Kimco Realty Announces Fourth Quarter and Full Year 2014 Operating Results; Reports Strong Increases in Operating Fundamentals - Company's Occupancy Rate at Highest Level Since 2008

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

Kimco Realty Corp. KIM today reported results for the fourth quarter and year ended December 31, 2014.

Highlights - Fourth Quarter and Full Year 2014

• FFO increased 15.2% for the fourth quarter and 7.4% for the full year 2014 over the comparable 2013 periods; FFO as adjusted increased 6.1% and 5.3%, respectively, during these same periods;
• U.S. same-property net operating income (NOI) increased 4.3% for the fourth quarter compared to the same period in 2013 representing the nineteenth consecutive positive quarterly increase;
• U.S. and combined portfolio occupancy increased to 95.7% and 95.8%, respectively, representing the highest levels since the first quarter of 2008;
• U.S. transaction volume (pro-rata) surpassed $1.8 billion in 2014; acquired interests in 60 properties totaling $1.1 billion and sold 91 properties for $717.1 million;
• Strategic exit from Latin America substantially complete with the sale of 25 properties, totaling $205.2 million, during the fourth quarter;
• Subsequently closed on a new $650 million unsecured term loan; and
• On February 2, 2015, purchased the remaining 66.7% interest in the 39-property Kimstone portfolio for $925 million.

Financial Results

Net income available to common shareholders for the fourth quarter of 2014 was $38.2 million, or $0.09 per diluted share, compared to $47.0 million, or $0.11 per diluted share, for the fourth quarter of 2013. Net income available to common shareholders during the fourth quarter of 2014 included $127.4 million of gains on sales of operating properties and $153.9 million of impairments, which were primarily attributable to a $134.3 million loss on foreign currency translation related to the company's strategic exit from Mexico. This compares to $22.0 million of gains on the sales of operating properties and $20.7 million of impairments during the fourth quarter of 2013. Both operating property impairments and gains on sales are excluded from the calculation of funds from operations (FFO).

For the full year 2014, net income available to common shareholders was $365.7 million, or $0.89 per diluted share, compared to $178.0 million, or $0.43 per diluted share, for the full year 2013. Net income available to common shareholders for the full year 2014 included $383.4 million of gains on sales of operating properties and $257.7 million of impairments. The impairments recognized were attributable to the sale or pending disposition of operating properties, including a $134.3 million loss on foreign currency related to the company's strategic exit from Mexico. This compares to $159.3 million of gains on the sales of operating properties and $165.8 million of impairments for the full year of 2013.

FFO, a widely accepted supplemental measure of REIT performance, was $156.7 million, or $0.38 per diluted share, for the fourth quarter of 2014 compared to $134.7 million, or $0.33 per diluted share, for the fourth quarter of 2013.

For the full year 2014, FFO was $596.2 million, or $1.45 per diluted share, compared to $552.5 million, or $1.35 per diluted share, for the full year 2013.

FFO as adjusted, which excludes the effects of non-operating impairments as well as transactional income and expenses, was $144.6 million, or $0.35 per diluted share, for the fourth quarter of 2014 compared to $134.8 million, or $0.33 per diluted share, for the fourth quarter of 2013.

For the full year 2014, FFO as adjusted was $576.9 million, or $1.40 per diluted share, compared to $543.7 million, or $1.33 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

Details on fourth quarter 2014 shopping center portfolio operating results and related metrics:

• Pro-rata occupancy in the U.S. and combined portfolios (including Canada and Latin America) ended the quarter at 95.7% and 95.8%, respectively. This represents increases of 80 basis points and 130 basis points, respectively, over the fourth quarter of 2013.
• U.S. shopping center portfolio pro-rata occupancy for anchor space (10,000 square feet and greater) was 98.3%, a 40 basis-point increase from the fourth quarter of 2013. The pro-rata occupancy for small shop space increased 280 basis points to 88% during this same period.
• U.S. portfolio pro-rata rental-rate leasing spreads increased 9.4% with rental rates for new leases up 11.9% and renewals/options increasing 8.6%.
• U.S. same-property net operating income (NOI) increased 4.3% compared to the fourth quarter of 2013, including a 1.4% increase from the inclusion of redevelopments. For the full year 2014, U.S. same-property NOI increased 3.3%, including a 90 basis-point increase from the inclusion of redevelopments.
• Combined same-property NOI, excluding the impact of foreign currency, increased 4.0% over the fourth quarter of 2013 and 3.3% for the full year of 2014. Combined same-property NOI, including the impact of foreign currency, increased 3.1% and 2.5%, respectively, for the fourth quarter and full year of 2014 compared to the same periods in 2013.

