SPRINGS 1998 JOINT VENTURE 19.4 271,095 66.9
ALTAMONTE SPRINGS 1995 FEE 5.6 94,193 100.0
BOCA RATON 1967 FEE 9.9 73,549 95.5
BOYNTON BEACH (7) 1999 FEE 18.0 197,362 99.0
BRADENTON 1968 JOINT VENTURE 6.2 30,938 96.8
BRADENTON 1998 FEE 19.6 162,997 90.4
BRANDON (7) 2001 FEE 29.7 143,785 100.0
CORAL SPRINGS 1994 FEE 5.9 55,597 100.0
CORAL SPRINGS 1997 FEE 9.8 86,342 98.7
EAST ORLANDO 1971 GROUND LEASE (2068) 11.6 131,981 82.5
FT. PIERCE 1970 JOINT VENTURE 14.8 210,460 99.0
HOLLYWOOD (9) 2002 JOINT VENTURE 13.5 135,056 95.3
HOLLYWOOD 2002 JOINT VENTURE 5.0 50,000 100.0
HOMESTEAD 1972 GROUND LEASE (2018)
/JOINT VENTURE 21.0 208,794 99.5
JACKSONVILLE 1999 FEE 18.6 203,536 100.0
JACKSONVILLE (9) 1987 JOINT VENTURE 7.2 72,136 98.5
JACKSONVILLE 2002 JOINT VENTURE 5.1 51,000 100.0
JENSEN BEACH 1994 FEE 20.7 173,356 97.4
JENSEN BEACH (9) 2002 JOINT VENTURE 19.8 197,731 95.0
KEY LARGO (7) 2000 FEE 21.5 207,361 97.6
KISSIMMEE 1996 FEE 18.4 130,983 98.0
LAKELAND 2001 FEE 22.9 229,383 95.3
LARGO 1968 FEE 12.0 149,472 100.0
LARGO 1992 FEE 29.4 215,916 95.7
LARGO 1993 FEE 6.6 59,730 64.3
LAUDERDALE LAKES 1968 JOINT VENTURE 10.0 115,341 98.2
LAUDERHILL 1978 FEE 17.8 181,476 91.7
LEESBURG 1969 GROUND LEASE (2017) 1.3 13,468 88.9
MARGATE 1993 FEE 34.1 260,896 94.1
MELBOURNE 1968 GROUND LEASE (2071) 11.5 168,737 97.5
MAJOR LEASES
-------------------------------------------------------------
LEASE OPTION
LOCATION TENANT NAME EXPIRATION EXPIRATION
- ----------------------------------------------------------------------------------------------
ALABAMA
FAIRFIELD TELETECH CUSTOM 2009 2029
HOOVER WAL-MART 2025 2095
MOBILE (9) WAL-MART 2006 2036
ARIZONA
CHANDLER (4) BASHAS 2022 2042
FOUNTAIN HILLS (4) WALGREENS 2078
GILBERT (4) PETER PIPER PIZZA 2013 2023
GLENDALE (7) COSTCO 2011 2046
GLENDALE SEARS 2006 2016
MESA ROSS STORES 2005
NORTH PHOENIX BURLINGTON COAT FACTORY 2013 2023
PEORIA (4) ROSS STORES 2013 2033
PHOENIX HOME DEPOT 2020 2050
PHOENIX COSTCO 2006 2041
PHOENIX SAFEWAY 2009 2039
TEMPE PETSMART 2011 2031
TEMPE (5)
CALIFORNIA
ALHAMBRA COSTCO 2027 2057
ANAHEIM
CARMICHAEL HOME DEPOT 2008 2022
CHULA VISTA COSTCO 2006 2041
CORONA COSTCO 2007 2042
COVINA (7) HOME DEPOT 2004 2034
DALY CITY BURLINGTON COAT FACTORY 2012 2022
LA MIRADA TOYS "R" US 2012 2032
MONTEBELLO (7) SEARS 2012 2062
OXNARD (7) TARGET 2008 2013
SAN DIEGO (7) LUCKY STORES 2012
SAN RAMON (7) PETCO 2012 2012
