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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, 2003
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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
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(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
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Depositary Shares, each representing one-
tenth of a share of 6.65% Class F
Cumulative Redeemable Preferred Stock,
par value $1.00 per share. New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
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
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The aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $4.4 billion based upon the
closing price on the New York Stock Exchange for such stock on January 30, 2004.
(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.
110,745,713 shares as of January 30, 2004.
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 20, 2004.
Index to Exhibits begins on page 49.
2
TABLE OF CONTENTS
Form
10-K
Report
Item No. Page
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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 . . . . . . . . . . . . 28
PART II
5. Market for the Registrant's Common Equity
and Related Shareholder Matters . . . . . . . . . . . . . 30
6. Selected Financial Data . . . . . . . . . . . . . . . . . . 31
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . . . 33
7A. Quantitative and Qualitative Disclosures About Market Risk . 45
8. Financial Statements and Supplementary Data . . . . . . . . 46
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . 46
9A. Controls and Procedures . . . . . . . . . . . . . . . . . . 46
PART III
10. Directors and Executive Officers of the Registrant . . . . . 47
11. Executive Compensation . . . . . . . . . . . . . . . . . . . 47
12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . 47
13. Certain Relationships and Related Transactions . . . . . . . 47
14. Principal Accountant Fees and Services . . . . . . . . . . . 47
PART IV
15. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 48
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.
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 40 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 5, 2004, the
Company's portfolio was comprised of 699 property interests including 620
neighborhood and community shopping center properties (including 26 property
interests related to the Company's Preferred Equity program), 36 retail store
leases, 33 ground-up development projects and ten parcels of undeveloped land
totaling approximately 102.6 million square feet of leasable space (including
3.9 million square feet related to the Company's Preferred Equity program and
4.9 million square feet projected for the ground-up development projects)
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 8 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.
The Company's web site is located at http://www.Kimcorealty.com. On the
Company's 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").
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.
4
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, 2003, 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 8 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 accounts for this investment under the equity
method of accounting (see Recent Developments - Operating Real Estate Joint
Venture Investments and Note 8 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. The Company also provides preferred equity capital for
real estate entrepreneurs and provides real estate capital and advisory services
to both healthy and distressed retailers. The Company also makes selective
investments in secondary market opportunities where a security or other
investment is, in management's judgment, priced below the value of the
underlying real estate.
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, 2003, the Company's single largest
neighborhood and community shopping center, accounted for only 1.0% of the
Company's annualized base rental revenues and only 0.6% of the Company's total
shopping center GLA. At December 31, 2003, the Company's five largest tenants
were The Home Depot, Kmart Corporation, Kohl's, Royal Ahold and TJX Companies,
which represent approximately 3.0%, 2.9%, 2.8%, 2.6% and 2.5%, 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.
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.
6
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, 2003, the
Company's level of debt to total market capitalization was 30%. 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 $3.3
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.
During June 2003, the Company established a $500.0 million unsecured revolving
credit facility, which is scheduled to expire in August 2006. This credit
facility, which replaced the Company's $250.0 million unsecured revolving credit
facility, has made available funds to both finance the purchase of properties
and other investments and meet any short-term working capital requirements. As
of December 31, 2003, there was $45.0 million outstanding under this unsecured
revolving credit facility.
The Company also established a $400.0 million unsecured bridge facility, which
is scheduled to expire in September 2004, with an option to extend up to $150.0
million for an additional year. Proceeds from this facility were used to
partially fund the Mid-Atlantic Realty Trust transaction (see Recent
Developments - Mid-Atlantic Realty Trust Merger and Notes 3 and 13 of the Notes
to Consolidated Financial Statements included in this annual report on Form
10-K). As of December 31, 2003, there was $329.0 million outstanding on this
unsecured bridge facility.
The Company has a $300.0 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. (See Note 13 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
and construction loans to partially fund the capital needs of KDI, the Company's
merchant building subsidiary. As of December 31, 2003, the Company had over 400
unencumbered property interests in its portfolio representing over 88% 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 2003, the Company filed a shelf registration on Form S-3 for up to
$1.0 billion of debt securities, preferred stock, depositary shares, common
stock and common stock warrants. As of January 30, 2004, the Company had
approximately $609.7 million available for issuance under this shelf
registration statement.
7
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 $308.6
million for the year ended December 31, 2003, as compared to $278.9 million for
the year ended December 31, 2002.
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 other investment opportunities 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 renewing 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 various cities throughout the United States. A total of 405 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.
8
The Company also employs a total of 18 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.
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 2003
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")), (ii) real estate advisory and
disposition services provided in connection with asset designation rights, and
(iii) acting as an agent or principal in connection with tax deferred exchange
transactions. As such, the Company was subject to federal and state income taxes
on the income from these activities.
Recent Developments
Mid-Atlantic Realty Trust Merger -
During June 2003, the Company and Mid-Atlantic Realty Trust ("Mid-Atlantic")
entered into a definitive merger agreement (the "Merger Agreement") whereby
Mid-Atlantic would merge with and into a wholly-owned subsidiary of the Company
(the "Merger" or "Mid-Atlantic Merger"). The Merger required the approval of
holders of 66 2/3% of Mid-Atlantic's outstanding shares. Subject to certain
conditions, limited partners in Mid-Atlantic's operating partnership were
offered the same cash consideration for each outstanding unit and offered the
opportunity (in lieu of cash) to exchange their interests for preferred units in
the operating partnership upon the closing of the transaction.
The shareholders of Mid-Atlantic approved the Merger on September 30, 2003 and
the closing occurred October 1, 2003. Mid-Atlantic shareholders received cash
consideration of $21.051 per share. In addition, more than 99.0% of the limited
partners in Mid-Atlantic's operating partnership elected to have their
partnership units redeemed for cash consideration equal to $21.051 per unit.
The transaction had a total value of approximately $700.0 million including the
assumption of approximately $216.0 million of debt. The Company funded the
transaction with available cash, a new $400.0 million bridge facility and funds
from its existing revolving credit facility.
In connection with the Merger, the Company acquired interests in 41 operating
shopping centers, one regional mall, two shopping centers under development and
eight other commercial assets. The properties have a gross leasable area of
approximately 5.7 million square feet of which approximately 95.0% of the
stabilized square footage is currently leased. The Company also acquired
approximately 80.0 acres of undeveloped land. The properties are located
primarily in Maryland, Virginia, New York, Pennsylvania, Massachusetts and
Delaware. The Company has tentative agreements for a number of the properties to
be allocated to its strategic co-investment programs. For financial reporting
purposes the Merger was accounted for under the purchase method of accounting in
accordance with Statement of Financial Accounting Standards No. 141, Business
Combinations, ("SFAS No. 141").
During December 2003, the Company disposed of the one regional mall and the
adjacent annex acquired in the Merger located in Bel Air, MD for a sales price
of approximately $71.0 million, which approximated its net book value.
9
Operating Properties -
Acquisitions -
During the year ended December 31, 2003, the Company acquired 14 operating
properties located in eight states and Mexico, comprising approximately 1.7
million square feet of GLA for an aggregate purchase price of approximately
$293.9 million. Details of these transactions are as follows:
During January 2003, the Company acquired a property located in Houston, TX,
comprising approximately 0.2 million square feet of GLA, for a purchase price of
approximately $26.3 million. During June 2003, the Company transferred this
property to KROP.
During February 2003, the Company acquired a property located in Nashau, NH,
comprising approximately 0.2 million square feet of GLA, for a purchase price of
approximately $25.7 million.
During March 2003, the Company acquired four operating properties located in
Queens, NY, comprising approximately 0.1 million square feet of GLA, for an
aggregate purchase price of approximately $19.9 million.
During April 2003, the Company acquired a property located in Sterling, VA,
comprising approximately 0.4 million square feet of GLA, for a purchase price of
approximately $58.7 million. During September 2003, the Company transferred this
property to KROP.
During June 2003, the Company acquired a 66.7% controlling interest in a
property located in New Braunfels, TX, comprising approximately 0.1 million
square feet of GLA, for a purchase price of approximately $4.2 million.
