Kimco Realty Reports Strong Third Quarter 2014 Operating Results - FFO as Adjusted per Diluted Share Increases 9.1% Led by Solid U.S. Same-Property NOI Growth of 4.9%; Board Approves a 6.7% Dividend Increase per Common Share

NEW HYDE PARK, N.Y.--(BUSINESS WIRE)--

Kimco Realty Corp. KIM today reported results for the third quarter ended September 30, 2014.

Financial Results

Net income available to common shareholders for the third quarter of 2014 was $180.1 million, or $0.44 per diluted share, compared to $41.2 million, or $0.10 per diluted share, for the third quarter of 2013. Net income available to common shareholders during the third quarter of 2014 included $115.4 million of gains on sales of operating properties and $5.3 million of impairments attributable to the sale or pending disposition of operating properties. This compares to $81.6 million of gains on the sales of operating properties and $91.0 million of impairments during the third quarter of 2013. Both operating property impairments and gains on sales are excluded from the calculation of funds from operations (FFO).

For the nine months ended September 30, 2014, net income available to common shareholders was $327.5 million, or $0.79 per diluted share, compared to $131.0 million, or $0.32 per diluted share, through September 30, 2013. Net income available to common shareholders for the nine months ended September 30, 2014 included $256.0 million of gains on sales of operating properties and $103.7 million of impairments attributable to the sale or pending disposition of operating properties. This compares to $137.2 million of gains on the sales of operating properties and $145.1 million of impairments during the same period of 2013.

FFO, a widely accepted supplemental measure of REIT performance, was $159.9 million, or $0.39 per diluted share, for the third quarter of 2014 compared to $141.4 million, or $0.34 per diluted share, for the third quarter of 2013, representing a 14.7% increase. For the nine months ended September 30, 2014, FFO was $439.5 million, or $1.07 per diluted share, compared to $417.9 million, or $1.02 per diluted share, for the same period last year.

FFO as adjusted, which excludes the effects of non-operating impairments as well as transactional income and expenses, was $148.2 million, or $0.36 per diluted share, for the third quarter of 2014, compared to $134.6 million, or $0.33 per diluted share, for the third quarter of 2013, representing a 9.1% increase. FFO as adjusted for the nine months ended September 30, 2014 was $432.2 million, or $1.05 per diluted share, compared to $408.9 million, or $1.00 per diluted share, for the same period in 2013.

A reconciliation of net income to FFO and FFO as adjusted is provided in the tables accompanying this press release.

Operating Results

Third quarter 2014 shopping center portfolio operating results:

• Pro-rata occupancy in the U.S. and combined (including Canada and Latin America) portfolios ended the quarter at 95.5% and 95.3%, respectively. This represented increases of 110 basis points and 130 basis points, respectively, over the third quarter of 2013.
• U.S. shopping center portfolio pro-rata occupancy for anchor space (10,000 square feet and greater) was 98.2%, an 80 basis-point increase from the third quarter of 2013. The pro-rata occupancy for small shop space increased 230 basis points to 87% during this same period.
• U.S. portfolio pro-rata rental-rate leasing spreads increased 7.1% with rental rates for new leases up 10.2% and renewals/options increasing 6.4%.
• U.S. same-property net operating income (NOI) increased 4.9% compared to the third quarter of 2013, including a 1.70% increase from the inclusion of redevelopments.
• Combined same-property NOI, excluding the impact of foreign currency, increased 4.8% over the third quarter of 2013 with positive same-property NOI in Canada (+2.6%) and Latin America (+12.6%). Combined same-property NOI, including the impact of foreign currency, increased 4.2% over the same period in 2013.
• Total leases executed in the combined portfolio: 511 new leases, renewals and options totaling 2.2 million square feet.

Investment Activity

United States

• As previously announced, the company acquired a portfolio of 10 predominantly grocery-anchored shopping centers from its joint venture with SEB Asset Management for a gross price of $275.8 million. Kimco paid approximately $69.8 million for the remaining 85% equity interest held by SEB Asset Management which was subject to $193.6 million of mortgage debt.
• During the third quarter, Kimco sold ownership interests in 24 U.S. properties (including seven properties held in joint ventures) totaling 2.4 million square feet for a gross sales price of $263.6 million, including $35.2 million of mortgage debt. The company's pro-rata share from these sales was $205.4 million.
• Subsequent to the third quarter, Kimco sold ownership interests in 17 properties totaling 2.1 million square feet for a gross sales price of $316.3 million. The company's pro-rata share from these sales was $161.3 million.
• Kimco currently has 37 properties for sale with an accepted offer or under contract with a gross sales price totaling approximately $215.6 million of which the company's pro-rata share is expected to be approximately $192.8 million.

