10-K 1 b330628_10k.txt 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, 2003 ----------------- 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 6.65% Class F 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 Indicate by check mark whether the Registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X Indicate by check mark whether the Registrant is an accelerated filer (as defined in rule 12b-2 of the Act.) Yes X No --- --- The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $4.4 billion based upon the closing price on the New York Stock Exchange for such stock on January 30, 2004. (APPLICABLE ONLY TO CORPORATE REGISTRANTS) Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date. 110,745,713 shares as of January 30, 2004. 1 DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates certain information by reference to the Registrant's definitive proxy statement to be filed with respect to the Annual Meeting of Stockholders expected to be held on May 20, 2004. Index to Exhibits begins on page 49. 2 TABLE OF CONTENTS Form 10-K Report Item No. Page -------- ------ PART I 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . 17 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 19 4. Submission of Matters to a Vote of Security Holders . . . . 19 Executive Officers of the Registrant . . . . . . . . . . . . 28 PART II 5. Market for the Registrant's Common Equity and Related Shareholder Matters . . . . . . . . . . . . . 30 6. Selected Financial Data . . . . . . . . . . . . . . . . . . 31 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . 33 7A. Quantitative and Qualitative Disclosures About Market Risk . 45 8. Financial Statements and Supplementary Data . . . . . . . . 46 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . 46 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . 46 PART III 10. Directors and Executive Officers of the Registrant . . . . . 47 11. Executive Compensation . . . . . . . . . . . . . . . . . . . 47 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . 47 13. Certain Relationships and Related Transactions . . . . . . . 47 14. Principal Accountant Fees and Services . . . . . . . . . . . 47 PART IV 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 48 3 PART I FORWARD-LOOKING STATEMENTS This annual report on Form 10-K, together with other statements and information publicly disseminated by Kimco Realty Corporation (the "Company" or "Kimco") contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors which may cause actual results to differ materially from current expectations include, but are not limited to, (i) general economic and local real estate conditions, (ii) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or general downturn in their business, (iii) financing risks, such as the inability to obtain equity or debt financing on favorable terms, (iv) changes in governmental laws and regulations, (v) the level and volatility of interest rates (vi) the availability of suitable acquisition opportunities and (vii) increases in operating costs. Accordingly, there is no assurance that the Company's expectations will be realized. Item 1. Business General Kimco Realty Corporation, a Maryland corporation, is one of the nation's largest owners and operators of neighborhood and community shopping centers. The Company is a self-administered real estate investment trust ("REIT") and manages its properties through present management, which has owned and operated neighborhood and community shopping centers for over 40 years. The Company has not engaged, nor does it expect to retain, any REIT advisors in connection with the operation of its properties. As of February 5, 2004, the Company's portfolio was comprised of 699 property interests including 620 neighborhood and community shopping center properties (including 26 property interests related to the Company's Preferred Equity program), 36 retail store leases, 33 ground-up development projects and ten parcels of undeveloped land totaling approximately 102.6 million square feet of leasable space (including 3.9 million square feet related to the Company's Preferred Equity program and 4.9 million square feet projected for the ground-up development projects) located in 41 states, Canada and Mexico. The Company's ownership interests in real estate consist of its consolidated portfolio and in portfolios where the Company owns an economic interest, such as; Kimco Income REIT ("KIR"), the RioCan Venture ("RioCan Venture"), Kimco Retail Opportunity Portfolio ("KROP") and other properties or portfolios where the Company also retains management (See Recent Developments - Operating Real Estate Joint Venture Investments and Note 8 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K). The Company believes its portfolio of neighborhood and community shopping center properties is the largest (measured by gross leasable area ("GLA")) currently held by any publicly-traded REIT. The Company's executive offices are located at 3333 New Hyde Park Road, New Hyde Park, New York 11042-0020 and its telephone number is (516) 869-9000. Unless the context indicates otherwise, the term the "Company" as used herein is intended to include subsidiaries of the Company. The Company's web site is located at http://www.Kimcorealty.com. On the Company's web site you can obtain, free of charge, a copy of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as amended, as soon as reasonably practicable after we file such material electronically with, or furnish it to, the Securities and Exchange Commission (the "SEC"). History The Company began operations through its predecessor, The Kimco Corporation, which was organized in 1966 upon the contribution of several shopping center properties owned by its principal stockholders. In 1973, these principals formed the Company as a Delaware corporation, and in 1985, the operations of The Kimco Corporation were merged into the Company. The Company completed its initial public stock offering (the "IPO") in November 1991, and commencing with its taxable year which began January 1, 1992, elected to qualify as a REIT in accordance with Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). In 1994, the Company reorganized as a Maryland corporation. 4 The Company's growth through its first 15 years resulted primarily from the ground-up development and construction of its shopping centers. By 1981, the Company had assembled a portfolio of 77 properties that provided an established source of income and positioned the Company for an expansion of its asset base. At that time, the Company revised its growth strategy to focus on the acquisition of existing shopping centers and creating value through the redevelopment and re-tenanting of those properties. As a result of this strategy, substantially all of the operating shopping centers added to the Company's portfolio since 1981 have been through the acquisition of existing shopping centers. During 1998, the Company, through a merger transaction, completed the acquisition of The Price REIT, Inc., a Maryland corporation, (the "Price REIT"). Prior to the merger, Price REIT was a self-administered and self-managed equity REIT that was primarily focused on the acquisition, development, management and redevelopment of large retail community shopping center properties concentrated in the western part of the United States. In connection with the merger, the Company acquired interests in 43 properties, located in 17 states. With the completion of the Price REIT merger, the Company expanded its presence in certain western states including California, Arizona and Washington. In addition, Price REIT had strong ground-up development capabilities. These development capabilities, coupled with the Company's own construction management expertise, provides the Company, on a selective basis, the ability to pursue ground-up development opportunities. Also, during 1998, the Company formed KIR, an entity in which the Company held a 99.99% limited partnership interest. KIR was established for the purpose of investing in high quality properties financed primarily with individual non-recourse mortgages. The Company believes that these properties are appropriate for financing with greater leverage than the Company traditionally uses. At the time of formation, the Company contributed 19 properties to KIR, each encumbered by an individual non-recourse mortgage. During 1999, KIR sold a significant interest in the partnership to institutional investors. As of December 31, 2003, the Company holds a 43.3% non-controlling limited partnership interest in KIR and accounts for its investment in KIR under the equity method of accounting. (See Recent Developments - Operating Real Estate Joint Venture Investments and Note 8 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) In connection with the Tax Relief Extension Act of 1999 (the "RMA") which became effective January 1, 2001, the Company is now permitted to participate in activities which it was precluded from previously in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable subsidiaries under the Code, subject to certain limitations. As such, the Company, through its taxable REIT subsidiaries, is engaged in various retail real estate related opportunities, including (i) merchant building through its wholly-owned taxable REIT subsidiary, Kimco Developers, Inc. ("KDI"), which is primarily engaged in the ground-up development of neighborhood and community shopping centers and subsequent sale thereof upon completion (see Recent Developments - Kimco Developers, Inc. ("KDI")), (ii) retail real estate advisory and disposition services which primarily focus on leasing and disposition strategies for real estate property interests of both healthy and distressed retailers and (iii) acting as an agent or principal in connection with tax deferred exchange transactions. The Company will consider other investments through taxable REIT subsidiaries should suitable opportunities arise. During October 2001, the Company continued its geographical expansion by forming the RioCan Venture with RioCan Real Estate Investment Trust ("RioCan", Canada's largest publicly traded REIT measured by GLA) in which the Company has a non-controlling 50% interest, to acquire retail properties and development projects in Canada. The Company accounts for this investment under the equity method of accounting (see Recent Developments - Operating Real Estate Joint Venture Investments and Note 8 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) In addition, the Company continues to capitalize on its established expertise in retail real estate by establishing other ventures in which the Company owns a smaller equity interest and provides management, leasing and operational support for those properties. The Company also provides preferred equity capital for real estate entrepreneurs and provides real estate capital and advisory services to both healthy and distressed retailers. The Company also makes selective investments in secondary market opportunities where a security or other investment is, in management's judgment, priced below the value of the underlying real estate. 5 Investment and Operating Strategy The Company's investment objective has been to increase cash flow, current income and, consequently, the value of its existing portfolio of properties, and to seek continued growth through (i) the strategic re-tenanting, renovation and expansion of its existing centers and (ii) the selective acquisition of established income-producing real estate properties and properties requiring significant re-tenanting and redevelopment, primarily in neighborhood and community shopping centers in geographic regions in which the Company presently operates. The Company will consider investments in other real estate sectors and in geographic markets where it does not presently operate should suitable opportunities arise. The Company's neighborhood and community shopping center properties are designed to attract local area customers and typically are anchored by a discount department store, a supermarket or drugstore tenant offering day-to-day necessities rather than high-priced luxury items. The Company may either purchase or lease income-producing properties in the future, and may also participate with other entities in property ownership through partnerships, joint ventures or similar types of co-ownership. Equity investments may be subject to existing mortgage financing and/or other indebtedness. Financing or other indebtedness may be incurred simultaneously or subsequently in connection with such investments. Any such financing or indebtedness will have priority over the Company's equity interest in such property. The Company may make loans to joint ventures in which it may or may not participate in the future. In addition to property or equity ownership, the Company provides property management services for fees relating to the management, leasing, operation, supervision and maintenance of real estate properties. While the Company has historically held its properties for long-term investment, and accordingly has placed strong emphasis on its ongoing program of regular maintenance, periodic renovation and capital improvement, it is possible that properties in the portfolio may be sold, in whole or in part, as circumstances warrant, subject to REIT qualification rules. The Company seeks to reduce its operating and leasing risks through diversification achieved by the geographic distribution of its properties and a large tenant base. At December 31, 2003, the Company's single largest neighborhood and community shopping center, accounted for only 1.0% of the Company's annualized base rental revenues and only 0.6% of the Company's total shopping center GLA. At December 31, 2003, the Company's five largest tenants were The Home Depot, Kmart Corporation, Kohl's, Royal Ahold and TJX Companies, which represent approximately 3.0%, 2.9%, 2.8%, 2.6% and 2.5%, respectively, of the Company's annualized base rental revenues, including the proportionate share of base rental revenues from properties in which the Company has less than a 100% economic interest. In connection with the RMA, which became effective January 1, 2001, the Company has expanded its investment and operating strategy to include new retail real estate related opportunities which the Company was precluded from previously in order to maintain its qualification as a REIT. As such, the Company, has established a merchant building business through its KDI subsidiary. KDI makes selective acquisitions of land parcels for the ground-up development of neighborhood and community shopping centers and subsequent sale thereof upon completion. Additionally, the Company has developed a retail property solutions business which specializes in real estate advisory and disposition services of real estate controlled by both healthy and distressed and/or bankrupt retailers. These services may include assistance with inventory and fixture liquidation in connection with going-out-of-business sales. The Company may participate with other entities in providing these advisory services through partnerships, joint ventures or other co-ownership arrangements. The Company, as a regular part of its investment strategy, will continue to actively seek investments for its taxable REIT subsidiaries. The Company emphasizes equity real estate investments including preferred equity investments, but may, at its discretion, invest in mortgages, other real estate interests and other investments. The mortgages in which the Company may invest may be either first mortgages, junior mortgages or other mortgage-related securities. The Company provides mortgage financing to retailers with significant real estate assets, in the form of lease- hold interests or fee owned properties, where the Company believes the underlying value of the real estate collateral is in excess of its loan balance. In addition, the Company will acquire debt instruments at a discount in the secondary market where the Company believes the real estate value of the enterprise is substantially greater than the current value. The Company may legally invest in the securities of other issuers, for the purpose, among others, of exercising control over such entities, subject to the gross income and asset tests necessary for REIT qualification. The Company may, on a selective basis, acquire all or substantially all securities or assets of other REITs or similar entities where such investments would be consistent with the Company's investment policies. In any event, the Company does not intend that its investments in securities will require it to register as an "investment company" under the Investment Company Act of 1940. 6 The Company has authority to offer shares of capital stock or other senior securities in exchange for property and to repurchase or otherwise reacquire its common stock or any other securities and may engage in such activities in the future. At all times, the Company intends to make investments in such a manner as to be consistent with the requirements of the Code, to qualify as a REIT unless, because of circumstances or changes in the Code (or in Treasury Regulations), the Board of Directors determines that it is no longer in the best interests of the Company to qualify as a REIT. The Company's policies with respect to the aforementioned activities may be reviewed and modified from time to time by the Company's Board of Directors without the vote of the Company's stockholders. Capital Strategy and Resources The Company intends to operate with and maintain a conservative capital structure with a level of debt to total market capitalization of approximately 50% or less. As of December 31, 2003, the Company's level of debt to total market capitalization was 30%. In addition, the Company intends to maintain strong debt service coverage and fixed charge coverage ratios as part of its commitment to maintaining its investment-grade debt ratings. Since the completion of the Company's IPO in 1991, the Company has utilized the public debt and equity markets as its principal source of capital for its expansion needs. Since the IPO, the Company has completed additional offerings of its public unsecured debt and equity, raising in the aggregate over $3.3 billion for the purposes of, among other things, repaying indebtedness, acquiring interests in neighborhood and community shopping centers, funding ground-up development projects, expanding and improving properties in the portfolio and other investments. During June 2003, the Company established a $500.0 million unsecured revolving credit facility, which is scheduled to expire in August 2006. This credit facility, which replaced the Company's $250.0 million unsecured revolving credit facility, has made available funds to both finance the purchase of properties and other investments and meet any short-term working capital requirements. As of December 31, 2003, there was $45.0 million outstanding under this unsecured revolving credit facility. The Company also established a $400.0 million unsecured bridge facility, which is scheduled to expire in September 2004, with an option to extend up to $150.0 million for an additional year. Proceeds from this facility were used to partially fund the Mid-Atlantic Realty Trust transaction (see Recent Developments - Mid-Atlantic Realty Trust Merger and Notes 3 and 13 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K). As of December 31, 2003, there was $329.0 million outstanding on this unsecured bridge facility. The Company has a $300.0 million medium-term notes program (the "MTN program") pursuant to which it may from time to time offer for sale its senior unsecured debt for any general corporate purposes, including (i) funding specific liquidity requirements in its business, including property acquisitions, development and redevelopment costs, and (ii) managing the Company's debt maturities. (See Note 13 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) In addition to the public debt and equity markets as capital sources, the Company may, from time to time, obtain mortgage financing on selected properties and construction loans to partially fund the capital needs of KDI, the Company's merchant building subsidiary. As of December 31, 2003, the Company had over 400 unencumbered property interests in its portfolio representing over 88% of the Company's net operating income. It is management's intention that the Company continually have access to the capital resources necessary to expand and develop its business. Accordingly, the Company may seek to obtain funds through additional equity offerings, unsecured debt financings and/or mortgage financings and other capital alternatives in a manner consistent with its intention to operate with a conservative debt capitalization policy. During May 2003, the Company filed a shelf registration on Form S-3 for up to $1.0 billion of debt securities, preferred stock, depositary shares, common stock and common stock warrants. As of January 30, 2004, the Company had approximately $609.7 million available for issuance under this shelf registration statement. 7 The Company anticipates that cash flows from operations will continue to provide adequate capital to fund its operating and administrative expenses, regular debt service obligations and the payment of dividends in accordance with REIT requirements in both the short-term and long-term. In addition, the Company anticipates that cash on hand, free cash flow generated by the operating business, availability under its revolving credit facility, issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company. Cash flow from operations was $308.6 million for the year ended December 31, 2003, as compared to $278.9 million for the year ended December 31, 2002. Competition As one of the original participants in the growth of the shopping center industry and one of the nation's largest owners and operators of neighborhood and community shopping centers, the Company has established close relationships with a large number of major national and regional retailers and maintains a broad network of industry contacts. Management is associated with and/or actively participates in many shopping center and REIT industry organizations. Notwithstanding these relationships, there are numerous regional and local commercial developers, real estate companies, financial institutions and other investors who compete with the Company for the acquisition of properties and other investment opportunities and in seeking tenants who will lease space in the Company's properties. Inflation and Other Business Issues Many of the Company's leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive payment of additional rent calculated as a percentage of tenants' gross sales above predetermined thresholds ("Percentage Rents"), which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses include increases in the consumer price index or similar inflation indices. In addition, many of the Company's leases are for terms of less than 10 years, which permits the Company to seek to increase rents upon renewal to market rates. Most of the Company's leases require the tenant to reimburse the Company for their allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. The Company periodically evaluates its exposure to short-term interest rates and fluctuations in foreign currency exchange rates and will, from time to time, enter into interest rate protection agreements and foreign currency hedge agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate debt and changes in foreign currency exchange rates. Risk Factors Set forth below are the material risks associated with the purchase and ownership of the securities of the Company. As an owner of real estate, the Company is subject to certain business risks arising in connection with the underlying real estate, including, among other factors, (i) defaults of major tenants due to bankruptcy, insolvency and/or general downturn in their business which could reduce the Company's cash flow, (ii) major tenants not renewing their leases as they expire or renewing at lower rental rates which could reduce the Company's cash flow, (iii) changes in retailing trends which could reduce the need for shopping centers, (iv) potential liability for future or unknown environmental issues, (v) changes in real estate and zoning laws and competition from other real estate owners which could make it difficult to lease or develop properties, and (vi) the inability to acquire capital, either in the form of debt or equity, on satisfactory terms to fund the Company's cash requirements. The success of the Company also depends upon trends in the economy, including, but not limited to, interest rates, income tax laws, governmental regulations and legislation and population trends. Additionally, the Company is subject to complex regulations related to its status as a REIT and would be adversely affected if it failed to maintain its qualification as a REIT. Operating Practices Nearly all operating functions, including leasing, legal, construction, data processing, maintenance, finance and accounting, are administered by the Company from its executive offices in New Hyde Park, New York. The Company believes it is critical to have a management presence in its principal areas of operation and accordingly, the Company maintains regional offices in various cities throughout the United States. A total of 405 persons are employed at the Company's executive and regional offices. The Company's regional offices are generally staffed by a manager and the support personnel necessary to both function as local representatives for leasing and promotional purposes and to complement the corporate office efforts to ensure that property inspection and maintenance objectives are achieved. The regional offices are important in reducing the time necessary to respond to the needs of the Company's tenants. Leasing and maintenance personnel from the corporate office also conduct regular inspections of each shopping center. 8 The Company also employs a total of 18 persons at several of its larger properties in order to more effectively administer its maintenance and security responsibilities. Management Information Systems Virtually all operating activities are supported by a sophisticated computer software system designed to provide management with operating data necessary to make informed business decisions on a timely basis. These systems are continually expanded and enhanced by the Company and reflect a commitment to quality management and tenant relations. The Company has integrated an advanced mid-range computer with personal computer technology, creating a management information system that facilitates the development of property cash flow budgets, forecasts and related management information. Qualification as a REIT The Company has elected, commencing with its taxable year which began January 1, 1992, to qualify as a REIT under the Code. If, as the Company believes, it is organized and operates in such a manner so as to qualify and remain qualified as a REIT under the Code, the Company generally will not be subject to federal income tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income as defined under the Code. In connection with the RMA, which became effective January 1, 2001, the Company is now permitted to participate in activities which the Company was precluded from previously in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable subsidiaries under the Code, subject to certain limitations. The primary activities conducted by the Company in its taxable REIT subsidiaries during 2003 include, but are not limited to, (i) the ground-up development of shopping center properties and subsequent sale thereof upon completion (see Recent Developments - Kimco Developers, Inc. ("KDI")), (ii) real estate advisory and disposition services provided in connection with asset designation rights, and (iii) acting as an agent or principal in connection with tax deferred exchange transactions. As such, the Company was subject to federal and state income taxes on the income from these activities. Recent Developments Mid-Atlantic Realty Trust Merger - During June 2003, the Company and Mid-Atlantic Realty Trust ("Mid-Atlantic") entered into a definitive merger agreement (the "Merger Agreement") whereby Mid-Atlantic would merge with and into a wholly-owned subsidiary of the Company (the "Merger" or "Mid-Atlantic Merger"). The Merger required the approval of holders of 66 2/3% of Mid-Atlantic's outstanding shares. Subject to certain conditions, limited partners in Mid-Atlantic's operating partnership were offered the same cash consideration for each outstanding unit and offered the opportunity (in lieu of cash) to exchange their interests for preferred units in the operating partnership upon the closing of the transaction. The shareholders of Mid-Atlantic approved the Merger on September 30, 2003 and the closing occurred October 1, 2003. Mid-Atlantic shareholders received cash consideration of $21.051 per share. In addition, more than 99.0% of the limited partners in Mid-Atlantic's operating partnership elected to have their partnership units redeemed for cash consideration equal to $21.051 per unit. The transaction had a total value of approximately $700.0 million including the assumption of approximately $216.0 million of debt. The Company funded the transaction with available cash, a new $400.0 million bridge facility and funds from its existing revolving credit facility. In connection with the Merger, the Company acquired interests in 41 operating shopping centers, one regional mall, two shopping centers under development and eight other commercial assets. The properties have a gross leasable area of approximately 5.7 million square feet of which approximately 95.0% of the stabilized square footage is currently leased. The Company also acquired approximately 80.0 acres of undeveloped land. The properties are located primarily in Maryland, Virginia, New York, Pennsylvania, Massachusetts and Delaware. The Company has tentative agreements for a number of the properties to be allocated to its strategic co-investment programs. For financial reporting purposes the Merger was accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations, ("SFAS No. 141"). During December 2003, the Company disposed of the one regional mall and the adjacent annex acquired in the Merger located in Bel Air, MD for a sales price of approximately $71.0 million, which approximated its net book value. 9 Operating Properties - Acquisitions - During the year ended December 31, 2003, the Company acquired 14 operating properties located in eight states and Mexico, comprising approximately 1.7 million square feet of GLA for an aggregate purchase price of approximately $293.9 million. Details of these transactions are as follows: During January 2003, the Company acquired a property located in Houston, TX, comprising approximately 0.2 million square feet of GLA, for a purchase price of approximately $26.3 million. During June 2003, the Company transferred this property to KROP. During February 2003, the Company acquired a property located in Nashau, NH, comprising approximately 0.2 million square feet of GLA, for a purchase price of approximately $25.7 million. During March 2003, the Company acquired four operating properties located in Queens, NY, comprising approximately 0.1 million square feet of GLA, for an aggregate purchase price of approximately $19.9 million. During April 2003, the Company acquired a property located in Sterling, VA, comprising approximately 0.4 million square feet of GLA, for a purchase price of approximately $58.7 million. During September 2003, the Company transferred this property to KROP. During June 2003, the Company acquired a 66.7% controlling interest in a property located in New Braunfels, TX, comprising approximately 0.1 million square feet of GLA, for a purchase price of approximately $4.2 million. Additionally, during June 2003, the Company acquired a property located in Colma, CA, comprising approximately 0.2 million square feet of GLA, for a purchase price of approximately $59.2 million. During November 2003, the Company transferred this property to KROP. Also, during June 2003, the Company acquired a property located in Greenwood, CO, comprising approximately 0.2 million square feet of GLA, for a purchase price of approximately $29.7 million. During November 2003, the Company sold this property for a sales price of approximately $30.6 million which resulted in a gain on sale of approximately $0.7 million. During July 2003, the Company acquired a property in Novato, CA, comprising approximately 0.1 million square feet of GLA, for a purchase price of approximately $21.9 million. During December 2003, the Company transferred this property into a newly formed joint venture in which the Company has a 10% non-controlling interest. During October 2003, the Company acquired a property located in Florence, KY, comprising approximately 0.1 million square feet of GLA, for an aggregate purchase price of approximately $14.9 million. Additionally, during October 2003, the Company acquired an operating property located in Juarez, Mexico, comprising approximately 0.1 million square feet of GLA through a joint venture in which the Company has a 90.0% controlling interest. The property was acquired for a purchase price of approximately $9.9 million. During November 2003, the Company acquired a property located in Monroeville, PA, comprising approximately 0.1 million square feet of GLA, for an aggregate purchase price of approximately $23.5 million. Dispositions - During 2003, the Company disposed of, in separate transactions, (i) 10 operating shopping center properties, for an aggregate sales price of approximately $119.1 million, including the assignment of approximately $1.7 million of mortgage debt encumbering one of the properties, (ii) two regional malls for an aggregate sales price of approximately $135.6 million, (iii) one out-parcel for a sales price of approximately $8.1 million, (iv) transferred three operating properties to KROP for a price of approximately $144.2 million which approximated their net book value, (v) transferred an operating property to a newly formed joint venture in which the Company has a 10% non-controlling interest for a price of approximately $21.9 million which approximated its net book value and (vi) terminated four leasehold positions in locations where a tenant in bankruptcy had rejected its lease. These transactions resulted in net gains of approximately $50.8 million. 10 Redevelopments - The Company has an ongoing program to reformat and re-tenant its properties to maintain or enhance its competitive position in the marketplace. During 2003, the Company substantially completed the redevelopment and re-tenanting of various operating properties. The Company expended approximately $57.9 million in connection with these major redevelopments and re-tenanting projects during 2003. The Company is currently involved in redeveloping several other shopping centers in the existing portfolio. The Company anticipates its capital commitment toward these and other redevelopment projects will be approximately $50.0 million to $75.0 million during 2004. Kimco Developers, Inc. ("KDI") - Effective January 1, 2001, the Company elected taxable REIT subsidiary status for its wholly-owned subsidiary, KDI. KDI is primarily engaged in the ground-up development of neighborhood and community shopping centers and the subsequent sale thereof upon completion. As of December 31, 2003, KDI had in progress 26 ground-up development projects located in nine states. These projects had substantial pre-leasing prior to the commencement of construction. During 2003, KDI expended approximately $208.9 million in connection with the purchase of land and construction costs related to these projects. These projects are currently proceeding on schedule and in line with the Company's budgeted costs. The Company anticipates its capital commitment toward these and other development projects will be approximately $160.0 million to $200.0 million during 2004. The proceeds from the sales of the completed ground-up development projects during 2004 and proceeds from construction loans are expected to be sufficient to fund these anticipated capital requirements. KDI Acquisitions - During the year ended December 31, 2003, KDI acquired interests in 12 land parcels, in separate transactions, for the ground-up development of shopping centers and subsequent sales thereof upon completion for an aggregate purchase price of approximately $80.2 million, as follows: Purchase Price Date Acquired City State (in millions) ------------- ---- ----- -------------- February 2003 Avondale AZ $ 2.2 March 2003 Raleigh NC 3.2 April 2003 Maricopa AZ 2.7 May 2003 Muskegan MI 4.2 June 2003 Vancouver WA 9.4 July 2003 Birmingham AL 2.5 September 2003 Longview WA 16.5 September 2003 Ft. Worth TX 8.5 October 2003 Burleson TX 5.6 December 2003 Lake Worth TX 11.8 December 2003 Jacksonville FL 7.6 December 2003 Houston TX 6.0 ----- $80.2 ===== The estimated project costs for these newly acquired parcels is approximately $220.0 million with completion dates ranging from June 2004 to December 2005. During 2003, the Company obtained individual construction loans on seven ground-up development projects and paid off construction loans on three ground-up development properties. At December 31, 2003 total loan commitments on the remaining 13 construction loans aggregate approximately $238.9 million of which approximately $92.8 million has been funded. These loans have maturities ranging from 3 to 34 months and bear interest at rates ranging from 2.87% to 5.0% at December 31, 2003. KDI Dispositions - During the year ended December 31, 2003, KDI sold four of its recently completed projects and 26 out-parcels for approximately $134.6 million. These sales resulted in pre-tax gains of approximately $17.5 million. Details are as follows: 11