Investment Activity

United States

• As previously announced, the company purchased the interest in nine shopping centers during the fourth quarter for its wholly owned portfolio, totaling more than 1.4 million square feet, for a gross purchase price of $245.0 million. Kimco's share of the purchase price was $158.8 million. In addition, the company acquired several land parcels totaling $114.2 million as part of four future ground-up development projects.
• For the full year 2014, Kimco acquired interests in 60 retail properties, including 33 acquired from existing joint venture partners, totaling 6.7 million square feet. The aggregate purchase price for these acquisitions was $1.4 billion. Kimco's share of the purchase price was $1.1 billion.
• During the fourth quarter, Kimco sold ownership interests in 41 properties (30 wholly owned and 11 joint ventures) in the U.S., totaling 4.5 million square feet, for a gross sales price of $492.3 million. The company's pro-rata share from these sales was $332.2 million.
• For the full year 2014, the company sold 91 U.S. shopping centers (62 wholly owned properties and 29 unconsolidated properties), totaling 9.6 million square feet, for a gross sales price of $1.0 billion. Kimco's pro-rata share from these sales was $717.1 million.

Kimco initiated its portfolio transformation strategy in September 2010 to acquire high-quality properties with value creation opportunities in strong demographic trade areas in core markets, while disposing of assets in tertiary locations with low growth profiles. During this time, the company has successfully acquired interests in 142 shopping centers while disposing of 234 properties, leading to a 340 basis-point increase in pro-rata occupancy and an 18.2% growth in the average base rent per square foot for the portfolio.

• Subsequent to the year end, Kimco completed the acquisition for the remaining 66.7% interest in the 39-property Kimstone portfolio from its joint venture partner, a subsidiary of Blackstone Real Estate Partners VII (BREP), for $925 million, which includes the assumption of $426.7 million in mortgage debt.
• In January 2015, the company invested $85.3 million of new equity in the consortium that owns AB Acquisition LLC (Albertsons) to facilitate Albertsons' recent acquisition of Safeway Inc. Kimco holds a 9.94% ownership interest in the combined company which operates 2,230 stores across 34 states and the District of Columbia operating under Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Albertsons, ACME, Jewel-Osco, Lucky, Shaw's, Star Market, Super Saver, United Supermarkets, Market Street and Amigos.

Mexico and South America (Latin America)

• In the fourth quarter of 2014, Kimco sold a total of 25 properties in Latin America totaling $205.2 million with the company's pro-rata share from these sales totaling approximately $171.9 million.
• For the full year 2014, Kimco completed the sale of 41 properties in Latin America, totaling approximately 7.5 million square feet, for a gross sales price of $622.3 million. The company's pro-rata share from these sales was $475.4 million.

These sales reflect Kimco's strategy to simplify its operations by exiting Latin America. With the consummation of these sales, the company has substantially liquidated its portfolio in Mexico, marking the significant completion of Kimco's goal to exit Latin America.

2015 Guidance

Kimco provides full year 2015 guidance for FFO, as well as FFO as adjusted and operational estimates for occupancy, same-property NOI, acquisitions, dispositions and transactional income, net.

Kimco's initial full year 2015 financial and operational guidance:

FFO (per diluted share)			$1.45 - $1.53
FFO as adjusted (per diluted share)*			$1.40 - $1.44
U.S. Portfolio Occupancy			+25 to +50 basis points
U.S. Same-property NOI			+3.00% to +3.50%
Acquisitions (Kimco share)			$1.1 billion - $1.3 billion
Dispositions (Kimco share)			$550 million - $750 million
Transactional Income, net			$20 million - $38 million
*Excludes Transactional Income, net

Dividend Declarations

Kimco's board of directors declared a quarterly cash dividend of $0.24 per common share, payable on April 15, 2015, to shareholders of record on April 6, 2015, representing an ex-dividend date of April 1, 2015.

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 April 15, 2015, to shareholders of record on April 2, 2015, with an ex-dividend date of March 31, 2015.

Conference Call and Supplemental Materials

Kimco will hold its quarterly conference call on Friday, February 6, 2015, at 10:00 a.m. Eastern Standard Time (EST). The call will include a review of the company's fourth quarter and full year 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: 2464033).