Mexico and South America (Latin America)

• As previously announced during the third quarter, Kimco completed the sale of three shopping centers in Mexico for a gross sales price of 1.5 billion pesos ($110.8 million). The company's pro-rata share from these sales was approximately 1.3 billion pesos ($99.2 million).
• Subsequent to the third quarter, the company sold its two remaining Peruvian properties for approximately $5.8 million.
• Since the beginning of 2014, Kimco has sold 18 retail properties in Latin America, 16 of which were located in Mexico, comprising 4.5 million square feet for a gross sales price of $420.7 million. The company's pro-rata share from these sales was $308.8 million.

Dividend Declarations

Kimco's board of directors declared and increased the company's quarterly cash dividend 6.7% to $0.24 per common share payable on January 15, 2015, to shareholders of record on January 2, 2015, representing an ex-dividend date of December 30, 2014.

The board of directors also declared quarterly dividends with respect to the company's various series of cumulative redeemable preferred shares (Class H, Class I, Class J and Class K). All dividends on the preferred shares will be paid on January 15, 2015, to shareholders of record on January 2, 2015, with an ex-dividend date of December 30, 2014.

2014 Guidance

The company has revised its 2014 full-year guidance range for FFO, FFO as adjusted (which does not include any estimate for transactional activities or non-operating impairments), occupancy and same-property NOI for the combined portfolio as follows:

			Revised Guidance			Previous Guidance
FFO (per diluted share):			$1.42 -$1.45			$1.36 - $1.40
FFO as adjusted (per diluted share):			$1.38 - $1.40			$1.36 - $1.40
Combined portfolio occupancy:			+80 to +100 basis points			+50 to +75 basis points
Combined same-property NOI:			+2.75% to +3.5%			+2.5% to +3.5%

Conference Call and Supplemental Materials

Kimco will hold its quarterly conference call on Wednesday, October 29, 2014, at 10:00 a.m. EDT. The call will include a review of the company's third quarter 2014 results as well as a discussion of the company's strategy and expectations for the future. To participate, dial 1-888-317-6003 (Passcode: 4676982).

A replay will be available through 9:00 a.m. EST on December 1, 2014 by dialing 1-877-344-7529 (Passcode: 10051546). Access to the live call and replay will be available on the company's website at investors.kimcorealty.com.

About Kimco

Kimco Realty Corp. KIM is a real estate investment trust (REIT) headquartered in New Hyde Park, New York, that owns and operates North America's largest publicly-traded portfolio of neighborhood and community shopping centers. As of September 30, 2014, the company owned interests in 814 shopping centers comprising 117 million square feet of leasable space across 41 states, Puerto Rico, Canada, Mexico and South America. Publicly traded on the NYSE since 1991, and included in the S&P 500 Index, the company has specialized in shopping center acquisitions, development and management for more than 50 years. For further information, please visit www.kimcorealty.com, the company's blog at blog.kimcorealty.com, or follow Kimco on Twitter at www.twitter.com/kimcorealty.

Safe Harbor Statement

The statements in this news release state the company's and management's intentions, beliefs, expectations or projections of the future and are forward-looking statements. It is important to note that the company's actual results could differ materially from those projected in such forward-looking statements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to (i) general adverse economic and local real estate conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business, (iii) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms to the company, (iv) the company's ability to raise capital by selling its assets, (v) changes in governmental laws and regulations, (vi) the level and volatility of interest rates and foreign currency exchange rates, (vii) risks related to our international operations, (viii) the availability of suitable acquisition, disposition and redevelopment opportunities, (ix) valuation and risks related to our joint venture and preferred equity investments, (x) valuation of marketable securities and other investments, (xi) increases in operating costs, (xii) changes in the dividend policy for the company's common stock, (xiii) the reduction in the company's income in the event of multiple lease terminations by tenants or a failure by multiple tenants to occupy their premises in a shopping center, (xiv) impairment charges and (xv) unanticipated changes in the company's intention or ability to prepay certain debt prior to maturity and/or hold certain securities until maturity. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company's Securities and Exchange Commission (SEC) filings, including but not limited to the company's Annual Report on Form 10-K for the year ended December 31, 2013. Copies of each filing may be obtained from the company or the SEC.

