-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, USKq0bzp9Y/DEcabgmNkRLsQRriUE+IaHk7mHMj/AuYhCmtP8YonZxMJ7mbCKgWD trMMTGLOQmLfdhik39q60w== 0000889812-98-000713.txt : 19980327 0000889812-98-000713.hdr.sgml : 19980327 ACCESSION NUMBER: 0000889812-98-000713 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980326 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIMCO REALTY CORP CENTRAL INDEX KEY: 0000879101 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 132744380 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-10899 FILM NUMBER: 98573642 BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PARK RD STREET 2: PO BOX 5020 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5168699000 10-K405 1 ANNUAL REPORT 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, 1997 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 ____________ Commission file number 1-10899 Kimco Realty Corporation (Exact name of registrant as specified in its charter) Maryland 13-2744380 (State of incorporation) (I.R.S. Employer Identification No.) 3333 New Hyde Park Road, New Hyde Park, NY 11042-0020 (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 Common Stock, par value $.01 per share New York Stock Exchange Depositary Shares, each representing one-tenth of a share of 7-3/4% Class A Cumulative Redeemable Preferred Stock, par value $1.00 per share. New York Stock Exchange Depositary Shares, each representing one-tenth of a share of 8-1/2% Class B Cumulative Redeemable Preferred Stock, par value $1.00 per share. New York Stock Exchange Depositary Shares, each representing one-tenth of a share of 8-3/8% Class C Cumulative Redeemable Preferred Stock, par value $1.00 per share. New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None (Title of class) Indicate by check mark whether the registrant (1) 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 (2) 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] The aggregate market value of the voting stock held by nonaffiliates of the registrant was approximately $1.14 billion based upon the closing price on the New York Stock Exchange for such stock on February 27, 1998. (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. 40,416,795 shares as of February 27, 1998. 1 of 135 DOCUMENTS INCORPORATED BY REFERENCE Part II incorporates certain information by reference to the following exhibits to this annual report on Form 10-K: Exhibit 3.4, Articles Supplementary relating to the Registrant's 8-3/8% Class C Cumulative Redeemable Preferred Stock; Exhibit 3.3, Articles Supplementary relating to the Registrant's 8 1/2% Class B Cumulative Redeemable Preferred Stock; Exhibit 4.4, Certificate of Designations relating to the Registrant's 7 3/4% Class A Cumulative Redeemable Preferred Stock; Exhibits 4.5, 4.6 and 4.7, Indenture, First Supplemental Indenture and Second Supplemental Indenture, respectively, each relating to the Registrant's public bond issues, and Exhibit 10.4, Credit Agreement relating to the Registrant's revolving credit facility. 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 28, 1998. Index to Exhibits begins on page 34. 2 TABLE OF CONTENTS Form 10-K Report Item No. Page - -------- ---- PART I 1. Business ........................................................... 4 2. Properties ......................................................... 13 3. Legal Proceedings .................................................. 15 4. Submission of Matters to a Vote of Security Holders ................ 15 Executive Officers of the Registrant ............................... 24 PART II 5. Market for the Registrant's Common Equity and Related Shareholder Matters .................................. 25 6. Selected Financial Data ............................................ 26 7. Management's Discussion and Analysis of Financial Condition and Results of Operations .............................. 28 8. Financial Statements and Supplementary Data ........................ 31 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .............................. 31 PART III 10. Directors and Executive Officers of the Registrant ................. 32 11. Executive Compensation ............................................. 32 12. Security Ownership of Certain Beneficial Owners and Management ....................................................... 32 13. Certain Relationships and Related Transactions ..................... 32 PART IV 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K ......................................................... 33 3 PART I Item 1. Business General Kimco Realty Corporation (the "Company") is one of the nation's largest owners and operators of neighborhood and community shopping centers. As of February 1, 1998, the Company's portfolio was comprised of 339 property interests including 273 neighborhood and community shopping center properties, two regional malls, 62 retail store leases, one leased parcel of undeveloped land and one distribution center comprising a total of approximately 41.7 million square feet of leasable space located in 37 states. 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 real estate investment trust ("REIT"). The Company is a self-administered REIT and manages its properties through present management, which has owned and operated neighborhood and community shopping centers for more than 30 years. The Company has not engaged, nor does it expect to retain, any REIT advisors in connection with the operation of its properties. 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. 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 reorganized as a Maryland corporation during 1994. The Company's growth through its first fifteen 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 strategy to focus on the acquisition of existing shopping centers because it believed generally that available financial returns did not justify the risks of continued ground-up development of properties. Furthermore, the Company's management believed that existing properties with below market-rate leases were available in the market at attractive prices. The Company considers such properties to offer greater leasing flexibility in the event space becomes available or should there be an overcapacity of space in the local economy. The Company also believes that opportunities exist to create value through the redevelopment and re-tenanting of existing shopping centers. As a result of this change in strategy, the Company has developed only two of the 262 property interests added to its portfolio since 1981, as compared with 68 of the 77 properties owned prior to that time. 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 intends to 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 supermarket, discount department store or drugstore tenant offering day-to-day 4 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 other indebtedness or such financing or indebtedness may be incurred in connection with acquiring 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. 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 emphasizes equity real estate investments, but may, in 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 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 acquire all or substantially all of these securities or assets of other REITs or similar entities where such investments would be consistent with the Company's investment policies. In any event, the Company does not intend that its investments in securities will require it to register as an "investment company" under the Investment Company Act of 1940. The Company 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, 1997, the Company's single largest neighborhood and community shopping center accounted for only approximately 1.9% of the Company's annualized base rental revenues and only 1% of the Company's total shopping center GLA. At December 31, 1997, the Company's five largest tenants include Venture, Kmart Corporation, Kohl's, Walmart and TJX Companies, which represent approximately 11.7%, 4.1%, 3.4%, 2.7% and 2.2%, respectively, of the Company's annualized base rental revenues. The Company intends to maintain a conservative debt capitalization with a ratio of debt to total market capitalization of approximately 50% or less. As of December 31, 1997, the Company had a debt to total market capitalization ratio of approximately 24%. 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 Internal Revenue Code of 1986, as amended (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 stockholders. 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 commercial developers and real estate companies that compete with the Company in seeking properties for acquisition and tenants who will lease space in 5 these properties. Capital Resources Completion of the Company's IPO, which resulted in net cash proceeds of approximately $116 million, permitted the Company to significantly deleverage its real estate portfolio and has made available the public debt and equity markets as the Company's principal source of capital for the future. A $100 million, unsecured revolving credit facility established in June 1994, which is scheduled to expire in June 2000 and an additional $150 million interim unsecured revolving credit facility, established in March 1998, scheduled to expire in June 1998, have made available funds to both finance the purchase of properties and meet any short-term working capital requirements. It is the Company's intention to extend the term of the $150 million interim revolving credit facility and establish it as a continuing part of the Company's total unsecured revolving credit availability. The Company has also implemented a $150 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 and redevelopment costs, and (ii) better managing the Company's debt maturities. (See Note 7 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) Since the IPO, the Company has completed additional offerings of its public unsecured debt and equity raising in the aggregate over $1.15 billion for the purposes of repaying indebtedness, acquiring interests in neighborhood and community shopping centers and for expanding and improving properties in the portfolio. 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 or debt financings, including an increase in the Company's unsecured revolving credit facility, in a manner consistent with its intention to operate with a conservative debt capitalization policy. 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 all dividend payments in accordance with REIT requirements in both the short-term and long-term. In addition, the Company anticipates that cash on hand, borrowings under its revolving credit facilities, issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company. 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 pay an 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 will, from time to time, enter into interest rate protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate loans. As an owner of real estate, the Company is subject to risks arising in connection with the underlying real estate, including defaults or nonrenewal of tenant leases, environmental matters, financing availability and changes in real estate and zoning laws. The success of the Company also depends upon trends in the economy, including interest rates, income tax laws, governmental 6 regulations and legislation and population trends. 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; accordingly, the Company also maintains regional offices in Boca Raton and Orlando, Florida; Philadelphia, Pennsylvania; and Dayton and Cleveland, Ohio. A total of 107 persons are employed at the Company's executive and regional offices. The Company's regional offices are generally staffed by a manager and the support personnel necessary to both function as local representatives for leasing and promotional purposes and to complement the corporate office efforts to ensure that property inspection and maintenance objectives are achieved. The regional offices are important in reducing the time necessary to respond to the needs of the Company's tenants. Leasing and maintenance personnel from the corporate office also conduct regular inspections of each shopping center. The Company also employs a total of 61 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 proprietary 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 Sections 856 through 860 of 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. Recent Developments Shopping Center Acquisitions - In January 1997, the Company purchased the Target Shopping Center located on Sagamore Parkway North in Lafayette, IN. This 177,000 square foot center is anchored by Target Stores and was acquired for approximately $4.1 million. In April 1997, the Company acquired the Carrollwood Commons shopping center located at Ehrlich Road and North Dale Mabry Highway, in Tampa, FL for approximately $14.1 million. This shopping center has 110,000 square feet of GLA and is anchored by Staples and Ross Stores. In June 1997, the Company purchased Shady Oaks Shopping Center, Woodforest Shopping Center and Hammond Aire Plaza located in Ocala, FL, Houston, TX, and Baton Rouge, LA, respectively. These properties were acquired in separate transactions for an aggregate purchase price of approximately $34.6 million. Shady Oaks Shopping Center, located at the intersection of S.R. 200 and Shady Oaks Road comprises 251,000 square feet of GLA and is anchored by Kmart Corporation, Service Merchandise and Kash N' Karry. Woodforest Shopping Center, which comprises 113,000 square feet of GLA at the intersection of Wood Forest Boulevard and Uvalde Road, is anchored by HEB Pantry Food and Palais Royal. Tenants at Hammond Aire Plaza, which comprises 264,000 square feet of GLA at the intersection of Old Hammond Highway and Airline Highway, include Marshalls, Steinmart and Taylor Office Supply. 7 In September 1997, the Company acquired the Crossroads Center located on Frontage Road in Florence, SC for approximately $7.3 million. This 114,000 square foot shopping center is anchored by Staples and Hamricks. In October 1997, the Company purchased Mountainside Plaza and Maplewood Plaza located in Phoenix, AZ and Coral Springs, FL, respectively. These properties were acquired in separate transactions for an aggregate purchase price of approximately $20.5 million, including the assumption of approximately $8.1 million of mortgage debt encumbering the Mountainside Plaza property. Mountainside, which comprises 124,000 square feet of GLA at the intersection of Chandler Boulevard and 40th Street, is anchored by Safeway and Walgreens. Tenants at Maplewood Plaza, which comprises 86,000 square feet of GLA at the intersection of Ramblewood Drive and University Drive, include TJ Maxx and Blockbuster Video. In November 1997, the Company acquired the Festival at Manassas and Acadiana Square shopping centers located in Manassas, VA and Lafeyette, LA, respectively, in separate transactions for an aggregate purchase price of approximately $19.5 million. The Festival at Manassas is a 118,000 square foot center located at the intersection of Sudley Road and Portsmouth Drive and is anchored by Super Fresh Grocery and Blockbuster Video. Acadiana Square shopping center is a 148,000 square foot center located at the intersection of U.S. Highway 167 and Ambassador Caffery Parkway and is anchored by SteinMart, TJ Maxx and Office Max. In December 1997, the Company acquired The Gallery Shopping Center, Tri-Cities Square Shopping Center, Greenridge Shopping Center and North Rivers Market located in Greenville, SC, Mount Dora, FL, Staten Island, NY and North Charleston, SC, respectively. These properties were acquired in separate transactions for an aggregate purchase price of approximately $41.6 million, including the assumption of approximately $5.9 million of mortgage debt encumbering the Greenridge Shopping Center property. The Gallery Shopping Center, which comprises 91,000 square feet of GLA on Haywood Road, is anchored by Baby Superstore. Tri-Cities Square Shopping Center, located on Eurora Road and US Highway 441, comprises 111,000 square feet of GLA and is anchored by Kmart. The Greenridge Shopping Center, which comprises 101,000 square feet of GLA at the intersection of Arthur Kill Road and Richmond Avenue, is anchored by Waldbaums Supermarket and CVS Drug Stores. North Rivers Market, which comprises 196,000 square feet of GLA at the intersection of Rivers Avenue and Northbrook Boulevard, is anchored by TJ Maxx, Marshalls and Phar-Mor. Retail Properties Acquisition - In August 1997, certain subsidiaries of the Company acquired certain real estate assets from Venture Stores, Inc. ("Venture") consisting of interests in 49 fee and leasehold properties totaling approximately 5.9 million square feet of leasable area located in Illinois, Missouri, Texas, Oklahoma, Kansas, Indiana and Iowa (collectively, the "Venture Properties Acquisition"). The aggregate price was approximately $130 million, consisting of $70.5 million in cash and the assumption of approximately $59.5 million of existing mortgage debt on certain of these properties. The mortgage debt bears interest at 10.54% per annum and cannot be repaid without penalty, until its maturity on July 1, 2000. In addition, the Company was granted (i)an option to acquire two other properties for $4.5 million, (ii) an option to acquire up to 11 additional properties should certain conditions be satisfied and (iii) rights of first refusal, for a period of five years, to acquire 31 additional properties containing 4.2 million square feet of leasable area. The transaction also included approximately 573,000 square feet of retail space substantially occupied by other retailers and approximately 165,000 square feet of available non-Venture retail space. Simultaneously with this transaction, the Company entered into a long-term unitary net lease with Venture covering all premises occupied by Venture on these properties. As a result of this transaction, Venture was the primary or sole tenant at 60 of the Company's locations representing approximately 11.7% of the Company's annualized base rental revenues as of December 31, 1997. In January 1998, Venture filed for protection under Chapter 11 of the 8 United States Bankruptcy Code. The Company has not received notice that Venture will be delinquent in the payment of any rents due. There can be, however, no assurance that Venture will continue to pay rents as they become due or that the trustee in bankruptcy will not reject the leases under which Venture is bound. Irrespective of Venture's current financial status, management believes that the Venture Properties Acquisition represents a unique strategic opportunity for the Company, based on the significant intrinsic value in the underlying real estate assets as a result of (i) attractive geographic locations, (ii) current below market-rate leases and (iii)the opportunity to lease-up the remaining 165,000 square feet of vacant non-Venture retail space. In addition to its intrinsic real estate value, the Venture Properties Acquisition also provides the Company with (i) strong initial yields, (ii) increased geographic diversification and (iii) options to acquire additional properties. Accordingly, the Company believes that it could replace any defaulted or discharged leases with leases that are on no less favorable terms than the leases currently in place. The Company, as a regular part of its business operations, will continue to actively seek properties for acquisition which have below market-rate leases or other cash flow growth potential. Property 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 1997, the Company substantially completed the redevelopment of 7 shopping centers in its portfolio, including properties located in Plainview, NY; Lexington, KY; Charles Town, WV; Norriton, PA; Westmont, NJ; Coral Springs, FL and Dayton, OH at a total cost of approximately $26.3 million. The Company is currently involved in redeveloping several other shopping centers, most notably its properties in N. Miami, FL, Richboro, PA, Winston-Salem, NC, and Grove Gate, FL. Approximately $3.7 million was expended during 1997 related to these ongoing projects. Each redevelopment represents an opportunity for the Company to capitalize on its leasing, site planning, design and construction expertise. The Company anticipates its capital commitment toward these and other redevelopments during 1998 will be approximately $30 million. These projects, which are currently proceeding on schedule and in line with the Company's budgeted costs, are expected to contribute to growth in the Company's funds from operations in the future. Property Disposition - During June 1997, the Company disposed of a property in Troy, OH. Proceeds from the disposition totaling approximately $1.6 million, together with an additional $8.3 million cash investment, were used to acquire an exchange shopping center property located in Ocala, FL. Kimco Select Investments - Kimco Select Investments, a New York general partnership ("Kimco Select"), was formed in 1997 to provide the Company, through its 90% ownership interest, the opportunity to make investments outside of its core neighborhood and community shopping center business. Although potential investments may be largely retail-focused, Kimco Select may invest in other asset categories. Kimco Select will focus on investments where the intrinsic value in the underlying assets may provide potentially superior returns relative to the inherent risk. These investments may be in the form of direct ownership of real estate, mortgage loans, public and private debt and equity securities that Kimco Select believes are undervalued, unoccupied properties, properties leased to weak or bankrupt tenants and other assets. Kimco Select is managed by David M. Samber, formerly President and Chief Operating Officer of the Company, who owns the remaining 10% ownership interest in Kimco Select. The Company has made an initial commitment of $35 million towards investments by Kimco Select and may increase its commitment as management deems appropriate. 9 During 1997, Kimco Select through a joint venture investment, acquired an interest in a multi-story building in Eastwick, PA. This 39,000 square foot property, and a 53,000 square foot property in Upper Darby, PA previously acquired, have been redeveloped as ambulatory care facilities, anchored by Mercy Health Corporation, a leading regional health care system and contain complementary retail space. The acquisition and redevelopment costs related to these two properties totaled approximately $10 million. Kimco Select also acquired (i) various first mortgage loan participations, (ii) certain public bonds, and (iii) a joint venture interest in an entity which owns an office building in Miami, FL. The aggregate acquisition cost related to these investments was approximately $4.6 million. Financings - Debt. During 1997, the Company issued an aggregate principal amount of $100 million of unsecured notes under its MTN program. These unsecured notes are comprised of (i) a $30 million ten-year note bearing interest at 7.46% and maturing in May 2007, (ii) a $20 million twelve-year note bearing interest at 7.56% and maturing in May 2009, (iii) a $20 million ten-year note bearing interest at 6.96% and maturing in July 2007 and (iv) a $30 million twelve-year note bearing interest at 7.06% and maturing in July 2009. (See Note 7 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) In June 1997, the Company amended its $100 million, unsecured revolving credit facility with a group of banks to provide, for a reduction (i) by .25% (25 basis points) in the spread above the LIBOR rate or money-market rate, whichever is applicable, paid on borrowings under the facility and (ii) by .02% (2 basis points) in the annual fee payable on a certain portion of the facility which remains unused from time to time. In addition, certain administrative and extension fees were also reduced. The facility term was also extended one year and is now scheduled to expire on June 30, 2000. Equity. During September 1997, the Company completed a primary public stock offering of 4,000,000 shares of common stock at $35.50 per share. The net proceeds from this sale of common stock, totaling approximately $134.5 million (after related transaction costs of approximately $7.5 million) have been used primarily for the acquisition of neighborhood and community shopping centers. (See Note 11 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) Subsequent Events Property Acquisitions / Disposition - In January 1998, the Company acquired seven neighborhood and community shopping center properties comprising approximately 632,000 square feet of GLA in the Denver, CO market for approximately $43.6 million, including the assumption of $4.2 million of mortgage debt. These properties are primarily anchored by supermarket or drugstore tenants, including Safeway, Cub Foods and Phar-Mor. In addition, the Company, through its affiliate Kimco Select, acquired interests in three retail properties in the Chicago, IL market comprising approximately 516,000 square feet of GLA for an aggregate purchase price of approximately $23.7 million. These properties include approximately 70,000 square feet of showroom space and adjoining warehouses of approximately 100,000 square feet at each location. Simultaneous with this transaction, the Company leased to Heilig-Meyers, the country's largest furniture retailer, the showroom portion of each property under individual long-term leases. The Company is currently planning the redevelopment of the warehouse portion of each property. The Company disposed of a property in Pinellas Park, FL during January 1998. Cash proceeds from the disposition totaling $2.3 million will be used to acquire an exchange shopping center property. 10 Price REIT Merger - On January 13, 1998, the Company and The Price REIT, Inc., a Maryland corporation ("Price REIT") signed a definitive agreement to merge, (the "Merger"). Pursuant to the terms of the Agreement and Plan of Merger dated January 13, 1998, as amended March 5, 1998 (the "Merger Agreement"), Price REIT will be merged into a newly formed wholly-owned subsidiary of the Company. The transaction is intended, for financial accounting purposes, to be accounted for as a purchase. Under the terms of the Merger Agreement each share of Price REIT common stock will be exchanged for a combination of the Company's common stock and Kimco depositary shares (the "Class D Depositary Shares"), each depositary share representing a 1/10 of a share interest in a new issue of Kimco 7.5% Class D Cumulative Convertible Preferred Stock (the "Class D Convertible Preferred Stock") having an aggregate value of at least $45 based on the "Kimco Average Price" (as defined herein) and the liquidation preference of the Class D Depositary Shares (collectively, the "Merger Consideration"). The Merger, which is expected to be completed in mid-1998, is subject to customary closing conditions, including certain regulatory approvals and the approval of the issuance of the Merger Consideration by the stockholders of the Company and the approval of the Merger by the Stockholders of Price REIT. The Merger Agreement provides for a pre-closing adjustment to the number of shares of the Company's common stock and Class D Depositary Shares issuable per share of Price REIT common stock in order to ensure that Price REIT stockholders will receive at least, and possibly more than, $45 in the Company's securities per Price REIT share. Specifically, in the event that the average closing price of the Company's common stock (the "Kimco Average Price" as defined herein) ending on and including the seventh trading day immediately preceding the date of the Company's 1998 annual meeting of stockholders plus $10 is less than $45, the amount of Class D Depositary Shares will be increased up to a maximum of $11.25 of Class D Depositary Shares (based on a liquidation preference of $25 per Class D Depositary Share) to arrive at a value of $45. To the extent that the issuance of $11.25 of Class D Depositary Shares would still result in less than $45 of combined value, the number of shares of the Company's common stock issuable per Price REIT share will be increased in order to arrive at a total of $45 delivered in the Company's securities. However, the Company may elect to terminate the Merger Agreement in the event its Average Price (the "Average Price", as defined herein) during a specified calculation period or the closing price on the scheduled closing date or on either of the two days prior to the scheduled closing date is less than $32. In the event that the "Kimco Average Price" (as defined herein) plus $10 is greater than $45, each share of Price REIT common stock would continue to be converted into one share of the Company's common stock and the amount of Class D Depositary Shares will be decreased by 50% of the amount by which the Kimco Average Price referred to above plus $10 exceeds $45. However, Price REIT stockholders will never receive less than $9 of Class D Depositary Shares. Thus, as a result of the merger, Price REIT stockholders will obtain the benefit of 50% of the increase in value of the Company's common stock as reflected in the Kimco Average Price between $35 and $37, and 100% of any increase above $37. As used herein, the "Kimco Average Price" shall be the average of Average Prices (as defined herein) of the Company's common stock for fifteen (15) randomly selected trading days within the thirty (30) consecutive trading days ending on and including the seventh trading day immediately preceding the date of the Company's 1998 annual meeting of stockholders. As used herein, the "Average Price" for any date means the average of the daily high and low prices of the Company's common stock on the New York Stock Exchange (the "NYSE") as reported in The Wall Street Journal, or if not reported thereby, by another authoritative source. The random selection of trading days shall be made under the joint supervision of the financial advisors retained by the Company and Price REIT in connection with the transactions contemplated hereby. The dividend rate on the Class D Depositary Shares will be 7.5 % per annum, or, if greater, the dividend on the shares of the Company's common stock into which a Class D Depositary Share is convertible plus $0.0275 quarterly. The Class D Depositary Shares will be convertible into the Company's common stock 11 at a conversion price of $40.25 per share at any time by the holder and may be redeemed by the Company at the conversion price in shares of the Company's common stock at any time after the third anniversary of the Merger if for any 20 trading days during a rolling 30 day consecutive trading-day period the Company's common stock closing price exceeds $48.30, subject to certain adjustments. The Class D Depositary Shares are expected to be listed on the NYSE. The Merger Agreement also provides that each party will be entitled to a Break-Up Fee in the amount of $12,500,000 or reimbursement of expenses up to $2,000,000 in the event the agreement is terminated under various circumstances. The Company has also agreed that if it elects to terminate the Merger Agreement because its common stock price closes below $32, Price REIT will be entitled to receive $6,250,000. Financings - In March 1998, the Company obtained an additional $150 million interim unsecured revolving credit facility to both finance the purchase of properties and meet any short-term working capital requirements. This facility is scheduled to expire in June 1998, however, it is the Company's intention to extend the term of this facility and establish it as a continuing part of the Company's total unsecured revolving credit availability. KC Holdings, Inc. To facilitate the Company's November 1991 IPO, forty-six shopping center properties and certain other assets, together with indebtedness related thereto, were transferred to subsidiaries of KC Holdings, Inc. ("KC Holdings") a newly formed corporation that is owned by the stockholders of the Company prior to the IPO. The Company, although having no ownership interest in KC Holdings or its subsidiary companies, was granted ten-year, fixed-price options to reacquire the real estate assets owned by KC Holdings' subsidiaries, subject to any liabilities outstanding with respect to such assets at the time of an option exercise. As of February 27, 1998, KC Holdings' subsidiaries had conveyed fourteen shopping center properties back to the Company and had disposed of ten additional centers in transactions with third parties. The members of the Company's Board of Directors who are not also shareholders of KC Holdings unanimously approved the purchase of each of the fourteen shopping centers that have been reacquired by the Company from KC Holdings. (See Notes 9 and 13 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) The Company manages 18 of KC Holdings' 22 shopping center properties pursuant to a management agreement. KC Holdings' other four shopping center properties are managed by unaffiliated joint venture partners. Acquisition Option - The Company holds 10-year acquisition options which expire in November 2001 to reacquire interests in the 22 shopping center properties owned by KC Holdings' subsidiaries. The option exercise prices are fixed and payable in shares of the Company's common stock or, in the event payment in the form of common stock could jeopardize the Company's status as a REIT, an equivalent value in cash. If the Company exercises its options to acquire all the remaining shopping center properties, the maximum aggregate amount payable to KC Holdings would be approximately $11.1 million, or approximately 316,000 shares of the Company's common stock (assuming shares valued at the closing price on the NYSE of $35.13 per share as of February 27, 1998). The Company would acquire the properties subject to any existing mortgage indebtedness and other liabilities on the properties. The acquisition options enable the Company to obtain any appreciation in the value of these properties over the option exercise prices, while eliminating the Company's interim exposure to leverage and operating risks. The option exercise prices for the shopping center properties are generally equal to 10% of KC Holdings' share of the mortgage debt which was outstanding 12 on the properties at the date of the IPO. If, however, the market value of the Company's common stock at the time an option is exercised is less than $13.33 per share (the IPO price), then the option exercise price will decline proportionately (subject to maximum reduction of 50%). The 22 shopping center properties subject to the acquisition options are held in 8 subsidiaries of KC Holdings. Thirteen of these properties are subject to a single lease and/or a single cross-collateralized mortgage and are therefore held by a single subsidiary. Four of the properties, which are owned in two separate joint ventures and managed by unaffiliated joint venture partners, are held by two additional subsidiaries, and the remaining five shopping center properties are each held by separate subsidiaries. The Company may exercise its acquisition options separately with respect to each subsidiary. The acquisition options may be exercised by either (i) a majority of the Company's directors who are not also stockholders of KC Holdings, provided that the pro forma annualized net cash flows of the properties to be acquired exceed the dividend yield on the shares issued to exercise each option, or (ii) a majority of the Company's stockholders who are not also stockholders of KC Holdings. KC Holdings' subsidiaries may sell any of the properties subject to the acquisition options to any third party unaffiliated with KC Holdings or its stockholders, provided that KC Holdings provides the Company with a 30-day right of first refusal notice with regard to such sale. KC Holdings may cause such a selling subsidiary to distribute any sale proceeds to KC Holdings or its stockholders, provided that the option exercise price with respect to such subsidiary is reduced by the amount that is distributed, and further provided that no amount may be distributed so as to cause the option exercise price for any subsidiary to be reduced to less than $1. Each of KC Holdings' subsidiaries may pay dividends to KC Holdings to the extent of net operating cash flow. In addition, any KC Holdings subsidiary may make distributions to KC Holdings in excess of net operating cash flow, provided that the option exercise price with respect to such subsidiary is reduced by the amount of such distribution, and further provided that no amount may be distributed so as to cause the option exercise price for any subsidiary to be reduced to less than $1. KC Holdings may increase the indebtedness in its subsidiaries for the purpose of improving, maintaining, refinancing or operating the related shopping center properties. Such indebtedness may include borrowings from the stockholders of KC Holdings. In the event of a complete casualty or a condemnation of a property held by any of KC Holdings' subsidiaries, the acquisition option will terminate with respect to such property and the option shall continue to be effective with respect to any other properties held by such subsidiary. Each of KC Holdings' subsidiaries has agreed with the Company that it will engage in no activities other than in connection with the ownership, maintenance and improvement of the properties that it owns and only to the extent that the Company could engage in such activities without receiving or earning non-qualifying income (in excess of certain limits) under the REIT provisions of the Code or without otherwise impairing the Company's status as a REIT. In addition, KC Holdings has covenanted not to engage in any other real estate activity. The Company has agreed not to make loans to KC Holdings or its subsidiaries. Exchange Listings The Company's common stock, Class A Depositary Shares, Class B Depositary Shares and Class C Depositary Shares are traded on the NYSE under the trading symbols "KIM", "KIMprA", "KIMprB" and "KIMprC", respectively. Item 2. Properties Real Estate Portfolio As of February 1, 1998 the Company's shopping center portfolio was comprised of approximately 35.8 million square feet of GLA in 273 neighborhood and community shopping center properties and two regional malls, located in 30 states. Neighborhood and community shopping centers 13 comprise the primary focus of the Company's current portfolio, representing approximately 97% of the Company's total shopping center GLA. As of February 1, 1998 approximately 90% of the Company's neighborhood and community shopping center space was leased, and the average annualized base rent per leased square foot was $6.37. The Company's neighborhood and community shopping center properties, generally owned and operated through subsidiaries or joint ventures, had an average size of approximately 126,000 square feet as of February 1, 1998. The Company 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 1997, the Company capitalized approximately $3.7 million in connection with these property improvements. 