Sales Price Date Sold Project City State (in millions) --------- ------- ---- ----- ------------- January 2003 Various (4 out-parcels) Various NV, OH, AZ $ 3.4 February 2003 Wakefield Crossing (1 out-parcel) Raleigh NC 0.5 March 2003 Gateway Station (1 out-parcel) Burleson TX 1.3 April 2003 Wakefield Crossings (4 out-parcels) Various Various 3.1 May 2003 Sale of built up space at Gilbert Fiesta Gilbert Fiesta AZ 10.8 June 2003 Hamstra Square (Sale of Center) Chandler AZ 13.0 June 2003 Gateway Station (Phase I) Burleson TX 27.9 June 2003 Various (2 out-parcels) Various TX, NV 8.6 July 2003 Various (3 out-parcels) Various NC, OH, AZ 2.0 August 2003 Various (2 out-parcels) Various NC, TX 2.3 September 2003 Hillsborough (sale of center) Hillsborough NJ 46.5 October 2003 Various (3 out-parcels) Various TX, WA 5.6 November 2003 Various (5 out-parcels) Various AZ, WA 8.5 December 2003 Gateway Station (1 out-parcel) Burleson TX 1.1 ------ $134.6 ======
Operating Real Estate Joint Venture Investments - Kimco Income REIT ("KIR") - During 1998, the Company formed KIR, an entity that was established for the purpose of investing in high quality real estate properties financed primarily with individual non-recourse mortgages. These properties include, but are not limited to, fully developed properties with strong, stable cash flows from credit-worthy retailers with long-term leases. The Company originally held a 99.99% limited partnership interest in KIR. Subsequent to KIR's formation, the Company sold a significant portion of its original interest to an institutional investor and admitted three other limited partners. As of December 31, 2003, KIR has received total capital commitments of $569.0 million, of which the Company subscribed for $247.0 million and the four limited partners subscribed for $322.0 million. The Company has a 43.3% non-controlling limited partnership interest in KIR, manages the portfolio and accounts for its investment under the equity method of accounting. During 2003, the limited partners in KIR contributed $30.0 million towards their respective capital commitments, including $13.0 million by the Company. As of December 31, 2003, KIR had unfunded capital commitments of $99.0 million, including $42.9 million from the Company. During 2003, KIR purchased two shopping center properties, in separate transactions, aggregating approximately 0.6 million square feet of GLA for approximately $103.5 million. During September 2003, KIR elected to terminate its secured revolving credit facility. This facility was scheduled to expire in November 2003 and had $5.0 million outstanding at the time of termination, which was paid in full. During December 2003, KIR disposed of, in separate transactions, two out-parcels located in Las Vegas, NV, for an aggregate sales price of approximately $1.4 million, which represented the approximate carrying value of the property. As of December 31, 2003, the KIR portfolio was comprised of 70 shopping center properties aggregating approximately 14.6 million square feet of GLA located in 21 states. During 2003, KIR obtained individual non-recourse, non-cross collateralized fixed-rate ten year mortgages aggregating approximately $78.0 million on two of its previously unencumbered properties with rates ranging from 5.54% to 5.82% per annum. The net proceeds were used to satisfy the outstanding balance on the secured credit facility and partially fund the acquisition of various shopping center properties. 12 Kimco / G.E. Joint Venture ("KROP") - During 2001, the Company formed a joint venture (the "Kimco Retail Opportunity Portfolio" or "KROP") with GE Capital Real Estate ("GECRE"), in which the Company has a 20% non-controlling interest and manages the portfolio. The purpose of this joint venture is to acquire established, high-growth potential retail properties in the United States. Total capital commitments to KROP from GECRE and the Company are for $200.0 million and $50.0 million, respectively, and such commitments are funded proportionately as suitable opportunities arise and are agreed to by GECRE and the Company. The Company accounts for its investment in KROP under the equity method of accounting. During 2003, GECRE and the Company contributed approximately $45.6 million and $11.4 million, respectively, towards their capital commitments. Additionally, GECRE and the Company provided short-term interim financing for all acquisitions made by KROP without a mortgage in place at the time of acquisition. All such financing bears interest at rates ranging from LIBOR plus 4.0% to LIBOR plus 5.25% and have maturities of less than one year. As of December 31, 2003, KROP had outstanding short-term interim financing due to GECRE and the Company totaling $16.8 million each. During 2003, KROP purchased, in separate transactions, eight shopping centers comprising approximately 1.9 million square feet of GLA for an aggregate purchase price of approximately $250.2 million, including the assumption of approximately $6.5 million of mortgage debt encumbering one of the properties. During December 2003, KROP disposed of a portion of a shopping center located in Columbia, MD, for an aggregate sales price of approximately $2.8 million, which approximated the carrying value. During 2003, KROP obtained individual non-recourse, non-cross collateralized fixed-rate mortgages aggregating approximately $89.3 million on three of its previously unencumbered properties with rates ranging from 4.25% to 5.92% and terms ranging from five to ten years. During 2003, KROP obtained individual non-recourse, non-cross collateralized variable-rate five year mortgages aggregating approximately $35.6 million on five of its previously unencumbered properties with rates ranging from LIBOR plus 2.2% to LIBOR plus 2.5%. In order to mitigate the risks of interest rate fluctuations associated with these variable rate obligations, KROP entered into interest rate cap agreements for the notional values of these mortgages. As of December 31, 2003, the KROP portfolio was comprised of 23 shopping center properties aggregating approximately 3.5 million square feet of GLA located in 12 states. International Real Estate Joint Venture Investments - Canadian Investments - During October 2001, the Company formed the RioCan Venture in which the Company has a 50% non-controlling interest, to acquire retail properties and development projects in Canada. The acquisition and development projects are to be sourced and managed by RioCan and are subject to review and approval by a joint oversight committee consisting of RioCan management and the Company's management personnel. Capital contributions will only be required as suitable opportunities arise and are agreed to by the Company and RioCan. During 2003, the RioCan Venture acquired a shopping center property comprising approximately 0.2 million square feet of GLA for a purchase price of approximately CAD $42.6 million (approximately USD $29.0 million) including the assumption of approximately CAD $28.7 million (approximately USD $19.6 million) of mortgage debt. Additionally during 2003, the RioCan Venture acquired, in a single transaction, four parcels of land adjacent to an existing property for a purchase price of approximately CAD $18.7 million (approximately USD $14.2 million). This property was subsequently encumbered with non-recourse mortgage debt of approximately CAD $16.3 million (approximately USD $12.4 million). As of December 31, 2003, the RioCan Venture was comprised of 31 operating properties and three development properties, consisting of approximately 7.2 million square feet of GLA. Mexican Investments - During October 2002, the Company, in separate transactions, acquired two operating properties located in Saltillo and Monterrey, Mexico, comprising approximately 0.3 million square feet of GLA for an aggregate purchase price of approximately $368.5 million pesos ("MXN") (USD $35.7 million). The Monterrey site consisted of a portion under development of approximately 0.1 million square feet of GLA which was completed during October 2003, for a cost of approximately MXN $57.9 million (USD $5.8 million). 13 During December 2003, the Company, in a single transaction, sold a 50.0% interest in each of its properties located in Saltillo and Monterrey, Mexico for an aggregate sales price of approximately MXN $240.4 million (USD $21.4 million) which approximated 50.0% of their aggregate carrying value. Other Real Estate Joint Ventures - The Company and its subsidiaries have investments in and advances to various other real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. During June 2003, the Company acquired a former Service Merchandise property located in Novi, MI, through a joint venture, in which the Company has a 42.5% non-controlling interest. The property was acquired for a purchase price of approximately $4.1 million. During June 2003, the Company acquired a property located in South Bend, IN, through a joint venture in which the Company has a 37.5% non-controlling interest. The property was acquired for an aggregate purchase price of approximately $4.9 million. During July 2003, the Company acquired a property located in Pineville, NC, through a joint venture, in which the Company has a 20.0% non-controlling interest. The property was acquired for a purchase price of approximately $27.3 million, including $19.3 million of non-recourse mortgage debt encumbering the property. During August 2003, the Company acquired a property located in Shaumburg, IL, through a joint venture in which the Company has a 45.0% non-controlling interest. The property was acquired for an aggregate purchase price of approximately $66.6 million. Simultaneous with the acquisition, the venture obtained a $51.6 million non-recourse mortgage at a floating interest rate of LIBOR plus 2.25%. Additionally, during the year ended December 31, 2003, the Company acquired 11 properties, in separate transactions, through various joint ventures in which the Company has a 50.0% non-controlling interest. These properties were acquired for an aggregate purchase price of approximately $113.3 million, including the assumption of approximately $40.5 million of non-recourse debt encumbering six of the properties. Other Real Estate Investments - Kmart Venture - During July 2002, the Company, through a taxable REIT subsidiary, formed a venture (the "Kmart Venture") in which the Company has a controlling interest for purposes of acquiring asset designation rights for 54 former Kmart locations. The total commitment to Kmart by the Kmart Venture, prior to the profit sharing arrangement commencing, was approximately $43.0 million. As of December 31, 2003, the Kmart Venture completed the designation of all properties and has funded the total commitment of approximately $43.0 million to Kmart. During 2003, the Kmart Venture commenced the profit sharing arrangement and the Company recognized pre-tax profits of approximately $0.6 million. Kimsouth - During November 2002, the Company, through its taxable REIT subsidiary, together with Prometheus Southeast Retail Trust, completed the merger and privatization of Konover Property Trust, which has been renamed Kimsouth Realty, Inc., ("Kimsouth"). The Company acquired 44.5% of the common stock of Kimsouth, which consisted primarily of 38 retail shopping center properties comprising approximately 4.6 million square feet of GLA. Total acquisition value was approximately $280.9 million including approximately $216.2 million in assumed mortgage debt. The Company's investment strategy with respect to Kimsouth includes re-tenanting, repositioning and disposition of the properties. During 2003, Kimsouth disposed of 14 shopping center properties, in separate transactions, for an aggregate sales price of approximately $84.0 million, including the assignment of approximately $18.4 million of mortgage debt encumbering six of the properties. During 2003, the Company recognized pre-tax profits from the Kimsouth investment of approximately $12.1 million which is included in the caption Income from other real estate investments on the Company's Consolidated Statements of Income. As of December 31, 2003, the Kimsouth portfolio was comprised of 22 properties aggregating approximately 3.2 million square feet of GLA located in six states. 14 Preferred Equity Capital - During 2002, the Company established a preferred equity program, which provides capital to developers and owners of shopping centers. As of December 31, 2003, the Company has provided, in separate transactions, an aggregate of approximately $66.4 million in investment capital to developers and owners of 21 shopping centers. Mortgages and Other Financing Receivables - During March 2002, the Company provided a $50.0 million ten-year loan to Shopko Stores Inc., at an interest rate of 11.0% per annum collateralized by 15 properties. The Company receives principal and interest payments on a monthly basis. During January 2003, the Company sold a $37.0 million participation interest in this loan to an unaffiliated third party. The interest rate of the $37.0 million participation interest is a variable rate based on LIBOR plus 3.50%. The Company continues to act as the servicer for the full amount of the loan. During May 2002, in connection with Frank's Nursery & Crafts, Inc. ("Franks") emergence from Chapter 11 under the U.S. Bankruptcy Code, the Company received approximately 4.3 million shares of Frank's common stock in settlement of its pre-petition claim. The Company also provided exit financing in the form of a $15.0 million three-year term loan at a fixed interest rate of 10.25% per annum collateralized by 40 real estate interests. Simultaneously, the Company provided an additional $17.5 million revolving loan, also at an interest rate of 10.25% per annum. Interest is payable quarterly in arrears. As of December 31, 2003, the aggregate outstanding loan balance was approximately $32.5 million. As an inducement to make these loans, Frank's issued the Company approximately 4.4 million warrants with an exercise price of $1.15 per share and 5.0 million warrants with an exercise price of $2.00 per share. During 2003, the Company had written down the remaining carrying value of its equity investment in Frank's common stock and fully reserved the value of the Frank's warrants, with a corresponding adjustment in Other comprehensive income ("OCI"). During June 2003, the Company provided a five-year $3.5 million loan to Grass America, Inc. ("Grass America") at an interest rate of 12.25% per annum collateralized by certain real estate interests of Grass America. The Company receives principal and interest payments on a monthly basis. During December 2003, the Company provided a four-year $8.25 million term loan to Spartan Stores, Inc. ("Spartan") at a fixed rate of 16.0% per annum. This loan is collateralized by the real estate interests of Spartan. The Company receives principal and interest payments monthly. During December 2003, the Company, through a taxable REIT subsidiary, acquired a $24.0 million participation interest in 12% senior secured notes of the FRI-MRD Corporation ("FRI-MRD") for $13.3 million. These notes, which are currently non-performing, are collateralized by certain equity interests and a note receivable of a FRI-MRD subsidiary. Financing Transactions - Unsecured Debt - During May 2003, the Company issued $50.0 million of fixed-rate unsecured senior notes under its medium-term notes ("MTN") program. This fixed rate MTN matures in May 2010 and bears interest at 4.62% per annum, payable semi-annually in arrears. The proceeds from this MTN issuance were used to partially fund the redemption of the Company's $75.0 million 7 3/4% Class A Cumulative Redeemable Preferred Stock. During August 2003, the Company issued $100.0 million of fixed-rate unsecured senior notes under its MTN program. This fixed rate MTN matures in August 2008 and bears interest at 3.95% per annum, payable semi-annually in arrears. The proceeds from this MTN issuance were used to redeem all $100.0 million of the Company's remarketed reset notes due August 18, 2008, bearing interest at LIBOR plus 1.25%. During October 2003, the Company issued $100.0 million of fixed-rate unsecured senior notes under its MTN program. This fixed rate MTN matures in October 2013 and bears interest at 5.19% per annum, payable semi-annually in arrears. The proceeds from this MTN issuance were used for the repayment of the Company's 6.5% $100.0 million fixed-rate unsecured senior notes which matured October 1, 2003. Construction Loans - During 2003, the Company obtained construction financing on seven ground-up development projects for an aggregate loan amount of up to $152.2 million, of which approximately $45.6 million was funded as of December 31, 2003. As of December 31, 2003, the Company had a total of 13 construction loans with total commitments of up to $238.9 million of which $92.8 million had been funded to the Company. These loans have maturities ranging from 3 to 34 months and variable interest rates ranging from 2.87% to 5.00% at December 31, 2003. 15 Early Extinguishment of Non-Recourse Mortgages - As part of the Company's strategy to reduce its exposure to Kmart Corporation, the Company had previously encumbered certain Kmart sites with individual non-recourse mortgages. As a result of the Kmart bankruptcy filing in January 2002 and the subsequent rejection of leases including leases at these encumbered sites, the Company suspended debt service payments on these loans and began active negotiations with the respective lenders. During February 2003, the Company reached agreement with a lender in connection with two former Kmart encumbered locations. The Company paid approximately $8.3 million in full satisfaction of these loans which aggregated approximately $14.7 million. The Company recognized a gain on early extinguishment of debt of approximately $6.2 million as a result of this transaction. During December 2003, the Company reached agreement with a lender in connection with an individual non-recourse mortgage encumbering a former Kmart site located in Chicago, IL. The Company paid approximately $5.9 million in full satisfaction of this loan which had a outstanding balance of approximately $9.3 million. As a result of this transaction, the Company recognized a gain on early extinguishment of debt of approximately $3.5 million. Credit Facilities - The Company maintains a $500.0 million unsecured revolving credit facility (the "Credit Facility") with a group of banks which is scheduled to mature in August 2006. Under the terms of the Credit Facility, funds may be borrowed for general corporate purposes, including (i) funding property acquisitions, (ii) funding development and redevelopment costs and (iii) funding any short-term working capital requirements. Interest on borrowings under the Credit Facility accrues at a spread (currently 0.55%) to LIBOR, which fluctuates in accordance with changes in the Company's senior debt ratings. The Company's senior debt ratings are currently A-/stable from Standard & Poors and Baa1/stable from Moody's Investor Services. As part of the Credit Facility, the Company has a competitive bid option where the Company may auction up to $250.0 million of its requested borrowings to the bank group. This competitive bid option provides the Company the opportunity to obtain pricing below the currently stated spread to LIBOR of 0.55%. As of December 31, 2003, there was $45.0 million outstanding under the Credit Facility. During October 2003, the Company obtained a $400.0 million unsecured bridge facility that bears interest at LIBOR plus 0.55%. This loan is scheduled to expire September 30, 2004 with an option to extend up to $150.0 million for an additional year. The Company utilized these proceeds to partially fund the Mid-Atlantic Realty Trust transaction. As of December 31, 2003, there was $329.0 million outstanding on this unsecured bridge facility. Equity - During June 2003, the Company redeemed all 2,000,000 outstanding depositary shares of the Company's 8 1/2% Class B Cumulative Redeemable Preferred Stock, par value $1.00 per share ("Class B Preferred Stock"), all 3,000,000 outstanding depositary shares of the Company's 7 3/4% Class A Cumulative Redeemable Preferred Stock, par value $1.00 per share ("Class A Preferred Stock") and all 4,000,000 outstanding depositary shares of the Company's 8 3/8% Class C Cumulative Redeemable Preferred Stock, par value $1.00 per share ("Class C Preferred Stock"), each at a redemption price of $25.00 per depositary share, totaling $225.0 million, plus accrued dividends. During June 2003, the Company issued 7,000,000 Depositary Shares (the "Class F Depositary Shares"), each representing a one-tenth fractional interest in a share of the Company's 6.65% Class F Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Class F Preferred Stock"). Dividends on the Class F Depositary Shares are cumulative and payable quarterly in arrears at the rate of 6.65% per annum based on the $25.00 per share initial offering price, or $1.6625 per annum. The Class F Depositary Shares are redeemable, in whole or part, for cash on or after June 5, 2008 at the option of the Company, at a redemption price of $25.00 per depositary share, plus any accrued and unpaid dividends thereon. The Class F Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. Net proceeds from the sale of the Class F Depositary Shares, totaling approximately $169.0 million (after related transaction costs of $6.0 million) were used to redeem all of the Company's Class B Preferred Stock and Class C Preferred Stock and to fund a portion of the redemption of the Company's Class A Preferred Stock. Additionally, during June 2003, the Company completed a primary public stock offering of 2,070,000 shares of the Company's common stock. The net proceeds from this sale of common stock, totaling approximately $76.0 million (after related transaction costs of $0.7 million) were used for general corporate purposes, including the acquisition of interests in real estate properties. 16 During September 2003, the Company completed a primary public stock offering of 2,760,000 shares of the Company's common stock. The net proceeds from this sale of common stock, totaling approximately $112.7 million (after related transaction costs of $1.0 million) were used for general corporate purposes, including the acquisition of interests in real estate properties. Hedging Activities - During 2002 and 2003, the Company entered into various foreign currency forward contracts and a cross currency swap aggregating approximately CAD $189.6 million and MXN $381.8 million in connection with the Company's Canadian and Mexican real estate investments and investment in stock of RioCan. During December 2003, the Company sold a 50% interest in its Saltillo and Monterrey, Mexico properties. In connection with this sale, the Company partially assigned to the buyer a portion of its foreign currency forwards and cross currency swap aggregating approximately MXN $156.9 million. At December 31, 2003, the Company's remaining portion of these foreign currency forwards and cross currency swap is approximately MXN $224.9 million, which fully hedges the Company's remaining investment in these properties. (See Note 17 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) Exchange Listings The Company's common stock and Class F Depositary Shares are traded on the NYSE under the trading symbols "KIM" and "KIMprF", respectively. Trading of the Class A, B and C Depositary Shares ceased in June 2003 in connection with the Company's redemption of such shares. Item 2. Properties Real Estate Portfolio As of January 1, 2004, the Company's real estate portfolio was comprised of interests in approximately 93.5 million square feet of GLA (not including 26 property interests comprising 3.9 million square feet of GLA related to the Preferred Equity program and 4.9 million square feet of projected GLA for the ground-up development projects) in 594 neighborhood and community shopping center properties, 37 retail store leases, 10 parcels of undeveloped land and 28 projects under development, located in 41 states, Canada and Mexico. The Company's portfolio includes a 43.3% interest in 70 shopping center properties comprising approximately 14.6 million square feet of GLA relating to KIR, a 50% interest in 31 shopping center properties comprising approximately 7.3 million square feet of GLA relating to the RioCan Venture and a 20% interest in 23 shopping center properties comprising approximately 3.5 million square feet of GLA relating to KROP. Neighborhood and community shopping centers comprise the primary focus of the Company's current portfolio. As of January 1, 2004, approximately 90.7% of the Company's neighborhood and community shopping center space (excluding the KIR, KROP and Kimsouth portfolios) was leased, and the average annualized base rent per leased square foot of the portfolio was $8.79. As of January 1, 2004, the KIR, KROP and Kimsouth portfolios were 97.7%, 98.2% and 80.2% leased, respectively, with an average annualized base rent per leased square foot of $11.85, $12.49 and $8.63, respectively. The Company's neighborhood and community shopping center properties, generally owned and operated through subsidiaries or joint ventures, had an average size of approximately 148,000 square feet as of January 1, 2004. The Company generally retains its shopping centers for long-term investment and consequently pursues a program of regular physical maintenance together with major renovations and refurbishing to preserve and increase the value of its properties. These projects usually include renovating existing facades, installing uniform signage, resurfacing parking lots and enhancing parking lot lighting. During 2003, the Company capitalized approximately $6.2 million in connection with these property improvements and expensed to operations approximately $17.5 million. The Company's neighborhood and community shopping centers are usually "anchored" by a national or regional discount department store, supermarket or drugstore. As one of the original participants in the growth of the shopping center industry and one of the nation's largest owners and operators of shopping centers, the Company has established close relationships with a large number of major national and regional retailers. Some of the major national and regional companies that are tenants in the Company's shopping center properties include The Home Depot, Kmart Corporation, Kohl's, Royal Ahold, TJX Companies, Wal-Mart, Great Atlantic & Pacific, Best Buy, Toys R' Us, and Bed Bath & Beyond. 17 A substantial portion of the Company's income consists of rent received under long-term leases. Most of the leases provide for the payment of fixed base rentals monthly in advance and for the payment by tenants of an allocable share of the real estate taxes, insurance, utilities and common area maintenance expenses incurred in operating the shopping centers. Although many of the leases require the Company to make roof and structural repairs as needed, a number of tenant leases place that responsibility on the tenant, and the Company's standard small store lease provides for roof repairs to be reimbursed by the tenant as part of common area maintenance. The Company's management places a strong emphasis on sound construction and safety at its properties. Approximately 1,918 of the Company's 6,820 leases also contain provisions requiring the payment of additional rent calculated as a percentage of tenants' gross sales above predetermined thresholds. Percentage Rents accounted for approximately 1% of the Company's revenues from rental property for the year ended December 31, 2003. Minimum base rental revenues and operating expense reimbursements accounted for approximately 99% of the Company's total revenues from rental property for the year ended December 31, 2003. The Company's management believes that the base rent per leased square foot for many of the Company's existing leases is generally lower than the prevailing market-rate base rents in the geographic regions where the Company operates, reflecting the potential for future growth. For the period January 1, 2003 to December 31, 2003, the Company increased the average base rent per leased square foot in its consolidated portfolio of neighborhood and community shopping centers from $8.31 to $8.79, an increase of $0.48. This increase primarily consists of (i) a $0.32 increase relating to the net effect of acquisitions and dispositions, (ii) an $0.11 increase related to the fluctuation in exchange rates related to the Canadian denominated leases, and (iii) a $0.05 increase relating to new leases signed net of leases vacated. The Company seeks to reduce its operating and leasing risks through geographic and tenant diversity. No single neighborhood and community shopping center accounted for more than 0.6% of the Company's total shopping center GLA or more than 1.0% of total annualized base rental revenues as of December 31, 2003. The Company's five largest tenants include The Home Depot, Kmart Corporation, Kohl's, Royal Ahold and TJX Companies, which represent approximately 3.0%, 2.9%, 2.8%, 2.6% and 2.5%, respectively, of the Company's annualized base rental revenues, including the proportionate share of base rental revenues from properties in which the Company has less than a 100% economic interest. The Company maintains an active leasing and capital improvement program that, combined with the high quality of the locations, has made, in management's opinion, the Company's properties attractive to tenants. The Company's management believes its experience in the real estate industry and its relationships with numerous national and regional tenants gives it an advantage in an industry where ownership is fragmented among a large number of property owners. Retail Store Leases In addition to neighborhood and community shopping centers, as of January 1, 2004, the Company had interests in retail store leases totaling approximately 3.4 million square feet of anchor stores in 37 neighborhood and community shopping centers located in 20 states. As of January 1, 2004, approximately 86.0% of the space in these anchor stores had been sublet to retailers that lease the stores under net lease agreements providing for average annualized base rental payments of $4.07 per square foot. The average annualized base rental payments under the Company's retail store leases to the land owners of such subleased stores is approximately $2.60 per square foot. The average remaining primary term of the retail store leases (and, similarly, the remaining primary terms of the sublease agreements with the tenants currently leasing such space) is approximately 4.5 years, excluding options to renew the leases for terms which generally range from 5 to 25 years. The Company's investment in retail store leases is included in the caption Other Real Estate Investments on the Company's Consolidated Balance Sheets. Ground-Leased Properties The Company has interests in 60 shopping center properties that are subject to long-term ground leases where a third party owns and has leased the underlying land to the Company (or an affiliated joint venture) to construct and/or operate a shopping center. The Company or the joint venture pays rent for the use of the land and generally is responsible for all costs and expenses associated with the building and improvements. At the end of these long-term leases, unless extended, the land together with all improvements revert to the land owner. Ground-Up Development Properties As of January 1, 2004, the Company, through its wholly-owned taxable REIT subsidiary, KDI, has currently in progress 26 ground-up development projects located in nine states which are expected to be sold upon completion. These projects had substantial pre-leasing prior to the commencement of construction. As of January 1, 2004, the average annual base rent per leased square foot for the KDI portfolio was $14.22 and the average annual base rent per leased square foot for new leases executed in 2003 was $15.24. 18 Undeveloped Land The Company owns certain unimproved land tracts and parcels of land adjacent to certain of its existing shopping centers that are held for possible expansion. At times, should circumstances warrant, the Company may develop or dispose of these parcels. The table on pages 20 to 27 sets forth more specific information with respect to each of the Company's property interests. Item 3. Legal Proceedings The Company is not presently involved in any litigation nor to its knowledge is any litigation threatened against the Company or its subsidiaries that, in management's opinion, would result in any material adverse effect on the Company's ownership, management or operation of its properties, or which is not covered by the Company's liability insurance. Item 4. Submission of Matters to a Vote of Security Holders ------------------------------------------------------------ None. 19