Additionally, during June 2003, the Company acquired a property located in
Colma, CA, comprising approximately 0.2 million square feet of GLA, for a
purchase price of approximately $59.2 million. During November 2003, the Company
transferred this property to KROP.
Also, during June 2003, the Company acquired a property located in Greenwood,
CO, comprising approximately 0.2 million square feet of GLA, for a purchase
price of approximately $29.7 million. During November 2003, the Company sold
this property for a sales price of approximately $30.6 million which resulted in
a gain on sale of approximately $0.7 million.
During July 2003, the Company acquired a property in Novato, CA, comprising
approximately 0.1 million square feet of GLA, for a purchase price of
approximately $21.9 million. During December 2003, the Company transferred this
property into a newly formed joint venture in which the Company has a 10%
non-controlling interest.
During October 2003, the Company acquired a property located in Florence, KY,
comprising approximately 0.1 million square feet of GLA, for an aggregate
purchase price of approximately $14.9 million.
Additionally, during October 2003, the Company acquired an operating property
located in Juarez, Mexico, comprising approximately 0.1 million square feet of
GLA through a joint venture in which the Company has a 90.0% controlling
interest. The property was acquired for a purchase price of approximately $9.9
million.
During November 2003, the Company acquired a property located in Monroeville,
PA, comprising approximately 0.1 million square feet of GLA, for an aggregate
purchase price of approximately $23.5 million.
Dispositions -
During 2003, the Company disposed of, in separate transactions, (i) 10 operating
shopping center properties, for an aggregate sales price of approximately $119.1
million, including the assignment of approximately $1.7 million of mortgage debt
encumbering one of the properties, (ii) two regional malls for an aggregate
sales price of approximately $135.6 million, (iii) one out-parcel for a sales
price of approximately $8.1 million, (iv) transferred three operating properties
to KROP for a price of approximately $144.2 million which approximated their net
book value, (v) transferred an operating property to a newly formed joint
venture in which the Company has a 10% non-controlling interest for a price of
approximately $21.9 million which approximated its net book value and (vi)
terminated four leasehold positions in locations where a tenant in bankruptcy
had rejected its lease. These transactions resulted in net gains of
approximately $50.8 million.
10
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 2003,
the Company substantially completed the redevelopment and re-tenanting of
various operating properties. The Company expended approximately $57.9 million
in connection with these major redevelopments and re-tenanting projects during
2003. 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
$50.0 million to $75.0 million during 2004.
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, 2003, KDI had in progress 26
ground-up development projects located in nine states. These projects had
substantial pre-leasing prior to the commencement of construction. During 2003,
KDI expended approximately $208.9 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 2004. The proceeds from the sales of the completed ground-up development
projects during 2004 and proceeds from construction loans are expected to be
sufficient to fund these anticipated capital requirements.
KDI Acquisitions -
During the year ended December 31, 2003, KDI acquired interests in 12 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 $80.2 million, as follows:
Purchase Price
Date Acquired City State (in millions)
------------- ---- ----- --------------
February 2003 Avondale AZ $ 2.2
March 2003 Raleigh NC 3.2
April 2003 Maricopa AZ 2.7
May 2003 Muskegan MI 4.2
June 2003 Vancouver WA 9.4
July 2003 Birmingham AL 2.5
September 2003 Longview WA 16.5
September 2003 Ft. Worth TX 8.5
October 2003 Burleson TX 5.6
December 2003 Lake Worth TX 11.8
December 2003 Jacksonville FL 7.6
December 2003 Houston TX 6.0
-----
$80.2
=====
The estimated project costs for these newly acquired parcels is approximately
$220.0 million with completion dates ranging from June 2004 to December 2005.
During 2003, the Company obtained individual construction loans on seven
ground-up development projects and paid off construction loans on three
ground-up development properties. At December 31, 2003 total loan commitments on
the remaining 13 construction loans aggregate approximately $238.9 million of
which approximately $92.8 million has been funded. These loans have maturities
ranging from 3 to 34 months and bear interest at rates ranging from 2.87% to
5.0% at December 31, 2003.
KDI Dispositions -
During the year ended December 31, 2003, KDI sold four of its recently completed
projects and 26 out-parcels for approximately $134.6 million. These sales
resulted in pre-tax gains of approximately $17.5 million. Details are as
follows:
11
Sales Price
Date Sold Project City State (in millions)
- --------- ------- ---- ----- -------------
January 2003 Various (4 out-parcels) Various NV, OH, AZ $ 3.4
February 2003 Wakefield Crossing (1 out-parcel) Raleigh NC 0.5
March 2003 Gateway Station (1 out-parcel) Burleson TX 1.3
April 2003 Wakefield Crossings (4 out-parcels) Various Various 3.1
May 2003 Sale of built up space at Gilbert Fiesta Gilbert Fiesta AZ 10.8
June 2003 Hamstra Square (Sale of Center) Chandler AZ 13.0
June 2003 Gateway Station (Phase I) Burleson TX 27.9
June 2003 Various (2 out-parcels) Various TX, NV 8.6
July 2003 Various (3 out-parcels) Various NC, OH, AZ 2.0
August 2003 Various (2 out-parcels) Various NC, TX 2.3
September 2003 Hillsborough (sale of center) Hillsborough NJ 46.5
October 2003 Various (3 out-parcels) Various TX, WA 5.6
November 2003 Various (5 out-parcels) Various AZ, WA 8.5
December 2003 Gateway Station (1 out-parcel) Burleson TX 1.1
------
$134.6
======
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, 2003, 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, manages the portfolio and accounts for its investment under the
equity method of accounting.
During 2003, the limited partners in KIR contributed $30.0 million towards their
respective capital commitments, including $13.0 million by the Company. As of
December 31, 2003, KIR had unfunded capital commitments of $99.0 million,
including $42.9 million from the Company.
During 2003, KIR purchased two shopping center properties, in separate
transactions, aggregating approximately 0.6 million square feet of GLA for
approximately $103.5 million.
During September 2003, KIR elected to terminate its secured revolving credit
facility. This facility was scheduled to expire in November 2003 and had $5.0
million outstanding at the time of termination, which was paid in full.
During December 2003, KIR disposed of, in separate transactions, two out-parcels
located in Las Vegas, NV, for an aggregate sales price of approximately $1.4
million, which represented the approximate carrying value of the property.
As of December 31, 2003, the KIR portfolio was comprised of 70 shopping center
properties aggregating approximately 14.6 million square feet of GLA located in
21 states.
During 2003, KIR obtained individual non-recourse, non-cross collateralized
fixed-rate ten year mortgages aggregating approximately $78.0 million on two of
its previously unencumbered properties with rates ranging from 5.54% to 5.82%
per annum. The net proceeds were used to satisfy the outstanding balance on the
secured credit facility and partially fund the acquisition of various shopping
center properties.
12
Kimco / G.E. Joint Venture ("KROP") -
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 2003, GECRE and the Company contributed approximately $45.6 million and
$11.4 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 LIBOR plus
5.25% and have maturities of less than one year. As of December 31, 2003, KROP
had outstanding short-term interim financing due to GECRE and the Company
totaling $16.8 million each.
During 2003, KROP purchased, in separate transactions, eight shopping centers
comprising approximately 1.9 million square feet of GLA for an aggregate
purchase price of approximately $250.2 million, including the assumption of
approximately $6.5 million of mortgage debt encumbering one of the properties.
During December 2003, KROP disposed of a portion of a shopping center located in
Columbia, MD, for an aggregate sales price of approximately $2.8 million, which
approximated the carrying value.
During 2003, KROP obtained individual non-recourse, non-cross collateralized
fixed-rate mortgages aggregating approximately $89.3 million on three of its
previously unencumbered properties with rates ranging from 4.25% to 5.92% and
terms ranging from five to ten years.
During 2003, KROP obtained individual non-recourse, non-cross collateralized
variable-rate five year mortgages aggregating approximately $35.6 million on
five of its previously unencumbered properties with rates ranging from LIBOR
plus 2.2% to LIBOR plus 2.5%. In order to mitigate the risks of interest rate
fluctuations associated with these variable rate obligations, KROP entered into
interest rate cap agreements for the notional values of these mortgages.
As of December 31, 2003, the KROP portfolio was comprised of 23 shopping center
properties aggregating approximately 3.5 million square feet of GLA located in
12 states.