SANTA ANA HOME DEPOT 2015 2035
SANTEE OFFICE DEPOT 2006 2021
SANTEE (4)
STOCKTON OFFICE DEPOT 2005 2015
TEMECULA (7) FOOD 4 LESS 2010 2030
TORRANCE (7) LINENS N THINGS 2010 2020
COLORADO
AURORA TJ MAXX 2007 2012
AURORA
AURORA ALBERTSONS 2007 2043
COLORADO SPRINGS ALBERTSONS 2004 2034
DENVER SAV-A-LOT 2012 2027
ENGLEWOOD HOBBY LOBBY 2013 2023
FT. COLLINS KOHLS 2020 2070
LAKEWOOD SAFEWAY 2007 2032
CONNECTICUT
BRANFORD (7) KOHLS 2007 2022
ENFIELD (7) KOHLS 2021 2041
FARMINGTON SPORTS AUTHORITY 2018 2063
HAMDEN WAL-MART 2019 2039
NORTH HAVEN HOME DEPOT 2009 2029
WATERBURY STOP & SHOP 2013 2043
DELAWARE
ELSMERE VALUE CITY 2008 2038
DOVER (5)
FLORIDA
ALTAMONTE SPRINGS DSW SHOE WAREHOUSE 2012 2032
ALTAMONTE SPRINGS THOMASVILLE HOME 2011 2021
BOCA RATON WINN DIXIE 2008 2033
BOYNTON BEACH (7) ALBERTSONS 2015 2040
BRADENTON GRAND CHINA 2009 2014
BRADENTON PUBLIX 2012 2032
BRANDON (7) BED BATH & BEYOND 2005 2015
CORAL SPRINGS LINENS N THINGS 2012 2027
CORAL SPRINGS TJ MAXX 2007 2017
EAST ORLANDO SPORTS AUTHORITY 2010 2020
FT. PIERCE KMART 2006 2016
HOLLYWOOD (9) WINN-DIXIE 2011 2036
HOLLYWOOD TJ MAXX 2010
HOMESTEAD PUBLIX 2014 2034
JACKSONVILLE BURLINGTON COAT FACTORY 2008 2018
JACKSONVILLE (9) FOOD LION 2012 2042
JACKSONVILLE TJ MAXX 2010
JENSEN BEACH MARSHALLS 2005 2020
JENSEN BEACH (9) HOME DEPOT 2005 2030
KEY LARGO (7) KMART 2014 2064
KISSIMMEE KASH N KARRY 2006 2036
LAKELAND STEIN MART 2006 2026
LARGO WAL-MART 2007 2027
LARGO PUBLIX 2009 2029
LARGO
LAUDERDALE LAKES SAVE- A- LOT 2007 2017
LAUDERHILL WORLD JEWELRY CENTER 2014 2024
LEESBURG
MARGATE PUBLIX 2008 2028
MELBOURNE SUBMITTORDER CO 2010 2022
MAJOR LEASES
----------------------------------------------------------------------------------------------------
LEASE OPTION LEASE OPTION
LOCATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
ALABAMA
FAIRFIELD
HOOVER
MOBILE (9) KROGER 2006 SAAD'S HEALTH CARE 2004
ARIZONA
CHANDLER (4)
FOUNTAIN HILLS (4)
GILBERT (4)
GLENDALE (7) LEVITZ 2012 2032
GLENDALE MICHAELS 2008 2018 FACTORY 2U STORES 2005 2015
MESA HARKINS THEATRE 2005 2025 OUR HOME 2005 2015
NORTH PHOENIX ULTIMATE ELECTRONICS 2015 2030 MICHAELS 2007 2022
PEORIA (4) MICHAELS 2012 2032
PHOENIX JOANN FABRICS 2010 2025 AUTO ZONE 2008 2013
PHOENIX RODEO 2005 PETSMART 2003
PHOENIX PIANO WAREHOUSE 2006 2011
TEMPE STAPLES 2005 2025 GUITAR CENTER 2007 2017
TEMPE (5)
CALIFORNIA
ALHAMBRA COSTCO 2027 2057 JOANN FABRICS 2004 2019