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- ALABAMA BIRMINGHAM (4) 2003 JOINT VENTURE 21.4 85,000 100.0 TJ MAXX FAIRFIELD 2000 FEE 8.7 86,566 100.0 TELETECH CUSTOM HOOVER 2000 FEE 11.5 115,347 100.0 WAL-MART MOBILE (9) 2002 JOINT VENTURE 52.6 525,505 67.5 KROGER ALASKA KENAI 2003 JOINT VENTURE 14.7 146,759 100.0 HOME DEPOT ARIZONA AVONDALE (4) 2003 JOINT VENTURE 17.3 21,000 100.0 FOUNTAIN HILLS (4) 2001 JOINT VENTURE 23.2 113,000 99.0 WALGREENS GILBERT FIESTA (4) 2002 JOINT VENTURE 1.8 - - GLENDALE (7) 1998 FEE 40.5 333,388 99.6 COSTCO GLENDALE 1998 JOINT VENTURE 48.2 111,825 81.7 SEARS MARANA 2003 FEE 18.2 191,008 100.0 LOWE'S HOME CENTER MARICOPA (4) 2003 FEE 15.1 68,000 100.0 BASHAS' MESA 1998 FEE 19.8 146,492 93.6 ROSS STORES NORTH PHOENIX 1998 FEE 17.0 230,164 100.0 BURLINGTON COAT FACTORY PEORIA (4) 2000 JOINT VENTURE 69.8 218,000 99.2 KOHLS PHOENIX 1998 FEE 13.4 153,174 90.5 HOME DEPOT PHOENIX 1998 FEE 26.6 333,382 61.3 COSTCO PHOENIX 1997 FEE 17.5 131,621 88.3 SAFEWAY TEMPE 1998 JOINT VENTURE 21.1 236,015 43.5 PETSMART TEMPE (5) 1998 JOINT VENTURE 20.0 - - TUCSON 2003 JOINT VENTURE 17.8 190,174 100.0 LOWE'S HOME CENTER CALIFORNIA ALHAMBRA 1998 FEE 18.4 174,996 100.0 COSTCO ANAHEIM 1995 FEE 1.0 15,396 100.0 CARMICHAEL 1998 FEE 18.5 212,811 98.8 HOME DEPOT CHULA VISTA 1998 FEE 31.3 329,245 100.0 COSTCO COLMA (8) 2003 JOINT VENTURE 6.4 213,532 100.0 MARSHALLS CORONA 1998 FEE 47.6 486,958 99.2 COSTCO COVINA (7) 2000 GROUND LEASE (2054) 26.0 269,433 98.0 HOME DEPOT DALY CITY 2002 FEE 25.6 439,600 84.4 BURLINGTON COAT FACTORY EL CAJON 2003 JOINT VENTURE 11.8 120,711 100.0 KOHLS FOLSOM 2003 JOINT VENTURE 10.8 108,225 100.0 KOHLS LA MIRADA 1998 FEE 31.2 288,471 92.6 TOYS "R" US MONTEBELLO (7) 2000 FEE 20.4 250,439 100.0 SEARS MORGAN HILL 2003 JOINT VENTURE 10.3 103,362 100.0 HOME DEPOT NOVATO 2003 FEE 11.3 125,462 100.0 SAFEWAY OXNARD (7) 1998 FEE 14.4 171,580 100.0 TARGET SAN DIEGO (7) 2000 FEE 11.2 117,410 100.0 LUCKY STORES SAN RAMON (7) 1999 FEE 5.3 42,066 86.3 PETCO SANTA ANA 1998 FEE 12.0 134,400 100.0 HOME DEPOT SANTEE 2003 JOINT VENTURE 31.1 311,485 93.2 TJ MAXX SANTEE 1998 FEE 10.4 103,903 98.8 OFFICE DEPOT STOCKTON 1999 FEE 14.6 152,919 96.6 SUPER UNITED FURNITURE TEMECULA (7) 1999 FEE 40.0 341,612 97.9 KMART TORRANCE (7) 2000 FEE 26.7 266,917 97.0 HL TORRANCE TUSTIN 2003 JOINT VENTURE 10.8 108,413 100.0 KMART COLORADO AURORA 1998 FEE 13.8 145,754 77.9 TJ MAXX AURORA 1998 FEE 9.9 44,174 100.0 AURORA 1998 FEE 13.9 152,981 99.0 ALBERTSONS COLORADO SPRINGS 1998 FEE 10.7 107,310 90.6 ALBERTSONS DENVER 1998 FEE 1.5 18,405 100.0 SAV-A-LOT ENGLEWOOD 1998 FEE 6.5 80,330 100.0 HOBBY LOBBY FORT COLLINS 2000 FEE 11.8 117,862 89.8 KOHLS GREENWOOD VILLAGE 2003 JOINT VENTURE 21.0 196,726 100.0 HOME DEPOT LAKEWOOD 1998 FEE 7.6 82,581 95.0 SAFEWAY CONNECTICUT BRANFORD (7) 2000 FEE 19.2 191,574 98.5 KOHLS ENFIELD (7) 2000 FEE 16.2 162,459 100.0 KOHLS FARMINGTON 1998 FEE 16.9 184,572 95.3 SPORTS AUTHORITY HAMDEN 1967 JOINT VENTURE 31.7 341,502 98.1 WAL-MART NORTH HAVEN 1998 FEE 31.7 331,919 100.0 HOME DEPOT WATERBURY 1993 FEE 13.1 137,943 100.0 RAYMOUR & FLANIGAN DELAWARE ELSMERE 1979 GROUND LEASE (2076) 17.1 114,530 100.0 VALUE CITY DOVER (5) 1999 JOINT VENTURE 89.0 - - MILFORD 2003 FEE 7.8 61,100 89.4 FOOD LION WILMINGTON 2003 GROUND LEASE (2052) 25.9 165,805 100.0 SHOPRITE FLORIDA ALTAMONTE SPRINGS 1995 FEE 5.6 94,193 100.0 ORIENTAL MARKET ALTAMONTE SPRINGS 1998 JOINT VENTURE 19.4 271,095 71.6 ALTAMANTE CINEMA 8 BOCA RATON 1967 FEE 9.9 73,549 100.0 WINN DIXIE BOYNTON BEACH (7) 1999 FEE 18.0 197,362 99.7 BEALLS BRADENTON 1968 JOINT VENTURE 6.2 30,938 100.0 GRAND CHINA BUFFET BRADENTON 1998 FEE 19.6 162,997 95.8 PUBLIX BRANDON (7) 2001 FEE 29.7 143,785 99.1 BED BATH & BEYOND CORAL SPRINGS 1994 FEE 5.9 55,597 100.0 LINENS N THINGS CORAL SPRINGS 1997 FEE 9.8 86,342 100.0 TJ MAXX CORAL WAY 1992 JOINT VENTURE 8.7 87,305 100.0 WINN DIXIE EAST ORLANDO 1971 GROUND LEASE (2068) 11.6 131,981 99.1 SPORTS AUTHORITY FORT PIERCE 1970 JOINT VENTURE 14.8 210,460 99.0 KMART HOLLYWOOD 2002 JOINT VENTURE 5.0 50,000 100.0 HOME GOODS HOLLYWOOD (9) 2002 JOINT VENTURE 13.5 135,056 95.3 WINN DIXIE HOMESTEAD 1972 GROUND LEASE (2018)/JOINT VENTURE 21.0 208,794 99.5 PUBLIX JACKSONVILLE 2002 JOINT VENTURE 5.1 51,000 100.0 MICHAELS JACKSONVILLE 1999 FEE 18.6 203,536 97.6 BURLINGTON COAT FACTORY JACKSONVILLE (4) 2003 JOINT VENTURE 113.6 - - JENSEN BEACH (9) 2002 JOINT VENTURE 19.8 197,731 94.9 HOME DEPOT MAJOR LEASES ------------------------------------------------------------------------------------------------------------ LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION ----------------------------------------------------------------------------------------------------------------------------------- ALABAMA BIRMINGHAM (4) 2014 2034 A.C. MOORE 2014 2029 PETSMART 2019 2039 FAIRFIELD 2009 2029 HOOVER 2025 2095 MOBILE (9) 2006 CIRCUIT CITY 2041 2041 MARSHALLS 2005 2012 ALASKA KENAI 2018 2048 ARIZONA AVONDALE (4) FOUNTAIN HILLS (4) 2078 ROSS STORES 2015 2035 GILBERT FIESTA (4) GLENDALE (7) 2011 2046 LEVITZ 2012 2032 STOOL & DINETTE 2004 GLENDALE 2006 2016 MICHAELS 2008 2018 MARANA 2019 2069 MARICOPA (4) 2024 2044 MESA 2005 HARKINS THEATRE 2005 2025 OUR HOME 2005 2015 NORTH PHOENIX 2013 2023 ULTIMATE ELECTRONICS 2015 2030 MICHAELS 2007 2022 PEORIA (4) 2024 2064 ROSS STORES 2014 2034 MICHAELS 2012 2032 PHOENIX 2020 2050 JO-ANN FABRICS 2010 2025 PHOENIX 2006 2041 RODEO 2005 PHOENIX 2009 2039 TEMPE 2011 2031 STAPLES 2005 2025 GUITAR CENTER 2007 2017 TEMPE (5) TUCSON 2049 2049 CALIFORNIA ALHAMBRA 2027 2057 COSTCO 2027 2057 JO-ANN FABRICS 2004 2019 ANAHEIM CARMICHAEL 2008 2022 SPORTS AUTHORITY 2009 2024 LONGS DRUG 2013 2033 CHULA VISTA 2006 2041 NAVCARE 2009 COLMA (8) 2007 2012 NORDSTROM'S RACK 2007 2017 BED BATH & BEYOND 2011 2026 CORONA 2007 2042 HOME DEPOT 2010 2029 LEVITZ 2009 2029 COVINA (7) 2009 2034 STAPLES 2006 2011 PETSMART 2008 2028 DALY CITY 2012 2022 SAFEWAY 2004 2024 WALGREENS 2007 EL CAJON 2024 2053 FOLSOM 2018 2048 LA MIRADA 2012 2032 LA FITNESS 2012 2022 US POST OFFICE 2010 2020 MONTEBELLO (7) 2012 2062 TOYS "R" US 2018 2043 AMC THEATRES 2012 2032 MORGAN HILL 2024 2054 NOVATO 2008 2028 RITE AID 2008 2023 BIG LOTS 2005 2020 OXNARD (7) 2008 2013 FOOD 4 LESS 2008 24 HOUR FITNESS CENTER 2010 2020 SAN DIEGO (7) 2012 SPORTMART 2013 SAN RAMON (7) 2012 2022 SANTA ANA 2015 2035 SANTEE 2012 BED BATH & BEYOND 2013 PETSMART 2018 SANTEE 2006 2021 ROSS STORES 2009 2024 MICHAELS 2008 2018 STOCKTON 2009 2019 OFFICE DEPOT 2005 2015 COSTCO 2008 2033 TEMECULA (7) 2017 2032 FOOD 4 LESS 2010 2030 TRISTONE THEATRES 2008 2018 TORRANCE (7) 2011 2021 LINENS N THINGS 2010 2020 MARSHALLS 2009 2019 TUSTIN 2018 2048 COLORADO AURORA 2007 2012 CLASSIC TREASURES 2007 SPACE AGE FEDERAL 2008 AURORA AURORA 2007 2052 COOMERS CRAFTS 2006 CROWN LIQUORS 2005 2010 COLORADO SPRINGS 2004 2034 EL PASO COUNTY 2005 DENVER 2012 2027 ENGLEWOOD 2013 2023 OLD COUNTRY BUFFET 2009 2019 FORT COLLINS 2020 2070 GREENWOOD VILLAGE 2019 2069 LAKEWOOD 2007 2032 CONNECTICUT BRANFORD (7) 2007 2022 SUPER FOODMART 2016 2038 ENFIELD (7) 2021 2041 WALDBAUMS 2014 2034 FARMINGTON 2018 2063 LINENS N THINGS 2016 2036 BORDERS BOOKS 2018 2063 HAMDEN 2019 2039 BON-TON 2012 BOB'S STORES 2016 2036 NORTH HAVEN 2009 2029 BJ'S 2006 2041 XPECT DISCOUNT 2008 2013 WATERBURY 2017 2037 STOP & SHOP 2013 2043 DELAWARE ELSMERE 2008 2038 DOVER (5) MILFORD 2014 2034 WILMINGTON 2014 2044 SPORTS AUTHORITY 2008 2023 RAYMOUR & FLANIGAN FURNITURE 2019 2044 FLORIDA ALTAMONTE SPRINGS 2012 2022 THOMASVILLE HOME 2011 2021 PEARL ARTS N CRAFTS 2008 2018 ALTAMONTE SPRINGS 2008 LEATHER GALLERIES, THE 2009 2014 DSW SHOE WAREHOUSE 2012 2032 BOCA RATON 2008 2033 BOYNTON BEACH (7) 2006 2056 ALBERTSONS 2015 2040 BRADENTON 2009 2014 BRADENTON 2012 2032 TJ MAXX 2009 2019 JO-ANN FABRICS 2009 2024 BRANDON (7) 2005 2015 ROSS STORES 2010 2025 THOMASVILLE HOME 2010 2020 CORAL SPRINGS 2012 2027 CORAL SPRINGS 2007 2017 RAG SHOP 2006 2026 BLOCKBUSTER 2006 2016 CORAL WAY 2011 2036 DIAMONDS CRAFTS 2005 2014 EAST ORLANDO 2010 2020 OFFICE DEPOT 2005 2025 C-TOWN 2013 2028 FORT PIERCE 2006 2016 WINN DIXIE 2005 2027 AARON'S 2005 2010 HOLLYWOOD 2010 MICHAELS 2010 HOLLYWOOD (9) 2011 2036 DOLLAR MART PLUS 2, INC. 2007 2011 ECKERD 2006 2021 HOMESTEAD 2014 2034 MARSHALLS 2011 2026 OFFICEMAX 2013 2028 JACKSONVILLE 2013 HOME GOODS 2010 JACKSONVILLE 2008 2018 OFFICEMAX 2012 2032 TJ MAXX 2007 2017 JACKSONVILLE (4) JENSEN BEACH (9) 2005 2030 PETSMART 2009 2029 RAG SHOP 2005 2020
20
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- JENSEN BEACH 1994 FEE 20.7 173,356 96.9 SERVICE MERCHANDISE KEY LARGO (7) 2000 FEE 21.5 207,332 96.6 KMART KISSIMMEE 1996 FEE 18.4 130,983 100.0 KASH N' KARRY LAKELAND 2001 FEE 22.9 229,383 94.0 STEIN MART LARGO 1968 FEE 12.0 149,472 86.1 WAL-MART LARGO 1992 FEE 29.4 215,916 96.8 PUBLIX LARGO 1993 FEE 6.6 59,730 82.7 ROCK N HORSE LAUDERDALE LAKES 1968 JOINT VENTURE 10.0 115,341 96.9 SAVE-A-LOT LAUDERHILL 1978 FEE 17.8 181,476 90.9 SMART & FINAL LEESBURG 1969 GROUND LEASE (2017) 1.3 13,468 88.9 MARGATE 1993 FEE 34.1 260,752 98.0 PUBLIX MELBOURNE 1968 GROUND LEASE (2071) 11.5 168,737 96.5 SUBMITTORDER CO MELBOURNE 1994 FEE 13.8 131,851 75.7 TEGGE FURNISHINGS MELBOURNE 1998 FEE 13.2 148,660 86.7 KROGER MELBOURNE (9) 1987 JOINT VENTURE 11.9 118,828 86.0 PUBLIX MIAMI 1968 FEE 8.2 104,968 99.9 KMART MIAMI 1962 JOINT VENTURE 14.0 79,273 100.0 BABIES R US MIAMI 1986 FEE 7.8 83,380 97.5 PUBLIX MIAMI 1995 FEE 5.4 63,604 100.0 KIDS R US MIAMI 1985 FEE 15.9 108,795 100.0 PUBLIX MOUNT DORA 1997 FEE 12.4 118,150 100.0 KMART OCALA 1997 FEE 27.2 254,459 89.1 KMART ORANGE PARK 2003 JOINT VENTURE 5.0 50,299 100.0 BED BATH & BEYOND ORLANDO 1968 FEE 12.0 131,646 96.6 BED BATH & BEYOND ORLANDO (7) 2000 FEE 18.0 179,065 97.1 KMART ORLANDO 1968 JOINT VENTURE 10.0 114,434 100.0 BALLY TOTAL FITNESS ORLANDO 1968 GROUND LEASE (2047)/JOINT VENTURE 7.8 110,788 100.0 OFFICE FURNITURE ORLANDO 1994 FEE 28.0 236,486 98.4 OLD TIME POTTERY ORLANDO 1996 FEE 11.7 129,256 100.0 ROSS STORES PALATKA 1970 FEE 8.9 82,730 58.3 BIG LOTS PANAMA CITY (4) 2002 JOINT VENTURE 8.3 50,000 100.0 ROSS STORES PENSACOLA (9) 2002 JOINT VENTURE 18.2 189,287 76.3 WINN DIXIE PLANTATION 1974 JOINT VENTURE 4.6 60,414 100.0 BREAD OF LIFE POMPANO BEACH 1968 JOINT VENTURE 6.6 66,838 100.0 RAMP 48 PORT RICHEY (7) 1998 FEE 14.3 103,294 91.8 CIRCUIT CITY RIVIERA BEACH 1968 JOINT VENTURE 5.1 46,390 78.7 FURNITURE KINGDOM SANFORD 1989 FEE 40.9 157,547 92.9 ROSS STORES SARASOTA 1970 FEE 10.0 102,455 100.0 TJ MAXX SARASOTA 1989 FEE 12.0 129,700 97.3 KASH N' KARRY ST. PETERSBURG 1968 GROUND LEASE (2084)/JOINT VENTURE 9.0 118,979 86.6 KASH N' KARRY TALLAHASSEE 1998 FEE 12.8 105,535 95.6 STEIN MART TALLAHASSEE (4) 2000 GROUND LEASE (2085)/JOINT VENTURE 34.0 225,000 100.0 BED BATH & BEYOND TAMPA 2003 JOINT VENTURE 7.5 75,297 100.0 AMERICAN SIGNATURE HOME TAMPA 1997 FEE 16.3 127,837 95.1 STAPLES TAMPA (7) 2001 FEE 73.0 335,593 96.4 BEST BUY TAMPA (4) 2001 JOINT VENTURE 30.9 97,000 100.0 MARSHALLS WEST PALM BEACH (9) 2002 JOINT VENTURE 11.9 119,443 90.8 WINN DIXIE WEST PALM BEACH 1995 FEE 7.9 80,845 100.0 BABIES R US WEST PALM BEACH 1967 JOINT VENTURE 7.6 77,286 100.0 WINN DIXIE WINTER HAVEN 1973 JOINT VENTURE 13.9 92,428 88.9 BIG LOTS GEORGIA ATLANTA 1988 FEE 19.5 165,314 100.0 SCOTT ANTIQUES AUGUSTA 1995 FEE 11.3 122,350 74.9 TJ MAXX AUGUSTA (7) 2001 FEE 49.9 531,046 98.3 SPORTS AUTHORITY GAINSVILLE 1993 JOINT VENTURE 12.6 142,468 100.0 FARMERS FURNITURE MACON 1969 FEE 12.3 127,260 45.0 FREDS STORES MARIETTA (9) 2002 GROUND LEASE (2048)/JOINT VENTURE 15.2 151,820 83.3 INGLES SUBLEASE SAVANNAH 1993 FEE 22.2 187,076 99.1 BED BATH & BEYOND SAVANNAH 1995 GROUND LEASE (2045) 9.5 88,325 100.0 MEDIA PLAY SNELLVILLE (7) 2001 FEE 35.6 311,033 100.0 KOHLS ILLINOIS ADDISON 1968 GROUND LEASE (2066) 8.0 93,289 45.6 DINOREX ALTON 1986 FEE 21.2 159,824 82.1 VALUE CITY ARLINGTON HEIGHTS 1998 FEE 7.0 80,040 - AURORA 1998 FEE 17.9 91,182 - BATAVIA (7) 2002 FEE 31.7 272,416 98.6 KOHLS BELLEVILLE 1987 GROUND LEASE (2057) 20.3 81,490 100.0 KMART BLOOMINGTON 1972 FEE 16.1 188,250 100.0 SCHNUCK MARKETS BLOOMINGTON 2003 JOINT VENTURE 11.0 73,951 97.5 BRADLEY 1996 FEE 5.4 80,535 100.0 CARSON PIRIE SCOTT CALUMET CITY 1997 FEE 17.0 197,949 34.1 MARSHALLS CARBONDALE 1997 GROUND LEASE (2052) 8.1 80,535 100.0 K'S MERCHANDISE CHAMPAIGN (7) 2001 FEE 9.3 111,720 100.0 BEST BUY CHAMPAIGN 1999 FEE 9.0 102,615 100.0 K'S MERCHANDISE CHICAGO (6) 1997 FEE 13.4 109,441 - CHICAGO 1997 GROUND LEASE (2040) 17.5 104,264 100.0 GOLDBLATT'S CHICAGO 1997 FEE 6.0 86,894 100.0 KMART CHICAGO 1988 FEE 6.4 95,951 - COUNTRYSIDE 1997 GROUND LEASE (2053) 27.7 117,005 100.0 HOME DEPOT CRESTWOOD 1997 GROUND LEASE (2051) 36.8 79,903 100.0 KMART CRYSTAL LAKE 1998 FEE 6.1 80,390 100.0 HOBBY LOBBY DOWNERS GROVE 1998 FEE 7.2 192,639 100.0 HOME DEPOT EXPO DOWNERS GROVE 1999 FEE 24.8 144,670 97.2 DOMINICK'S DOWNERS GROVE 1997 FEE 12.0 141,906 100.0 TJ MAXX ELGIN 1972 FEE 18.7 186,432 94.6 ELGIN MALL FAIRVIEW HEIGHTS 1986 GROUND LEASE (2050) 19.1 192,073 100.0 KMART FOREST PARK 1997 GROUND LEASE (2021) 9.3 98,371 100.0 KMART GENEVA 1996 FEE 8.2 104,688 100.0 GANDER MOUNTAIN MATTESON 1997 FEE 17.0 157,852 96.3 SPORTMART MOUNT PROSPECT 1997 FEE 16.8 192,789 98.4 KOHLS MUNDELIEN 1991 FEE 7.6 89,692 100.0 BURLINGTON COAT FACTORY NAPERVILLE 1997 FEE 9.0 102,327 100.0 BURLINGTON COAT FACTORY MAJOR LEASES --------------------------------------------------------------------------------------------------------- LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION -------------------------------------------------------------------------------------------------------------------------------- JENSEN BEACH 2010 2070 MARSHALLS 2005 2020 KEY LARGO (7) 2014 2064 PUBLIX 2009 2029 BEALLS OUTLET 2005 2011 KISSIMMEE 2006 2036 OFFICEMAX 2012 2027 JO-ANN FABRICS 2006 2016 LAKELAND 2006 2026 AMC THEATRES 2007 2017 ROSS STORES 2007 2012 LARGO 2007 2027 LARGO 2009 2029 AMC THEATRES 2011 2036 OFFICE DEPOT 2004 2019 LARGO 2006 2012 LAUDERDALE LAKES 2007 2017 THINK THRIFT 2007 2017 LAUDERHILL 2017 WORLD JEWELRY CENTER 2014 2024 BABIES R US 2004 2014 LEESBURG MARGATE 2008 2028 OFFICE DEPOT 2005 2020 SAM ASH MUSIC 2006 2011 MELBOURNE 2010 2022 JO-ANN FABRICS 2006 2016 WALGREENS 2045 MELBOURNE 2005 2007 GOODWILL INDUSTRIES 2004 2010 SAVE-A-LOT 2013 2023 MELBOURNE 2004 2034 SERVICE MERCHANDISE 2005 2035 BED BATH & BEYOND 2013 2028 MELBOURNE (9) 2007 WALGREENS 2027 MIAMI 2009 2029 MILAM'S MARKET 2004 2008 WALGREENS 2009 MIAMI 2006 2021 FIRESTONE TIRE 2004 2009 MIAMI 2009 2029 WALGREENS 2018 MIAMI 2016 2021 PARTY CITY 2007 2017 MIAMI 2019 2039 WALGREENS 2058 MOUNT DORA 2013 2063 OCALA 2006 2021 BEST BUY 2019 2034 SERVICE MERCHANDISE 2007 2032 ORANGE PARK 2015 MICHAELS 2010 ORLANDO 2007 2022 BOOKS-A-MILLION 2006 2016 OFFICEMAX 2008 2023 ORLANDO (7) 2014 2064 PUBLIX 2012 2037 ORLANDO 2008 2018 HSN 2004 BEDDING & FURNITURE DISCOUNT 2009 ORLANDO 2008 VALUE THRIFT 2004 ORLANDO 2010 2020 SPORTS AUTHORITY 2011 2031 SAND LAKE THEATER 2008 ORLANDO 2008 2028 BIG LOTS 2009 WORLD GYM 2010 2020 PALATKA 2007 2017 PANAMA CITY (4) 2014 2034 BED BATH & BEYOND 2013 2028 PENSACOLA (9) 2012 2037 PARTY CITY 2013 2023 BEALLS OUTLET 2006 2016 PLANTATION 2009 2019 WHOLE FOODS 2009 2019 POMPANO BEACH 2004 2009 PORT RICHEY (7) 2011 2031 STAPLES 2006 2011 MICHAELS 2006 RIVIERA BEACH 2009 2014 GOODWILL INDUSTRIES 2005 2008 SANFORD 2012 2032 OFFICE DEPOT 2009 2019 ECKERD 2005 2025 SARASOTA 2007 2017 OFFICEMAX 2009 2024 FRANK'S NURSERY 2012 2032 SARASOTA 2020 2040 DG ACE HARDWARE 2008 2023 ANTHONY'S LADIES WEAR 2007 2017 ST. PETERSBURG 2017 2037 TJ MAXX 2007 2012 DOLLAR TREE 2007 2022 TALLAHASSEE 2008 2008 BEN FRANKLIN 2007 2022 SHOE STATION 2007 2012 TALLAHASSEE (4) 2017 2032 SPORTS AUTHORITY 2008 2034 MARSHALLS 2011 2021 TAMPA 2019 DSW SHOE WAREHOUSE 2018 2033 TAMPA 2008 2018 ROSS STORES 2007 2022 US POST OFFICE 2006 2021 TAMPA (7) 2016 2031 JO-ANN FABRICS 2016 2031 BED BATH & BEYOND 2015 2030 TAMPA (4) 2013 2028 PETCO 2012 2026 WEST PALM BEACH (9 2017 2042 WALGREENS 2018 2058 WEST PALM BEACH 2006 2021 WEST PALM BEACH 2010 2030 WINTER HAVEN 2005 2010 JO-ANN FABRICS 2006 2016 FAMILY DOLLAR 2007 2022 GEORGIA ATLANTA 2005 AUGUSTA 2010 2015 ROSS STORES 2013 2033 RUGGED WEARHOUSE 2008 2018 AUGUSTA (7) 2012 2027 MANSOUR'S 2020 2040 BED BATH & BEYOND 2013 2028 GAINSVILLE 2008 2013 BIG LOTS 2012 OFFICE DEPOT 2004 2020 MACON 2009 2014 MARIETTA (9) 2004 2024 SAVANNAH 2013 2028 TJ MAXX 2005 2015 MARSHALLS 2007 2022 SAVANNAH 2006 2021 STAPLES 2015 2030 WEST MARINE 2004 2014 SNELLVILLE (7) 2022 2062 BELK'S STORE 2015 2035 LINENS N THINGS 2015 2030 ILLINOIS ADDISON 2014 2024 $DOLLAR PALACE 2008 2013 ALTON 2008 2023 ARLINGTON HEIGHTS AURORA BATAVIA (7) 2019 2049 HOBBY LOBBY 2009 2019 LINENS N THINGS 2014 2029 BELLEVILLE 2024 2054 BLOOMINGTON 2014 2029 TOYS "R" US 2015 2045 BARNES & NOBLE 2005 2015 BLOOMINGTON BRADLEY 2014 2034 CALUMET CITY 2008 BEST BUY 2012 2032 CARBONDALE 2012 2052 CHAMPAIGN (7) 2016 2031 DICK'S SPORTING GOODS 2016 2031 MICHAELS 2010 2025 CHAMPAIGN 2014 2034 CHICAGO (6) CHICAGO 2005 2025 JB GRUBART 2005 2013 FASHION ISLAND 2005 CHICAGO 2024 2054 CHICAGO COUNTRYSIDE 2023 2053 CRESTWOOD 2024 2051 CRYSTAL LAKE 2009 2019 DINOREX 2012 2022 DOWNERS GROVE 2022 2062 RHODES FURNITURE 2008 2018 DOWNERS GROVE 2009 2019 DOLLAR TREE 2008 2023 WALGREENS 2022 DOWNERS GROVE 2009 2024 BEST BUY 2016 2031 ELGIN 2013 2023 ELGIN FARMERS PRODUCTS 2010 2030 FAIRVIEW HEIGHTS 2024 2050 OFFICEMAX 2015 2025 WALGREENS 2010 2029 FOREST PARK 2021 GENEVA 2013 2028 MATTESON 2014 2029 MARSHALLS 2010 2025 LINENS N THINGS 2014 2029 MOUNT PROSPECT 2024 2054 HOBBY LOBBY 2016 2026 POOL-A-RAMA 2010 2017 MUNDELIEN 2018 2033 NAPERVILLE 2013 2033
21
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- NORRIDGE 1997 GROUND LEASE (2042) 11.7 116,914 100.0 KMART OAKBROOK TERRACE 1997 FEE 15.6 164,903 100.0 HOME DEPOT OAKLAWN 1997 FEE 15.4 165,337 100.0 KMART ORLAND PARK 1998 FEE 7.8 166,000 100.0 RHODES FURNITURE ORLAND PARK 1980 FEE 18.8 131,546 100.0 VALUE CITY OTTAWA 1970 FEE 9.0 60,000 100.0 VALUE CITY PEORIA 1997 GROUND LEASE (2031) 20.5 156,067 100.0 KMART ROLLING MEADOWS 2003 FEE 3.7 37,225 100.0 FAIR LANES ROLLING MEADOWS SCHAUMBURG 2003 JOINT VENTURE 63.0 629,605 90.0 GALYAN'S TRADING COMPANY SCHAUMBURG 1998 FEE 7.3 167,690 100.0 RHODES FURNITURE SKOKIE 1997 FEE 5.8 58,455 100.0 MARSHALLS STREAMWOOD 1999 FEE 5.6 81,000 100.0 VALUE CITY WAUKEGAN 1998 FEE 6.8 90,555 100.0 PICK N SAVE WOODRIDGE 1998 FEE 13.1 161,272 90.7 HOLLYWOOD THEATRES INDIANA EVANSVILLE 1986 FEE 14.2 194,489 88.1 BURLINGTON COAT FACTORY EVANSVILLE 1986 FEE 11.5 149,182 10.6 FELBRAM 1970 FEE 4.1 27,400 100.0 SAVE-A-LOT GREENWOOD 1970 FEE 25.7 168,577 100.0 BABY SUPERSTORE GRIFFITH 1997 GROUND LEASE (2054) 10.6 114,684 100.0 KMART INDIANAPOLIS 1963 JOINT VENTURE 17.4 165,220 99.3 KROGER INDIANAPOLIS 1986 FEE 20.6 185,589 98.1 TARGET LAFAYETTE 1971 FEE 12.4 90,500 97.3 MENARD LAFAYETTE 1997 FEE 24.3 183,440 53.7 PAYLESS SUPERMARKET LAFAYETTE 1998 FEE 43.2 214,876 99.3 FAMOUS FOOTWEAR MISHAWAKA 1998 FEE 7.5 82,100 100.0 K'S MERCHANDISE SOUTH BEND 2003 JOINT VENTURE 25.7 257,155 92.6 SOUTH BEND 1999 FEE 1.8 81,668 100.0 MENARD IOWA CLIVE 1996 FEE 8.8 90,000 100.0 KMART CLIVE (8) 2002 JOINT VENTURE 23.0 109,434 87.2 BABIES R US DAVENPORT 1997 GROUND LEASE (2028) 9.1 91,035 100.0 KMART DES MOINES 1999 FEE 23.0 156,506 73.6 BEST BUY DUBUQUE 1997 GROUND LEASE (2019) 6.5 82,979 100.0 SHOPKO SE DES MOINES 1996 FEE 9.6 111,847 100.0 HOME DEPOT WATERLOO 1996 FEE 9.0 96,000 - KANSAS E. WICHITA (7) 1996 FEE 6.5 96,011 100.0 DICK'S SPORTING GOODS OVERLAND PARK 1980 FEE 14.5 120,164 100.0 HOME DEPOT W. WICHITA (7) 1996 FEE 8.1 96,319 100.0 SHOPKO WICHITA (7) 1998 FEE 13.5 133,771 97.3 BEST BUY KENTUCKY BELLEVUE 1976 FEE 6.0 53,695 100.0 KROGER FLORENCE 2003 FEE 8.2 99,578 97.8 DICK'S SPORTING GOODS HINKLEVILLE 1998 GROUND LEASE (2039) 2.0 85,229 100.0 K'S MERCHANDISE LEXINGTON 1993 FEE 35.8 258,713 100.0 BEST BUY LOUISIANA BATON ROUGE 1997 FEE 18.6 350,006 87.4 BURLINGTON COAT FACTORY HARVEY (8) 2003 JOINT VENTURE 17.4 181,660 100.0 BEST BUY HOUMA 1999 FEE 10.1 98,586 94.4 OLD NAVY LAFAYETTE 1997 FEE 21.9 244,733 98.3 STEIN MART NEW ORLEANS 1983 JOINT VENTURE 7.0 190,000 100.0 DILLARDS MAINE BANGOR 2001 FEE 8.6 86,422 100.0 BURLINGTON COAT FACTORY MARYLAND BALTIMORE 2003 FEE 4.2 44,170 90.0 BALTIMORE 2003 FEE 18.4 152,834 100.0 KMART BALTIMORE 2003 FEE 10.6 115,450 92.6 SAFEWAY BALTIMORE 2003 FEE 5.8 49,629 100.0 CORT FURNITURE RENTAL BALTIMORE 2003 FEE 9.2 90,622 94.8 SUPER FRESH BALTIMORE 2003 FEE 7.3 77,287 100.0 SUPER FRESH BALTIMORE 2003 FEE 7.4 77,290 100.0 GIANT FOOD BALTIMORE 2003 FEE 7.5 90,903 97.8 GIANT BEL AIR 2003 FEE 19.7 121,363 100.0 SAFEWAY BEL AIR 2003 FEE 2.7 26,900 79.2 CLINTON 2003 FEE 0.3 2,544 100.0 CLINTON 2003 GROUND LEASE (2069) 2.6 26,412 100.0 FAIR LANES CLINTON COLUMBIA (8) 2002 JOINT VENTURE 7.6 73,299 100.0 OLD NAVY COLUMBIA (8) 2002 JOINT VENTURE 5.9 58,662 100.0 PARTY PARTY PARTY COLUMBIA (8) 2002 JOINT VENTURE 15.5 86,456 100.0 GIANT FOOD COLUMBIA (8) 2002 JOINT VENTURE 16.3 100,505 100.0 GIANT FOOD COLUMBIA (8) 2002 JOINT VENTURE 12.2 86,032 95.6 SAFEWAY COLUMBIA (8) 2002 JOINT VENTURE 12.3 91,165 100.0 SAFEWAY COLUMBIA 2002 FEE 7.3 52,291 100.0 GIANT FOOD COLUMBIA 2002 FEE 2.5 23,835 98.5 COLUMBIA (8) 2002 JOINT VENTURE 7.0 87,597 100.0 SAFEWAY COLUMBIA 2002 FEE 6.1 58,224 100.0 FOOD LION COLUMBIA (8) 2002 JOINT VENTURE 15.2 101,707 100.0 GIANT FOOD COLUMBIA 2002 JOINT VENTURE 5.0 50,000 100.0 MICHAELS EASTON 2003 FEE 11.1 113,330 100.0 GIANT FOOD ELLICOTT CITY 2003 FEE 31.8 139,898 100.0 SAFEWAY GAITHERSBURG 1989 FEE 8.7 87,061 100.0 GREAT BEGINNINGS FURNITURE GLEN BURNIE 1997 GROUND LEASE (2034) 6.0 60,173 100.0 ROOMSTORE GLEN BURNIE 2003 FEE 21.9 249,746 100.0 LOWE'S HOME CENTER GLEN BURNIE 2003 FEE 4.5 75,185 83.1 SEVERN GRAPHICS GLEN BURNIE 2003 FEE 1.9 18,823 71.1 HAGERSTOWN 1973 FEE 10.5 117,718 91.3 AMES HUNT VALLEY 2003 FEE 9.1 94,653 94.8 GIANT LANDOVER 1993 FEE 23.3 232,903 100.0 RAYTHEON LAUREL 1964 FEE 8.1 75,924 100.0 VILLAGE THRIFT LAUREL 1972 FEE 10.0 81,550 - LINTHICUM 2003 FEE 0.4 5,488 100.0 MAJOR LEASES --------------------------------------------------------------------------------------------------------- LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION -------------------------------------------------------------------------------------------------------------------------------- NORRIDGE 2024 2042 OAKBROOK TERRACE 2024 2044 LINENS N THINGS 2017 2032 LOYOLA UNIV. MEDICAL CENTER 2006 2016 OAKLAWN 2024 2054 CHUCK E CHEESE 2007 ORLAND PARK 2008 2018 RHODES FURNITURE 2008 2018 ORLAND PARK 2015 2030 OTTAWA 2006 2011 PEORIA 2024 2031 MARSHALLS 2009 2024 ROLLING MEADOWS 2008 2013 SCHAUMBURG 2014 2039 CARSON PIRIE SCOTT 2021 2071 LOEWS THEATRE 2019 2039 SCHAUMBURG 2008 2018 RHODES FURNITURE 2008 2018 SKOKIE 2010 2025 OLD NAVY 2010 2015 STREAMWOOD 2015 2030 WAUKEGAN 2009 2029 WOODRIDGE 2012 2022 KOHLS 2010 2030 MCSPORTS 2006 INDIANA EVANSVILLE 2007 2027 OFFICEMAX 2012 2027 MICHAELS 2005 2020 EVANSVILLE FELBRAM 2006 2016 GREENWOOD 2006 2021 TOYS "R" US 2011 2056 TJ MAXX 2010 2010 GRIFFITH 2024 2054 INDIANAPOLIS 2026 2066 AJ WRIGHT 2012 2027 CVS 2021 2031 INDIANAPOLIS 2009 2029 DOLLAR TREE 2004 2014 RAINBOW SHOPS 2009 2019 LAFAYETTE 2006 LAFAYETTE 2004 2014 JO-ANN FABRICS 2010 2020 SMITH OFFICE EQUIPMENT 2008 LAFAYETTE 2011 2026 PETSMART 2012 2032 STAPLES 2011 2026 MISHAWAKA 2013 2023 SOUTH BEND SOUTH BEND 2010 2030 IOWA CLIVE 2021 2051 CLIVE (8) 2015 2040 JO-ANN FABRICS 2013 2023 DAVID'S BRIDAL 2011 2021 DAVENPORT 2024 2028 DES MOINES 2008 2023 OFFICEMAX 2008 2018 JO-ANN FABRICS 2007 2017 DUBUQUE 2018 SE DES MOINES 2020 2065 WATERLOO KANSAS E. WICHITA (7) 2018 2033 GORDMANS 2012 2032 OVERLAND PARK 2005 2050 W. WICHITA (7) 2018 2038 WICHITA (7) 2010 2025 TJ MAXX 2004 2019 MICHAELS 2005 2025 KENTUCKY BELLEVUE 2005 2035 FLORENCE 2018 2033 LINEN'S AND THINGS 2018 2033 MCSWAIN CARPETS 2012 2017 HINKLEVILLE 2014 2039 LEXINGTON 2009 2024 BED BATH & BEYOND 2013 2038 TOYS "R" US 2013 2038 LOUISIANA BATON ROUGE 2004 2024 STEIN MART 2006 2016 THE RUG GALLERY 2004 2009 HARVEY (8) 2017 2032 LINENS N THINGS 2012 2032 BARNES & NOBLE 2012 2022 HOUMA 2009 2014 OFFICEMAX 2013 2028 MICHAELS 2009 2019 LAFAYETTE 2005 2020 LINENS N THINGS 2009 2024 TJ MAXX 2009 2019 NEW ORLEANS 2011 2031 MAINE BANGOR 2007 2032 MARYLAND BALTIMORE BALTIMORE 2005 2055 SALVO AUTO PARTS 2004 2019 BALTIMORE 2016 2046 RITE AID 2006 2026 FOOT LOCKER 2007 BALTIMORE 2012 2022 BALTIMORE 2020 2060 RITE AID 2007 2017 BALTIMORE 2021 2061 BALTIMORE 2006 2031 BALTIMORE 2026 2051 BEL AIR 2030 2060 CVS 2021 2041 BEL AIR CLINTON CLINTON 2006 COLUMBIA (8) 2008 2013 COLUMBIA (8) 2007 2012 COLUMBIA (8) 2009 2019 COLUMBIA (8) 2012 2022 COLUMBIA (8) 2006 COLUMBIA (8) 2018 2043 COLUMBIA 2007 COLUMBIA COLUMBIA (8) 2018 2048 COLUMBIA 2018 2043 COLUMBIA (8) 2017 2027 COLUMBIA 2013 HOME GOODS 2011 EASTON 2024 2054 FASHION BUG 2005 2025 ELLICOTT CITY 2012 2042 PETCO 2006 2021 GAITHERSBURG 2011 2021 FURNITURE 4 LESS 2005 2010 GLEN BURNIE 2004 GLEN BURNIE 2019 2059 GIANT FOOD 2005 2025 GLEN BURNIE 2005 2012 GLEN BURNIE HAGERSTOWN 2007 2017 SUPER SHOE 2006 2016 ADVANCE AUTO PARTS 2006 2011 HUNT VALLEY 2013 2033 LANDOVER 2007 2010 LAUREL 2004 2009 DOLLAR TREE 2010 2015 OLD COUNTRY BUFFET 2009 2019 LAUREL LINTHICUM
22
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- LUTHERVILLE 2003 GROUND LEASE (2066) 12.9 122,289 100.0 METRO FOOD LUTHERVILLE 2003 FEE 1.2 12,333 86.7 NORTH EAST 2003 FEE 17.5 80,190 100.0 FOOD LION OWINGS MILLS 2003 FEE 11.0 116,303 95.9 GIANT FOOD PASADENA 2003 GROUND LEASE (2030) 3.0 41,241 96.5 PERRY HALL 2003 FEE 15.7 204,770 77.2 BRUNSWICK BOWLING PERRY HALL 2003 FEE 8.2 65,059 100.0 SUPER FRESH TIMONIUM 2003 FEE 6.0 59,829 94.5 AMERICAN RADIOLOGY TIMONIUM 2003 FEE 17.2 206,729 91.1 TOWSON 2003 FEE 8.7 82,280 100.0 LINENS N THINGS WALDORF 2003 FEE 2.6 26,128 100.0 FAIR LANES WALDORF WALDORF 2003 FEE 0.5 4,500 100.0 WOODSTOCK 2003 FEE 13.9 103,547 100.0 WEIS MARKETS MASSACHUSETTS FOXBOROUGH (7) 2000 FEE 11.9 118,844 94.2 STOP & SHOP GREAT BARRINGTON 1994 FEE 14.1 131,235 98.5 KMART PITTSFIELD 2003 FEE 13.0 72,014 100.0 STOP & SHOP SHREWSBURY 1955 FEE 10.8 108,418 100.0 BOB'S STORES MICHIGAN CLARKSTON 1996 FEE 20.0 168,102 96.7 FARMER JACK CLAWSON 1993 FEE 13.5 179,572 100.0 FARMER JACK FARMINGTON 1993 FEE 2.8 96,983 100.0 DAMMAN HARDWARE FLINT 1989 FEE 46.6 248,347 82.3 KESSEL FOOD MARKETS KALAMAZOO 2002 JOINT VENTURE 60.0 339,975 64.3 HOBBY LOBBY LIVONIA 1968 FEE 4.5 44,185 100.0 DAMMAN HARDWARE MUSKEGON 1985 FEE 12.2 79,215 100.0 PLUMB'S FOOD NORTON SHORES (4) 2003 JOINT VENTURE 37.1 26,000 100.0 SHOE CARNIVAL NOVI 2003 JOINT VENTURE 6.0 60,000 100.0 MICHAELS TAYLOR 1993 FEE 13.0 141,549 100.0 KOHLS WALKER 1993 FEE 41.8 338,928 100.0 RUBLOFF DEVELOPMENT MINNESOTA MAPLE GROVE (7) 2001 FEE 63.0 466,401 100.0 BYLERLY'S MAPLEWOOD (8) 2002 JOINT VENTURE 8.2 96,376 100.0 BEST BUY MINNETONKA (7) 1998 FEE 12.1 120,220 100.0 TOYS "R" US MISSISSIPPI JACKSON 2002 JOINT VENTURE 5.0 50,000 100.0 MICHAELS MISSOURI BRIDGETON 1997 GROUND LEASE (2040) 27.3 101,592 100.0 KOHLS CAPE GIRARDEAU 1997 GROUND LEASE (2060) 7.0 80,803 - CREVE COEUR 1998 FEE 12.2 113,781 100.0 KOHLS ELLISVILLE 1970 FEE 18.4 118,080 100.0 SHOP N SAVE HAZELWOOD (3) 1970 FEE 16.8 149,230 16.3 WALGREENS INDEPENDENCE 1985 FEE 21.0 184,870 100.0 KMART JOPLIN 1998 FEE 12.6 155,416 100.0 GOODY'S FAMILY CLOTHING JOPLIN (7) 1998 FEE 9.5 80,524 100.0 SHOPKO KANSAS CITY 1997 FEE 17.8 150,381 82.3 HOME DEPOT KIRKWOOD 1980 GROUND LEASE (2069) 19.8 254,638 100.0 HEMISPHERES LEMAY 1974 GROUND LEASE (2073) 3.1 73,281 100.0 SHOP N SAVE MANCHESTER (7) 1998 FEE 9.6 89,305 100.0 KOHLS SPRINGFIELD 1994 FEE 41.5 282,360 97.6 BEST BUY SPRINGFIELD 1986 GROUND LEASE (2087) 18.5 202,926 100.0 KMART SPRINGFIELD (3) 2002 FEE 8.5 84,916 100.0 BED BATH & BEYOND ST. CHARLES (5) 1998 FEE 36.9 8,000 100.0 ST. CHARLES 1999 GROUND LEASE (2039) 8.4 84,460 100.0 KOHLS ST. LOUIS 1972 FEE 13.1 129,093 91.7 SHOP N SAVE ST. LOUIS 1986 FEE 17.5 176,333 60.7 BURLINGTON COAT FACTORY ST. LOUIS 1997 GROUND LEASE (2025) 19.7 193,875 96.7 HOME DEPOT ST. LOUIS 1997 GROUND LEASE (2035) 37.7 174,967 98.4 KMART ST. LOUIS 1997 GROUND LEASE (2040) 16.3 128,765 100.0 KMART ST. PETERS 1997 FEE 14.8 154,533 98.4 HOBBY LOBBY NEVADA HENDERSON (4) 1999 JOINT VENTURE 32.1 99,000 100.0 LEVITZ LAS VEGAS (7) 2000 FEE 22.9 234,496 98.5 RODEO DISCOUNT MALL NEW HAMPSHIRE NASHUA 2003 FEE 18.0 179,582 90.5 DSW SHOE WAREHOUSE SALEM 1994 FEE 39.8 344,076 100.0 KOHLS NEW JERSEY BRIDGEWATER (7) 2001 FEE 15.8 370,545 100.0 BED BATH & BEYOND CHERRY HILL 1985 JOINT VENTURE 18.6 124,750 92.3 SUPER G CHERRY HILL 1996 GROUND LEASE (2035) 15.2 129,809 95.5 KOHLS CHERRY HILL (8) 2003 FEE 48.0 209,185 100.0 KOHLS CINNAMINSON 1996 FEE 13.7 121,852 36.1 ODD-JOB DELRAN (7) 2000 FEE 16.1 161,128 37.3 EICKHOFF SUPERMARKETS EAST WINDSOR 2002 FEE 34.8 242,729 99.3 TARGET FRANKLIN 1998 FEE 14.9 138,364 90.4 EDWARDS HOLMDEL 2002 FEE 29.7 296,807 73.2 A&P LINDEN 2002 FEE 0.9 13,340 100.0 STRAUSS DISCOUNT AUTO NORTH BRUNSWICK 1994 FEE 38.1 409,879 100.0 WAL-MART PISCATAWAY 1998 FEE 9.6 97,348 98.0 SHOPRITE PLAINFIELD (7) 1998 FEE 16.2 136,939 97.9 A&P RIDGEWOOD 1994 FEE 2.7 24,280 100.0 FRESH FIELDS WESTMONT 1994 FEE 17.4 192,254 87.8 SUPER FRESH NEW MEXICO ALBUQUERQUE 1998 FEE 4.7 37,735 85.1 SEARS HARDWARE ALBUQUERQUE 1998 FEE 26.0 183,912 94.5 MOVIES WEST ALBUQUERQUE 1974 FEE 4.8 59,722 98.0 PAGE ONE NEW YORK ALBANY 2003 FEE 17.9 135,831 93.7 PRICE CHOPPER BRIDGEHAMPTON 1973 FEE 30.2 287,587 98.7 KMART BRONX 1990 JOINT VENTURE 22.9 228,638 100.0 NATIONAL AMUSEMENTS BROOKLYN (7) 2000 FEE 8.1 80,708 100.0 HOME DEPOT BROOKLYN 2003 FEE 0.8 7,500 100.0 MAJOR LEASES --------------------------------------------------------------------------------------------------------- LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION -------------------------------------------------------------------------------------------------------------------------------- LUTHERVILLE 2018 2038 CIRCUIT CITY 2010 2030 LOEHMANN'S 2005 2016 LUTHERVILLE NORTH EAST 2018 2038 OWINGS MILLS 2020 2045 MERRITT ATHLETIC CLUB 2005 2015 PASADENA PERRY HALL 2005 2010 FRANK'S NURSERY 2008 2013 RITE AID 2005 2035 PERRY HALL 2022 2062 TIMONIUM 2012 2027 TIMONIUM TOWSON 2015 2025 COMPUSA 2014 2029 TWEETER ENTERTAINMENT 2014 2024 WALDORF 2007 2017 WALDORF WOODSTOCK 2021 2041 MASSACHUSETTS FOXBOROUGH (7) 2012 2022 OCEAN STATE JOB 2007 2022 GREAT BARRINGTON 2006 2016 PRICE CHOPPER 2016 2036 PITTSFIELD 2014 2044 SHREWSBURY 2018 2033 BED BATH & BEYOND 2012 2032 STAPLES 2006 2021 MICHIGAN CLARKSTON 2015 2045 FRANK'S NURSERY 2011 2031 CVS 2005 2020 CLAWSON 2006 2016 FRANK'S NURSERY 2016 STAPLES 2011 2026 FARMINGTON 2015 2030 DOLLAR CASTLE 2005 2010 BARGAIN BOOKS 2004 FLINT 2014 2034 TOP ONE DISCOUNT 2005 HURLEY MEDICAL 2010 2020 KALAMAZOO 2013 2023 FRANK'S NURSERY 2007 2012 MARSHALLS 2010 2020 LIVONIA 2018 2033 CENTURY 21 2005 2010 MUSKEGON 2007 2022 JO-ANN FABRICS 2005 2012 NORTON SHORES (4) 2015 2025 NOVI 2016 HOME GOODS 2011 TAYLOR 2022 2042 BABIES R US 2017 2043 PARTY CONCEPTS 2007 2012 WALKER 2016 2051 KOHLS 2017 2037 LOEKS THEATRES 2007 2042 MINNESOTA MAPLE GROVE (7) 2020 2035 BEST BUY 2015 2030 JO-ANN FABRICS 2010 2030 MAPLEWOOD (8) 2014 2029 FRANK'S NURSERY 2011 2031 MINNETONKA (7) 2016 2031 GOLFSMITH 2008 2018 OFFICEMAX 2006 2011 MISSISSIPPI JACKSON 2014 HOME GOODS 2014 MISSOURI BRIDGETON 2010 2020 CAPE GIRARDEAU CREVE COEUR 2018 2038 CLUB FITNESS 2014 2024 ELLISVILLE 2005 2015 LAMPS & MORE 2005 HAZELWOOD (3) 2006 INDEPENDENCE 2024 2054 THE TILE SHOP 2014 2024 OFFICE DEPOT 2012 2032 JOPLIN 2010 2015 HASTINGS BOOKS 2009 2014 OFFICEMAX 2010 2025 JOPLIN (7) 2018 2038 KANSAS CITY 2005 2050 KIRKWOOD 2012 2022 HOBBY LOBBY 2014 2024 GART SPORTS 2014 2029 LEMAY 2008 ST. LOUIS SALES 2006 2011 DOLLAR GENERAL 2008 MANCHESTER (7) 2018 2038 SPRINGFIELD 2011 2026 JC PENNEY 2005 2015 TJ MAXX 2006 2021 SPRINGFIELD 2024 2054 OFFICE DEPOT 2005 2010 BARNES & NOBLE 2017 2047 SPRINGFIELD (3) 2013 2028 MARSHALLS 2012 2027 BORDERS BOOKS 2023 2038 ST. CHARLES (5) ST. CHARLES 2019 2039 ST. LOUIS 2017 2082 ST. LOUIS 2004 2024 OFFICE DEPOT 2005 2015 ST. LOUIS 2024 2025 FRANK'S NURSERY 2005 2015 WEEKENDS ONLY 2004 2009 ST. LOUIS 2024 2035 ST. LOUIS DANCER'S ACADEMY 2006 ST. LOUIS 2024 2040 ST. PETERS 2013 2023 GART SPORTS 2014 2029 OFFICE DEPOT 2019 NEVADA HENDERSON (4) 2013 2023 INTERIOR SURROUNDINGS 2008 2013 LAS VEGAS (7) 2023 2033 ALBERTSONS 2009 2019 FACTORY 2-U STORES 2009 NEW HAMPSHIRE NASHUA 2011 2031 BED BATH & BEYOND 2007 2032 MICHAELS 2007 2027 SALEM 2008 2013 SHAWS SUPERMARKET 2008 2038 BOB'S STORES 2011 2021 NEW JERSEY BRIDGEWATER (7) 2010 2030 BABIES R US 2014 2039 MARSHALLS 2009 2024 CHERRY HILL 2016 2036 DOLLAR TREE 2005 2015 CHERRY HILL 2016 2036 SEARS HARDWARE 2004 2013 CHERRY HILL (8) 2018 2068 WORLDWIDE WHOLESALE 2018 2033 BABIES R US 2013 2033 CINNAMINSON 2009 2014 ACME MARKETS 2047 DELRAN (7) 2006 2016 AMC THEATERS 2004 2014 EAST WINDSOR 2027 2067 GENUARDI'S 2026 2056 TJ MAXX 2011 2026 FRANKLIN 2010 2020 NEW YORK SPORTS CLUB 2006 2016 HOLMDEL 2013 2043 MARSHALLS 2013 2028 OFFICEMAX 2009 2024 LINDEN 2023 2033 NORTH BRUNSWICK 2018 2058 BURLINGTON COAT FACTORY 2008 2013 MARSHALLS 2012 2027 PISCATAWAY 2014 2024 PLAINFIELD (7) 2018 2058 SEARS HARDWARE 2008 2028 CVS 2018 2038 RIDGEWOOD 2015 2030 WESTMONT 2017 2081 SUPER FITNESS 2009 JO-ANN FABRICS 2010 2020 NEW MEXICO ALBUQUERQUE 2006 2021 ALBUQUERQUE 2011 2021 ROSS STORES 2006 2021 VALLEY FURNITURE 2007 2017 ALBUQUERQUE 2008 2013 WALGREENS 2027 NEW YORK ALBANY 2007 2027 BIG LOTS 2008 2018 ECKERD 2007 2022 BRIDGEHAMPTON 2019 2039 KING KULLEN 2015 2035 TJ MAXX 2007 2017 BRONX 2011 2036 WALDBAUMS 2011 2046 OFFICE OF HEARING 2007 BROOKLYN (7) 2022 2052 WALGREENS 2030 BROOKLYN
23