International Real Estate Joint Venture Investments -
Canadian 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. Capital contributions will only be required as suitable opportunities
arise and are agreed to by the Company and RioCan.
During 2003, the RioCan Venture acquired a shopping center property comprising
approximately 0.2 million square feet of GLA for a purchase price of
approximately CAD $42.6 million (approximately USD $29.0 million) including the
assumption of approximately CAD $28.7 million (approximately USD $19.6 million)
of mortgage debt. Additionally during 2003, the RioCan Venture acquired, in a
single transaction, four parcels of land adjacent to an existing property for a
purchase price of approximately CAD $18.7 million (approximately USD $14.2
million). This property was subsequently encumbered with non-recourse mortgage
debt of approximately CAD $16.3 million (approximately USD $12.4 million).
As of December 31, 2003, the RioCan Venture was comprised of 31 operating
properties and three development properties, consisting of approximately 7.2
million square feet of GLA.
Mexican Investments -
During October 2002, the Company, in separate transactions, acquired two
operating properties located in Saltillo and 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). The Monterrey
site consisted of a portion under development of approximately 0.1 million
square feet of GLA which was completed during October 2003, for a cost of
approximately MXN $57.9 million (USD $5.8 million).
13
During December 2003, the Company, in a single transaction, sold a 50.0%
interest in each of its properties located in Saltillo and Monterrey, Mexico for
an aggregate sales price of approximately MXN $240.4 million (USD $21.4 million)
which approximated 50.0% of their aggregate carrying value.
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 June 2003, the Company acquired a former Service Merchandise property
located in Novi, MI, through a joint venture, in which the Company has a 42.5%
non-controlling interest. The property was acquired for a purchase price of
approximately $4.1 million.
During June 2003, the Company acquired a property located in South Bend, IN,
through a joint venture in which the Company has a 37.5% non-controlling
interest. The property was acquired for an aggregate purchase price of
approximately $4.9 million.
During July 2003, the Company acquired a property located in Pineville, NC,
through a joint venture, in which the Company has a 20.0% non-controlling
interest. The property was acquired for a purchase price of approximately $27.3
million, including $19.3 million of non-recourse mortgage debt encumbering the
property.
During August 2003, the Company acquired a property located in Shaumburg, IL,
through a joint venture in which the Company has a 45.0% non-controlling
interest. The property was acquired for an aggregate purchase price of
approximately $66.6 million. Simultaneous with the acquisition, the venture
obtained a $51.6 million non-recourse mortgage at a floating interest rate of
LIBOR plus 2.25%.
Additionally, during the year ended December 31, 2003, the Company acquired 11
properties, in separate transactions, through various joint ventures in which
the Company has a 50.0% non-controlling interest. These properties were acquired
for an aggregate purchase price of approximately $113.3 million, including the
assumption of approximately $40.5 million of non-recourse debt encumbering six
of the properties.
Other Real Estate Investments -
Kmart Venture -
During July 2002, the Company, through a taxable REIT subsidiary, formed a
venture (the "Kmart Venture") in which the Company has a controlling interest
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, was approximately $43.0 million. As of
December 31, 2003, the Kmart Venture completed the designation of all properties
and has funded the total commitment of approximately $43.0 million to Kmart.
During 2003, the Kmart Venture commenced the profit sharing arrangement and the
Company recognized pre-tax profits of approximately $0.6 million.
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 4.6 million square feet of GLA. Total acquisition value was
approximately $280.9 million including approximately $216.2 million in assumed
mortgage debt. The Company's investment strategy with respect to Kimsouth
includes re-tenanting, repositioning and disposition of the properties.
During 2003, Kimsouth disposed of 14 shopping center properties, in separate
transactions, for an aggregate sales price of approximately $84.0 million,
including the assignment of approximately $18.4 million of mortgage debt
encumbering six of the properties. During 2003, the Company recognized pre-tax
profits from the Kimsouth investment of approximately $12.1 million which is
included in the caption Income from other real estate investments on the
Company's Consolidated Statements of Income.
As of December 31, 2003, the Kimsouth portfolio was comprised of 22 properties
aggregating approximately 3.2 million square feet of GLA located in six states.
14
Preferred Equity Capital -
During 2002, the Company established a preferred equity program, which provides
capital to developers and owners of shopping centers. As of December 31, 2003,
the Company has provided, in separate transactions, an aggregate of
approximately $66.4 million in investment capital to developers and owners of 21
shopping centers.
Mortgages and Other Financing Receivables -
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. During January 2003, the Company sold a $37.0 million participation
interest in this loan to an unaffiliated third party. The interest rate of the
$37.0 million participation interest is a variable rate based on LIBOR plus
3.50%. The Company continues to act as the servicer for the full amount of the
loan.
During May 2002, in connection with Frank's Nursery & Crafts, Inc. ("Franks")
emergence from Chapter 11 under the U.S. Bankruptcy Code, the Company received
approximately 4.3 million shares of Frank's common stock in settlement of its
pre-petition claim. The Company also provided exit financing in the form of a
$15.0 million three-year term loan at a fixed interest rate of 10.25% per annum
collateralized by 40 real estate interests. Simultaneously, the Company provided
an additional $17.5 million revolving loan, also at an interest rate of 10.25%
per annum. Interest is payable quarterly in arrears. As of December 31, 2003,
the aggregate outstanding loan balance was approximately $32.5 million. 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 and 5.0 million
warrants with an exercise price of $2.00 per share. During 2003, the Company had
written down the remaining carrying value of its equity investment in Frank's
common stock and fully reserved the value of the Frank's warrants, with a
corresponding adjustment in Other comprehensive income ("OCI").
During June 2003, the Company provided a five-year $3.5 million loan to Grass
America, Inc. ("Grass America") at an interest rate of 12.25% per annum
collateralized by certain real estate interests of Grass America. The Company
receives principal and interest payments on a monthly basis.
During December 2003, the Company provided a four-year $8.25 million term loan
to Spartan Stores, Inc. ("Spartan") at a fixed rate of 16.0% per annum. This
loan is collateralized by the real estate interests of Spartan. The Company
receives principal and interest payments monthly.
During December 2003, the Company, through a taxable REIT subsidiary, acquired a
$24.0 million participation interest in 12% senior secured notes of the FRI-MRD
Corporation ("FRI-MRD") for $13.3 million. These notes, which are currently
non-performing, are collateralized by certain equity interests and a note
receivable of a FRI-MRD subsidiary.
Financing Transactions -
Unsecured Debt -
During May 2003, the Company issued $50.0 million of fixed-rate unsecured senior
notes under its medium-term notes ("MTN") program. This fixed rate MTN matures
in May 2010 and bears interest at 4.62% per annum, payable semi-annually in
arrears. The proceeds from this MTN issuance were used to partially fund the
redemption of the Company's $75.0 million 7 3/4% Class A Cumulative Redeemable
Preferred Stock.
During August 2003, the Company issued $100.0 million of fixed-rate unsecured
senior notes under its MTN program. This fixed rate MTN matures in August 2008
and bears interest at 3.95% per annum, payable semi-annually in arrears. The
proceeds from this MTN issuance were used to redeem all $100.0 million of the
Company's remarketed reset notes due August 18, 2008, bearing interest at LIBOR
plus 1.25%.
During October 2003, the Company issued $100.0 million of fixed-rate unsecured
senior notes under its MTN program. This fixed rate MTN matures in October 2013
and bears interest at 5.19% per annum, payable semi-annually in arrears. The
proceeds from this MTN issuance were used for the repayment of the Company's
6.5% $100.0 million fixed-rate unsecured senior notes which matured October 1,
2003.
Construction Loans -
During 2003, the Company obtained construction financing on seven ground-up
development projects for an aggregate loan amount of up to $152.2 million, of
which approximately $45.6 million was funded as of December 31, 2003. As of
December 31, 2003, the Company had a total of 13 construction loans with total
commitments of up to $238.9 million of which $92.8 million had been funded to
the Company. These loans have maturities ranging from 3 to 34 months and
variable interest rates ranging from 2.87% to 5.00% at December 31, 2003.