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. National and regional companies that are tenants in the Company's shopping center properties include Venture, Kmart Corporation, Kohl's, WalMart, TJX Companies, Toys/Kids `R Us and Schottenstein Stores. 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 a majority 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 1,100 of the Company's 2,680 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 2% of the Company's revenues from rental property for the year ended December 31, 1997. Minimum base rental revenues and operating expense reimbursements accounted for approximately 98% of the Company's total revenues from rental property for the year ended December 31, 1997. The Company's management believes that the average base rent per square foot for 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. The Company has been able to capitalize on the below market-rate leases in its existing shopping center portfolio to obtain increases in rental revenues through the renewal of leases or strategic re-tenanting of space. From January 1, 1997 to December 31, 1997, excluding the effect of 1997 acquisitions, the Company increased the average base rent per leased square foot on its portfolio of neighborhood and community shopping centers from $6.21 to $6.50, an increase of $.29 per square foot, or approximately 5%, which was attributable to leasing activity within the existing portfolio. The effect of 1997 acquisitions reduced the overall rent per leased square foot by $.19, thus bringing the average rent per leased square foot to $6.31 as of December 31, 1997. The average annual base rent per leased square foot for new leases executed in 1997 was $9.07. The Company seeks to reduce its operating and leasing risks through geographic and tenant diversity. No single neighborhood and community shopping center 14 accounted for more than 1.0% of the Company's total shopping center GLA or more than 1.9% of total annualized base rental revenues as of December 31, 1997. The five largest tenants of the Company include Venture, Kmart Corporation, Kohl's, WalMart and TJX Companies, which represent approximately 11.7%, 4.1%, 3.4%, 2.7% and 2.2%, respectively, of the annualized base rental revenues at December 31, 1997. 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 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 its neighborhood and community shopping center portfolio and two regional malls, the Company holds interests in various retail store leases relating to approximately 5.6 million square feet of anchor store premises in 62 neighborhood and community shopping centers located in 24 states. As of February 1, 1998 approximately 98% of these premises had been sublet to retailers which lease the stores pursuant to net lease agreements providing for average annualized base rental payments to the Company of $3.73 per square foot. The Company's average annualized base rental obligation pursuant to its retail store leases with the fee owners of such subleased premises is approximately $2.74 per square foot. The average remaining primary term of the Company's retail store leases (and similarly the remaining primary terms of its sublease agreements with the tenants currently leasing such space) is approximately 4.8 years, excluding options to renew such leases for terms which generally range from 5-25 years. Ground-Leased Properties The Company has 45 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. Undeveloped Land Although the Company does not own any unimproved land tracts that it intends to develop as new shopping centers, the Company does own parcels of land adjacent to certain of its existing shopping centers that are held for possible expansion and a parcel of undeveloped land leased to a retailer. At times, should circumstances warrant, the Company may develop or dispose of these parcels. The table on pages 16 to 23 sets forth more specific information with respect to each of the Company's shopping center properties as of December 31, 1997. 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 15 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- ARIZONA PHOENIX 1997 FEE 17.50 124,054 99 PHOENIX 1996 FEE/JOINT VENTURE 13.09 186,575 93 CALIFORNIA ANAHEIM 1995 FEE 1.04 15,306 100 CONNECTICUT HAMDEN 1997 FEE/JOINT VENTURE 7.42 341,502 97 WATERBURY 1993 FEE 13.10 136,153 100 DELAWARE ELSMERE 1979 GROUND LEASE(2076) 17.14 111,600 100 FLORIDA MELBOURNE 1994 FEE 13.84 131,851 77 MELBOURNE 1968 GROUND LEASE(2071) 11.53 168,797 58 CORAL SPRINGS 1994 FEE 5.90 46,497 100 CORAL SPRINGS 1997 FEE 9.80 83,500 100 LAUDERDALE LAKES 1968 FEE/JOINT VENTURE 10.04 112,476 92 LAUDERHILL 1974 FEE 15.50 180,026 88 MARGATE 1993 FEE 34.07 256,030 91 PLANTATION 1974 FEE/JOINT VENTURE 4.59 60,414 100 POMPANO BEACH 1968 FEE/JOINT VENTURE 6.55 63,838 98 HOMESTEAD 1972 FEE/JOINT VENTURE 21.00 160,819 87 MIAMI (3) 1968 FEE 8.23 104,968 33 MIAMI (3) 1985 FEE 15.92 93,643 88 MIAMI 1986 FEE 7.78 81,780 97 SOUTH MIAMI 1995 FEE 5.44 60,804 96 TAMPA 1997 FEE 16.34 109,408 100 LEESBURG 1969 GROUND LEASE(2017) 1.25 13,468 89 MOUNT DORA 1997 FEE 12.44 118,150 97 BRADENTON 1968 FEE/JOINT VENTURE 6.20 24,700 100 OCALA 1997 FEE 27.17 250,620 95 STUART 1994 FEE 20.67 170,291 98 EAST ORLANDO 1971 FEE 11.63 124,798 100 LAKE BARTON 1968 FEE 4.79 2,800 100 ORLANDO 1994 FEE 28.00 230,704 100 ORLANDO (3) 1996 FEE 11.70 129,036 61 ORLANDO 1968 GROUND LEASE(2047)/JOINT VENTURE 7.75 103,480 100 ORLANDO 1968 FEE/JOINT VENTURE 10.00 114,434 100 ALTAMONTE SPRINGS 1995 FEE 5.58 94,193 100 KISSIMMEE 1996 FEE 18.42 130,983 100 BOCA RATON 1967 FEE 9.85 73,549 92 RIVIERA BEACH 1968 GROUND LEASE(2066)/JOINT VENTURE 5.06 46,390 44 WEST PALM BEACH 1995 FEE 7.93 80,845 99 WEST PALM BEACH 1967 FEE/JOINT VENTURE 7.57 74,326 100 NEW PORT RICHEY 1972 FEE 0.99 9,000 LARGO 1968 FEE 11.98 149,472 100 LARGO 1992 FEE 29.44 215,916 95 LARGO 1993 FEE 6.62 56,630 86 PINELLAS PARK (5) 1970 FEE 13.70 119,355 2 MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ ARIZONA PHOENIX SAFEWAY(2009), WALGREENS(2029) PHOENIX HOME DEPOT(1998/2018) CALIFORNIA ANAHEIM CONNECTICUT HAMDEN BRADLEES(2004/2014), STEINBACH INC(2002/2012), BOB'S(2016/2036) WATERBURY BRADLEES(2002/2007), STOP & SHOP(2013/2043) DELAWARE ELSMERE SCHOTTENSTEIN(2008/2038) FLORIDA MELBOURNE WINN DIXIE(2002/2027) MELBOURNE FABRI CENTER(2006/2016), WALGREENS(2045) CORAL SPRINGS LINENS 'N THINGS(2012/2027), PIER 1 IMPORTS(2001/2011) CORAL SPRINGS TJ MAXX(2001), BLOCKBUSTER(2006) LAUDERDALE LAKES FAMILY DOLLAR(2002/2017) LAUDERHILL BABY SUPERSTORE(2004/2014), PARTY CITY(2007/2017) MARGATE PUBLIX(2008/2028), OFFICE DEPOT(2000/2020) PLANTATION WHOLE FOODS(2009/2019) POMPANO BEACH BIG LOTS(2001/2011) HOMESTEAD PUBLIX(2014/2034), OFFICE MAX(2013/2028), ECKERD(2002/2012) MIAMI (3) WALGREENS (1999) MIAMI (3) PUBLIX(2018/2038), WALGREENS(2058) MIAMI PUBLIX(2009/2029), WALGREENS(2018) SOUTH MIAMI KIDS R US (2016/2021), PARTY CITY(2007/2017) TAMPA STAPLES(2003/2018), ROSS STORES(2002/2022) LEESBURG DISCOUNT AUTO PARTS (1999/2004) MOUNT DORA KMART(2013/2063), PET SUPERMARKET(2003/2013) BRADENTON DISCOUNT VIDEO (2002/2007) OCALA KMART(2001/2021), SERVICE MERCHANDISE(2007/2032) STUART SERVICE MERCHANDISE(2010/2070), MARSHALLS (1999/2019) EAST ORLANDO SPORTS AUTHORITY(2000/2020), OFFICE DEPOT (2005/2025) LAKE BARTON ORLANDO COSTCO (2006/2026), SPORTS AUTHORITY(2011/2031) ORLANDO (3) ROSS STORES(2003/2023), BIG LOTS(1999/2009) ORLANDO DORIN DISTRIBUTORS (2002/2007), ECONOMY RESTAURANT (1998/2003) ORLANDO BALLYS HEALTH(2008/2018), HSN REALTY(2000/2009) ALTAMONTE SPRINGS ROOMS TO GO(2001), THOMASVILLE HOME(2001/2006) KISSIMMEE KASH N KARRY(2006/2036), OFFICE MAX (2012/2027) BOCA RATON WINN DIXIE (2008/2033) RIVIERA BEACH BOATHOUSE DISCOUNT(2002/2007) WEST PALM BEACH BABY SUPERSTORE(2006/2021) WEST PALM BEACH WINN DIXIE (2010/2030), FAMILY DOLLAR(2009/2024) NEW PORT RICHEY LARGO WALMART (2007/2027) LARGO PUBLIX (2009/2029), OFFICE DEPOT(1999/2019) LARGO PINELLAS PARK (5)
16 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- ST. PETERSBURG 1968 GROUND LEASE(2084)/JOINT VENTURE 9.01 119,179 90 WINTER HAVEN 1973 FEE/JOINT VENTURE 13.90 88,400 60 PALATKA 1970 FEE 8.90 72,216 93 SARASOTA 1970 FEE 10.00 103,085 97 SARASOTA 1989 FEE 11.98 109,273 97 FERN PARK 1968 FEE 12.00 131,894 99 SANFORD 1989 FEE 40.90 301,801 91 FT. PIERCE 1970 FEE/JOINT VENTURE 14.83 210,460 88 GEORGIA MACON 1969 FEE 12.30 127,260 78 SAVANNAH 1993 FEE 22.22 187,302 88 SAVANNAH 1995 FEE 9.50 88,480 100 FOREST PARK 1969 FEE 14.21 100,452 90 ATLANTA 1988 FEE 19.48 165,314 100 GAINESVILLE 1970 FEE/JOINT VENTURE 12.60 142,288 99 AUGUSTA 1995 FEE 11.32 119,930 99 IOWA WATERLOO 1996 FEE 8.97 96,000 100 DUBUQUE 1997 GROUND LEASE(2019) 8.37 83,705 100 CLIVE 1996 FEE 8.80 90,000 100 DES MOINES 1996 FEE 9.56 96,400 100 DAVENPORT 1997 GROUND LEASE(2004) 9.10 91,035 100 ILLINOIS CALUMET CITY 1997 FEE 16.98 197,386 95 CHICAGO 1997 GROUND LEASE(2020) 10.94 109,441 100 CHICAGO 1997 GROUND LEASE(2040) 17.48 104,263 100 CHICAGO 1997 FEE 6.04 87,563 100 COUNTRYSIDE 1997 GROUND LEASE(2053) 27.67 117,456 100 CRESTWOOD 1997 GROUND LEASE(2051) 36.75 79,903 100 FOREST PARK 1997 GROUND LEASE(2021) 9.83 98,371 100 MATTESON 1997 FEE 17.01 165,623 98 MT.PROSPECT 1997 FEE 16.80 165,603 87 NILES 1997 GROUND LEASE(2022) 10.18 101,775 100 NORRIDGE 1997 GROUND LEASE(2042) 11.69 116,914 100 OAK LAWN 1997 FEE 15.43 165,623 94 OAKBROOK TERRACE 1997 FEE 16.90 169,034 100 SCHAUMBURG 1997 GROUND LEASE(2015) 10.49 104,910 100 SKOKIE 1997 GROUND LEASE(2003) 10.66 106,600 100 ADDISON 1968 GROUND LEASE(2066) 7.99 93,289 100 DOWNERS GROVE 1997 FEE 12.04 144,559 100 NAPERVILLE 1997 FEE 9.00 102,615 100 CARBONDALE 1997 GROUND LEASE(2052) 8.05 80,535 100 BRADLEY 1996 FEE 5.35 80,300 100 ELGIN 1972 FEE 18.69 178,539 89 GENEVA 1996 FEE 8.18 104,000 100 OTTAWA 1970 FEE 9.00 60,000 100 BLOOMINGTON 1972 FEE 16.09 175,530 100 PEORIA 1997 GROUND LEASE(2055) 20.45 158,407 83 CRESTHILL 1997 GROUND LEASE(2039) 9.03 90,313 100 MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ ST. PETERSBURG KASH N KARRY(2017/2037), TJ MAXX(2001/2011) WINTER HAVEN BIG LOTS(2000/2010), FABRI CENTER(2006/2016) PALATKA SAVE A LOT(2003/2013), BIG LOTS(1999/2009) SARASOTA TJ MAXX(2001/2016), OFFICE MAX(2009/2024), FRANKS NURSERY(2012/2032) SARASOTA WINN DIXIE(1998/2023) FERN PARK BED BATH AND BEYOND(2002/2012), BOOKS-A-MILLION(2006/2016), OFFICE MAX (2008/2023) SANFORD WALMART(2005/2035), ROSS STORES(2005/2025), PUBLIX (2005/2025) FT. PIERCE KMART (2001/2016), WINN DIXIE (2002/2027), FABRI CENTER (2000/2010) GEORGIA MACON HEILIG-MEYERS(2007/2017) SAVANNAH PHAR-MOR (1999/2004), TJ MAXX (2005/2015), MARSHALLS (2007/2022) SAVANNAH MEDIA PLAY (2006/2021), PIGGLY WIGGLY(1999/2004), REVCO (2000) FOREST PARK ATLANTA GEORGIA SHOW(2000) GAINESVILLE CONSOLIDATED STORES(2002), OFFICE DEPOT(2004/2020) AUGUSTA PHAR-MOR(1997/2007), TJ MAXX(2004/2014), GOLDS GYM(2004/2009) IOWA WATERLOO KMART(2021/2051) DUBUQUE VENTURE(2022/2052) CLIVE KMART(2021/2051) DES MOINES VENTURE(2021/2051) DAVENPORT VENTURE(2022/2052) ILLINOIS CALUMET CITY VENTURE(2022/2052), MARSHALLS(2003), BEST BUY (2012) CHICAGO VENTURE(2022/2052) CHICAGO VENTURE(2022/2052) CHICAGO VENTURE(2022/2052) COUNTRYSIDE VENTURE(2022/2052) CRESTWOOD VENTURE(2022/2052) FOREST PARK VENTURE(2022/2052) MATTESON VENTURE(2022/2052), MARSHALLS(2000/2010) MT.PROSPECT VENTURE(2022/2052), PAYLESS (2000/2005) NILES VENTURE(2022/2052), PAYLESS (1999) NORRIDGE VENTURE(2022/2052) OAK LAWN VENTURE(2022/2052), CHUCK E CHEESE(2002/2007), FASHION BUG (1998/2008) OAKBROOK TERRACE VENTURE(2022/2052), LINENS N THINGS(2006) SCHAUMBURG VENTURE(2022/2052) SKOKIE VENTURE(2022/2052) ADDISON SCHOTTENSTEIN STORES(2001/2016) DOWNERS GROVE VENTURE(2022/2052), BEST BUY (2012/2032) NAPERVILLE VENTURE(2022/2052) CARBONDALE VENTURE(2022/2052) BRADLEY VENTURE(2021/2051) ELGIN MENARD(2001/2006), EAGLE FOOD (1998/2023) GENEVA VENTURE(2021/2051) OTTAWA SCHOTTENSTEIN STORES(2001/2011) BLOOMINGTON SCHNUCK MARKETS(2004/2024), TOYS R US(2015/2045), BARNES & NOBLE(2005/2015) PEORIA VENTURE(2022/2052) CRESTHILL VENTURE(2022/2052)
17 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- INDIANA GRIFFITH 1997 GROUND LEASE(2054) 10.57 114,870 100 MERRILLVILLE 1997 GROUND LEASE(2015) 10.19 101,887 100 E. WASHINGTON 1997 FEE 9.56 89,042 100 EAGLEDALE 1967 FEE 11.92 75,000 7 FELBRAM 1970 FEE 4.13 27,400 91 GREENWOOD 1970 FEE 25.68 157,160 100 INDIANAPOLIS 1986 FEE 20.60 178,610 82 LAFAYETTE 1997 FEE 24.34 176,940 94 LAFAYETTE 1971 FEE 12.37 90,500 100 EVANSVILLE 1986 FEE 14.20 193,007 98 EVANSVILLE 1986 FEE 11.50 147,775 98 KANSAS ROELAND PARK 1997 GROUND LEASE(2024) 12.70 127,401 100 WICHITA 1996 FEE 6.50 96,100 100 WICHITA 1996 FEE 8.06 97,000 100 KENTUCKY BELLEVUE 1976 FEE 6.04 53,695 100 LEXINGTON 1993 FEE 35.82 259,928 100 LOUISIANA LAFEYETTE 1997 FEE 21.94 150,936 98 BATON ROUGE 1997 FEE 18.58 257,856 89 BATON ROUGE 1983 FEE/JOINT VENTURE 7.00 190,000 100 MASSACHUSETTS GREAT BARRINGTON 1994 FEE 14.14 135,435 85 LEOMINSTER 1975 FEE 57.00 596,286 92 MARYLAND LAUREL 1964 FEE 18.00 75,882 95 LAUREL 1972 FEE 8.06 81,550 100 HAGERSTOWN 1973 FEE 10.48 115,718 100 MICHIGAN WALKER 1993 FEE 41.78 284,143 91 MUSKEGON 1985 FEE 12.20 71,235 88 CLARKSTON 1996 FEE 20.00 156,864 100 CLAWSON 1993 FEE 13.47 177,797 100 FARMINGTON 1993 FEE 2.78 97,038 98 GRAND HAVEN 1976 FEE 7.55 87,430 100 LIVONIA 1968 FEE 4.53 44,185 97 TAYLOR 1993 FEE 13.00 121,364 100 MISSOURI SPRINGFIELD 1994 FEE 41.50 271,552 93 CAPE GIRARDEAU 1997 FEE 6.99 79,960 100 ST. LOUIS 1972 FEE 13.11 163,821 82 KANSAS CITY 1997 FEE 15.64 147,989 100 MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ INDIANA GRIFFITH VENTURE(2022/2052) MERRILLVILLE VENTURE(2022/2052) E. WASHINGTON VENTURE(2022/2052) EAGLEDALE FELBRAM SAVE A LOT(2001/2016), BLOCKBUSTER(1999/2009) GREENWOOD BABY SUPERSTORE(2006/2021), TJ MAXX(2004/2010) INDIANAPOLIS TARGET(1999/2029), FABRI CENTER(1998) LAFAYETTE TARGET(1999/2024), FABRI CENTER(1999) LAFAYETTE MENARD (TJX) (2001/2006) EVANSVILLE VENTURE(2012/2032), OFFICE MAX(2012/2027), MICHAELS(2004/2019) EVANSVILLE VENTURE(2012/2032), BUEHLER FOODS(2003/2013) KANSAS ROELAND PARK VENTURE(2022/2052), PRICE CHOPPER(1999/2009) WICHITA VENTURE(2021/2051) WICHITA VENTURE(2021/2051) KENTUCKY BELLEVUE KROGER(2005/2035) LEXINGTON BEST BUY(2009/2024), BED BATH & BEYOND(2013/2038), TOYS R US(2013/2038) LOUISIANA LAFEYETTE STEIN MART(2005), TJ MAXX(2003), OFFICE MAX(2012) BATON ROUGE STEIN MART(2006/2016), TAYLOR OFFICE SUPPLY(1997/2005), MARSHALLS(2001/2016) BATON ROUGE MERCANTILE STORES(2011/2031) MASSACHUSETTS GREAT BARRINGTON KMART(2001/2016), PRICE CHOPPER(2016/2036) LEOMINSTER SEARS(2003/2033), JC PENNEY(2009/2034), BRADLEES(2009/2024) MARYLAND LAUREL FOOD A RAMA(1999/2009), FACTORY CARD OUTLET(2005/2015), OLD COUNTRY BUFFET(2009/2019) LAUREL AMES(2007/2017) HAGERSTOWN AMES(2007/2017) MICHIGAN WALKER KMART(2016/2051), KOHLS(2012/2032), OFFICE MAX(2011) MUSKEGON PLUMB(2002/2022), FABRI CENTER(2002/2012) CLARKSTON A&P(2015/2045), FRANKS NURSERY(2011/2031) CLAWSON A&P(2006/2016), FRANKS NURSERY(1998), STAPLES(2011/2026) FARMINGTON A&P(2001), DAMMAN HARDWARE(2002/2012) GRAND HAVEN FAMILY FARE(2006/2026), QUALITY MATTRESS(2008) LIVONIA DAMMAN HARDWARE(2004/2014) TAYLOR KOHLS(2011/2031), DRUG EMPORIUM(2000/2020) MISSOURI SPRINGFIELD BEST BUY(2011/2026), JC PENNEY(2005/2015), TJ MAXX(2006/2021) CAPE GIRARDEAU VENTURE(2022/2052) ST. LOUIS KMART(1999/2019), WALGREENS(2006) KANSAS CITY VENTURE(2022/2052), PRICE CHOPPER(2001/2006)
18 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- KANSAS CITY 1997 FEE 17.84 157,938 93 O'FALLON 1997 FEE 18.25 50,000 100 ST.PETERS 1997 FEE 14.77 167,397 97 BRIDGETON 1997 GROUND LEASE(2040) 10.24 102,420 100 ELLISVILLE 1970 FEE 18.37 118,080 100 HAZELWOOD 1970 FEE 15.00 130,780 88 JENNINGS 1971 FEE 8.20 155,095 18 LEMAY 1974 FEE 3.09 73,281 95 ST.LOUIS 1997 FEE 16.58 165,809 80 ST.LOUIS 1997 GROUND LEASE(2025) 19.66 162,901 93 ST.LOUIS 1997 GROUND LEASE(2035) 37.71 164,191 98 ST.LOUIS 1997 GROUND LEASE(2040) 16.33 116,222 100 NORTH CAROLINA DURHAM 1996 FEE 13.24 116,195 84 WINSTON-SALEM (3) 1969 FEE 13.15 137,929 74 GASTONIA 1989 FEE 24.85 235,607 97 CHARLOTTE 1968 FEE 13.50 110,300 95 CHARLOTTE 1993 FEE 13.96 135,257 95 CHARLOTTE 1986 GROUND LEASE(2048) 18.47 227,883 94 RALEIGH 1993 FEE 35.94 374,395 99 NEW HAMPSHIRE SALEM 1994 FEE 39.80 332,951 93 NEW JERSEY RIDGEWOOD 1994 FEE 2.71 24,280 100 CINNAMINSON (3) 1996 FEE 13.67 121,084 14 BLACKWOOD (5) 1996 GROUND LEASE(2032) 9.80 123,970 CHERRY HILL 1996 GROUND LEASE(2035) 15.20 129,809 100 CHERRY HILL 1985 FEE/JOINT VENTURE 18.58 121,673 79 WESTMONT (3) 1994 FEE 17.39 195,824 69 NORTH BRUNSWICK 1994 FEE 38.12 437,433 94 NEW YORK POUGHKEEPSIE 1972 FEE 20.03 180,150 89 HENRIETTA 1988 FEE 14.90 123,000 15 IRONDEQUOIT 1988 FEE 12.80 105,000 WEST GATES 1993 FEE 18.55 185,153 39 CARLE PLACE 1993 FEE 8.34 132,318 91 PLAINVIEW 1969 FEE 6.98 88,329 92 SYOSSET 1967 FEE 2.49 32,124 64 STATEN ISLAND 1989 FEE 16.70 210,990 98 STATEN ISLAND 1997 FEE 7.00 101,391 98 NANUET 1984 FEE 6.00 70,829 71 BRIDGEHAMPTON 1973 FEE 30.20 281,632 100 CENTEREACH 1993 FEE/JOINT VENTURE 40.68 371,028 90 HAMPTON BAYS 1989 FEE 8.17 70,990 100 YONKERS 1995 FEE 4.13 43,560 100 MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ KANSAS CITY VENTURE(2022/2052) O'FALLON VENTURE(2022/2052) ST.PETERS VENTURE(2022/2052), OFFICE DEPOT(2004) BRIDGETON VENTURE(2022/2052) ELLISVILLE SHOP N SAVE(2005/2015) HAZELWOOD KMART(2000/2020), WALGREENS(2006) JENNINGS WALGREENS(2056) LEMAY SHOP N SAVE(1998/2008), ODD LOTS(1999) ST.LOUIS VENTURE(2022/2052), COLONEL DAY'S L(2001) ST.LOUIS VENTURE(2022/2052) ST.LOUIS VENTURE(2022/2052), OFFICE DEPOT(1999) ST.LOUIS VENTURE(2022/2052) NORTH CAROLINA DURHAM TJ MAXX(2003/2013), DURHAM SPORTING(2002/2012) WINSTON-SALEM (3) KROGER(2016/2041) GASTONIA SERVICE MERCHANDISE(2003), TOYS R US(2015/2045), WINN DIXIE(2002) CHARLOTTE MEDIA PLAY(2004/2019), TJ MAXX(2001/2016) CHARLOTTE BI-LO(2009/2029), MICHAELS(2003/2013), PARTY CITY(2004/2014) CHARLOTTE TOYS R US(2012/2042), DRUG EMPORIUM(2005/2015), OFFICE MAX(2009/2024) RALEIGH BEST BUY(2005/2020), PHAR-MOR(2010/2025), GENERAL CINEMA(2009/2029) NEW HAMPSHIRE SALEM BRADLEES(2003/2013), SHAWS SUPERMARKET(2008/2038), BOB'S(2011/2021) NEW JERSEY RIDGEWOOD CINNAMINSON (3) BLACKWOOD (5) CHERRY HILL KOHLS(2016/2036), SEARS(2003/2013) CHERRY HILL GIANT FOOD(2016/2036) WESTMONT (3) A&P(2017/2081) NORTH BRUNSWICK WALMART(2018/2058), BURLINGTON COAT FACTORY(2008/2013), HOMEPLACE(2012/2027) NEW YORK POUGHKEEPSIE CALDOR(1999/2029), EDWARDS(2002/2012) HENRIETTA STAPLES(2010/2022) IRONDEQUOIT WEST GATES TOPS(2004/2024) CARLE PLACE HARROWS(2005/2015), STAPLES(2010/2025), SNEAKER STADIUM(2011/2026) PLAINVIEW WALDBAUMS(2017/2037) SYOSSET STATEN ISLAND KMART(2001/2011), PATHMARK(2001/2021) STATEN ISLAND WALDBAUMS(2001/2031), SUPER X DRUGS(2000/2015) NANUET RKO CENTURY THEATRES(2000/2010) BRIDGEHAMPTON CALDOR(2009/2039), KING KULLEN(2015/2035), TJ MAXX(2007/2017) CENTEREACH WALMART(2015/2044), KING KULLEN(2003/2034), MODELL'S SPORTING GOODS(2009/2019) HAMPTON BAYS STERNS(2005/2025), GENOVESE(2001/2016) YONKERS BIG V SUPERMARKET(2008/2028)
19 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- OHIO LIMA 1986 FEE 18.13 194,130 99 SPRINGFIELD 1988 FEE 14.32 131,628 100 CLEVELAND 1975 GROUND LEASE(2035) 9.42 82,411 76 COLUMBUS 1988 FEE 12.40 191,789 100 COLUMBUS 1988 FEE 13.70 140,993 100 COLUMBUS 1988 FEE 17.90 129,008 100 COLUMBUS 1988 FEE 12.40 135,650 100 UPPER ARLINGTON 1969 FEE 13.28 149,412 86 WESTERVILLE 1988/93 FEE 25.40 240,224 99 WHITEHALL 1967 FEE 13.80 112,813 16 BEAVERCREEK 1986 FEE 18.19 126,137 69 CAMBRIDGE 1973 FEE 13.08 95,955 100 CINCINATTI 1988 FEE 11.60 139,985 67 CINCINNATI 1988 FEE 29.20 321,537 99 SHARONVILLE 1977 GROUND LEASE(2076)/JOINT VENTURE 14.99 130,715 100 MENTOR 1987 FEE 20.59 103,871 98 MENTOR 1988 FEE 25.00 271,914 100 WICKLIFFE 1995 FEE 10.00 128,180 100 ELYRIA 1988 FEE 8.30 103,400 100 BRUNSWICK 1975 FEE 20.00 171,223 96 CENTERVILLE 1988 FEE 15.20 115,378 65 DAYTON 1988 FEE 16.86 141,616 90 DAYTON 1984 FEE 32.01 215,891 86 DAYTON 1969 GROUND LEASE(2043) 22.82 163,131 66 KETTERING 1988 FEE 11.21 123,148 88 SPRINGBORO PIKE 1985 FEE 12.96 99,007 100 CANTON 1993 FEE 7.88 63,712 70 CANTON 1972 FEE 19.60 161,675 79 MASSILLON 1988 GROUND LEASE(2001) 13.09 102,632 100 AKRON 1975 FEE 6.91 56,975 78 BARBERTON 1972 FEE 9.97 119,975 100 OKLAHOMA OKLAHOMA CITY 1997 FEE 9.64 96,418 100 OKLAHOMA CITY 1997 GROUND LEASE(2019) 7.36 73,600 100 TULSA 1996 FEE 8.79 96,100 100 PENNSYLVANIA GETTYSBURG 1986 FEE 2.25 30,706 100 DUQUESNE 1993 FEE 8.77 69,733 100 PENN HILLS 1986 GROUND LEASE(2027) 31.06 110,517 100 WEST MIFFLIN 1974 FEE 24.62 194,776 95 WEST MIFFLIN 1986 FEE 8.33 84,279 100 FEASTERVILLE 1996 FEE 4.60 86,575 100 MORRISVILLE (3) 1996 FEE 14.38 117,511 24 RICHBORO (3) 1986 FEE 14.47 80,737 64 WARRINGTON (3) 1996 FEE 8.28 82,338 EXTON 1996 FEE 9.78 85,184 100 UPPER ALLEN 1986 FEE 6.00 59,470 97 HARRISBURG 1972 FEE/JOINT VENTURE 17.00 175,917 100 MIDDLETOWN 1973 FEE 21.86 140,481 57 MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ OHIO LIMA RAYS SUPERMARKET(2011/2026), THE PHARM(2004/2024) SPRINGFIELD KMART(2010/2029), KROGER(2001/2007) CLEVELAND ALDI'S(2003/2023) COLUMBUS KOHLS(2011/2031), KIDS R US(2015/2040) COLUMBUS KOHLS(2011/2031), STAPLES(2000/2010) COLUMBUS KOHLS(2011/2031) COLUMBUS KOHLS(2011/2031), CIRCUIT CITY(2018/2038) UPPER ARLINGTON TJ MAXX (2001/2006) WESTERVILLE KOHLS(2016/2036), OFFICE MAX(2002/2022), HOMEPLACE(2005/2020) WHITEHALL BEAVERCREEK KROGER(1996/2021) CAMBRIDGE QUALITY STORES (TJX)(2000/2018), KROGER(1999/2014) CINCINATTI CIRCUIT CITY(2008/2031), CONSOLIDATED STORES(1999/2009), OFFICE DEPOT(2004/2024) CINCINNATI HECHINGERS(2013/2033), SERVICE MERCHANDISE(2002/2012), TOYS R US(2016/2046) SHARONVILLE KMART(2004/2054), KROGER(1998/2028), CHARMING SHOPPES(2000/2010) MENTOR HILLS(2020/2045) MENTOR RINI SUPERMARKET(2019/2029), BURLINGTON COAT FACTORY(2014) WICKLIFFE GABRIEL BROTHERS(2008/2023), CONSOLIDATED STORES(2000), HANCOCK FABRICS(2000/2010) ELYRIA KMART(2010/2029) BRUNSWICK KMART(2000/2050), RINI SUPERMARKET(2001/2031) CENTERVILLE WACCAMAW(2006/2021), LASER QUEST(2007/2017), COMPLETE PETMART(2002/2007) DAYTON SCHOTTENSTEIN STORES(2000/2020), CIRCUIT CITY(2018/2038) DAYTON VICTORIA'S SECRET(2004/2019), JOANN FABRICS(2006/2016), KROGER(2012/2038) DAYTON BEST BUY(2004/2024), JUST FOR FEET(2005/2015), FABRI CENTER(2002/2012) KETTERING SCHOTTENSTEIN STORES(2000/2015) SPRINGBORO PIKE MEDIA PLAY(2007/2022), OFFICE MAX(2002/2022), HANCOCK FABRICS(2007/2017) CANTON CINEMARK(1998/2003) CANTON TOYS R US(2018/2043), TJ MAXX(2007/2017) MASSILLON HILLS(2001) AKRON DOLLAR GENERAL(1999/2002) BARBERTON OKLAHOMA OKLAHOMA CITY VENTURE(2022/2052) OKLAHOMA CITY VENTURE(2022/2052) TULSA KMART(2021/2051) PENNSYLVANIA GETTYSBURG GIANT FOOD(2000/2010) DUQUESNE PAT CATAN(2000/2005) PENN HILLS HILLS(2017/2026) WEST MIFFLIN HILLS(2004/2034), GIANT EAGLE(2014/2039) WEST MIFFLIN HILLS(2007/2032) FEASTERVILLE VALUE CITY(2011/2026) MORRISVILLE (3) RICHBORO (3) A&P(2002/2032), RITE AID(2007/2017) WARRINGTON (3) EXTON KOHLS(2016/2036) UPPER ALLEN GIANT FOOD(2010/2030) HARRISBURG HILLS(2002/2032), MEDIA PLAY(2011/2026), SUPERPETZ(2002/2022) MIDDLETOWN ELECTRONIC INSTITUTE(1999)
20 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- MIDDLETOWN 1986 FEE 4.66 35,747 62 HAVERTOWN 1996 FEE 9.01 80,938 100 SPRINGFIELD 1983 FEE 19.66 218,907 98 UPPER DARBY 1996 FEE/JOINT VENTURE 16.34 52,657 53 ERIE 1968 FEE 1.96 2,196 100 WHITEHALL 1996 GROUND LEASE(2081) 6.00 84,524 100 CENTER SQUARE 1996 FEE 17.72 116,055 100 E STROUDSBURG 1973 FEE 15.33 167,654 96 EAGLEVILLE 1973 FEE 15.20 165,385 100 LANDSDALE 1996 GROUND LEASE(2037) 1.39 71,760 100 NORRISTOWN 1984 FEE 12.52 134,960 87 PHILADELPHIA 1997 FEE 3.40 38,753 90 PHILADELPHIA 1996 FEE 6.30 82,345 100 PHILADELPHIA 1996 GROUND LEASE(2035) 13.33 133,309 100 PHILADELPHIA 1983 FEE/JOINT VENTURE 8.12 214,170 98 PHILADELPHIA 1995 FEE/JOINT VENTURE 22.55 275,033 98 NEW KENSINGTON 1986 FEE 12.53 106,624 100 YORK 1986 FEE 8.00 61,979 100 YORK 1986 FEE 13.65 53,011 100 YORK 1986 FEE 3.32 35,500 100 SOUTH CAROLINA AIKEN 1989 FEE 16.63 132,345 77 CHARLESTON 1978 FEE 17.60 168,803 76 NORTH CHARLESTON 1997 FEE 21.07 247,908 92 CHARLESTON 1995 FEE 17.15 188,161 100 FLORENCE 1997 FEE 21.00 113,922 100 GREENVILLE 1997 FEE 20.35 97,340 98 TENNESSEE CHATTANOOGA 1973 GROUND LEASE(2073) 7.63 44,288 66 MADISON 1978 GROUND LEASE(2039) 14.49 182,256 99 TEXAS PLANO 1996 FEE 9.03 96,700 100 DALLAS 1969 FEE/JOINT VENTURE 75.00 566,826 55 DUNCANVILLE 1996 FEE 6.80 96,500 100 GARLAND 1996 FEE 2.89 41,364 100 GARLAND 1996 FEE 8.83 103,600 100 MESQUITE 1974 FEE 9.03 79,550 100 BAYTOWN 1996 FEE 8.68 103,800 100 HOUSTON 1973 FEE 4.25 45,494 100 HOUSTON 1997 FEE 8.04 112,560 91 HOUSTON 1996 FEE 8.75 106,000 100 HOUSTON 1997 FEE 8.17 105,353 100 WEST OAKS 1996 FEE 8.18 96,500 100 AMARILLO 1997 GROUND LEASE(2061) 9.30 103,589 100 CORSICANA 1997 FEE 10.25 350,000 100 ALRINGTON 1996 FEE 8.04 97,000 100 ARLINGTON 1997 GROUND LEASE(2043) 8.00 96,127 100 FT. WORTH 1996 FEE 12.59 106,000 100 NORTH RICHLAND HILLS (6) 1997 FEE 9.17 MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ MIDDLETOWN US POSTAL SERVICE(2016/2026) HAVERTOWN KOHLS(2016/2036) SPRINGFIELD VALUE CITY(2013/2043), STAPLES(2008/2023), JO ANN FABRICS(2006/2016) UPPER DARBY MERCY HEALTH(2012/2022) ERIE BARRON OIL(2016) WHITEHALL KOHLS(2016/2036) CENTER SQUARE KOHLS(2016/2036), SEARS(2002/2007) E STROUDSBURG KMART(2002/2022), WEIS MARKETS(2002/2012) EAGLEVILLE KMART(1999/2019), GENUARDI SUPERMARKET(2011/2025) LANDSDALE KOHLS(2012) NORRISTOWN GIANT FOOD(2017/2037), STAPLES(2008/2023), FABRI CENTER(2002/2012) PHILADELPHIA MERCY HEALTH(2012/2022) PHILADELPHIA KOHLS(2016/2036) PHILADELPHIA KMART(2010/2035) PHILADELPHIA JC PENNEY(1999), TOYS R US(2002/2052) PHILADELPHIA PET FOOD GIANT(2006/2016), PEP BOYS(2004/2014) NEW KENSINGTON GIANT EAGLE(2006/2026) YORK SUPERPETZ(2004/2009), DISCOVERY ZONE(2005/2015) YORK GIANT FOOD(2006/2026) YORK GIANT FOOD(2002/2017), RITE AID(2002/2012) SOUTH CAROLINA AIKEN WALMART(2002/2032), CVS(1997/2007) CHARLESTON STEIN MART(2001/2016) NORTH CHARLESTON TOYS R US (REA)(1999), PHAR-MOR(2000/2010), TJ MAXX(2003/2013) CHARLESTON TJ MAXX(1999/2004), OFFICE DEPOT(2001/2016), MARSHALLS(1998/2001) FLORENCE HAMRICK'S(2001/2011), STAPLES(2010/2035), ATHLETE'S FOOT(2007/2017) GREENVILLE BABY SUPERSTORE(2002/2022), GATEWAY 2000(2002/2022) TENNESSEE CHATTANOOGA MADISON OLD TIME POTTERY(2001/2006), HOLLYWOOD ENTERTAINMENT(2008/2014) TEXAS PLANO VENTURE(2021/2051) DALLAS MONTGOMERY WARD(2000/2015) DUNCANVILLE KMART(2021/2051) GARLAND KROGER(2000/2025) GARLAND KMART(2021/2051) MESQUITE KROGER(2012/2037) BAYTOWN VENTURE(2021/2051) HOUSTON KROGER(2002/2012) HOUSTON HEB GROCERY(2007/2027), PALAIS ROYAL(2007/2022), CATO(2004/2009) HOUSTON KMART(2021/2051) HOUSTON VENTURE(2022/2052) WEST OAKS KMART(2021/2051) AMARILLO VENTURE(2022/2052) CORSICANA VENTURE(2022/2052) ALRINGTON KMART(2021/2051) ARLINGTON VENTURE(2022/2052) FT. WORTH KMART(2021/2051) NORTH RICHLAND HILLS (6) VENTURE(2022/2052)
21 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- UTAH OGDEN 1967 FEE 11.36 121,425 100 VIRGINIA RICHMOND 1995 FEE 11.47 121,550 100 WOODBRIDGE 1973 GROUND LEASE(2072)/JOINT VENTURE 19.63 186,142 59 MANASSAS 1997 FEE 13.50 117,525 88 WISCONSIN RACINE 1988 FEE 14.20 153,530 85 WEST VIRGINIA MARTINSBURG 1986 FEE 6.04 43,212 100 CHARLES TOWN 1985 FEE 22.00 201,313 83 ------- ---------- -- TOTAL 266 PROPERTY INTERESTS 3742.06 34,931,408 90 ------- ---------- -- ACQUISITIONS SUBSEQUENT TO DECEMBER 31, 1997 COLORADO AURORA 1998 FEE 14.56 145,626 91 AURORA 1998 FEE 4.43 44,270 99 AURORA 1998 FEE 13.90 152,181 97 COLORADO SPRINGS 1998 FEE 10.78 107,798 100 ENGLEWOOD 1998 FEE 6.48 80,330 99 DENVER 1998 FEE 1.45 18,405 100 LAKEWOOD 1998 FEE 7.55 83,304 98 FLORIDA CORAL WAY 1998 FEE/JOINT VENTURE 6.46 74,973 98 ILLINOIS DOWNERS'S GROVE (3) 1998 FEE 7.19 182,624 48 ORLANDO (3) 1998 FEE 7.76 166,000 49 SCHAUMBURG (3) 1998 FEE 7.30 167,690 51 INDIANA INDIANAPOLIS 1998 FEE/JOINT VENTURE 17.42 166,104 55 PENNSYLVANIA TREXLER TOWN (3) 1998 GROUND LEASE/JOINT VENTURE 1.18 50,000 60 MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ UTAH OGDEN KMART(2002) VIRGINIA RICHMOND BURLINGTON COAT FACTORY(2006/2035) WOODBRIDGE AMES(2000/2020) MANASSAS SUPERFRESH(2006), BLOCKBUSTER(1999) WISCONSIN RACINE PIGGLY WIGGLY(1999/2010), CONSOLIDATED STORES(2000/2005), HEILIG-MEYERS (2007/2017) WEST VIRGINIA MARTINSBURG GIANT FOOD(2010/2030), CVS(2003/2009) CHARLES TOWN WALMART(2017/2047) TOTAL 266 PROPERTY INTERESTS ACQUISITIONS SUBSEQUENT TO DECEMBER 31, 1997 COLORADO AURORA TJ MAXX(2003/2013), GRANTREE FURNITURE(1998), CLASSIC TREASURES(2000/2004) AURORA BLOCKBUSTER(1998/2003), JJ'S HALLMARK(2003/2013), BENVENUTO(2002/2007) AURORA ALBERTSON'S(2005/2050), COOMER'S(2001/2006), CROWN LIQUOR(1999) COLORADO SPRINGS CUB FOODS(2004/2034), SCHOOL DISTRICT(2000), EZ PAWN(2000/2010) ENGLEWOOD PHAR-MOR(2004/2019), OLD COUNTRY BUFFET(2001), JUNIOR LEAGUE(2009/2019) DENVER RITE AID(1998/2018) LAKEWOOD SAFEWAY(2002/2032), PERFORMANCE BIKE(2002), WMC CORP.(1999/2004) FLORIDA CORAL WAY BABY SUPERSTORE(2006/2021) ILLINOIS DOWNERS'S GROVE (3) HEILIG-MEYERS(2008/2018) ORLANDO (3) HEILIG-MEYERS(2008/2018) SCHAUMBURG (3) HEILIG-MEYERS(2008/2018) INDIANA INDIANAPOLIS KROGER(2000/2020), CVS(2004/2024) PENNSYLVANIA TREXLER TOWN (3) LEHIGH VALLEY HEALTH(2007/2022)
22 PROPERTY CHART
YEAR OWNERSHIP LEASABLE PERCENT DEVELOPED INTEREST/ LAND AREA AREA LEASED OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ.FT.) (1) ----------- --------------- ------- -------- ------- DISPOSITIONS SUBSEQUENT TO DECEMBER 31, 1997 FLORIDA PINELLAS PARK 1970 FEE (13.70) (119,355) NEW JERSEY BLACKWOOD 1996 GROUND LEASE(2032) (9.80) (123,970) -------- ---------- TOTAL 277 PROPERTY INTERESTS 3,825.02 36,127,388 ======== ========== RETAIL STORE LEASES(4) 1995/97 LEASEHOLD 5,597,143 98.00 ---------- GRAND TOTAL 339 PROPERTY INTERESTS 41,724,531 ========== MAJOR LEASES (LEASE EXPIRATION/ OPTION EXPIRATION) ------------------ DISPOSITIONS SUBSEQUENT TO DECEMBER 31, 1997 FLORIDA PINELLAS PARK NEW JERSEY BLACKWOOD TOTAL 277 PROPERTY INTERESTS RETAIL STORE LEASES(4) VARIOUS GRAND TOTAL 339 PROPERTY INTERESTS
(1) PERCENT LEASED INFORMATION AS OF DECEMBER 31, 1997 OR LATER DATE OF ACQUISITION. (2) THE TERM "JOINT VENTURE" INDICATES THAT THE COMPANY OWNS THE PROPERTY IN CONJUNCTION WITH ONE OR MORE JOINT VENTURE PARTNERS. THE DATE INDICATED IS THE EXPIRATION DATE OF ANY GROUND LEASE AFTER GIVING AFFECT TO ALL RENEWAL PERIODS. (3) DENOTES REDEVELOPMENT PROJECT (4) THE COMPANY HOLDS INTEREST IN VARIOUS RETAIL STORE LEASES RELATED TO THE ANCHOR STORE PREMISES IN NEIGHBORHOOD AND COMMUNITY SHOPPING CENTERS. (5) SOLD OR TERMINATED SUBSEQUENT TO DECEMBER 31,1997 (6) LEASED PARCEL OF UNDEVELOPED LAND 23 Executive Officers of the Registrant The following table sets forth information with respect to the six executive officers of the Company as of February 27, 1998.