The company refers you to the documents filed by the company from time to time with the SEC, specifically the section titled "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 31, 2013, as may be updated or supplemented in the company's Quarterly Reports on Form 10-Q and the company's other filings with the SEC, which discuss these and other factors that could adversely affect the company's results.

Condensed Consolidated Statements of Income
(in thousands, except share information)
(unaudited)
				Three Months Ended												Nine Months Ended
				September 30,												September 30,
					2014						2013						2014						2013
	Revenues
		Revenues from rental properties		$	253,367					$	212,153					$	723,891					$	629,691
		Management and other fee income			8,679						9,310						26,245						26,752
		Total revenues			262,046						221,463						750,136						656,443
	Operating expenses
		Rent			3,559						3,315						10,362						10,012
		Real estate taxes			31,553						28,156						92,413						81,345
		Operating and maintenance			32,143						23,767						90,190						73,721
		General and administrative expenses			28,674						30,828						94,682						96,148
		Provision for doubtful accounts			992						2,102						4,612						6,917
		Impairment charges			6,141						58,650						45,691						83,887
		Depreciation and amortization			69,188						57,933						191,423						170,827
		Total operating expenses			172,250						204,751						529,373						522,857
	Operating income				89,796						16,712						220,763						133,586
	Other income/(expense)
		Mortgage financing income			417						925						2,544						3,341
		Interest, dividends and other investment income			269						416						712						9,464
		Other (expense)/income, net			(1,238	)					3,527						(3,796	)					(1,292	)
		Interest expense			(51,578	)					(53,949	)					(154,998	)					(162,404	)
	Income from continuing operations before income taxes,
	equity in income of joint ventures, gain on change in control
	of interests and equity in income from other real estate investments				37,666						(32,369	)					65,225						(17,305	)
		Provision for income taxes, net			(5,366	)					(23,763	)					(14,651	)					(26,584	)
		Equity in income of joint ventures, net			51,787						96,175						150,073						179,791
		Gain on change in control of interests, net			14,431						-						83,773						21,711
		Equity in income of other real estate investments, net			6,036						10,547						16,404						29,910
		Income from continuing operations			104,554						50,590						300,824						187,523
	Discontinued operations
		Income from discontinued operating properties, net of tax			4,062						9,588						23,475						32,733
		Impairment/loss on operating properties, net of tax			(566	)					(26,928	)					(58,373	)					(68,130	)
		Gain on disposition of operating properties, net of tax			89,259						23,398						118,804						27,762
		Income/(loss) from discontinued operations			92,755						6,058						83,906						(7,635	)
	Gain on sale of operating properties, net of tax (1)				-						540						389						1,080
		Net income			197,309						57,188						385,119						180,968
		Net income attributable to noncontrolling interests (3)			(2,601	)					(1,425	)					(13,899	)					(6,296	)
		Net income attributable to the Company			194,708						55,763						371,220						174,672
		Preferred stock dividends			(14,573	)					(14,573	)					(43,720	)					(43,720	)
		Net income available to the Company's common shareholders		$	180,135					$	41,190					$	327,500					$	130,952
	Per common share:
		Income from continuing operations: (3)
		Basic		$	0.21					$	0.08					$	0.61					$	0.33
		Diluted		$	0.21		(2	)		$	0.08		(2	)		$	0.61		(2	)		$	0.33		(2	)
		Net income: (4)
		Basic		$	0.44					$	0.10					$	0.80					$	0.32
		Diluted		$	0.44		(2	)		$	0.10		(2	)		$	0.79		(2	)		$	0.32		(2	)
	Weighted average shares:
		Basic			409,326						408,060						408,868						407,459
		Diluted			411,101						408,866						410,683						408,510

(1)		Included in the calculation of income from continuing operations per common share in accordance with SEC guidelines.
(2)		Reflects the potential impact if certain units were converted to common stock at the beginning of the period. The impact of the conversion would have an anti-dilutive effect on net income and therefore have not been included.
(3)		Includes the net income attributable to noncontrolling interests related to continued operations of ($2,605) and ($4,204) for the quarters ended September 30, 2014 and 2013, and ($6,503) and ($8,140) for the nine months ended September 30, 2014 and 2013, respectively.
(4)		Includes earnings attributable to unvested restricted shares of $431 and $337 for the quarters ended September 30, 2014 and 2013 and $1,292 and $1,011 for the nine months ended September 30, 2014 and 2013, respectively.