15
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 certain Kmart sites with individual
non-recourse mortgages. 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 suspended debt service payments on these loans and began
active negotiations with the respective lenders.
During February 2003, the Company reached agreement with a lender in connection
with two former Kmart encumbered locations. The Company paid approximately $8.3
million in full satisfaction of these loans which aggregated approximately $14.7
million. The Company recognized a gain on early extinguishment of debt of
approximately $6.2 million as a result of this transaction.
During December 2003, the Company reached agreement with a lender in connection
with an individual non-recourse mortgage encumbering a former Kmart site located
in Chicago, IL. The Company paid approximately $5.9 million in full satisfaction
of this loan which had a outstanding balance of approximately $9.3 million. As a
result of this transaction, the Company recognized a gain on early
extinguishment of debt of approximately $3.5 million.
Credit Facilities -
The Company maintains a $500.0 million unsecured revolving credit facility (the
"Credit Facility") with a group of banks which is scheduled to mature in August
2006. 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 0.55%) 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 $250.0 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
0.55%. As of December 31, 2003, there was $45.0 million outstanding under the
Credit Facility.
During October 2003, the Company obtained a $400.0 million unsecured bridge
facility that bears interest at LIBOR plus 0.55%. This loan is scheduled to
expire September 30, 2004 with an option to extend up to $150.0 million for an
additional year. The Company utilized these proceeds to partially fund the
Mid-Atlantic Realty Trust transaction. As of December 31, 2003, there was $329.0
million outstanding on this unsecured bridge facility.
Equity -
During June 2003, the Company redeemed all 2,000,000 outstanding depositary
shares of the Company's 8 1/2% Class B Cumulative Redeemable Preferred Stock,
par value $1.00 per share ("Class B Preferred Stock"), all 3,000,000 outstanding
depositary shares of the Company's 7 3/4% Class A Cumulative Redeemable
Preferred Stock, par value $1.00 per share ("Class A Preferred Stock") and all
4,000,000 outstanding depositary shares of the Company's 8 3/8% Class C
Cumulative Redeemable Preferred Stock, par value $1.00 per share ("Class C
Preferred Stock"), each at a redemption price of $25.00 per depositary share,
totaling $225.0 million, plus accrued dividends.
During June 2003, the Company issued 7,000,000 Depositary Shares (the "Class F
Depositary Shares"), each representing a one-tenth fractional interest in a
share of the Company's 6.65% Class F Cumulative Redeemable Preferred Stock, par
value $1.00 per share (the "Class F Preferred Stock"). Dividends on the Class F
Depositary Shares are cumulative and payable quarterly in arrears at the rate of
6.65% per annum based on the $25.00 per share initial offering price, or $1.6625
per annum. The Class F Depositary Shares are redeemable, in whole or part, for
cash on or after June 5, 2008 at the option of the Company, at a redemption
price of $25.00 per depositary share, plus any accrued and unpaid dividends
thereon. The Class F Depositary Shares are not convertible or exchangeable for
any other property or securities of the Company. Net proceeds from the sale of
the Class F Depositary Shares, totaling approximately $169.0 million (after
related transaction costs of $6.0 million) were used to redeem all of the
Company's Class B Preferred Stock and Class C Preferred Stock and to fund a
portion of the redemption of the Company's Class A Preferred Stock.
Additionally, during June 2003, the Company completed a primary public stock
offering of 2,070,000 shares of the Company's common stock. The net proceeds
from this sale of common stock, totaling approximately $76.0 million (after
related transaction costs of $0.7 million) were used for general corporate
purposes, including the acquisition of interests in real estate properties.
16
During September 2003, the Company completed a primary public stock offering of
2,760,000 shares of the Company's common stock. The net proceeds from this sale
of common stock, totaling approximately $112.7 million (after related
transaction costs of $1.0 million) were used for general corporate purposes,
including the acquisition of interests in real estate properties.
Hedging Activities -
During 2002 and 2003, the Company entered into various foreign currency forward
contracts and a cross currency swap aggregating approximately CAD $189.6 million
and MXN $381.8 million in connection with the Company's Canadian and Mexican
real estate investments and investment in stock of RioCan. During December 2003,
the Company sold a 50% interest in its Saltillo and Monterrey, Mexico
properties. In connection with this sale, the Company partially assigned to the
buyer a portion of its foreign currency forwards and cross currency swap
aggregating approximately MXN $156.9 million. At December 31, 2003, the
Company's remaining portion of these foreign currency forwards and cross
currency swap is approximately MXN $224.9 million, which fully hedges the
Company's remaining investment in these properties. (See Note 17 of the Notes to
Consolidated Financial Statements included in this annual report on Form 10-K.)
Exchange Listings
The Company's common stock and Class F Depositary Shares are traded on the NYSE
under the trading symbols "KIM" and "KIMprF", respectively. Trading of the Class
A, B and C Depositary Shares ceased in June 2003 in connection with the
Company's redemption of such shares.
Item 2. Properties
Real Estate Portfolio As of January 1, 2004, the Company's real estate
portfolio was comprised of interests in approximately 93.5 million square feet
of GLA (not including 26 property interests comprising 3.9 million square feet
of GLA related to the Preferred Equity program and 4.9 million square feet of
projected GLA for the ground-up development projects) in 594 neighborhood and
community shopping center properties, 37 retail store leases, 10 parcels of
undeveloped land and 28 projects under development, located in 41 states, Canada
and Mexico. The Company's portfolio includes a 43.3% interest in 70 shopping
center properties comprising approximately 14.6 million square feet of GLA
relating to KIR, a 50% interest in 31 shopping center properties comprising
approximately 7.3 million square feet of GLA relating to the RioCan Venture and
a 20% interest in 23 shopping center properties comprising approximately 3.5
million square feet of GLA relating to KROP. Neighborhood and community shopping
centers comprise the primary focus of the Company's current portfolio. As of
January 1, 2004, approximately 90.7% of the Company's neighborhood and community
shopping center space (excluding the KIR, KROP and Kimsouth portfolios) was
leased, and the average annualized base rent per leased square foot of the
portfolio was $8.79. As of January 1, 2004, the KIR, KROP and Kimsouth
portfolios were 97.7%, 98.2% and 80.2% leased, respectively, with an average
annualized base rent per leased square foot of $11.85, $12.49 and $8.63,
respectively.
The Company's neighborhood and community shopping center properties, generally
owned and operated through subsidiaries or joint ventures, had an average size
of approximately 148,000 square feet as of January 1, 2004. 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 2003, the Company capitalized approximately $6.2 million in
connection with these property improvements and expensed to operations
approximately $17.5 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
The Home Depot, Kmart Corporation, Kohl's, Royal Ahold, TJX Companies, Wal-Mart,
Great Atlantic & Pacific, Best Buy, Toys R' Us, and Bed Bath & Beyond.
17
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 1,918 of the Company's 6,820 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, 2003.
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, 2003. 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, 2003 to December 31, 2003, the Company increased the
average base rent per leased square foot in its consolidated portfolio of
neighborhood and community shopping centers from $8.31 to $8.79, an increase of
$0.48. This increase primarily consists of (i) a $0.32 increase relating to the
net effect of acquisitions and dispositions, (ii) an $0.11 increase related to
the fluctuation in exchange rates related to the Canadian denominated leases,
and (iii) a $0.05 increase relating to new leases signed net of leases vacated.
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 0.6% of the Company's total shopping center GLA or more
than 1.0% of total annualized base rental revenues as of December 31, 2003. The
Company's five largest tenants include The Home Depot, Kmart Corporation,
Kohl's, Royal Ahold and TJX Companies, which represent approximately 3.0%, 2.9%,
2.8%, 2.6% and 2.5%, 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.
Retail Store Leases In addition to neighborhood and community shopping
centers, as of January 1, 2004, the Company had interests in retail store leases
totaling approximately 3.4 million square feet of anchor stores in 37
neighborhood and community shopping centers located in 20 states. As of January
1, 2004, approximately 86.0% 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 $4.07 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 $2.60 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 4.5 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 is 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, 2004, the Company, through
its wholly-owned taxable REIT subsidiary, KDI, has currently in progress 26
ground-up development projects located in nine states which are expected to be
sold upon completion. These projects had substantial pre-leasing prior to the
commencement of construction. As of January 1, 2004, the average annual base
rent per leased square foot for the KDI portfolio was $14.22 and the average
annual base rent per leased square foot for new leases executed in 2003 was
$15.24.