Name Age Position Since ---- --- -------- ----- Milton Cooper 69 Chairman of the Board of 1991 Directors and Chief Executive Officer Michael J. Flynn 62 Vice Chairman of the 1996 Board of Directors. President and Chief 1997 Operating Officer Joseph V. Denis 46 Vice President - 1993 Construction Bruce M. Kauderer 51 Vice President - Legal 1995 General Counsel and 1997 Secretary Michael V. Pappagallo 39 Vice President - 1997 Chief Financial Officer Alex Weiss 40 Vice President - 1988 Management Information Systems
Michael J. Flynn has been President and Chief Operating Officer since January 2, 1997, Vice Chairman of the Board of Directors since January 2, 1996 and a Director of the Company since December 1, 1991. Mr. Flynn was Chairman of the Board and President of Slattery Associates, Inc. for more than five years prior to joining the Company. Joseph V. Denis has been a Vice President of the Company since October 1993. Mr. Denis was President and Chief Operating Officer of Konover Construction Company, and previously held various positions with such company as a project and construction manager, for more than five years prior to joining the Company in June 1993. Bruce M. Kauderer has been a Vice President of the Company since June 1995 and since December 15, 1997, General Counsel and Secretary of the Company. Mr. Kauderer was a founder of and partner with Kauderer & Pack P.C. from 1992 to June 1995 and a Partner with Fink Weinberger, P.C. for more than five years prior to 1992. Michael V. Pappagallo has been a Vice President and Chief Financial Officer of the Company since May 27, 1997. Mr. Pappagallo was Chief Financial Officer of GE Capital's Commercial Real Estate Financial and Services business from September 1994 to May 1997 and held various other positions within GE Capital for more than five years prior to joining the Company. The executive officers of the Company serve in their respective capacities for approximate one-year terms and are subject to re-election by the Board of Directors, generally at the time of the Annual Meeting of the Board of Directors following the Annual Meeting of Stockholders. 24 PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters Market Information The Company completed its IPO on November 22, 1991. Shares of the Company's common stock were sold for cash or exchanged for mortgage debt and equity interests in certain of the Company's shopping center properties based upon an initial public offering price of $13.33 per share. Additional primary public common stock offerings were completed in June 1992, April 1993, January 1995, February 1996 and September 1997, wherein shares of the Company's common stock were sold for cash or exchanged for equity interests in shopping center properties based upon $16.92, $22.83, $24.17, $26.50 and $35.50 per share offering prices, respectively. The table below sets forth, for the quarterly periods indicated, the high and low sales prices per share reported on the NYSE Composite Tape for the Company's common stock. The Company's common stock is traded under the trading symbol "KIM". Stock Price -------------- Period High Low ------ ---- --- 1996: First Quarter $28.00 $25.25 Second Quarter $28.50 $25.63 Third Quarter $30.25 $26.50 Fourth Quarter $34.88 $28.38 1997: First Quarter $34.63 $31.75 Second Quarter $33.38 $30.25 Third Quarter $36.19 $31.75 Fourth Quarter $35.50 $30.50 Holders The approximate number of holders of record of the Company's common stock, par value $.01 per share, was 572 as of February 27, 1998. Dividends Since the IPO, the Company has paid regular quarterly dividends to its stockholders. Quarterly dividends at the rate of $.39 per share were declared and paid on November 30, 1995 and January 16, 1996, March 15, 1996 and April 15, 1996, June 17, 1996 and July 15, 1996 and September 16, 1996 and October 15, 1996 respectively. Quarterly dividends at the increased rate of $.43 per share were declared and paid on December 2, 1996 and January 15, 1997, March 17, 1997 and April 15, 1997, June 16, 1997, and July 15, 1997, September 15, 1997 and October 15, 1997. On December 1, 1997 the Company declared its dividend payable during the first quarter of 1998 at the increased rate of $.48 per share payable January 15, 1998 to shareholders of record on January 2, 1998. This $.48 per share dividend, if annualized, would equal $1.92 per share, or an annual yield of approximately 5.5% based on the closing price of $35.13 of the Company's common stock on the NYSE as of February 27, 1998. The Company has determined that 100% of the dividends totaling $1.72 and $1.56 per share, paid during 1997 and 1996, respectively, represented ordinary dividend income to its stockholders. While the Company intends to continue paying regular quarterly dividends, future dividend declarations will be at the discretion of the Board of Directors and will depend on the actual cash flow of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Directors deems relevant. The actual cash flow available to pay dividends will be affected by a number of factors, including the revenues received from rental properties, the operating expenses of the Company, the interest expense on its borrowings, the ability of lessees to meet their obligations to the Company and any unanticipated capital expenditures. 25 In addition to its common stock offerings, the Company has capitalized the growth in its business through the issuance of unsecured fixed and floating-rate medium-term notes, underwritten bonds and perpetual preferred stock. Borrowings under the Company's revolving credit facility have also been an interim source of funds to both finance the purchase of properties and meet any short-term working capital requirements. The various instruments governing the Company's issuance of its unsecured public debt, bank debt and preferred stock impose certain restrictions on the Company with regard to dividends, voting, liquidation and other preferential rights available to the holders of such instruments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Notes 7 and 11 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K. Reference should also be made to the documents incorporated by reference into Part II of this annual report listed in "Documents Incorporated by Reference" above for further information with respect to such restrictions. The Company does not believe that the preferential rights available to the holders of its Class A, Class B and Class C Preferred Stock, the financial covenants contained in its public bond Indenture or its revolving credit agreements will have any adverse impact on the Company's ability to pay dividends in the normal course to its common stockholders or to distribute amounts necessary to maintain its qualification as a REIT. The Company maintains a dividend reinvestment program pursuant to which common and preferred stockholders may elect to automatically reinvest their dividends to purchase shares of the Company's common stock. The Company may, from time to time, either (i) repurchase shares of its common stock in the open market, or (ii) issue new shares of its common stock, for the purpose of fulfilling its obligations under this dividend reinvestment program. Item 6. Selected Financial Data The following table sets forth selected, historical consolidated financial data for the Company and should be read in conjunction with the Consolidated Financial Statements of the Company and Notes thereto included in this annual report on Form 10-K. The Company believes that the book value of its real estate assets, which reflects the historical costs of such real estate assets less accumulated depreciation, is not indicative of the current market value of its properties. Historical operating results are not necessarily indicative of future operating performance. 26
Year Ended December 31, -------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- (in thousands, except per share data) Operating Data: Revenues from rental property (1) $198,929 $168,144 $143,132 $125,272 $98,854 Depreciation and amortization $30,053 $27,067 $26,188 $23,478 $19,898 Income before extraordinary items $85,836(3) $73,827(3) $51,922 $41,071 $35,159(4) Income per common share, before extraordinary items: Basic $1.80(3) $1.61(3) $1.33 $1.17 $1.17(4) Diluted $1.78(3) $1.59(3) $1.32 $1.16 $1.17(4) Interest expense $31,745 $27,019 $25,585 $20,483 $17,203 Weighted average number of shares of common stock outstanding: Basic 37,388 35,906 33,388 30,072 28,657 Diluted 37,850 36,219 33,633 30,264 28,783 Cash dividends per common share $1.72 $1.56 $1.44 $1.33 $1.25 December 31, -------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- Balance Sheet Data: Real estate, before accumulated depreciation $1,404,196(5) $1,072,056(5) $932,390(5) $796,611 $662,874 Total assets $1,343,890 $1,023,033 $884,242 $736,709 $652,823 Total debt $531,614 $364,655 $389,223 $372,999 $290,886 Other Data: Year Ended December 31, -------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 ----------- ----------- ----------- ----------- ----------- Funds from Operations (2): Net Income $85,836 $73,827 $51,922 $40,247 $34,573 Depreciation and amortization 30,053 27,067 26,188 23,478 19,898 (Gain) loss on sales of properties and early repayment of mortgage debt (244) (802) (370) 824 (2,895) Preferred stock dividends (18,438) (16,134) (7,631) (5,812) (1,582) Other 976 1,148 2,019 901 875 ----------- ----------- ----------- ----------- ----------- Funds from Operations $98,183 $85,106 $72,128 $59,638 $50,869 =========== =========== =========== =========== =========== Cash flow provided by operations $125,108 $101,892 $74,233 $62,933 $54,886 Cash flow used for investing activities ($280,823) ($144,027) ($127,261) ($142,183) ($119,788) Cash flow provided by financing activities $149,269 $63,395 $58,248 $37,047 $109,384
(1) Does not include revenues from rental property relating to unconsolidated joint ventures or revenues relating to the investment in retail store leases. (2) Most industry analysts and equity REITs, including the Company, generally consider funds from operations ("FFO") to be an appropriate supplemental measure of the performance of an equity REIT. In March 1995, the National Assocation of Real Estate Invesment Trusts ("NAREIT") modified the definition of FFO, among other things, to eliminate adding back amortization of deferred financing costs and depreciation of non-real estate items to net income when computing FFO. The Company adopted this new method as of January 1, 1996. FFO is defined as net income applicable to common shares before depreciation and amortization, extraordinary items, gains or losses on sales of real estate, plus FFO of unconsolidated joint ventures determined on a consistent basis. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles and therefore should not be considered an alternative for net income as a measure of results of operations, or for cash flows from operations calculated in accordance with generally accepted accounting principles as a measure of liquidity. In addition, the comparability of the Company's FFO with the FFO reported by other REITs may be affected by the differences that may exist regarding certain accounting policies relating to expenditures for repairs and other recurring items. (3) Includes $.2 million or $.01 per share in 1997 and $.8 million or $.02 per share in 1996 relating to non-recurring gains from the disposition of a shopping center property in each year. (4) Includes approximately $3.4 million, or $.12 per share, in non-recurring gains related to the sale of a shopping center and a casualty claim related to a joint venture property. (5) Does not include the Company's investment in retail store leases. 27 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in this annual report on Form 10-K. Historical results and percentage relationships set forth in the Consolidated Statements of Income contained in the Consolidated Financial Statements, including trends which might appear, should not be taken as indicative of future operations. Results of Operations Comparison of 1997 to 1996 Revenues from rental property increased approximately $30.8 million, or 18.3% to $198.9 million for the year ended December 31, 1997, as compared with $168.1 million for the year ended December 31, 1996. This increase resulted primarily from the combined effect of (i) the acquisition of 14 shopping center properties and 49 retail properties during 1997 providing revenues from rental property of $6.1 million and $14.0 million, respectively (ii) the full year impact related to the 39 property interests acquired in 1996 and (iii) new leasing and re-tenanting within the portfolio at improved rental rates providing an increase in the overall occupancy level from 87% at December 31, 1996 to 90% at December 31, 1997. Rental property expenses, including depreciation and amortization, increased approximately $18.2 million, or 18.8%, to $115.2 million for the year ended December 31, 1997, as compared with $97.0 million for the preceding calendar year. Rent, real estate taxes and depreciation and amortization charges contributed significantly to this net increase in rental property expenses (increasing $3.5 million, $6.5 million and $3.0 million, respectively, for the year ended December 31, 1997 as compared to the preceding year) primarily due to the 14 shopping center properties and 49 retail properties acquired during 1997 and the 39 property interests acquired during 1996. Interest expense increased approximately $4.7 million between the respective periods reflecting higher average outstanding borrowings during calendar year 1997 resulting from (i) the issuance of an aggregate $100 million unsecured medium-term notes during 1997 and (ii) the assumption of approximately $73.2 million of mortgage debt in connection with the acquisition of certain property interests during 1997, as compared to the preceding year. The Company has interests in various retail store leases relating to the anchor store premises in neighborhood and community shopping centers. These premises have been substantially sublet to retailers which lease the stores pursuant to net lease agreements. Income from the investment in retail store leases during the years ended December 31, 1997 and 1996 was $3.6 million in each year. General and administrative expenses increased approximately $1.3 million to $11.6 million for the year ended December 31, 1997, as compared to $10.3 million for the preceding calendar year. This increase is primarily attributable to increased senior management and staff levels during 1997 and 1996. During 1997, the Company disposed of a property in Troy, OH. Cash proceeds from the disposition totaling $1.6 million, together with an additional $8.3 million cash investment, were used to acquire an exchange shopping center property located in Ocala, FL. Net income for the year ended December 31, 1997 of approximately $85.8 million represented an improvement of approximately $12.0 million, as compared with net income of approximately $73.8 million for the preceding calendar year. After adjusting for the gains on the sale of shopping center properties during both periods, net income for 1997 increased by $12.6 million, or $.20 per share, compared to 1996. This substantially improved performance was primarily attributable to property acquisitions and redevelopments and increased leasing activity which strengthened operating profitability. 28 Comparison of 1996 to 1995 Revenues from rental property increased approximately $25.0 million, or 17.5% to $168.1 million for the year ended December 31, 1996, as compared with $143.1 million for the year ended December 31, 1995. This increase resulted primarily from the combined effect of shopping center acquisitions during the respective periods (39 property interests in 1996 and 18 property interests in 1995) as well as new leasing and re-tenanting within the portfolio at improved rental rates. Rental property expenses, including depreciation and amortization, increased approximately $8.1 million, or 9.1%, to $97.0 million for the year ended December 31, 1996, as compared with $88.9 million for the preceding calendar year. This increase is primarily due to property acquisitions and renovations within the existing portfolio during the respective periods which gave rise to an overall increase in real estate taxes and depreciation and amortization expenses, as well as increased snow removal costs during 1996. Interest charges increased approximately $1.4 million between the respective periods reflecting higher average outstanding borrowings during calendar year 1996 as compared to the preceding year. During July 1995, certain subsidiaries of the Company obtained interests in retail store leases relating to the anchor store premises in neighborhood and community shopping centers. These premises have been substantially sublet to retailers which lease the stores pursuant to net lease agreements. Income from the investment in retail store leases during the years ended December 31, 1996 and 1995 were $3.6 and $1.8 million, respectively. General and administrative expenses increased approximately $1.5 million to $10.3 million for the year ended December 31, 1996, as compared to $8.8 million for the preceding calendar year. This increase is primarily attributable to increased senior management and staff levels during 1996 and 1995. Other income, net increased approximately $3.3 million for the year ended December 31, 1996 as compared with the preceding year. This increase is primarily attributable to interest earned on funds raised through public equity offerings during 1996 and held in short-term income producing investments pending the acquisition of interests in neighborhood and community shopping center properties. During September 1996, the Company disposed of a property in Watertown, NY. Cash proceeds from the disposition totaling $1.8 million, together with an additional $2.2 million cash investment, were used to acquire an exchange shopping center property during January 1997. Net income for the year ended December 31, 1996 of approximately $73.8 million represented an improvement of approximately $21.9 million, as compared with net income of approximately $51.9 million for the preceding calendar year. After adjusting for the gain on the sale of a shopping center property during 1996, net income for 1996 increased by $21.1 million, or $.26 per share, compared to 1995. This substantially improved performance was primarily attributable to property acquisitions and redevelopments, the investment in retail store leases and sustained leasing activity which strengthened operating profitability. Liquidity and Capital Resources Completion of the Company's IPO, which resulted in net cash proceeds of approximately $116 million, permitted the Company to significantly deleverage its real estate portfolio and has made available the public debt and equity markets as the Company's principal source of capital for the future. A $100 million, unsecured revolving credit facility established in June 1994, which is scheduled to expire in June 2000, and an additional $150 million interim unsecured revolving credit facility established in March 1998, scheduled to expire in June 1998, have made available funds to both finance the purchase of properties and meet any short-term working capital requirements. It is the Company's intention to extend the term of the $150 million interim revolving credit facility and establish it as a continuing part of the Company's total unsecured revolving credit availability. As of December 31, 1997 there were no borrowings under the revolving 29 credit facility. The Company has also implemented a $150 million 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 and redevelopment costs and (ii) better managing the Company's debt maturities. (See Note 7 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) Since the IPO, the Company has completed additional offerings of its public unsecured debt and equity raising in the aggregate over $1.15 billion for the purposes of repaying indebtedness, acquiring neighborhood and community shopping centers and for expanding and improving properties in the portfolio. In connection with its intention to continue to qualify as a REIT for Federal income tax purposes, the Company expects to continue paying regular dividends to its stockholders. These dividends will be paid from operating cash flows which are expected to increase due to property acquisitions and growth in rental revenues in the existing portfolio and from other sources. Since cash used to pay dividends reduces amounts available for capital investment, the Company generally intends to maintain a conservative dividend payout ratio, reserving such amounts as it considers necessary for the expansion and renovation of shopping centers in its portfolio, debt reduction, the acquisition of interests in new properties as suitable opportunities arise, and such other factors as the Board of Directors considers appropriate. Cash dividends paid increased to $82.6 million in 1997, compared to $69.8 million in 1996 and $53.9 million in 1995. The Company's dividend payout ratio, based on funds from operations on a per common share basis, for 1997, 1996 and 1995 was approximately 65.4%, 65.8%, and 66.7%, respectively. Although the Company receives most of its rental payments on a monthly basis, it intends to continue paying dividends quarterly. Amounts accumulated in advance of each quarterly distribution will be invested by the Company in short-term money market or other suitable instruments. The Company anticipates its capital commitment toward redevelopment projects during 1998 will be approximately $30 million. 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 or debt financings, including an increase in the Company's unsecured revolving credit facility, in a manner consistent with its intention to operate with a conservative debt capitalization policy. 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 all dividend payments in accordance with REIT requirements in both the short-term and long-term. In addition, the Company anticipates that cash on hand, borrowings under its revolving credit facilities, issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company. Cash flows from operations as reported in the Consolidated Statements of Cash Flows increased to $125.1 million for 1997 from $101.9 million for 1996 and $74.2 million for 1995. Effects of Inflation 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 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 pay an 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 30 periodically evaluates its exposure to short-term interest rates and will, from time to time, enter into interest rate protection agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate loans. New Accounting Pronouncements In 1997 the Financial Accounting Standards Board issued statement of Financial Accounting Standards No. 130 - "Reporting Comprehensive Income" which established standards for reporting and displaying comprehensive income and its components. In 1997 the Financial Accounting Standards Board also issued statement of Financial Accounting Standards No. 131 "Disclosures about Segments of an Enterprise and Related Information" which established standards for reporting information about operating segments. The Company is required to adopt these two standards with its December 31, 1998 financial statements. The Company is currently evaluating the effect, if any, these statements will have on the Company's financial presentation. Forward-looking statements This annual report on Form 10-K includes certain forward-looking statements reflecting the Company's and management's intentions and expectations, however, many factors which may affect the actual results are difficult to predict. Factors that may cause actual results to differ materially from current expectations include general economic conditions, local real estate conditions, increases in interest rates and increases in operating costs. Accordingly, there is no assurance that the Company's expectations will be realized. Item 8. Financial Statements and Supplementary Data The response to this Item 8 is included as a separate section of this annual report on Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 31 PART III Item 10. Directors and Executive Officers of the Registrant Incorporated herein by reference to the Company's definitive proxy statement to be filed with respect to its Annual Meeting of Stockholders expected to be held on May 28, 1998. Information with respect to the Executive Officers of the Registrant follows Part I, Item 4 of this annual report on Form 10-K. Item 11. Executive Compensation Incorporated herein by reference to the Company's definitive proxy statement to be filed with respect to its Annual Meeting of Stockholders expected to be held on May 28, 1998. Item 12. Security Ownership of Certain Beneficial Owners and Management Incorporated herein by reference to the Company's definitive proxy statement to be filed with respect to its Annual Meeting of Stockholders expected to be held on May 28, 1998. Item 13. Certain Relationships and Related Transactions Incorporated herein by reference to the Company's definitive proxy statement to be filed with respect to its Annual Meeting of Stockholders expected to be held on May 28, 1998. 32 PART IV Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K (a) 1. Financial Statements - Form 10-K The following consolidated financial information Report is included as a separate section of this annual Page report on Form 10-K. --------- Report of Independent Accountants 38 Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 1997 and 1996 39 Consolidated Statements of Income for the years ended December 31, 1997, 1996 and 1995 40 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995 41 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 42 Notes to Consolidated Financial Statements 43 2. Financial Statement Schedules - Schedule II - Valuation and Qualifying Accounts 58 Schedule III - Real Estate and Accumulated Depreciation 59 All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule. 3. Exhibits The exhibits listed on the accompanying Index to Exhibits are filed as part of this report. 34 (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company for the quarter ended December 31, 1997. A current report on Form 8-K was filed on January 21, 1998 to disclose the signing of a definitive agreement to merge The Price REIT, Inc. ("Price REIT") into a wholly owned subsidiary of the Company ("Merger Sub") and to disclose the Agreement and Plan of Merger, dated January 13, 1998 (the "Original Agreement") among the Company, Merger Sub and Price REIT. A current report on Form 8-K was filed on January 30, 1998 to disclose certain historical and pro forma financial information relating to the Company and Price REIT as if the Merger had occurred as of January 1, 1996 and September 30, 1997. A current report on Form 8-K was filed on March 12, 1998 to disclose that the Company, Merger-Sub and Price REIT entered into a first Amendment, dated March 5, 1998, to the Original Agreement. A current report on Form 8-K was filed on January 22, 1998 to disclose certain historical financial information for certain properties acquired during 1997 and pro forma financial information for all shopping center acquisitions during 1997. 33 INDEX TO EXHIBITS Form 10K Exhibits Page - -------- -------- 2.1 -- Form of Plan of Reorganization of Kimco Realty Corporation [Incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form S-11 No. 33-42588]. 2.2 -- Agreement and Plan of Merger dated July 29, 1994 between Kimco Realty Corporation, a Delaware corporation and Kimco Realty Corporation of Maryland, a Maryland corporation [Incorporated by reference to Exhibit 2.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "1994 10-K")]. 2.3 -- Agreement and Plan of Merger, dated as of January 13, 1998, among Kimco Realty Corporation, REIT Sub, Inc. and The Price REIT (the "Merger Agreement). [Incorporated by reference to Exhibit 99.2 to the Company's Current Report on form 8-K filed January 21, 1998]. 2.4 -- First Amendment to the Merger Agreement, dated as of March 5, 1998, among Kimco Realty Corporation, REIT Sub, Inc. and The Price REIT, Inc. [Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed March 12, 1998]. 3.1 -- Articles of Amendment and Restatement of the Company, dated August 4, 1994 [Incorporated by reference to Exhibit 3.1 to the 1994 10-K]. 3.2 -- By-laws of the Company, as amended to August 4, 1994. 3.3 -- Articles Supplementary relating to the 8 1/2% Class B Cumulative Redeemable Preferred Stock, par value $1.00 per share, of the Company, dated July 25, 1995. [Incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (file #1-10899) (the "1995 Form 10-K")]. 3.4 -- Articles Supplementary relating to the 8 3/8% Class C Cumulative Redeemable Preferred Stock, par value $1.00 per share, of the Company, dated April 9, 1996 [Incorp- orated by reference to Exhibit 3.4 to the 1996 Form 10-K]. 4.1 -- Agreement of the Company pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K [Incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Company's Registration Statement on Form S-11 No. 33-42588]. 4.2 -- Form of $100 million 6-1/2% Senior Notes due 2003 [Incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, (file #1-10899) (the "1993 Form 10-K")]. 4.3 -- Form of $100 million Floating Rate Senior Notes due 1999 [Incorporated by reference to Exhibit 4.3 to the 1993 Form 10-K]. 4.4 -- Certificate of Designations [Incorporated by reference to Exhibit 4(d) to Amendment No. 1 to the Registration Statement on Form S-3 dated September 10, 1993 (the "Registration Statement", Commission File No. 33-67552)]. 4.5 -- Indenture dated September 1, 1993 between Kimco Realty Corporation and IBJ Schroder Bank and Trust Company [Incorporated by reference to Exhibit 4(a) to the Registration Statement]. 4.6 -- First Supplemental Indenture, dated as of August 4, 1994. [Incorporated by reference to Exhibit 4.6 to the 1995 Form 10-K.] 4.7 -- Second Supplemental Indenture, dated as of April 7, 1995 [Incorporated by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K dated April 7, 1995 (the "April 1995 8-K")]. 34 INDEX TO EXHIBITS (continued) Form 10K Page -------- Exhibits - -------- 4.8 -- Form of Medium-Term Note (Fixed Rate) [Incorporated by reference to Exhibit 4(b) to the April 1995 8-K]. 4.9 -- Form of Medium-Term Note (Floating Rate) [Incorporated by reference to Exhibit 4(c) to the April 1995 8-K]. 10.1 -- Form of Acquisition Option Agreement between the Company and the subsidiary named therein [Incorporated by reference to Exhibit 10.1 to Amendment No. 3 to the Company's Registration Statement on Form S-11 No. 33-42588]. 10.2 -- Management Agreement between the Company and KC Holdings, Inc. [Incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-11 No. 33-47915]. 10.3 -- Amended and Restated Stock Option Plan [Incorporated by reference to Exhibit 10.3 to the 1995 Form 10-K.] 10.4 -- Credit Agreement among Kimco Realty Corporation, The Several Lenders from Time to Time Parties Hereto, Chemical Bank and The First National Bank of Chicago, as Co-Managers and Chemical Bank, as Administrative Agent, dated as of June 30, 1994. [Incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1994]. 10.5 -- Employment Agreement, Restricted Equity Agreement, Non-Qualified and Incentive Stock Option Agreement, and Price Condition Non-Qualified and Incentive Stock Option Agreement between Kimco Realty Corporation and Michael J. Flynn, each dated November 1, 1995 [Incorporated by reference to Exhibit 10.5 to the 1995 Form 10-K]. 10.6 -- Employment Agreement between Kimco Realty Corporation and Bruce M. Kauderer, dated May 5, 1995 [Incorporated by Reference to Exhibit 10.6 to the 1996 Form 10-K]. *10.7 -- Employment Agreement between Kimco Realty Corporation and Michael V. Pappagallo, dated April 30, 1997. 63 *10.8 -- Credit Agreement among Kimco Realty Corporation, The Several Lenders from Time to Time, Parties Hereto, The Chase Manhattan Bank and The First National Bank of Chicago, as Co-Managers and The Chase Manhattan Bank, as Administrative Agent, dated as of March 2, 1998. 69 *12.1 -- Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 127 *12.2 -- Computation of Ratio of Funds from Operations to Combined Fixed Charges and Preferred Stock Dividends. 128 *21.1 -- Subsidiaries of the Company 129 *23.1 -- Consent of Coopers & Lybrand L.L.P. 135 99.1 -- Prospectus of Kimco Realty Corporation [Incorporated by reference to the Prospectus dated November 4, 1997, filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended]. - -------------------------------------------------------------------------------- * Filed herewith. 35 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KIMCO REALTY CORPORATION (Registrant) By: /s/ Milton Cooper ----------------------- Milton Cooper Chief Executive Officer Dated: March 26, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- /s/ Martin S. Kimmel Chairman (Emeritus) of March 26, 1998 - --------------------------- the Board of Directors Martin S. Kimmel /s/ Milton Cooper Chairman of the Board March 26, 1998 - --------------------------- of Directors and Chief Milton Cooper Executive Officer /s/ Michael J. Flynn Vice Chairman of the March 26, 1998 - --------------------------- Board of Directors, Michael J. Flynn President and Chief Operating Officer /s/ Richard G. Dooley Director March 26, 1998 - -------------------------- Richard G. Dooley /s/ Joe Grills Director March 26, 1998 - -------------------------- Joe Grills /s/ Frank Lourenso Director March 26, 1998 - -------------------------- Frank Lourenso /s/ Michael V. Pappagallo Chief Financial Officer March 26, 1998 - -------------------------- Michael V. Pappagallo /s/ Glenn G. Cohen Treasurer March 26, 1998 - --------------------------- Glenn G. Cohen /s/ Toni Calandrino Controller March 26, 1998 - --------------------------- Toni Calandrino 36 ANNUAL REPORT ON FORM 10-K ITEM 8, ITEM 14 (a) (1) and (2) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES ------- FORM 10-K Page No. --------- KIMCO REALTY CORPORATION AND SUBSIDIARIES Report of Independent Accountants 38 Consolidated Financial Statements and Financial Statement Schedules: Consolidated Balance Sheets as of December 31, 1997 and 1996 39 Consolidated Statements of Income for the years ended December 31, 1997, 1996 and 1995 40 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995 41 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 42 Notes to Consolidated Financial Statements 43 Financial Statement Schedules: II. Valuation and Qualifying Accounts 58 III. Real Estate and Accumulated Depreciation 59 37 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Kimco Realty Corporation: We have audited the consolidated financial statements and the financial statement schedules of Kimco Realty Corporation (the "Company") and Subsidiaries listed in the index on the preceding page of this annual report on Form 10-K. These financial statements and the financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Kimco Realty Corporation and Subsidiaries as of December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. New York, New York February 27, 1998, except for Note 17, for which the date is March 5, 1998. 38 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS -----------------------------------------
December 31, December 31, 1997 1996 --------------- --------------- ASSETS: Real Estate Rental property Land $212,019,596 $165,636,244 Buildings and improvements 1,190,828,854 905,033,615 --------------- --------------- 1,402,848,450 1,070,669,859 Less, accumulated depreciation and amortization 207,408,091 180,552,647 --------------- --------------- 1,195,440,359 890,117,212 Undeveloped land 1,347,709 1,386,127 --------------- --------------- Real estate, net 1,196,788,068 891,503,339 Investment in retail store leases 15,938,041 18,994,321 Investments and advances in real estate joint ventures 9,794,142 15,143,222 Cash and cash equivalents 30,978,178 37,425,206 Accounts and notes receivable 16,203,454 13,986,138 Deferred charges and prepaid expenses 21,260,041 17,854,754 Other assets 52,928,200 28,125,581 --------------- --------------- $1,343,890,124 $1,023,032,561 =============== =============== LIABILITIES & STOCKHOLDERS' EQUITY: Notes payable $410,250,000 $310,250,000 Mortgages payable 121,363,908 54,404,939 Accounts payable and accrued expenses 34,288,409 21,983,886 Dividends payable 22,545,806 18,720,819 Other liabilities 7,590,856 7,242,868 --------------- --------------- 596,038,979 412,602,512 --------------- --------------- Minority interests in partnerships 4,531,934 4,659,080 --------------- --------------- Commitments and contingencies Stockholders' equity Preferred Stock, $1 par value, authorized 5,000,000 and 930,000 shares, respectively Class A Preferred Stock, authorized 345,000 shares Issued and outstanding 300,000 shares 300,000 300,000 Aggregate liquidation preference $75,000,000 Class B Preferred Stock, authorized 230,000 shares Issued and outstanding 200,000 shares 200,000 200,000 Aggregate liquidation preference $50,000,000 Class C Preferred Stock, authorized 460,000 shares Issued and outstanding 400,000 shares 400,000 400,000 Aggregate liquidation preference $100,000,000 Common stock, $.01 par value, Authorized 100,000,000, and 50,000,000 shares, respectively Issued and outstanding 40,394,805 and 36,215,055 shares, respectively 403,948 362,151 Paid-in capital 857,658,054 719,601,956 Cumulative distributions in excess of net income (115,642,791) (115,093,138) --------------- --------------- 743,319,211 605,770,969 --------------- --------------- $1,343,890,124 $1,023,032,561 =============== ===============
The accompanying notes are an integral part of these consolidated financial statements. 39 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME ----------------
Year Ended December 31, ----------------------------------------------- 1997 1996 1995 ------------- ------------- ------------- Revenues from rental property $198,929,403 $168,144,419 $143,132,165 ------------- ------------- ------------- Rental property expenses: Rent 4,873,200 1,417,263 1,301,340 Real estate taxes 26,345,685 19,815,808 16,869,710 Interest 31,744,762 27,019,283 25,585,063 Operating and maintenance 22,194,628 21,659,620 18,935,374 Depreciation and amortization 30,052,714 27,066,709 26,187,794 ------------- ------------- ------------- 115,210,989 96,978,683 88,879,281 ------------- ------------- ------------- Income from rental property 83,718,414 71,165,736 54,252,884 Income from investment in retail store leases 3,571,946 3,631,845 1,810,505 ------------- ------------- ------------- 87,290,360 74,797,581 56,063,389 Management fee income 3,276,152 3,447,577 3,736,062 General and administrative expenses (11,651,341) (10,333,924) (8,831,626) Equity in income (losses) of real estate joint ventures, net 1,116,988 820,083 (288,582) Minority interests in income of partnerships, net (463,522) (470,441) (215,656) Other income, net 6,023,813 4,764,062 1,458,212 ------------- ------------- ------------- Income before gain on sale of shopping center 85,592,450 73,024,938 51,921,799 Gain on sale of shopping center 243,995 801,955 -- ------------- ------------- ------------- Net income $85,836,445 $73,826,893 $51,921,799 ============= ============= ============= Net income applicable to common shares $67,398,745 $57,692,418 $44,291,243 ============= ============= ============= Net income per common share Basic $1.80 $1.61 $1.33 ============= ============= ============= Diluted $1.78 $1.59 $1.32 ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements. 40 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended December 31, 1997, 1996 and 1995 -----------------
Preferred Stock Common Stock --------------------- -------------------------- Paid-in Issued Amount Issued Amount Capital ------- --------- ---------- --------- ------------- Balance, December 31, 1994 300,000 $ 300,000 30,097,896 $ 300,979 $ 430,935,721 Net income Dividends ($1.47 per common share; $1.9375 and $.99757 per Class A and Class B Depositary Share, respectively) Issuance of preferred stock 200,000 200,000 47,975,027 Issuance of common stock 3,592,871 35,929 82,724,947 Exercise of common stock options 40,581 405 676,127 ------- --------- ---------- --------- ------------- Balance, December 31, 1995 500,000 500,000 33,731,348 337,313 562,311,822 Net income Dividends ($1.60 per common share; $1.9375, $2.125 and $1.59943 per Class A, Class B and Class C Depositary Share, respectively) Issuance of preferred stock 400,000 400,000 96,037,337 Issuance of common stock 2,320,125 23,201 58,087,001 Exercise of common stock options 163,582 1,637 3,165,796 ------- --------- ---------- --------- ------------- Balance, December 31, 1996 900,000 900,000 36,215,055 362,151 719,601,956 Net income Dividends ($1.77 per common share; $1.9375, $2.125 and $2.0938 per Class A, Class B and Class C Depositary Share, respectively) Issuance of common stock 4,000,000 40,000 134,293,408 Exercise of common stock options 179,750 1,797 3,762,690 ------- --------- ---------- --------- ------------- Balance, December 31, 1997 900,000 $ 900,000 40,394,805 $ 403,948 $ 857,658,054 ======= ========= ========== ========= ============= Cumulative Distributions Total in Excess Stockholders' of Net Income Equity -------------- ------------- Balance, December 31, 1994 $ (109,335,607) $322,201,093 Net income 51,921,799 51,921,799 Dividends ($1.47 per common share; $1.9375 and $.99757 per Class A and Class B Depositary Share, respectively) (57,251,375) (57,251,375) Issuance of preferred stock 48,175,027 Issuance of common stock 82,760,876 Exercise of common stock options 676,532 -------------- ------------ Balance, December 31, 1995 (114,665,183) 448,483,952 Net income 73,826,893 73,826,893 Dividends ($1.60 per common share; $1.9375, $2.125 and $1.59943 per Class A, Class B and Class C Depositary Share, respectively) (74,254,848) (74,254,848) Issuance of preferred stock 96,437,337 Issuance of common stock 58,110,202 Exercise of common stock options 3,167,433 -------------- ------------ Balance, December 31, 1996 (115,093,138) 605,770,969 Net income 85,836,445 85,836,445 Dividends ($1.77 per common share; $1.9375, $2.125 and $2.0938 per Class A, Class B and Class C Depositary Share, respectively) (86,386,098) (86,386,098) Issuance of common stock 134,333,408 Exercise of common stock options 3,764,487 -------------- ------------ Balance, December 31, 1997 $ (115,642,791) $743,319,211 ============== ============
The accompanying notes are an integral part of these consolidated financial statements. 41 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS -----------------------------------------