Condensed Consolidated Balance Sheets
(in thousands, except share information)
(unaudited)
				September 30,				December 31,
					2014				2013
	Assets:
		Operating real estate, net of accumulated depreciation
		of $1,937,463 and $1,878,681, respectively		$	7,883,798			$	7,146,845
		Investments and advances in real estate joint ventures			1,087,425				1,257,010
		Real estate under development			79,203				97,818
		Other real estate investments			268,183				274,641
		Mortgages and other financing receivables			22,724				30,243
		Cash and cash equivalents			154,190				148,768
		Marketable securities			77,123				62,766
		Accounts and notes receivable			161,158				164,326
		Other assets			559,407				481,213
	Total assets			$	10,293,211			$	9,663,630
	Liabilities:
		Notes payable		$	3,353,458			$	3,186,047
		Mortgages payable			1,343,859				1,035,354
		Dividends payable			104,858				104,496
		Other liabilities			563,926				482,054
	Total liabilities				5,366,101				4,807,951
	Redeemable noncontrolling interests				91,413				86,153
	Stockholders' equity:
		Preferred stock, $1.00 par value, authorized 5,961,200 shares
		102,000 shares issued and outstanding (in series)
		Aggregate liquidation preference $975,000			102				102
		Common stock, $.01 par value, authorized 750,000,000 shares
		issued and outstanding 411,338,211 and 409,731,058 shares, respectively			4,113				4,097
		Paid-in capital			5,722,829				5,689,258
		Cumulative distributions in excess of net income			(945,949	)			(996,058	)
		Accumulated other comprehensive income			(68,620	)			(64,982	)
	Total stockholders' equity				4,712,475				4,632,417
		Noncontrolling interests			123,222				137,109
	Total equity				4,835,697				4,769,526
	Total liabilities and equity			$	10,293,211			$	9,663,630

Reconciliation of Net Income Available to Common Shareholders
to Funds From Operations - "FFO"
(in thousands, except per share data)
(unaudited)
			Three Months Ended										Nine Months Ended
			September 30,										September 30,
				2014					2013					2014					2013
	Net income available to common shareholders		$	180,135				$	41,190				$	327,500				$	130,952
	Gain on disposition of operating property, net of tax and noncontrolling interests			(89,262	)				(23,922	)				(118,420	)				(28,827	)
	Gain on disposition of joint venture operating properties			(26,106	)				(57,651	)				(137,530	)				(108,407	)
	Depreciation and amortization - real estate related			68,014					62,445					193,007					185,742
	Depr. and amort. - real estate jv's, net of noncontrolling interests			21,821					28,245					71,230					93,295
	Impairments of operating properties, net of tax and noncontrolling interests			5,306					91,046					103,723					145,118
	Funds from operations			159,908					141,353					439,510					417,873
	Transactional income, net			(11,706	)				(6,744	)				(7,261	)				(8,963	)
	Funds from operations as adjusted		$	148,202				$	134,609				$	432,249				$	408,910
	Weighted average shares outstanding for FFO calculations:
	Basic			409,326					408,060					408,868					407,459
	Units			1,530					1,519					1,537					1,539
	Dilutive effect of equity awards			2,967					2,378					3,006					2,622
	Diluted			413,823		(1	)		411,957		(1	)		413,411		(1	)		411,620		(1	)
	FFO per common share - basic		$	0.39				$	0.35				$	1.07				$	1.03
	FFO per common share - diluted		$	0.39		(1	)	$	0.34		(1	)	$	1.07		(1	)	$	1.02		(1	)
	FFO as adjusted per common share - diluted		$	0.36		(1	)	$	0.33		(1	)	$	1.05		(1	)	$	1.00		(1	)

	(1) Reflects the potential impact if certain units were converted to common stock at the beginning of the period. Funds from operations would be increased by $747 and $621 for the three months ended September 30, 2014 and 2013, and $2,240 and $1,878 for the nine months ended September 30, 2014 and 2013, respectively.
	FFO is a widely accepted supplemental measure of REIT performance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). Given the company's business as a real estate owner and operator, Kimco believes that FFO and FFO as adjusted is helpful to investors as a measure of its operating performance. NAREIT defines FFO as net income/(loss) attributable to common shareholders computed in accordance with generally accepted accounting principles, excluding (i) gains or losses from sales of operating real estate assets and (ii) extraordinary items, plus (iii) depreciation and amortization of operating properties and (iv) impairment of depreciable real estate and in substance real estate equity investments. Included in these items are also the company's share of unconsolidated real estate joint ventures and partnerships. FFO as adjusted excludes the effects of non-operating impairments, transactional income and expenses.