18
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 27 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
MAJOR LEASES
YEAR OWNERSHIP LAND LEASABLE PERCENT --------------------------
DEVELOPED INTEREST/ AREA AREA LEASED
LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME
- ----------------------------------------------------------------------------------------------------------------------------------
ALABAMA
BIRMINGHAM (4) 2003 JOINT VENTURE 21.4 85,000 100.0 TJ MAXX
FAIRFIELD 2000 FEE 8.7 86,566 100.0 TELETECH CUSTOM
HOOVER 2000 FEE 11.5 115,347 100.0 WAL-MART
MOBILE (9) 2002 JOINT VENTURE 52.6 525,505 67.5 KROGER
ALASKA
KENAI 2003 JOINT VENTURE 14.7 146,759 100.0 HOME DEPOT
ARIZONA
AVONDALE (4) 2003 JOINT VENTURE 17.3 21,000 100.0
FOUNTAIN HILLS (4) 2001 JOINT VENTURE 23.2 113,000 99.0 WALGREENS
GILBERT FIESTA (4) 2002 JOINT VENTURE 1.8 - -
GLENDALE (7) 1998 FEE 40.5 333,388 99.6 COSTCO
GLENDALE 1998 JOINT VENTURE 48.2 111,825 81.7 SEARS
MARANA 2003 FEE 18.2 191,008 100.0 LOWE'S HOME CENTER
MARICOPA (4) 2003 FEE 15.1 68,000 100.0 BASHAS'
MESA 1998 FEE 19.8 146,492 93.6 ROSS STORES
NORTH PHOENIX 1998 FEE 17.0 230,164 100.0 BURLINGTON COAT FACTORY
PEORIA (4) 2000 JOINT VENTURE 69.8 218,000 99.2 KOHLS
PHOENIX 1998 FEE 13.4 153,174 90.5 HOME DEPOT
PHOENIX 1998 FEE 26.6 333,382 61.3 COSTCO
PHOENIX 1997 FEE 17.5 131,621 88.3 SAFEWAY
TEMPE 1998 JOINT VENTURE 21.1 236,015 43.5 PETSMART
TEMPE (5) 1998 JOINT VENTURE 20.0 - -
TUCSON 2003 JOINT VENTURE 17.8 190,174 100.0 LOWE'S HOME CENTER
CALIFORNIA
ALHAMBRA 1998 FEE 18.4 174,996 100.0 COSTCO
ANAHEIM 1995 FEE 1.0 15,396 100.0
CARMICHAEL 1998 FEE 18.5 212,811 98.8 HOME DEPOT
CHULA VISTA 1998 FEE 31.3 329,245 100.0 COSTCO
COLMA (8) 2003 JOINT VENTURE 6.4 213,532 100.0 MARSHALLS
CORONA 1998 FEE 47.6 486,958 99.2 COSTCO
COVINA (7) 2000 GROUND LEASE (2054) 26.0 269,433 98.0 HOME DEPOT
DALY CITY 2002 FEE 25.6 439,600 84.4 BURLINGTON COAT FACTORY
EL CAJON 2003 JOINT VENTURE 11.8 120,711 100.0 KOHLS
FOLSOM 2003 JOINT VENTURE 10.8 108,225 100.0 KOHLS
LA MIRADA 1998 FEE 31.2 288,471 92.6 TOYS "R" US
MONTEBELLO (7) 2000 FEE 20.4 250,439 100.0 SEARS
MORGAN HILL 2003 JOINT VENTURE 10.3 103,362 100.0 HOME DEPOT
NOVATO 2003 FEE 11.3 125,462 100.0 SAFEWAY
OXNARD (7) 1998 FEE 14.4 171,580 100.0 TARGET
SAN DIEGO (7) 2000 FEE 11.2 117,410 100.0 LUCKY STORES
SAN RAMON (7) 1999 FEE 5.3 42,066 86.3 PETCO
SANTA ANA 1998 FEE 12.0 134,400 100.0 HOME DEPOT
SANTEE 2003 JOINT VENTURE 31.1 311,485 93.2 TJ MAXX
SANTEE 1998 FEE 10.4 103,903 98.8 OFFICE DEPOT
STOCKTON 1999 FEE 14.6 152,919 96.6 SUPER UNITED FURNITURE
TEMECULA (7) 1999 FEE 40.0 341,612 97.9 KMART
TORRANCE (7) 2000 FEE 26.7 266,917 97.0 HL TORRANCE
TUSTIN 2003 JOINT VENTURE 10.8 108,413 100.0 KMART
COLORADO
AURORA 1998 FEE 13.8 145,754 77.9 TJ MAXX
AURORA 1998 FEE 9.9 44,174 100.0
AURORA 1998 FEE 13.9 152,981 99.0 ALBERTSONS
COLORADO SPRINGS 1998 FEE 10.7 107,310 90.6 ALBERTSONS
DENVER 1998 FEE 1.5 18,405 100.0 SAV-A-LOT
ENGLEWOOD 1998 FEE 6.5 80,330 100.0 HOBBY LOBBY
FORT COLLINS 2000 FEE 11.8 117,862 89.8 KOHLS
GREENWOOD VILLAGE 2003 JOINT VENTURE 21.0 196,726 100.0 HOME DEPOT
LAKEWOOD 1998 FEE 7.6 82,581 95.0 SAFEWAY
CONNECTICUT
BRANFORD (7) 2000 FEE 19.2 191,574 98.5 KOHLS
ENFIELD (7) 2000 FEE 16.2 162,459 100.0 KOHLS
FARMINGTON 1998 FEE 16.9 184,572 95.3 SPORTS AUTHORITY
HAMDEN 1967 JOINT VENTURE 31.7 341,502 98.1 WAL-MART
NORTH HAVEN 1998 FEE 31.7 331,919 100.0 HOME DEPOT
WATERBURY 1993 FEE 13.1 137,943 100.0 RAYMOUR & FLANIGAN
DELAWARE
ELSMERE 1979 GROUND LEASE (2076) 17.1 114,530 100.0 VALUE CITY
DOVER (5) 1999 JOINT VENTURE 89.0 - -
MILFORD 2003 FEE 7.8 61,100 89.4 FOOD LION
WILMINGTON 2003 GROUND LEASE (2052) 25.9 165,805 100.0 SHOPRITE
FLORIDA
ALTAMONTE SPRINGS 1995 FEE 5.6 94,193 100.0 ORIENTAL MARKET
ALTAMONTE SPRINGS 1998 JOINT VENTURE 19.4 271,095 71.6 ALTAMANTE CINEMA 8
BOCA RATON 1967 FEE 9.9 73,549 100.0 WINN DIXIE
BOYNTON BEACH (7) 1999 FEE 18.0 197,362 99.7 BEALLS
BRADENTON 1968 JOINT VENTURE 6.2 30,938 100.0 GRAND CHINA BUFFET
BRADENTON 1998 FEE 19.6 162,997 95.8 PUBLIX
BRANDON (7) 2001 FEE 29.7 143,785 99.1 BED BATH & BEYOND
CORAL SPRINGS 1994 FEE 5.9 55,597 100.0 LINENS N THINGS
CORAL SPRINGS 1997 FEE 9.8 86,342 100.0 TJ MAXX
CORAL WAY 1992 JOINT VENTURE 8.7 87,305 100.0 WINN DIXIE
EAST ORLANDO 1971 GROUND LEASE (2068) 11.6 131,981 99.1 SPORTS AUTHORITY
FORT PIERCE 1970 JOINT VENTURE 14.8 210,460 99.0 KMART
HOLLYWOOD 2002 JOINT VENTURE 5.0 50,000 100.0 HOME GOODS
HOLLYWOOD (9) 2002 JOINT VENTURE 13.5 135,056 95.3 WINN DIXIE
HOMESTEAD 1972 GROUND LEASE (2018)/JOINT VENTURE 21.0 208,794 99.5 PUBLIX
JACKSONVILLE 2002 JOINT VENTURE 5.1 51,000 100.0 MICHAELS
JACKSONVILLE 1999 FEE 18.6 203,536 97.6 BURLINGTON COAT FACTORY
JACKSONVILLE (4) 2003 JOINT VENTURE 113.6 - -