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- BROOKLYN 2003 FEE 1.0 10,000 100.0 GENOVESE BUFFALO 1988 JOINT VENTURE 9.2 141,783 87.8 TOPS SUPERMARKET BUFFALO 1988 JOINT VENTURE 12.0 150,798 20.0 BIG LOTS BUFFALO, AMHERST 1988 JOINT VENTURE 7.5 101,066 100.0 TOPS SUPERMARKE CENTEREACH 1993 JOINT VENTURE 40.7 380,119 95.3 WAL-MART COMMACK 1998 GROUND LEASE (2085) 35.7 265,409 96.4 KING KULLEN COPIAGUE (7) 1998 FEE 15.4 163,999 100.0 HOME DEPOT FREEPORT (7) 2000 FEE 9.6 173,031 100.0 STOP & SHOP GLEN COVE (7) 2000 FEE 2.7 49,346 87.8 STAPLES HAMPTON BAYS 1989 FEE 8.2 70,990 100.0 MACY'S EAST HEMPSTEAD (7) 2000 FEE 1.4 13,905 100.0 WALGREENS LATHAM (7) 1999 FEE 60.3 616,130 99.3 SAMS CLUB LITTLE NECK 2003 FEE 4.5 48,275 100.0 MANHASSET (3) 1999 FEE 9.6 273,943 66.6 FILENE'S MERRICK (7) 2000 FEE 10.8 107,871 100.0 WALDBAUMS MIDDLETOWN (7) 2000 FEE 10.1 80,000 100.0 BEST BUY MUNSEY PARK (7) 2000 FEE 6.0 72,748 100.0 BED BATH & BEYOND NANUET 1984 FEE 6.0 70,632 96.3 PREMIER FITNESS OCEANSIDE 2003 FEE 0.2 1,856 100.0 PLAINVIEW 1969 GROUND LEASE (2070) 7.0 88,222 100.0 FAIRWAY STORES POUGHKEEPSIE 1972 FEE 20.0 167,668 99.5 STOP & SHOP RENSSELAER 2003 FEE 13.4 132,648 87.7 PRICE CHOPPER ROCHESTER 1988 FEE 14.9 129,238 100.0 STAPLES ROCHESTER 1988 FEE 12.8 17,995 100.0 STAPLES ROCHESTER 1993 FEE 18.6 185,153 36.3 TOPS SUPERMARKET STATEN ISLAND (7) 2000 FEE 14.4 177,118 100.0 TJ MAXX STATEN ISLAND 1989 FEE 16.7 210,875 100.0 KMART STATEN ISLAND 1997 GROUND LEASE (2072) 7.0 101,337 99.2 WALDBAUMS SYOSSET 1967 FEE 2.5 32,124 88.6 NEW YORK SPORTS CLUB YONKERS(7) 2000 GROUND LEASE (2047) 6.3 56,361 97.2 STAPLES YONKERS 1995 FEE 4.4 43,560 100.0 SHOPRITE NORTH CAROLINA APEX (9) 2002 JOINT VENTURE 6.7 65,834 97.6 FOOD LION CARY (7) 2001 FEE 38.6 315,797 100.0 BJ'S CARY 1996 FEE 8.6 86,015 100.0 BED BATH & BEYOND CARY 1998 FEE 10.9 102,787 95.7 LOWES CARY (9) 2002 JOINT VENTURE 18.2 182,266 78.4 WELLSPRING CARY (8) 2003 JOINT VENTURE 13.4 133,901 98.8 CARMIKE CINEMAS CHARLOTTE 1968 FEE 13.5 110,300 94.0 MEDIA PLAY CHARLOTTE 1993 FEE 14.0 139,269 92.6 BI-LO CHARLOTTE 1986 GROUND LEASE (2048) 18.5 253,979 95.0 TOYS "R" US DURHAM (7) 2002 FEE 39.5 408,292 100.0 WAL-MART DURHAM (4) 2002 JOINT VENTURE 21.3 96,000 100.0 KROGER DURHAM 1996 FEE 13.2 116,186 95.9 TJ MAXX GASTONIA 1989 FEE 24.9 240,957 84.5 HOBBY LOBBY GREENSBORO 1999 FEE 8.2 100,794 82.0 HOBBY LOBBY GREENSBORO (7) 1998 FEE 4.4 41,387 100.0 STAPLES LENOIR (9) 2002 JOINT VENTURE 14.4 144,239 72.4 BI-LO PINEVILLE 2003 JOINT VENTURE 39.1 269,710 97.4 KMART RALEIGH (9) 2002 GROUND LEASE (2049)/JOINT VENTURE 12.3 98,208 92.4 LOWES RALEIGH 1993 FEE 35.9 374,306 75.1 BEST BUY RALEIGH (4) 2001 JOINT VENTURE 24.4 47,000 100.0 MARQUEE CINEMAS RALEIGH (4) 2001 JOINT VENTURE 8.0 - - RALEIGH (4) 2003 JOINT VENTURE 36.4 47,000 100.0 FOOD LION RALEIGH 2001 FEE 26.0 83,965 96.7 KROGER RALEIGH (9) 2002 JOINT VENTURE 5.3 52,575 100.0 BOOKS-A-MILLION RALEIGH (9) (6) 2002 JOINT VENTURE 15.2 152,273 88.8 FOOD LION RALEIGH (9) 2002 JOINT VENTURE 12.6 124,520 93.2 RALEIGH ATHLETIC CLUB RALEIGH 2002 FEE 10.3 101,965 96.9 HARRIS TEETER WILSON (9) 2002 JOINT VENTURE 16.7 167,207 43.1 WINN DIXIE WINSTON-SALEM 1969 FEE 13.2 137,433 97.8 HARRIS TEETER OHIO AKRON 1975 FEE 6.9 76,438 100.0 GIANT EAGLE AKRON 1988 FEE 24.5 138,363 100.0 GABRIEL BROTHERS AKRON 1988 FEE 12.6 149,054 - AKRON 1988 GROUND LEASE (2012) 22.9 231,754 78.8 FIFTH AVENUE FLEA MARKET BARBERTON 1972 FEE 10.0 118,826 73.9 GIANT EAGLE BEAVERCREEK 1986 FEE 18.2 148,210 79.2 KROGER BROOKLYN 1988 FEE 14.4 133,563 22.8 ALMOST FREE BRUNSWICK 1975 FEE 20.0 171,223 92.6 KMART CAMBRIDGE 1997 FEE 13.1 98,533 94.7 TRACTOR SUPPLY CO. CANTON 1993 FEE 7.9 67,589 32.4 CINEMARK CANTON 1972 FEE 19.6 172,596 91.6 BURLINGTON COAT FACTORY CANTON 1988 FEE 9.2 99,267 - CENTERVILLE 1988 FEE 15.2 120,498 100.0 BED BATH & BEYOND CINCINNATI (7) 2000 FEE 36.7 378,901 98.1 WAL-MART CINCINNATI 1988 FEE 11.6 224,883 100.0 LOWE'S HOME CENTER CINCINNATI 1988 GROUND LEASE (2054) 8.8 121,242 100.0 BURLINGTON COAT FACTORY CINCINNATI (3) 1988 FEE 29.2 321,675 81.7 HOBBY LOBBY CINCINNATI 2000 FEE 8.8 88,317 100.0 HOBBY LOBBY CINCINNATI 1999 FEE 16.7 89,742 98.9 BIGGS FOODS CLEVELAND 1975 GROUND LEASE (2035) 9.4 69,383 70.3 ALDI COLUMBUS (7) 2002 FEE 36.5 234,702 100.0 LOWE'S HOME CENTER COLUMBUS 1988 FEE 12.4 191,089 100.0 KOHLS COLUMBUS 1988 FEE 13.7 142,743 97.4 KOHLS COLUMBUS 1988 FEE 17.9 129,008 100.0 KOHLS COLUMBUS 1988 FEE 12.4 135,650 100.0 KOHLS COLUMBUS 1988 FEE 12.5 99,262 100.0 SOUTHLAND EXPO COLUMBUS (7) 1998 FEE 12.1 112,922 96.8 BORDERS BOOKS COPLEY (8) 2003 JOINT VENTURE 9.4 525,841 99.5 INLAND I DELAWARE BUSINESS DAYTON 1969 GROUND LEASE (2043) 22.8 163,131 81.6 BEST BUY DAYTON 1984 FEE 32.1 213,728 90.0 VICTORIA'S SECRET MAJOR LEASES --------------------------------------------------------------------------------------------------------- LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION -------------------------------------------------------------------------------------------------------------------------------- BROOKLYN 2004 BUFFALO 2012 2037 FASHION BUG 2005 2024 DRESS BARN 2007 2022 BUFFALO 2007 2015 BUFFALO, AMHERST 2013 2033 CENTEREACH 2015 2044 BIG LOTS 2011 2021 MODELL'S 2009 2019 COMMACK 2017 2047 LINENS N THINGS 2018 2038 SPORTS AUTHORITY 2017 2037 COPIAGUE (7) 2011 2056 JACK LALANNE 2008 2018 FREEPORT (7) 2025 TOYS "R" US 2020 2040 MARSHALLS 2006 2016 GLEN COVE (7) 2014 2029 ANNIE SEZ 2011 2026 HAMPTON BAYS 2005 2025 GENOVESE 2006 2016 HEMPSTEAD (7) 2059 LATHAM (7) 2013 2043 WAL-MART 2013 2043 HOME DEPOT 2031 2071 LITTLE NECK MANHASSET (3) 2006 2011 MANHASSET DIAGNOSTIC 2012 2027 MERRICK (7) 2013 2041 ANNIE SEZ 2006 2021 PARTY CITY 2012 2022 MIDDLETOWN (7) 2016 2031 LINENS N THINGS 2016 2031 MUNSEY PARK (7) 2007 2022 FRESH FIELDS 2011 2021 NANUET 2012 2022 TUESDAY MORNING 2007 2017 OCEANSIDE PLAINVIEW 2017 2037 POUGHKEEPSIE 2020 2049 ODD LOTS 2007 2017 RENSSELAER 2018 2038 FASHION BUG 2005 2019 ROCHESTER 2010 2022 1180 JEFFERSON ROAD 2015 2025 ROCHESTER 2010 2027 ROCHESTER 2004 2024 STATEN ISLAND (7) 2005 2025 NATIONAL LIQUIDATORS 2010 2030 MICHAELS 2006 2031 STATEN ISLAND 2006 2011 PATHMARK 2011 2021 STATEN ISLAND 2006 2031 SYOSSET 2016 2021 YONKERS(7) 2014 2029 YONKERS 2008 2028 NORTH CAROLINA APEX (9) 2018 CARY (7) 2020 2040 KOHLS 2022 2001 PETSMART 2016 2036 CARY 2005 2014 DICK'S CLOTHING & SPORTING 2014 2029 CARY 2017 2037 ECKERD 2007 2017 CARY (9) 2013 2028 BEYOND FITNESS 2011 2025 GREGORY'S 2008 CARY (8) 2017 2027 FOOD LION 2019 DOLLAR TREE 2009 2019 CHARLOTTE 2005 2020 TJ MAXX 2007 2017 CVS 2015 2035 CHARLOTTE 2009 2029 RUGGED WEARHOUSE 2008 2018 PARTY CITY 2004 2014 CHARLOTTE 2012 2042 K&G MEN'S COMPANY 2008 2018 OFFICEMAX 2009 2024 DURHAM (7) 2015 2035 BEST BUY 2011 2026 LINENS N THINGS 2011 2026 DURHAM (4) 2023 2053 DURHAM 2009 2014 JO-ANN FABRICS 2010 2020 GASTONIA 2013 2023 TOYS "R" US 2015 2045 BOOK EXPRESS 2006 GREENSBORO 2014 2024 USA BABY 2008 2013 GREENSBORO (7) 2011 2031 DAVID'S BRIDAL 2006 2026 LENOIR (9) 2014 2044 BELK'S STORE 2019 2029 PINEVILLE 2017 2067 STEIN MART 2007 2012 TJ MAXX 2008 2018 RALEIGH (9) 2021 2052 RALEIGH 2005 2020 MARSHALLS 2009 2014 OFFICEMAX 2011 RALEIGH (4) 2019 2029 RALEIGH (4) RALEIGH (4) 2023 2043 RALEIGH 2019 2059 RALEIGH (9) 2006 2016 RALEIGH (9) (6) 2014 2034 BIG LOTS 2006 2016 KIMBRELL'S 2008 RALEIGH (9) 2006 2026 VERTICAL URGE 2010 2013 RALEIGH 2014 2034 ECKERD 2005 2015 WILSON (9) 2018 WINSTON-SALEM 2016 2041 DOLLAR TREE 2006 2016 SPORTSMAN'S SUPPLY 2008 OHIO AKRON 2021 2041 AKRON 2005 2025 PAT CATANS CRAFTS 2013 ESSENCE BEAUTY MART 2008 2014 AKRON AKRON 2005 PRIME BUSINESS SOLUTIONS 2006 2008 TIME WARNER CABLE 2005 BARBERTON 2027 2049 BEAVERCREEK 2018 2048 MOORES FITNESS 2007 2013 REVCO 2007 2027 BROOKLYN 2010 BRUNSWICK 2005 2050 GIANT EAGLE 2006 2031 CAMBRIDGE 2010 2020 KROGER 2004 2014 CANTON 2005 CANTON 2018 2043 TJ MAXX 2007 2017 PRICELESS KIDS 2007 2012 CANTON CENTERVILLE 2017 2032 THE TILE SHOP 2014 2024 ODD-JOB 2007 2017 CINCINNATI (7) 2010 2040 THRIFTWAY 2006 2026 DICK'S SPORTING GOODS 2016 2031 CINCINNATI 2022 2052 CIRCUIT CITY 2008 2031 BIG LOTS 2009 2019 CINCINNATI 2005 2025 TOYS "R" US 2019 2044 CINCINNATI (3) 2012 2022 RHODES FURNITURE 2013 2023 TOYS "R" US 2016 2046 CINCINNATI 2011 2021 GOLD'S GYM 2017 2027 CINCINNATI 2008 2028 CLEVELAND 2004 2023 COLUMBUS (7) 2016 2046 KROGER 2017 2037 COLUMBUS 2011 2031 KROGER 2031 2071 TOYS "R" US 2015 2040 COLUMBUS 2011 2031 STAPLES 2010 2020 COLUMBUS 2011 2031 GRANT/RIVERSIDE HOSP 2011 COLUMBUS 2011 2031 CIRCUIT CITY 2019 2039 COLUMBUS 2006 COLUMBUS (7) 2018 2038 ZANY BRAINY 2007 2017 FRANNYS HALLMARK 2004 2014 COPLEY (8) 2017 2067 HOME DEPOT 2013 2063 DICK'S SPORTING GOODS 2020 2045 DAYTON 2004 2024 BIG LOTS 2008 2018 JO-ANN FABRICS 2007 2012 DAYTON 2004 2019 JO-ANN FABRICS 2006 2016 KROGER 2012 2038
24
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- DAYTON 1988 FEE 16.9 141,616 100.0 VALUE CITY DAYTON 1988 FEE 11.2 116,374 100.0 VALUE CITY HUBER HEIGHTS (7) 1999 FEE 40.0 318,468 98.6 ELDER BEERMAN KENT 1988 GROUND LEASE (2013) 12.2 106,500 100.0 TOPS SUPERMARKET LIMA 1986 FEE 18.1 193,633 96.3 RAYS SUPERMARKET MENTOR 1987 FEE 20.6 103,910 100.0 GABRIEL BROTHERS MENTOR 1988 FEE 25.0 271,259 85.2 GIANT EAGLE MIAMISBURG 1999 FEE 0.6 12,600 47.6 MIDDLEBURG HEIGHTS 1988 FEE 8.2 104,342 51.5 GABRIEL BROTHERS NORTH OLMSTEAD 1988 FEE 11.7 99,862 100.0 TOPS SUPERMARKET ORANGE TOWNSHIP (4) 2001 FEE 19.8 14,000 100.0 SHARONVILLE 1977 GROUND LEASE (2076)/JOINT VENTURE 15.0 130,715 77.8 KROGER SPRINGBORO PIKE 1985 FEE 13.0 120,522 100.0 RHODES FURNITURE SPRINGDALE (7) 2000 FEE 22.0 243,047 89.7 WAL-MART SPRINGFIELD 1988 FEE 14.3 131,628 100.0 KMART UPPER ARLINGTON 1969 FEE 13.3 160,602 100.0 TJ MAXX WESTERVILLE 1993 FEE 25.4 242,124 88.3 MARC'S WICKLIFFE 1982 FEE 10.0 128,180 100.0 GABRIEL BROTHERS WILLOUGHBY HILLS 1988 FEE 14.1 156,219 33.0 MARCS DRUGS OKLAHOMA MIDWEST CITY 1998 FEE 9.7 99,433 - NORMAN (7) 2001 FEE 31.3 262,624 100.0 TOYS "R" US OKLAHOMA CITY 1997 FEE 9.8 103,027 100.0 ACADEMY SPORTS OKLAHOMA CITY 1998 FEE 19.8 232,635 99.2 HOME DEPOT SOUTH TULSA 1996 FEE 8.8 100,190 4.1 PENNSLYVANIA BETHLEHEM 2003 FEE 0.5 80,695 100.0 SUPER FRESH BLUE BELL 1996 FEE 17.7 120,211 100.0 KOHLS CARLISLE 2003 FEE 9.3 86,260 97.7 NELLS MARKET CHAMBERSBURG 2003 FEE 5.5 121,593 99.0 GIANT CHIPPEWA 2000 FEE 22.4 215,206 100.0 KMART DUQUESNE 1993 FEE 8.8 69,733 100.0 PAT CATANS CRAFTS EAGLEVILLE 1973 FEE 15.2 165,385 100.0 KMART EAST NORRITON 1984 FEE 12.5 136,635 97.1 SHOPRITE EAST STROUDSBURG 1973 FEE 15.3 168,506 100.0 KMART EASTWICK 1997 FEE 3.4 36,511 92.6 MERCY HOSPITAL EXTON 1990 FEE 6.1 60,685 100.0 ACME MARKETS EXTON 1996 FEE 9.8 85,184 100.0 KOHLS FEASTERVILLE 1996 FEE 4.6 86,575 100.0 VALUE CITY GETTYSBURG 1986 FEE 2.3 30,706 93.8 GIANT FOOD GREENSBURG 2002 JOINT VENTURE 5.0 50,000 100.0 TJ MAXX HAMBURG 2001 FEE 1.5 15,400 100.0 LEHIGH VALLEY HEALTH HARRISBURG 1972 FEE 17.0 175,917 100.0 GANDER MOUNTAIN HARRISBURG 1972 FEE 11.7 154,896 42.2 BIG LOTS HAVERTOWN 1996 FEE 9.0 80,938 100.0 KOHLS LANDSDALE 1996 GROUND LEASE (2037) 1.4 84,470 100.0 KOHLS MIDDLETOWN 1973 FEE 21.9 140,481 61.9 SHARP SHOPPER MIDDLETOWN 1986 FEE 4.7 38,953 83.0 US POST OFFICE MONROEVILLE 2003 FEE 13.7 142,900 100.0 BED BATH & BEYOND MONTGOMERY (7) 2002 FEE 45.0 257,565 100.0 GIANT FOOD NEW KENSINGTON 1986 FEE 12.5 106,624 100.0 GIANT EAGLE PHILADELPHIA 1983 JOINT VENTURE 8.1 214,970 98.5 JC PENNEY PHILADELPHIA 1995 JOINT VENTURE 22.6 277,123 98.8 SUPER FRESH PHILADELPHIA 1996 FEE 6.3 82,345 100.0 KOHLS PHILADELPHIA 1996 GROUND LEASE (2035) 6.8 133,309 100.0 KMART POTTSTOWN 2003 FEE 0.3 161,727 96.5 GIANT FOOD RICHBORO 1986 FEE 14.5 110,357 100.0 SUPER FRESH SCOTT TOWNSHIP 2000 GROUND LEASE (2052) 6.9 69,288 100.0 WAL-MART SHREWSBURY 2003 FEE 0.2 84,025 88.2 GIANT FOOD SPRINGFIELD 1983 FEE 19.7 218,907 92.1 VALUE CITY UPPER ALLEN 1986 FEE 6.0 59,470 96.2 GIANT FOOD UPPER DARBY 1996 JOINT VENTURE 16.3 48,936 91.4 MERCY HOSPITAL WAYNESBORO 2003 FEE 9.3 107,549 49.6 MARTIN'S WEST MIFFLIN 1974 FEE 21.9 193,878 94.7 GIANT EAGLE WEST MIFFLIN 1986 GROUND LEASE (2032) 8.3 84,279 94.0 AMES WHITEHALL 1996 GROUND LEASE (2081) 6.0 84,524 100.0 KOHLS YORK 1986 FEE 8.0 61,979 81.8 SUPERPETZ YORK 1986 FEE 13.7 59,016 95.2 GIANT FOOD YORK 1986 FEE 3.3 35,500 100.0 GIANT FOOD RHODE ISLAND CRANSTON 1998 FEE 11.0 129,907 92.2 BOB'S STORES PROVIDENCE 2003 GROUND LEASE (2022)/JOINT VENTURE 13.0 70,235 100.0 STOP & SHOP SOUTH CAROLINA AIKEN (6) 1989 FEE 3.2 11,200 71.6 CHARLESTON 1978 FEE 17.6 169,813 89.3 STEIN MART CHARLESTON 1995 FEE 17.2 186,740 99.1 TJ MAXX CHARLESTON (8) 2003 JOINT VENTURE 15.7 136,276 89.6 BED BATH & BEYOND CONWAY (9) 2002 JOINT VENTURE 5.4 54,124 100.0 FOOD LION FLORENCE 1997 FEE 21.0 113,922 97.2 HAMRICKS GREENVILLE 1997 FEE 20.4 148,490 91.2 RHODES FURNITURE MT PLEASANT (9) 2002 JOINT VENTURE 11.6 115,740 96.9 WHOLE FOODS NORTH CHARLESTON 2000 FEE 27.3 267,698 100.0 SPORTS AUTHORITY ORANGEBURG (9) 2002 JOINT VENTURE 10.7 106,557 82.2 BI-LO WALTERBORO (9) 2002 JOINT VENTURE 4.8 47,640 97.9 FOOD LION TENNESSEE CHATTANOOGA 2002 JOINT VENTURE 5.0 50,000 100.0 HOME GOODS CHATTANOOGA 1973 GROUND LEASE (2074) 7.6 50,588 82.8 MADISON (7) 1999 FEE 21.1 189,299 99.5 SPORTS AUTHORITY MADISON 1978 GROUND LEASE (2039) 14.5 184,506 70.6 OLD TIME POTTERY MEMPHIS (7) 2001 FEE 3.9 40,000 100.0 BED BATH & BEYOND MEMPHIS 2000 FEE 8.8 87,962 100.0 OLD TIME POTTERY MEMPHIS 1991 FEE 14.7 167,243 96.2 TOYS "R" US MAJOR LEASES --------------------------------------------------------------------------------------------------------- LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION -------------------------------------------------------------------------------------------------------------------------------- DAYTON 2010 2020 CIRCUIT CITY 2018 2038 DOLLAR GENERAL 2004 2007 DAYTON 2010 2015 BUTTERNUT BREAD 2004 HUBER HEIGHTS (7) 2014 2044 KOHLS 2015 2035 MARSHALLS 2009 2024 KENT 2026 2096 LIMA 2011 2026 SEAWAY FOOD TOWN 2009 2024 JO-ANN FABRICS 2006 2011 MENTOR 2013 2028 BIG LOTS 2014 2034 MENTOR 2019 2029 BURLINGTON COAT FACTORY 2014 JO-ANN FABRICS 2009 2019 MIAMISBURG MIDDLEBURG HEIGHTS 2014 2029 NORTH OLMSTEAD 2026 2096 ORANGE TOWNSHIP (4) SHARONVILLE 2008 2028 GABRIEL BROTHERS 2012 2032 SPRINGBORO PIKE 2013 2028 OFFICEMAX 2007 DOLLAR TREE 2008 2018 SPRINGDALE (7) 2015 2045 HH GREGG 2012 2017 OFFICEMAX 2009 2024 SPRINGFIELD 2010 2030 HOBBY LOBBY 2010 2020 UPPER ARLINGTON 2011 2021 PEDDLERS VILLAGE 2008 CVS 2019 2039 WESTERVILLE 2013 2023 KOHLS 2016 2036 OFFICEMAX 2007 2022 WICKLIFFE 2008 2023 BIG LOTS 2005 2010 DOLLAR GENERAL 2004 WILLOUGHBY HILLS 2012 2017 OKLAHOMA MIDWEST CITY NORMAN (7) 2012 2042 ROSS STORES 2007 2027 BARNES & NOBLE 2012 2027 OKLAHOMA CITY 2013 2023 OKLAHOMA CITY 2014 2044 GORDMANS 2013 2033 BEST BUY 2008 2023 SOUTH TULSA PENNSLYVANIA BETHLEHEM 2018 2058 BLUE BELL 2016 2036 HOME GOODS 2013 2033 CARLISLE 2010 2020 CHAMBERSBURG 2010 2040 CVS 2006 2020 CHIPPEWA 2018 2068 HOME DEPOT 2018 2068 DUQUESNE 2005 RED, WHITE & BLUE 2005 EAGLEVILLE 2004 2019 SAFEWAY 2011 2025 EAST NORRITON 2017 2037 STAPLES 2008 2023 JO-ANN FABRICS 2007 2012 EAST STROUDSBURG 2007 2022 WEIS MARKETS 2005 2010 EASTWICK 2012 2022 EXTON 2015 2045 EXTON 2016 2036 FEASTERVILLE 2011 2026 GETTYSBURG 2005 2010 GREENSBURG 2010 MICHAELS 2010 HAMBURG 2016 2026 HARRISBURG 2013 2028 MEDIA PLAY 2011 2026 SUPERPETZ 2007 2022 HARRISBURG 2015 2045 HAVERTOWN 2016 2036 LANDSDALE 2012 MIDDLETOWN 2010 2015 ELECTRONICS INSTITUTE 2004 CVS 2008 MIDDLETOWN 2016 2026 MONROEVILLE 2019 2034 PETSMART 2019 2034 MICHAELS 2009 2029 MONTGOMERY (7) 2020 2050 BED BATH & BEYOND 2016 2030 COMPUSA 2014 2028 NEW KENSINGTON 2006 2026 PHILADELPHIA 2012 2037 TOYS "R" US 2007 2052 PHILADELPHIA 2022 2047 PETSMART 2006 2016 AMC THEATERS 2004 2023 PHILADELPHIA 2016 2036 PHILADELPHIA 2010 2035 POTTSTOWN 2014 2049 TRACTOR SUPPLY CO. 2012 2027 TJ MAXX 2004 2019 RICHBORO 2018 2058 SCOTT TOWNSHIP 2015 2052 SHREWSBURY 2023 2053 SPRINGFIELD 2013 2043 STAPLES 2008 2023 JO-ANN FABRICS 2006 2016 UPPER ALLEN 2010 2030 CVS 2008 UPPER DARBY 2012 2022 ALLEGHENY CHILD ACADEMY 2012 2022 WAYNESBORO 2005 2025 WEST MIFFLIN 2014 2039 KENNYWOOD AMUSEMENT 2005 WEST MIFFLIN 2007 2032 WHITEHALL 2016 2036 YORK 2004 2009 ECKERD 2004 YORK 2006 2026 CVS 2005 2020 YORK 2007 2017 RHODE ISLAND CRANSTON 2008 2028 MARSHALLS 2011 2021 PROVIDENCE 2022 2072 SOUTH CAROLINA AIKEN (6) CHARLESTON 2006 2016 BY THE YARD 2006 2017 GCO CARPET 2012 CHARLESTON 2009 2014 OFFICE DEPOT 2006 2016 MARSHALLS 2006 2011 CHARLESTON (8) 2014 2034 COST PLUS 2014 2029 CONWAY (9) 2017 2037 FLORENCE 2006 2011 STAPLES 2010 2035 ATHLETE'S FOOT 2007 2017 GREENVILLE 2005 2020 BABIES R US 2007 2022 MT PLEASANT (9) 2024 2054 STAPLES 2012 NORTH CHARLESTON 2013 2033 TJ MAXX 2008 2013 MARSHALLS 2008 2013 ORANGEBURG (9) 2011 2031 WALTERBORO (9) 2018 2038 TENNESSEE CHATTANOOGA 2010 MICHAELS 2017 CHATTANOOGA MADISON (7) 2013 2028 BEST BUY 2014 2029 GOODY'S FAMILY CLOTHING 2010 2020 MADISON 2004 2006 MEMPHIS (7) 2012 2027 MEMPHIS 2010 2025 MEMPHIS 2017 2042 OFFICEMAX 2008 2028 MEMPHIS FEET 2015 2025
25
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- NASHVILLE (7) 1999 FEE 9.3 99,909 100.0 BEST BUY NASHVILLE 1998 FEE 10.2 109,012 100.0 MARSHALLS NASHVILLE 1986 FEE 16.9 172,135 100.0 STEIN MART TEXAS AMARILLO (7) 1997 FEE 9.3 343,989 96.7 HOME DEPOT AMARILLO (7) 2003 JOINT VENTURE 10.6 142,747 96.0 ROSS STORES ARLINGTON (8) 2002 JOINT VENTURE 6.3 75,248 100.0 TJ MAXX ARLINGTON 1997 FEE 8.0 96,127 100.0 HOBBY LOBBY AUSTIN (7) 1998 FEE 18.2 191,760 100.0 CIRCUIT CITY AUSTIN 1998 FEE 15.4 157,852 98.6 HEB GROCERY AUSTIN 2003 JOINT VENTURE 10.8 108,028 100.0 FRY'S ELECTRONICS BAYTOWN 1996 FEE 8.7 86,240 100.0 HOBBY LOBBY BEAUMONT (4) 2002 FEE 11.4 76,000 100.0 BED BATH & BEYOND BURLESON (4) 2000 JOINT VENTURE 54.6 27,000 100.0 BURLESON (4) 2003 JOINT VENTURE 1.3 - - DALLAS 2002 JOINT VENTURE 5.0 50,000 60.0 CONN'S DALLAS (8) 2002 JOINT VENTURE 9.6 105,195 92.6 TOM THUMB DALLAS 1969 JOINT VENTURE 75.0 - - DALLAS (7) 1998 FEE 6.8 83,867 100.0 ROSS STORES DUNCANVILLE 1996 FEE 6.8 96,500 - EAST PLANO 1996 FEE 9.0 100,598 100.0 HOME DEPOT EXPO FORT WORTH (4) 2003 JOINT VENTURE 45.5 - - GARLAND (7) 1998 FEE 6.3 62,000 80.6 OFFICE DEPOT GARLAND 1996 FEE 2.9 41,364 100.0 KROGER GARLAND 1996 FEE 8.8 103,600 - HOUSTON (8) 2002 FEE 8.7 95,032 98.6 MARSHALLS HOUSTON (4) 2001 JOINT VENTURE 23.8 77,000 100.0 ROSS STORES HOUSTON 1998 FEE 40.0 434,997 86.0 OSHMAN SPORTING HOUSTON 1997 FEE 8.0 113,831 89.1 HEB PANTRY STORE HOUSTON 1999 FEE 5.6 84,188 100.0 OFFICE DEPOT HOUSTON (8) 2003 JOINT VENTURE 17.1 183,024 93.4 ROSS STORES HOUSTON (4) 2003 JOINT VENTURE 30.0 - - HOUSTON (7) 2002 FEE 54.0 585,901 94.3 LOEWS THEATRES HOUSTON 1996 FEE 8.2 96,500 100.0 BURLINGTON COAT FACTORY LAKE WORTH (4) 2003 2003 57.9 - - LEWISVILLE 1998 FEE 11.2 74,837 91.2 BALLY TOTAL FITNESS LEWISVILLE 1998 FEE 7.6 123,560 83.9 BABIES R US LEWISVILLE 1998 FEE 9.4 93,668 65.4 DSW SHOE WAREHOUSE LUBBOCK 1998 FEE 9.6 108,326 100.0 PETSMART MESQUITE 1974 FEE 9.0 79,550 100.0 KROGER MESQUITE 1998 FEE 30.0 209,836 83.2 BEST BUY N. BRAUNFELS 2003 JOINT VENTURE 8.6 86,479 100.0 KOHLS NORTH RICHLAND HILLS 1997 FEE 9.2 - - PASADENA (7) 1999 FEE 15.1 169,203 100.0 PETSMART PASADENA (7) 2001 FEE 24.6 241,172 96.3 BEST BUY RICHARDSON (7) 1998 FEE 11.7 115,579 100.0 OFFICEMAX SAN ANTONIO (4) 1999 FEE 10.8 129,000 95.8 HOBBY LOBBY WOODLANDS (4) 2002 JOINT VENTURE 34.0 169,000 100.0 HEB GROCERY UTAH OGDEN 1967 FEE 11.4 142,628 100.0 COSTCO VIRGINIA BURKE 2003 OTH 12.5 125,830 99.3 SAFEWAY COLONIAL HEIGHTS 1996 FEE 6.1 60,909 100.0 BLOOM BROS FAIRFAX (7) 1998 FEE 37.0 323,262 100.0 HOME DEPOT FREDERICKSBURG 2003 FEE 11.2 141,857 98.7 KMART HARRISONBURG 1993 FEE 5.3 31,111 53.9 STAPLES HARRISONBURG (9) 2002 JOINT VENTURE 14.0 139,956 51.4 FARMER JACK HARRISONBURG 2003 FEE 12.3 150,404 92.5 KOHLS MANASSAS 1997 FEE 13.5 117,525 100.0 SUPER FRESH MANASSAS 2003 FEE 8.9 107,761 100.0 BURLINGTON COAT FACTORY PETERSBURG (9) 2002 JOINT VENTURE 5.0 50,280 89.1 FOOD LION RICHMOND 2002 FEE 8.5 84,683 100.0 BLOOM BROTHERS FURNITURE RICHMOND 1995 FEE 11.5 128,612 100.0 BURLINGTON COAT FACTORY ROANOKE (9) 2002 JOINT VENTURE 30.2 302,128 82.9 HEIRONIMUS STERLING (8) 1995 JOINT VENTURE 38.1 361,375 100.0 TOYS "R" US WOODBRIDGE 1973 GROUND LEASE (2072)/JOINT VENTURE 19.6 189,563 98.2 AMES WOODBRIDGE (7) 1998 FEE 54.0 495,596 98.2 LOWE'S HOME CENTER WOODBRIDGE 2003 FEE 27.6 316,626 92.3 LOWE'S HOME CENTER WASHINGTON BELLINGHAM (7) 1998 FEE 20.0 188,885 100.0 BON HOME STORE FEDERAL WAY (7) 2000 FEE 17.0 200,126 100.0 ASSOCIATED GROCERY LONGVIEW (4) 2003 JOINT VENTURE 50.6 156,000 100.0 ACE HARDWARE MARYSVILLE (8) 2002 JOINT VENTURE 15.5 226,038 99.0 ALBERTSONS SPOKANE (8) 2002 JOINT VENTURE 13.0 129,785 97.2 BED BATH & BEYOND TUKWILA (7) 2003 JOINT VENTURE 46.7 467,496 100.0 THE BON MARCHE VANCOUVER (4) 2003 JOINT VENTURE 38.9 - - WEST VIRGINIA CHARLES TOWN 1985 FEE 22.0 208,048 100.0 WAL-MART MARTINSBURG 1986 FEE 6.0 43,212 100.0 GIANT FOOD SOUTH CHARLESTON 1999 FEE 14.8 188,589 100.0 KROGER WISCONSIN RACINE 1988 FEE 14.2 157,150 92.6 PIGGLY WIGGLY CANADA ALBERTA SHOPPES @ SHAWNESSEY 2002 JOINT VENTURE 16.30 163,000 100.0 ZELLERS SHAWNESSY CENTRE 2002 JOINT VENTURE 30.61 306,059 100.0 FUTURE SHOP (BEST BUY) BRENTWOOD 2002 JOINT VENTURE 31.23 312,311 99.3 CANADA SAFEWAY SOUTH EDMONTON COMMON 2002 JOINT VENTURE 39.02 390,202 100.0 HOME OUTFITTERS GRANDE PRAIRIE III 2002 JOINT VENTURE 6.34 63,413 100.0 MICHAELS BRITISH COLUMBIA TILLICUM 2002 JOINT VENTURE 41.14 411,393 97.9 ZELLERS MAJOR LEASES --------------------------------------------------------------------------------------------------------- LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION -------------------------------------------------------------------------------------------------------------------------------- NASHVILLE (7) 2014 2029 OFFICEMAX 2015 2035 NASHVILLE 2007 OFFICEMAX 2009 2019 OLD COUNTRY BUFFET 2006 2016 NASHVILLE 2005 2013 ASHLEY FURNITURE HOMESTORE 2012 2022 BED BATH & BEYOND 2013 2028 TEXAS AMARILLO (7) 2019 2069 KOHLS 2025 2055 CIRCUIT CITY 2010 2035 AMARILLO (7) 2012 2037 BED BATH & BEYOND 2012 2032 JO-ANN FABRICS 2012 2032 ARLINGTON (8) 2011 2021 ARLINGTON 2008 2018 AUSTIN (7) 2017 2037 BABIES R US 2012 2027 WORLD MARKET 2011 2026 AUSTIN 2006 2026 DANCE SPACE 2006 2011 AUSTIN 2018 2048 BAYTOWN 2008 2018 ROSS STORES 2012 2032 BEAUMONT (4) 2013 2033 SHOE CARNIVAL 2013 2023 BURLESON (4) BURLESON (4) DALLAS 2013 DALLAS (8) 2017 2032 DALLAS DALLAS (7) 2007 2017 OFFICEMAX 2009 2024 BIG LOTS 2012 2032 DUNCANVILLE EAST PLANO 2024 2054 FORT WORTH (4) GARLAND (7) 2006 2021 99 CENTS ONLY STORE 2009 2024 GARLAND 2005 2025 GARLAND HOUSTON (8) 2008 2023 SUIT MART 2009 2014 HOUSTON (4) 2013 2033 PETCO 2014 2034 HOUSTON 2009 2024 HOBBY LOBBY 2012 2022 BED BATH & BEYOND 2009 2019 HOUSTON 2007 2027 PALAIS ROYAL 2007 2022 HOUSTON 2007 2022 METROPOLITAN FURNITURE 2013 2023 JUST FOR FEET 2013 2023 HOUSTON (8) 2013 2033 OFFICE DEPOT 2012 2032 OLD NAVY 2007 2022 HOUSTON (4) HOUSTON (7) 2017 2047 HOBBY LOBBY 2016 2026 OSHMAN SPORTING 2017 2037 HOUSTON 2020 2035 LAKE WORTH (4) LEWISVILLE 2007 2022 TALBOTS OUTLET 2007 2017 LEWISVILLE 2009 2027 BED BATH & BEYOND 2018 2033 LEWISVILLE 2008 2028 PETLAND 2009 2019 LUBBOCK 2015 2040 OFFICEMAX 2009 2029 BARNES & NOBLE 2010 2025 MESQUITE 2012 2037 MESQUITE 2009 2024 ASHLEY FURNITURE HOMESTORE 2007 2017 PETSMART 2007 2027 N. BRAUNFELS 2014 2064 NORTH RICHLAND HILL PASADENA (7) 2015 2030 OFFICEMAX 2014 2029 MICHAELS 2009 2024 PASADENA (7) 2012 2027 ROSS STORES 2012 2032 MARSHALLS 2012 2027 RICHARDSON (7) 2011 2026 BALLY TOTAL FITNESS 2009 2019 NORTHERN STORES 2004 2014 SAN ANTONIO (4) 2018 2033 BEALLS 2014 2024 WOODLANDS (4) 2025 2045 BORDERS BOOKS 2024 2044 UTAH OGDEN 2033 2073 VIRGINIA BURKE 2020 2050 CVS 2021 2041 COLONIAL HEIGHTS 2008 BOOKS-A-MILLION 2008 2015 FAIRFAX (7) 2013 2033 COSTCO 2011 2046 SPORTS AUTHORITY 2008 2013 FREDERICKSBURG 2007 2032 HARRISONBURG 2004 2014 HARRISONBURG (9) 2007 2037 CVS 2007 2017 HARRISONBURG 2024 2064 TOYS "R" US 2010 2040 MANASSAS 2006 2026 JO-ANN FABRICS 2006 2011 MANASSAS 2009 2030 CVS/PEOPLES 2004 2014 PETERSBURG (9) 2011 2031 RICHMOND 2013 2023 RICHMOND 2006 2035 ROANOKE (9) 2004 2008 MICHAELS 2004 2019 MARSHALLS 2013 2033 STERLING (8) 2012 2037 MICHAELS 2011 2026 CIRCUIT CITY 2017 2037 WOODBRIDGE 2006 2021 CAMPOS FURNITURE 2004 CAMPOS FURNITURE 2006 WOODBRIDGE (7) 2012 2032 SHOPPERS FOOD 2009 2044 PETSMART 2009 2014 WOODBRIDGE 2023 2053 ARBY'S RESTAURANT 2025 2035 WASHINGTON BELLINGHAM (7) 2012 2022 BEST BUY 2017 2032 BED BATH & BEYOND 2012 2027 FEDERAL WAY (7) 2015 2045 JO-ANN FABRICS 2010 2030 BARNES & NOBLE 2011 2026 LONGVIEW (4) 2014 2029 TRIANGLE DEVELOPMENT 2005 RITE AID 2006 2011 MARYSVILLE (8) 2022 2067 GOTTSCHALKS 2008 2018 JC PENNEY 2011 2046 SPOKANE (8) 2011 2026 ROSS STORES 2009 2019 RITE AID 2009 2039 TUKWILA (7) 2009 2019 BEST BUY 2016 2031 GART SPORTS 2014 2029 VANCOUVER (4) WEST VIRGINIA CHARLES TOWN 2017 2047 STAPLES 2008 2018 MARTINSBURG 2010 2030 CVS 2004 2008 SOUTH CHARLESTON 2008 2038 TJ MAXX 2006 2021 KRISPY KREME 2006 2026 WISCONSIN RACINE 2015 2030 BIG LOTS 2005 2015 HOBO 2004 2014 CANADA ALBERTA SHOPPES @ SHAWNESSE 2011 2096 SHAWNESSY CENTRE 2009 2024 LINEN N THINGS 2015 2025 BUSINESS DEPOT (STAPLES) 2013 2028 BRENTWOOD 2007 2037 SEARS WHOLE HOME 2010 2020 LINEN N THINGS 2016 2031 SOUTH EDMONTON COMM 2016 2031 LONDON DRUGS 2020 2057 MICHAELS 2011 2026 GRANDE PRAIRIE III 2011 2031 WINNERS (TJ MAXX) 2011 2026 JYSK LINEN 2012 2022 BRITISH COLUMBIA TILLICUM 2013 2098 SAFEWAY 2023 2053 WINNERS (TJ MAXX) 2008 2023
26
MAJOR LEASES YEAR OWNERSHIP LAND LEASABLE PERCENT -------------------------- DEVELOPED INTEREST/ AREA AREA LEASED LOCATION OR ACQUIRED (EXPIRATION)(2) (ACRES) (SQ. FT.) (1) TENANT NAME ---------------------------------------------------------------------------------------------------------------------------------- PRINCE GEORGE 2001 JOINT VENTURE 37.27 372,725 94.7 OVERWAITEE STRAWBERRY HILL 2002 JOINT VENTURE 33.28 332,817 99.6 HOME DEPOT MISSION 2001 JOINT VENTURE 25.65 256,547 97.6 OVERWAITEE ABBOTSFORD 2002 JOINT VENTURE 19.86 198,574 95.4 ZELLERS CLEARBROOK 2001 JOINT VENTURE 18.83 188,252 94.6 SAFEWAY SURREY 2001 JOINT VENTURE 17.06 170,591 99.4 CANADA SAFEWAY LANGLEY GATE 2002 JOINT VENTURE 15.18 151,802 100.0 SEARS LANGLEY POWER CENTER 2003 JOINT VENTURE 22.83 228,314 100.0 WINNERS (TJ MAXX) ONTARIO SHOPPERS WORLD ALBION 2002 JOINT VENTURE 34.10 341,030 99.6 CANADIAN TIRE SHOPPERS WORLD DANFORTH 2002 JOINT VENTURE 32.88 328,820 99.8 ZELLERS THICKSON RIDGE 2002 JOINT VENTURE 32.29 322,904 100.0 WINNERS (TJ MAXX) LINCOLN FIELDS 2002 JOINT VENTURE 28.68 286,791 96.9 WAL MART 404 TOWN CENTRE 2002 JOINT VENTURE 24.94 249,403 96.3 ZELLERS SUDBURY 2002 JOINT VENTURE 23.43 234,299 100.0 FAMOUS PLAYERS BOULEVARD CENTRE I 2002 JOINT VENTURE 21.74 217,446 99.5 ZELLERS BOULEVARD CENTRE II 2002 JOINT VENTURE - - - GREEN LANE CENTRE 2003 JOINT VENTURE 17.22 172,194 100.0 LINEN N THINGS KENDALWOOD 2002 JOINT VENTURE 15.44 154,445 97.8 PRICE CHOPPER LEASIDE 2002 JOINT VENTURE 13.30 133,035 100.0 CANADIAN TIRE WALKER PLACE 2002 JOINT VENTURE 6.99 69,857 100.0 COMMISSO'S RIOCAN GRAND PARK 2003 JOINT VENTURE 2.50 25,000 100.0 SHOPPERS DRUG MART BOULEVARD III (4) 2002 JOINT VENTURE 4.86 - - DUFFERIN (4) 2002 JOINT VENTURE 9.95 - - BRAMPTON (4) 2003 JOINT VENTURE 11.14 - - PRINCE EDWARD ISLAND CHARLOTTETOWN 2002 JOINT VENTURE 38.97 389,704 97.5 ZELLERS QUEBEC GREENFIELD PARK 2002 JOINT VENTURE 37.47 374,693 92.0 WINNERS (TJ MAXX) JACQUES CARTIER 2002 JOINT VENTURE 21.28 212,849 96.7 GUZZO CINEMA CHATEAUGUAY 2002 JOINT VENTURE 21.16 211,573 98.4 SUPER C MEXICO SALTILLO PLAZA 2002 FEE 17.46 174,637 98.5 HEB NUEVO LEON 2002 FEE 14.69 146,861 98.3 HEB JUAREZ 2003 FEE 29.04 290,388 100.0 SORIANA ------------------ TOTAL 637 PROPERTY INTERESTS 10,287 90,084,405 ------------------ ACQUISITIONS SUBSEQUENT TO DECEMBER 31, 2003 THROUGH FEBRUARY 5, 2004 MASSACHUSETTS HYANNIS 2004 FEE 22.6 225,990 98.5 TOYS R US MARLBOROUGH 2004 FEE 16.1 104,125 92.1 BEST BUY TEXAS TEMPLE 2004 JOINT VENTURE 26.8 274,786 87.4 HOBBY LOBBY DISPOSITIONS SUBSEQUENT TO DECEMBER 31, 2003 THROUGH FEBRUARY 5, 2004 ILLINOIS CHICAGO 1997 FEE 13.4 109,441 - NORTH CAROLINA RALEIGH 2002 JOINT VENTURE 15.2 152,273 88.8 FOOD LION SOUTH CAROLINA AIKEN 1989 FEE 3.2 11,200 71.6 RETAIL STORE LEASES (10) 1995/ 1997 LEASEHOLD 3,349,649 ----------------- GRAND TOTAL 673 PROPERTY INTERESTS 10,320 93,766,041 (11) ----------------- MAJOR LEASES ---------------------------------------------------------------------------------------------------------- LEASE OPTION LEASE OPTION LEASE OPTION LOCATION EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION TENANT NAME EXPIRATION EXPIRATION ----------------------------------------------------------------------------------------------------------------------------------- PRINCE GEORGE 2018 2028 THE BAY 2013 2083 LONDON DRUGS 2017 2027 STRAWBERRY HILL 2016 2016 CINEPLEX ODEON 2008 2018 WINNERS (TJ MAXX) 2009 2024 MISSION 2018 2028 FAMOUS PLAYERS 2010 2030 LONDON DRUGS 2019 2046 ABBOTSFORD 2017 2052 PETSMART 2013 2033 WINNERS (TJ MAXX) 2008 2023 CLEARBROOK 2007 2037 STAPLES 2012 2022 LANDMARK CINEMAS 2011 2021 SURREY 2011 2061 LONDON DRUGS 2011 2021 LANGLEY GATE 2008 2018 PETSMART 2008 2038 WINNERS (TJ MAXX) 2007 2017 LANGLEY POWER CENTER 2012 2027 MICHAELS 2011 2021 FUTURE SHOP (BEST BUY) 2012 2022 ONTARIO SHOPPERS WORLD ALBION 2010 2025 FORTINO'S 2010 2030 SHOPPERS WORLD DANFORTH 2009 2029 DOMINION 2018 2028 BUSINESS DEPOT (STAPLES) 2015 2030 THICKSON RIDGE 2013 2022 FUTURE SHOP (BEST BUY) 2006 2016 SEARS WHOLE HOME 2012 2022 LINCOLN FIELDS 2010 2025 LOEB (GROUND) 2004 2019 CAA OTTAWA 2007 2015 404 TOWN CENTRE 2009 2024 A & P 2007 2027 NATIONAL GYM CLOTHING 2009 2014 SUDBURY 2019 2039 BUSINESS DEPOT (STAPLES) 2014 2029 CHAPTERS 2010 2030 BOULEVARD CENTRE I 2017 2046 WINNERS (TJ MAXX) 2008 2023 LOEB 2008 BOULEVARD CENTRE II GREEN LANE CENTRE 2014 2029 MICHAELS 2013 2033 PETSMART 2008 2033 KENDALWOOD 2013 2038 VALUE VILLAGE 2008 2028 SHOPPERS DRUG MART 2011 2021 LEASIDE 2006 2036 FUTURE SHOP (BEST BUY) 2010 2025 PETSMART 2012 2037 WALKER PLACE 2012 2032 RIOCAN GRAND PARK 2018 2018 BOULEVARD III (4) DUFFERIN (4) BRAMPTON (4) PRINCE EDWARD ISLAND CHARLOTTETOWN 2019 2069 WINNERS (TJ MAXX) 2009 2019 WEST ROYALTY FITNESS 2010 2015 QUEBEC GREENFIELD PARK 2005 2020 BUREAU EN GROS (STAPLES) 2007 2022 GUZZO CINEMA 2019 2039 JACQUES CARTIER 2010 2040 VALUE VILLAGE 2008 2028 IGA 2007 2022 CHATEAUGUAY 2008 2028 HART 2005 2025 MEXICO SALTILLO PLAZA NUEVO LEON JUAREZ TOTAL 637 PROPERTY INTERESTS ACQUISITIONS SUBSEQUENT TO DECEMBER 31, 2003 THROUGH FEBRUARY 5, 2004 MASSACHUSETTS HYANNIS 2019 HOME GOODS 2010 STARS MARKET 2018 MARLBOROUGH 2019 2034 DSW SHOE WAREHOUSE 2014 2034 BORDER GROUP 2019 2034 TEXAS TEMPLE 2021 2036 ROSS STORES 2012 MARSHALLS 2011 2026 DISPOSITIONS SUBSEQUENT TO DECEMBER 31, 2003 THROUGH FEBRUARY 5, 2004 ILLINOIS CHICAGO NORTH CAROLINA RALEIGH 2014 BIG LOTS 2006 SOUTH CAROLINA AIKEN RETAIL STORE LEASES (10) 1995/ 1997 GRAND TOTAL 673 PROPERTY INTERESTS
(1) PERCENT LEASED INFORMATION AS OF DECEMBER 31, 2003 OR DATE OF ACQUISITION IF ACQUIRED SUBSEQUENT TO DECEMBER 31, 2003. (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) DENOTES GROUND-UP DEVELOPMENT PROJECT. THE SQUARE FOOTAGE SHOWN REPRESENTS THE COMPLETED LEASEABLE AREA. (5) DENOTES UNDEVELOPED LAND. (6) SOLD OR TERMINATED SUBSEQUENT TO DECEMBER 31, 2003. (7) DENOTES PROPERTY INTEREST IN KIMCO INCOME REIT ("KIR"). (8) DENOTES PROPERTY INTEREST IN KIMCO RETAIL OPPORTUNITY PORTFOLIO ("KROP"). (9) DENOTES PROPERTY INTEREST IN KIMSOUTH REALTY, INC. (10) THE COMPANY HOLDS INTERESTS IN VARIOUS RETAIL STORE LEASES RELATED TO THE ANCHOR STORE PREMISES IN NEIGHBORHOOD AND COMMUNITY SHOPPING CENTERS. (11) DOES NOT INCLUDE 3.9 MILLION SQUARE FEET RELATED TO THE PREFERRED EQUITY PROGRAM AND 4.9 MILLION SQUARE FEET OF PROJECTED LEASEABLE AREA RELATED TO THE GROUND-UP DEVELOPMENT PROJECTS. 27 Executive Officers of the Registrant The following table sets forth information with respect to the executive officers of the Company as of January 30, 2004. Name Age Position Since ---- --- -------- ----- Milton Cooper 75 Chairman of the Board of 1991 Directors and Chief Executive Officer Michael J. Flynn 68 Vice Chairman of the 1996 Board of Directors and President and Chief 1997 Operating Officer David B. Henry 55 Vice Chairman of the 2001 Board of Directors and Chief Investment Officer Thomas A. Caputo 57 Executive Vice President 2000 Glenn G. Cohen 40 Vice President - 2000 Treasurer 1997 Raymond Edwards 41 Vice President - 2001 Retail Property Solutions Jerald Friedman 59 President, KDI and 2000 Executive Vice President 1998 Bruce M. Kauderer 57 Vice President - Legal 1995 General Counsel and 1997 Secretary Michael V. Pappagallo 45 Vice President - 1997 Chief Financial Officer 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. David B. Henry has been Chief Investment Officer since April 2001 and Vice Chairman of the Board of Directors since May 2001. Mr. Henry served as the Chief Investment Officer and Senior Vice President of General Electric's GE Capital Real Estate business and Chairman of GE Capital Investment Advisors for more than five years prior to joining the Company. Thomas A. Caputo has been Executive Vice President of the Company since December 2000. Mr. Caputo was a principal with H & R Retail from January 2000 to December 2000. Mr. Caputo was a principal with the RREEF Funds, a pension advisor, for more than five years prior to January 2000. Glenn G. Cohen has been a Vice President of the Company since May 2000 and Treasurer of the Company since June 1997. Mr. Cohen served as Director of Accounting and Taxation of the Company from June 1995 to June 1997. Prior to joining the Company in June 1995, Mr. Cohen served as Chief Operating Officer and Chief Financial Officer for U.S. Balloon Manufacturing Co., Inc. from August 1993 to June 1995. Raymond Edwards has been Vice President - Retail Property Solutions since July 2001. Prior to joining the Company in July 2001, Mr. Edwards was Senior Vice President, Managing Director of SBC Group from 1998 to July 2001. SBC Group is a privately held company that acquires and invests in assets of retail companies. Previously, Mr. Edwards worked for 13 years at Keen Realty Consultants Inc. responsible for the marketing and disposition of real estate for retail operators including Caldor, Bonwit Teller, Alexander's and others. Jerald Friedman has been President of the Company's KDI subsidiary since April 2000 and Executive Vice President of the Company since June 1998. Mr. Friedman was Senior Executive Vice President and Chief Operating Officer of The Price REIT, Inc. from January 1997 to June 1998. From 1994 through 1996, Mr. Friedman was the Chairman and Chief Executive Officer of K & F Development Company, an affiliate of The Price REIT, Inc. 28 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. 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. 29 PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters Market Information The following table sets forth the common stock offerings completed by the Company during the three year period ended December 31, 2003. The Company's common stock was sold for cash at the following offering prices per share. Offering Date Offering Price ------------- -------------- November 2001 $32.85 December 2001 $33.57 June 2003 $36.72 September 2003 $40.83 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 ------ ---- ---- 2002: First Quarter $33.50 $29.00 Second Quarter $33.87 $31.00 Third Quarter $33.20 $25.96 Fourth Quarter $32.08 $27.77 2003: First Quarter $36.00 $30.25 Second Quarter $39.45 $34.47 Third Quarter $43.35 $37.21 Fourth Quarter $45.86 $40.26 Holders The number of holders of record of the Company's common stock, par value $0.01 per share, was 1,224 as of January 30, 2004. Dividends Since the IPO, the Company has paid regular quarterly dividends to its stockholders. Quarterly dividends at the rate of $0.52 per share were declared and paid on January 2, 2002 and January 15, 2002, March 15, 2002 and April 15, 2002, June 17, 2002 and July 15, 2002, September 16, 2002 and October 15, 2002, respectively. On October 28, 2002, the Company declared its dividend payable during the first quarter of 2003 at an increased rate of $0.54 per share payable on January 15, 2003 to shareholders of record as of January 2, 2003. Quarterly dividends at the rate of $0.54 per share were declared and paid on March 17, 2003 and April 15, 2003, June 16, 2003 and July 15, 2003, September 15, 2003 and October 15, 2003, respectively. On October 23, 2003, the Company declared its dividend payable during the first quarter of 2004 at an increased rate of $0.57 per share payable on January 15, 2004 to the shareholders of record as of January 2, 2004. This $0.57 per share dividend, if annualized, would equal $2.28 per share or an annual yield of approximately 4.9% based on the closing price of $46.13 of the Company's common stock on the NYSE as of January 30, 2004. The Company has determined that the $2.16 dividend per common share paid during 2003 represented 74% ordinary income, 14% capital gain and 12% return of capital to its stockholders and the $2.08 dividend per common share paid during 2002 represented 96% ordinary income and 4% return of capital 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. 30 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, mortgage debt and construction loans, convertible preferred stock and perpetual preferred stock. Borrowings under the Company's revolving credit facilities have also been an interim source of funds to both finance the purchase of properties and other investments and meet any short-term working capital requirements. The various instruments governing the Company's issuance of its unsecured public debt, bank debt, mortgage 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 13 and 18 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K. The Company does not believe that the preferential rights available to the holders of its Class F Preferred Stock, the financial covenants contained in its public bond Indenture, as amended, bridge facility, or its revolving credit agreement will have an 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 and direct stock purchase plan (the "Plan") pursuant to which common and preferred stockholders and other interested investors may elect to automatically reinvest their dividends to purchase shares of the Company's common stock or, through optional cash payments, purchase shares of the Company's common stock. The Company may, from time to time, either (i) purchase 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 the Plan. 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 and Management's Discussion and Analysis of Financial Condition and Results of Operations 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. 31