Year Ended December 31, --------------------------------------------------- 1997 1996 1995 ------------- ------------- ------------- Cash flow from operating activities: Net income $ 85,836,445 $ 73,826,893 $ 51,921,799 Adjustments for noncash items - Depreciation and amortization 30,052,714 27,066,709 26,187,794 Gain on sale of shopping center (243,995) (801,955) -- Minority interests in income of partnerships, net 463,522 470,441 215,656 Equity in (income) losses of real estate joint ventures, net (1,116,988) (820,083) 288,582 Change in accounts and notes receivable (2,217,316) 2,626,760 (940,256) Change in accounts payable and accrued expenses 12,304,523 2,730,442 1,162,406 Change in other operating assets and liabilities 28,736 (3,207,396) (4,602,986) ------------- ------------- ------------- Net cash flow provided by operations 125,107,641 101,891,811 74,232,995 ------------- ------------- ------------- Cash flow from investing activities: Acquisition of and improvements to real estate (261,225,536) (140,916,684) (105,139,671) Investment in retail store leases -- -- (23,026,673) Investment in real estate joint ventures (4,625,068) -- (6,523,502) Investment in marketable equity securities (11,138,247) (4,935,008) (2,470,990) Advances to affiliated companies (14,036,000) -- -- Construction advances to real estate joint ventures -- -- (1,870,500) Reimbursement of advances to real estate joint ventures 8,651,653 -- 6,794,928 Proceeds from sale of shopping center 1,550,000 1,825,000 4,975,582 ------------- ------------- ------------- Net cash flow used for investing activities (280,823,198) (144,026,692) (127,260,826) ------------- ------------- ------------- Cash flow from financing activities: Principal payments on debt, excluding normal amortization of rental property debt (4,650,000) (8,299,980) (29,037,746) Principal payments on rental property debt, net (1,618,255) (1,267,816) (1,221,912) Change in notes payable 100,000,000 (15,000,000) 20,050,000 Dividends paid (82,561,111) (69,751,755) (53,885,490) Proceeds from issuance of stock 138,097,895 157,714,972 122,343,419 ------------- ------------- ------------- Net cash flow provided by financing activities 149,268,529 63,395,421 58,248,271 ------------- ------------- ------------- Increase(decrease) in cash and cash equivalents (6,447,028) 21,260,540 5,220,440 Cash and cash equivalents, beginning of year 37,425,206 16,164,666 10,944,226 ------------- ------------- ------------- Cash and cash equivalents, end of year $ 30,978,178 $ 37,425,206 $ 16,164,666 ============= ============= ============= Supplemental schedule of noncash investing/financing activity: Acquisition of real estate interests by issuance of common stock and/or assumption of debt $ 73,227,224 $ -- $ 38,714,717 ============= ============= ============= Declaration of dividends paid in succeeding year $ 22,545,806 $ 18,720,819 $ 14,217,726 ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements. 42 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------- 1. Summary of Significant Accounting Policies: Business Kimco Realty Corporation (the "Company"), its subsidiaries, affiliates and related real estate joint ventures are engaged principally in the operation of neighborhood and community shopping centers which are anchored generally by discount department stores, supermarkets or drugstores. Additionally, the Company provides management services for shopping centers owned by affiliated entities and various real estate joint ventures. The Company seeks to reduce its operating and leasing risks through diversification achieved by the geographic distribution of its properties, avoiding dependence on any single property, and a large tenant base. At December 31, 1997, the Company's single largest neighborhood and community shopping center accounted for only 1.9% of the Company's annualized base rental revenues and only 1.0% of the Company's total shopping center gross leasable area ("GLA"). At December 31, 1997, the Company's five largest tenants include Venture, Kmart Corporation, Kohl's, WalMart and TJX Companies, which represent approximately 11.7%, 4.1%, 3.4%, 2.7% and 2.2%, respectively, of the Company's annualized base rental revenues. Principles of Consolidation and Estimates The accompanying Consolidated Financial Statements include the accounts of the Company, its subsidiaries, all of which are wholly-owned, and all majority-owned partnerships. All significant intercompany balances and transactions have been eliminated in consolidation. Generally accepted accounting principles require the Company's management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during a reporting period. Actual results may differ from such estimates. Real Estate Real estate assets are stated at cost, less accumulated depreciation and amortization. Such carrying amounts would be adjusted, if necessary, to reflect an impairment in the value of the assets. Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets, as follows: Buildings 15 to 39 years Fixtures and leasehold improvements Terms of leases or useful lives, whichever is shorter Expenditures for maintenance and repairs are charged to operations as incurred. Significant renovations are capitalized. 43 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- Investments in Real Estate Joint Ventures Investments in real estate joint ventures are accounted for on the equity method. Deferred Leasing and Financing Costs Costs incurred in obtaining tenant leases and long-term financing, included in deferred charges and prepaid expenses in the accompanying Consolidated Balance Sheets, are amortized over the terms of the related leases or debt agreements, as applicable. Revenue Recognition Minimum revenues from rental property are recognized on a straight-line basis over the terms of the related leases. Income Taxes The Company and its subsidiaries file a consolidated Federal income tax return. The Company has made an election to qualify, and believes it is operating so as to qualify, as a Real Estate Investment Trust (a "REIT") for Federal income tax purposes. Accordingly, 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. Per Share Data In 1997 the Financial Accounting Standards Board issued Financial Accounting Standards No. 128 - "Earnings Per Share". Statement 128 replaces the presentation of primary and fully diluted earnings per share ("EPS") pursuant to Accounting Principles Board Opinion No. 15 with the presentation of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares and then shared in the earnings of the Company. The following table sets forth the reconciliation between basic and diluted weighted average number of shares outstanding for each period: 1997 1996 1995 ---------- ---------- ---------- Basic EPS - weighted average number of common shares outstanding 37,387,984 35,906,029 33,388,004 Effect of dilutive securities - Stock options 462,076 312,993 244,633 ---------- ---------- ---------- Diluted EPS - weighted average number of common shares 37,850,060 36,219,022 33,632,637 ========== ========== ========== 44 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- New Accounting Pronouncements In 1997 the Financial Accounting Standards Board issued statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" which established standards for reporting and displaying comprehensive income and its components. In 1997 the Financial Accounting Standards Board also issued statement of Financial Accounting Standards No. 131 - "Disclosures about Segments of an Enterprise and Related Information" which established standards for reporting information about operating segments. The Company is required to adopt these two standards with its December 31, 1998 financial statements. The Company is currently evaluating the effect, if any, these statements will have on the Company's financial presentation. Reclassifications Certain account balances in the accompanying Consolidated Balance Sheet as of December 31, 1996, have been reclassified to conform with the current year presentation. 2. Shopping Center Acquisitions: During the years 1997, 1996 and 1995 certain subsidiaries of the Company acquired real estate interests in various shopping center properties at aggregate costs of approximately $146 million, $39 million and $83 million, respectively. These acquisitions have been funded principally through the application of proceeds from the Company's public unsecured debt and equity offerings. (See Notes 7 and 11.) 3. Retail Property Acquisitions: In August 1997, certain subsidiaries of the Company acquired certain real estate assets from a retailer consisting of interests in 49 fee and leasehold properties totaling approximately 5.9 million square feet of leasable area located in Illinois, Missouri, Texas, Oklahoma, Kansas, Indiana and Iowa. The aggregate price was approximately $130 million, consisting of $70.5 million in cash and the assumption of approximately $59.5 million of existing mortgage debt on certain of these properties. The mortgage debt bears interest at 10.54% per annum and cannot be repaid without penalty, until its maturity on July 1, 2000. In addition, the Company was granted (i) an option to acquire two other properties for $4.5 million, (ii) an option to acquire up to 11 additional properties should certain conditions be satisfied and (iii) rights of first refusal, for a period of five years, to acquire 31 additional properties containing 4.2 million square feet of leasable area. The transaction also included approximately 573,000 square feet of retail space substantially occupied by other retailers and approximately 165,000 square feet of available retail space. Simultaneously with this transaction, the Company entered into a long-term unitary net lease covering all premises occupied by this retailer pursuant to which this seller/tenant may remain in occupancy and continue to conduct business in these premises. 45 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- During August 1996, certain subsidiaries of the Company acquired interests in 16 retail properties, including 2 properties to which the Company and its affiliates already held fee title, for $21.8 million in cash. These property interests were acquired from a retailer which had elected to discontinue operation of its discount department store division. During January 1996, certain subsidiaries of the Company entered into two sale-leaseback transactions pursuant to which it acquired fee title to 16 retail properties located in Texas, Iowa, Oklahoma, Illinois and Kansas for a purchase price of $40 million. Simultaneously, the Company executed two long-term unitary net leases covering the 16 locations pursuant to which the seller/tenant may remain in occupancy and continue to conduct business in these premises. During July 1997, the Company consented to the modification of these two unitary net lease agreements whereby the Company entered into two unitary net lease agreements with another retailer on 9 of the retail properties and a new unitary lease with the seller/tenant on the remaining 7 locations. These retail property acquisitions have been funded principally through the the application of proceeds from the Company's public unsecured debt and equity offerings. (See Notes 7 and 11.) 4. Investment in Retail Store Leases: The Company has interests in various retail store leases relating to the anchor store premises in neighborhood and community shopping centers. These premises have been substantially sublet to retailers which lease the stores pursuant to net lease agreements. Income from the investment in these retail store leases during the years ended December 31, 1997 and 1996 was approximately $3.6 million in each year. These amounts represent sublease revenues during the years ended December 31, 1997 and 1996 of approximately $20.9 million and $21.0 million, respectively, less related expenses of $15.2 million and $15.2 million, respectively, and an amount, which in management's estimate, reasonably provides for the recovery of the investment over a period representing the expected remaining term of the retail store leases. The Company's future minimum revenues under the terms of all noncancellable tenant subleases and future minimum obligations through the remaining terms of its retail store leases are as follows (in millions of dollars): 1998, $20.3 and $15.4; 1999, $19.3 and $14.2; 2000, $16.5 and $12.3; 2001, $13.1 and $9.8; 2002, $9.5 and $7.2; and thereafter, $26.3 and $18.4, respectively. 46 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- 5. Investments and Advances in Real Estate Joint Ventures: The Company and its subsidiaries have investments in and advances to various real estate joint ventures. These joint ventures are engaged in the operation of shopping centers which are either owned or held under long-term operating leases. Summarized financial information for the recurring operations of these real estate joint ventures is as follows (in millions of dollars): December 31, ------------------------ 1997 1996 ------- ------- Assets: Real estate, net $58.3 $41.5 Other assets 7.8 4.0 ------- ------- $66.1 $45.5 ======= ======= Liabilities and Partners' Capital/(Deficit): Mortgages payable $63.5 $30.3 Other liabilities 19.7 15.1 Partners' Capital/(Deficit) (17.1) .1 ------- ------- $66.1 $45.5 ======= ======= Years Ended December 31, ------------------------ 1997 1996 1995 ------- ------- ------- Revenues from rental property $14.8 $11.2 $8.3 Operating expenses (3.6) (2.9) (2.1) Mortgage interest (3.1) (2.5) (2.4) Depreciation and amortization (2.2) (2.2) (2.0) Other, net (1.8) (1.3) (1.2) ------- ------- ------- Net income $4.1 $2.3 $.6 ======= ======= ======= Other liabilities in the accompanying Consolidated Balance Sheets include accounts with certain real estate joint ventures totaling approximately $5.1 and $4.1 million at December 31, 1997 and 1996, respectively. The Company and its subsidiaries have varying equity interests in these real estate joint ventures which may differ from their proportionate share of net income or loss recognized in accordance with generally accepted accounting principles. 6. Cash and Cash Equivalents: Cash and cash equivalents (demand deposits in banks, commercial paper and certificates of deposit with original maturities of three months or less) includes tenants' security deposits, escrowed funds and other restricted deposits approximating $10.1 million and $2.4 million at December 31, 1997 and 1996, respectively. 47 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- Cash and cash equivalent balances may, at a limited number of banks and financial institutions, exceed insurable amounts. The Company believes it mitigates its risks by investing in or through major financial institutions. Recoverability of investments is dependent upon the performance of the issuers. 7. Notes Payable: The Company has implemented a $150 million unsecured medium-term notes ("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 acquisition and redevelopment costs, and (ii) better managing the Company's debt maturities. During May and July 1997, the Company issued under its MTN program $100 million in fixed-rate senior unsecured medium-term notes (the "1997 Notes"). These notes have maturities ranging from ten to twelve years, and bear interest ranging from 6.96% to 7.56%. Interest on these notes is payable semi-annually in arrears. As of December 31, 1997, a total principal amount of $160.25 million, including the 1997 notes, in fixed-rate senior unsecured notes had been issued under the MTN program primarily for the acquisition of neighborhood and community shopping centers and the expansion and improvement of properties in the Company's portfolio. These notes have maturities ranging from ten to twelve years and bear interest at rates ranging from 6.70% to 7.91%. Interest on these fixed-rate senior unsecured notes is payable semi-annually in arrears. As of December 31, 1997, the Company had $100 million in Floating Rate Senior Notes due 1999 bearing interest at LIBOR plus .50% (6.3% at December 31, 1997). Interest on these floating-rate, senior unsecured notes resets and is payable quarterly in arrears. As of December 31, 1997, the Company had $100 million in 6.5% fixed-rate unsecured Senior Notes due 2003. Interest on these senior unsecured notes is paid semi-annually in arrears. During August 1996, the Company redeemed its $50 million unsecured Floating Rate Senior Notes due in 1998. These Floating Rate Senior Notes, redeemable at par at the option of the Company after May 11, 1996 and bearing interest at LIBOR plus .50%, were refinanced with a $50 million floating-rate unsecured medium-term note issued under the Company's MTN program. This floating-rate medium-term note is due in 1998 and bears interest at LIBOR plus .12% (6.0% at December 31, 1997). Interest on this floating-rate, senior unsecured medium-term note resets and is payable quarterly in arrears. In accordance with the terms of the Indenture pursuant to which the Company's senior, unsecured notes have been issued, the Company is (a) subject to maintaining certain maximum leverage ratios on both unsecured 48 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- senior corporate and secured debt, minimum debt service coverage ratios and minimum equity levels, and (b) restricted from paying dividends in amounts that exceed by more than $26 million the funds from operations, as defined, generated through the end of the calendar quarter most recently completed prior to the declaration of such dividend; however, this dividend limitation does not apply to any distributions necessary to maintain the Company's qualification as a REIT providing the Company is in compliance with its total leverage limitations. The Company maintains a $100 million, unsecured revolving credit agreement with a group of banks. Borrowings under this facility are available for general corporate purposes, including property acquisitions and redevelopment. Interest on borrowings accrues at a spread (currently .50%) to LIBOR or money-market rates, as applicable, which fluctuates in accordance with changes in the Company's senior debt ratings. A fee approximating .14% per annum is payable on that portion of the facility which remains unused. Pursuant to the terms of the agreement, the Company, among other things, is (a) subject to maintaining certain maximum leverage ratios on both unsecured senior corporate and secured debt, a minimum debt service coverage ratio and minimum unencumbered asset and equity levels, and (b) restricted from paying dividends in amounts that exceed 90% of funds from operations, as defined, plus 10% of the Company's stockholders' equity determined in accordance with generally accepted accounting principles. There were no borrowings outstanding under this facility at December 31, 1997. This revolving credit facility is scheduled to expire in June 2000. 8. Mortgages Payable: Mortgages payable, collateralized by certain shopping center properties and related tenants' leases, are generally due in monthly installments of principal and/or interest which mature at various dates through 2008. Interest rates range from approximately 6.8% to 12.9% (weighted average interest rate of 9.5% as of December 31, 1997). The scheduled maturities of all mortgages payable as of December 31, 1997, are approximately as follows (in millions of dollars): 1998, $7.9; 1999, $22.6; 2000, $61.6; 2001, $5.7; 2002, $1.2; and thereafter, $22.4. Three of the Company's properties are encumbered by approximately $13.5 million in floating-rate, tax-exempt mortgage bond financing. The rates on the bonds are reset annually, at which time bondholders have the right to require the Company to repurchase the bonds. The Company has engaged a remarketing agent for the purpose of offering for resale those bonds that are tendered to the Company. All bonds tendered for redemption in the past have been remarketed and the Company has arrangements, including letters of credit, with banks to both collateralize the principal amount and accrued interest on such bonds and to fund any repurchase obligations. 9. KC Holdings, Inc.: To facilitate the Company's November 1991 initial public stock offering (the "IPO"), forty-six shopping center properties and certain other assets, together with indebtedness related thereto, were transferred to subsidiaries of KC Holdings, Inc. ("KC Holdings"), a newly-formed corporation that is owned by the stockholders of the Company prior to the 49 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- IPO. The Company continues to manage eighteen of these shopping center properties and was granted ten-year, fixed-price options to reacquire the real estate assets owned by KC Holdings' subsidiaries, subject to any liabilities outstanding with respect to such assets at the time of an option exercise. As of December 31, 1997, KC Holdings' subsidiaries had conveyed 14 shopping centers back to the Company and had disposed of ten additional centers in transactions with third parties. The members of the Company's Board of Directors who are not also shareholders of KC Holdings unanimously approved the purchase of each of the 14 shopping centers that have been reacquired by the Company from KC Holdings. Selected financial information for the twenty-two properties owned by KC Holdings' subsidiaries as of and for the year ended December 31, 1997, is as follows: Real estate, net of accumulated depreciation and amortization, $55.0 million; Notes and mortgages payable, $61.2 million; Revenues from rental property, $11.2 million; Loss from rental operations, $.2 million, after depreciation and amortization deductions of $2.1 million; Income adjustment for real estate joint ventures, net, $.3 million. 10. Fair Value Disclosure of Financial Instruments: All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at amounts which, in management's estimation based upon an interpretation of available market information and valuation methodologies (including discounted cash flow analyses with regard to fixed rate debt) considered appropriate, reasonably approximate their fair values. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition of the Company's financial instruments. 11. Preferred and Common Stock Offerings: On September 30, 1997, the Company completed a primary public stock offering of 4,000,000 shares of common stock at $35.50 per share. The net proceeds from this sale of common stock, totaling approximately $134.5 million (after related transaction costs of approximately $7.5 million), have been used primarily for the acquisition of neighborhood and community shopping centers. On February 2, 1996, the Company completed a primary public stock offering of 2,200,000 shares of common stock at $26.50 per share. The net proceeds from this sale of common stock, totaling approximately $55.0 million (after related transaction costs of approximately $3.4 million), have been used primarily for the acquisition of neighborhood and community shopping centers. On April 10, 1996, the Company completed a public offering of 4,000,000 Depositary Shares (the "Class C Depositary Shares") at $25.00 per share, each such Class C Depositary Share representing 1/10 of a share of the Company's 8-3/8% Class C Cumulative Redeemable Preferred Stock (the "Class C Preferred Stock"), par value $1.00 per share. The cash proceeds to the Company, net of related transaction costs of approximately $3.6 million, totaling approximately $96.4 million, were used for the acquisition of interests in neighborhood and community shopping centers, and the redevelopment, expansion and improvement of properties in the Company's portfolio. 50 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- Dividends on the Class C Depositary Shares are cumulative and payable quarterly in arrears at the rate of 8-3/8% per annum based on the $25 per share initial offering price, or $2.0938 per depositary share. The Class C Depositary Shares are redeemable, in whole or in part, for cash on or after April 15, 2001 at the option of the Company at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The redemption price of the Class C Preferred Stock may be paid solely from the sale proceeds of other capital stock of the Company, which may include other classes or series of preferred stock. The Class C Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The Class C Preferred Stock (represented by the Class C Depositary Shares outstanding) ranks pari passu with the Company's 7-3/4% Class A Cumulative Redeemable Preferred Stock and 8-1/2% Class B Cumulative Redeemable Preferred Stock as to voting rights, priority for receiving dividends and liquidation preferences as set forth below. The Company has outstanding 3,000,000 Depositary Shares (the "Class A Depositary Shares"), each such Class A Depositary Share representing 1/10 of a share of the Company's 7-3/4% Class A Cumulative Redeemable Preferred Stock (the "Class A Preferred Stock"), par value $1.00 per share, and 2,000,000 Depositary Shares (the "Class B Depositary Shares"), each such Class B Depositary Share representing 1/10 of a share of the Company's 8-1/2% Class B Cumulative Redeemable Preferred Stock (the "Class B Preferred Stock"), par value $1.00 per share. Dividends on the Class A Depositary Shares are cumulative and payable quarterly in arrears at the rate of 7-3/4% per annum based on the $25 per share initial offering price, or $1.9375 per depositary share. The Class A Depositary Shares are redeemable, in whole or in part, for cash on or after September 23, 1998 at the option of the Company, at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The Class A Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The Class A Preferred Stock (represented by the Class A Depositary Shares outstanding) ranks pari passu with the Company's Class B Preferred Stock and Class C Preferred Stock as to voting rights, priority for receiving dividends and liquidation preferences as set forth below. Dividends on the Class B Depositary Shares are cumulative and payable quarterly in arrears at the rate of 8-1/2% per annum based on the $25 per share initial offering price, or $2.125 per depositary share. The Class B Depositary Shares are redeemable, in whole or in part, for cash on or after July 15, 2000 at the option of the Company at a redemption price of $25 per depositary share, plus any accrued and unpaid dividends thereon. The redemption price of the Class B Preferred Stock may be paid solely from the sale proceeds of other capital stock of the Company, which may include other classes or series of preferred stock. The Class B Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. The Class B Preferred Stock (represented by the Class B Depositary Shares outstanding) ranks pari passu with the Company's Class A Preferred Stock and Class C Preferred Stock as to voting rights, priority for receiving dividends and liquidation preferences as set forth below. 51 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- Voting Rights - As to any matter on which the Class A Preferred Stock, Class B Preferred Stock and Class C Preferred Stock (collectively, the "Preferred Stock") may vote, including any action by written consent, each share of Preferred Stock shall be entitled to 10 votes, each of which 10 votes may be directed separately by the holder thereof. With respect to each share of Preferred Stock, the holder thereof may designate up to 10 proxies, with each such proxy having the right to vote a whole number of votes (totaling 10 votes per share of Preferred Stock). As a result, each Class A, each Class B and each Class C Depositary Share is entitled to one vote. Liquidation Rights - In the event of any liquidation, dissolution or winding up of the affairs of the Company, the Preferred Stock holders are entitled to be paid, out of the assets of the Company legally available for distribution to its stockholders, a liquidation preference of $250.00 per share ($25 per Class A, Class B and Class C Depositary Share, respectively), plus an amount equal to any accrued and unpaid dividends to the date of payment, before any distribution of assets is made to holders of the Company's common stock or any other capital stock that ranks junior to the Preferred Stock as to liquidation rights. 12. Dispositions of Real Estate: During June 1997, the Company disposed of a property in Troy, OH. Proceeds from the disposition totaling approximately $1.6 million, together with an additional $8.3 million cash investment, were used to acquire an exchange shopping center property located in Ocala, FL. During September 1996, the Company disposed of a property in Watertown, NY. Proceeds from the disposition totaling approximately $1.8 million in cash, together with an additional $2.2 million cash investment, were used to acquire an exchange shopping center property located in Lafayette, IN during January 1997. 13. Transactions with Related Parties: The Company provides management services for shopping centers owned principally by affiliated entities and various real estate joint ventures in which certain stockholders of the Company have economic interests. Such services are performed pursuant to management agreements which provide for fees based upon a percentage of gross revenues from the properties and other direct costs incurred in connection with management of the centers. The Consolidated Statements of Income include management fee income from KC Holdings of approximately $.6 million, $.6 million, and $.6 million during years 1997, 1996 and 1995, respectively. Reference should be made to Notes 5 and 9 for further information regarding transactions with related parties. 14. Commitments and Contingencies: The Company and its subsidiaries are engaged in the operation of shopping centers which are either owned or held under long-term leases which expire at various dates through 2076. The Company and its subsidiaries, in turn, lease premises in these centers to tenants pursuant to lease agreements which provide for terms ranging generally from 5 to 25 years and for annual 52 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- minimum rentals plus incremental rents based on operating expense levels and tenants' sales volumes. Annual minimum rentals plus incremental rents based on operating expense levels comprised approximately 98%, 97% and 97% of total revenues from rental property for the years ended December 31, 1997, 1996 and 1995, respectively. The future minimum revenues from rental property under the terms of all noncancellable tenant leases, assuming no new or renegotiated leases are executed for such premises, for future years are approximately as follows (in millions of dollars): 1998, $175.1; 1999, $165.8; 2000, $153.1; 2001, $139.2; 2002, $126.1; and thereafter, $1,206.9. Minimum rental payments under the terms of all noncancellable operating leases pertaining to its shopping center portfolio for future years are approximately as follows (in millions of dollars): 1998, $9.8; 1999, $9.4; 2000, $8.8; 2001, $7.5; 2002, $6.6; and thereafter, $79.6. 15. Incentive Plans: The Company maintains a stock option plan (the "Plan") pursuant to which a maximum 3,000,000 shares of the Company's common stock may be issued for qualified and non-qualified options. Options granted under the Plan generally vest ratably over a three-year term, expire ten years from the date of grant and are exercisable at the market price on the date of grant, unless otherwise determined by the Board in its sole discretion. Information with respect to stock options under the Plan for years 1997, 1996 and 1995 is as follows:
Weighted Average Exercise Price Shares Per share ------ --------- Options outstanding, December 31, 1994 1,069,269 $19.87 Exercised (40,581) $16.67 Granted 423,540 $24.96 --------- Options outstanding, December 31, 1995 1,452,228 $21.44 Exercised (163,582) $19.36 Granted 315,500 $28.32 --------- Options outstanding, December 31, 1996 1,604,146 $23.01 Exercised (179,750) $20.94 Granted 470,700 $31.72 --------- Options outstanding, December 31, 1997 1,895,096 $25.37 ========= Options exercisable - December 31, 1995 762,204 $19.45 ========= ====== December 31, 1996 954,175 $20.84 ========= ====== December 31, 1997 1,126,093 $22.39 ========= ======
The exercise prices for options outstanding as of December 31, 1997 range from $13.33 to $34.19 per share. The weighted average remaining contractual life for options outstanding as of December 31, 1997 was approximately 7.6 years. Options to purchase 329,673, 800,373 and 53 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- 1,115,873 shares of the Company's common stock were available for issuance under the Plan at December 31, 1997, 1996 and 1995, respectively. The Company has elected to adopt the disclosure-only provisions of Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation". Accordingly, no compensation cost has been recognized with regard to options granted under the Plan in the accompanying Consolidated Statements of Income. If stock-based compensation costs had been recognized based on the estimated fair values at the dates of grant for options awarded during 1997, 1996 and 1995, net income and net income per common share for these calendar years would have been reduced by approximately $.7 million, or $.02 per share, $.4 million, or $.01 per share, and $.1 million, or less than $.01 per share, respectively. These pro forma adjustments to net income and net income per common share assume fair values of each option grant estimated using the Black-Scholes option pricing formula. The more significant assumptions underlying the determination of such fair values for options granted during 1997, 1996 and 1995 include: (i) weighted average risk-free interest rates of 6.18%, 6.24% and 6.02%, respectively; (ii) weighted average expected option lives of 8.2 years, 7.25 years and 6.13 years, respectively; (iii) an expected volatility of 15.65%, 15.79% and 15.79%, respectively, and (iv) an expected dividend yield of 6.44%, 6.82% and 6.82%, respectively. The per share weighted average fair value at the dates of grant for options awarded during 1997, 1996 and 1995 was $3.02, $2.50 and $2.14, respectively. The Company maintains a 401(k) retirement plan covering substantially all officers and employees which permits participants to defer up to a maximum 10% of their eligible compensation. This deferred compensation, together with Company matching contributions which generally equal employee deferrals up to a maximum of 5%, is fully vested and funded as of December 31, 1997. Company contributions to the plan totaled less than $.3 million for each of years 1997, 1996 and 1995. 16. Supplemental Financial Information: The following summary represents the results of operations, expressed in thousands except per share amounts, for each quarter during years 1997 and 1996. 1997 (Unaudited) --------------------------------------------- Mar. 31 June 30 Sept. 30 Dec. 31 ------- ------- --------- ------- Revenues from rental property $45,195 $45,276 $50,823 $57,635 Net income $20,604 $21,045 $20,641 $23,546 Net income, per common share: Basic $.44 $.45 $.44 $.47 Diluted $.44 $.45 $.43 $.46 54 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued ---------- 1996 (Unaudited) Mar. 31 June 30 Sept. 30 Dec. 31 ------- ------- -------- ------- Revenues from rental property $41,662 $42,444 $40,837 $43,201 Net income $15,928 $18,439 $19,833 $19,627 Net income, per common share: Basic $.38 $.39 $.42 $.42 Diluted $.38 $.39 $.41 $.41 Interest paid during years 1997, 1996 and 1995 approximated $29.9 million, $26.9 million and $25.0 million, respectively. Accounts and notes receivable in the accompanying Consolidated Balance Sheets are net of estimated unrecoverable amounts of approximately $1.8 million and $1.4 million, respectively, at December 31, 1997 and 1996. 17. Subsequent Events: Property Acquisitions / Disposition In January 1998, the Company acquired seven neighborhood and community shopping center properties comprising approximately 632,000 square feet of GLA in the Denver, CO market for approximately $43.6 million, including the assumption of $4.2 million of mortgage debt. These properties are primarily anchored by supermarket or drugstore tenants. In addition, the Company, through an affiliated entity, acquired interests in three retail properties in the Chicago, IL market comprising approximately 516,000 square feet of GLA for an aggregate purchase price of approximately $23.7 million. These properties include approximately 70,000 square feet of showroom space and adjoining warehouses of approximately 100,000 square feet at each location. Simultaneous with this transaction, the Company leased, to a national furniture retailer, the showroom portion of each property under individual long-term leases. The Company is currently planning the redevelopment of the warehouse portion of each property. The Company disposed of a property in Pinellas Park, FL during January 1998. Cash proceeds from the disposition totaling $2.3 million will be used to acquire an exchange shopping center property. Price REIT Merger On January 13, 1998, the Company and The Price REIT, Inc., a Maryland corporation ("Price REIT") signed a definitive agreement to merge, (the "Merger"). Pursuant to the terms of the Agreement and Plan of Merger dated January 13, 1998, as amended March 5, 1998 (the "Merger Agreement"), Price REIT will be merged into a newly formed wholly-owned subsidiary of the Company. The transaction is intended, for financial accounting purposes, to be accounted for as a purchase. Under the terms of the Merger Agreement each share of Price REIT common stock will be exchanged for a combination of the Company's common stock and Kimco depositary shares (the "Class D Depository Shares"), each 55 depositary share representing a 1/10 of a share interest in a new issue of Kimco 7.5% Class D Cumulative Convertible Preferred Stock (the "Class D Convertible Preferred Stock") having an aggregate value of at least $45 based on the "Kimco Average Price" (as defined herein) and the liquidation preference of the Class D Depositary Shares (collectively, the "Merger Consideration"). The Merger, which is expected to be completed in mid-1998, is subject to customary closing conditions, including certain regulatory approvals and the approval of the issuance of the Merger Consideration by the stockholders of the Company and the approval of the Merger by the stockholders of Price REIT. The Merger Agreement provides for a pre-closing adjustment to the number of shares of the Company's common stock and Class D Depositary Shares issuable per share of Price REIT common stock in order to ensure that Price REIT stockholders will receive at least, and possibly more than, $45 in the Company's securities per Price REIT share. Specifically, in the event that the average closing price of the Company's common stock (the "Kimco Average Price" as defined herein) ending on and including the seventh trading day immediately preceding the date of the Company's 1998 annual meeting of stockholders plus $10 is less than $45, the amount of Class D Depositary Shares will be increased up to a maximum of $11.25 of Class D Depositary Shares (based on a liquidation preference of $25 per Class D Depositary Share) to arrive at a value of $45. To the extent that the issuance of $11.25 of Class D Depositary Shares would still result in less than $45 of combined value, the number of shares of the Company's common stock issuable per Price REIT share will be increased in order to arrive at a total of $45 delivered in the Company's securities. However, the Company may elect to terminate the Merger Agreement in the event its Average Price (the "Average Price", as defined herein) during a specified calculation period or the closing price on the scheduled closing date or on either of the two days prior to the scheduled closing date is less than $32. In the event that the "Kimco Average Price" (as defined herein) plus $10 is greater than $45, each share of Price REIT common stock would continue to be converted into one share of the Company's common stock and the amount of Class D Depositary Shares will be decreased by 50% of the amount by which the Kimco Average Price referred to above plus $10 exceeds $45. However, Price REIT stockholders will never receive less than $9 of Class D Depositary Shares. Thus, as a result of the merger, Price REIT stockholders will obtain the benefit of 50% of the increase in value of the Company's common stock as reflected in the Kimco Average Price between $35 and $37, and 100% of any increase above $37. As used herein, the "Kimco Average Price" shall be the average of Average Prices (as defined herein) of the the Company's common stock for fifteen (15) randomly selected trading days within the thirty (30) consecutive trading days ending on and including the seventh trading day immediately preceding the date of the Company's 1998 annual meeting of stockholders. As used herein, the "Average Price" for any date means the average of the daily high and low prices of the Company's common stock on the New York Stock Exchange (the "NYSE") as reported in The Wall Street Journal, or if not reported thereby, by another authoritative source. The random selection of trading days shall be made under the joint supervision of the financial advisors retained by the Company and Price REIT in connection with the transactions contemplated hereby. 56 The dividend rate on the Class D Depositary Shares will be 7.5 % per annum, or, if greater, the dividend on the shares of the Company's common stock into which a Class D Depositary Share is convertible plus $0.0275 quarterly. The Class D Depositary Shares will be convertible into the Company's common stock at a conversion price of $40.25 per share at any time by the holder and may be redeemed by the Company at the conversion price in shares of the Company's common stock at any time after the third anniversary of the Merger if for any 20 trading days during a rolling 30 day consecutive trading-day period the Company's common stock closing price exceeds $48.30, subject to certain adjustments. The Class D Depositary Shares are expected to be listed on the NYSE. The Merger Agreement also provides that each party will be entitled to a Break-Up Fee in the amount of $12,500,000 or reimbursement of expenses up to $2,000,000 in the event the agreement is terminated under various circumstances. The Company has also agreed that if it elects to terminate the Merger Agreement because its common stock price closes below $32 Price REIT will be entitled to receive $6,250,000. Financings On March 2, 1998, the Company obtained an additional $150 million interim unsecured credit facility to both finance the purchase of properties and meet any short-term working capital requirements. The terms of this interim facility are substantially the same as those under the Company's $100 million revolving credit facility (See Note 7). This facility is scheduled to expire in June 1998, however, it is the Company's intention to extend the term of this facility and establish it as a continuing part of the Company's total unsecured revolving credit availability. 18. Pro Forma Financial Information (Unaudited): The Company and certain of its subsidiaries acquired and disposed of interests in shopping center properties during 1997. The pro forma financial information set forth below is based upon the Company's historical Consolidated Statements of Income for years 1997 and 1996, adjusted to give effect to these transactions as of January 1, 1996. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the transactions occurred on January 1, 1996, nor does it purport to represent the results of operations for future periods. (Amounts presented in millions of dollars, except per share figures.) Years Ended December 31, 1997 1996 ------------------------ ---- ---- Revenues from rental property $212.5 $187.8 Net Income $90.8 $80.5 Net Income, per common share $1.94 $1.79 57 Schedule II KIMCO REALTY CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Balance at Charged to Charged to Deductions Balance Beginning of expenses valuation at end of Period accounts period ------------ ----------- ------------ ----------- ---------- Year Ended December 31, 1997 Allowance for uncollectable accounts $1,350,000 $910,000 $ -- $460,000 $1,800,000 ========== ========== ========== ========== ========== Year Ended December 31, 1996 Allowance for uncollectable accounts $1,350,000 $955,000 $ -- $955,000 $1,350,000 ========== ========== ========== ========== ========== Year Ended December 31, 1995 Allowance for uncollectable accounts $1,000,000 $1,318,000 $ -- $968,000 $1,350,000 ========== ========== ========== ========== ==========
58 KIMCO REALTY CORPORATION AND SUBSIDIARIES REAL ESTATE ANJD ACCUMULATED DEPRECIATION DECEMBER 31, 1997 SCHEDULE III