Reconciliation of Income From Continuing Operations
to Same Property Net Operating Income "Same Property NOI"
(in thousands)
(unaudited)
			Three Months Ended								Nine Months Ended
			September 30,								September 30,
				2014				2013				2014				2013
Income from continuing operations			$	104,554			$	50,590			$	300,824			$	187,523
Adjustments:
Management and other fee income				(8,679	)			(9,310	)			(26,245	)			(26,752	)
General and administrative expenses				28,674				30,828				94,682				96,148
Impairment of property carrying values				6,141				58,650				45,691				83,887
Depreciation and amortization				69,188				57,933				191,423				170,827
Other expense, net				52,130				49,081				155,538				150,891
Provision for income taxes, net				5,366				23,763				14,651				26,584
Gain on change in control of interests				(14,431	)			-				(83,773	)			(21,711	)
Equity in income of other real estate investments, net				(6,036	)			(10,547	)			(16,404	)			(29,910	)
Non same property net operating income				(17,870	)			(12,123	)			(47,458	)			(56,219	)
Non-operational expense from joint ventures, net				24,274				(5,339	)			86,932				117,277
Same Property NOI			$	243,311			$	233,526			$	715,861			$	698,545
Impact from foreign currency				-				(1,372	)			-				(5,404	)
Same Property NOI, before foreign currency impact			$	243,311			$	232,154			$	715,861			$	693,141

Same Property Net Operating Income is a supplemental non-GAAP financial measure of real estate companies' operating performance. Same Property NOI is considered by management to be an important performance measure of Kimco's operations and management believes that it is helpful to investors as a measure of Kimco's operating performance because it includes only the net operating income of properties that have been owned for the entire current and prior year reporting periods and excludes properties under development and pending stabilization. As such, Same Property NOI assists in eliminating disparities in net income due to the development, acquisition or disposition of properties during the particular period presented, and thus provides a more consistent performance measure for the comparison of Kimco's properties.

Same Property NOI is calculated using revenues from rental properties (excluding straight-line rents, lease termination fees and above/below market rents) less operating and maintenance expense, real estate taxes and rent expense, plus Kimco's proportionate share of Same Property NOI from unconsolidated real estate joint ventures, calculated on the same basis. Same Property NOI includes all properties that are owned for the entire current and prior year reporting periods and excludes properties under development and properties pending stabilization. Properties are deemed stabilized at the earlier of (i) reaching 90% leased or (ii) one year following a projects inclusion in operating real estate (two years for Latin American properties).

Reconciliation of Projected Diluted Net Income Per Common Share
to Projected Diluted Funds From Operations Per Common Share
(unaudited)
		Projected Range
		Full Year 2014
		Low				High
Projected diluted net income available to common
shareholder per share		$	0.94			$	0.97
Projected depreciation & amortization			0.63				0.65
Projected depreciation & amortization real estate
joint ventures, net of noncontrolling interests			0.22				0.24
Gain on disposition of operating properties			(0.29	)			(0.31	)
Gain on disposition of joint venture operating properties,
net of noncontrolling interests			(0.33	)			(0.35	)
Impairments of operating properties, net of tax
and noncontrolling interests			0.25				0.25
Projected FFO per diluted common share		$	1.42			$	1.45
Transactional income, net			(0.04	)			(0.05	)
Projected FFO, as adjusted per diluted common share		$	1.38			$	1.40

Projections involve numerous assumptions such as rental income (including assumptions on percentage rent), interest rates, tenant defaults, occupancy rates, foreign currency exchange rates (such as the US-Canadian rate), selling prices of properties held for disposition, expenses (including salaries and employee costs), insurance costs and numerous other factors. Not all of these factors are determinable at this time and actual results may vary from the projected results, and may be above or below the range indicated. The above range represents management's estimate of results based upon these assumptions as of the date of this press release. Under U.S. GAAP, the company is required to release cumulative translation adjustment (“CTA”) balances into earnings when the company has substantially liquidated its investment in a foreign entity. CTAs result from currency fluctuations between local currency and the U.S. dollar during the period in which the company held its investment and are recorded as a component of Accumulated other comprehensive income (“AOCI”) on the company's Condensed Consolidated Balance Sheets. During 2013, the company began selling properties within its Latin American portfolio and the company may, in the near term, substantially liquidate all of its investments in this portfolio which will require the then unrealized loss on foreign currency translation to be recognized as a charge against earnings. The final impact of currency will apply to the respective gains and losses on the sale of these operating properties and will not have an impact on FFO or FFO as adjusted. At September 30, 2014, the aggregate CTA net loss balance relating to the company's Latin American portfolio was $127.0 million.