Year ended December 31, (2) ------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- (in thousands, except per share information) Operating Data: Revenues from rental property (1) $ 479,664 $ 432,777 $ 431,498 $ 423,623 $ 401,252 Interest expense(3) $ 102,709 $ 85,323 $ 87,005 $ 90,858 $ 83,479 Depreciation and amortization(3) $ 86,237 $ 70,894 $ 68,509 $ 66,375 $ 62,635 Gain on sale of development properties $ 17,495 $ 15,880 $ 13,418 $ - $ - Gain on sale of operating properties(3) $ 3,177 $ - $ - $ 3,962 $ 1,552 Provision for income taxes $ 8,514 $ 12,904 $ 19,376 $ - $ - Income from continuing operations $ 233,781 $ 234,242 $ 207,256 $ 187,897 $ 160,749 Income per common share, from continuing operations: Basic $ 2.10 $ 2.16 $ 2.01 $ 1.74 $ 1.48 Diluted $ 2.07 $ 2.14 $ 1.98 $ 1.73 $ 1.47 Weighted average number of shares of common stock: Basic 107,092 104,458 96,317 92,688 90,709 Diluted 108,770 105,969 101,163 93,653 91,466 Cash dividends declared per common share $ 2.19 $ 2.10 $ 1.96 $ 1.81 $ 1.64 December 31, ------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 ---- ---- ---- ---- ---- Balance Sheet Data: Real estate, before accumulated depreciation $ 4,136,524 $ 3,398,971 $ 3,201,364 $ 3,114,503 $ 2,951,050 Total assets $ 4,603,925 $ 3,758,350 $ 3,387,342 $ 3,175,294 $ 3,011,297 Total debt $ 2,154,948 $ 1,576,982 $ 1,328,079 $ 1,325,663 $ 1,249,571 Total stockholders' equity $ 2,135,846 $ 1,908,800 $ 1,892,647 $ 1,708,285 $ 1,609,256 Cash flow provided by operations $ 308,632 $ 278,931 $ 287,444 $ 250,546 $ 237,153 Cash flow used for investing activities $ (642,365) $ (396,655) $ (157,193) $ (191,626) $ (205,219) Cash flow (used for) provided by financing activities $ 346,059 $ 59,839 $ (55,501) $ (67,899) $ (47,778)
(1) Does not include (i) revenues from rental property relating to unconsolidated joint ventures, (ii) revenues relating to the investment in retail stores leases and (iii) revenues from properties included in discontinued operations. (2) All years have been adjusted to reflect the impact of operating properties sold during 2003 and 2002 and properties classified as held for sale as of December 31, 2003 which are reflected in discontinued operations in the Consolidated Statements of Income. (3) Does not include amounts reflected in Discontinued operations. 32 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. Executive Summary Kimco Realty Corporation is one of the nation's largest publicly-traded owners and operators of neighborhood and community shopping centers. As of February 5, 2004, the Company's portfolio was comprised of 699 property interests, including 620 shopping center properties (including 26 property interests relating to the Company's Preferred Equity program), 36 retail store leases, 33 ground-up development projects and ten undeveloped parcels of land, totaling approximately 102.6 million square feet of leasable space (including 3.9 million square feet related to the Company's Preferred Equity program and 4.9 million square feet projected for the ground-up development projects) located in 41 states, Canada and Mexico. The Company is self-administered and self-managed through present management, which has owned and managed neighborhood and community shopping centers for over 40 years. The executive officers are engaged in the day-to-day management and operation of real estate exclusively with the Company, with nearly all-operating functions, including leasing, asset management, maintenance, construction, legal, finance and accounting administered by the Company. Additionally, in connection with the Tax Relief Extension Act of 1999 (the "RMA"), which became effective January 1, 2001, the Company is now permitted to participate in activities which it was precluded from previously in order to maintain its qualification as a Real Estate Investment Trust ("REIT"), so long as these activities are conducted in entities which elect to be treated as taxable subsidiaries under the Code, subject to certain limitations. As such, the Company, through its taxable REIT subsidiaries, is engaged in various retail real estate related opportunities including (i) merchant building, through its Kimco Developers, Inc. ("KDI") subsidiary, which is primarily engaged in the ground-up development of neighborhood and community shopping centers and the subsequent sale thereof upon completion (ii) retail real estate advisory and disposition services which primarily focuses on leasing and disposition strategies of retail real estate controlled by both healthy and distressed and/or bankrupt retailers and (iii) acting as an agent or principal in connection with tax deferred exchange transactions. The Company will consider other investments through taxable REIT subsidiaries should suitable opportunities arise. The Company's strategy is to maintain a strong balance sheet while investing opportunistically and selectively. The Company intends to continue to execute its plan of delivering solid growth in earnings and dividends. As a result of the improved 2003 performance, the Board of Directors increased the quarterly dividend to $0.57 from $0.54 effective for the first quarter of 2004. Critical Accounting Policies The Consolidated Financial Statements of the Company include the accounts of the Company, its wholly-owned subsidiaries and all partnerships in which the Company has a controlling interest. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates are based on, but not limited to, historical results, industry standards and current economic conditions, giving due consideration to materiality. The most significant assumptions and estimates relate to revenue recognition and the recoverability of trade accounts receivable, depreciable lives and valuation of real estate. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates. 33 Revenue Recognition and Accounts Receivable Base rental revenues from rental property are recognized on a straight-line basis over the terms of the related leases. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the lessee. These percentage rents are recorded once the required sales level is achieved. In addition, leases typically provide for reimbursement to the Company of common area maintenance, real estate taxes and other operating expenses. Operating expense reimbursements are recognized as earned. Rental income may also include payments received in connection with lease termination agreements. The Company makes estimates of the uncollectability of its accounts receivable related to base rents, expense reimbursements and other revenues. The Company analyzes accounts receivable and historical bad debt levels, customer credit worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims. The Company's reported net income is directly affected by management's estimate of the collectability of accounts receivable. Real Estate Upon acquisition of operating real estate properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building and improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships) and assumed debt in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations ("SFAS No. 141"). Based on these estimates, the Company allocates the purchase price to the applicable assets and liabilities. The Company utilized methods similar to those used by independent appraisers in estimating the fair value of acquired assets and liabilities. The useful lives of amortizable intangible assets are evaluated each reporting period with any changes in estimated useful lives being accounted for over the revised remaining useful life. The Company's investments in real estate properties are carried at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to operations as incurred. Significant renovations and replacements, which improve and extend the life of the asset, are capitalized. Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets, as follows: Buildings 15 to 46 years Fixtures, building and leasehold improvements Terms of leases or useful (including certain identified intangible assets) lives, whichever is shorter The Company is required to make subjective assessments as to the useful lives of its properties for purposes of determining the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on the Company's net income. Real estate under development on the Company's Consolidated Balance Sheets represent ground-up development projects which are held for sale upon completion. These assets are carried at cost and no depreciation is recorded. The cost of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. The Company ceases cost capitalization when the property is held available for occupancy upon substantial completion of tenant improvements, but no later than one year from the completion of major construction activity. If in management's opinion, the estimated net sales price of these assets is less than the net carrying value, an adjustment to the carrying value would be recorded to reflect the estimated fair value of the property. A gain on the sale of these assets is generally recognized using the full accrual method in accordance with the provisions of Statement of Financial Accounting Standards No. 66, Accounting for Real Estate Sales. Long Lived Assets On a periodic basis, management assesses whether there are any indicators that the value of the real estate properties (including any related amortizable intangible assets or liabilities) may be impaired. A property value is considered impaired only if management's estimate of current and projected operating cash flows (undiscounted and without interest charges) of the property over its remaining useful life is less than the net carrying value of the property. Such cash flow projections consider factors such as expected future operating income, trend and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the carrying value of the property would be adjusted to an amount to reflect the estimated fair value of the property. 34 When a real estate asset is identified by management as held for sale the Company ceases depreciation of the asset and estimates the sales price of such asset net of selling costs. If, in management's opinion, the net sales price of the asset is less than the net book value of such asset, an adjustment to the carrying value would be recorded to reflect the estimated fair value of the property. The Company is required to make subjective assessments as to whether there are impairments in the value of its real estate properties, investments in joint ventures and other investments. The Company's reported net income is directly affected by management's estimate of impairments and/or valuation allowances. Results of Operations Comparison 2003 to 2002 Revenues from rental property increased $46.9 million or 10.8% to $479.7 million for the year ended December 31, 2003, as compared with $432.8 million for the year ended December 31, 2002. This net increase resulted primarily from the combined effect of (i) the acquisition of 55 operating properties during 2003, including 41 operating properties acquired in the Mid-Atlantic Merger, providing revenues of $34.2 million for the year ended December 31, 2003, (ii) the full year impact related to the 13 operating properties acquired in 2002 providing incremental revenues of $16.6 million, and (iii) an overall increase in shopping center portfolio occupancy to 90.7% at December 31, 2003 as compared to 87.8% at December 31, 2002 and the completion of certain development and redevelopment projects, providing incremental revenues of approximately $18.1 million as compared to the corresponding year ended December 31, 2002, offset by (iv) a decrease in revenues of approximately $8.4 million resulting from the bankruptcy filing of Kmart Corporation ("Kmart") and subsequent rejection of leases, and (v) sales of certain development properties and tenant buyouts resulting in a decrease of revenues of approximately $13.6 million as compared to the preceding year. Rental property expenses including depreciation and amortization increased $25.7 million or 13.8% to $212.7 million for the year ended December 31, 2003 as compared to $187.0 million for the preceding year. The rental property expense components of operating and maintenance and depreciation and amortization increased approximately $24.8 million or 21.5% for the year ended December 31, 2003 as compared with the year ended December 31, 2002. This increase is primarily due to property acquisitions during 2003 and 2002 and increased snow removal costs during 2003. Income from other real estate investments increased $6.8 million to $22.8 million as compared to $16.0 million for the preceding year. This increase is primarily due to increased investment in the Company's preferred equity program contributing $4.6 million during 2003 as compared to $1.0 million in 2002, contribution of $12.1 million from the Kimsouth investment resulting from the disposition of 14 investment properties during 2003, offset by a decrease in income of $7.8 million from the Montgomery Ward Asset Designation rights transaction. Management and other fee income increased approximately $3.2 million to $15.3 million for the year ended December 31, 2003 as compared to $12.1 million for the year ended December 31, 2002. This increase is primarily due to (i) increased management and acquisition fees resulting from the growth of the KROP portfolio, (ii) increased management fees from KIR resulting from the growth of the KIR portfolio, and (iii) increased property management activity providing incremental fee income of approximately $1.1 million for the year ended December 31, 2003 as compared to the preceding year. Interest expense increased $17.4 million or 20.4% to $102.7 million for the year ended December 31, 2003, as compared with $85.3 million for the year ended December 31, 2002. This increase is primarily due to an overall increase in borrowings during the year ended December 31, 2003 as compared to the preceding year, including additional borrowings and assumption of mortgage debt totaling approximately $616.0 million in connection with the Mid-Atlantic Merger. General and administrative expenses increased approximately $7.1 million for the year ended December 31, 2003, as compared to the preceding calendar year. This increase is primarily due to (i) increased staff levels related to the growth of the Company, and (ii) other personnel related costs, associated with a realignment of our regional operations. 35 During 2003, the Company reached agreement with certain lenders in connection with three individual non-recourse mortgages encumbering three former Kmart sites. The Company paid approximately $14.2 million in full satisfaction of these loans which aggregated approximately $24.0 million. As a result of these transactions, the Company recognized a gain on early extinguishment of debt of approximately $9.7 million during 2003. During December 2002, the Company reached agreement with certain lenders in connection with four individual non-recourse mortgages encumbering four former Kmart sites. The Company paid approximately $24.2 million in full satisfaction of these loans which aggregated approximately $46.5 million. The Company recognized a gain on early extinguishment of debt of approximately $22.3 million for the year ended December 31, 2002. As part of the Company's periodic assessment of its real estate properties with regard to both the extent to which such assets are consistent with the Company's long-term real estate investment objectives and the performance and prospects of each asset, the Company determined in 2002, that its investment in four operating properties, comprised of an aggregate 0.4 million square feet of GLA with an aggregate net book value of approximately $23.8 million, may not be fully recoverable. Based upon management's assessment of current market conditions and the lack of demand for the properties, the Company has reduced its potential holding period of these investments. As a result of the reduction in the anticipated holding period, together with a reassessment of the projected future operating cash flows of the properties and the effects of current market conditions, the Company has determined that its investment in these assets was not fully recoverable and has recorded an adjustment of property carrying value aggregating approximately $12.5 million for the year ended December 31, 2002. Approximately $1.5 million relating to the adjustment of property carrying value for one of these properties is included in the caption Income from discontinued operations on the Company's Consolidated Statements of Income. Provision for income taxes decreased $4.4 million to $8.5 million for the year ended December 31, 2003, as compared with $12.9 million for the year ended December 31, 2002. This decrease is primarily due to less taxable income provided by the Montgomery Ward Asset Designation Rights transaction in 2003 as compared to 2002. Equity in income of real estate joint ventures, net increased $4.6 million to $42.3 million for the year ended December 31, 2003, as compared to $37.7 million for the year ended December 31, 2002. This increase is primarily attributable to the equity in income from the Kimco Income REIT joint venture investment, the RioCan joint venture investment, and the KROP joint venture investment as described below. During 1998, the Company formed KIR, a limited partnership established to invest in high quality retail properties financed primarily through the use of individual non-recourse mortgages. The Company has a 43.3% non-controlling limited partnership interest in KIR, which the Company manages, and accounts for its investment in KIR under the equity method of accounting. Equity in income of KIR increased $1.6 million to $19.8 million for the year ended December 31, 2003, as compared to $18.2 million for the preceding year. This increase is primarily due to the Company's increased capital investment in KIR totaling $13.0 million during 2003 and $23.8 million during 2002. The additional capital investments received by KIR from the Company and its other institutional partners were used to purchase additional shopping center properties throughout calendar year 2003 and 2002. During October 2001, the Company formed a joint venture (the "RioCan Venture") with RioCan Real Estate Investment Trust ("RioCan", Canada's largest publicly traded REIT measured by gross leasable area ("GLA")), in which the Company has a 50% non-controlling interest, to acquire retail properties and development projects in Canada. As of December 31, 2003, the RioCan Venture consisted of 31 shopping center properties and three development projects with approximately 7.2 million square feet of GLA. The Company's equity in income from the RioCan Venture increased approximately $3.4 million to $12.5 million for the year ended December 31, 2003, as compared to $9.1 million for the preceding year. During October 2001, the Company formed the Kimco Retail Opportunity Portfolio ("KROP"), a joint venture with GE Capital Real Estate ("GECRE") which the Company manages and has a 20% non-controlling interest. The purpose of this venture is to acquire established, high-growth potential retail properties in the United States. As of December 31, 2003, KROP consisted of 23 shopping center properties with approximately 3.5 million square feet of GLA. The Company's equity in income from the KROP Venture increased approximately $1.0 million to $2.0 million for the year ended December 31, 2003, as compared to $1.0 million for the preceding year. 36 Minority interests in income of partnerships, net increased $5.5 million to $7.9 million as compared to $2.4 million for the preceding year. This increase is primarily due to the full year effect of the acquisition of a shopping center property acquired during October 2002, through a newly formed partnership by issuing approximately 2.4 million downREIT units valued at $80 million. The downREIT units are convertible at a ratio of 1:1 into the Company's common stock and are entitled to a distribution equal to the dividend rate on the Company's common stock multiplied by 1.1057. During 2003, the Company disposed of, in separate transactions, (i) 10 operating shopping center properties, for an aggregate sales price of approximately $119.1 million, including the assignment of approximately $1.7 million of mortgage debt encumbering one of the properties, (ii) two regional malls for an aggregate sales price of approximately $135.6 million, (iii) one out-parcel for a sales price of approximately $8.1 million, (iv) transferred three operating properties to KROP for a price of approximately $144.2 million which approximated their net book value, (v) transferred an operating property to a newly formed joint venture in which the Company has a non-controlling 10% interest for a price of approximately $21.9 million which approximated its net book value and (vi) terminated four leasehold positions in locations which a tenant in bankruptcy had rejected its lease. These transactions resulted in net gains of approximately $50.8 million. For those property dispositions for which SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144") is applicable, the operations and gain or loss on the sale of the property have been included in the caption Discontinued operations on the Company's Consolidated Statements of Income. During 2003, the Company identified two operating properties, comprised of approximately 0.2 million square feet of GLA, as "Held for Sale" in accordance with SFAS No. 144. The book value of these properties, aggregating approximately $19.5 million, net of accumulated depreciation of approximately $2.0 million, exceeded their estimated fair value. The Company's determination of the fair value of these properties, aggregating approximately $15.4 million, is based upon contracts of sale with third parties less estimated selling costs. As a result, the Company recorded an adjustment of property carrying values of $4.0 million. This adjustment is included, along with the related property operations for the current and comparative years, in the caption Income from discontinued operations on the Company's Consolidated Statements of Income. During 2002, the Company identified two operating properties, comprised of approximately 0.2 million square feet of GLA, as "Held for Sale" in accordance with SFAS No. 144. The book value of these properties, aggregating approximately $28.4 million, net of accumulated depreciation of approximately $2.9 million, exceeded their estimated fair value. The Company's determination of the fair value of these properties, aggregating approximately $7.9 million, is based upon executed contracts of sale with third parties less estimated selling costs. As a result, the Company recorded an adjustment of property carrying values of $20.5 million. This adjustment is included, along with the related property operations for the current and comparative years, in the caption Income from discontinued operations on the Company's Consolidated Statements of Income. Effective January 1, 2001, the Company has elected taxable REIT subsidiary status for its wholly-owned development subsidiary, KDI. KDI is primarily engaged in the ground-up development of neighborhood and community shopping centers and the subsequent sale thereof upon completion. During the year ended December 31, 2003, KDI sold four projects and 26 out-parcels, in separate transactions, for approximately $134.6 million. These sales resulted in pre-tax gains of approximately $17.5 million. During the year ended December 31, 2002, KDI sold four of its recently completed projects and eight out-parcels, in separate transactions, for approximately $128.7 million, including the assignment of approximately $17.7 million of mortgage debt encumbering one of the properties which resulted in pre-tax profits of $15.9 million. Net income for the year ended December 31, 2003 was $307.9 million as compared to $245.7 million for the year ended December 31, 2002. On a diluted per share basis, net income increased $0.46 to $2.62 for the year ended December 31, 2003 as compared to $2.16 for the preceding year. This improved performance is primarily attributable to (i) the acquisition of operating properties, including the Mid-Atlantic Merger, during 2003 and 2002, (ii) significant leasing within the portfolio which improved operating profitability, (iii) increased contributions from KIR, the RioCan Venture and KROP, (iv) increased gains on development sales from KDI, and (v) increased gains from operating property sales of $50.8 million in 2003 as compared to $12.8 million in 2002. The 2003 improvement also includes the impact from gains on early extinguishment of debt of $9.7 million in 2003 as compared to $22.3 million in 2002 and adjustments to property carrying values of $4.0 million in 2003 and $33.0 million in 2002. The 2003 diluted per share results were decreased by a reduction in net income available to common shareholders of $0.07 resulting from the deduction of original issuance costs associated with the redemption of the Company's 7 3/4% Class A, 8 1/2% Class B and 8 3/8% Class C Cumulative Redeemable Preferred Stocks during the second quarter of 2003. 37 Comparison 2002 to 2001 Revenues from rental property increased $1.3 million or 0.3% to $432.8 million for the year ended December 31, 2002, as compared with $431.5 million for the year ended December 31, 2001. This net increase resulted primarily from the combined effect of (i) the acquisition of 13 operating properties during 2002, providing revenues of $5.1 million for the year ended December 31, 2002, (ii) the full year impact related to the three operating properties acquired in 2001 providing incremental revenues of $2.3 million, and (iii) the completion of certain development and redevelopment projects, tenant buyouts and new leasing within the portfolio providing incremental revenues of approximately $20.5 million as compared to the corresponding year ended December 31, 2001, offset by (iv) an overall decrease in shopping center portfolio occupancy to 87.8% at December 31, 2002 as compared to 90.4% at December 31, 2001 due primarily to the bankruptcy filing of Kmart Corporation ("Kmart") and Ames Department Stores, Inc. ("Ames") and subsequent rejection of leases resulting in a decrease of revenues of approximately $24.2 million as compared to the preceding year, and (v) sales of certain shopping center properties throughout 2001 and 2002, resulting in a decrease of revenues of approximately $2.4 million as compared to the preceding year. Rental property expenses, including depreciation and amortization, increased $10.2 million or 5.8% to $187.0 million for the year ended December 31, 2002 as compared to $176.8 million for the preceding year. The rental property expense component of real estate taxes increased approximately $6.4 million or 11.8% for the year ended December 31, 2002 as compared with the year ended December 31, 2001. This increase relates primarily to the payment of real estate taxes by the Company on certain Kmart anchored locations where Kmart previously paid the real estate taxes directly to the taxing authorities. The rental property expense component of operating and maintenance increased approximately $1.7 million or 4.1% for the year ended December 31, 2002 as compared with the year ended December 31, 2001. This increase is primarily due to property acquisitions during 2002 and 2001, renovations within the portfolio and higher professional fees relating to tenant bankruptcies. Income from other real estate investments decreased $22.1 million to $16.0 million as compared to $38.1 million for the preceding year. This decrease is primarily due to the decrease in income from the Montgomery Ward asset designation rights transactions described below. During March 2001, the Company, through a taxable REIT subsidiary, formed a real estate joint venture (the "Ward Venture") in which the Company has a 50% interest, for purposes of acquiring asset designation rights for substantially all of the real estate property interests of the bankrupt estate of Montgomery Ward LLC and its affiliates. These asset designation rights have provided the Ward Venture the ability to direct the ultimate disposition of the 315 fee and leasehold interests held by the bankrupt estate, of which 303 transactions were completed as of December 31, 2002. During the year ended December 31, 2002, the Ward Venture completed transactions for 32 properties. The pre-tax profits from the Ward Venture decreased approximately $23.3 million to $11.3 million for the year ended December 31, 2002 as compared to $34.6 million for the preceding year. Mortgage financing income increased $16.8 million to $19.4 million for the year ended December 31, 2002 as compared to $2.6 million for the year ended December 31, 2001. This increase is primarily due to increased interest income earned related to certain real estate lending activities during the year ended December 31, 2002. Management and other fee income increased approximately $5.7 million to $12.1 million for the year ended December 31, 2002 as compared to $6.4 million for the year ended December 31, 2001. This increase is primarily due to (i) a $0.6 million increase in management fees from KIR resulting from the growth of the KIR portfolio, (ii) $2.1 million of management and acquisition fees relating to the KROP joint venture activities during the year ended December 31, 2002 and (iii) increased property management activity providing incremental fee income of approximately $3.0 million. Other income/(expense), net increased approximately $4.7 million to $2.5 million for the year ended December 31, 2002 as compared to the preceding calendar year. This increase is primarily due to pre-tax profits earned from the Company's participation in ventures established to provide inventory liquidation services to regional retailers in bankruptcy. 