INITIAL COST TOTAL COST BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION ---------- ---- ------------ -------------- -------- ------------ ----- -------------- BOCA RATON $573,875 $2,295,501 $788,261 $573,875 $3,083,762 $3,657,637 $430,622 WHITEHALL 432,652 770,159.00 170,161 432,652 940,320 1,372,972 675,739 OGDEN 213,818 855,275 465,600 213,818 1,320,875 1,534,693 663,559 ORLANDO 923,956 3,646,904 1,761,902 1,172,119 5,160,643 6,332,762 408,220 PLAINVIEW 263,693 584,031 9,181,712 263,693 9,765,743 10,029,436 1,371,486 POMPANO BEACH 97,169 874,442 1,187,173 97,169 2,061,615 2,158,784 937,945 LIVONIA 178,785 925,818 595,807 178,785 1,521,625 1,700,410 369,789 LAUDERDALE LAKES 342,420 2,416,645 2,087,730 342,420 4,504,375 4,846,795 2,741,430 FERN PARK 225,000 902,000 2,325,340 225,000 3,227,340 3,452,340 893,618 ADDISON 0 753,343 1,100,049 0 1,853,392 1,853,392 832,646 LARGO 293,686 792,119 1,220,469 293,686 2,012,588 2,306,274 1,237,337 WINSTON-SALEM 540,667 719,655 3,303,629 540,667 4,023,284 4,563,951 948,887 MELBOURNE 0 1,754,000 2,234,629 0 3,988,629 3,988,629 1,392,619 ST. PETERSBURG 0 917,360 681,718 0 1,599,078 1,599,078 564,819 GROVE GATE 365,893 1,049,172 1,048,494 365,893 2,097,666 2,463,559 1,000,774 UPPER ARLINGTON 504,256 2,198,476 4,838,738 1,255,544 6,285,926 7,541,470 3,361,654 SHILOH SPRING RD 0 1,735,836 2,274,519 0 4,010,355 4,010,355 2,228,842 FELBRAM 72,971 302,579 401,599 72,971 704,178 777,149 407,584 LEESBURG 0 171,636 97,728 0 269,364 269,364 180,312 FOREST PARK 141,200 564,800 64,990 141,200 629,790 770,990 375,314 LARGO EAST BAY 2,832,296 11,329,185 509,327 2,832,296 11,838,512 14,670,808 1,806,966 LEXINGTON 1,675,031 6,848,209 4,549,848 1,675,031 11,398,057 13,073,088 1,044,813 CLAWSON 1,624,771 6,578,142 2,077,101 1,624,771 8,655,243 10,280,014 783,771 CHARLOTTE 919,251 3,570,981 891,509 919,251 4,462,490 5,381,741 293,510 LAFAYETTE 230,402 1,305,943 65,497 230,402 1,371,440 1,601,842 773,264 FARMINGTON 1,098,426 4,525,723 911,452 1,098,426 5,437,175 6,535,601 530,816 WEST MIFFLIN 475,815 1,903,231 634,314 475,815 2,537,545 3,013,360 208,727 BRADENTON 125,000 299,253 323,963 125,000 623,216 748,216 297,979 GREENWOOD 423,371 1,883,421 1,145,394 423,371 3,028,815 3,452,186 1,185,108 PINELLAS PARK 219,924 870,000 501,212 219,924 1,371,212 1,591,136 310,411 GRAVOIS 1,032,416 4,455,514 796,472 1,032,416 5,251,986 6,284,402 2,828,335 JENNINGS 257,782 1,031,128 1,233,616 257,782 2,264,744 2,522,526 182,766 DALLAS 1,299,632 5,168,727 5,324,830 1,299,632 10,493,557 11,793,189 7,730,659 TUTTLE BEE SARASOTA 254,961 828,465 1,535,603 254,961 2,364,068 2,619,029 1,063,467 LAUREL 349,562 1,398,250 626,668 349,562 2,024,918 2,374,480 204,750 LAUREL 274,580 1,100,968 0 274,580 1,100,968 1,375,548 639,011 EAST ORLANDO 491,676 1,440,000 1,864,450 491,676 3,304,450 3,796,126 1,224,785 OTTAWA 137,775 784,269 303,414 137,775 1,087,683 1,225,458 858,972 BLOOMINGTON 805,521 2,222,353 2,579,854 805,521 4,802,207 5,607,728 1,317,593 RALEIGH 5,208,885 20,885,792 1,489,509 5,208,885 22,375,301 27,584,186 2,071,894 CANTON HILLS 500,980 2,020,274 758,076 500,980 2,778,350 3,279,330 232,974 SAVANNAH 2,052,270 8,232,978 235,152 2,052,270 8,468,130 10,520,400 949,864 MACON 262,700 1,487,860 1,385,111 349,326 2,786,345 3,135,671 1,089,370 CANTON 792,985 1,459,031 4,454,851 792,985 5,913,882 6,706,867 2,063,765 CHARLOTTE 1,783,400 7,139,131 0 1,783,400 7,139,131 8,922,531 793,257 PALATKA 130,844 556,658 897,013 130,844 1,453,671 1,584,515 694,710 EAST STROUDSBURG 1,050,000 2,372,628 356,808 1,050,000 2,729,436 3,779,436 1,447,631 POUGHKEEPSIE 876,548 4,695,659 1,015,594 876,548 5,711,253 6,587,801 2,851,250 BARBERTON 505,590 1,948,135 107,840 505,590 2,055,975 2,561,565 1,203,487 HAGERSTOWN 541,389 2,165,555 936,929 541,389 3,102,484 3,643,873 1,389,467 ELGIN 842,555 2,108,674 901,399 842,555 3,010,073 3,852,628 1,264,086 GRAND HAVEN 356,800 1,532,689 947,496 356,800 2,480,185 2,836,985 946,018 HOUSTON 275,000 507,588 191,639 275,000 699,227 974,227 523,223 WICKLIFFE 610,991 2,471,965 12,339 610,991 2,484,304 3,095,295 192,885 LEOMINSTER 3,732,508 6,754,092 28,840,650 4,933,640 34,393,610 39,327,250 8,877,994 LAUDERHILL 1,002,733 2,602,415 9,135,669 1,774,443 10,966,374 12,740,817 0 CAMBRIDGE 0 1,848,195 744,742 473,060 2,119,877 2,592,937 1,177,259 OLMSTED 167,337 2,815,856 867,451 167,337 3,683,307 3,850,644 2,345,014 LEMAY 125,879 503,510 127,868 125,879 631,378 757,257 344,485 AKRON WATERLOO 437,277 1,912,222 163,558 437,277 2,075,780 2,513,057 1,326,575 BRUNSWICK 771,765 6,058,560 289,996 771,765 6,348,556 7,120,321 3,922,108 WEST MIFFLIN HILLS 654,366 3,199,729 6,411,726 654,366 9,611,455 10,265,821 3,474,270 CHARLESTON 770,000 3,132,092 3,738,711 770,000 6,870,803 7,640,803 1,189,578 MESQUITE 520,340 2,081,356 528,652 520,340 2,610,008 3,130,348 162,785 BELLEVUE 405,217 1,743,573 0 405,217 1,743,573 2,148,790 1,263,128 TOTAL COST, DATE OF NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ---------------- ------------ -------------- BOCA RATON $3,227,015 $0 1992(A) WHITEHALL 697,233 0 1967(C) OGDEN 871,134 0 1967(C) ORLANDO 5,924,542 0 1995(A) PLAINVIEW 8,657,950 0 1969(C) POMPANO BEACH 1,220,839 0 1968(C) LIVONIA 1,330,621 0 1968(C) LAUDERDALE LAKES 2,105,365 0 1968(C) FERN PARK 2,558,722 0 1968(C) ADDISON 1,020,746 0 1968(C) LARGO 1,068,937 0 1968(C) WINSTON-SALEM 3,615,064 0 1969(C) MELBOURNE 2,596,010 0 1968(C) ST. PETERSBURG 1,034,259 0 1968(C) GROVE GATE 1,462,785 0 1968(C) UPPER ARLINGTON 4,179,816 0 1969(C) SHILOH SPRING RD 1,781,513 0 1969(C) FELBRAM 369,565 0 1970(C) LEESBURG 89,052 0 1969(C) FOREST PARK 395,676 0 1969(C) LARGO EAST BAY 12,863,842 0 1992(A) LEXINGTON 12,028,275 0 1993(A) CLAWSON 9,496,243 0 1993(A) CHARLOTTE 5,088,231 0 1995(A) LAFAYETTE 828,578 0 1971(C) FARMINGTON 6,004,785 0 1993(A) WEST MIFFLIN 2,804,633 0 1993(A) BRADENTON 450,237 0 1968(C) GREENWOOD 2,267,078 1,258,779 1970(C) PINELLAS PARK 1,280,725 0 1970(C) GRAVOIS 3,456,067 0 1972(C) JENNINGS 2,339,760 0 1971(C) DALLAS 4,062,530 0 1969(C) TUTTLE BEE SARASOTA 1,555,562 0 1970(C) LAUREL 2,169,730 0 1995(A) LAUREL 736,537 0 1972(C) EAST ORLANDO 2,571,341 0 1971(C) OTTAWA 366,486 0 1970(C) BLOOMINGTON 4,290,135 0 1972(C) RALEIGH 25,512,292 0 1993(A) CANTON HILLS 3,046,356 0 1993(A) SAVANNAH 9,570,536 0 1993(A) MACON 2,046,301 0 1969(C) CANTON 4,643,102 0 1972(C) CHARLOTTE 8,129,274 0 1993(A) PALATKA 889,805 0 1970(C) EAST STROUDSBURG 2,331,805 0 1973(C) POUGHKEEPSIE 3,736,551 0 1972(C) BARBERTON 1,358,078 0 1972(C) HAGERSTOWN 2,254,406 0 1973(C) ELGIN 2,588,542 0 1972(C) GRAND HAVEN 1,890,967 0 1976(C) HOUSTON 451,004 0 1973(C) WICKLIFFE 2,902,410 0 1995(A) LEOMINSTER 30,449,256 0 1975(A) LAUDERHILL 12,740,817 0 1974(C) CAMBRIDGE 1,415,678 0 1973(C) OLMSTED 1,505,630 0 1973(C) LEMAY 412,772 0 1974(C) AKRON WATERLOO 1,186,482 0 1975(C) BRUNSWICK 3,198,213 0 1975(C) WEST MIFFLIN HILLS 6,791,551 0 1973(C) CHARLESTON 6,451,225 0 1978(C) MESQUITE 2,967,563 0 1995(A) BELLEVUE 885,662 0 1976(A)
59
INITIAL COST TOTAL COST BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION ---------- ---- ------------ -------------- -------- ------------ ----- -------------- ELSMERE 0 3,185,642 0 0 3,185,642 3,185,642 1,849,509 MADISON 0 4,133,904 2,126,058 0 6,259,962 6,259,962 3,024,957 SPRINGFIELD 919,998 4,981,589 2,213,910 919,998 7,195,499 8,115,497 3,797,978 CHERRY HILL 2,417,583 6,364,094 902,987 2,417,583 7,267,081 9,684,664 2,576,385 NANUET 798,932 2,361,900 1,300,829 798,932 3,662,729 4,461,661 1,308,444 OAKCREEK 1,245,870 4,339,637 3,762,195 1,245,870 8,101,832 9,347,702 2,604,606 NORRISTOWN 686,134 2,664,535 3,215,424 774,084 5,792,009 6,566,093 2,324,405 SPRINGBORO PIKE 1,854,527 2,572,518 2,428,558 1,854,527 5,001,076 6,855,603 1,843,481 LIMA 770,121 3,080,479 463,987 770,121 3,544,466 4,314,587 248,395 CHARLES TOWN 602,000 3,725,871 10,342,778 602,000 14,068,649 14,670,649 2,935,648 MUSKEGON 391,500 958,500 692,656 391,500 1,651,156 2,042,656 854,262 NORTH MIAMI 732,914 4,080,460 2,163,630 732,914 6,244,090 6,977,004 3,008,705 NEW KENSINGTON 521,945 2,548,322 573,181 521,945 3,121,503 3,643,448 1,846,398 PENN HILLS 0 1,737,289 0 0 1,737,289 1,737,289 1,021,689 BEAVERCREEK 635,228 3,024,722 1,924,519 635,228 4,949,241 5,584,469 2,192,705 HAMPTON BAYS 1,495,105 5,979,320 41,919 1,495,105 6,021,239 7,516,344 1,556,758 BRIDGEHAMPTON 1,811,752 3,107,232 20,647,203 1,811,752 23,754,435 25,566,187 4,849,853 EASTERN BLVD. 412,016 1,876,962 149,142 412,016 2,026,104 2,438,120 1,153,321 E. PROSPECT ST. 604,826 2,755,314 250,000 604,826 3,005,314 3,610,140 1,721,499 W. MARKET ST. 188,562 1,158,307 0 188,562 1,158,307 1,346,869 706,146 MIDDLETOWN 207,283 1,174,603 193,507 207,283 1,368,110 1,575,393 718,748 UPPER ALLEN 445,743 1,782,972 152,550 445,743 1,935,522 2,381,265 1,134,354 GETTYSBURG 74,626 671,630 101,519 74,626 773,149 847,775 471,658 MARTINSBURG 242,634 1,273,828 628,937 242,634 1,902,765 2,145,399 1,026,402 SOUTH EAST SARASOTA 1,283,400 5,133,544 1,087,560 1,440,264 6,064,240 7,504,504 1,375,333 AIKEN 980,808 3,923,234 31,700 980,808 3,954,934 4,935,742 1,045,244 TYVOLA RD. 0 4,736,345 1,494,281 0 6,230,626 6,230,626 2,750,950 RACINE 1,403,082 5,612,330 1,075,740 1,403,082 6,688,070 8,091,152 1,672,692 WEST MIFFLIN 1,468,341 0 0 1,468,341 0 1,468,341 0 INDIANAPOLIS 447,600 3,607,193 1,872,732 447,600 5,479,925 5,927,525 2,310,368 RICHBORO 788,761 3,155,044 3,297,541 976,439 6,264,907 7,241,346 2,665,621 MILLER ROAD 1,138,082 4,552,327 1,337,385 1,138,082 5,889,712 7,027,794 2,949,762 SANFORD 3,406,565 13,648,041 1,208,601 3,406,565 14,856,642 18,263,207 3,701,739 CARLE PLACE 1,183,290 4,903,642 10,409,825 1,314,540 15,182,217 16,496,757 309,008 PLAZA EAST 1,236,149 4,944,597 1,963,838 1,236,149 6,908,435 8,144,584 264,087 PLAZA WEST 808,435 3,210,187 575,057 808,435 3,785,244 4,593,679 117,478 MENTOR 503,981 2,455,926 361,206 503,981 2,817,132 3,321,113 932,647 MORSE RD. 835,386 2,097,600 2,587,666 835,386 4,685,266 5,520,652 1,160,778 HAMILTON RD. 856,178 2,195,520 3,270,616 856,178 5,466,136 6,322,314 1,304,267 OLENTANGY RIVER RD. 764,517 1,833,600 2,197,502 764,517 4,031,102 4,795,619 1,205,151 SALEM AVE. 665,314 347,818 4,967,368 665,314 5,315,186 5,980,500 998,800 KETTERING 1,190,496 4,761,984 414,232 1,190,496 5,176,216 6,366,712 1,428,575 W. BROAD ST. 982,464 3,929,856 1,572,526 982,464 5,502,382 6,484,846 1,449,332 ELYRIA 781,728 3,126,912 52,741 781,728 3,179,653 3,961,381 913,510 RIDGE ROAD 1,285,213 4,712,358 485,447 1,285,213 5,197,805 6,483,018 863,250 SPRINGFIELD 842,976 3,371,904 120,272 842,976 3,492,176 4,335,152 999,678 MENTOR ERIE CMNS. 2,234,474 9,648,000 2,440,175 2,234,474 12,088,175 14,322,649 2,444,754 SPRINGDALE 3,205,653 14,619,732 4,595,951 3,205,653 19,215,683 22,421,336 3,102,452 WESTERVILLE 1,050,431 4,201,616 7,303,469 1,050,431 11,505,085 12,555,516 1,709,115 IRONDEQUOIT 1,234,250 8,190,181 0 1,234,250 8,190,181 9,424,431 1,190,274 WEST GATES 1,784,718 9,721,970 78,077 1,784,718 9,800,047 11,584,765 1,053,652 HENRIETTA 1,075,358 6,635,486 0 1,075,358 6,635,486 7,710,844 939,853 JONESBORO RD. &I-285 468,118 1,872,473 53,114 468,118 1,925,587 2,393,705 488,721 STATEN ISLAND 2,280,000 9,027,951 3,931,524 2,280,000 12,959,475 15,239,475 2,819,389 GASTONIA 2,467,696 9,870,785 324,583 2,467,696 10,195,368 12,663,064 1,911,415 MARGATE 2,948,530 11,754,120 1,011,511 2,948,530 12,765,631 15,714,161 1,337,107 CENTEREACH 1,182,650 4,735,779 15,928,405 1,417,098 20,429,736 21,846,834 1,430,301 WALKER 3,682,478 14,730,060 35,709 3,682,478 14,765,769 18,448,247 1,542,905 TAYLOR 1,451,397 5,806,263 0 1,451,397 5,806,263 7,257,660 620,250 WATERBURY 2,253,078 9,017,012 59,581 2,253,078 9,076,593 11,329,671 968,188 GREAT BARRINGTON 642,170 2,547,830 6,100,504 1,280,713 8,009,791 9,290,504 236,404 KISSIMMEE 1,328,536 5,296,652 1,515,262 1,328,536 6,811,914 8,140,450 261,165 WESTMONT 601,655 2,404,604 7,263,252 601,655 9,667,856 10,269,511 277,402 RIDGEWOOD 450,000 2,106,566 0 450,000 2,106,566 2,556,566 216,864 MELBOURNE 715,844 2,878,374 317,408 715,844 3,195,782 3,911,626 281,608 NORTH BRUNSWICK 3,204,978 12,819,912 12,320,414 3,204,978 25,140,326 28,345,304 1,260,413 SAND LAKE 3,092,706 12,370,824 702,368 3,092,706 13,073,192 16,165,898 1,190,544 STUART 2,109,677 8,415,323 109,950 2,109,677 8,525,273 10,634,950 748,304 ROCKINGHAM 2,660,915 10,643,660 7,429,652 2,660,915 18,073,312 20,734,227 1,026,294 CORAL SPRINGS 710,000 2,842,907 3,031,115 710,000 5,874,022 6,584,022 249,516 TOTAL COST, DATE OF NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ---------------- ------------ -------------- ELSMERE 1,336,133 0 1979(C) MADISON 3,235,005 0 1978(C) SPRINGFIELD 4,317,519 3,545,000 1983(A) CHERRY HILL 7,108,279 4,900,000 1985(C) NANUET 3,153,217 0 1984(A) OAKCREEK 6,743,096 5,055,000 1984(A) NORRISTOWN 4,241,688 0 1984(A) SPRINGBORO PIKE 5,012,122 0 1985(C) LIMA 4,066,192 0 1995(A) CHARLES TOWN 11,735,001 0 1985(A) MUSKEGON 1,188,394 0 1985(A) NORTH MIAMI 3,968,299 0 1985(A) NEW KENSINGTON 1,797,050 0 1986(A) PENN HILLS 715,600 0 1986(A) BEAVERCREEK 3,391,764 0 1986(A) HAMPTON BAYS 5,959,586 0 1989(A) BRIDGEHAMPTON 20,716,334 0 1972(C) EASTERN BLVD. 1,284,799 0 1987(A) E. PROSPECT ST. 1,888,641 0 1986(A) W. MARKET ST. 640,723 0 1986(A) MIDDLETOWN 856,645 0 1986(A) UPPER ALLEN 1,246,911 0 1986(A) GETTYSBURG 376,117 0 1986(A) MARTINSBURG 1,118,997 0 1986(A) SOUTH EAST SARASOTA 6,129,171 0 1989(A) AIKEN 3,890,498 0 1989(A) TYVOLA RD. 3,479,676 0 1986(A) RACINE 6,418,460 0 1988(A) WEST MIFFLIN 1,468,341 0 1986(A) INDIANAPOLIS 3,617,157 0 1986(A) RICHBORO 4,575,725 0 1986(A) MILLER ROAD 4,078,032 0 1986(A) SANFORD 14,561,468 0 1989(A) CARLE PLACE 16,187,749 0 1993(A) PLAZA EAST 7,880,497 2,138,328 1995(A) PLAZA WEST 4,476,201 2,138,328 1995(A) MENTOR 2,388,466 0 1987(A) MORSE RD. 4,359,874 0 1988(A) HAMILTON RD. 5,018,047 0 1988(A) OLENTANGY RIVER RD. 3,590,468 0 1988(A) SALEM AVE. 4,981,700 3,668,618 1988(A) KETTERING 4,938,137 3,475,534 1988(A) W. BROAD ST. 5,035,514 0 1988(A) ELYRIA 3,047,871 3,861,704 1988(A) RIDGE ROAD 5,619,768 0 1992(A) SPRINGFIELD 3,335,474 4,054,789 1988(A) MENTOR ERIE CMNS. 11,877,895 4,247,874 1988(A) SPRINGDALE 19,318,884 0 1992(A) WESTERVILLE 10,846,401 0 1988(A) IRONDEQUOIT 8,234,157 0 1993(A) WEST GATES 10,531,113 0 1993(A) HENRIETTA 6,770,991 0 1993(A) JONESBORO RD. &I-285 1,904,984 0 1988(A) STATEN ISLAND 12,420,086 4,894,652 1989(A) GASTONIA 10,751,649 0 1989(A) MARGATE 14,377,054 0 1993(A) CENTEREACH 20,416,533 0 1993(A) WALKER 16,905,342 0 1993(A) TAYLOR 6,637,410 0 1993(A) WATERBURY 10,361,483 5,615,210 1993(A) GREAT BARRINGTON 9,054,100 0 1994(A) KISSIMMEE 7,879,285 0 1996(A) WESTMONT 9,992,109 0 1994(A) RIDGEWOOD 2,339,702 0 1993(A) MELBOURNE 3,630,018 0 1994(A) NORTH BRUNSWICK 27,084,891 0 1994(A) SAND LAKE 14,975,354 0 1994(A) STUART 9,886,646 0 1994(A) ROCKINGHAM 19,707,933 0 1994(A) CORAL SPRINGS 6,334,506 0 1994(A)
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INITIAL COST TOTAL COST BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION ---------- ---- ------------ -------------- -------- ------------ ----- -------------- SPRINGFIELD 2,745,595 10,985,778 3,241,680 2,904,022 14,069,031 16,973,053 844,920 CHARLESTON 1,744,430 6,986,094 141,033 1,744,430 7,127,127 8,871,557 424,935 SAVANNAH 652,255 2,616,522 0 652,255 2,616,522 3,268,777 156,520 WEST PALM BEACH 550,896 2,298,964 318,210 550,896 2,617,174 3,168,070 206,319 SOUTH MIAMI 1,280,440 5,133,825 1,792,588 1,280,440 6,926,413 8,206,853 350,240 AUGUSTA 1,482,564 5,928,122 0 1,482,564 5,928,122 7,410,686 311,603 ALTAMONTE SPRINGS 770,893 3,083,574 0 770,893 3,083,574 3,854,467 158,132 KENT 2,261,530 0 0 2,261,530 0 2,261,530 0 ORLANDO 560,800 2,268,112 17,268 560,800 2,285,380 2,846,180 103,050 DURHAM 1,882,800 7,551,576 59,762 1,882,800 7,611,338 9,494,138 337,890 PHOENIX 1,430,790 3,348,652 4,839 1,430,790 3,353,491 4,784,281 224,076 GARLAND 210,286 845,845 0 210,286 845,845 1,056,131 35,940 MARLTON PIKE 0 4,318,534 0 0 4,318,534 4,318,534 147,642 CAMDEN 0 1,000,570 0 0 1,000,570 1,000,570 0 CINNAMINSON 657,140 2,628,559 0 657,140 2,628,559 3,285,699 0 FLORENCE 1,465,661 6,011,013 0 1,465,661 6,011,013 7,476,674 43,011 PHOENIX 2,450,341 9,802,046 0 2,450,341 9,802,046 12,252,387 41,886 MORRISVILLE 627,864 2,511,457 0 627,864 2,511,457 3,139,321 0 CENTER SQUARE 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087 PHILADELPHIA 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087 FEASTERVILLE 520,521 2,082,083 0 520,521 2,082,083 2,602,604 53,387 WARRINGTON 268,194 1,072,774 0 268,194 1,072,774 1,340,968 0 WHITEHALL 0 5,195,577 0 0 5,195,577 5,195,577 177,627 HARRIS COUNTY 1,843,000 7,372,420 0 1,843,000 7,372,420 9,215,420 94,512 HAVERTOWN 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087 EXTON 731,888 2,927,551 0 731,888 2,927,551 3,659,439 100,087 EASTWICK 889,001 2,762,888 2,386,166 889,001 5,603,093 6,492,094 0 UPPER DARBY 231,821 927,286 3,049,951 285,828 3,923,230 4,209,058 0 TAMPA 2,820,000 11,283,189 0 2,820,000 11,283,189 14,103,189 216,900 OCALA 1,980,000 7,927,484 0 1,980,000 7,927,484 9,907,484 118,461 BATON ROUGE 3,125,527 12,503,083 0 3,125,527 12,503,083 15,628,610 160,284 WHITE LAKE 2,300,050 9,249,607 1,061,046 2,300,050 10,310,653 12,610,703 314,530 LAFAYETTE 2,115,000 8,508,218 0 2,115,000 8,508,218 10,623,218 36,318 LAFAYETTE 812,810 3,252,269 0 812,810 3,252,269 4,065,079 79,925 MANASSAS 1,788,750 7,162,661 0 1,788,750 7,162,661 8,951,411 22,932 CORAL SPRINGS 1,649,000 6,626,301 0 1,649,000 6,626,301 8,275,301 14,094 STATEN ISLAND 2,940,000 11,811,964 0 2,940,000 11,811,964 14,751,964 0 GREENVILLE 1,448,913 5,807,874 0 1,448,913 5,807,874 7,256,787 12,410 MT. DORA 1,011,000 4,062,890 0 1,011,000 4,062,890 5,073,890 8,681 N. CHARLESTON 2,965,748 11,895,294 0 2,965,748 11,895,294 14,861,042 0 RICHMOND 670,500 2,751,375 0 670,500 2,751,375 3,421,875 183,872 YONKERS 871,977 3,487,909 0 871,977 3,487,909 4,359,886 372,650 TULSA 500,950 2,002,508 0 500,950 2,002,508 2,503,458 98,486 WATERLOO 500,525 2,002,101 0 500,525 2,002,101 2,502,626 98,394 CLIVE 500,525 2,002,101 0 500,525 2,002,101 2,502,626 98,394 DES MOINES 500,525 2,002,101 0 500,525 2,002,101 2,502,626 98,394 E. WICHITA 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371 W. WICHITA 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371 PLANO 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371 WEST OAKS 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371 ARLINGTON 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371 DUNCANVILLE 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371 GARLAND 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371 HOUSTON 500,422 2,001,687 0 500,422 2,001,687 2,502,109 146,458 GENEVA 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371 BAYTOWN 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371 FT. WORTH 500,414 2,001,656 0 500,414 2,001,656 2,502,070 98,371 BRADLEY 500,422 2,001,687 0 500,422 2,001,687 2,502,109 98,371 O'FALLON 300,000 1,200,000 0 300,000 1,200,000 1,500,000 10,256 N. RICHLAND HILLS 2,900,000 0 0 2,900,000 0 2,900,000 0 CORSICANA 1,600,000 6,400,000 0 1,600,000 6,400,000 8,000,000 54,701 OVERLAND 0 4,928,677 0 0 4,928,677 4,928,677 42,125 ST. LOUIS 0 5,756,736 0 0 5,756,736 5,756,736 49,203 PEORIA 0 3,029,106 0 0 3,029,106 3,029,106 25,890 KANSAS CITY 574,777 2,299,106 0 574,777 2,299,106 2,873,883 19,650 ST. LOUIS 0 2,242,258 0 0 2,242,258 2,242,258 19,165 OAK LAWN 1,316,783 5,267,130 0 1,316,783 5,267,130 6,583,913 45,018 CALUMET CITY 1,247,879 4,991,514 0 1,247,879 4,991,514 6,239,393 42,663 OAKBROOK TERRACE 1,393,667 5,576,268 0 1,393,667 5,576,268 6,969,935 47,660 MATTERSON 731,621 2,926,483 0 731,621 2,926,483 3,658,104 25,013 TOTAL COST, DATE OF NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ---------------- ------------ -------------- SPRINGFIELD 16,128,133 0 1994(A) CHARLESTON 8,446,622 0 1995(A) SAVANNAH 3,112,257 0 1995(A) WEST PALM BEACH 2,961,751 0 1995(A) SOUTH MIAMI 7,856,613 0 1995(A) AUGUSTA 7,099,083 0 1995(A) ALTAMONTE SPRINGS 3,696,335 0 1995(A) KENT 2,261,530 0 1995(A) ORLANDO 2,743,130 0 1996(A) DURHAM 9,156,248 0 1996(A) PHOENIX 4,560,205 0 1996(A) GARLAND 1,020,191 0 1996(A) MARLTON PIKE 4,170,892 0 1996(A) CAMDEN 1,000,570 0 1996(A) CINNAMINSON 3,285,699 0 1996(A) FLORENCE 7,433,663 0 1997(A) PHOENIX 12,210,501 8,107,496 1997(A) MORRISVILLE 3,139,321 0 1996(A) CENTER SQUARE 3,559,352 0 1996(A) PHILADELPHIA 3,559,352 0 1996(A) FEASTERVILLE 2,549,217 0 1996(A) WARRINGTON 1,340,968 0 1996(A) WHITEHALL 5,017,950 0 1996(A) HARRIS COUNTY 9,120,908 0 1997(A) HAVERTOWN 3,559,352 0 1996(A) EXTON 3,559,352 0 1996(A) EASTWICK 6,492,094 0 1997(A) UPPER DARBY 4,209,058 0 1996(A) TAMPA 13,886,289 0 1997(A) OCALA 9,789,023 0 1997(A) BATON ROUGE 15,468,326 0 1997(A) WHITE LAKE 12,296,173 0 1996(A) LAFAYETTE 10,586,900 0 1997(A) LAFAYETTE 3,985,154 0 1997(A) MANASSAS 8,928,479 0 1997(A) CORAL SPRINGS 8,261,207 0 1997(A) STATEN ISLAND 14,751,964 5,841,637 1997(A) GREENVILLE 7,244,377 0 1997(A) MT. DORA 5,065,209 0 1997(A) N. CHARLESTON 14,861,042 0 1997(A) RICHMOND 3,238,003 0 1995(A) YONKERS 3,987,236 0 1995(A) TULSA 2,404,972 0 1996(A) WATERLOO 2,404,232 0 1996(A) CLIVE 2,404,232 0 1996(A) DES MOINES 2,404,232 0 1996(A) E. WICHITA 2,403,699 0 1996(A) W. WICHITA 2,403,699 0 1996(A) PLANO 2,403,699 0 1996(A) WEST OAKS 2,403,738 0 1996(A) ARLINGTON 2,403,699 0 1996(A) DUNCANVILLE 2,403,699 0 1996(A) GARLAND 2,403,699 0 1996(A) HOUSTON 2,355,651 0 1996(A) GENEVA 2,403,738 0 1996(A) BAYTOWN 2,403,738 0 1996(A) FT. WORTH 2,403,699 0 1996(A) BRADLEY 2,403,738 0 1996(A) O'FALLON 1,489,744 0 1997(A) N. RICHLAND HILLS 2,900,000 0 1997(A) CORSICANA 7,945,299 0 1997(A) OVERLAND 4,886,552 0 1997(A) ST. LOUIS 5,707,533 0 1997(A) PEORIA 3,003,216 2,958,163 1997(A) KANSAS CITY 2,854,233 2,806,575 1997(A) ST. LOUIS 2,223,093 0 1997(A) OAK LAWN 6,538,895 6,429,714 1997(A) CALUMET CITY 6,196,730 6,093,263 1997(A) OAKBROOK TERRACE 6,922,275 6,806,686 1997(A) MATTERSON 3,633,091 3,572,429 1997(A)
61
INITIAL COST TOTAL COST BUILDINGS AND SUBSEQUENT BUILDINGS AND ACCUMULATED PROPERTIES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS TOTAL DEPRECIATION ---------- ---- ------------ -------------- -------- ------------ ----- -------------- MT. PROSPECT 797,082 3,188,329 0 797,082 3,188,329 3,985,411 27,251 ST. PETERS 1,182,194 4,728,775 0 1,182,194 4,728,775 5,910,969 40,417 KANSAS CITY 775,025 3,100,101 0 775,025 3,100,101 3,875,126 26,497 ROELAND PARK 0 4,328,087 0 0 4,328,087 4,328,087 36,992 MAPLEWOOD 604,803 2,419,213 0 604,803 2,419,213 3,024,016 20,677 NORRIDGE 0 2,560,464 0 0 2,560,464 2,560,464 21,884 COUNTRYSIDE 0 2,786,926 0 0 2,786,926 2,786,926 23,820 DUBUQUE 0 1,614,911 0 0 1,614,911 1,614,911 13,803 CARBONDALE 0 1,553,753 0 0 1,553,753 1,553,753 13,280 MERRILLVILLE 0 1,965,694 0 0 1,965,694 1,965,694 16,801 GRIFFITH 0 2,495,820 0 0 2,495,820 2,495,820 21,332 DOWNER GROVE 811,778 3,247,114 0 811,778 3,247,114 4,058,892 27,753 CHICAGO 0 2,111,433 0 0 2,111,433 2,111,433 18,046 SKOKIE 0 2,056,622 0 0 2,056,622 2,056,622 17,578 SCHAUMBURG 0 2,309,103 0 0 2,309,103 2,309,103 19,736 CHICAGO 0 2,011,534 0 0 2,011,534 2,011,534 17,193 DAVENPORT 0 1,756,328 0 0 1,756,328 1,756,328 15,011 TULSA 0 0 0 0 0 0 0 FOREST PARK 0 2,088,921 0 0 2,088,921 2,088,921 17,854 NAPERVILLE 488,267 1,953,067 0 488,267 1,953,067 2,441,334 16,693 INDIANAPOLIS 343,575 1,374,302 0 343,575 1,374,302 1,717,877 11,746 NILES 0 2,217,231 0 0 2,217,231 2,217,231 18,951 ARLINGTON 0 1,854,567 0 0 1,854,567 1,854,567 15,851 JOLIET 0 1,742,399 0 0 1,742,399 1,742,399 14,892 CAPE GIRARDEAU 0 1,542,659 0 0 1,542,659 1,542,659 13,185 BRIDGETON 0 1,975,978 0 0 1,975,978 1,975,978 16,889 EDMOND 477,036 1,908,145 0 477,036 1,908,145 2,385,181 16,309 HOUSTON 406,513 1,626,051 0 406,513 1,626,051 2,032,564 13,898 AMARILLO 0 1,998,531 0 0 1,998,531 1,998,531 17,081 OKLAHOMA CITY 0 1,419,957 0 0 1,419,957 1,419,957 12,136 ELSTON 337,869 1,351,474 0 337,869 1,351,474 1,689,343 11,551 S. CICERO 0 1,541,560 0 0 1,541,560 1,541,560 13,176 BALANCE OF PORTFOLIO 2,951,539 4,071,395 12,356,603 3,112,139 15,813,359 18,925,498 10,555,720 ------------------------------------------------------------------------------------------------------------- $208,025,559 $876,286,555 $319,884,045 $213,367,305 $1,190,828,854 $1,404,196,159 $207,408,091 ============================================================================================================= TOTAL COST, DATE OF NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ---------------- ------------ -------------- MT. PROSPECT 3,958,160 3,892,071 1997(A) ST. PETERS 5,870,552 5,772,532 1997(A) KANSAS CITY 3,848,629 3,784,369 1997(A) ROELAND PARK 4,291,095 0 1997(A) MAPLEWOOD 3,003,339 2,953,192 1997(A) NORRIDGE 2,538,580 0 1997(A) COUNTRYSIDE 2,763,106 2,721,654 1997(A) DUBUQUE 1,601,108 0 1997(A) CARBONDALE 1,540,473 0 1997(A) MERRILLVILLE 1,948,893 0 1997(A) GRIFFITH 2,474,488 2,437,366 1997(A) DOWNER GROVE 4,031,139 3,963,831 1997(A) CHICAGO 2,093,387 0 1997(A) SKOKIE 2,039,044 0 1997(A) SCHAUMBURG 2,289,367 0 1997(A) CHICAGO 1,994,341 0 1997(A) DAVENPORT 1,741,317 0 1997(A) TULSA 0 0 1997(A) FOREST PARK 2,071,067 0 1997(A) NAPERVILLE 2,424,641 2,384,156 1997(A) INDIANAPOLIS 1,706,131 0 1997(A) NILES 2,198,280 0 1997(A) ARLINGTON 1,838,716 0 1997(A) JOLIET 1,727,507 0 1997(A) CAPE GIRARDEAU 1,529,474 0 1997(A) BRIDGETON 1,959,089 0 1997(A) EDMOND 2,368,872 0 1997(A) HOUSTON 2,018,666 1,984,960 1997(A) AMARILLO 1,981,450 0 1997(A) OKLAHOMA CITY 1,407,821 0 1997(A) ELSTON 1,677,792 0 1997(A) S. CICERO 1,528,384 0 1997(A) BALANCE OF PORTFOLIO 8,369,778 0 VARIOUS --------------------------------------------------- $1,196,788,068 $121,363,910 ===================================================
Depreciation and amortization of the Company's investment in buildings and improvements reflected in the statements of income is calculated over the estimated useful lives of the assets as follows: Buildings....................15 to 39 years Improvements.................Terms of leases or useful lives, whichever is shorter The aggregate cost for Federal income tax purposes was approximately $1,394 million at December 31, 1997. The changes in total real estate assets for the years ended December 31, 1997, 1996, and 1995 are as follows:
Years Ended December 31, ------------ 1997 1996 1995 -------------------------------------------------------- Balance, beginning of period $1,072,055,986 $932,390,261 $796,611,263 Acquisitions ............. 276,119,791 100,808,213 83,267,813 Improvements ............. 61,144,440 40,108,471 60,586,575 Sales .................... (5,124,058) (1,250,959) (8,075,390) -------------------------------------------------------- Balance, end of period ..... $1,404,196,159 $1,072,055,986 $932,390,261 ========================================================
The changes in accumulated depreciation for the years ended December 31, 1997, 1996, and 1995 are as follows:
Years Ended December 31, ------------- 1997 1996 1995 -------------------------------------------------- Balance, beginning of period $180,552,647 $156,131,718 $132,556,084 Depreciation for year .... 28,371,587 24,963,191 23,608,732 Sales .................... (1,516,143) (542,262) (33,098) -------------------------------------------------- Balance, end of period ..... $207,408,091 $180,552,647 $156,131,718 ==================================================
62 EX-10.7 2 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS AGREEMENT dated April 30, 1997, is made by and between Kimco Realty Corporation (the "Company"), a Maryland Corporation and Michael V. Pappagallo (the "Executive"). RECITALS: A. It is the desire of the Company to assure itself of the management services of the Executive by engaging the Executive as Chief Financial Officer of the Company. B. The Executive desires to commit himself to serve the Company on the terms herein provided. NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows: 1. Certain Definitions: a) "Base Salary" is defined in Section 5(a). b) "Benefits" is defined in Section 5(d). c) "Bonus" is defined in Section 5(b). d) "Calendar Quarter" shall mean each of the three month periods ending March 31, June 30, September 30 and December 31 of each year. e) "Cause": For purposes of this Agreement, the Company shall have "Cause" to terminate the Executive's employment hereunder upon (i) a finding by the Board that he has harmed the Company through an act of dishonesty in the performance of his duties hereunder, (ii) his conviction of a felony, or (iii) his failure to perform his material duties under this Agreement (other than a failure due to disability) after written notice specifying the failure and a reasonable opportunity to cure (it being understood that if his failure to perform is not of a type requiring a single action to cure fully, that he may commence the cure promptly after such written notice and thereafter diligently prosecute such cure to completion). f) "Disability" shall mean the absence of the Executive from the Executive's duties to the Company on a full-time basis for a total of 16 weeks during any 12 month period as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). g) "Effective Date" shall mean May 27, 1997. h) "Employment Fraction" is defined in Section 5(b). i) "Guaranteed Bonus" is defined in Section 5(b). j) "Option Plan" is defined in Section 5(c). k) "Stock Option" is defined in Section 5(c). l) "Term of Employment" is defined in Section 2. 63 2. Employment The Company shall employ the Executive, and the Executive shall enter the employ of the Company, in the positions set forth in Section 3 and upon the other terms and conditions herein provided. Unless sooner terminated as provided herein, this Agreement and the term of employment hereunder (the "Term of Employment") shall initially commence on the Effective Date and expire on the second anniversary of such date. 3. Position: During the Term of Employment, the Executive shall serve as the Chief Financial Officer of the Company, reporting directly to the President of the Company. 4. Place of Performance: In connection with his employment during the Term of Employment, the Executive shall be based at the Company's principal executive offices currently located in New Hyde Park, NY. 5. Compensation and Related Matters: a) Base Salary: During the Term of Employment the Executive shall receive a base salary ("Base Salary") at a rate of $250,000 per annum ( or such greater amount as shall be determined by the Board), payable monthly or more frequently in accordance with the Company's practice as applied to other senior executives. b) Bonus: As additional compensation for services rendered, the Executive shall receive a bonus ("Bonus") in cash as of the latest day in each Calendar Quarter any part of which falls within the Term of Employment. The amount of the Bonus shall be one-quarter of the product of $150,000 and the Employment Fraction for the Calendar Quarter period in question (the "Guaranteed Bonus") or such higher amount as the Board in its sole discretion shall determine. The "Employment Fraction" for a Calendar Quarter is the fraction of such period which falls within the Term of Employment. c) Equity Compensation: at the Effective Date and pursuant to an agreement under the Stock Option Plan for Key Employees and Outside Directors of Kimco Realty Corporation (the "Option Plan"), the Company shall grant the Executive stock options with respect to 50,000 shares of the Company's common stock, exercisable at the fair market value of such stock at the date of grant (the "Stock Options"). The Stock Options shall be "Non Qualified Options" (as such term is defined in the Option Plan) and shall vest in three equal installments upon the day prior to each of the first three anniversaries of the date of grant. d) Benefits: During the Term of Employment, the Executive shall be entitled to participate in or receive benefits under the employee benefit plans and other arrangements made available by the Company to its senior employees generally (collectively "Benefits") subject to and on a basis consistent with the terms, conditions and overall administration of such plans or arrangements, provided, however that the Executive shall be entitled to [four] weeks of paid vacation per annum during the Term of Employment, exclusive of Company holidays and that the Executive shall be entitled to take sick or personal days off in accordance with Company's practice as applied to other senior executives. e) Business Expenses: the Company shall promptly reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of his duties to the Company hereunder. f) No Waiver: the Executive shall also be entitled to such other benefits or terms of employment as are provided by law. 6. Termination: The Executive's employment hereunder may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement only under the following circumstances: 64 a) Death: The Executive's employment hereunder shall terminate upon his death. b) Disability: If the Company determines in good faith that Disability of the Executive has occurred during the Term of Employment, the Company may give the Executive written notice of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive, provided that within the 30 days after such receipt, the Executive shall not have returned to full-time performance of his duties. The Executive shall continue to receive his Base Salary and Benefits until the date of termination. This subsection 6(b) shall not limit the entitlement of the Executive, his estate of beneficiaries to any disability or other benefits then available to the Executive under any disability insurance or other benefit plan or policy which is maintained by the Company for the Executive's benefit. c) Cause: The Company may terminate the Executive's employment hereunder for Cause. d) Without Cause: the Company may terminate the Executive's employment hereunder without Cause upon [thirty days] notice. e) Notice of Termination: Any termination of the Executive's employment hereunder (other than by reason of the Executive's death) shall be communicated by a notice of termination to the other parties hereto. For purposes of this Agreement, a "notice of termination" shall mean a written notice which (i) indicates the specific termination provision in the Agreement relied upon, (ii) sets forth in reasonable detail any facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision indicated and (iii) specifies the effective date of the termination. 7. Benefits upon Termination of Employment: a) Termination upon Death or Disability: If the Executive's employment shall terminate by reason of his death (pursuant to Section 6(a)) or by reason of his Disability (pursuant to Section 6(b)), the Company shall continue to pay the Executive his Base Salary and Guaranteed Bonus and to make all necessary payment for and provide all Benefits to the Executive under this Agreement pursuant to Section 5(d) until the date of his termination, and the Executive's Stock shall become fully vested as of such date of termination. b) Termination without Cause: If the Executive's employment shall terminate without Cause (pursuant to Section 6(b)) (i) the Company shall continue to pay the Executive his Base Salary and Guaranteed Bonus and to make all necessary payments for and provide all Benefits to the Executive under this Agreement pursuant to Section 5(d) until the then scheduled expiration of the Term of Employment (ii) if the Sock Option have not become 100% vested and have not otherwise expires, as of such date of termination, the Stock Options shall become 100% vested as of the termination date. c) Termination by Reason of Expiration of the Term of Employment: Should the Executive's employment hereunder terminate by reason of the expiration of the Term of Employment. (i) the Company shall continue to pay the Executive his Base Salary and Guaranteed Bonus and to make all necessary payments for and provide all Benefits the Executive under this Agreement pursuant to Section 5(d) until the date of his termination, and 65 (ii) if the Stock Options have not become 100% vested and have not otherwise expires as of such date of termination, the Stock Options shall continue to eligible to vest as scheduled pursuant to Section 5(c) and shall become vested on such scheduled vesting date(s) if the Executive shall have made himself available to consult with the Company as reasonably requested by the Company during the period beginning on the date of termination and ending on such scheduled vesting date(s). d) Other Terminations of Employment: Should the Executive's employment hereunder terminate for any reason not set forth in subsections (a) - (c) above, then any Stock Options not then vested shall be forfeited and the Company shall have no other obligation of any kind hereunder to the Executive. 8. Survival: The expiration or termination of the Term of Employment shall not impair the right or obligations of any party hereto which shall have accrued hereunder prior to such expiration. 9. Mitigation of Damages: In the event of any termination of the Executive's employment by the Company, the Executive shall not be required to seek other employment to mitigate damages. 10. Disputes: Any dispute or controversy arising under, out of, in connection with or in relation to this Agreement shall, at the election and upon written demand of any party to this Agreement, be finally determined and settled by arbitration in New York, New York in accordance with the rules and procedures of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction thereof. The prevailing party in any such proceeding shall be entitled to collect from the other party, all legal fees and expenses reasonably incurred in connection therewith: 11. Binding on Successors: This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representative, executors, administrators, heirs, distributees, devisces, and legatees, as applicable. 12. Governing Law: This Agreement is being made and executed in and is intended to be preformed in the State of New York, and shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of New York. 13. Validity: The invalidity or unenforceability of any provision or provisions of the Agreement shall not affect the validity or enforceability of any other provision in this Agreement, which shall remain in full force and effect. 14. Notices: Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage paid as follows: If to the Company, addressed to its principal offices to the attention of President at: 3333 New Hyde Park Road New Hyde Park, NY 11042 If to the Executive, to him at the address set forth below under his signature; Or at any other address as any party shall have specified by notice in writing to the other parties. 15. Counterparts: This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. 66 16. Entire Agreement: The terms of this Agreement are intended by the parties to be the final expression of their agreement with respect to the employment of the Executive by the Company and may not be contradicted by evidence of any prior contemporaneous agreement. The parties further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement. 17. Amendments: Waivers: This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by the Executive and a disinterested director of the Company. By an instrument in writing similarly executed, the Executive or the Company may waive compliance by the other party with any provision of this Agreement that such other party was or is obligated to comply with or perform, provided, however, that such waiver shall not operate as a waiver of, or Estelle with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy or power hereunder preclude any other further exercise of any other right, remedy, or power provided herein or by law or in equity. 18. No Effect on Other Contractual Rights: Notwithstanding Section 6, the provisions of this Agreement, and any other payment provided for hereunder, shall not reduce any amounts otherwise payable to the Executive under any other agreement between the Executive and the Company, or in any way diminish the Executive's rights under any employee benefit plan, program or arrangement of the Company to which he may be entitled as an employee of the Company. 19. No Inconsistent Actions: Cooperation a) The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement. b) Each of the parties hereto shall cooperate and take such actions and execute such other documents as may be reasonably requested by the other in order to carry out the provisions and purposes of this Agreement. 20. No Alienation of Benefits: To the extent permitted by law the benefits provided by this Agreement shall not be subject to garnishment, attachment or any other legal process by the creditors of the Executive, his beneficiary of his estate. 67 IN WITNESS WHEREOF, the parties has executed this Agreement as of the date and year first above written. EXECUTIVE KIMCO REALTY CORPORATION a Maryland Corporation By: /s/ Michael J. Flynn ----------------------------------- President & Chief Operating Officer /s/ Michael V. Pappagallo - --------------------------- 68 EX-10.8 3 CREDIT AGREEMENT ================================================================================ CREDIT AGREEMENT among KIMCO REALTY CORPORATION The Several Lenders from Time to Time Parties Hereto THE CHASE MANHATTAN BANK and THE FIRST NATIONAL BANK OF CHICAGO, as Co-Managers and THE CHASE MANHATTAN BANK, as Administrative Agent Dated as of March 2, 1998 ================================================================================ 69 TABLE OF CONTENTS
Page ---- SECTION 1 DEFINITIONS............................................................ 1.1 Defined Terms ......................................................... 1 1.2 Other Definitional Provisions ......................................... 17 SECTION 2 AMOUNT AND TERMS OF CREDIT FACILITIES ................................. 17 2.1 RESERVED .............................................................. 17 2.2 Commitments ........................................................... 17 2.3 Optional Prepayments .................................................. 19 2.4 Conversion and Continuation Options ................................... 19 2.5 Fees .................................................................. 20 2.6 Interest Rates and Payment Dates ...................................... 20 2.7 Computation of Interest and Fees ...................................... 21 2.8 Inability to Determine Interest Rate; Unavailability of C/D Rate Option 21 2.9 Pro Rata Treatment and Payments ....................................... 22 2.10 Illegality ............................................................ 23 2.11 Requirements of Law ................................................... 23 2.12 Taxes ................................................................. 25 2.13 Indemnity ............................................................. 26 2.14 Change of Lending Office .............................................. 27 2.15 Replacement of Lenders under Certain Circumstances .................... 27 SECTION 3 LETTERS OF CREDIT ..................................................... 27 3.1. L/C Commitment ........................................................ 27 3.2. Procedure for Issuance of Letters of Credit ........................... 28 3.3. Fees and Other Charges ................................................ 28 3.4. L/C Participations .................................................... 28 3.5. Reimbursement Obligation of the Borrower .............................. 29 3.6. Obligations Absolute .................................................. 30 3.7. Letter of Credit Payments ............................................. 30 3.8. Applications .......................................................... 30 SECTION 4 REPRESENTATIONS AND WARRANTIES ........................................ 30 4.1 Financial Condition ................................................... 30 4.2 No Change ............................................................. 31 4.3 Corporate Existence; Compliance with Law .............................. 31 4.4 Corporate Power; Authorization; Enforceable Obligations ............... 31 4.5 No Legal Bar .......................................................... 32 4.6 No Material Litigation ................................................ 32 4.7 No Default ............................................................ 32 4.8 Ownership of Property ................................................. 32 4.9 Intellectual Property ................................................. 32 4.10 No Burdensome Restrictions ............................................ 32 4.11 Taxes ................................................................. 32 4.12 Federal Regulations ................................................... 33 4.13 ERISA ................................................................. 33 4.14 Investment Company Act; Other Regulations ............................. 33 4.15 Subsidiaries .......................................................... 33 4.16 Purpose of Loans ...................................................... 33 4.17 Environmental Matters ................................................. 33
70
Page ---- 4.18 Insurance ............................................................ 34 4.19 Condition of Properties .............................................. 34 4.20 Benefit of Loans ..................................................... 35 4.21 REIT ................................................................. 35 SECTION 5 CONDITIONS PRECEDENT ................................................. 35 5.1 Conditions to Initial Extension of Credit ............................ 35 5.2 Conditions to Each Extension of Credit ............................... 36 SECTION 6 AFFIRMATIVE COVENANTS ................................................ 36 6.1 Financial Statements ................................................. 37 6.2 Certificates; Other Information ...................................... 37 6.3 Payment of Obligations ............................................... 38 6.4 Maintenance of Existence, etc ........................................ 38 6.5 Maintenance of Property; Insurance ................................... 38 6.6 Inspection of Property; Books and Records; Discussions ............... 38 6.7 Notices .............................................................. 38 6.8 Environmental Laws ................................................... 39 SECTION 7 NEGATIVE COVENANTS ................................................... 39 7.1 Financial Covenants .................................................. 40 7.2 Limitation on Fundamental Changes .................................... 40 7.3 Limitation on Restricted Payments .................................... 40 7.4 Limitation on Investments, Loans and Advances ........................ 41 7.5 Limitation on Transactions with Affiliates ........................... 41 7.6 Limitation on Changes in Fiscal Year ................................. 41 7.7 Limitation on Lines of Business, Issuance of Commercial Paper, Creation of Subsidiaries, Negative Pledges ........................... 41 SECTION 8. EVENTS OF DEFAULT .................................................... 42 SECTION 9. THE ADMINISTRATIVE AGENT ............................................. 45 9.1 Appointment .......................................................... 45 9.2 Delegation of Duties ................................................. 45 9.3 Exculpatory Provisions ............................................... 45 9.4 Reliance by Administrative Agent ..................................... 46 9.5 Notice of Default .................................................... 46 9.6 Non-Reliance on Administrative Agent and Other Lenders ............... 46 9.7 Indemnification ...................................................... 47 9.8 Administrative Agent in Its Individual Capacity ...................... 47 9.9 Successor Administrative Agent ....................................... 47 9.10 The Co-Managers ...................................................... 48 SECTION 10 MISCELLANEOUS ........................................................ 48 10.1 Amendments and Waivers ............................................... 48 10.2 Notices .............................................................. 48 10.3 No Waiver; Cumulative Remedies........................................ 49 10.4 Survival of Representations and Warranties............................ 49 10.5 Payment of Expenses and Taxes......................................... 49 10.6 Successors and Assigns................................................ 50 10.7 Participations........................................................ 50 10.8 Assignments........................................................... 51