A replay will be available through March 2, 2015, by dialing 1-877-344-7529 (Passcode: 10056722). Access to the live call and replay will be available through 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, N.Y., that owns and operates North America's largest publicly traded portfolio of neighborhood and community shopping centers. As of December 31, 2014, the company owned interests in 754 shopping centers comprising 110 million square feet of leasable space across 39 states, Puerto Rico, Canada, Mexico and Chile. 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 and management's ability to estimate the impact thereof, (vii) risks related to the company's international operations, (viii) the availability of suitable acquisition and disposition opportunities, and risks related to acquisitions not performing in accordance with our expectations, (ix) valuation and risks related to the company's 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 SEC filings. 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								Year Ended
		December 31,								December 31,
			2014				2013				2014				2013
Revenues
Revenues from rental properties		$	255,748			$	217,362			$	958,888			$	825,210
Management and other fee income			8,764				9,565				35,009				36,317
Total revenues			264,512				226,927				993,897				861,527
Operating expenses
Rent			3,888				3,335				14,250				13,347
Real estate taxes			33,129				28,522				124,670				108,746
Operating and maintenance			34,078				30,142				119,697				99,405
General and administrative expenses			27,675				31,543				122,201				127,470
Provision for doubtful accounts			788				721				4,882				6,133
Impairment charges			11,420				609				39,808				32,247
Depreciation and amortization			72,767				59,571				258,074				224,713
Total operating expenses			183,745				154,443				683,582				612,061
Operating income			80,767				72,484				310,315				249,466
Other income/(expense)
Mortgage financing income			585				963				3,129				4,304
Interest, dividends and other investment income			323				7,384				966				16,847
Other (expense)/income, net			(4,238	)			3,004				(8,544	)			1,195
Interest expense			(49,823	)			(50,920	)			(203,759	)			(212,240	)
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			27,614				32,915				102,107				59,572
Provision for income taxes, net			(7,727	)			(6,333	)			(22,438	)			(32,654	)
Equity in income of joint ventures, net			9,487				28,898				159,560				208,689
Gain on change in control of interests, net			23,462				-				107,235				21,711
Equity in income of other real estate investments, net			21,638				1,225				38,042				31,136
Income from continuing operations			74,474				56,705				384,506				288,454
Discontinued operations
Income from discontinued operating properties, net of tax			5,610				9,853				36,780				50,610
Impairment/loss on operating properties, net of tax			(101,040	)			(22,677	)			(176,315	)			(143,057	)
Gain on disposition of operating properties, net of tax			71,716				16,151				190,520				43,914
(Loss)/income from discontinued operations			(23,714	)			3,327				50,985				(48,533	)
Gain on sale of operating properties, net of tax (1)			-				352				389				1,432
Net income			50,760				60,384				435,880				241,353
Net loss/(income) attributable to noncontrolling interests (3)			2,020				1,224				(11,879	)			(5,072	)
Net income attributable to the Company			52,780				61,608				424,001				236,281
Preferred stock dividends			(14,573	)			(14,573	)			(58,294	)			(58,294	)
Net income available to the Company's common shareholders		$	38,207			$	47,035			$	365,707			$	177,987
Per common share:
Income from continuing operations: (3)
Basic		$	0.14			$	0.09			$	0.77			$	0.53
Diluted		$	0.14		(2)	$	0.09		(2)	$	0.77		(2)	$	0.53		(2)
Net income: (4)
Basic		$	0.09			$	0.11			$	0.89			$	0.43
Diluted		$	0.09		(2)	$	0.11		(2)	$	0.89		(2)	$	0.43		(2)
Weighted average shares:
Basic			409,740				408,139				409,088				407,631
Diluted			411,000				408,995				411,038				408,614

(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 ($3,290) and ($4,920) for the quarters ended December 31, 2014 and 2013, and ($9,762) and ($13,002) for the year ended December 31, 2014 and 2013, respectively.
(4)		Includes earnings attributable to unvested restricted shares of $459 and $358 for the quarters ended December 31, 2014 and 2013 and $1,749 and $1,360 for the year ended December 30, 2014 and 2013, respectively.