ANAHEIM
CARMICHAEL SPORTS AUTHORITY 2009 2024 LONGS DRUG 2013 2033
CHULA VISTA
CORONA HOME DEPOT 2010 2029 LEVITZ 2009 2029
COVINA (7) STAPLES 2006 2011 PETSMART 2008 2028
DALY CITY SAFEWAY 2004 2024 WALGREENS 2007
LA MIRADA LA FITNESS 2012 2022 US POST OFFICE 2010 2020
MONTEBELLO (7) AMC THEATRES 2012 2032 TOYS "R" US 2018 2043
OXNARD (7) FOOD 4 LESS 2008 24 HOUR FITNESS 2010 2030
SAN DIEGO (7) SPORTMART 2013
SAN RAMON (7)
SANTA ANA
SANTEE ROSS STORES 2004 2024 MICHAELS 2008 2018
SANTEE (4)
STOCKTON COSTCO 2008 2033
TEMECULA (7) TJ MAXX 2006 2011 KMART 2017 2032
TORRANCE (7) MARSHALLS 2004 2019 HL TORRANCE 2011 2021
COLORADO
AURORA
AURORA
AURORA COOMER CRAFTS 2006 CROWN LIQUORS 2005 2010
COLORADO SPRINGS EL PASO COUNTY 2005
DENVER
ENGLEWOOD OLD COUNTRY BUFFET 2009 2019
FT. COLLINS
LAKEWOOD
CONNECTICUT
BRANFORD (7) SUPER FOODMART 2016 2038
ENFIELD (7) WALDBAUMS 2014 2034
FARMINGTON LINENS N THINGS 2016 2036 BORDERS BOOKS 2018 2063
HAMDEN BON-TON 2012 BOB'S STORES 2016 2036
NORTH HAVEN BJ'S 2006 2041 XPECT DISCOUNT 2008 2013
WATERBURY RAYMOUR & FLANIGAN 2017 2037
DELAWARE
ELSMERE
DOVER (5)
FLORIDA
ALTAMONTE SPRINGS MICHAELS 2005 2015 CLASSIC LEATHER 2009 2014
ALTAMONTE SPRINGS PEARL ARTS N CRAFTS 2008 2018 ORIENTAL MARKET 2012 2022
BOCA RATON
BOYNTON BEACH (7)
BRADENTON
BRADENTON TJ MAXX 2009 2019 JOANN FABRICS 2009 2024
BRANDON (7) ROSS DRESS FOR LESS 2005 2025 THOMASVILLE 2010 2020
CORAL SPRINGS
CORAL SPRINGS RAG SHOP 2006 2026 BLOCKBUSTER 2006 2016
EAST ORLANDO OFFICE DEPOT 2005 2025
FT. PIERCE WINN DIXIE 2005 2027
HOLLYWOOD (9) DOLLAR MART PLUS 2, INC. 2007 2011
HOLLYWOOD MICHAELS 2010
HOMESTEAD
MARSHALLS 2011 2026 OFFICEMAX 2013 2028
JACKSONVILLE OFFICEMAX 2012 2032 TJ MAXX 2007 2017
JACKSONVILLE (9)
JACKSONVILLE MICHAELS 2012
JENSEN BEACH
JENSEN BEACH (9) PETSMART 2009 2029
KEY LARGO (7) PUBLIX 2009 2029
KISSIMMEE OFFICEMAX 2012 2027 JOANN FABRICS 2006 2016
LAKELAND AMC THEATRES 2007 2017 ROSS STORES 2007 2012
LARGO BARGAIN BOOKS 2003
LARGO AMC THEATRES 2011 2036 OFFICE DEPOT 2004 2019
LARGO
LAUDERDALE LAKES THINK THRIFT 2007 2017
LAUDERHILL BABIES R US 2004 2014 BOARDMANS 2005 2010
LEESBURG
MARGATE OFFICE DEPOT 2005 2020 SAM ASH MUSIC 2006 2011
MELBOURNE JOANN FABRICS 2006 2016 WALGREENS 2045
20
YEAR OWNERSHIP LAND LEASABLE PERCENT
DEVELOPED INTEREST/ AREA AREA LEASED
LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1)