72 10.9 The Register; Disclosure; Pledges to Federal Reserve Banks............ 51 10.10 Adjustments; Set-off ................................................. 52 10.11 Counterparts ......................................................... 52 10.12 Severability ......................................................... 52 10.13 Integration .......................................................... 53 10.14 GOVERNING LAW ........................................................ 53 10.15 Submission To Jurisdiction; Waivers .................................. 53 10.16 Acknowledgements ..................................................... 53 10.17 WAIVERS OF JURY TRIAL ................................................ 54 10.18 Confidentiality ...................................................... 54
73 CREDIT AGREEMENT, dated as of March 2, 1998, among KIMCO REALTY CORPORATION, a Maryland corporation (the "Borrower"), the several banks, financial institutions and other entities from time to time parties to this Agreement (the "Lenders"), THE CHASE MANHATTAN BANK and THE FIRST NATIONAL BANK OF CHICAGO, as co-managers (in such capacity, the "Co-Managers"), and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders hereunder (in such capacity, the "Administrative Agent"). The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "ABR": for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by Chase in connection with extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Administrative Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it; and "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate, or both, for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the ABR shall be determined without regard to clause (b) or (c), or both, of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the ABR due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively. 74 2 "ABR Loans": Revolving Credit Loans the rate of interest applicable to which is based upon the ABR. "Administrative Agent": as defined in the preamble hereto. "Affiliate": as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Aggregate Outstanding Extensions of Credit": as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding and (b) such Lender's Commitment Percentage of the L/C Obligations then outstanding. "Agreement": this Credit Agreement, as amended, supplemented or otherwise modified from time to time. "Applicable Margin": with respect to each Revolving Credit Loan at any date, the applicable percentage per annum set forth below based upon the Status on such date:
Level I Level II Level III Level IV Level V Status Status Status Status Status ------ ------ ------ ------ ------ Eurodollar Loans, C/D Rate Loans and 0.25% 0.35% 0.50% 0.85% 1.50% Money Market Loans ABR Loans 0% 0% 0% 0% 0.35%
"Application": an application, in such form as the Issuing Lender may specify from time to time, requesting the Issuing Lender to open a Letter of Credit. "Available Commitment": as to any Lender, at any time of determination, an amount equal to such Lender's Commitment at such time minus such Lender's Aggregate Outstanding Extensions of Credit at such time. "Board": the Board of Governors of the Federal Reserve System (or any successor). "Borrower": as defined in the preamble hereto. "Borrowing Date": any Business Day specified in a notice pursuant to Section 2.2(d) as a date on which the Borrower requests the Lenders to make Revolving Credit Loans hereunder. "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close, except that, when used in connection with a Eurodollar Loan with respect to which the Eurodollar Rate is determined based upon the Telerate screen in accordance with the definition of Eurodollar Rate, "Business Day" shall mean any Business Day on which dealings in foreign currencies and exchange between banks may be carried on in London, England and New York, New York. 75 3 "Capital Stock": any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "Cash Equivalents": (i) securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality thereof having maturities of not more than one year from the date of acquisition, (ii) time deposits and certificates of deposit having maturities of not more than one year from the date of acquisition of any Lender or of any domestic commercial bank the senior long-term unsecured debt of which is rated at least A or the equivalent thereof by S&P or A2 or the equivalent thereof by Moody's and having capital and surplus in excess of $500,000,000, (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i) and (ii) entered into with any bank meeting the qualifications specified in clause (ii) above, (iv) commercial paper rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody's and in either case maturing within 90 days after the date of acquisition and (v) investments in money market funds that have assets in excess of $2,000,000,000, are managed by recognized and responsible institutions and invest all of their assets in (x) obligations of the types referred to in clauses (i), (ii), (iii) and (iv) above and (y) commercial paper having at least the rating described in clause (iv) above and maturing within 270 days after the date of acquisition. "C/D Assessment Rate": for any day as applied to any C/D Rate Loan or any ABR Loan, the annual assessment rate in effect on such day which is payable by a member of the Bank Insurance Fund classified as adequately capitalized and within supervisory subgroup "B" (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. ss. 327.3(d) (or any successor provision) to the Federal Deposit Insurance Corporation (or any successor) for such Corporation's (or such successor's) insuring time deposits at offices of such institution in the United States. "C/D Base Rate": with respect to each day during each Interest Period pertaining to a C/D Rate Loan, the rate of interest per annum notified to the Administrative Agent by Chase as the average rate bid at 9:00 A.M., New York City time, or as soon thereafter as practicable, on the first day of such Interest Period by a total of three certificate of deposit dealers of recognized standing selected by Chase for the purchase at face value from Chase of its certificates of deposit in an amount comparable to the C/D Rate Loan of Chase to which such Interest Period applies and having a maturity comparable to such Interest Period. "C/D Rate": with respect to each day during each Interest Period pertaining to a C/D Rate Loan, a rate per annum determined for such day (rounded upward to the nearest 1/100th of 1%) equal to the C/D Base Rate plus the C/D Assessment Rate. "C/D Rate Loans": Revolving Credit Loans the rate of interest applicable to which is based upon the C/D Rate. "C/D Reserve Percentage": for any day as applied to any ABR Loan, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board, for determining the maximum reserve requirement for a Depositary Institution (as defined in Regulation D of the Board) in respect of new non-personal time deposits in Dollars having a maturity of 30 days or more. "C/D Tranche": the collective reference to C/D Rate Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date 76 4 (whether or not such Loans shall originally have been made on the same day). "Chase": The Chase Manhattan Bank. "Closing Date": March 2, 1998. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Co-Managers": as defined in the preamble hereto. "Commitment": as to any Lender, the obligation of such Lender (if any) to make Revolving Credit Loans to and/or issue or participate in Letters of Credit issued on behalf of the Borrower hereunder in an aggregate principal and/or face amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 1.1, as such amount may be changed from time to time in accordance with the provisions of this Agreement. "Commitment Fee": as defined in Section 2.5(a). "Commitment Percentage": as to any Lender at any time, the percentage which such Lender's Commitment then constitutes of the aggregate Commitments of all Lenders (or, at any time after the Commitments shall have expired or terminated, the percentage which the aggregate principal amount of such Lender's Revolving Credit Loans then outstanding constitutes of the aggregate principal amount of the Revolving Credit Loans of all Lenders then outstanding). "Commitment Period": the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Commitments shall terminate as provided herein. "Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414 of the Code. "Consolidated Adjusted Cash Flow": for any period, (a) Consolidated Cash Flow for such period minus (b) an amount equal to 0.25 times the aggregate gross leasable area (measured in square feet) of the shopping centers located on the Properties as of the last day of such period. "Consolidated Cash Flow": for any period of two consecutive fiscal quarters (a "Cash Flow Test Period"), an amount equal to (a) Funds From Operations for such period plus (b) Consolidated Interest Expense for such period minus (c) the amount (if any) by which (i) the sum of (x) management fee income of the Borrower and its consolidated Subsidiaries included in Funds From Operations for such period and (y) other income of the Borrower and its consolidated Subsidiaries included in Funds From Operations for such period not attributable to the Properties exceeds (ii) 115% of the sum of (x) management fee income of the Borrower and its consolidated Subsidiaries included in Funds From Operations for the corresponding period of two consecutive fiscal quarters of the Borrower ending on the date which is one year prior to the last day of such Cash Flow Test Period and (y) other income of the Borrower and its consolidated Subsidiaries included in Funds From Operations for such corresponding period not attributable to the Properties. "Consolidated Debt Service": for any period of two consecutive fiscal quarters (a "Debt Service Test Period"), (a) Consolidated Interest Expense for such period plus (b) the aggregate 77 5 amount of scheduled principal payments on Indebtedness (excluding optional prepayments and scheduled principal payments in respect of any Indebtedness which is payable in a single installment at final maturity) required to be made during such period by the Borrower or any of its consolidated Subsidiaries; provided, that, in the case of any Indebtedness which amortizes in annual installments, (i) only 50% of the principal amount of any such annual installment which is payable during any Debt Service Test Period shall be included in Consolidated Debt Service for such Debt Service Test Period and (ii) in the event that no annual installment is payable in respect of a particular item of such Indebtedness during a Debt Service Test Period, but an annual installment in respect of such Indebtedness is payable during the period of two consecutive fiscal quarters commencing immediately after such Debt Service Test Period, 50% of the amount of such annual installment shall nevertheless be included in Consolidated Debt Service for such Debt Service Test Period. "Consolidated Interest Expense": for any period, the amount of interest expense of the Borrower and its Subsidiaries for such period on the aggregate principal amount of their Indebtedness, determined on a consolidated basis in accordance with GAAP. "Consolidated Modified Cash Flow": for any period of two consecutive fiscal quarters of the Borrower, (a) Consolidated Cash Flow for such period minus (b) the aggregate amount of Property Net Operating Income attributable to each Identified Property with respect to such period, in each case from the date of acquisition of such Identified Property through the last day of such period. "Consolidated Net Income": for any period, consolidated net income (or loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any other Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries and (b) the undistributed earnings of any Subsidiary or Joint Venture to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary or Joint Venture is not at the time permitted by the terms of any Contractual Obligation or Requirement of Law applicable to such Subsidiary or Joint Venture. "Consolidated GAAP Net Worth": at any date of determination, all items which in conformity with GAAP would be included under shareholders' equity on a consolidated balance sheet of the Borrower and its Subsidiaries at such date. "Consolidated Net Worth": at any date of determination, an amount equal to (a) Gross Asset Value as of such date minus (b) Consolidated Total Indebtedness as of such date. "Consolidated Secured Indebtedness": as of any date of determination, the sum of (a) the aggregate principal amount of all Indebtedness of the Borrower and its Subsidiaries outstanding at such date which does not constitute Unsecured Indebtedness and (b) the excess, if any, of (i) the aggregate principal amount of all Unsecured Indebtedness of the Subsidiaries of the Borrower over (ii) $10,000,000, determined on a consolidated basis in accordance with GAAP. "Consolidated Senior Unsecured Indebtedness": as of any date of determination, the sum of (a) the aggregate principal amount of all Indebtedness of the Borrower and its Subsidiaries outstanding at such date which constitutes Unsecured Indebtedness (excluding (i) Indebtedness which is contractually subordinated to the Indebtedness of the Borrower and its Subsidiaries under the Loan Documents on customary terms acceptable to the Administrative Agent, (ii) Indebtedness of the Borrower and its Subsidiaries under the Loan Documents and (iii) 78 6 Indebtedness incurred pursuant to any commitment referred to in clause (c) below), (b) the aggregate Commitments then in effect and (c) the aggregate commitments then in effect with respect to any other unsecured committed line of credit extended to the Borrower or any of its Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Consolidated Total Indebtedness": as of any date of determination, all Indebtedness of the Borrower and its Subsidiaries outstanding at such date, determined on a consolidated basis in accordance with GAAP. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Default": any of the events specified in Section 8, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Dollars" and "$": dollars in lawful currency of the United States of America. "Environmental Laws": any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect, in each case to the extent the foregoing are applicable to the Borrower, any Subsidiary or any Joint Venture or any of their respective assets or properties. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time. "Eurodollar Rate": with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate Service (or otherwise on such service), the "Eurodollar Rate" shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Administrative Agent and the Borrower or, in the absence of such agreement, the "Eurodollar Rate" shall instead be the rate per annum notified to the Administrative Agent by Chase as the rate at which Chase is offered Dollar deposits at or about 10:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period, in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of its Eurodollar Loan to be outstanding during such Interest Period. "Eurodollar Loans": Revolving Credit Loans the rate of interest applicable to which is based upon the Eurodollar Rate. "Eurodollar Tranche": the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). 79 7 "Event of Default": any of the events specified in Section 8, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Federal Funds Effective Rate": as defined in the definition of "ABR". "Final Date": as defined in Section 2.11(e). "Financing Lease": any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Funds From Operations": for any period, (a) Consolidated Net Income for such period without giving effect to depreciation and amortization, gains or losses from extraordinary items, gains or losses on sales of real estate, gains or losses on investments in marketable securities and any provisions/benefits for income taxes for such period plus (b) funds from operations of unconsolidated joint ventures for such period, all determined on a consistent basis for such period. "GAAP": generally accepted accounting principles in the United States of America consistent with those utilized in preparing the audited financial statements referred to in Section 4.1. "Governmental Authority": any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Gross Asset Value": as of the last day of any period of two consecutive fiscal quarters of the Borrower, an amount equal to the sum of (a) 2 multiplied by an amount equal to (i) Consolidated Modified Cash Flow for such period divided by (ii) 0.105, (b) Unrestricted Cash and Cash Equivalents as of such day and (c) an amount equal to 75% of the aggregate purchase price paid by the Borrower and its Subsidiaries to acquire each Identified Property with respect to such period. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation (determined without duplication) of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the maximum stated amount of the primary obligation relating to 80 8 such Guarantee Obligation (or, if less, the maximum stated liability set forth in the instrument embodying such Guarantee Obligation), provided, that, in the absence of any such stated amount or stated liability, the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. "Identified Property": with respect to any period of two consecutive fiscal quarters of the Borrower, any Property acquired by the Borrower or any of its Subsidiaries during such period and designated as an "Identified Property" for such period by the Borrower by written notice to the Administrative Agent concurrently with the delivery of any compliance certificate pursuant to Section 6.2(b); provided, that, after giving effect to such designation (and the calculation of Gross Asset Value as a result thereof), the amount described in clause (c) of the definition of Gross Asset Value for such period shall not exceed 20% of such Gross Asset Value. "Indebtedness": of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), to the extent such obligations constitute indebtedness for the purposes of GAAP, (c) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (d) all obligations of such Person under Financing Leases, (e) all obligations of such Person in respect of acceptances issued or created for the account of such Person, (f) all Guarantee Obligations of such Person (excluding, in the case of the Borrower, Guarantee Obligations of the Borrower in respect of primary obligations of any Subsidiary), and (g) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof. "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. "Interest Payment Date": (a) as to any ABR Loan, the last day of each calendar month to occur while such Loan is outstanding and the Termination Date, (b) as to any Eurodollar Loan or C/D Rate Loan, the last day of each calendar month to occur while such Loan is outstanding and the last day of the Interest Period with respect thereto and (c) as to any Money Market Loans, the Money Market Loan Maturity Date applicable thereto. "Interest Period": (a) with respect to any Eurodollar Loan: (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two or three months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two or three months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto; and (b) with respect to any C/D Rate Loan: 81 9 (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such C/D Rate Loan and ending 30, 60 or 90 days thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such C/D Rate Loan and ending 30, 60 or 90 days thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not less than two Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (1) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (2) if any Interest Period pertaining to a C/D Rate Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day; and (3) any Interest Period pertaining to a Eurodollar Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month. "Issuing Lender": Chase, in its capacity as issuer of any Letter of Credit. "Joint Venture": any joint venture, partnership or other minority-owned entity (other than a Subsidiary) in which the Borrower or any of its Subsidiaries owns an interest. "L/C Commitment": $25,000,000. "L/C Fee Payment Date": with respect to each Letter of Credit, the last day of each March, June, September and December to occur while such Letter of Credit is outstanding and the date on which such Letter of Credit shall expire or be cancelled or fully drawn. "L/C Fee Rate": with respect to each Letter of Credit at any date, the applicable percentage per annum set forth below based upon the Status on such date:
Level I Level II Level III Level IV Level V Status Status Status Status Status ------ ------ ------ ------ ------ 0.25% 0.35% 0.50% 0.85% 1.50%
"L/C Obligations": at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 0. 82 10 "L/C Participants": the collective reference to all the Lenders other than the Issuing Lender. "Lenders": as defined in the preamble hereto. "Letters of Credit": as defined in Section 0. "Lien": any mortgage, pledge, hypothecation, assignment (including any collateral assignment but excluding any assignment of an asset made in lieu of a sale thereof where the assignor is paid the fair market value of such asset by the assignee and the assignee assumes all of the rights and obligations attributable to ownership of such asset), deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). "Loan Documents": this Agreement, the Notes, the Applications and the Subsidiary Guarantee. "Loan Parties": the Borrower and the Subsidiary Guarantors. "Material Adverse Effect": a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under any Loan Document to which it is a party, (c) the ability of the Guarantors, taken as a whole, to perform their respective obligations under the Subsidiary Guarantee or (d) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder. "Materials of Environmental Concern": any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation. "Money Market Loan Maturity Date": with respect to any Money Market Loan, the maturity date requested by the Borrower in connection therewith (which date shall in no event be later than the earlier of (a) 29 days after the Borrowing Date thereof or (b) the Termination Date). "Money Market Loans": Revolving Credit Loans the rate of interest applicable to which is based upon the Money Market Rate. "Money Market Rate": with respect to any proposed Money Market Loan, the quoted rate per annum obtained by the Administrative Agent with respect thereto, and accepted by each Lender in its sole discretion, no later than 10:00 A.M., New York City time, two Business Days prior to the requested Borrowing Date (or, in the case of Money Market Loans having a Money Market Loan Maturity Date of six days or less from the relevant Borrowing Date, the quoted rate per annum obtained by the Administrative Agent with respect thereto, and accepted by each Lender in its sole discretion, no later than one hour after the quote is obtained by the Administrative Agent, which quote shall in no event be obtained later than 12:00 Noon, New York City time, on the relevant Borrowing Date). 83 11 "Money Market Tranche": the collective reference to Money Market Loans having the same Borrowing Date and Money Market Loan Maturity Date. "Moody's": Moody's Investors Service, Inc. and its successors. "Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Non-Excluded Taxes": as defined in Section 2.12(a). "Non-Recourse Indebtedness": Indebtedness the documentation with respect to which expressly provides that (a) the lender(s) thereunder (and any agent for such lender(s)) may not seek a money judgment against the Borrower and/or any Subsidiary and (b) recourse for payment in respect of such Indebtedness is limited to those assets or Capital Stock of the Person issuing such Indebtedness which secure such Indebtedness (except in the case of customary indemnities contained in such documentation, provided that if a claim is made in connection with such indemnities, such claim shall not constitute Non-Recourse Indebtedness for the purposes of this Agreement). "Non-U.S. Lender": as defined in Section 2.12(b). "Note": as defined in Section 2.2(b). "Operations and Maintenance Plan": the Borrower's operations and maintenance plan with respect to environmental matters attached hereto as Exhibit G. "Owned Property": (a) each Property wholly owned in fee by the Borrower or any Subsidiary or Joint Venture and (b) each Property ("Groundlease Properties") as to which (i) the improvements are wholly owned in fee by the Borrower or any Subsidiary or Joint Venture and (ii) the land is subject to a valid Qualified Leasehold Interest in favor of the Borrower or such Subsidiary or Joint Venture, provided, that (x) the aggregate Property Net Operating Income in respect of Groundlease Properties included in any calculation of Value of Unencumbered Properties for any period shall not exceed 15% of the aggregate Property Net Operating Income with respect to all Unencumbered Properties for such period and (y) the aggregate Property Net Operating Income in respect of Groundlease Properties as to which the leasehold interest is not a Qualified Mortgageable Leasehold Interest included in any calculation of Value of Unencumbered Properties for any period shall not exceed 10% of the aggregate Property Net Operating Income with respect to all Unencumbered Properties for such period. As used in this definition: "Qualified Leasehold Interest" means any leasehold interest which (i) may be transferred and/or assigned without the consent of the lessor (or as to which the lease expressly provides that (x) such lease may be transferred and/or assigned with the consent of the lessor and (y) such consent shall not be unreasonably withheld or delayed) and (ii) has a remaining term of at least 40 years. "Qualified Mortgageable Leasehold Interest" means any Qualified Leasehold Interest with respect to which (i) a security interest may be granted without the consent of the lessor and (ii) the lease governing such leasehold interest expressly provides that (x) the lessor shall notify any holder of a security interest in such leasehold 84 12 interest of the occurrence of any default by the lessee under such lease and shall afford such holder the right to cure such default and (y) in the event that such lease is terminated, such holder shall have the option to enter into a new lease having terms substantially identical to those contained in the terminated lease. "Participant": as defined in Section 10.7. "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. "Permitted Liens": (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP; (b) mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 90 days or which are being contested in good faith by appropriate proceedings; and (c) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Property": each parcel of real property (including the shopping center thereon) owned or operated by the Borrower, any Subsidiary or any Joint Venture. "Property Net Operating Income": with respect to any Property, for any period, an amount equal to the excess, if any, of (a) Property Gross Revenues in respect of such Property for such period over (b) Property Operating Expenses in respect of such Property for such period. "Property Gross Revenues": with respect to any Property, for any period, all gross income, revenues and consideration, of whatever form or nature, received by or paid to or for the account or benefit of the Person owning such Property (and, if such Person is a Joint Venture or a Subsidiary which is not a Wholly Owned Subsidiary, distributed or distributable to the Borrower or any Wholly Owned Subsidiary), in each instance during such period, in connection with the ownership, operation, leasing and occupancy of such Property, including, without limitation, the following: (a) amounts received under the leases, including, without limitation base rent, escalation, overage, additional, participation, percentage and similar rentals, late charges and interest payments and amounts received on account of maintenance or service charges, real estate taxes, assessments, utilities, air conditioning and heating and other administrative, management, operating, leasing and maintenance expenses for such property, but excluding until earned security deposits, prepaid rents and other refundable receipts, (b) rents and receipts from licenses, concessions, vending machines and similar items, (c) parking fees and rentals, (d) other fees, charges or payments not denominated as rental of office, retail, storage, parking or other space in such property, and (e) payments received as consideration, in whole or 85 13 in part, for the cancellation, modification, extension or renewal of leases; but in any event excluding the proceeds of any financing in respect of all or any portion of such Property. "Property Operating Expenses": with respect to any Property, for any period, the sum of (I) all expenses incurred by the Borrower and its Subsidiaries during such period with respect to the ownership, operation, leasing and occupancy of such Property (including expenses payable by any Joint Venture to the extent the Borrower or any of its Subsidiaries is liable therefor), including, without limitation, the following: (a) real estate taxes; (b) special assessments or similar charges paid during such period; (c) personal property taxes; (d) costs of utilities, air conditioning and heating; (e) maintenance and repair costs of a non-capital nature; (f) operating expenses and fees; (g) wages and salaries of on-site employees engaged in the operation and management of such Property, including employers' social security taxes and other taxes, insurance benefits and the like, levied on or with respect to such wages or salaries; (h) premiums payable for insurance carried on or with respect to such Property; (i) advertising and promotion costs; (j) rental expense and (k) in the case of any Property owned or operated by a Joint Venture, any obligation of the Borrower or any of its Subsidiaries (contingent or otherwise) to contribute funds to such Joint Venture and (II) a reserve in respect of management fees and expenses equal to 5% of Property Gross Revenues for such period with respect to such Property. The following shall be excluded from Property Operating Expenses: (1) foreign, U.S., state and local income taxes, franchise taxes or other taxes based on income, (2) depreciation, amortization and any other non-cash deduction for income tax purposes, (3) interest expenses of the Person owning such Property and (4) any expenditures made for capital improvements and the cost of leasing commissions. "Purchasing Lender": as defined in Section 10.8(a). "Rating Agencies": the collective reference to S&P and Moody's. "Register": as defined in Section 10.9(a). "Regulation U": Regulation U of the Board as in effect from time to time. "Reimbursement Obligation": the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 0 for amounts drawn under Letters of Credit. "Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under Sections .13, .14, .16, .18, .19 or .20 of PBGC Reg.ss. 2615. "Required Lenders": at any date, the holders of 66-2/3% of the aggregate Commitments, or, if the Commitments have been terminated, of the aggregate unpaid principal amount of the Revolving Credit Loans and L/C Obligations. "Required Remedial Lenders": at any date, the holders of 66-2/3% of the aggregate Commitments. "Requirement of Law": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each 86 14 case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer": the chief executive officer and the president of the Borrower or, with respect to financial matters, the chief financial officer of the Borrower. "Revolving Credit Loan": any loan made by any Lender pursuant to this Agreement. "S&P": Standard & Poor's Ratings Group and its successors. "Significant Subsidiary": at any date of determination, any Subsidiary of the Borrower which at such date owns or operates one or more Properties having an aggregate Equity Value in excess of $10,000,000. For the purposes of this definition, "Equity Value" means: (a) in the case of any Property owned or operated by the Borrower or any of its Subsidiaries on October 1, 1996, (i) 2 multiplied by an amount equal to (x) Property Net Operating Income of such Property for the period of two consecutive fiscal quarters of the Borrower ending March 31, 1997 divided by (y) 0.105 minus (ii) the aggregate outstanding principal amount of any Indebtedness secured by such Property as of the last day of such period; and (b) in the case of any other Property, the aggregate purchase price paid by the Borrower or any of its Subsidiaries in connection with the acquisition of such Property (excluding (i) the principal amount of any Indebtedness secured by such Property and assumed in connection with the acquisition thereof and (ii) if such Property is acquired subject to Indebtedness, the principal amount of such Indebtedness). "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Status": as to the Borrower, the existence of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status, as the case may be. As used in this definition: "Level I Status" exists at any date if, at such date, the Borrower has a long-term senior unsecured debt rating of AAA or better by S&P and Aaa or better by Moody's; "Level II Status" exists at any date if, at such date, Level I Status does not exist and the Borrower has a long-term senior unsecured debt rating of AA- or better by S&P and Aa3 or better by Moody's; "Level III Status" exists at any date if, at such date, neither Level I Status nor Level II Status exists and the Borrower has a long-term senior unsecured debt rating of A- or better by S&P and A3 or better by Moody's; "Level IV Status" exists at any date if, at such date, neither Level I Status, Level II Status nor Level III Status exists and the Borrower has a long-term senior unsecured debt rating of BBB- or better by S&P and Baa3 or better by Moody's; and "Level V Status" exists at any date if, at such date, none of Level I Status, Level II Status, Level III Status or Level IV Status exists; 87 15 provided that if S&P and/or Moody's shall cease to issue ratings of debt securities of real estate investment trusts generally, then the Administrative Agent and the Borrower shall negotiate in good faith to agree upon a substitute rating agency or agencies (and to correlate the system of ratings of each substitute rating agency with that of the rating agency for which it is substituting) and (a) until such substitute rating agency or agencies are agreed upon, Status shall be determined on the basis of the rating assigned by the other rating agency (or, if both S&P and Moody's shall have so ceased to issue such ratings, on the basis of the Status in effect immediately prior thereto) and (b) after such substitute rating agency or agencies are agreed upon, Status shall be determined on the basis of the rating assigned by the other rating agency and such substitute rating agency or the two substitute rating agencies, as the case may be. "Subsidiary": as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. "Subsidiary Guarantee": the Guarantee to be executed and delivered by each Subsidiary of the Borrower, substantially in the form of Exhibit C, as the same may be amended, supplemented or otherwise modified from time to time. "Subsidiary Guarantor": each Subsidiary of the Borrower party to the Subsidiary Guarantee. "Termination Date": May __, 1998. "Tranche": any C/D Tranche, Eurodollar Tranche or Money Market Tranche in respect of Revolving Credit Loans. "Transferee": as defined in Section 10.9(b). "Type": as to any Revolving Credit Loan, its nature as an ABR Loan, a Eurodollar Loan, a C/D Rate Loan or a Money Market Loan. "Unencumbered": with respect to any asset, at any date of determination, the circumstance that such asset on such date (a) is not subject to any Liens or claims (including restrictions on transferability or assignability) of any kind (including any such Lien, claim or restriction imposed by the organizational documents of any Subsidiary or Joint Venture, but excluding Permitted Liens and, in the case of any Qualified Leasehold Interest (to the extent permitted by the definition thereof), restrictions on transferability or assignability in respect of such leasehold interest), (b) is not subject to any agreement (including (i) any agreement governing Indebtedness incurred in order to finance or refinance the acquisition of such asset and (ii) if applicable, the organizational documents of any Subsidiary or Joint Venture) which prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any assets or Capital Stock of the Borrower or any of its Subsidiaries (excluding (x) any agreement which limits generally the amount of secured Indebtedness which may be incurred by the Borrower and its Subsidiaries and (y) any lease with respect to a Qualified Leasehold Interest which is not a Qualified Mortgageable Leasehold 88 16 Interest, so long as such restriction applies only to the leasehold interest created by such lease) and (c) is not subject to any agreement (including any agreement governing Indebtedness incurred in order to finance or refinance the acquisition of such asset) which entitles any Person to the benefit of any Lien (other than Permitted Liens) on any assets or Capital Stock of the Borrower or any of its Subsidiaries, or would entitle any Person to the benefit of any Lien (other than Permitted Liens) on such assets or Capital Stock upon the occurrence of any contingency (including, without limitation, pursuant to an "equal and ratable" clause). For the purposes of this Agreement, any Owned Property of a Subsidiary which is not a Wholly Owned Subsidiary or of a Joint Venture shall not be deemed to be Unencumbered unless both (i) such Property and (ii) all Capital Stock of such Subsidiary or Joint Venture owned by the Borrower or any of its Subsidiaries is Unencumbered. "Uniform Customs": the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time. "Unrestricted Cash and Cash Equivalents": at any date of determination, the sum of (a) the aggregate amount of Unrestricted cash then held by the Borrower or any of its consolidated Subsidiaries and (b) the aggregate amount of Unrestricted Cash Equivalents (valued at the lower of cost and fair market value) then held by the Borrower or any of its consolidated Subsidiaries. As used in this definition, "Unrestricted" means, with respect to any asset, the circumstance that such asset is not subject to any Liens or claims of any kind in favor of any Person. It is understood that, for the purposes of this definition, any asset held by the Borrower or any of its Subsidiaries as security for any obligations owing to the Borrower or any of its Subsidiaries by any other Person shall not be deemed to be Unrestricted. "Unsecured Indebtedness": all Indebtedness of the Borrower and its Subsidiaries which is not secured by a Lien on any income, Capital Stock, property or asset of the Borrower or any of its Subsidiaries. "Value of Unencumbered Properties": for any period of two consecutive fiscal quarters, an amount equal to 2 multiplied by (a) the aggregate Property Net Operating Income with respect to the Unencumbered Owned Properties for such period divided by (b) 0.105. "Wholly Owned Subsidiary": as to any Person, any other Person all of the Capital Stock of which (other than directors' qualifying shares required by law) is owned by such Person directly and/or through other Wholly Owned Subsidiaries. "Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor which is a Wholly Owned Subsidiary of the Borrower. 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any other Loan Document or any certificate or other document made or delivered pursuant hereto or thereto. (b) As used herein and in any other Loan Document, and any certificate or other document made or delivered pursuant hereto or thereto, accounting terms relating to the Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this 89 17 Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES 2.1 RESERVED. THIS SECTION INTENTIONALLY OMITTED 2.2 Commitments. (a) Revolving Credit Loans. (i) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans to the Borrower from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding which, when added to such Lender's Commitment Percentage of the then outstanding L/C Obligations, does not exceed the amount of such Lender's Commitment. During the Commitment Period the Borrower may use the Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. Notwithstanding anything to the contrary contained in this Agreement, in no event shall, at any time, the sum of the Aggregate Outstanding Revolving Extensions of Credit of all of the Lenders exceed the aggregate Commitments then in effect. (ii) The Revolving Credit Loans may from time to time be (v) Eurodollar Loans, (w) ABR Loans, (x) C/D Rate Loans, (y) Money Market Loans or (z) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2(d) and 2.4, provided that no Revolving Credit Loan shall be made as a Eurodollar Loan or a C/D Rate Loan after the day that is one month or 30 days, respectively, prior to the Termination Date. (b) Notes. The Revolving Credit Loans made by each Lender shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit A-2, with appropriate insertions as to payee, date and principal amount (a "Note"), payable to the order of such Lender and in a principal amount equal to the lesser of (i) the amount of the initial Commitment of such Lender and (ii) the aggregate unpaid principal amount of all Revolving Credit Loans made by such Lender. Each Lender is hereby authorized to record the date, Type and amount of each Revolving Credit Loan made by such Lender, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal thereof and, in the case of Eurodollar Loans and C/D Rate Loans, the length of each Interest Period with respect thereto and, in the case of Money Market Loans, the Money Market Loan Maturity Date with respect thereto, on the schedule annexed to and constituting a part of its Note, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded; provided that the failure by any Lender to make any such recordation or any error in such recordation shall not affect the obligations of the Borrower under this Agreement or the Notes. Each Note shall (x) be dated the Closing Date, (y) be stated to have a final maturity on the Termination Date and (z) provide for the payment of interest in accordance with Section 2.6. (c) Repayment of Revolving Credit Loans. The Borrower shall repay all then outstanding Revolving Credit Loans on the Termination Date or such earlier date as the Commitments shall terminate as provided herein; provided, that each Money Market Loan shall, in any event, be repaid on the Money Market Loan Maturity Date in respect thereof. (d) Procedure for Borrowing Revolving Credit Loans. The Borrower may borrow under the Commitments during the Commitment Period on any Business Day, provided that the Borrower shall 90 18 give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, (i) three Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be initially Eurodollar Loans or Money Market Loans having a Money Market Loan Maturity Date of more than six days from the relevant Borrowing Date, (ii) two Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be initially C/D Rate Loans or Money Market Loans having a Money Market Loan Maturity Date of six days or less from the relevant Borrowing Date, or (iii) one Business Day prior to the requested Borrowing Date, otherwise), specifying (w) the amount to be borrowed, (x) the requested Borrowing Date and, in the case of each Money Market Loan, the requested Money Market Loan Maturity Date, (y) whether the borrowing is to be of Eurodollar Loans, ABR Loans, C/D Rate Loans, Money Market Loans or a combination thereof and (z) if the borrowing is to be entirely or partly of Eurodollar Loans or C/D Rate Loans, the respective amounts of each such Type of Revolving Credit Loan and the respective lengths of the initial Interest Periods therefor. Each borrowing under the Commitments shall be in an amount equal to (i) in the case of ABR Loans, $500,000 or a whole multiple of $100,000 in excess thereof (or, if the then aggregate Available Commitments are less than $500,000, such lesser amount) and (ii) in the case of Eurodollar Loans, C/D Rate Loans or Money Market Loans, $3,000,000 or a whole multiple of $100,000 in excess thereof. Upon receipt of any such notice from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Each Lender will make the amount of its pro rata share of each such borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent specified in Section 10.2 prior to 11:00 A.M., New York City time (or in the case of Money Market Loans having a Money Market Loan Maturity Date of six days or less from the relevant Borrowing Date, 3:00 P.M., New York City time), on the Borrowing Date requested by the Borrower in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Borrower by the Administrative Agent crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent. In no event may the number of Money Market Loans requested in any calendar month pursuant to this Section 2.2(d) exceed seven. (e) Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, prepayments, conversions and continuations of Revolving Credit Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, (i) the aggregate principal amount of the Revolving Credit Loans comprising each Tranche shall be equal to $3,000,000 or a whole multiple of $100,000 in excess thereof, (ii) no Lender's share of any Tranche shall be less than $500,000 and (iii) there shall be no more than four Tranches outstanding at any one time. (f) Termination or Reduction of Commitments. The Borrower shall have the right, upon not less than three Business Days' irrevocable notice to the Administrative Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments; provided that no such termination or reduction shall be permitted if, after giving effect thereto and to any payments of the Revolving Credit Loans made on the effective date thereof, (i) the aggregate principal amount of the Revolving Credit Loans then outstanding, when added to the aggregate L/C Obligations then outstanding, would exceed the Commitments then in effect or (ii) the Available Commitment of any Lender would be less than zero. Any such reduction shall be in an amount equal to $1,000,000 or a whole multiple thereof and shall reduce permanently the Commitments then in effect. 