38 Interest expense decreased $1.7 million or 1.9% to $85.3 million for the year ended December 31, 2002, as compared with $87.0 million for the year ended December 31, 2001. This decrease is primarily due to reduced interest costs on the Company's floating-rate revolving credit facilities and remarketed reset notes which was partially offset by an increase in borrowings during the year ended December 31, 2002, as compared to the preceding year. General and administrative expenses increased approximately $3.3 million for the year ended December 31, 2002, as compared to the preceding calendar year. This increase is primarily due to higher costs related to the growth of the Company including (i) increased senior management and staff levels, (ii) increased system related costs and (iii) other personnel related costs. The Company had previously encumbered certain Kmart sites with individual non-recourse mortgages as part of its strategy to reduce its exposure to Kmart Corporation. As a result of the Kmart bankruptcy filing in January 2002 and the subsequent rejection of leases including leases at these encumbered sites, the Company, during July 2002, had suspended debt services payments on these loans and was actively negotiating with the respective lenders. During December 2002, the Company reached agreement with certain lenders in connection with four of these locations. The Company paid approximately $24.2 million in full satisfaction of these loans which aggregated approximately $46.5 million. The Company recognized a gain on early extinguishment of debt of approximately $22.3 million. As part of the Company's periodic assessment of its real estate properties with regard to both the extent to which such assets are consistent with the Company's long-term real estate investment objectives and the performance and prospects of each asset, the Company determined in 2002, that its investment in four operating properties, comprised of an aggregate 0.4 million square feet of GLA with an aggregate net book value of approximately $23.8 million, may not be fully recoverable. Based upon management's assessment of current market conditions and the lack of demand for the properties, the Company has reduced its potential holding period of these investments. As a result of the reduction in the anticipated holding period, together with a reassessment of the projected future operating cash flows of the properties and the effects of current market conditions, the Company has determined that its investment in these assets was not fully recoverable and has recorded an adjustment of property carrying value aggregating approximately $12.5 million, of which approximately $1.5 million is included in the caption Income from discontinued operations on the Company's Consolidated Statements of Income. Equity in income of real estate joint ventures, net increased $16.0 million to $37.7 million for the year ended December 31, 2002, as compared to $21.7 million for the year ended December 31, 2001. This increase is primarily attributable to the equity in income from the Kimco Income REIT joint venture investment, the RioCan joint venture investment, and the KROP joint venture investment as described below. During 1998, the Company formed KIR, a limited partnership established to invest in high quality retail properties financed primarily through the use of individual non-recourse mortgages. The Company has a 43.3% non-controlling limited partnership interest in KIR, which the Company manages, and accounts for its investment in KIR under the equity method of accounting. Equity in income of KIR increased $3.5 million to $18.2 million for the year ended December 31, 2002, as compared to $14.7 million for the preceding year. This increase is primarily due to the Company's increased capital investment in KIR totaling $23.8 million during 2002 and $30.8 million during 2001. The additional capital investments received by KIR from the Company and its other institutional partners were used to purchase additional shopping center properties throughout calendar year 2002 and 2001. During October 2001, the Company formed a joint venture (the "RioCan Venture") with RioCan Real Estate Investment Trust ("RioCan", Canada's largest publicly traded REIT measured by gross leasable area ("GLA")), in which the Company has a 50% non-controlling interest, to acquire retail properties and development projects in Canada. As of December 31, 2002, the RioCan Venture consisted of 28 shopping center properties and four development projects with approximately 6.7 million square feet of GLA. The Company's equity in income from the RioCan Venture increased approximately $8.7 million to $9.1 million for the year ended December 31, 2002, as compared to $0.4 million for the preceding year. During October 2001, the Company formed the Kimco Retail Opportunity Portfolio ("KROP"), a joint venture with GE Capital Real Estate ("GECRE") which the Company manages and has a 20% non-controlling interest. The purpose of this venture is to acquire established, high-growth potential retail properties in the United States. As of December 31, 2002, KROP consisted of 15 shopping center properties with approximately 1.5 million square feet of GLA. During the year ended December 31, 2002, the Company's equity in income from KROP was approximately $1.0 million. 39 Minority interests in income of partnerships, net increased $0.7 million to $2.4 million as compared to $1.7 million for the preceding year. This increase is primarily due to the acquisition of a shopping center property acquired through a newly formed partnership by issuing approximately 2.4 million downREIT units valued at $80 million. The downREIT units are convertible at a ratio of 1:1 into the Company's common stock and are entitled to a distribution equal to the dividend rate on the Company's common stock multiplied by 1.1057. During 2002, the Company identified two operating properties, comprised of approximately 0.2 million square feet of GLA, as "Held for Sale" in accordance with SFAS No. 144. The book value of these properties, aggregating approximately $28.4 million, net of accumulated depreciation of approximately $2.9 million, exceeded their estimated fair value. The Company's determination of the fair value of these properties, aggregating approximately $7.9 million, is based upon executed contracts of sale with third parties less estimated selling costs. As a result, the Company recorded an adjustment of property carrying values of $20.5 million. This adjustment is included, along with the related property operations for the current and comparative years, in the caption Income from discontinued operations on the Company's Consolidated Statements of Income. During 2002, the Company, (i) disposed of, in separate transactions, 12 operating properties for an aggregate sales price of approximately $74.5 million, including the assignment/repayment of approximately $22.6 million of mortgage debt encumbering three of the properties and, (ii) terminated five leasehold positions in locations where a tenant in bankruptcy had rejected its lease. These dispositions resulted in net gains of approximately $12.8 million for the year ended December 31, 2002. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"), the operations and net gain on disposition of these properties have been included in the caption Discontinued operations on the Company's Consolidated Statements of Income. During 2001, the Company, in separate transactions, disposed of three operating properties, including the sale of a property to KIR, and a portion of another operating property comprising in the aggregate approximately 0.6 million square feet of GLA. Cash proceeds from these dispositions aggregated approximately $46.7 million, which resulted in a net gain of approximately $3.0 million. Cash proceeds from the sale of the operating property in Elyria, OH totaling $5.8 million, together with an additional $7.1 million cash investment, were used to acquire an exchange shopping center property located in Lakeland, FL during August 2001. Effective January 1, 2001, the Company has elected taxable REIT subsidiary status for its wholly-owned development subsidiary ("KDI"). KDI is primarily engaged in the ground-up development of neighborhood and community shopping centers and the subsequent sale thereof upon completion. During the year ended December 31, 2002, KDI sold four projects and eight out-parcels, in separate transactions, for approximately $128.7 million, including the assignment of approximately $17.7 million of mortgage debt encumbering one of the properties. These sales resulted in pre-tax gains of approximately $15.9 million. During the year ended December 31, 2001, KDI sold two of its recently completed projects and five out-parcels, in separate transactions, for approximately $61.3 million, which resulted in pre-tax profits of $13.4 million. Net income for the year ended December 31, 2002 was $245.7 million as compared to $236.5 million for the year ended December 31, 2001, representing an increase of $9.2 million. This increase reflects the combined effect of increased contributions from the investments in KIR, KROP, the RioCan Venture and other financing investments, reduced by lower income resulting from tenant bankruptcies and subsequent rejection of leases and a decrease in profits from the Ward Venture. Tenant Concentrations 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, 2003, the Company's five largest tenants were The Home Depot, Kmart Corporation, Kohl's, Royal Ahold, and TJX Companies, which represented approximately 3.0%, 2.9%, 2.8%, 2.6% and 2.5%, respectively, of the Company's annualized base rental revenues, including the proportionate share of base rental revenues from properties in which the Company has less than a 100% economic interest. 40 On January 14, 2003, Kmart announced it would be closing 326 locations relating to its January 22, 2002 filing of protection under Chapter 11 of the U.S. Bankruptcy Code. Nine of these locations (excluding the KIR portfolio which includes three additional locations and Kimsouth which includes two additional locations) are leased from the Company. The annualized base rental revenues from these nine locations are approximately $4.3 million. As of December 31, 2003, Kmart rejected its lease at eight of these locations representing approximately $3.8 million of annualized base rental revenues. The Company has signed a lease at three of these sites, terminated its ground lease at another site, sold two properties and continues to negotiate leases with prospective tenants at the two remaining sites. Liquidity and Capital Resources It is management's intention that the Company continually have access to the capital resources necessary to expand and develop its business. As such, the Company intends to operate with and maintain a conservative capital structure with a level of debt to total market capitalization of 50% or less. As of December 31, 2003 the Company's level of debt to total market capitalization was 30%. In addition, the Company intends to maintain strong debt service coverage and fixed charge coverage ratios as part of its commitment to maintaining its investment-grade debt ratings. The Company may, from time to time, seek to obtain funds through additional equity offerings, unsecured debt financings and/or mortgage/construction loan financings and other debt and equity alternatives in a manner consistent with its intention to operate with a conservative debt structure. Since the completion of the Company's IPO in 1991, the Company has utilized the public debt and equity markets as its principal source of capital for its expansion needs. Since the IPO, the Company has completed additional offerings of its public unsecured debt and equity, raising in the aggregate over $3.3 billion for the purposes of, among other things, repaying indebtedness, acquiring interests in neighborhood and community shopping centers, funding ground-up development projects, expanding and improving properties in the portfolio and other investments. The Company has a $500.0 million unsecured revolving credit facility, which is scheduled to expire in August 2006. This credit facility has made available funds to both finance the purchase of properties and other investments and meet any short-term working capital requirements. As of December 31, 2003 there was $45.0 million outstanding under this credit facility. The Company also has a $400.0 million unsecured bridge facility, which is scheduled to expire in September 2004, with an option to extend up to $150.0 million for an additional year. Proceeds from this facility were used to partially fund the Mid-Atlantic Realty Trust transaction. (See Recent Developments - Mid-Atlantic Realty Trust Merger and Notes 3 and 13 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) As of December 31, 2003, there was $329.0 million outstanding on this unsecured bridge facility. The Company has a $300.0 million MTN program pursuant to which it may, from time to time, offer for sale its senior unsecured debt for any general corporate purposes, including (i) funding specific liquidity requirements in its business, including property acquisitions, development and redevelopment costs and (ii) managing the Company's debt maturities. (See Note 13 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) In addition to the public equity and debt markets as capital sources, the Company may, from time to time, obtain mortgage financing on selected properties and construction loans to partially fund the capital needs of KDI, the Company's merchant building subsidiary. As of December 31, 2003, the Company had over 400 unencumbered property interests in its portfolio. During May 2003, the Company filed a shelf registration statement on Form S-3 for up to $1.0 billion of debt securities, preferred stock, depositary shares, common stock and common stock warrants. As of December 31, 2003, the Company had $609.7 million available for issuance under this shelf registration statement. 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, growth in operating income in the existing portfolio and from other investments. 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 and other investments as suitable opportunities arise, and such other factors as the Board of Directors considers appropriate. Cash dividends paid increased to $246.3 million in 2003, compared to $235.6 million in 2002 and $209.8 million in 2001. 41 Although the Company receives substantially all of its rental payments on a monthly basis, it generally 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 2004 will be approximately $50.0 million to $75.0 million. Additionally, the Company anticipates its capital commitment toward ground-up development during 2004 will be approximately $160.0 million to $200.0 million. The proceeds from the sales of development properties and proceeds from construction loans in 2004 should be sufficient to fund the ground-up development capital requirements. 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 facility, issuance of equity and public debt, as well as other debt and equity alternatives, will provide the necessary capital required by the Company. Cash flows from operations as reported in the Consolidated Statements of Cash Flows was $308.6 million for 2003, $278.9 million for 2002 and $287.4 million for 2001. Contractual Obligations and Other Commitments The Company has debt obligations relating to its revolving credit facility, bridge facility, MTNs, senior notes, mortgages and construction loans with maturities ranging from less than one year to 20 years. As of December 31, 2003, the Company's total debt had a weighted average term to maturity of approximately 4.3 years. In addition, the Company has non-cancelable operating leases pertaining to its shopping center portfolio. As of December 31, 2003, the Company has certain 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 to construct and/or operate a shopping center. In addition, the Company has non-cancelable operating leases pertaining to its retail store lease portfolio. The following table summarizes the Company's debt maturities and obligations under non-cancelable operating leases as of December 31, 2003 (in millions):
2004 2005 2006 2007 2008 Thereafter Total ---- ---- ---- ---- ---- ---------- ----- Long-Term Debt $570.4 $244.6 $198.1 $207.6 $143.1 $791.2 $2,155.0 Operating Leases Ground Leases $ 11.3 $ 10.9 $ 10.2 $ 9.9 $ 8.9 $153.5 $ 204.7 Retail Store Leases $ 7.9 $ 7.7 $ 6.3 $ 4.4 $ 2.7 $ 2.8 $ 31.8
The Company has $50.0 million of unsecured senior notes, $135.0 million of medium term notes and $47.7 million of construction loans maturing in 2004. In addition, the Company's unsecured bridge facility, which is scheduled to expire in September 2004, with an option to extend up to $150.0 million for an additional year, had $329.0 million outstanding as of December 31, 2003. The Company anticipates satisfying these maturities with a combination of operating cash flows, its unsecured revolving credit facility and new debt financings. The Company has issued letters of credit in connection with the collateralization of tax-exempt mortgage bonds, completion guarantees for certain construction projects, and guaranty of payment related to the Company's insurance program. These letters of credit aggregate approximately $15.3 million. Additionally, the RioCan Venture, an entity in which the Company holds a 50% non-controlling interest, has a CAD $5.0 million (approximately USD $3.9 million) letter of credit facility. This facility is jointly guaranteed by RioCan and the Company and has approximately CAD $3.1 million (approximately USD $2.4 million) outstanding as of December 31, 2003 relating to various development projects. During 2003, the Company obtained construction financing on seven ground-up development projects for an aggregate loan commitment amount of up to $152.2 million. As of December 31, 2003, the Company had 13 construction loans with total commitments of up to $238.9 million of which $92.8 million had been funded to the Company. These loans have maturities ranging from 3 to 34 months and interest rates ranging from 2.87% to 5.00% at December 31, 2003. 42 Off-Balance Sheet Arrangements ------------------------------ Unconsolidated Real Estate Joint Ventures The Company has investments in various unconsolidated real estate joint ventures with varying structures. These investments include the Company's 43.3% non-controlling interest in KIR, the Company's 50% non-controlling interest in the RioCan Venture, the Company's 20% non-controlling interest in KROP, and varying interests in other real estate joint ventures. These joint ventures operate either shopping center properties or are established for development projects. Such arrangements are generally with third party institutional investors, local developers and individuals. The properties owned by the joint ventures are primarily financed with individual non-recourse mortgage loans. Non-recourse mortgage debt is generally defined as debt whereby the lenders' sole recourse with respect to borrower defaults is limited to the value of the property collateralized by the mortgage. The lender generally does not have recourse against any other assets owned by the borrower or any of the constituent members of the borrower, except for certain specified exceptions listed in the particular loan documents. The KIR joint venture was established for the purpose of investing in high quality real estate properties financed primarily with individual non-recourse mortgages. The Company believes that these properties are appropriate for financing with greater leverage than the Company traditionally uses. As of December 31, 2003, KIR had interests in 70 properties comprising 14.6 million square feet of GLA. As of December 31, 2003, KIR had obtained individual non-recourse mortgage loans on 68 of these properties. These non-recourse mortgage loans have maturities ranging from 2 to 15 years and rates ranging from 3.23% to 8.52%. As of December 31, 2003, the Company's pro-rata share of non-recourse mortgages relating to the KIR joint venture was approximately $506.8 million. The Company also has unfunded capital commitments to KIR in the amount of approximately $42.9 million as of December 31, 2003. (See Note 8 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) The RioCan Venture was established with RioCan Real Estate Investment Trust to acquire properties and development projects in Canada. As of December 31, 2003, the RioCan Venture consisted of 31 shopping center properties and three development projects with approximately 7.2 million square feet of GLA. As of December 31, 2003, the RioCan Venture had obtained individual, non-recourse mortgage loans on 27 of these properties aggregating approximately CAD $590.6 million (USD $453.3 million). These non-recourse mortgage loans have maturities ranging from five months to 11 years and rates ranging from 5.12% to 8.70%. As of December 31, 2003 the Company's pro-rata share of non-recourse mortgage loans relating to the RioCan Venture was approximately CAD $295.3 million (USD $226.7 million). (See Note 8 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) The Kimco Retail Opportunity Portfolio ("KROP"), a joint venture with GE Capital Real Estate ("GECRE") was established to acquire high-growth potential retail properties in the United States. As of December 31, 2003, KROP consisted of 23 shopping center properties with approximately 3.5 million square feet of GLA. As of December 31, 2003, KROP had non-recourse mortgage loans totaling $295.1 million with fixed rates ranging from 4.25% to 8.64% and variable rates ranging from LIBOR plus 1.8% to LIBOR plus 2.5%. KROP has entered into a series of interest rate cap agreements to mitigate the impact of changes in interest rates on its variable rate mortgage agreements. Such mortgage debt is collateralized by the individual shopping center property and is payable in monthly installments of principal and interest. At December 31, 2003 the weighted average interest rate for all mortgage debt outstanding was 5.04% per annum. As of December 31, 2003, the Company's pro-rata share of non-recourse mortgage loans relating to the KROP joint venture was approximately $59.0 million. Additionally, the Company along with its joint venture partner have provided interim financing ("Short-term Notes") for all acquisitions without a mortgage in place at the time of closing. As of December 31, 2003 KROP has outstanding Short-term Notes of $16.8 million due each the Company and GECRE. These short-term notes all have maturities of less than one year with rates ranging from LIBOR plus 4.0% to LIBOR plus 5.25%. (See Note 8 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) The Company has various other unconsolidated real estate joint ventures with ownership interests ranging from 4% to 50%. As of December 31, 2003, these unconsolidated joint ventures had individual non-recourse mortgage loans aggregating approximately $425.0 million. The Company's pro-rata share of these non-recourse mortgages was approximately $187.0 million. (See Note 8 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) 43 Other Real Estate Investments During November 2002, the Company, through its taxable REIT subsidiary, together with Prometheus Southeast Retail Trust, completed the merger and privatization of Konover Property Trust, which has been renamed Kimsouth Realty, Inc., ("Kimsouth"). The Company acquired 44.5% of the common stock of Kimsouth, which consisted primarily of 38 retail shopping center properties comprising approximately 4.6 million square feet of GLA. Total acquisition value was approximately $280.9 million including approximately $216.2 million in mortgage debt. The Company's investment strategy with respect to Kimsouth includes re-tenanting, repositioning and disposition of the properties. As a result of this strategy, Kimsouth has sold 16 properties as of December 31, 2003. The Kimsouth portfolio is comprised of 22 properties totaling 3.2 million square feet of GLA as of December 31, 2003 with non-recourse mortgage debt of approximately $137.0 million encumbering the properties. All mortgages payable are collateralized by certain properties and are due in monthly installments. As of December 31, 2003, interest rates range from 2.88% to 9.22% and the weighted average interest rate for all mortgage debt outstanding was 5.71% per annum. As of December 31, 2003, the Company's pro-rata share of non-recourse mortgage loans relating to the Kimsouth portfolio was approximately $61.0 million. During June 2002, the Company acquired a 90% equity participation interest in an existing leveraged lease of 30 properties. The properties are leased under a long-term bond-type net lease whose primary term expires in 2016, with the lessee having certain renewal option rights. The Company's cash equity investment was approximately $4.0 million. This equity investment is reported as a net investment in leveraged lease in accordance with SFAS No. 13, Accounting for Leases (as amended). The net investment in leveraged lease reflects the original cash investment adjusted by remaining net rentals, estimated unguaranteed residual value, unearned and deferred income, and deferred taxes relating to the investment. As of December 31, 2003, eight of these properties were sold whereby the proceeds from the sales were used to paydown the mortgage debt by approximately $18.7 million. As of December 31, 2003, the remaining 22 properties were encumbered by third-party non-recourse debt of approximately $73.6 million that is scheduled to fully amortize during the primary term of the lease from a portion of the periodic net rents receivable under the net lease. As an equity participant in the leveraged lease, the Company has no recourse obligation for principal or interest payments on the debt, which is collateralized by a first mortgage lien on the properties and collateral assignment of the lease. Accordingly, this debt has been offset against the related net rental receivable under the lease. 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 payment of additional rent calculated as a percentage of tenants' gross sales above pre-determined thresholds, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses often include increases based upon changes 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 to market rates upon renewal. 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 foreign currency exchange rates and will, from time to time, enter into interest rate protection agreements and/or foreign currency hedge agreements which mitigate, but do not eliminate, the effect of changes in interest rates on its floating-rate debt and fluctuations in foreign currency exchange rates. New Accounting Pronouncements In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"), the primary objective of which is to provide guidance on the identification of entities for which control is achieved through means other than voting rights ("variable interest entities" or "VIEs") and to determine when and which business enterprise should consolidate the VIE (the "primary beneficiary"). This new model applies when either (i) the equity investors (if any) do not have a controlling financial interest or (ii) the equity investment at risk is insufficient to finance that entity's activities without additional financial support. In addition, effective upon issuance, FIN 46 requires additional disclosures by the primary beneficiary and other significant variable interest holders. The provisions of FIN 46 apply immediately to VIE's created after January 31, 2003. In October 2003, the FASB issued FASB Staff Position 46-6, which deferred the effective date to December 31, 2003 for applying the provisions of FIN 46 for interests held by public companies in all VIEs created prior to February 1, 2003. Additionally, in December 2003, the FASB issued Interpretation No. 46(R), Consolidation of Variable Interest Entities (revised December 2003) ("FIN 46(R)"). The provisions of FIN 46(R) are effective as of March 31, 2004 for all non-special purpose entity ("non-SPE") interests held by public companies in all variable interest entities created prior to February 1, 2003. These deferral provisions did not defer the disclosure provisions of FIN 46(R). 44 The Company has evaluated its joint venture investments established after January 31, 2003 and based upon its interpretation of FIN 46 and applied judgment, the Company has determined that these joint venture investments are not VIEs and are not required to be consolidated. The Company continues to evaluate all of its investments in joint ventures created prior to February 1, 2003 to determine whether any of these entities are VIEs and whether the Company is considered to be the primary beneficiary or a holder of a significant variable interest in the VIE. If it is determined that certain of these entities are VIEs the Company will be required to consolidate those entities in which the Company is the primary beneficiary or make additional disclosures for entities in which the Company is determined to hold a significant variable interest in the VIE as of March 31, 2004. The Company's joint ventures and other real estate investments primarily consist of co-investments with institutional and other joint venture partners in neighborhood and community shopping center properties, consistent with its core business. These joint ventures typically obtain non-recourse third party financing on their property investments, thus contractually limiting the Company's losses to the amount of its equity investment, and due to the lender's exposure to losses, a lender typically will require a minimum level of equity in order to mitigate their risk. The Company's exposure to losses associated with its unconsolidated joint ventures is limited to its carrying value in these investments. (See Notes 8 and 9 of the Notes to Consolidated Financial Statements included in this annual report on Form 10-K.) In April 2003, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities ("SFAS No. 149"). This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The provisions of this statement are effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material adverse impact on the Company's financial position or results of operations. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("SFAS No. 150"). This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The provisions of this statement are effective for financial instruments entered into or modified after May 31, 2003, and otherwise are effective at the beginning of the first interim period beginning after June 15, 2003. On November 7, 2003, the FASB deferred the classification and measurement provisions of SFAS No. 150 as they apply to certain mandatorily redeemable non-controlling interests. This deferral is expected to remain in effect while these provisions are further evaluated by the SFAS. As a result of this deferral, the adoption of SFAS No. 150 did not have a material adverse impact on the Company's financial position or results of operations. At December 31, 2003, the estimated fair value of minority interests relating to mandatorily redeemable non-controlling interests associated with finite-lived subsidiaries of the Company is approximately $3.9 million. These finite-lived subsidiaries have termination dates ranging from 2019 to 2027. Item 7A. Quantitative and Qualitative Disclosures About Market Risk As of December 31, 2003, the Company had approximately $558.2 million of floating-rate debt outstanding including $45.0 million on its unsecured revolving credit facility, $85 million of unsecured MTN's due August 2004 and $329.0 million on its bridge facility due September 2004. The Company believes the interest rate risk on its floating-rate debt is not material to the Company or its overall capitalization. 45 As of December 31, 2003, the Company has Canadian investments totaling CAD $189.2 million (approximately USD $145.2 million) comprised of a real estate joint venture and marketable securities. In addition, the Company has Mexican real estate investments of MXN $330.3 million (approximately USD $29.4 million). The foreign currency exchange risk has been mitigated through the use of foreign currency forward contracts (the "Forward Contracts") and a cross currency swap (the "CC Swap") with major financial institutions. The Company is exposed to credit risk in the event of non-performance by the counter-party to the Forward Contracts and the CC Swap. The Company believes it mitigates its credit risk by entering into the Forward Contracts and the CC Swap with major financial institutions. The Company has not, and does not plan to, enter into any derivative financial instruments for trading or speculative purposes. As of December 31, 2003, the Company had no other material exposure to market risk. 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. Item 9A. Controls and Procedures The Company's management, with the participation of the Company's chief executive officer and chief financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's chief executive officer and chief financial officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal year to which this report relates that have materially affected, or are reasonable likely to materially affect, the Company's internal control over financial reporting. 46 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 20, 2004. 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 20, 2004. 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 20, 2004. 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 20, 2004. Item 14. Principal Accountant Fees and Services 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 20, 2004. 47 PART IV Item 15. 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 Auditors 54 Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 2003 and 2002 55 Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001 56 Consolidated Statements of Comprehensive Income for the years ended December 31, 2003, 2002 and 2001 57 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2003, 2002 and 2001 58 Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 59 Notes to Consolidated Financial Statements 60 2. Financial Statement Schedules - Schedule II - Valuation and Qualifying Accounts 90 Schedule III - Real Estate and Accumulated Depreciation 91 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. 49 (b) Reports on Form 8-K A Current Report on Form 8-K dated October 1, 2003 was furnished under Item 9 to announce the Company's completion of its acquisition of Mid-Atlantic Realty Trust. A Current Report on Form 8-K dated October 23, 2003 was furnished under Item 12 and Item 9 relating to the announcement of the Company's third quarter 2003 operating results. A Current Report on Form 8-K dated November 10, 2003 was furnished under Item 12 and Item 9 to announce the Company's updated financial results for the three and nine months ended September 30, 2003 reflecting the FASB's deferral of certain provisions of SFAS No. 150. 48 INDEX TO EXHIBITS
Form 10-K 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]. 3.1 -- Articles of Amendment and Restatement of the Company, dated August 4, 1994 [Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994]. 3.2 -- By-laws of the Company dated February 6, 2002, as amended. [Incorporated by reference to Exhibit 3.2 to the 2001 Form 10-K] 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 [Incorporated by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1996]. 3.5 -- Articles Supplementary relating to the 7 1/2% Class D Cumulative Convertible Preferred Stock, par value $1.00 per share, of the Company, dated May 14, 1998 [Incorporated by reference to the Company's and The Price REIT, Inc.'s Joint Proxy/Prospectus on Form S-4 No. 333-52667]. 3.6 -- Articles Supplementary relating to the 6.65% Class F Cumulative Redeemable Preferred Stock, par value $1.00 per share, of the Company, dated May 7, 2003 [Incorporated by reference to the Company's filing on Form 8-A dated June 3, 2003]. 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 -- 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)]. 4.3 -- Indenture dated September 1, 1993 between Kimco Realty Corporation and Bank of New York (as successor to IBJ Schroder Bank and Trust Company) [Incorporated by reference to Exhibit 4(a) to the Registration Statement]. 4.4 -- First Supplemental Indenture, dated as of August 4, 1994. [Incorporated by reference to Exhibit 4.6 to the 1995 Form 10-K.] 4.5 -- 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")].
49 INDEX TO EXHIBITS (continued)
Form 10-K Exhibits Page -------- ---- 4.6 -- Form of Medium-Term Note (Fixed Rate). [Incorporated by reference to Exhibit 4.6 to the 2001 Form 10-K] 4.7 -- Form of Medium-Term Note (Floating Rate). [Incorporated by reference to Exhibit 4.7 to the 2001 Form 10-K] 4.8 -- Form of Remarketed Reset Note [Incorporated by reference to Exhibit 4(j) to the Company's Current Report on Form 8-K dated March 26, 1999]. 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 -- Employment Agreement between Kimco Realty Corporation and Michael J. Flynn, dated November 1, 1988 [Incorporated by reference to Exhibit 10.4 to the 1998 Form 10-K]. 10.5 -- 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 Michael V. Pappagallo, dated January 1, 2002 [Incorporated By reference to Exhibit 10.6 to the 2001 Form 10-K]. 10.7 -- Employment Agreement between Kimco Realty Corporation and Jerald Friedman, dated January 13, 1998 [Incorporated by Reference to Exhibit 10.10 to the Company's and the Price REIT, Inc.'s Joint Proxy Statement/Prospectus on Form S-4 No. 333-52667]. 10.8 -- First Amendment to Amended and Restated Executive Employment Agreement between Kimco Realty Corporation and Jerald Friedman, dated January 1, 2002. [Incorporated by reference to Exhibit 10.8 to the 2001 Form 10-K] 10.9 -- Amended and Restated Stock Option Plan [Incorporated by reference to the Company's and The Price REIT, Inc.'s Joint Proxy/Prospectus on Form S-4 No. 333-52667]. 10.10 -- Employment Agreement between Kimco Realty Corporation and David B. Henry - the Company commenced a five-year employment agreement with Mr. Henry pursuant to which Mr. Henry will serve as Chief Investment Officer and has been nominated as Vice Chairman of the Board of Directors [Incorporated by reference to Exhibit 10.11 to the Company's Form 10-Q filed on May 10, 2001]. 10.11 -- Employment Agreement between Kimco Realty Corporation and Raymond Edwards - the Company commenced a five-year employment agreement with Mr. Edwards pursuant to which Mr. Edwards will serve as a Vice President of the Company [Incorporated by reference to Exhibit 10.11 to the 2002 Form 10-K].