- ---------------------------------------------------------------------------------------------------
MELBOURNE 1994 FEE 13.8 131,851 74.8
MELBOURNE 1998 FEE 13.2 148,660 94.0
MELBOURNE (9) 1987 JOINT VENTURE 11.9 118,828 87.3
MIAMI 1968 FEE 8.2 104,968 100.0
MIAMI 1962 JOINT VENTURE 14.0 166,578 96.0
MIAMI 1986 FEE 7.8 83,380 100.0
MIAMI 1995 FEE 5.4 63,604 100.0
MIAMI 1985 FEE 15.9 108,795 100.0
MOUNT DORA 1997 FEE 12.4 118,150 100.0
OAKLAND PARK (9) 2002 JOINT VENTURE 13.2 132,226 89.3
OCALA 1997 FEE 27.2 254,459 91.4
ORLANDO (7) 2000 FEE 18.0 179,065 97.4
ORLANDO 1968 JOINT VENTURE 10.0 114,434 100.0
ORLANDO 1968 FEE 12.0 131,646 97.5
ORLANDO 1968 GROUND LEASE (2047)
/JOINT VENTURE 7.8 110,788 100.0
ORLANDO 1994 FEE 28.0 236,486 97.4
ORLANDO 1996 FEE 11.7 127,806 100.0
PALATKA 1970 FEE 8.9 82,730 85.7
PANAMA CITY (4) 2002 JOINT VENTURE 8.0 52,000 74.1
PENSACOLA (9) 2002 JOINT VENTURE 18.2 181,910 82.5
PLANTATION 1974 JOINT VENTURE 4.6 60,414 100.0
POMPANO BEACH 1968 JOINT VENTURE 6.6 66,838 100.0
PORT RICHEY (7) 1998 FEE 14.3 103,294 93.3
RIVIERA BEACH 1968 JOINT VENTURE 5.1 46,390 78.7
SANFORD 1989 FEE 40.9 155,753 98.5
SARASOTA 1970 FEE 10.0 102,485 100.0
SARASOTA 1989 FEE 12.0 128,177 88.3
ST. PETERSBURG 1968 GROUND LEASE (2084)
/JOINT VENTURE 9.0 118,979 89.9
TALLAHASSEE 1998 FEE 12.8 105,535 95.4
TALLAHASSEE (4) 2000 GROUND LEASE(2085)
/JOINT VENTURE 34.0 211,000 -
TAMPA (7) 2001 FEE 73.0 324,846 98.2
TAMPA 1997 FEE 16.3 127,837 100.0
TAMPA (4) 2001 JOINT VENTURE 30.9 79,000 -
WEST PALM BEACH (9) 2002 JOINT VENTURE 12.0 119,570 81.2
WEST PALM BEACH 1995 FEE 7.9 80,845 95.4
WEST PALM BEACH 1967 JOINT VENTURE 7.6 77,286 98.8
WINTER HAVEN 1973 JOINT VENTURE 13.9 92,428 88.9
GEORGIA
ATLANTA 1988 FEE 19.5 165,314 100.0
AUGUSTA 1995 FEE 11.3 119,930 70.8
AUGUSTA (7) 2001 FEE 24.0 533,039 99.3
GAINSVILLE 1993 JOINT VENTURE 12.6 142,468 100.0
MACON 1969 FEE 12.3 127,260 54.9
MARIETTA (9) 2002 JOINT VENTURE 15.2 151,820 93.1
SAVANNAH 1993 FEE 22.2 187,076 92.2
SAVANNAH 1995 GROUND LEASE (2045) 9.5 88,325 98.2
SNELLVILLE (7) 2001 FEE 35.6 311,164 100.0
SMYRNA (9) 2002 JOINT VENTURE 7.8 77,961 99.7
ILLINOIS
ADDISON 1968 GROUND LEASE (2066) 8.0 93,289 22.0
ADDISON 1998 FEE 16.4 115,130 -
ALTON 1986 FEE 21.2 159,824 82.1
ARLINGTON HEIGHTS 1998 FEE 7.0 80,040 -
AURORA 1998 FEE 17.9 91,182 -
BATAVIA (7) 2002 FEE 31.7 272,416 100.0
BELLEVILLE 1987 GROUND LEASE (2066) 20.3 81,490 100.0