2.3 Optional Prepayments. The Borrower may at any time and from time to time prepay the Revolving Credit Loans (subject, in the case of Eurodollar Loans, C/D Rate Loans and Money Market Loans, to compliance with the terms of Sections 2.2(e) and 2.13), in whole or in part, without premium or penalty, upon at least three Business Days' irrevocable notice to the Administrative Agent, specifying the date and amount of prepayment and whether the prepayment is of Eurodollar Loans, C/D 91 19 Rate Loans, ABR Loans, Money Market Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any amounts payable pursuant to Section 2.13. Partial prepayments shall be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the aggregate outstanding principal amount of Revolving Credit Loans). 2.4 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans or C/D Rate Loans to ABR Loans, and/or to convert Eurodollar Loans or ABR Loans to C/D Rate Loans, by giving the Administrative Agent at least two Business Days' prior irrevocable notice of such election, provided that any such conversion of Eurodollar Loans or C/D Rate Loans may only be made on the last day of an Interest Period with respect thereto. The Borrower may elect from time to time to convert ABR Loans or C/D Rate Loans to Eurodollar Loans by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election, provided that any such conversion of C/D Rate Loans may, subject to the third succeeding sentence, only be made on the last day of an Interest Period with respect thereto. Any such notice of conversion to Eurodollar Loans or C/D Rate Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each affected Lender thereof. If the last day of the then current Interest Period with respect to C/D Rate Loans that are to be converted to Eurodollar Loans is not a Business Day, such conversion shall be made on the next succeeding Business Day, and during the period from such last day to such succeeding Business Day such Loans shall bear interest as if they were ABR Loans. All or any part of outstanding Eurodollar Loans, ABR Loans and C/D Rate Loans may be converted as provided herein, provided that (i) no Loan may be converted into a Eurodollar Loan or a C/D Rate Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion that such a conversion is not appropriate, (ii) any such conversion may only be made if, after giving effect thereto, Section 2.2(e) would not be contravened and (iii) no Revolving Credit Loan may be converted into a Eurodollar Loan or a C/D Rate Loan after the date that is one month or 30 days, respectively, prior to the Termination Date. (b) Any Eurodollar Loans or C/D Rate Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Borrower giving irrevocable notice to the Administrative Agent, in accordance with the applicable provisions of the term "Interest Period" set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan or C/D Rate Loan may be continued as such (i) when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion that such a continuation is not appropriate, (ii) if, after giving effect thereto, Section 2.2(e) would be contravened or (iii) after the date that is one month or 30 days, respectively, prior to the Termination Date, and provided, further, that if the Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period. 2.5 Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (the "Commitment Fee") for the period from and including the first day of the Commitment Period to the Termination Date, computed at the rate of 1/8th of 1% per annum on the average daily amount of the Available Commitment of such Lender during the period for which payment is made (taking into consideration any reductions in the Commitment of such Lender pursuant to Section 2.2(f) occurring during such period), payable monthly in arrears on the last day of each March, June, September and December during the term of this Agreement and on the Termination Date or such earlier date as the Commitments shall terminate as provided herein, commencing on the first of such 92 20 dates to occur after the Closing Date. (b) The Borrower shall pay to the Administrative Agent, for its own account, and, to the extent mutually agreed upon by the Administrative Agent and the Lenders, for the account of the Lenders, the fees in the amounts and on the dates previously agreed to in writing by the Borrower. 2.6 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the Applicable Margin. (b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin. (c) Each C/D Rate Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the C/D Rate determined for such day plus the Applicable Margin. (d) Each Money Market Loan shall bear interest at a rate per annum equal to the Money Market Rate applicable thereto plus the Applicable Margin. (e) If all or a portion of (i) the principal amount of any Revolving Credit Loan, (ii) any interest payable thereon or (iii) any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of overdue principal (except as otherwise specified in clause (y) below), the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section 2.6 plus 3% or (y) in the case of any overdue principal with respect to Money Market Loans or any overdue interest, commitment fee or other amount, the rate described in Section 2.6(b) plus 3%, in each case from the date of such non-payment to the date on which such amount is paid in full (as well after as before judgment). (f) Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to Section 2.6(e) shall be payable from time to time on demand. 2.7 Computation of Interest and Fees. (a) Commitment fees and interest (other than interest calculated on the basis of the Prime Rate) shall be calculated on the basis of a 360-day year for the actual days elapsed. Interest calculated on the basis of the Prime Rate shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of each determination of a Eurodollar Rate, C/D Rate or Money Market Rate. Any change in the interest rate on a Revolving Credit Loan resulting from a change in the ABR or the C/D Assessment Rate shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify the Borrower and the Lenders of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver to the Borrower a statement showing the quotations used by the Administrative Agent in determining any interest rate with respect to any Eurodollar Loan or C/D Rate Loan. 2.8 Inability to Determine Interest Rate; Unavailability of C/D Rate Option. If prior to the first day of any Interest Period: 93 21 (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate or the C/D Rate for such Interest Period, (b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate or the C/D Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Revolving Credit Loans during such Interest Period, or (c) the Administrative Agent shall have received notice from any Lender that it is unable to fund Revolving Credit Loans hereunder on the basis of the C/D Rate, the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans or C/D Rate Loans, as the case may be, requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y) any Revolving Credit Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans or C/D Rate Loans, as the case may be, shall be converted to or continued as ABR Loans and (z) any outstanding Eurodollar Loans or C/D Rate Loans, as the case may be, shall be converted, on the first day of such Interest Period, to ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans or C/D Rate Loans, as the case may be, shall be made or continued as such, nor shall the Borrower have the right to convert Revolving Credit Loans to Eurodollar Loans or C/D Rate Loans, as the case may be. 2.9 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the Lenders hereunder, each payment by the Borrower on account of any Commitment Fee hereunder and any reduction of the Commitments of the Lenders shall be made pro rata according to the respective Commitment Percentages of the Lenders. Each payment (including each prepayment) by the Borrower on account of principal of and interest on the Revolving Credit Loans shall be made pro rata according to the respective outstanding principal amounts of the Revolving Credit Loans then held by the Lenders. All payments (including prepayments) to be made by the Borrower hereunder and under the Notes, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Administrative Agent's office specified in Section 10.2, in Dollars and in immediately available funds. It is understood that, if any payment of principal is made on any day in accordance with the preceding sentence, no interest shall accrue on such day in respect of such principal. The Administrative Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day (and, with respect to any such payments of principal, interest thereon shall be payable at the then applicable rate during such extension) unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. (b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender 94 22 is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 2.9(b) shall be conclusive in the absence of manifest error. If such Lender's share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans hereunder, on demand, from the Borrower. 2.10 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert C/D Rate Loans or ABR Loans to Eurodollar Loans shall forthwith be cancelled and (b) such Lender's Revolving Credit Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 2.13. 2.11 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the Closing Date: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Note, any Letter of Credit or any Application or any Eurodollar Loan, C/D Rate Loan or Money Market Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except in each case for Non-Excluded Taxes covered by Section 2.12 and changes in the rate of tax on the overall net income of such Lender); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any relevant office of such Lender which is not otherwise included in the determination of the Eurodollar Rate, the C/D Rate or the Money Market Rate hereunder; or (iii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans, C/D Rate Loans or Money Market Loans or issuing or participating in Letters of Credit or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this Section 2.11(a), it shall promptly notify the Borrower, through the Administrative Agent, of the event by reason of which it has become so entitled. (b) If any Lender shall have determined that the application of any Requirement of Law 95 23 regarding capital adequacy or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority does or shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder or under any Letter of Credit to a level below that which such Lender or such corporation could have achieved but for such application or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy and such Lender's treatment of its Commitments for internal purposes as of the date on which it became a party hereto) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor (setting forth in reasonable detail the basis for such request), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. (c) The Borrower agrees to pay to each Lender which requests compensation under this Section 2.11(c) (by notice to the Borrower), on the last day of each Interest Period with respect to any Eurodollar Loan made by such Lender, so long as such Lender shall be required to maintain reserves against "Eurocurrency liabilities" under Regulation D of the Board (or, so long as such Lender may be required by the Board or by any other Governmental Authority to maintain reserves against any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined as provided in this Agreement or against any category of extensions of credit or other assets of such Lender which includes any Eurodollar Loans), an additional amount (determined by such Lender and notified to the Borrower) representing such Lender's calculation or, if an accurate calculation is impracticable, reasonable estimate (using such reasonable means of allocation as such Lender shall determine) of the actual costs, if any, incurred by such Lender during such Interest Period, as a result of the applicability of the foregoing reserves to such Eurodollar Loans, which amount in any event shall not exceed the product of the following for each day of such Interest Period: (i) the principal amount of the Eurodollar Loans made by such Lender to which such Interest Period relates and outstanding on such day; and (ii) the difference between (x) a fraction the numerator of which is the Eurodollar Rate (expressed as a decimal) applicable to such Eurodollar Loan, and the denominator of which is one minus the maximum rate (expressed as a decimal) at which such reserve requirements are imposed by the Board or other Governmental Authority on such date minus (y) such numerator; and (iii) a fraction the numerator of which is one and the denominator of which is 360. Any Lender which gives notice under this Section 2.11(c) shall promptly withdraw such notice (by written notice of withdrawal given to the Administrative Agent and the Borrower) in the event such Lender is no longer required to maintain such reserves or the circumstances giving rise to such notice shall otherwise cease to exist. (d) The Borrower agrees to pay to each Lender which requests compensation under this Section 2.11(d) (by notice to the Borrower), on the last day of each Interest Period with respect to any C/D Rate Loan made by such Lender, so long as such Lender shall be required to maintain reserves against "non-personal time deposits" under Regulation D of the Board (or, so long as such Lender may be required by the Board or by any other Governmental Authority to maintain reserves against any other category of liabilities which includes deposits by reference to which the interest rate on C/D Rate Loans is determined as provided in this Agreement or against any category of extensions of credit or other assets of such Lender which includes any C/D Rate Loans), an additional amount (determined by such 96 24 Lender and notified to the Borrower) representing such Lender's calculation or, if an accurate calculation is impracticable, reasonable estimate (using such reasonable means of allocation as such Lender shall determine) of the actual costs, if any, incurred by such Lender during such Interest Period, as a result of the applicability of the foregoing reserves to such C/D Rate Loans, which amount in any event shall not exceed the product of the following for each day of such Interest Period: (i) the principal amount of the C/D Rate Loans made by such Lender to which such Interest Period relates and outstanding on such day; and (ii) the difference between (x) a fraction the numerator of which is the C/D Rate (expressed as a decimal) applicable to such C/D Rate Loan, and the denominator of which is one minus the maximum rate (expressed as a decimal) at which such reserve requirements are imposed by the Board or other Governmental Authority on such date minus (y) such numerator; and (iii) a fraction the numerator of which is one and the denominator of which is 360. Any Lender which gives notice under this Section 2.11(d) shall promptly withdraw such notice (by written notice of withdrawal given to the Administrative Agent and the Borrower) in the event such Lender is no longer required to maintain such reserves or the circumstances giving rise to such notice shall otherwise cease to exist. (e) A certificate as to any additional amounts payable pursuant to this Section 2.11 submitted by any Lender, through the Administrative Agent, to the Borrower shall be conclusive in the absence of manifest error. The agreements in this Section 2.11 shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder (the date on which all of the foregoing shall have occurred, the "Final Date") until the first anniversary of the Final Date. 2.12 Taxes. (a) All payments made by the Borrower under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or the Notes). If any such non- excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder or under the Notes, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Non-U.S. Lender if such Lender fails to comply with the requirements of Section 2.12(b). Whenever any Non-Excluded Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the 97 25 Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. The agreements in this Section 2.12(a) shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. (b) Each Lender (or Transferee) that is not a citizen or resident of the United States of America, a corporation, partnership or other entity created or organized in or under the laws of the United States of America, or any estate or trust that is subject to federal income taxation regardless of the source of its income (a "Non-U.S. Lender") shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, an annual certificate representing under penalty of perjury that such Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this Section 2.12(b), a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.12(b) that such Non-U.S. Lender is not legally able to deliver. 2.13 Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of Eurodollar Loans, C/D Rate Loans or Money Market Loans, or in the conversion into or continuation of Eurodollar Loans or C/D Rate Loans, after the Borrower has given a notice requesting or accepting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement, or (c) the making of a prepayment of Eurodollar Loans, C/D Rate Loans or Money Market Loans on a day which is not the last day of an Interest Period, or the Money Market Loan Maturity Date, as the case may be, with respect thereto. Such indemnification may, at the option of any Lender, include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of the relevant Interest Period or the relevant Money Market Loan Maturity Date, as the case may be (or proposed Interest Period or proposed Money Market Loan Maturity Date, as the case may be), in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market or other relevant market. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder until the first anniversary of the Final Date. 2.14 Change of Lending Office. Each Lender and each Transferee agrees that, upon the 98 26 occurrence of any event giving rise to the operation of Section 2.10, 2.11 or 2.12 with respect to such Lender or Transferee, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender or Transferee) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender or Transferee, cause such Lender or Transferee and its lending office(s) to suffer no economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section 2.14 shall affect or postpone any of the obligations of any Borrower or the rights of any Lender or Transferee pursuant to Sections 2.10, 2.11 and 2.12. 2.15 Replacement of Lenders under Certain Circumstances. The Borrower shall be permitted to replace any Lender which (a) requests reimbursement for amounts owing pursuant to Section 2.11 or 2.12, (b) is affected in the manner described in Section 2.10 and as a result thereof any of the actions described in Section 2.10 is required to be taken or (c) defaults in its obligation to make Revolving Credit Loans hereunder, with a replacement bank or other financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) the Borrower shall repay (or the replacement bank or institution shall purchase, at par) all Revolving Credit Loans and other amounts owing to such replaced Lender prior to the date of replacement, (iv) the Borrower shall be liable to such replaced Lender under Section 2.13 if any Eurodollar Loan, C/D Rate Loan or Money Market Loan owing to such replaced Lender shall be prepaid (or purchased) other than on the last day of the Interest Period or the Money Market Loan Maturity Date, as the case may be, relating thereto, (v) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be satisfactory to the Administrative Agent and the Issuing Lender, (vi) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 10.8 (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein), (vii) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 2.11 or 2.12, as the case may be, and (viii) any such replacement shall not be deemed to be a waiver of any rights which the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender. SECTION 3. LETTERS OF CREDIT 3.1. L/C Commitment. (a) Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the other Lenders set forth in Section 0, agrees to issue letters of credit ("Letters of Credit") for the account of the Borrower on any Business Day during the Commitment Period in such form as may be approved from time to time by the Issuing Lender; provided that the Issuing Lender shall have no obligation to issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the Available Commitment of any Lender would be less than zero. (b) Each Letter of Credit (i) shall be denominated in Dollars, (ii) shall be a standby letter of credit issued to support obligations of the Borrower and its Subsidiaries, contingent or otherwise, incurred in the ordinary course of business and (iii) shall expire no later than the earlier of the first anniversary of the date of issuance thereof or the Termination Date (or, in the case of any Letter of Credit with automatic renewal or evergreen provisions, shall have a final expiration date no later than the Termination Date). (c) Each Letter of Credit shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York. (d) The Issuing Lender shall not at any time be obligated to issue any Letter of Credit 99 27 hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law. 3.2. Procedure for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at its address for notices specified herein an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may request. Upon receipt of any Application, the Issuing Lender will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to the Borrower promptly following the issuance thereof. 3.3. Fees and Other Charges. (a) The Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit fee with respect to each Letter of Credit at a per annum rate, for each day during the period from the date of issuance of such Letter of Credit to the first date thereafter on which such Letter of Credit shall expire or be cancelled or fully drawn (the "L/C Termination Date"), equal to the L/C Fee Rate in effect on such day, calculated on the basis of a 360-day year, of the aggregate amount available to be drawn under such Letter of Credit on such day. Subject to the provisions of the following sentence, such letter of credit fee shall be payable in arrears on each L/C Fee Payment Date to occur while the relevant Letter of Credit is outstanding and shall be nonrefundable. A portion of each aforementioned letter of credit fee equal to 1/8th of 1% per annum shall be payable to the Issuing Lender, and the remaining portion of such letter of credit fee shall be payable to the Issuing Lender and the L/C Participants to be shared ratably among them in accordance with their respective Commitment Percentages. (b) In addition to the foregoing fees, the Borrower shall pay or reimburse the Issuing Lender for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. (c) The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all fees received by the Administrative Agent for their respective accounts pursuant to this Section 3.3. 3.4. L/C Participations. (a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Commitment Percentage in the Issuing Lender's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed. (b) If any amount required to be paid by any L/C Participant to the Issuing Lender 100 28 pursuant to Section 0 in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit is paid to the Issuing Lender within three Business Days after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal funds rate, as quoted by the Issuing Lender, during the period from and including the date such payment is required to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 0 is not in fact made available to the Issuing Lender by such L/C Participant within three Business Days after the date such payment is due, the Issuing Lender shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans hereunder. A certificate of the Issuing Lender submitted to any L/C Participant with respect to any amounts owing under this Section shall be conclusive in the absence of manifest error. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its pro rata share of such payment in accordance with this Section 3.4, the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, including proceeds of collateral applied thereto by the Issuing Lender), or any payment of interest on account thereof, the Issuing Lender will promptly distribute to such L/C Participant its pro rata share thereof; provided, however, that in the event that any such payment received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. 3.5. Reimbursement Obligation of the Borrower. (a) The Borrower agrees to reimburse the Issuing Lender on each date on which the Issuing Lender notifies the Borrower of the date and amount of a draft presented under any Letter of Credit and paid by the Issuing Lender for the amount of (i) such draft so paid (which reimbursement may be effected through the procedure described in Section 3.5(c)) and (ii) any taxes, fees, charges or other costs or expenses incurred by the Issuing Lender in connection with such payment. Each such payment shall be made to the Issuing Lender at its address for notices specified herein in lawful money of the United States of America and in immediately available funds. (b) Interest shall be payable on any and all amounts remaining unpaid by the Borrower under this Section 3 from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full at the rate which would be payable on any outstanding ABR Loans which were then overdue. (c) Each drawing under any Letter of Credit shall constitute a request by the Borrower to the Administrative Agent for a borrowing pursuant to Section 2.2(d) of ABR Loans in the amount of such drawing. The Borrowing Date with respect to such borrowing shall be the date of such drawing. 3.6. Obligations Absolute. (a) The Borrower's obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Lender or any beneficiary of a Letter of Credit. (b) The Borrower also agrees with the Issuing Lender that the Issuing Lender shall not be responsible for, and the Borrower's Reimbursement Obligations under Section 0 shall not be affected by, among other things, (i) the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which 101 29 such Letter of Credit may be transferred or (iii) any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. (c) The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. (d) The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence of willful misconduct and in accordance with the standards of care specified in the Uniform Commercial Code of the State of New York, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender to the Borrower. 3.7. Letter of Credit Payments. If any draft shall be presented for payment under any Letter of Credit, the Issuing Lender shall promptly notify the Borrower of the date and amount thereof. The responsibility of the Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit shall, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. 3.8. Applications. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply. SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into this Agreement, to make or maintain the Revolving Credit Loans, and to issue or participate in the Letters of Credit, the Borrower hereby represents and warrants to the Administrative Agent and each Lender that: 4.1 Financial Condition. The consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at December 31, 1996 and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by Coopers & Lybrand, copies of which have heretofore been furnished to the Lenders, are complete and correct and present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such dates, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. The unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at September 30, 1997 and the related unaudited consolidated statements of income and of cash flows for the nine-month period ended on such date, certified by a Responsible Officer, copies of which have heretofore been furnished to the Lenders, are complete and correct and present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the nine-month period then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). Except as set forth on Schedule 4.1, neither the Borrower nor any of its consolidated Subsidiaries has, at the Closing Date, any material Indebtedness, Guarantee Obligation, contingent liability or liability for taxes, or any unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto. Except as set forth on Schedule 4.1, 102 30 during the period from December 31, 1996 to and including the Closing Date there has been no sale, transfer or other disposition by the Borrower or any of its consolidated Subsidiaries of any material part of its business or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of the Borrower and its consolidated Subsidiaries at December 31, 1996. 4.2 No Change. Since December 31, 1996 (a) there has been no development or event nor any prospective development or event, which has had or could reasonably be expected to have a Material Adverse Effect and (b) except for regular quarterly dividends, no dividends or other distributions have been declared, paid or made upon the Capital Stock of the Borrower nor has any of the Capital Stock of the Borrower been redeemed, retired, purchased or otherwise acquired for value by the Borrower or any of its Subsidiaries. 4.3 Corporate Existence; Compliance with Law. (a) The Borrower (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (iii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except to the extent the failure to be so qualified and in good standing could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, and (iv) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) Each Subsidiary of the Borrower (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (iii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, and (iv) is in compliance with all Requirements of Law except, in the case of clauses (i), (ii), (iii) or (iv) above, as could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 4.4 Corporate Power; Authorization; Enforceable Obligations. Each Loan Party has the corporate power and authority, and the legal right, to make, deliver and perform each Loan Document to which it is a party and, in the case of the Borrower, to borrow hereunder and each Loan Party has taken all necessary corporate action to authorize the execution, delivery and performance of each Loan Document to which it is a party and, in the case of the Borrower, the borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of any Loan Document. Each Loan Document has been duly executed and delivered on behalf of each Loan Party party thereto. Each Loan Document constitutes a legal, valid and binding obligation of each Loan Party party thereto enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 4.5 No Legal Bar. The execution, delivery and performance of the Loan Documents and the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of the Borrower or of any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to 103 31 any such Requirement of Law or Contractual Obligation. 4.6 No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to this Agreement, the other Loan Documents or any of the transactions contemplated hereby, or (b) which could reasonably be expected to have a Material Adverse Effect. 4.7 No Default. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 4.8 Ownership of Property. Each of the Borrower and its Subsidiaries has good record title in fee simple to, or a valid leasehold interest in, all its real property, and good title to all its other property. 4.9 Intellectual Property. The Borrower and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes ("Intellectual Property") necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect. No claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does the Borrower know of any valid basis for any such claim. The use of such Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.10 No Burdensome Restrictions. No Requirement of Law or Contractual Obligation of the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect. 4.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Borrower, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge. 4.12 Federal Regulations. No part of the proceeds of any Revolving Credit Loans will be used for "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board as now and from time to time hereafter in effect or for any purpose which violates the provisions of the Regulations of the Board. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in said Regulation U. 4.13 ERISA. No Reportable Event has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code. The present value of all accrued benefits under each Single Employer Plan maintained by the Borrower or any Commonly Controlled Entity (based on those assumptions used to fund the Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the 104 32 value of the assets of such Plan allocable to such accrued benefits. Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan, and neither the Borrower nor any Commonly Controlled Entity would become subject to any liability under ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. The present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the employees participating) of the liability of the Borrower and each Commonly Controlled Entity for post retirement benefits to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) equals or exceeds the assets under all such Plans allocable to such benefits. 4.14 Investment Company Act; Other Regulations. The Borrower is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any Federal or State statute or regulation which limits its ability to incur Indebtedness. 4.15 Subsidiaries. The corporations listed on Schedule 4.15 constitute all the Subsidiaries of the Borrower at the Closing Date. 4.16 Purpose of Loans. The proceeds of the Revolving Credit Loans shall be used by the Borrower for general corporate purposes (excluding commercial paper back-up). 4.17 Environmental Matters. Each of the following representations and warranties is true and correct on and as of the Closing Date except to the extent that the facts and circumstances giving rise to any such failure to be so true and correct, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) To the best knowledge of the Borrower, the Properties do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations which constitute or constituted a violation of, or could reasonably give rise to liability under, Environmental Laws. (b) To the best knowledge of the Borrower, the Properties and all operations at the Properties are in compliance, and have in the last two years been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about the Properties, or violation of any Environmental Law with respect to the Properties. (c) Neither the Borrower nor any of its Subsidiaries has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties, nor does the Borrower have knowledge or reason to believe that any such notice will be received or is being threatened. (d) To the best knowledge of the Borrower, Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could reasonably give rise to liability under, Environmental Laws, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Laws. (e) No judicial proceedings or governmental or administrative action is pending, or, to 105 33 the knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower is or will be named as a party with respect to the Properties, nor are there any consent decrees or other decrees, consent orders, administrative order or other orders, or other administrative of judicial requirements outstanding under any Environmental Law with respect to the Properties. (f) To the best knowledge of the Borrower, there has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of the Borrower and its Subsidiaries in connection with the Properties in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws. 4.18 Insurance. The Borrower and each Subsidiary maintains with insurance companies rated at least A- by A.M. Best & Co., with premiums at all times currently paid, insurance upon fixed assets and inventories, including public liability insurance, fire and all other risks insured against by extended coverage, fidelity bond coverage, business interruption insurance, and all insurance required by law, all in form and amounts required by law and customary to the respective natures of their businesses and properties, except in cases where failure to maintain such insurance will not have or potentially have an adverse effect on any of such properties or on the business, assets, property or financial or other condition of the Borrower or any Subsidiary. 4.19 Condition of Properties. Each of the following representations and warranties is true and correct except to the extent that the facts and circumstances giving rise to any such failure to be so true and correct, in the aggregate, could not reasonably be expected to have a Material Adverse Effect: (a) All of the improvements located on the Properties and the use of said improvements shall comply and shall continue to comply in all respects with all applicable zoning resolutions, building codes, subdivision and other similar applicable laws, rules and regulations and are covered by existing valid certificates of occupancy and all other certificates and permits required by applicable laws, rules, regulations and ordinances or in connection with the use, occupancy and operation thereof. (b) No material portion of any of the Properties, nor any improvements located on said Properties that are material to the operation, use or value thereof have been damaged in any respect as a result of any fire, explosion, accident, flood or other casualty. (c) No condemnation or eminent domain proceeding has been commenced or to the knowledge of the Borrower is about to be commenced against any portion of any of the Properties, or any improvements located thereon that are material to the operation, use or value of said Properties except as set forth and described in Schedule 4.19 attached hereto. (d) No notices of violation of any federal, state or local law or ordinance or order or requirement have been issued with respect to any Properties. 4.20 Benefit of Loans. The Borrower and each Subsidiary are engaged as an integrated corporate group in the business of acquiring, owning, developing and operating shopping centers and of providing the required services and other facilities for those integrated operations. The Borrower and each Subsidiary require financing on such a basis that funds can be made available to the Borrower and each Subsidiary to the extent required for the continued operation of their integrated activities and each of them expect to derive benefit, directly or indirectly, in return for undertaking their respective obligations under this Agreement and the other Loan Documents, both individually and as members of the integrated group. 106 34 4.21 REIT. The Borrower is an equity-oriented real estate investment trust under Sections 856 through 860 of the Code. SECTION 5. CONDITIONS PRECEDENT 5.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction, on or prior to the Closing Date, of the following conditions precedent: (a) Agreement; Notes. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Borrower, with a counterpart for each Lender and (ii) for the account of each Lender, a Note conforming to the requirements hereof and executed by a duly authorized officer of the Borrower. (b) Closing Certificate. The Administrative Agent shall have received, with a copy for each Lender, a certificate of each Loan Party, dated the Closing Date, substantially in the form of Exhibit D, with appropriate insertions and attachments, satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of such Loan Party, and attaching the documents referred to in Sections 5.1(c) and (d). (c) Corporate Proceedings of the Loan Parties. The Administrative Agent shall have received, with a copy for each Lender, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of each Loan Party authorizing (i) the execution, delivery and performance of each Loan Document to which it is a party and (ii) in the case of the Borrower, the borrowings contemplated hereunder. (d) Corporate Documents. The Administrative Agent shall have received, with a copy for each Lender, true and complete copies of the certificate of incorporation and by-laws of the Borrower. (e) Fees. The Administrative Agent shall have received an upfront fee payable for the ratable benefit of the Lenders in the amount previously disclosed to each Lender. (f) Legal Opinions. The Administrative Agent shall have received, with a counterpart for each Lender, the executed legal opinion of Robert P. Schulman, Esq., counsel to the Borrower, substantially in the form of Exhibit E. (g) Subsidiary Guarantee. The Administrative Agent shall have received the Subsidiary Guarantee, executed and delivered by a duly authorized officer of each Subsidiary of the Borrower, with a counterpart for each Lender. 5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be made by it on any date (including, without limitation, its initial extension of credit) is subject to the satisfaction of the following conditions precedent: (a) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date. (b) No Default. (i) No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extension of credit requested to be made on 107 35 such date and (ii) the Borrower would be in compliance with each financial covenant set forth in paragraphs (a) through (d) of Section 7.1 if the ratio or amount referred to therein were to be calculated as of such date (provided, that for the purposes of determining such compliance, Gross Asset Value and Value of Unencumbered Properties shall be determined for the most recent period of two consecutive fiscal quarters of the Borrower as to which a compliance certificate has been delivered pursuant to Section 6.2(b)). (c) Additional Matters. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be satisfactory in form and substance to the Administrative Agent, and the Administrative Agent shall have received such other documents and legal opinions in respect of any aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request. Each borrowing by, or issuance of a Letter of Credit on behalf of, the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied. SECTION 6. AFFIRMATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect, any Note or any Letter of Credit remains outstanding and unpaid or any other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to: 6.1 Financial Statements. Furnish to the Administrative Agent (with sufficient copies for each Lender): (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by Coopers & Lybrand or other independent certified public accountants of nationally recognized standing; and (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of the Borrower and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments); all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 6.2 Certificates; Other Information. Furnish to the Administrative Agent (with 108 36 sufficient copies for each Lender (in the case of clauses (a)-(c) below) or each relevant Lender (in the case of clauses (d)-(e) below)): (a) concurrently with the delivery of the financial statements referred to in Section 6.