JENSEN BEACH (9) 2002 JOINT VENTURE 19.8 197,731 94.9 HOME DEPOT
MAJOR LEASES
------------------------------------------------------------------------------------------------------------
LEASE OPTION LEASE OPTION LEASE OPTION
LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
ALABAMA
BIRMINGHAM (4) 2014 2034 A.C. MOORE 2014 2029 PETSMART 2019 2039
FAIRFIELD 2009 2029
HOOVER 2025 2095
MOBILE (9) 2006 CIRCUIT CITY 2041 2041 MARSHALLS 2005 2012
ALASKA
KENAI 2018 2048
ARIZONA
AVONDALE (4)
FOUNTAIN HILLS (4) 2078 ROSS STORES 2015 2035
GILBERT FIESTA (4)
GLENDALE (7) 2011 2046 LEVITZ 2012 2032 STOOL & DINETTE 2004
GLENDALE 2006 2016 MICHAELS 2008 2018
MARANA 2019 2069
MARICOPA (4) 2024 2044
MESA 2005 HARKINS THEATRE 2005 2025 OUR HOME 2005 2015
NORTH PHOENIX 2013 2023 ULTIMATE ELECTRONICS 2015 2030 MICHAELS 2007 2022
PEORIA (4) 2024 2064 ROSS STORES 2014 2034 MICHAELS 2012 2032
PHOENIX 2020 2050 JO-ANN FABRICS 2010 2025
PHOENIX 2006 2041 RODEO 2005
PHOENIX 2009 2039
TEMPE 2011 2031 STAPLES 2005 2025 GUITAR CENTER 2007 2017
TEMPE (5)
TUCSON 2049 2049
CALIFORNIA
ALHAMBRA 2027 2057 COSTCO 2027 2057 JO-ANN FABRICS 2004 2019
ANAHEIM
CARMICHAEL 2008 2022 SPORTS AUTHORITY 2009 2024 LONGS DRUG 2013 2033
CHULA VISTA 2006 2041 NAVCARE 2009
COLMA (8) 2007 2012 NORDSTROM'S RACK 2007 2017 BED BATH & BEYOND 2011 2026
CORONA 2007 2042 HOME DEPOT 2010 2029 LEVITZ 2009 2029
COVINA (7) 2009 2034 STAPLES 2006 2011 PETSMART 2008 2028
DALY CITY 2012 2022 SAFEWAY 2004 2024 WALGREENS 2007
EL CAJON 2024 2053
FOLSOM 2018 2048
LA MIRADA 2012 2032 LA FITNESS 2012 2022 US POST OFFICE 2010 2020
MONTEBELLO (7) 2012 2062 TOYS "R" US 2018 2043 AMC THEATRES 2012 2032
MORGAN HILL 2024 2054
NOVATO 2008 2028 RITE AID 2008 2023 BIG LOTS 2005 2020
OXNARD (7) 2008 2013 FOOD 4 LESS 2008 24 HOUR FITNESS CENTER 2010 2020
SAN DIEGO (7) 2012 SPORTMART 2013
SAN RAMON (7) 2012 2022
SANTA ANA 2015 2035
SANTEE 2012 BED BATH & BEYOND 2013 PETSMART 2018
SANTEE 2006 2021 ROSS STORES 2009 2024 MICHAELS 2008 2018
STOCKTON 2009 2019 OFFICE DEPOT 2005 2015 COSTCO 2008 2033
TEMECULA (7) 2017 2032 FOOD 4 LESS 2010 2030 TRISTONE THEATRES 2008 2018
TORRANCE (7) 2011 2021 LINENS N THINGS 2010 2020 MARSHALLS 2009 2019
TUSTIN 2018 2048
COLORADO
AURORA 2007 2012 CLASSIC TREASURES 2007 SPACE AGE FEDERAL 2008
AURORA
AURORA 2007 2052 COOMERS CRAFTS 2006 CROWN LIQUORS 2005 2010
COLORADO SPRINGS 2004 2034 EL PASO COUNTY 2005
DENVER 2012 2027
ENGLEWOOD 2013 2023 OLD COUNTRY BUFFET 2009 2019
FORT COLLINS 2020 2070
GREENWOOD VILLAGE 2019 2069
LAKEWOOD 2007 2032
CONNECTICUT
BRANFORD (7) 2007 2022 SUPER FOODMART 2016 2038
ENFIELD (7) 2021 2041 WALDBAUMS 2014 2034
FARMINGTON 2018 2063 LINENS N THINGS 2016 2036 BORDERS BOOKS 2018 2063
HAMDEN 2019 2039 BON-TON 2012 BOB'S STORES 2016 2036
NORTH HAVEN 2009 2029 BJ'S 2006 2041 XPECT DISCOUNT 2008 2013
WATERBURY 2017 2037 STOP & SHOP 2013 2043
DELAWARE
ELSMERE 2008 2038
DOVER (5)
MILFORD 2014 2034
WILMINGTON 2014 2044 SPORTS AUTHORITY 2008 2023 RAYMOUR & FLANIGAN FURNITURE 2019 2044
FLORIDA
ALTAMONTE SPRINGS 2012 2022 THOMASVILLE HOME 2011 2021 PEARL ARTS N CRAFTS 2008 2018
ALTAMONTE SPRINGS 2008 LEATHER GALLERIES, THE 2009 2014 DSW SHOE WAREHOUSE 2012 2032
BOCA RATON 2008 2033
BOYNTON BEACH (7) 2006 2056 ALBERTSONS 2015 2040
BRADENTON 2009 2014
BRADENTON 2012 2032 TJ MAXX 2009 2019 JO-ANN FABRICS 2009 2024
BRANDON (7) 2005 2015 ROSS STORES 2010 2025 THOMASVILLE HOME 2010 2020
CORAL SPRINGS 2012 2027
CORAL SPRINGS 2007 2017 RAG SHOP 2006 2026 BLOCKBUSTER 2006 2016
CORAL WAY 2011 2036 DIAMONDS CRAFTS 2005 2014
EAST ORLANDO 2010 2020 OFFICE DEPOT 2005 2025 C-TOWN 2013 2028
FORT PIERCE 2006 2016 WINN DIXIE 2005 2027 AARON'S 2005 2010
HOLLYWOOD 2010 MICHAELS 2010
HOLLYWOOD (9) 2011 2036 DOLLAR MART PLUS 2, INC. 2007 2011 ECKERD 2006 2021
HOMESTEAD 2014 2034 MARSHALLS 2011 2026 OFFICEMAX 2013 2028
JACKSONVILLE 2013 HOME GOODS 2010
JACKSONVILLE 2008 2018 OFFICEMAX 2012 2032 TJ MAXX 2007 2017
JACKSONVILLE (4)
JENSEN BEACH (9) 2005 2030 PETSMART 2009 2029 RAG SHOP 2005 2020
20
MAJOR LEASES
YEAR OWNERSHIP LAND LEASABLE PERCENT --------------------------
DEVELOPED INTEREST/ AREA AREA LEASED
LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME
- ----------------------------------------------------------------------------------------------------------------------------------
JENSEN BEACH 1994 FEE 20.7 173,356 96.9 SERVICE MERCHANDISE
KEY LARGO (7) 2000 FEE 21.5 207,332 96.6 KMART
KISSIMMEE 1996 FEE 18.4 130,983 100.0 KASH N' KARRY
LAKELAND 2001 FEE 22.9 229,383 94.0 STEIN MART
LARGO 1968 FEE 12.0 149,472 86.1 WAL-MART
LARGO 1992 FEE 29.4 215,916 96.8 PUBLIX
LARGO 1993 FEE 6.6 59,730 82.7 ROCK N HORSE
LAUDERDALE LAKES 1968 JOINT VENTURE 10.0 115,341 96.9 SAVE-A-LOT
LAUDERHILL 1978 FEE 17.8 181,476 90.9 SMART & FINAL
LEESBURG 1969 GROUND LEASE (2017) 1.3 13,468 88.9