50 INDEX TO EXHIBITS (continued)
Form 10-K Exhibits Page -------- ---- 10.12 -- $500,000,000 Credit Agreement dated as of June 3, 2003 among Kimco Realty Corporation, the Several Lenders from Time to Time Parties Hereto, JPMorgan Chase Bank as Issuing Lender, Bank One, NA, Wachovia Bank, National Association as Syndication Agents, UBS AG, Cayman Island Branch, The Bank of Nova Scotia, New York Agency as Documentation Agents, The Bank of New York, Eurohypo AG, New York Branch, Keybank National Association, Merrill Lynch Bank, USA, Suntrust as Co-Agents and JPMorgan Chase As Administrative Agent [Incorporated by reference to Exhibit 10.11 to the Company's Form 10-Q filed on August 11, 2003]. 10.13 -- $400,000,000 Credit Agreement dated as of October 1, 2003 among Kimco Realty Corporation, the Several Lenders from Time to Time Parties Hereto, Wachovia Bank, National Association and the Bank of Nova Scotia, as Syndication Agents, Keybank National Association as Documentation Agent, Bank One, NA as Administrative Agent, Banc One Capital Markets, Inc. and Scotia Capital as Co-Bookrunners And Co-Lead Arrangers [Incorporated by reference to Exhibit 10.12 to the Company's Form 10-Q filed on November 10, 2003]. *12.1 -- Computation of Ratio of Earnings to Fixed Charges. 99 *12.2 -- Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 100 *21.1 -- Subsidiaries of the Company 101 *23.1 -- Consent of PricewaterhouseCoopers LLP 109 *31.1 -- Certification of the Company's Chief Executive Officer, Milton Cooper, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 110 *31.2 -- Certification of the Company's Chief Financial Officer, Michael V. Pappagallo, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 111 *32.1 -- Certification of the Company's Chief Executive Officer Milton Cooper, and the Company's Chief Financial Officer Michael V. Pappagallo, pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 112
--------------------------------------- * Filed herewith. 51 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 9, 2004 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 9, 2004 --------------------------- the Board of Directors Martin S. Kimmel /s/ Milton Cooper Chairman of the Board March 9, 2004 --------------------------- of Directors and Chief Milton Cooper Executive Officer /s/ Michael J. Flynn Vice Chairman of the March 9, 2004 --------------------------- Board of Directors, Michael J. Flynn President and Chief Operating Officer /s/ David B. Henry Vice Chairman of the March 9, 2004 --------------------------- Board of Directors and David B. Henry Chief Investment Officer /s/ Richard G. Dooley Director March 9, 2004 --------------------------- Richard G. Dooley /s/ Joe Grills Director March 9, 2004 --------------------------- Joe Grills /s/ F. Patrick Hughes Director March 9, 2004 --------------------------- F. Patrick Hughes /s/ Frank Lourenso Director March 9, 2004 --------------------------- Frank Lourenso /s/ Richard Saltzman Director March 9, 2004 --------------------------- Richard Saltzman /s/ Michael V. Pappagallo Vice President - March 9, 2004 --------------------------- Chief Financial Officer Michael V. Pappagallo /s/ Glenn G. Cohen Vice President - March 9, 2004 --------------------------- Treasurer Glenn G. Cohen /s/ Paul Westbrook Director of Accounting March 9, 2004 --------------------------- Paul Westbrook
52 ANNUAL REPORT ON FORM 10-K ITEM 8, ITEM 15 (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 Auditors 54 Consolidated Financial Statements and Financial Statement Schedules: Consolidated Balance Sheets as of December 31, 2003 and 2002 55 Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001 56 Consolidated Statements of Comprehensive Income for the years ended December 31, 2003, 2002 and 2001 57 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2003, 2002 and 2001 58 Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 59 Notes to Consolidated Financial Statements 60 Financial Statement Schedules: II. Valuation and Qualifying Accounts 90 III. Real Estate and Accumulated Depreciation 91
REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Stockholders of Kimco Realty Corporation: In our opinion, the consolidated financial statements listed in the index appearing under Item 15 (a)(1) present fairly, in all material respects, the financial position of Kimco Realty Corporation and Subsidiaries (collectively, the "Company") at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15 (a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 7 to the consolidated financial statements, effective January 1, 2002 the Company adopted the provisions of Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which requires that the results of operations, including any gain or loss on sale, relating to real estate that has been disposed of or is classified as held for sale after initial adoption be reported in discontinued operations for all periods presented. /s/ PricewaterhouseCoopers LLP New York, New York March 2, 2004 54 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share information)
December 31, December 31, 2003 2002 -------------- ------------- Assets: Real Estate Rental property Land $ 664,069 $ 518,268 Building and improvements 3,166,857 2,666,626 ----------- ----------- 3,830,926 3,184,894 Less, accumulated depreciation and amortization 568,015 516,558 ----------- ----------- 3,262,911 2,668,336 Real estate under development 304,286 234,953 Undeveloped land parcels 1,312 1,312 ----------- ----------- Real estate, net 3,568,509 2,904,601 Investment and advances in real estate joint ventures 487,394 390,484 Other real estate investments 113,085 99,542 Mortgages and other financing receivables 95,019 94,024 Cash and cash equivalents 48,288 35,962 Marketable securities 45,677 66,992 Accounts and notes receivable 57,080 56,484 Deferred charges and prepaid expenses 66,095 50,149 Other assets 122,778 60,112 ----------- ----------- $ 4,603,925 $ 3,758,350 =========== =========== Liabilities & Stockholders' Equity: Notes payable $ 1,686,250 $ 1,302,250 Mortgages payable 375,914 230,760 Construction loans payable 92,784 43,972 Accounts payable and accrued expenses 92,239 94,784 Dividends payable 65,969 59,646 Other liabilities 55,006 24,198 ----------- ----------- 2,368,162 1,755,610 ----------- ----------- Minority interests in partnerships 99,917 93,940 ----------- ----------- Commitments and contingencies Stockholders' Equity Preferred stock, $1.00 par value, authorized 3,600,000 shares Class A Preferred Stock, $1.00 par value, authorized 345,000 shares Issued and outstanding 0 and 300,000 shares, respectively - 300 Aggregate liquidation preference $0 and $75,000, respectively Class B Preferred Stock, $1.00 par value, authorized 230,000 shares Issued and outstanding 0 and 200,000 shares, respectively - 200 Aggregate liquidation preference $0 and $50,000, respectively Class C Preferred Stock, $1.00 par value, authorized 460,000 shares Issued and outstanding 0 and 400,000 shares, respectively - 400 Aggregate liquidation preference $0 and $100,000, respectively Class F Preferred Stock, $1.00 par value, authorized 700,000 shares Issued and outstanding 700,000 and 0 shares, respectively 700 - Aggregate liquidation preference $175,000 and $0, respectively Common stock, $.01 par value, authorized 200,000,000 shares Issued and outstanding 110,623,967 and 104,601,828 shares, respectively 1,106 1,046 Paid-in capital 2,147,286 1,984,820 Cumulative distributions in excess of net income (30,112) (85,367) ----------- ----------- 2,118,980 1,901,399 Accumulated other comprehensive income 16,866 7,401 ----------- ----------- 2,135,846 1,908,800 ----------- ----------- $ 4,603,925 $ 3,758,350 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 55 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share information)
Year Ended December 31, ----------------------------------------- 2003 2002 2001 --------- --------- --------- Real estate operations: ----------------------- Revenues from rental property $ 479,664 $ 432,777 $ 431,498 --------- --------- --------- Rental property expenses: Rent 11,240 11,300 11,569 Real estate taxes 61,276 60,248 53,892 Operating and maintenance 53,979 44,525 42,784 --------- --------- --------- 126,495 116,073 108,245 --------- --------- --------- 353,169 316,704 323,253 Income from other real estate investments 22,828 16,038 38,113 Mortgage financing income 18,587 19,412 2,594 Management and other fee income 15,315 12,069 6,350 Depreciation and amortization (86,237) (70,894) (68,509) --------- --------- --------- 323,662 293,329 301,801 --------- --------- --------- Interest, dividends and other investment income 19,464 18,565 16,999 Other income/(expense), net (3,792) 2,532 (2,176) --------- --------- --------- 15,672 21,097 14,823 --------- --------- --------- Interest expense (102,709) (85,323) (87,005) General and administrative expenses (38,657) (31,605) (28,336) Gain on early extinguishment of debt 2,921 19,033 - Adjustment of property carrying values - (11,000) - --------- --------- --------- 200,889 205,531 201,283 Provision for income taxes (1,516) (6,552) (14,009) Equity in income of real estate joint ventures, net 42,276 37,693 21,664 Minority interests in income of partnerships, net (7,868) (2,430) (1,682) --------- --------- --------- Income from continuing operations 233,781 234,242 207,256 --------- --------- --------- Discontinued operations: Income from discontinued operating properties 10,023 7,928 18,191 Gain on early extinguishment of debt 6,760 3,222 - Adjustment of property carrying values (4,016) (22,030) - Gain on disposition of operating properties 47,657 12,778 - --------- --------- --------- Income from discontinued operations 60,424 1,898 18,191 --------- --------- --------- Gain on sale of operating properties 3,177 - 3,040 Gain on sale of development properties net of tax of $6,998, $6,352 and $5,367, respectively 10,497 9,528 8,051 --------- --------- --------- Net Income 307,879 245,668 236,538 Original issuance costs associated with the redemption of preferred stock (7,788) - - Preferred stock dividends (14,669) (18,437) (24,553) --------- --------- --------- Net income available to common shareholders $ 285,422 $ 227,231 $ 211,985 ========= ========= ========= Per common share: Income from continuing operations: -Basic $ 2.10 $ 2.16 $ 2.01 ========= ========= ========= -Diluted $ 2.07 $ 2.14 $ 1.98 ========= ========= ========= Net income : -Basic $ 2.67 $ 2.18 $ 2.20 ========= ========= ========= -Diluted $ 2.62 $ 2.16 $ 2.16 ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 56 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended December 31, 2003, 2002 and 2001 (in thousands)
2003 2002 2001 --------- --------- --------- Net income $ 307,879 $ 245,668 $ 236,538 --------- --------- --------- Other comprehensive income: Change in unrealized gain/(loss) on marketable securities 3,798 (4,456) 8,784 Change in unrealized gain on interest rate swaps 620 3,264 (3,884) Change in unrealized gain on warrants 4,319 1,524 2,410 Change in unrealized gain/(loss) on foreign currency hedge agreements (15,465) 195 - Foreign currency translation adjustment 16,193 (436) - --------- --------- --------- Other comprehensive income 9,465 91 7,310 --------- --------- --------- Comprehensive income $ 317,344 $ 245,759 $ 243,848 ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 57 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended December 31, 2003, 2002, and 2001 (in thousands, except per share information)
Cumulative Preferred Stock Common Stock Distributions ----------------- ----------------- Paid in in Excess Issued Amount Issued Amount Capital of Net Income --------------------------------------------------------------------- Balance, January 1, 2001 1,318 $ 1,318 94,717 $ 947 $ 1,819,130 $(113,110) Net income 236,538 Dividends ($1.96 per common share; $1.9375, $2.125, $2.0938, and $1.8409 per Class A, Class B, Class C, and Class D Depositary Share, respectively) (216,559) Issuance of common stock 3,906 40 122,103 Exercise of common stock options 1,694 17 34,919 Conversion of Class D Preferred Stock to common stock (326) (326) 3,036 30 290 Other comprehensive income ----- ------- ------- ------- ------------ ----------- Balance, December 31, 2001 992 992 103,353 1,034 1,976,442 (93,131) Net income 245,668 Dividends ($2.10 per common share; $1.9375, $2.125 and $2.0938 per Class A, Class B, and Class C Depositary Share, respectively) (237,904) Issuance of common stock 80 1 2,523 Exercise of common stock options 308 3 5,771 Collection of notes receivable Conversion of Class D Preferred Stock to common stock (92) (92) 861 8 84 Other comprehensive income ----- ------- ------- ------- ------------ ----------- Balance, December 31, 2002 900 900 104,602 1,046 1,984,820 (85,367) Net income 307,879 Dividends ($2.19 per common share; $1.0979, $1.3399, $1.3610, and $1.016 per Class A, Class B, Class C and Class F Depositary Share, respectively) (252,624) Issuance of common stock 4,944 49 192,703 Exercise of common stock options 1,078 11 25,777 Redemption of Class A, B and C preferred stock (900) (900) (224,100) Issuance of Class F Preferred Stock 700 700 168,086 Other comprehensive income ----- ------- ------- ------- ------------ ----------- Balance, December 31, 2003 700 $ 700 110,624 $ 1,106 $ 2,147,286 $ (30,112) ===== ======= ======= ======= ============ =========== Accumulated Total Other Comprehensive Stockholders' Income Equity ---------------------------------------- Balance, January 1, 2001 $ - $ 1,708,285 Net income 236,538 Dividends ($1.96 per common share; $1.9375, $2.125, $2.0938, and $1.8409 per Class A, Class B, Class C, and Class D Depositary Share, respectively) (216,559) Issuance of common stock 122,143 Exercise of common stock options 34,936 Conversion of Class D Preferred Stock to common stock (6) Other comprehensive income 7,310 7,310 -------- ----------- Balance, December 31, 2001 7,310 1,892,647 Net income 245,668 Dividends ($2.10 per common share; $1.9375, $2.125 and $2.0938 per Class A, Class B, and Class C Depositary Share, respectively) (237,904) Issuance of common stock 2,524 Exercise of common stock options 5,774 Collection of notes receivable Conversion of Class D Preferred Stock to common stock - Other comprehensive income 91 91 -------- ----------- Balance, December 31, 2002 7,401 1,908,800 Net income 307,879 Dividends ($2.19 per common share; $1.0979, $1.3399, $1.3610, and $1.016 per Class A, Class B, Class C and Class F Depositary Share, respectively) (252,624) Issuance of common stock 192,752 Exercise of common stock options 25,788 Redemption of Class A, B and C preferred stock (225,000) Issuance of Class F Preferred Stock 168,786 Other comprehensive income 9,465 9,465 -------- ----------- Balance, December 31, 2003 $ 16,866 $ 2,135,846 ======== ===========
The accompanying notes are an integral part of these consolidated financial statements. 58 KIMCO REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31, ----------------------------------------- 2003 2002 2001 --------- --------- --------- Cash flow from operating activities: Net income $ 307,879 $ 245,668 $ 236,538 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 89,068 76,674 74,209 Adjustment of property carrying values 4,016 33,031 - Gain on sale of development properties (17,495) (15,879) (13,418) Gain on sale of operating properties (50,834) (12,778) (3,040) Gain on early extinguishment of debt (9,681) (22,255) - Minority interests in income of partnerships, net 7,868 2,430 1,682 Equity in income of real estate joint ventures, net (42,276) (37,693) (21,664) Income from other real estate investments (19,976) (13,222) (33,518) Distributions from unconsolidated investments 67,712 40,275 36,377 Change in accounts and notes receivable (596) (6,938) (1,956) Change in accounts payable and accrued expenses (2,545) 12,612 3,607 Change in other operating assets and liabilities (24,508) (22,994) 8,627 --------- --------- --------- Net cash flow provided by operating activities 308,632 278,931 287,444 --------- --------- --------- Cash flow from investing activities: Acquisition of and improvements to operating real estate (917,403) (244,750) (63,809) Acquisition of and improvements to real estate under development (187,877) (113,450) (107,364) Investment in marketable securities (23,680) (39,183) (29,070) Proceeds from sale of marketable securities 62,744 49,396 36,427 Investments and advances to real estate joint ventures (152,997) (157,427) (63,302) Reimbursements of advances to real estate joint ventures 93,729 16,665 - Redemption of minority interests in real estate partnerships (4,729) - (7,133) Other real estate investments (52,818) (69,288) (24,824) Reimbursements of advances to other real estate investments 13,264 1,179 24,824 Investment in mortgage loans receivable (64,652) (123,242) (36,099) Collection of mortgage loans receivable 41,529 89,053 5,952 Proceeds from sale of mortgage loan receivable 36,723 - - Proceeds from sale of operating properties 423,237 84,139 46,766 Proceeds from sale of development properties 90,565 108,209 61,921 Other - 2,044 (1,482) --------- --------- --------- Net cash flow used for investing activities (642,365) (396,655) (157,193) --------- --------- --------- Cash flow from financing activities: Principal payments on debt, excluding normal amortization of rental property debt (18,326) (30,689) (4,587) Principal payments on rental property debt (5,813) (5,931) (5,126) Principal payments on construction loan financings (40,644) (801) - Proceeds from mortgage/construction loan financings 110,816 67,773 51,230 Borrowings under revolving credit facilities 195,000 269,000 10,000 Repayment of borrowings under revolving credit facilities (190,000) (229,000) (55,000) Proceeds from issuance of unsecured senior notes 250,000 337,000 - Repayment of unsecured senior notes (200,000) (110,000) - Proceeds from senior term loan 400,000 - - Repayment of senior term loan (71,000) - - Payment of unsecured obligation - (11,300) - Dividends paid (246,301) (235,602) (209,785) Proceeds from issuance of stock 387,327 9,389 157,767 Redemption of preferred stock (225,000) - - --------- --------- --------- Net cash flow provided by (used for) financing activities 346,059 59,839 (55,501) --------- --------- --------- Change in cash and cash equivalents 12,326 (57,885) 74,750 Cash and cash equivalents, beginning of year 35,962 93,847 19,097 --------- --------- --------- Cash and cash equivalents, end of year $ 48,288 $ 35,962 $ 93,847 ========= ========= ========= Interest paid during the year (net of capitalized interest of $8,887, $9,089 and $7,924, respectively) $ 97,215 $ 83,977 $ 81,092 ========= ========= ========= Income taxes paid during the year $ 15,901 $ 12,035 $ 24,888 ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 59 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies: Business Kimco Realty Corporation (the "Company" or "Kimco"), 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. The Company also provides property management services for shopping centers owned by affiliated entities, various real estate joint ventures and unaffiliated third parties. Additionally, in connection with the Tax Relief Extension Act of 1999 (the "RMA"), which became effective January 1, 2001, the Company is now permitted to participate in activities which it was precluded from previously in order to maintain its qualification as a Real Estate Investment Trust ("REIT"), so long as these activities are conducted in entities which elect to be treated as taxable subsidiaries under the Internal Revenue Code, subject to certain limitations. As such, the Company, through its taxable REIT subsidiaries, is engaged in various retail real estate related opportunities including (i) merchant building, through its Kimco Developers, Inc. ("KDI") subsidiary, which is primarily engaged in the ground-up development of neighborhood and community shopping centers and the subsequent sale thereof upon completion, (ii) retail real estate advisory and disposition services which primarily focuses on leasing and disposition strategies of retail real estate controlled by both healthy and distressed and/or bankrupt retailers, and (iii) acting as an agent or principal in connection with tax deferred exchange transactions. 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, 2003, the Company's single largest neighborhood and community shopping center accounted for only 1.0% of the Company's annualized base rental revenues and only 0.6% of the Company's total shopping center gross leasable area ("GLA"). At December 31, 2003, the Company's five largest tenants were The Home Depot, Kmart Corporation, Kohl's, Royal Ahold and TJX Companies, which represented approximately 3.0%, 2.9%, 2.8%, 2.6% and 2.5%, respectively, of the Company's annualized base rental revenues, including the proportionate share of base rental revenues from properties in which the Company has less than a 100% economic interest. The principal business of the Company and its consolidated subsidiaries is the ownership, development, management and operation of retail shopping centers, including complementary services that capitalize on the Company's established retail real estate expertise. The Company does not distinguish or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single reportable segment for disclosure purposes in accordance with accounting principles generally accepted in the United States of America. 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 partnerships in which the Company has a controlling interest. All intercompany balances and transactions have been eliminated in consolidation. Accounting principles generally accepted in the United States of America ("GAAP") 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. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition and the collectability of trade accounts receivable. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates. 60 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued Real Estate Real estate assets are stated at cost, less accumulated depreciation and amortization. If there is an event or a change in circumstances that indicates that the basis of a property (including any related amortizable intangible assets or liabilities) may not be recoverable, then management will assess any impairment in value by making a comparison of (i) the current and projected operating cash flows (undiscounted and without interest charges) of the property over its remaining useful life and (ii) the net carrying amount of the property. If the current and projected operating cash flows (undiscounted and without interest charges) are less than the carrying value of the property, the carrying value would be adjusted to an amount to reflect the estimated fair value of the property. When a real estate asset is identified by management as held for sale, the Company ceases depreciation of the asset and estimates the sales price, net of selling costs. If, in management's opinion, the net sales price of the asset is less than the net book value of the asset, an adjustment to the carrying value would be recorded to reflect the estimated fair value of the property. Upon acquisition of real estate operating properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building and improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships) and assumed debt in accordance with Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations ("SFAS No. 141"). Based on these estimates, the Company allocates the purchase price to the applicable assets and liabilities. The Company utilized methods similar to those used by independent appraisers in estimating the fair value of acquired assets and liabilities. The fair value of the tangible assets of an acquired property considers the value of the property "as-if-vacant". The fair value reflects the depreciated replacement cost of the permanent assets, with no trade fixtures included. In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases are estimated based on the present value of the difference between the contractual amounts to be paid pursuant to the leases and management's estimate of the market lease rates and other lease provisions (i.e. expense recapture, base rental changes, etc.) measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market intangible is amortized to rental income over the estimated remaining term of the respective leases. In determining the value of in-place leases, management considers current market conditions and costs to execute similar leases in arriving at an estimate of the carrying costs during the expected lease-up period from vacant to existing occupancy. In estimating carrying costs, management includes real estate taxes, insurance, other operating expenses and estimates of lost rental revenue during the expected lease-up periods and costs to execute similar leases including leasing commissions, legal and other related costs based on current market demand. In estimating the value of tenant relationships, management considers the nature and extent of the existing tenant relationship, the expectation of lease renewals, growth prospects, and tenant credit quality, among other factors. The value assigned to in-place leases and tenant relationships are amortized over the estimated remaining term of the leases. If a lease were to be terminated prior to its scheduled expiration, all unamortized costs relating to that lease would be written off. Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets, as follows: Buildings 15 to 46 years Fixtures, building and leasehold improvements Terms of leases or useful (including certain identified intangible assets) lives, whichever is shorter
Expenditures for maintenance and repairs are charged to operations as incurred. Significant renovations and replacements, which improve and extend the life of the asset, are capitalized. The useful lives of amortizable intangible assets are evaluated each reporting period with any changes in estimated useful lives being accounted for over the revised remaining useful life. 61 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued Real Estate Under Development Real estate under development represents the ground-up development of neighborhood and community shopping centers which are held for sale upon completion. These properties are carried at cost and no depreciation is recorded on these assets. The cost of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. The Company ceases cost capitalization when the property is held available for occupancy upon substantial completion of tenant improvements, but no later than one year from the completion of major construction activity. If in management's opinion, the net sales price of these assets is less than the net carrying value, the carrying value would be written down to an amount to reflect the estimated fair value of the property. Investments in Unconsolidated Joint Ventures The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting as the Company exercises significant influence, but does not control these entities. These investments are recorded initially at cost and subsequently adjusted for equity in earnings and cash contributions and distributions. On a periodic basis, management assesses whether there are any indicators that the value of the Company's investments in unconsolidated joint ventures may be impaired. An investment's value is impaired only if management's estimate of the fair value of the investment is less than the carrying value of the investment. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. Marketable Securities The Company classifies its existing marketable equity securities as available-for-sale in accordance with the provisions of SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. These securities are carried at fair market value, with unrealized gains and losses reported in stockholders' equity as a component of Accumulated other comprehensive income ("OCI"). Gains or losses on securities sold are based on the specific identification method. All debt securities are classified as held-to-maturity because the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion discounts to maturity. 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 and Accounts Receivable Base rental revenues from rental property are recognized on a straight-line basis over the terms of the related leases. Certain of these leases also provide for percentage rents based upon the level of sales achieved by the lessee. These percentage rents are recorded once the required sales level is achieved. Rental income may also include payments received in connection with lease termination agreements. In addition, leases typically provide for reimbursement to the Company of common area maintenance costs, real estate taxes and other operating expenses. Operating expense reimbursements are recognized as earned. The Company makes estimates of the uncollectability of its accounts receivable related to base rents, expense reimbursements and other revenues. The Company analyzes accounts receivable and historical bad debt levels, customer credit worthiness and current economic trends and evaluating the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims. The Company's reported net income is directly affected by management's estimate of the collectability of accounts receivable. 62 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued 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 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 Section 856 through 860 of the Internal Revenue Code, as amended (the "Code"). In connection with the RMA, which became effective January 1, 2001, the Company is now permitted to participate in certain activities which it was previously precluded from in order to maintain its qualification as a REIT, so long as these activities are conducted in entities which elect to be treated as taxable subsidiaries under the Code. As such, the Company is subject to federal and state income taxes on the income from these activities. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Foreign Currency Translation and Transactions Assets and liabilities of our foreign operations are translated using year-end exchange rates, and revenues and expenses are translated using exchange rates as determined throughout the year. Gains or losses resulting from translation are included in OCI, as a separate component of the Company's stockholders' equity. Gains or losses resulting from foreign currency transactions are translated to local currency at the rates of exchange prevailing at the dates of the transactions. The effect of the transaction's gain or loss is included in the caption Other income/(expense), net in the Consolidated Statements of Income. Derivative / Financial Instruments Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"), as amended by SFAS No. 149 in April 2003 to clarify accounting and reporting for derivative instruments. SFAS No. 133 establishes accounting and reporting standards for derivative instruments. This accounting standard requires the Company to measure derivative instruments at fair value and to record them in the Consolidated Balance Sheet as an asset or liability, depending on the Company's rights or obligations under the applicable derivative contract. In addition, the fair value adjustments will be recorded in either stockholders' equity or earnings in the current period based on the designation of the derivative. The effective portions of changes in fair value of cash flow hedges are reported in OCI and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in the fair value of foreign currency hedges that are designated and effective as net investment hedges are included in the cumulative translation component of OCI in accordance with SFAS No. 52 to the extent they are economically effective and are subsequently reclassified to earnings when the hedged investments are sold or otherwise disposed of. The changes in fair value of derivative instruments which are not designated as hedging instruments and the ineffective portions of hedges are recorded in earnings for the current period. The Company utilizes derivative financial instruments to reduce exposure to fluctuations in interest rates, foreign currency exchange rates and market fluctuation on equity securities. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. The Company has not, and does not plan to enter into financial instruments for trading or speculative purposes. Additionally, the Company has a policy of only entering into derivative contracts with major financial institutions. The principal financial instruments used by the Company are interest rate swaps, foreign currency exchange forward contracts, cross currency swaps and warrant contracts. In accordance with the provisions of SFAS No. 133, these derivative instruments were designated and qualified as cash flow, fair value or foreign currency hedges (see Note 17). 63 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued Earnings Per Share On October 24, 2001, the Company's Board of Directors declared a three-for-two split (the "Stock Split") of the Company's common stock which was effected in the form of a stock dividend paid on December 21, 2001 to stockholders of record on December 10, 2001. All share and per share data included in the accompanying Consolidated Financial Statements and Notes thereto have been adjusted to reflect this Stock Split. The following table sets forth the reconciliation of earnings and the weighted average number of shares used in the calculation of basic and diluted earnings per share (amounts presented in thousands, except per share data):