Condensed Consolidated Balance Sheets
(in thousands, except share information)
(unaudited)
	December 31,				December 31,
		2014				2013
Assets:
Operating real estate, net of accumulated depreciation
of $1,955,406 and $1,878,681, respectively	$	7,930,489			$	7,146,845
Investments and advances in real estate joint ventures		1,037,218				1,257,010
Real estate under development		132,331				97,818
Other real estate investments		266,157				274,641
Mortgages and other financing receivables		74,013				30,243
Cash and cash equivalents		187,322				148,768
Marketable securities		90,235				62,766
Accounts and notes receivable		172,386				164,326
Other assets		395,577				481,213
Total assets	$	10,285,728			$	9,663,630
Liabilities:
Notes payable	$	3,192,167			$	3,186,047
Mortgages payable		1,428,131				1,035,354
Dividends payable		111,143				104,496
Other liabilities		561,042				482,054
Total liabilities		5,292,483				4,807,951
Redeemable noncontrolling interests		91,480				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 411,819,818 and 409,731,058 shares, respectively		4,118				4,097
Paid-in capital		5,732,021				5,689,258
Cumulative distributions in excess of net income		(1,006,578	)			(996,058	)
Accumulated other comprehensive income		45,122				(64,982	)
Total stockholders' equity		4,774,785				4,632,417
Noncontrolling interests		126,980				137,109
Total equity		4,901,765				4,769,526
Total liabilities and equity	$	10,285,728			$	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								Year Ended
		December 31,								December 31,
			2014				2013				2014				2013
Net income available to common shareholders		$	38,207			$	47,035			$	365,707			$	177,987
Gain on disposition of operating property, net of tax and noncontrolling interests			(71,152	)			(16,503	)			(189,572	)			(45,330	)
Gain on disposition of joint venture operating properties and change in control of interests			(56,262	)			(5,530	)			(193,791	)			(113,937	)
Depreciation and amortization - real estate related			70,878				64,511				263,885				250,253
Depr. and amort. - real estate jv's, net of noncontrolling interests			21,113				24,448				92,343				117,743
Impairments of operating properties, net of tax and noncontrolling interests			153,937		(2)		20,707				257,660				165,825
Funds from operations			156,721				134,668				596,232				552,541
Transactional charges / (income), net			(12,079	)			132				(19,341	)			(8,831	)
Funds from operations as adjusted		$	144,642			$	134,800			$	576,891			$	543,710
Weighted average shares outstanding for FFO calculations:
Basic			409,740				408,139				409,088				407,631
Units			1,531				1,522				1,536				1,523
Dilutive effect of equity awards			3,171				2,414				3,139				2,541
Diluted			414,442		(1)		412,075		(1)		413,763		(1)		411,695		(1)
FFO per common share - basic		$	0.38			$	0.33			$	1.46			$	1.36
FFO per common share - diluted		$	0.38		(1)	$	0.33		(1)	$	1.45		(1)	$	1.35		(1)
FFO as adjusted per common share - diluted		$	0.35		(1)	$	0.33		(1)	$	1.40		(1)	$	1.33		(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 $795 and $641 for the three months ended December 31, 2014 and 2013, and 3,033 and $2,516 for the years ended December 30, 2014 and 2013, respectively.
(2) Includes cumulative translation adjustment of currency of $134.3 million due to the substantial liquidation of the Company's Mexican Portfolio.
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
Combined Same Property Net Operating Income "Combined Same Property NOI" and
U.S. Same Property Net Operating Income "U.S. Same Property NOI"
(in thousands)
(unaudited)
		Three Months Ended								Year Ended
		December 31,								December 31,
			2014				2013				2014				2013
Income from continuing operations		$	74,474			$	56,705			$	384,506			$	288,454
Adjustments:
Management and other fee income			(8,764	)			(9,565	)			(35,009	)			(36,317	)
General and administrative expenses			27,675				31,543				122,201				127,470
Impairment of property carrying values			11,420				609				39,808				32,247
Depreciation and amortization			72,767				59,571				258,074				224,713
Other expense, net			53,153				39,569				208,208				189,894
Provision for income taxes, net			7,727				6,333				22,438				32,654
Gain on change in control of interests			(23,462	)			-				(107,235	)			(21,711	)
Equity in income of other real estate investments, net			(21,638	)			(1,225	)			(38,042	)			(31,136	)
Non same property net operating income			(22,557	)			(12,021	)			(83,755	)			(80,373	)
Non-operational expense from joint ventures, net			61,988				54,227				148,918				171,503
Combined Same Property NOI		$	232,783			$	225,746			$	920,112			$	897,398
Impact from foreign currency			-				(1,907	)			-				(6,672	)
Combined Same Property NOI, before foreign currency impact		$	232,783			$	223,839			$	920,112			$	890,726
Canadian Same Property NOI, before foreign currency impact			(23,316	)			(23,060	)			(94,940	)			(92,286	)
U.S. Same Property NOI		$	209,467			$	200,779			$	825,172			$	798,440

Same Property Net Operating Income ("Same Property NOI") 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.

Reconciliation of Projected Diluted Net Income Per Common Share
to Projected Diluted Funds From Operations Per Common Share
(unaudited)
		Actual					Projected Range
			2014				Full Year 2015
							Low				High
Projected diluted net income available to common
shareholder per share		$	0.89				$	0.90			$	1.09
Projected depreciation & amortization			0.64					0.70				0.72
Projected depreciation & amortization real estate
joint ventures, net of noncontrolling interests			0.22					0.15				0.17
Gain on disposition of operating properties,
net of tax and noncontrolling interests			(0.46	)				(0.05	)			(0.15	)
Gain on disposition of joint venture operating properties,
and change in control of interests			(0.47	)				(0.25	)			(0.30	)
Impairments of operating properties, net of tax
and noncontrolling interests			0.63					-				-
Projected FFO per diluted common share		$	1.45				$	1.45			$	1.53
Transactional income, net			(0.05	)				(0.05	)			(0.09	)
Projected FFO, as adjusted per diluted common share		$	1.40				$	1.40			$	1.44

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.