MARGATE 1993 FEE 34.1 260,752 98.0 PUBLIX
MELBOURNE 1968 GROUND LEASE (2071) 11.5 168,737 96.5 SUBMITTORDER CO
MELBOURNE 1994 FEE 13.8 131,851 75.7 TEGGE FURNISHINGS
MELBOURNE 1998 FEE 13.2 148,660 86.7 KROGER
MELBOURNE (9) 1987 JOINT VENTURE 11.9 118,828 86.0 PUBLIX
MIAMI 1968 FEE 8.2 104,968 99.9 KMART
MIAMI 1962 JOINT VENTURE 14.0 79,273 100.0 BABIES R US
MIAMI 1986 FEE 7.8 83,380 97.5 PUBLIX
MIAMI 1995 FEE 5.4 63,604 100.0 KIDS R US
MIAMI 1985 FEE 15.9 108,795 100.0 PUBLIX
MOUNT DORA 1997 FEE 12.4 118,150 100.0 KMART
OCALA 1997 FEE 27.2 254,459 89.1 KMART
ORANGE PARK 2003 JOINT VENTURE 5.0 50,299 100.0 BED BATH & BEYOND
ORLANDO 1968 FEE 12.0 131,646 96.6 BED BATH & BEYOND
ORLANDO (7) 2000 FEE 18.0 179,065 97.1 KMART
ORLANDO 1968 JOINT VENTURE 10.0 114,434 100.0 BALLY TOTAL FITNESS
ORLANDO 1968 GROUND LEASE (2047)/JOINT VENTURE 7.8 110,788 100.0 OFFICE FURNITURE
ORLANDO 1994 FEE 28.0 236,486 98.4 OLD TIME POTTERY
ORLANDO 1996 FEE 11.7 129,256 100.0 ROSS STORES
PALATKA 1970 FEE 8.9 82,730 58.3 BIG LOTS
PANAMA CITY (4) 2002 JOINT VENTURE 8.3 50,000 100.0 ROSS STORES
PENSACOLA (9) 2002 JOINT VENTURE 18.2 189,287 76.3 WINN DIXIE
PLANTATION 1974 JOINT VENTURE 4.6 60,414 100.0 BREAD OF LIFE
POMPANO BEACH 1968 JOINT VENTURE 6.6 66,838 100.0 RAMP 48
PORT RICHEY (7) 1998 FEE 14.3 103,294 91.8 CIRCUIT CITY
RIVIERA BEACH 1968 JOINT VENTURE 5.1 46,390 78.7 FURNITURE KINGDOM
SANFORD 1989 FEE 40.9 157,547 92.9 ROSS STORES
SARASOTA 1970 FEE 10.0 102,455 100.0 TJ MAXX
SARASOTA 1989 FEE 12.0 129,700 97.3 KASH N' KARRY
ST. PETERSBURG 1968 GROUND LEASE (2084)/JOINT VENTURE 9.0 118,979 86.6 KASH N' KARRY
TALLAHASSEE 1998 FEE 12.8 105,535 95.6 STEIN MART
TALLAHASSEE (4) 2000 GROUND LEASE (2085)/JOINT VENTURE 34.0 225,000 100.0 BED BATH & BEYOND
TAMPA 2003 JOINT VENTURE 7.5 75,297 100.0 AMERICAN SIGNATURE HOME
TAMPA 1997 FEE 16.3 127,837 95.1 STAPLES
TAMPA (7) 2001 FEE 73.0 335,593 96.4 BEST BUY
TAMPA (4) 2001 JOINT VENTURE 30.9 97,000 100.0 MARSHALLS
WEST PALM BEACH (9) 2002 JOINT VENTURE 11.9 119,443 90.8 WINN DIXIE
WEST PALM BEACH 1995 FEE 7.9 80,845 100.0 BABIES R US
WEST PALM BEACH 1967 JOINT VENTURE 7.6 77,286 100.0 WINN DIXIE
WINTER HAVEN 1973 JOINT VENTURE 13.9 92,428 88.9 BIG LOTS
GEORGIA
ATLANTA 1988 FEE 19.5 165,314 100.0 SCOTT ANTIQUES
AUGUSTA 1995 FEE 11.3 122,350 74.9 TJ MAXX
AUGUSTA (7) 2001 FEE 49.9 531,046 98.3 SPORTS AUTHORITY
GAINSVILLE 1993 JOINT VENTURE 12.6 142,468 100.0 FARMERS FURNITURE
MACON 1969 FEE 12.3 127,260 45.0 FREDS STORES
MARIETTA (9) 2002 GROUND LEASE (2048)/JOINT VENTURE 15.2 151,820 83.3 INGLES SUBLEASE
SAVANNAH 1993 FEE 22.2 187,076 99.1 BED BATH & BEYOND
SAVANNAH 1995 GROUND LEASE (2045) 9.5 88,325 100.0 MEDIA PLAY
SNELLVILLE (7) 2001 FEE 35.6 311,033 100.0 KOHLS
ILLINOIS
ADDISON 1968 GROUND LEASE (2066) 8.0 93,289 45.6 DINOREX
ALTON 1986 FEE 21.2 159,824 82.1 VALUE CITY
ARLINGTON HEIGHTS 1998 FEE 7.0 80,040 -
AURORA 1998 FEE 17.9 91,182 -
BATAVIA (7) 2002 FEE 31.7 272,416 98.6 KOHLS
BELLEVILLE 1987 GROUND LEASE (2057) 20.3 81,490 100.0 KMART
BLOOMINGTON 1972 FEE 16.1 188,250 100.0 SCHNUCK MARKETS
BLOOMINGTON 2003 JOINT VENTURE 11.0 73,951 97.5
BRADLEY 1996 FEE 5.4 80,535 100.0 CARSON PIRIE SCOTT
CALUMET CITY 1997 FEE 17.0 197,949 34.1 MARSHALLS
CARBONDALE 1997 GROUND LEASE (2052) 8.1 80,535 100.0 K'S MERCHANDISE
CHAMPAIGN (7) 2001 FEE 9.3 111,720 100.0 BEST BUY
CHAMPAIGN 1999 FEE 9.0 102,615 100.0 K'S MERCHANDISE
CHICAGO (6) 1997 FEE 13.4 109,441 -
CHICAGO 1997 GROUND LEASE (2040) 17.5 104,264 100.0 GOLDBLATT'S
CHICAGO 1997 FEE 6.0 86,894 100.0 KMART
CHICAGO 1988 FEE 6.4 95,951 -
COUNTRYSIDE 1997 GROUND LEASE (2053) 27.7 117,005 100.0 HOME DEPOT
CRESTWOOD 1997 GROUND LEASE (2051) 36.8 79,903 100.0 KMART
CRYSTAL LAKE 1998 FEE 6.1 80,390 100.0 HOBBY LOBBY
DOWNERS GROVE 1998 FEE 7.2 192,639 100.0 HOME DEPOT EXPO
DOWNERS GROVE 1999 FEE 24.8 144,670 97.2 DOMINICK'S
DOWNERS GROVE 1997 FEE 12.0 141,906 100.0 TJ MAXX
ELGIN 1972 FEE 18.7 186,432 94.6 ELGIN MALL
FAIRVIEW HEIGHTS 1986 GROUND LEASE (2050) 19.1 192,073 100.0 KMART
FOREST PARK 1997 GROUND LEASE (2021) 9.3 98,371 100.0 KMART
GENEVA 1996 FEE 8.2 104,688 100.0 GANDER MOUNTAIN
MATTESON 1997 FEE 17.0 157,852 96.3 SPORTMART
MOUNT PROSPECT 1997 FEE 16.8 192,789 98.4 KOHLS
MUNDELIEN 1991 FEE 7.6 89,692 100.0 BURLINGTON COAT FACTORY
NAPERVILLE 1997 FEE 9.0 102,327 100.0 BURLINGTON COAT FACTORY
MAJOR LEASES
---------------------------------------------------------------------------------------------------------
LEASE OPTION LEASE OPTION LEASE OPTION
LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION
- --------------------------------------------------------------------------------------------------------------------------------
JENSEN BEACH 2010 2070 MARSHALLS 2005 2020
KEY LARGO (7) 2014 2064 PUBLIX 2009 2029 BEALLS OUTLET 2005 2011