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in Sections 6.1(a) and 6.1(b), a compliance certificate of a Responsible Officer of the Borrower substantially in the form of Exhibit F; (c) within ten days after the same are sent, copies of all financial statements and reports which the Borrower sends to its stockholders, and within ten days after the same are filed, copies of all financial statements, reports or other documents which the Borrower may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; (d) promptly upon request of any Lender (through the Administrative Agent), copies of any environmental report prepared pursuant to Section 6.8(d); and (e) promptly, such additional financial information, information with respect to any Property and other information as any Lender may from time to time reasonably request (through the Administrative Agent). 6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except (a) where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be or (b) (i) Non-Recourse Indebtedness and (ii) other obligations which aggregate not more than $5,000,000, in each case to the extent the Borrower or the relevant Subsidiary has determined in good faith that it is in its best interests not to pay or contest such Non-Recourse Indebtedness or such other obligations, as the case may be. 6.4 Maintenance of Existence, etc. (a) Preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except as otherwise permitted pursuant to Section 7.2. (b) Comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, be reasonably expected to have a Material Adverse Effect. 6.5 Maintenance of Property; Insurance. Keep all property useful and necessary in its business in good working order and condition; maintain insurance with financially sound and reputable insurance companies rated at least A- by A.M. Best & Co. on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to each Lender, upon written request, full information as to the insurance carried. 6.6 Inspection of Property; Books and Records; Discussions. Keep proper books of 109 37 records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of any Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Borrower and its Subsidiaries with officers and employees of the Borrower and its Subsidiaries and with its independent certified public accountants. 6.7 Notices. Promptly give notice to the Administrative Agent and each Lender of: (a) the occurrence of any Default or Event of Default; (b) any (i) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, which in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect; (c) any litigation or proceeding affecting the Borrower or any of its Subsidiaries in which the amount involved is $5,000,000 or more and not covered by insurance or in which material injunctive or similar relief is sought; (d) the following events, as soon as possible and in any event within 30 days after the Borrower knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan; and (e) any development or event which has had or could reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto. 6.8 Environmental Laws. (a) Comply with, and use its best efforts to ensure compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws and obtain and comply with and maintain, and use its best efforts to ensure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, except to the extent that failure to do so could not be reasonably expected to have a Material Adverse Effect. (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws, except to the extent that (i) the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not be reasonably expected to have a Material Adverse Effect or (ii) the Borrower has determined in good faith that contesting the same is not in the best interests of the Borrower and its Subsidiaries and the failure to contest the same could not 110 38 be reasonably expected to have a Material Adverse Effect. (c) Defend, indemnify and hold harmless the Administrative Agent and each Lender, and their respective employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of the Borrower, its Subsidiaries or the Properties, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing arise out of the gross negligence or willful misconduct of the party seeking indemnification therefor. This indemnity shall continue in full force and effect regardless of the termination of this Agreement. (d) Comply in all material respects with the Operations and Maintenance Plan. SECTION 7. NEGATIVE COVENANTS The Borrower hereby agrees that, so long as the Commitments remain in effect, any Note or any Letter of Credit remains outstanding and unpaid or any other amount is owing to any Lender or the Administrative Agent hereunder, the Borrower shall not, and, in the case of Sections 7.2 through 7.7, shall not permit any of its Subsidiaries to, directly or indirectly: 7.1 Financial Covenants. (a) Consolidated Total Indebtedness. Permit, at the last day of any period of two consecutive fiscal quarters of the Borrower, Consolidated Total Indebtedness as of such day to exceed an amount equal to 55% of Gross Asset Value as of such day. (b) Consolidated Secured Indebtedness. Permit, at the last day of any period of two consecutive fiscal quarters of the Borrower, Consolidated Secured Indebtedness as of such day to exceed an amount equal to 25% of Gross Asset Value as of such day. (c) Consolidated Net Worth. Permit, at the last day of any period of two consecutive fiscal quarters of the Borrower, Consolidated Net Worth as of such day to be less than an amount equal to the sum of (i) $325,000,000 and (ii) 50% of the aggregate proceeds received by the Borrower (net of customary related fees and expenses) in connection with any offering of Capital Stock of the Borrower consummated after the Closing Date. (d) Value of Unencumbered Properties. Permit, for any period of two consecutive fiscal quarters of the Borrower, the ratio of (i) the sum of (x) Value of Unencumbered Properties for such period and (y) the excess, if any, of (I) Unrestricted Cash and Cash Equivalents as of the last day of such period over (II) $15,000,000 to (ii) Consolidated Senior Unsecured Indebtedness as of the last day of such period to be less than 1.75 to 1.0. (e) Consolidated Adjusted Cash Flow. Permit, for any period of two consecutive fiscal quarters of the Borrower, the ratio of (i) Consolidated Adjusted Cash Flow for such period to (ii) Consolidated Debt Service for such period to be less than 2.50 to 1.0. 7.2 Limitation on Fundamental Changes. (a) Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or (b) in 111 39 the case of the Borrower, convey, sell, lease, assign, transfer or otherwise dispose of, all or a substantial portion (determined on a consolidated basis with respect to the Borrower and its Subsidiaries taken as a whole) of the property, business or assets owned or leased by the Borrower (directly or through a Subsidiary or Joint Venture), except that any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any one or more Wholly Owned Subsidiary Guarantors (provided that the Wholly Owned Subsidiary Guarantor(s) shall be the continuing or surviving corporation). 7.3 Limitation on Restricted Payments. Unless otherwise required in order to maintain the Borrower's status as a real estate investment trust, declare or pay any dividend (other than dividends payable solely in the same class of Capital Stock) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of the Borrower or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary (collectively, "Restricted Payments"); provided, that, notwithstanding the foregoing, (a) during any period of four consecutive fiscal quarters of the Borrower, the Borrower may make Restricted Payments in an aggregate amount not to exceed 90% of Funds From Operations for such period and (b) in addition to Restricted Payments made pursuant to clause (a) above, the Borrower may make Restricted Payments on any date so long as, after giving effect thereto, (i) the aggregate amount of Restricted Payments made pursuant to this clause (b) since the Closing Date shall not exceed 10% of Consolidated GAAP Net Worth determined as of the last day of the most recent fiscal period for which financial statements have been delivered pursuant to Section 6.1, after giving pro forma effect to the making of such Restricted Payments and any other Restricted Payments made after such last day and (ii) no Default or Event of Default shall have occurred and be continuing. 7.4 Limitation on Investments, Loans and Advances. Make any advance, loan, extension of credit or capital contribution to any Person, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or otherwise make any investment in, any Person, or acquire or otherwise make any investment in any real property (collectively, "Investments"), except: (a) Investments in Cash Equivalents; (b) Investments in (i) any Property now or hereafter owned or leased by the Borrower or any Subsidiary or (ii) any present or future consolidated Subsidiary of the Borrower engaged principally in the ownership, operation and management of shopping centers; (c) (i) Investments by the Borrower in any present or future Wholly Owned Subsidiary Guarantor and (ii) Investments by any Subsidiary in the Borrower or any present or future Wholly Owned Subsidiary Guarantor; (d) Investments made pursuant to Section 7.3; and (e) Investments not otherwise permitted by this Section 7.4 so long as, on the date any such Investment is made and after giving effect thereto, the aggregate amount of Investments made pursuant to this clause (e) since the Closing Date (valued at cost) shall not exceed 10% of Gross Asset Value as of the last day of the most recently ended period of two consecutive fiscal quarters of the Borrower; provided, that in no event shall the aggregate amount of Investments made pursuant to this Section 7.4 in any single Property (including Investments in any Subsidiary or Joint Venture owning or operating such 112 40 Property) exceed $50,000,000. 7.5 Limitation on Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate (other than any Wholly Owned Subsidiary Guarantor) unless (a) no Default or Event of Default would occur as a result thereof and (b) such transaction is (i) in the ordinary course of the Borrower's or such Subsidiary's business and (ii) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm's length transaction with a Person which is not an Affiliate. 7.6 Limitation on Changes in Fiscal Year. Permit the fiscal year of the Borrower to end on a day other than December 31, unless otherwise required by any applicable law, rule or regulation. 7.7 Limitation on Lines of Business, Issuance of Commercial Paper, Creation of Subsidiaries, Negative Pledges. (a) Fail to continue to engage principally in business of the same general type as now conducted by it (which is the ownership, operation and management of shopping centers). (b) Issue any commercial paper in an aggregate principal amount exceeding the aggregate unused and available commitments under any revolving credit facility (other than the Commitments hereunder) entered into by the Borrower and not prohibited by this Agreement. For the purposes of this paragraph, commitments shall be deemed to be available to the extent that, on any date of determination, assuming timely delivery of a borrowing notice by the Borrower, the lender(s) thereunder would be obligated to fund loans pursuant thereto. (c) Create or acquire any Subsidiary after the Closing Date unless such Subsidiary executes a supplement to the Subsidiary Guarantee in form and substance satisfactory to the Administrative Agent pursuant to which such Subsidiary shall become a party to the Subsidiary Guarantee, in each case in accordance with the following schedule: (i) with respect to individual Subsidiaries, immediately after the aggregate amount expended in connection therewith (including amounts expended in connection with property acquired by or contributed to such Subsidiary) ("Subsidiary Expenditures") equals at least $50,000,000 and (ii) with respect to any Subsidiary that is not already a Subsidiary Guarantor, (x) immediately after the aggregate amount of Subsidiary Expenditures relating to all Subsidiaries that are not already Subsidiary Guarantors equals at least $150,000,000 and (y) immediately after each delivery of financial statements pursuant to Section 6.1. (d) Enter into with any Person, or suffer to exist, any agreement, other than (i) this Agreement and the other Loan Documents or (ii) any agreements governing any purchase money Liens, Financing Leases or mortgage financings not prohibited by this Agreement (in which cases, any prohibition or limitation referred to below shall only be effective against the assets financed thereby) which prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired. SECTION 8. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Note or any Reimbursement Obligation when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Note, or any other amount payable hereunder, within five Business Days 113 41 after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made or deemed made by the Borrower or any other Loan Party herein or in any other Loan Document or which is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Borrower shall default in the observance or performance of any agreement contained in Section 6.7(a) or Section 7; or (d) The Borrower or any other Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section 8), and such default shall continue unremedied for a period of 30 days after notice from the Administrative Agent or the Required Lenders; or (e) The Borrower or any of its Subsidiaries shall (i) default in making any payment of any principal of any Indebtedness (including, without limitation, any Guarantee Obligation, but excluding the Notes and any Non-Recourse Indebtedness) on the scheduled or original due date with respect thereto; or (ii) default in making any payment of any interest on any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided, that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time constitute an Event of Default under this Agreement unless, at such time, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $5,000,000; or (f) (i) The Borrower or any of its Significant Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Significant Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Significant Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any of its Significant Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded 114 42 pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Significant Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Significant Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Remedial Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Remedial Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or (h) One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance) of $5,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or (i) The Subsidiary Guarantee shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or (j) The Borrower shall cease, for any reason, to maintain its status as an equity-oriented real estate investment trust under Sections 856 through 860 of the Code; or (k) At any time the Borrower and its Subsidiaries shall be required to take any actions in respect of environmental remediation and/or environmental compliance, the aggregate expenses, fines, penalties or other charges with respect to which, in the judgment of the Required Remedial Lenders, could reasonably be expected to exceed $20,000,000; provided, that any such remediation or compliance shall not be taken into consideration for the purposes of determining whether an Event of Default has occurred pursuant to this paragraph (k) if (i) such remediation or compliance is being contested by the Borrower or the applicable Subsidiary in good faith by appropriate proceedings or (ii) such remediation or compliance is satisfactorily completed within 90 days from the date on which the Borrower or the applicable Subsidiary receives notice that such remediation or compliance is required, unless such remediation or compliance cannot reasonably be completed within such 90 day period in which case such time period shall be extended for a period of time reasonably necessary to perform such compliance or remediation using diligent efforts (not to exceed 180 days if the continuance of such remediation or compliance beyond such 180 day period, in the judgment of the Required Remedial Lenders, could reasonably be expected to have a Material Adverse Effect; then, and in any such event, (A) if such event is an Event of Default specified in paragraph (f) above with respect to the Borrower, automatically the Commitments shall immediately terminate and the Revolving 115 43 Credit Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) and the Notes shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Remedial Lenders, the Administrative Agent may, or upon the request of the Required Remedial Lenders, the Administrative Agent shall, by notice to the Borrower declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Remedial Lenders, the Administrative Agent may, or upon the request of the Required Remedial Lenders, the Administrative Agent shall, by notice to the Borrower, declare the Revolving Credit Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented the documents required thereunder) and the Notes to be due and payable forthwith, whereupon the same shall immediately become due and payable. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Lender and the L/C Participants, a security interest in such cash collateral to secure all obligations of the Borrower under this Agreement and the other Loan Documents. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of the Borrower hereunder and under the other Loan Documents. After all such Letters of Credit shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of the Borrower hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower. The Borrower shall execute and deliver to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, such further documents and instruments as the Administrative Agent may request to evidence the creation and perfection of the within security interest in such cash collateral account. Except as expressly provided above in this Section 8, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 9. THE ADMINISTRATIVE AGENT 9.1 Appointment. Each Lender hereby irrevocably designates and appoints The Chase Manhattan Bank as the Administrative Agent for such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes The Chase Manhattan Bank, as the Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations, liabilities or standard of care shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent. 116 44 9.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to rely upon advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. 9.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party. 9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders or the Required Remedial Lenders, as the case may be, as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Notes and the other Loan Documents in accordance with a request of the Required Lenders or the Required Remedial Lenders, as the case may be, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. 9.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders or the Required Remedial Lenders, as the case may be; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 117 45 9.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of any Loan Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and made its own decision to make its Revolving Credit Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Loan Parties which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. 9.7 Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought under this Section 9.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Revolving Credit Loans shall have been paid in full, ratably in accordance with their Commitment Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Notes) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Administrative Agent's gross negligence or willful misconduct. The agreements in this Section 9.7 shall survive the payment of the Notes and all other amounts payable hereunder. 9.8 Administrative Agent in Its Individual Capacity. The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Administrative Agent were not the Administrative Agent hereunder and under the other Loan Documents. With respect to its Revolving Credit Loans made or renewed by it and any Note issued to it, and with respect to any Letter of Credit issued or participated in by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. 9.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 10 days' notice to the Lenders, in which case the Required Lenders shall 118 46 appoint from among the Lenders a successor agent for the Lenders. In addition, in the event that the Administrative Agent, in its capacity as a Lender, shall have assigned all of its outstanding Commitments and Loans to another bank, financial institution or other entity pursuant to Section 10.8, then the Required Lenders may, upon 10 days' notice to the Administrative Agent, replace the Administrative Agent with a successor agent appointed from among the remaining Lenders. Upon approval of any such successor agent by the Borrower, such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term "Administrative Agent" shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Notes. After any Administrative Agent's resignation or replacement as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents. 9.10 The Co-Managers. No Co-Manager in its capacity as such shall have any rights, duties or responsibilities hereunder, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against any Co-Manager in its capacity as Co-Manager. SECTION 10. MISCELLANEOUS 10.1 Amendments and Waivers. Neither this Agreement nor any other Loan Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with the relevant Loan Parties written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) reduce the amount or extend the scheduled date of maturity of any Revolving Credit Loan or Note, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender's Commitment, in each case without the consent of each Lender directly affected thereby, or (ii) amend, modify or waive any provision of this Section 10.1, reduce the percentage specified in the definition of Required Lenders or Required Remedial Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, or release all or substantially all of the Subsidiaries from the Subsidiary Guarantee, in each case without the written consent of all the Lenders, or (iii) amend, modify or waive any provision of Section 3 without the written consent of the Issuing Lender, or (iv) amend, modify or waive any provision of Section 9 without the written consent of the then Administrative Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the other Loan Parties, the Lenders, the Administrative Agent and all future holders of the Notes. In the case of any waiver, the Borrower, the other Loan Parties, the Lenders and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Notes and any other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 119 47 10.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Borrower and the Administrative Agent, and as notified to the Administrative Agent pursuant to an administrative questionnaire in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Notes: The Borrower: Kimco Realty Corporation 3333 New Hyde Park Road, Suite 100 New Hyde Park, New York 11042 Attention: Michael V. Pappagallo Telecopy: 516-869-9001 The Administrative Agent: The Chase Manhattan Bank 380 Madison Avenue, 10th Floor New York, New York 10017 Attention: Charles Hoagland Telecopy: 212-622-3395 with a copy to: The Chase Manhattan Bank 380 Madison Avenue, 10th Floor New York, New York 10017 Attention: Investor Relations Group Telecopy: 212-622-3553 provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to Section 2.2, 2.3 or 2.4 shall not be effective until received. 10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 10.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the other Loan Documents and the making of the extensions of credit hereunder. 10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all its out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the fees and disbursements of counsel to the Administrative Agent; (b) to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including, without limitation, the fees and 120 48 disbursements of counsel to the Administrative Agent and to the several Lenders; (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents; and (d) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents and any such other documents, including, without limitation, any of the foregoing relating to the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of the Borrower, any of its Subsidiaries or any of the Properties (all the foregoing in this clause (d), collectively, the "indemnified liabilities"), provided, that the Borrower shall have no obligation hereunder to the Administrative Agent or any Lender with respect to indemnified liabilities arising from the gross negligence or willful misconduct of the Administrative Agent or such Lender, as the case may be. The agreements in this Section 10.5 shall survive repayment of the Notes and all other amounts payable hereunder. 10.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Administrative Agent, all future holders of the Notes and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. Notwithstanding anything to the contrary in this Agreement, unless a Default or Event of Default pursuant to Section 8(a) shall have occurred and be continuing, neither Co-Manager may sell participating interests pursuant to Section 10.7 or assignments pursuant to Section 10.8 if, after giving effect thereto, the aggregate amount of such Co-Manager's retained Commitments which are not subject to any participation shall be less than 15% of the aggregate Commitments of all of the Lenders then in effect. 10.7 Participations. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities (each, a "Participant") participating interests in any Revolving Credit Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Note for all purposes under this Agreement and the Notes, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the Notes. In no event shall any Participant under any such participation have any right to approve any amendment or waiver of any provision of this Agreement or any other Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, any Revolving Credit Loan or Note or any fees payable hereunder, or postpone the date of the final maturity of any Revolving Credit Loan or Note, in each case to the extent subject to such participation. The Borrower agrees that, while an Event of Default shall have occurred and be continuing, if amounts outstanding under this Agreement and the Notes are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or any Note, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in Section 10.10(a) as fully as if it were a Lender 121 49 hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of Sections 2.10, 2.11, 2.12 and 2.13 with respect to its participation in the Commitments and the Revolving Credit Loans outstanding from time to time as if it was a Lender; provided that, in the case of Section 2.12, such Participant shall have complied with the requirements of said Section and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such Section than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. Promptly after selling any participation pursuant to this Section 10.7, each Lender shall notify the Administrative Agent in writing of the identity of the Participant and the amount of such participation. 10.8 Assignments. (a) Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time and from time to time assign to any Lender or any affiliate of any Lender or, with the consent of the Issuing Lender and the Administrative Agent, to an additional bank, financial institution or other entity (each, a "Purchasing Lender") all or any part of its rights and obligations under this Agreement and the other Loan Documents pursuant to an Assignment and Acceptance, substantially in the form of Exhibit B, executed by such Purchasing Lender, such assigning Lender (and, in the case of a Purchasing Lender that is not a Lender or an affiliate thereof, by the Issuing Lender and the Administrative Agent) and delivered to the Administrative Agent for its acceptance and recording in the Register, provided, that except in the case of an assignment of all of a Lender's rights and obligations under this Agreement, the aggregate amount of the Commitments of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $15,000,000 or such lesser amount as may be consented to by the Administrative Agent (which consent shall not be unreasonably withheld). Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a Commitment as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). (b) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and a Purchasing Lender (and, in the case of a Purchasing Lender that is not a Lender or an affiliate thereof, by the Issuing Lender and the Administrative Agent) together with payment to the Administrative Agent of a registration and processing fee of $4,000 (which shall not be payable by the Borrower), the Administrative Agent shall (i) promptly accept such Assignment and Acceptance and (ii) promptly after the effective date determined pursuant thereto, record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower. On or prior to such effective date, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent a new Note (in exchange for the Note of the assigning Lender) in an amount equal to the Commitment assumed by the relevant Purchasing Lender pursuant to such Assignment and Acceptance, and, if the assigning Lender has retained a Commitment hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Notes shall be dated the Closing Date and shall otherwise be in the form of the Notes replaced thereby. 10.9 The Register; Disclosure; Pledges to Federal Reserve Banks. (a) The Administrative Agent shall maintain at its address referred to in Section 10.2 copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders, the Commitments of the Lenders, and the principal amount of the Revolving Credit Loans owing to each Lender from time to time. The entries in the Register shall be conclusive, in the absence of clearly demonstrable error, and the Borrower, the Administrative Agent and the Lenders 122 50 may treat each Person whose name is recorded in the Register as the owner of the Revolving Credit Loans recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (b) Subject to Section 10.18, the Borrower authorizes each Lender to disclose to any Participant or Purchasing Lender (each, a "Transferee") and any prospective Transferee any and all financial information in such Lender's possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement. (c) Nothing herein shall prohibit any Lender from pledging or assigning any Note to any Federal Reserve Bank in accordance with applicable law. 10.10 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall at any time receive any payment of all or part of its Revolving Credit Loans or the Reimbursement Obligations owing to it, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Revolving Credit Loans or the Reimbursement Obligations owing to it, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Revolving Credit Loans or the Reimbursement Obligations owing to it, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder or under the Notes (whether at the stated maturity, by acceleration or otherwise) to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such setoff and application. 10.11 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. 10.12 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such 123 51 provision in any other jurisdiction. 10.13 Integration. This Agreement and the other Loan Documents represent the agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 10.14 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 10.15 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages. 10.16 Acknowledgements. The Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the 124 52 Borrower and the Lenders. 10.17 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 10.18 Confidentiality. Each of the Administrative Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate of any Lender, (b) to any Transferee or prospective Transferee which agrees to comply with the provisions of this Section 10.18, (c) to the employees, directors, agents, attorneys, accountants and other professional advisors of such Lender or its affiliates, (d) upon the request or demand of any Governmental Authority having jurisdiction over the Administrative Agent or such Lender, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) which has been publicly disclosed other than in breach of this Section 10.18, or (h) in connection with the exercise of any remedy hereunder or under any other Loan Document. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. KIMCO REALTY CORPORATION By: /s/ Michael V. Pappagallo --------------------------------------- Title: V.P. & Chief Financial Officer THE CHASE MANHATTAN BANK, as Administrative Agent and as a Co-Manager By: /s/ Charles Hoagland --------------------------------------- Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO, as a Co-Manager By: /s/ Lynn Braun --------------------------------------- Title: Corporate Banking Officer 125 53 The Lenders: THE CHASE MANHATTAN BANK By: /s/ Charles Hoagland ------------------------------ Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO By: /s/ Lynn Braun ------------------------------ Title: Corporate Banking Officer 126 EX-12.1 4 COMPUTATION OF EARNINGS Kimco Realty Corporation and Subsidiaries Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends For the Year Ended December 31, 1997 Income before extraordinary items $85,836,445 Add: Interest on indebtedness 30,745,963 Amortization of debt related expenses 1,253,325 Portion of rents representative of the interest factor 2,070,049 ------------- 119,905,782 Adjustment for equity share in partnerships (653,466) ------------- Income before extraordinary items, as adjusted $119,252,316 ============= Combined fixed charges and preferred stock dividends- Interest on indebtedness $31,262,146 Preferred stock dividends 18,437,700 Amortization of debt related expenses 1,141,095 Portion of rents representative of the interest factor 2,070,049 ------------- Combined fixed charges and preferred stock dividends $52,910,990 ============= Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 2.3 ============= 127 EX-12.2 5 COMPUTATION OF RATIO OF FUNDS FROM OPERATIONS Kimco Realty Corporation and Subsidiaries Computation of Ratio of Funds from Operations to Combined Fixed Charges and Preferred Stock Dividends For the Year Ended December 31, 1997 Funds from Operations, Available to Common Stockholders $98,183,170 Add: Interest on indebtedness 30,745,963 Preferred stock dividends 18,437,700 Portion of rents representative of the interest factor 2,070,049 ------------- 149,436,882 Adjustment for equity share in partnerships (1,629,172) ------------- Funds from Operations, as adjusted $147,807,710 ============= Combined fixed charges and preferred stock dividends- Interest on indebtedness $31,262,146 Preferred stock dividends 18,437,700 Portion of rents representative of the interest factor 2,070,049 ------------- Combined fixed charges and preferred stock dividends $51,769,895 ============= Ratio of Funds from Operations to Combined Fixed Charges and Preferred Stock Dividends 2.9 ============= 128 EX-21.1 6 KIMCO REALTY CORPORATION AND SUBSIDIARIES KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380 DECEMBER 31, 1997 ENTITY NAME FEI KIMCO REALTY CORP. 13-2744380 44 Plaza, Inc. 13-2683791 Auk Realty 11-2612680 BRENDA PROPERTIES 11-2727694 EAST END OPERATING CORP. 11-2498666 Fox Hill II 11-2671016 Fox Hill Poughkeepsie 11-2727165 GC ACQUISITION CORP. 11-2928815 HARVEST OF NASHVILLE 11-2464767 HARVEST OF TEXAS 11-2330375 HARVEST PROPERTIES 11-2330376 KCH ACQUISITION, INC. 11-3238575 KIMCADE, INC. 34-1831497 Kimcal 13-2587851 KIMCO 118 O/P, INC. 65-0471143 KIMCO 120 O/P, INC. 65-0471149 KIMCO 413B, INC. 34-1740528 KIMCO 420, INC. 34-1710200 KIMCO 632, INC. 58-2201467 KIMCO ACADIANA 670, INC. 72-1397863 KIMCO ALTAMONTE SPRINGS 636, INC. 65-0642321 KIMCO ANAHEIM, INC 93-1222235 KIMCO AUGUSTA 635, INC. 58-2214762 KIMCO BATON ROUGE 666, INC. 62-2698758 KIMCO BLACKWOOD 644, INC. 23-3469041 KIMCO BOULDER 688, INC. 84-1444967 Kimco BT Corp. 11-2465201 KIMCO BUCKS 651, INC. 23-2862081 KIMCO BUSTLETON 612, INC. 13-3867963 KIMCO CAMBRIDGE 242, INC. 31-1497725 KIMCO CANTON 182, INC. 34-1744056 KIMCO CARROLLWOOD 664,INC. 65-0737809 KIMCO CENTEREACH 605, INC. 11-3182994 KIMCO CHARLESTON 631, INC. 57-1030009 KIMCO CHARLOTTE 192, INC. 56-1831137 KIMCO CINNAMINSON 645, INC. 22-3469045 KIMCO CLAWSON 143, INC. 38-3115543 KIMCO COLFAX 681, INC 84-1444973 KIMCO CORAL SPRINGS 623, INC. 65-0535840 Kimco Corporation 13-6115192 KIMCO COTTMAN 294, INC. 23-2862072 KIMCO CROSS CREEK 607, INC. 38-3141738 KIMCO DENVER 680, INC. 84-1444974 KIMCO DEV OF WOOSTER 11-2950598 129 KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380 DECEMBER 31, 1997 ENTITY NAME FEI KIMCO DEV. OF AIKEN 11-2978740 KIMCO DEV. OF BRADDOCK HILLS 11-2776505 KIMCO DEV. OF GASTONIA 11-2962621 KIMCO DEV. OF GIANTS 11-2792369 KIMCO DEV. OF GREENWOOD OP 11-2981360 KIMCO DEV. OF HAMPTON BAYS 11-2983330 KIMCO DEV. OF MCINTOSH SARA 11-2981378 KIMCO DEV. OF MENTOR 11-3009184 KIMCO DEV. OF MUSKEGON 11-2757467 KIMCO DEV. OF N. KENSINGTON 11-2776507 KIMCO DEV. OF SEMINOLE SANF 11-2847353 KIMCO DEV. OF TROY 11-2845542 KIMCO DEV. OF TYVOLA 11-2805703 KIMCO DEV. OF WATERLOO AKRON 11-2981359 KIMCO DEVELOPMENT IF 31 SOUTH, 11-2845541 KIMCO DURHAM 639, INC. 59-1968284 KIMCO EAGLEDALE 13-2587857 KIMCO EAST BANK 689, INC. 84-1444975 KIMCO ELEVEN MTG. CORP. 11-2993846 KIMCO ENFIELD 611, INC. 06-1386487 KIMCO ENGLEWOOD 683, INC. 84-1444966 KIMCO FARMINGTON 146, INC. 38-3115548 KIMCO FLORENCE 646, INC. 58-2346490 KIMCO FT. PIERCE 147, INC. 59-3272388 KIMCO GALLERY 660, INC. 23-2862071 KIMCO GARLAND 642, INC. 75-2650811 KIMCO GATES 149, INC. 13-3717461 KIMCO GREAT BARRINGTON 609, INC. 04-3239597 KIMCO GREEN ORCHARD 606, INC. 11-3182994 KIMCO GREENRIDGE 674, INC 13-3974423 KIMCO GREENVILLE 676, INC. 58-2361775 KIMCO HAYDEN PLAZA 640, INC. 86-0821811 KIMCO KENT 637, INC. 13-3850824 KIMCO KISSIMMEE 613, INC. 65-0655663 KIMCO KML, INC. 23-2862080 KIMCO LAFAYETTE 671, INC. 35-2001919 KIMCO LAKEWOOD 684, INC. 84-1445058 KIMCO LARGO 139, INC 65-0406401 KIMCO LARGO 196, INC. 65-0419586 Kimco Laurel 13-2731273 KIMCO LEXINGTON 140, INC. 11-2845537 Kimco Livonia 13-2587856 KIMCO MANAGEMENT OF MARYLAND 52-1844127 KIMCO MANASSAS 672, INC. 54-1868158 130 KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380 DECEMBER 31, 1997 ENTITY NAME FEI KIMCO MAPLEWOOD 673, INC. 133974423 KIMCO MELBOURNE 616, INC. 65-0471154 KIMCO MGT OF NEW JERSEY 11-3046314 KIMCO MORRISVILLE 648, INC 23-2862079 KIMCO MOUNTAINSIDE PHOENIX 647, INC. 86-0892535 KIMCO MT. DORA 677, INC. 65-0797960 KIMCO NO. BRUNSWICK 617, INC. 11-3204466 KIMCO NORTH RIVERS 692, INC 57-1062095 KIMCO OCALA 665, INC. 582317767 KIMCO OF CHERRY HILL 11-2641098 Kimco of Columbus 13-6206133 Kimco of Georgia 13-2697308 KIMCO OF HERMITAGE 11-2513375 KIMCO OF HICKORY HOLLOW 11-2464914 KIMCO OF HUNTINGTON 11-2516647 Kimco of Illinois 13-2731271 KIMCO OF KETTERING 11-2670996 Kimco of Millerode 11-2845539 Kimco of Missouri 13-2736629 KIMCO OF NANUET 11-2669924 Kimco of New England 13-2731276 Kimco of New York 11-2845540 Kimco of North Carolina 13-2660757 Kimco of North Miami 11-2761316 KIMCO OF OAKVIEW 11-2727695 Kimco of Ohio 13-2587859 Kimco of Pennsylvania 13-2731277 Kimco of Racine, Inc. 11-2928818 KIMCO OF SPRINGBORO PIKE 11-2733483 KIMCO OF SPRINGFIELD 11-2612681 KIMCO OF STUART 619, INC. 11-3205441 Kimco of Syosset 13-2660758 KIMCO OF TAMPA 11-2513372 Kimco of Tennessee 62-0813485 KIMCO OPPORTUNITY, INC. 11-3353009 KIMCO ORLANDO 638, INC. 65-0667618 KIMCO PALMER PARK 654, INC. 23-2862077 KIMCO PEPPERTREE, INC. 65-0433600 KIMCO PHILMED, INC. 52-2016394 KIMCO PORT WASHINGTON 675, INC 11-3416853 KIMCO PROPERTIES, INC. 13-2731270 KIMCO PROPS. NASHVILLE 11-2464762 KIMCO PURCHASING AGENCY 11-2966000 KIMCO QUINCY 685, INC 84-1444963 131 KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380 DECEMBER 31, 1997 ENTITY NAME FEI KIMCO RALEIGH 177, INC. 56-1828155 KIMCO RALPH'S CORNER 659, INC. 23-2862075 KIMCO RICHMOND 800, INC. 52-1925248 KIMCO RIDGEWOOD 615, INC. 11-3183902 KIMCO SAND LAKE 618, INC. 65-0471136 KIMCO SARASOTA 378, INC. 65-0531169 KIMCO SAVANNAH 185, INC. 58-2055982 KIMCO SELECT INVESTMENTS 11-3353010 KIMCO SELECT TREXLER 663, INC. 23-2919887 KIMCO SOUTH MIAMI 634,INC. 65-0559378 KIMCO SOUTH PARKER 682, INC 84-1444970 KIMCO SOUTHINGTON 610, INC. 11-3193467 KIMCO SPRING CREEK 686, INC. 84-1444969 KIMCO SPRINGFIELD 625, INC. 43-1698931 KIMCO TOWSON 621, INC. 22-3333299 Kimco Utah 13-2659226 KIMCO VALLEY HI 687, INC. 84-1444972 KIMCO WARRINGTON 652, INC. 23-2862076 KIMCO WATERBURY 608, INC. 06-1382854 KIMCO WEST PALM BEACH 633, INC. 65-0642317 KIMCO WESTERVILLE 178, INC 34-1744144 KIMCO WESTMONT 614, INC. 38-3141736 KIMCO WHITE LAKE 667, INC. 38-3316919 KIMCO WM148, INC. 23-2725735 KIMCO WOODFOREST 655, INC. 75-2713979 KIMCO YONKERS 801, INC. 13-3851642 Kimcoast Warren 13-2683717 KIMSWORTH OF ALABAMA, INC. 51-0368373 KIMSWORTH OF ARIZONA, INC. 51-0368375 KIMSWORTH OF ARKANSAS, INC. 51-0368374 KIMSWORTH OF COLORADO, INC. 51-0368377 KIMSWORTH OF FLORIDA, INC. 51-0368378 KIMSWORTH OF GEORGIA, INC. 51-0368380 KIMSWORTH OF ILLINOIS, INC. 51-0368382 KIMSWORTH OF INDIANA, INC. 51-0368383 KIMSWORTH OF IOWA, INC. 51-0368381 KIMSWORTH OF KANSAS, INC. 51-0368385 KIMSWORTH OF LOUISIANNA, INC. 51-0368386 KIMSWORTH OF MARYLAND, INC. 51-0368387 KIMSWORTH OF MICHIGAN, INC. 51-0368389 KIMSWORTH OF MINNESOTA, INC. 51-0368389 KIMSWORTH OF MISSISSIPPI, INC. 51-0368392 KIMSWORTH OF MISSOURI, INC. 51-0368391 KIMSWORTH OF MONTANA, INC. 51-0368393 132 KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380 DECEMBER 31, 1997 ENTITY NAME FEI KIMSWORTH OF NEBRASKA, INC. 51-0368394 KIMSWORTH OF NEW JERSEY, INC. 51-0368398 KIMSWORTH OF NEW MEXICO, INC. 51-0368399 KIMSWORTH OF OHIO, INC. 51-0368400 KIMSWORTH OF PENNSYLVANIA, INC. 51-0368401 KIMSWORTH OF S. CAROLINA, INC. 51-0368402 KIMSWORTH OF TEXAS, INC. 51-0368403 KIMSWORTH OF VIRGINIA, INC. 51-0368405 KIMSWORTH, INC. 51-0368319 KIMVEN CORPORATION 75-2630665 KIMVEN II CORPORATION 75-2633956 Kimzadd, Inc. 11-3050459 Kimzay Benton Harbor 11-2964477 Kimzay Bloomington 13-2663111 Kimzay Charlotte 13-2603692 KIMZAY CORPORATION 13-2587863 KIMZAY FLORIDA 13-2587853 Kimzay Georgia 13-2603693 Kimzay Greenwood 13-2663112 Kimzay Illinois 13-2587858 Kimzay Missouri 13-2636710 Kimzay Winston-Salem 13-2663113 Kimzfern, Inc. 11-3035885 Kimzgate, Inc. 11-3035881 Kimzlar, Inc. 11-3050459 Kimzwood, Inc. 11-3035886 KMICO DURHAM 639, INC. 56-1968284 KRC ACQUISITION CORP 11-2993846 KRC AMARILLO 879, INC. 752725430 KRC ARLINGTON 866, INC. 75-2725443 KRC BRIDGETON 875, INC. 43-1792428 KRC CARBONDALE 848, INC. 36-4181898 KRC CORPUS CHRISTI 878, INC. 75-2725431 KRC CRESTHILL 868, INC. 36-4181908 KRC CRESTWOOD 887, INC. 36-4181906 KRC DUBUQUE 847, INC. 39-1908742 KRC FOREST PARK 862, INC. 36-4181902 KRC IRVING 867, INC. PENDING KRC MERRILLVILLE 849, INC. 39-1908741 KRC N KOSTNER 853, INC. 36-4181900 KRC N ROCKWELL 882, INC. 73-1526425 KRC NILES 865, INC. 36-4191909 KRC S SHIELDS 871, INC. 73-1526423 KRC SCHAUMBERG 855, INC. 36-4181901 133 KIMCO REALTY CORPORATION AND SUBSIDIARIES 13-2744380 DECEMBER 31, 1997 ENTITY NAME FEI KRC SHAWNEE 884, INC. 75-2725442 KRC TULSA 859, INC. 73-1526424 KRCV CORP. 74-2846276 LAUREL 173, INC. 52-1948299 Manetto Hills 13-2604645 Milmar Realty 13-2671681 NORBER CORP. 11-2691272 Passive Investors 11-2723241 Permelynn Corporation 13-2660042 Permelynn of Bridgehampton 13-2690180 Permelynn of Georgia 13-2731264 Permelynn of Westchester 13-2702562 REDEL CONSTRUCTION 13-3793428 Rich Hill Inc. 13-2731275 ROCKINGHAM 620, INC. 02-0471000 Sanndrel of Harrisburg 13-2684422 Sanndrel of Pennsylvania 13-2700618 Sanndrel of Virginia 13-2700298 SANNDREL, INC. 13-2670120 ST. ANDREWS S.C. 11-2464767 WOODSO CORP 11-2964256 134 EX-23 7 CONSENTS OF COUNSEL Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Kimco Realty Corporation and Subsidiaries on Form S-3 (File Nos. 333-04833 and 333-37285), of our report dated February 27, 1998, except for Note 17, for which the date is March 5, 1998, on our audits of the consolidated financial statements and financial statement schedules of Kimco Realty Corporation and Subsidiaries, as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997, which report is included in this Annual report on Form 10-K. COOPERS & LYBRAND L.L.P. New York, New York March 25, 1998 135 EX-27 8 ARTICLE 5 OF REGULATION S-X
5 Financial Data Schedule information has been extracted from the Registrant's Consolidated Balance Sheet (non-classified) as of December 31, 1997 and the Consolidated Statement of Income for the year then ended. 12-MOS DEC-31-1997 DEC-31-1997 30,978,178 18,916,557 18,003,454 1,800,000 0 0 1,404,196,159 207,408,091 1,343,890,124 0 531,613,908 0 900,000 403,948 742,015,263 1,343,890,124 198,929,403 198,929,403 53,413,513 53,413,513 0 0 31,744,762 85,836,445 0 85,836,445 0 0 0 85,836,445 1.80 1.78
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