BLOOMINGTON 1972 FEE 16.1 188,250 100.0
BRADLEY 1996 FEE 5.4 80,535 100.0
BRIDGEVIEW (6) 1998 FEE 6.8 88,069 -
CALUMET CITY 1997 FEE 17.0 197,383 33.9
CARBONDALE 1997 GROUND LEASE (2052) 8.1 80,535 100.0
CHAMPAIGN 1999 FEE 9.0 102,615 100.0
CHAMPAIGN(7) 2001 FEE 9.3 111,720 100.0
CHICAGO 1997 FEE 13.4 109,441 100.0
CHICAGO 1997 GROUND LEASE (2040) 17.5 104,264 100.0
CHICAGO 1997 FEE 6.0 86,894 100.0
CHICAGO 1988 FEE 6.4 80,842 -
COUNTRYSIDE 1997 GROUND LEASE (2053) 27.7 121,894 2.9
CRESTWOOD 1997 GROUND LEASE (2051) 36.8 79,903 100.0
CRYSTAL LAKE 1998 FEE 6.1 80,390 100.0
DOWNERS GROVE 1998 GROUND LEASE (2041) 7.2 192,639 100.0
DOWNERS GROVE 1999 FEE 24.8 144,670 100.0
DOWNERS GROVE 1997 FEE 12.0 141,906 100.0
ELGIN 1972 FEE 18.7 186,432 92.5
ELGIN 1998 FEE 9.0 100,342 -
FAIRVIEW HEIGHTS 1986 GROUND LEASE (2050) 19.1 192,073 96.6
FOREST PARK 1997 GROUND LEASE (2021) 9.3 98,371 100.0
GENEVA 1996 FEE 8.2 104,688 100.0
MATTESON 1997 FEE 17.0 136,885 91.3
MT. PROSPECT 1997 FEE 16.8 192,789 84.0
MUNDELIEN 1991 FEE 7.6 85,018 100.0
NAPERVILLE 1997 FEE 9.0 101,827 100.0
NORRIDGE 1997 GROUND LEASE (2042) 11.7 116,914 100.0
OAKLAWN 1997 FEE 15.4 165,337 100.0
OAKBROOK TERRACE 1997 FEE 15.6 165,100 100.0
ORLAND PARK 1998 FEE 7.8 166,000 100.0
ORLAND PARK 1980 FEE 18.8 131,546 100.0
OTTAWA 1970 FEE 9.0 60,000 100.0
MAJOR LEASES
-------------------------------------------------------------
LEASE OPTION
LOCATION TENANT NAME EXPIRATION EXPIRATION
- --------------------------------------------------------------------------------------------
MELBOURNE TEGGE FURNISHINGS 2005 2007
MELBOURNE KROGER 2004 2034
MELBOURNE (9) PUBLIX 2007
MIAMI KMART 2009 2029
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MIAMI PUBLIX 2009 2029
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MIAMI PUBLIX 2019 2039
MOUNT DORA KMART 2013 2063
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OCALA KMART 2006 2021
ORLANDO (7) KMART 2014 2064
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ORLANDO OFFICE FURNITURE 2008
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PLANTATION BREAD OF LIFE 2009 2019
POMPANO BEACH RAMP 48 2003 2009
PORT RICHEY (7) CIRCUIT CITY 2011 2031
RIVIERA BEACH GOODWILL INDUSTRIES 2005 2008
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SARASOTA TJ MAXX 2007 2017
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