KISSIMMEE 2006 2036 OFFICEMAX 2012 2027 JO-ANN FABRICS 2006 2016
LAKELAND 2006 2026 AMC THEATRES 2007 2017 ROSS STORES 2007 2012
LARGO 2007 2027
LARGO 2009 2029 AMC THEATRES 2011 2036 OFFICE DEPOT 2004 2019
LARGO 2006 2012
LAUDERDALE LAKES 2007 2017 THINK THRIFT 2007 2017
LAUDERHILL 2017 WORLD JEWELRY CENTER 2014 2024 BABIES R US 2004 2014
LEESBURG
MARGATE 2008 2028 OFFICE DEPOT 2005 2020 SAM ASH MUSIC 2006 2011
MELBOURNE 2010 2022 JO-ANN FABRICS 2006 2016 WALGREENS 2045
MELBOURNE 2005 2007 GOODWILL INDUSTRIES 2004 2010 SAVE-A-LOT 2013 2023
MELBOURNE 2004 2034 SERVICE MERCHANDISE 2005 2035 BED BATH & BEYOND 2013 2028
MELBOURNE (9) 2007 WALGREENS 2027
MIAMI 2009 2029 MILAM'S MARKET 2004 2008 WALGREENS 2009
MIAMI 2006 2021 FIRESTONE TIRE 2004 2009
MIAMI 2009 2029 WALGREENS 2018
MIAMI 2016 2021 PARTY CITY 2007 2017
MIAMI 2019 2039 WALGREENS 2058
MOUNT DORA 2013 2063
OCALA 2006 2021 BEST BUY 2019 2034 SERVICE MERCHANDISE 2007 2032
ORANGE PARK 2015 MICHAELS 2010
ORLANDO 2007 2022 BOOKS-A-MILLION 2006 2016 OFFICEMAX 2008 2023
ORLANDO (7) 2014 2064 PUBLIX 2012 2037
ORLANDO 2008 2018 HSN 2004 BEDDING & FURNITURE DISCOUNT 2009
ORLANDO 2008 VALUE THRIFT 2004
ORLANDO 2010 2020 SPORTS AUTHORITY 2011 2031 SAND LAKE THEATER 2008
ORLANDO 2008 2028 BIG LOTS 2009 WORLD GYM 2010 2020
PALATKA 2007 2017
PANAMA CITY (4) 2014 2034 BED BATH & BEYOND 2013 2028
PENSACOLA (9) 2012 2037 PARTY CITY 2013 2023 BEALLS OUTLET 2006 2016
PLANTATION 2009 2019 WHOLE FOODS 2009 2019
POMPANO BEACH 2004 2009
PORT RICHEY (7) 2011 2031 STAPLES 2006 2011 MICHAELS 2006
RIVIERA BEACH 2009 2014 GOODWILL INDUSTRIES 2005 2008
SANFORD 2012 2032 OFFICE DEPOT 2009 2019 ECKERD 2005 2025
SARASOTA 2007 2017 OFFICEMAX 2009 2024 FRANK'S NURSERY 2012 2032
SARASOTA 2020 2040 DG ACE HARDWARE 2008 2023 ANTHONY'S LADIES WEAR 2007 2017
ST. PETERSBURG 2017 2037 TJ MAXX 2007 2012 DOLLAR TREE 2007 2022
TALLAHASSEE 2008 2008 BEN FRANKLIN 2007 2022 SHOE STATION 2007 2012
TALLAHASSEE (4) 2017 2032 SPORTS AUTHORITY 2008 2034 MARSHALLS 2011 2021
TAMPA 2019 DSW SHOE WAREHOUSE 2018 2033
TAMPA 2008 2018 ROSS STORES 2007 2022 US POST OFFICE 2006 2021
TAMPA (7) 2016 2031 JO-ANN FABRICS 2016 2031 BED BATH & BEYOND 2015 2030
TAMPA (4) 2013 2028 PETCO 2012 2026
WEST PALM BEACH (9 2017 2042 WALGREENS 2018 2058
WEST PALM BEACH 2006 2021
WEST PALM BEACH 2010 2030
WINTER HAVEN 2005 2010 JO-ANN FABRICS 2006 2016 FAMILY DOLLAR 2007 2022
GEORGIA
ATLANTA 2005
AUGUSTA 2010 2015 ROSS STORES 2013 2033 RUGGED WEARHOUSE 2008 2018
AUGUSTA (7) 2012 2027 MANSOUR'S 2020 2040 BED BATH & BEYOND 2013 2028
GAINSVILLE 2008 2013 BIG LOTS 2012 OFFICE DEPOT 2004 2020
MACON 2009 2014
MARIETTA (9) 2004 2024
SAVANNAH 2013 2028 TJ MAXX 2005 2015 MARSHALLS 2007 2022
SAVANNAH 2006 2021 STAPLES 2015 2030 WEST MARINE 2004 2014
SNELLVILLE (7) 2022 2062 BELK'S STORE 2015 2035 LINENS N THINGS 2015 2030
ILLINOIS
ADDISON 2014 2024 $DOLLAR PALACE 2008 2013
ALTON 2008 2023
ARLINGTON HEIGHTS
AURORA
BATAVIA (7) 2019 2049 HOBBY LOBBY 2009 2019 LINENS N THINGS 2014 2029
BELLEVILLE 2024 2054
BLOOMINGTON 2014 2029 TOYS "R" US 2015 2045 BARNES & NOBLE 2005 2015
BLOOMINGTON
BRADLEY 2014 2034
CALUMET CITY 2008 BEST BUY 2012 2032
CARBONDALE 2012 2052
CHAMPAIGN (7) 2016 2031 DICK'S SPORTING GOODS 2016 2031 MICHAELS 2010 2025
CHAMPAIGN 2014 2034
CHICAGO (6)
CHICAGO 2005 2025 JB GRUBART 2005 2013 FASHION ISLAND 2005
CHICAGO 2024 2054
CHICAGO
COUNTRYSIDE 2023 2053
CRESTWOOD 2024 2051
CRYSTAL LAKE 2009 2019 DINOREX 2012 2022
DOWNERS GROVE 2022 2062 RHODES FURNITURE 2008 2018
DOWNERS GROVE 2009 2019 DOLLAR TREE 2008 2023 WALGREENS 2022
DOWNERS GROVE 2009 2024 BEST BUY 2016 2031
ELGIN 2013 2023 ELGIN FARMERS PRODUCTS 2010 2030
FAIRVIEW HEIGHTS 2024 2050 OFFICEMAX 2015 2025 WALGREENS 2010 2029
FOREST PARK 2021
GENEVA 2013 2028
MATTESON 2014 2029 MARSHALLS 2010 2025 LINENS N THINGS 2014 2029
MOUNT PROSPECT 2024 2054 HOBBY LOBBY 2016 2026 POOL-A-RAMA 2010 2017
MUNDELIEN 2018 2033
NAPERVILLE 2013 2033
21
MAJOR LEASES
YEAR OWNERSHIP LAND LEASABLE PERCENT --------------------------
DEVELOPED INTEREST/ AREA AREA LEASED
LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME
- ----------------------------------------------------------------------------------------------------------------------------------
NORRIDGE 1997 GROUND LEASE (2042) 11.7 116,914 100.0 KMART
OAKBROOK TERRACE 1997 FEE 15.6 164,903 100.0 HOME DEPOT
OAKLAWN 1997 FEE 15.4 165,337 100.0 KMART
ORLAND PARK 1998 FEE 7.8 166,000 100.0 RHODES FURNITURE
ORLAND PARK 1980 FEE 18.8 131,546 100.0 VALUE CITY
OTTAWA 1970 FEE 9.0 60,000 100.0 VALUE CITY
PEORIA 1997 GROUND LEASE (2031) 20.5 156,067 100.0 KMART
ROLLING MEADOWS 2003 FEE 3.7 37,225 100.0 FAIR LANES ROLLING MEADOWS
SCHAUMBURG 2003 JOINT VENTURE 63.0 629,605 90.0 GALYAN'S TRADING COMPANY
SCHAUMBURG 1998