2003 2002 2001 ---- ---- ---- Computation of Basic Earnings Per Share: Income from continuing operations $ 233,781 $ 234,242 $ 207,256 Gain on sale of operating properties 3,177 - 3,040 Gain on sale of development properties, net of provision for income tax 10,497 9,528 8,051 Original issuance costs associated with the redemption of preferred stock (7,788) - - Preferred Stock Dividends (14,669) (18,437) (24,553) --------- --------- --------- Income from continuing operations applicable to common shares 224,998 225,333 193,794 Income from discontinued operations 60,424 1,898 18,191 --------- --------- --------- Net income applicable to common shares $ 285,422 $ 227,231 $ 211,985 ========= ========= ========= Weighted average common shares outstanding 107,092 104,458 96,317 ========= ========= ========= Basic Earnings Per Share: Income from continuing operations $ 2.10 $ 2.16 $ 2.01 Income from discontinued operations 0.57 0.02 0.19 --------- --------- --------- Net income $ 2.67 $ 2.18 $ 2.20 ========= ========= ========= Computation of Diluted Earnings Per Share: Income from continuing operations applicable to common shares $ 224,998 $ 225,333 $ 193,794 Dividends on Class D Convertible Preferred Stock - - 6,115 Dividends on convertible downREIT units (a) 1,423 - --------- --------- --------- Income from continuing operations for diluted earnings per share 224,998 226,756 199,909 Income from discontinued operations 60,424 1,898 18,191 --------- --------- --------- Net income for diluted earnings per share $ 285,422 $ 228,654 $ 218,100 ========= ========= =========
64 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
Weighted average common shares outstanding - Basic 107,092 104,458 96,317 Effect of dilutive securities: Stock options 1,678 999 1,139 Assumed conversion of Class D Preferred stock to common stock - 4 3,707 Assumed conversion of downREIT units - 508 - --------- --------- --------- Shares for diluted earnings per share 108,770 105,969 101,163 ========= ========= ========= 2003 2002 2001 --------- --------- --------- Diluted Earnings Per Share: Income from continuing operations $ 2.07 $ 2.14 $ 1.98 Income from discontinued operations 0.55 0.02 0.18 --------- --------- --------- Net income $ 2.62 $ 2.16 $ 2.16 ========= ========= =========
(a) In 2003, the effect of the assumed conversion of downREIT units had an anti-dilutive effect upon the calculation of Income from continuing operations per share. Accordingly, the impact of such conversion has not been included in the determination of diluted earnings per share calculations. The Company maintains a stock option plan (the "Plan") for which prior to January 1, 2003, the Company accounted for under the intrinsic value-based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation (an interpretation of APB Opinion No. 25). Effective January 1, 2003, the Company adopted the prospective method provisions of SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure an Amendment of FASB Statement No. 123 ("SFAS No. 148"), which will apply the recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123") to all employee awards granted, modified or settled after January 1, 2003. Awards under the Company's Plan generally vest ratably over a three-year term and expire ten years from the date of grant. Therefore, the cost related to stock-based employee compensation included in the determination of net income is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS No. 123. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding stock awards in each period (amounts presented in thousands, expect per share data):
Year Ended December 31, ----------------------------------------------------- 2003 2002 2001 --------- --------- --------- Net income, as reported $ 307,879 $ 245,668 $ 236,538 Add: Stock based employee compensation expense included in reported net Income 148 - - Deduct: Total stock based employee Compensation expense determined under fair value based method for all awards (3,095) (3,153) (2,702) --------- --------- --------- Pro Forma Net Income - Basic $ 304,932 $ 242,515 $ 233,836 ========= ========= ========= Earnings Per Share Basic - as reported $ 2.67 $ 2.18 $ 2.20 ========= ========= ========= Basic - pro forma $ 2.64 $ 2.15 $ 2.17 ========= ========= ========= Net income for diluted earnings per share $ 285,422 $ 228,654 $ 218,100 Add: Stock based employee compensation expense included in reported net Income 148 - - Deduct: Total stock based employee Compensation expense determined under fair value based method for all awards (3,095) (3,153) (2,702) --------- --------- --------- Pro Forma Net Income - Diluted $ 282,475 $ 225,501 $ 215,398 ========= ========= ========= Earnings Per Share Diluted - as reported $ 2.62 $ 2.16 $ 2.16 ========= ========= ========= Diluted - pro forma $ 2.60 $ 2.13 $ 2.13 ========= ========= =========
65 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued These pro forma adjustments to net income and net income per diluted 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 2003, 2002 and 2001 include: (i) weighted average risk-free interest rates of 2.84%, 3.06% and 4.85%, respectively; (ii) weighted average expected option lives of 3.80 years, 4.1 years and 5.5 years, respectively; (iii) weighted average expected volatility of 15.26%, 16.12% and 15.76%, respectively, and (iv) weighted average expected dividend yield of 6.25%, 6.87% and 6.74%, respectively. The per share weighted average fair value at the dates of grant for options awarded during 2003, 2002 and 2001 was $2.35, $1.50 and $1.98, respectively. New Accounting Pronouncements In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"), the primary objective of which is to provide guidance on the identification of entities for which control is achieved through means other than voting rights ("variable interest entities" or "VIEs") and to determine when and which business enterprise should consolidate the VIE (the "primary beneficiary"). This new model applies when either (i) the equity investors (if any) do not have a controlling financial interest or (ii) the equity investment at risk is insufficient to finance that entity's activities without additional financial support. In addition, effective upon issuance, FIN 46 requires additional disclosures by the primary beneficiary and other significant variable interest holders. The provisions of FIN 46 apply immediately to VIE's created after January 31, 2003. In October 2003, the FASB issued FASB Staff Position 46-6, which deferred the effective date to December 31, 2003 for applying the provisions of FIN 46 for interests held by public companies in all VIE's created prior to February 1, 2003. Additionally, in December 2003, the FASB issued Interpretation No. 46(R), Consolidation of Variable Interest Entities (revised December 2003) ("FIN 46(R)"). The provisions of FIN 46(R) are effective as of March 31, 2004 for all non-special purpose entity ("non-SPE") interests held by public companies in all variable interest entities created prior to February 1, 2003. These deferral provisions did not defer the disclosure provisions of FIN 46(R). The Company has evaluated its joint venture investments established after January 31, 2003 and based upon its interpretation of FIN 46 and applied judgment, the Company has determined that these joint venture investments are not VIEs and are not required to be consolidated. The Company continues to evaluate all of its investments in joint ventures created prior to February 1, 2003 to determine whether any of these entities are VIEs and whether the Company is considered to be the primary beneficiary or a holder of a significant variable interest in the VIE. If it is determined that certain of these entities are VIEs, the Company will be required to consolidate these entities in which the Company is the primary beneficiary or make additional disclosures for entities in which the Company is determined to hold a significant variable interest in the VIE as of March 31, 2004. The Company's joint ventures and other real estate investments primarily consist of co-investments with institutional and other joint venture partners in neighborhood and community shopping center properties, consistent with its core business. These joint ventures typically obtain non-recourse third party financing on their property investments, thus contractually limiting the Company's losses to the amount of its equity investment; and due to the lender's exposure to losses, a lender typically will require a minimum level of equity in order to mitigate their risk. The Company's exposure to losses associated with its unconsolidated joint ventures is limited to its carrying value in these investments. 66 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities ("SFAS No. 149"). This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. The provisions of this statement are effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS No. 149 did not have a material adverse impact on the Company's financial position or results of operations. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("SFAS No. 150"). This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The provisions of this statement are effective for financial instruments entered into or modified after May 31, 2003, and otherwise are effective at the beginning of the first interim period beginning after June 15, 2003. On November 7, 2003, the FASB deferred the classification and measurement provisions of SFAS No. 150 as they apply to certain mandatorily redeemable non-controlling interests. This deferral is expected to remain in effect while these provisions are further evaluated by the FASB. As a result of this deferral, the adoption of SFAS No. 150 did not have a material adverse impact on the Company's financial position or results of operations. At December 31, 2003, the estimated fair value of minority interests relating to mandatorily redeemable non-controlling interests associated with finite-lived subsidiaries of the Company is approximately $3.9 million. These finite-lived subsidiaries have termination dates ranging from 2019 to 2027. Reclassifications Certain reclassifications of prior years' amounts have been made to conform with the current year presentation. 2. Real Estate: The Company's components of Rental property consist of the following (in thousands):
December 31, ---------------------------- 2003 2002 ----------- ------------ Land $ 664,069 $ 518,268 Buildings and improvements Buildings 2,743,112 2,527,975 Building improvements 51,042 22,849 Tenant improvements 338,205 98,367 Fixtures & leasehold improvements 14,627 17,435 Other rental property, net (1) 19,871 - ----------- --------- 3,830,926 3,184,894 Accumulated depreciation and amortization (568,015) (516,558) ------------ ---------- Total $ 3,262,911 $ 2,668,336 =========== ===========
(1) At December 31, 2003, Other rental property, net consisted of (i) intangible assets including, $33,007 of in-place leases, $12,913 of tenant relationships and $12,892 of above-market leases and (ii) an intangible liability consisting of $38,941 of below-market leases. 3. Mid-Atlantic Realty Trust Merger: During June 2003, the Company and Mid-Atlantic Realty Trust ("Mid-Atlantic") entered into a definitive merger agreement whereby Mid-Atlantic would merge with and into a wholly-owned subsidiary of the Company (the "Merger" or "Mid-Atlantic Merger"). The Merger required the approval of holders of 66 2/3% of Mid-Atlantic's outstanding shares. Subject to certain conditions, limited partners in Mid-Atlantic's operating partnership were offered the same cash consideration for each outstanding unit and offered the opportunity (in lieu of cash) to exchange their interests for preferred units in the operating partnership upon the closing of the transaction. 67 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued The shareholders of Mid-Atlantic approved the Merger on September 30, 2003, and the closing occurred October 1, 2003. Mid-Atlantic shareholders received cash consideration of $21.051 per share. In addition, more than 99.0% of the limited partners in Mid-Atlantic's operating partnership elected to have their partnership units redeemed for cash consideration equal to $21.051 per unit. The transaction had a total value of approximately $700.0 million including the assumption of approximately $216.0 million of debt. The Company funded the transaction with available cash, a new $400.0 million bridge facility and funds from its existing revolving credit facility. In connection with the Merger, the Company acquired interests in 41 operating shopping centers, one regional mall, two shopping centers under development and eight other commercial assets. The properties have a gross leasable area of approximately 5.7 million square feet of which approximately 95.0% of the stabilized square footage is currently leased. The Company also acquired approximately 80.0 acres of undeveloped land. The properties are located primarily in Maryland, Virginia, New York, Pennsylvania, Massachusetts and Delaware. The Company has tentative agreements for a number of the properties to be allocated to its strategic co-investment programs. For financial reporting purposes the Merger was accounted for under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations ("SFAS No. 141"). During December 2003, the Company disposed of the one regional mall and the adjacent annex acquired in the Merger located in Bel Air, MD for a sales price of approximately $71.0 million, which approximated its net book value. 4. Property Acquisitions, Developments and Other Investments: Operating Properties - During the years 2003, 2002 and 2001 the Company acquired operating properties, in separate transactions, at aggregate costs of approximately $293.9 million, $258.7 million, and $21.1 million, respectively. Ground-Up Development Properties - Effective January 1, 2001, the Company elected taxable REIT subsidiary status for its wholly-owned development subsidiary, Kimco Developers, Inc. ("KDI"). KDI is primarily engaged in the ground-up development of neighborhood and community shopping centers and the subsequent sale thereof upon completion. During the years 2003, 2002 and 2001 certain subsidiaries and affiliates of the Company expended approximately $208.9 million, $148.6 million, and $119.4 million, respectively, in connection with the purchase of land and construction costs related to its ground-up development projects. Other Investments - During October 2002, the Company purchased from various joint venture partners, the remaining interest in a property located in Harrisburg, PA for an aggregate purchase price of $0.5 million. This property is now 100% owned by the Company. These property acquisitions and other investments have been funded principally through the application of proceeds from the Company's public unsecured debt issuances, equity offerings and proceeds from mortgage and construction financings. 5. Dispositions of Real Estate: During 2003, the Company disposed of, in separate transactions, (i) 10 operating properties, for an aggregate sales price of approximately $119.1 million, including the assignment of approximately $1.7 million of mortgage debt encumbering one of the properties, (ii) two regional malls for an aggregate sales price of approximately $135.6 million including the Bel Air, MD property referred to above, (iii) one out-parcel for a sales price of approximately $8.1 million, (iv) transferred three operating properties to KROP, as defined below, for a price of approximately $144.2 million which approximated their net book value, (v) transferred an operating property to a newly formed joint venture in which the Company has a 10% non-controlling interest for a price of approximately $21.9 million which approximated its net book value and (vi) terminated four leasehold positions in locations where a tenant in bankruptcy had rejected its lease. These transactions resulted in net gains of approximately $50.8 million. 68 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During 2002, the Company, (i) disposed of, in separate transactions, 12 operating properties for an aggregate sales price of approximately $74.5 million, including the assignment/repayment of approximately $22.6 million of mortgage debt encumbering three of the properties and (ii) terminated five leasehold positions in locations where a tenant in bankruptcy had rejected its lease. These transactions resulted in net gains of approximately $12.8 million. During 2003, KDI sold four of its recently completed projects and 26 out-parcels, in separate transactions, for approximately $134.6 million, which resulted in the recognition of pre-tax gains of approximately $17.5 million. During 2002, KDI sold four of its recently completed projects and eight out-parcels for approximately $128.7 million including the assignment of approximately $17.7 million in mortgage debt encumbering one of the properties. The sales resulted in pre-tax gains of approximately $15.9 million. 6. Adjustment of Property Carrying Values: As part of the Company's periodic assessment of its real estate properties with regard to both the extent to which such assets are consistent with the Company's long-term real estate investment objectives and the performance and prospects of each asset the Company determined in 2002 that its investment in four operating properties comprised of an aggregate 0.4 million square feet of GLA with an aggregate net book value of approximately $23.8 million, may not be fully recoverable. Based upon management's assessment of current market conditions and lack of demand for the properties, the Company reduced its anticipated holding period of these investments. As a result of the reduction in the anticipated holding period, together with a reassessment of the potential future operating cash flows of the properties and the effects of current market conditions, the Company determined that its investment in these assets was not fully recoverable and recorded an adjustment of property carrying values aggregating approximately $12.5 million in 2002, of which approximately $1.5 million is included in the caption Income from discontinued operations on the Company's Consolidated Statements of Income. 7. Discontinued Operations and Assets Held for Sale: In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144"). SFAS 144 established criteria beyond that previously specified in Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121"), to determine when a long-lived asset is classified as held for sale, and it provides a single accounting model for the disposal of long-lived assets. SFAS 144 was effective beginning January 1, 2002. In accordance with SFAS 144, the Company now reports as discontinued operations assets held for sale (as defined by SFAS 144) as of the end of the current period and assets sold subsequent to January 1, 2002. All results of these discontinued operations, are included in a separate component of income on the Consolidated Statements of Income under the caption Discontinued operations. This change has resulted in certain reclassifications of 2003, 2002 and 2001 financial statement amounts. 69 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued The components of Income from discontinued operations for each of the three years in the period ended December 31, 2003 are shown below. These include the results of operations through the date of each respective sale for properties sold during 2003 and 2002 and a full year of operations for those assets classified as held for sale as of December 31, 2003, (in thousands):
2003 2002 2001 ------- ---------- --------- Discontinued Operations: Revenues from rental property $ 16,945 $ 27,328 $ 37,117 Rental property expenses (4,283) (10,979) (10,161) --------- ----------- ---------- Income from property operations 12,662 16,349 26,956 Depreciation of rental property (2,830) (5,780) (5,699) Other income/(expense) 191 (2,641) (3,066) -------- ----------- ---------- Income from discontinued operating properties 10,023 7,928 18,191 Gain on early extinguishment of debt 6,760 3,222 - Adjustment of property carrying values (4,016) (22,030) - Gain on disposition of operating properties 47,657 12,778 - -------- ----------- ---------- Income from discontinued operations $ 60,424 $ 1,898 $ 18,191 ======== =========== ==========
During December 2003, the Company identified two operating properties, comprised of approximately 0.2 million square feet of GLA, as "Held for Sale" in accordance with SFAS 144. The book value of these properties, aggregating approximately $19.4 million, net of accumulated depreciation of approximately $2.1 million, exceeded their estimated fair value. The Company's determination of the fair value of these properties, aggregating approximately $15.4 million, is based upon contracts of sale with third parties less estimated selling costs. As a result, the Company recorded an adjustment of property carrying values of approximately $4.0 million. This adjustment is included, along with the related property operations for the current and comparative years, in the caption Income from discontinued operations on the Company's Consolidated Statements of Income. During 2003, the Company reached agreement with certain lenders in connection with three individual non-recourse mortgages encumbering three former Kmart sites. The Company paid approximately $14.2 million in full satisfaction of these loans which aggregated approximately $24.0 million. As a result of these transactions, the Company recognized a gain on early extinguishment of debt of approximately $9.7 million during 2003, of which $6.8 million is included in Income from discontinued operations. During November 2002, the Company disposed of an operating property located in Chicago, IL. Net proceeds from this sale of approximately $8.0 million were accepted by a lender in full satisfaction of an outstanding mortgage loan of approximately $11.5 million. As a result of this transaction, the Company recognized a gain of early extinguishment of debt of approximately $3.2 million. During 2002, the Company identified two operating properties, comprised of approximately 0.2 million square feet of GLA, as "Held for Sale" in accordance with SFAS No. 144. The book value of these properties, aggregating approximately $28.4 million, net of accumulated depreciation of approximately $2.9 million, exceeded their estimated fair value. The Company's determination of the fair value of these properties, aggregating approximately $7.9 million, is based upon executed contracts of sale with third parties less estimated selling costs. As a result, the Company recorded an adjustment of property carrying values of $20.5 million. 8. Investment and Advances in Real Estate Joint Ventures: Kimco Income REIT ("KIR") - During 1998, the Company formed KIR, an entity that was established for the purpose of investing in high quality real estate properties financed primarily with individual non-recourse mortgages. These properties include, but are not limited to, fully developed properties with strong, stable cash flows from credit-worthy retailers with long-term leases. The Company originally held a 99.99% limited partnership interest in KIR. Subsequent to KIR's formation, the Company sold a significant portion of its original interest to an institutional investor and admitted three other limited partners. As of December 31, 2003, KIR has received total capital commitments of $569.0 million, of which the Company subscribed for $247.0 million and the four limited partners subscribed for $322.0 million. As of December 31, 2003, the Company has a 43.3% non-controlling limited partnership interest in KIR. 70 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During 2003, the limited partners in KIR contributed $30.0 million towards their respective capital commitments, including $13.0 million by the Company. As of December 31, 2003, KIR had unfunded capital commitments of $99.0 million, including $42.9 million from the Company. The Company's equity in income from KIR for the years ended December 31, 2003, 2002 and 2001 was approximately $19.8 million, $18.2 million and $14.7 million, respectively. In addition, KIR entered into a master management agreement with the Company, whereby, the Company will perform services for fees related to management, leasing, operations, supervision and maintenance of the joint venture properties. For the years ended December 31, 2003, 2002 and 2001, the Company (i) earned management fees of approximately $2.9 million, $2.5 million and $1.9 million, respectively, (ii) received reimbursement of administrative fees of approximately $0.4 million, $1.0 million and $1.4 million, respectively, and (iii) earned leasing commissions of approximately $0.5 million, $0.8 million and $0.3 million, respectively. During 2003, KIR purchased two shopping center properties, in separate transactions, aggregating approximately 0.6 million square feet of GLA for approximately $103.5 million. During 2003, KIR disposed of two out-parcels in Las Vegas, NV, for an aggregate sales price of approximately $1.4 million, which approximated their net book value. During 2003, KIR obtained individual non-recourse, non-cross collateralized fixed-rate ten year mortgages aggregating $78.0 million on two of its previously unencumbered properties with rates ranging from 5.54% to 5.82% per annum. The net proceeds were used to satisfy the outstanding balance on the secured credit facility and partially fund the acquisition of various shopping center properties. During September 2003, KIR elected to terminate its secured revolving credit facility. This facility was scheduled to expire in November 2003 and had $5.0 million outstanding at the time of termination, which was paid in full. At December 31, 2002, there was $15.0 million outstanding under this facility. During 2002, KIR purchased five shopping center properties, in separate transactions, aggregating approximately 1.8 million square feet of GLA for approximately $213.5 million, including the assumption of approximately $63.1 million of mortgage debt encumbering two of the properties. During July 2002, KIR disposed of a shopping center property in Aurora, IL for an aggregate sales price of approximately $2.4 million, which represented the approximate book value of the property. During 2002, KIR obtained individual non-recourse, non-cross collateralized fixed-rate ten year mortgages aggregating approximately $170.3 million on seven of its previously unencumbered properties with rates ranging from 5.95% to 7.38% per annum. The net proceeds were used to finance the acquisition of various shopping center properties. As of December 31, 2003, the KIR portfolio was comprised of 70 shopping center properties aggregating approximately 14.6 million square feet of GLA located in 21 states. RioCan Investments - During October 2001, the Company formed a joint venture (the "RioCan Venture") with RioCan Real Estate Investment Trust ("RioCan") in which the Company has a 50% non-controlling interest, to acquire retail properties and development projects in Canada. The acquisition and development projects are to be sourced and managed by RioCan and are subject to review and approval by a joint oversight committee consisting of RioCan management and the Company's management personnel. Capital contributions will only be required as suitable opportunities arise and are agreed to by the Company and RioCan. 71 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During 2003, the RioCan Venture acquired a shopping center property comprising approximately 0.2 million square feet of GLA for a price of approximately CAD $42.6 (approximately USD $29.0 million) including the assumption of approximately CAD $28.7 (approximately USD $19.6 million) of mortgage debt. Additionally during 2003, the RioCan Venture acquired, in a single transaction, four parcels of land adjacent to an existing property for a purchase price of approximately CAD $18.7 million (approximately USD $14.2 million). This property was subsequently encumbered with non-recourse mortgage debt of approximately CAD $16.3 million (approximately USD $12.4 million). As of December 31, 2003, the RioCan Venture was comprised of 31 operating properties and three development properties consisting of approximately 7.2 million square feet of GLA. Kimco / G.E. Joint Venture ("KROP") During 2001, the Company formed a joint venture (the "Kimco Retail Opportunity Portfolio" or "KROP") with GE Capital Real Estate ("GECRE"), in which the Company has a 20% non-controlling interest and manages the portfolio. The purpose of this joint venture is to acquire established high growth potential retail properties in the United States. Total capital commitments to KROP from GECRE and the Company are for $200.0 million and $50.0 million, respectively, and such commitments are funded proportionately as suitable opportunities arise and are agreed to by GECRE and the Company. During 2003, GECRE and the Company contributed approximately $45.6 million and $11.4 million, respectively, towards their capital commitments. As of December 31, 2003, KROP had unfunded capital commitments of $144.3 million, including $28.9 million by the Company. Additionally, GECRE and the Company provided short-term interim financing for all acquisitions made by KROP without a mortgage in place at the time of acquisition. All such financing bears interest at rates ranging from LIBOR plus 4.0% to LIBOR plus 5.25% and have maturities of less than one year. KROP had outstanding short-term interim financing due to GECRE and the Company totaling $16.8 million each as of December 31, 2003 and $17.3 million each as of December 31, 2002. During 2003, KROP purchased eight shopping centers, in separate transactions, aggregating 1.9 million square feet of GLA for approximately $250.2 million, including the assumption of approximately $6.5 million of mortgage debt encumbering one of the properties. During December 2003, KROP disposed of a portion of a shopping center in Columbia, MD, for an aggregate sales price of approximately $2.8 million, which approximated the book value of the property. During 2002, KROP purchased 16 shopping centers aggregating 1.6 million square feet of GLA for approximately $177.8 million, including the assumption of approximately $29.5 million of mortgage debt encumbering three of the properties. During October 2002, KROP disposed of a shopping center in Columbia, MD for an aggregate sales price of approximately $2.9 million, which resulted in a gain of approximately $0.7 million. During 2003, KROP obtained individual non-recourse, non-cross collateralized fixed rate mortgages aggregating approximately $89.3 million on three of its previously unencumbered properties with rates ranging from 4.25% to 5.92% and terms ranging from five to ten years. During 2003, KROP obtained individual non-recourse, non-cross collateralized variable-rate five year mortgages aggregating approximately $35.6 million on five of its previously unencumbered properties with rates ranging from LIBOR plus 2.2% to LIBOR plus 2.5%. In order to mitigate the risks of interest rate fluctuations associated with these variable rate obligations, KROP entered into interest rate cap agreements for the notional values of these mortgages. 72 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During 2002, KROP obtained a cross-collateralized mortgage with a five-year term aggregating $73.0 million on eight properties with an interest rate of LIBOR plus 1.8%. Upon the sale of one of the collateralized properties, $1.9 million was repaid during 2002. In order to mitigate the risks of interest rate fluctuations associated with this variable rate obligation, KROP entered into an interest rate cap agreement for the notional value of this mortgage. As of December 31, 2003, the KROP portfolio was comprised of 23 shopping center properties aggregating approximately 3.5 million square feet of GLA located in 12 states. Other Real Estate Joint Ventures - The Company and its subsidiaries have investments in and advances to various other real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. During June 2003, the Company acquired a former Service Merchandise property located in Novi, MI, through a joint venture, in which the Company has a 42.5% non-controlling interest. The property was acquired for a purchase price of approximately $4.1 million. During June 2003, the Company acquired a property located in South Bend, IN, through a joint venture in which the Company has a 37.5% non-controlling interest. The property was acquired for an aggregate purchase price of approximately $4.9 million. During July 2003, the Company acquired a property located in Pineville, NC, through a joint venture, in which the Company has a 20% non-controlling interest. The property was acquired for a purchase price of approximately $27.3 million, including $19.3 million of non-recourse mortgaged debt encumbering the property. During August 2003, the Company acquired a property located in Shaumburg, IL, through a joint venture in which the Company has a 45% non-controlling interest. The property was purchased for an aggregate purchase price of approximately $66.6 million. Simultaneous with the acquisition, the venture obtained a $51.6 million non-recourse mortgage at a floating interest rate of LIBOR plus 2.25%. During December 2003, the Company, in a single transaction, sold a 50.0% interest in each of its properties located in Saltillo and Monterrey, Mexico for an aggregate sales price of approximately MXN $240.4 million (USD $21.4 million) which approximated 50.0% of their aggregate carrying value. As a result, the Company has a 50% non-controlling interest in these properties and accounts for the investment under the equity method of accounting. Additionally, during the year ended December 31, 2003, the Company acquired 11 properties, in separate transactions, through various joint ventures in which the Company has a 50% non-controlling interest. These properties were acquired for an aggregate purchase price of approximately $113.3 million, including $40.5 million of non-recourse debt encumbering six of the properties. During 2002, the Company acquired seven former Service Merchandise locations, in separate transactions, through a venture in which the Company has a 42.5% non-controlling interest. These properties were purchased for an aggregate purchase price of approximately $20.9 million. During July 2002, the Company acquired a property located in Kalamazoo, MI, through a joint venture in which the Company has a 50% non-controlling interest. The property was purchased for an aggregate purchase price of approximately $6.0 million. During December 2002, the Company acquired an out-parcel of an existing property located in Tampa, FL, through a joint venture in which the Company has a 50% non-controlling interest. The property was purchased for an aggregate purchase price of approximately $4.9 million. 73 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued Additionally, during 2002, the Company, in separate transactions, disposed of two operating properties through a joint venture in which the Company has a 50% non-controlling interest. The properties were located in Tempe, AZ and Glendale, AZ and sold for approximately $19.2 million and $1.7 million, respectively. The Company accounts for its investments in unconsolidated real estate joint ventures under the equity method of accounting. Summarized financial information for the recurring operations of these real estate joint ventures, is as follows (in millions): December 31, 2003 2002 ---- ---- Assets: Real estate, net $3,313.0 $2,511.8 Other assets 156.2 132.5 -------- -------- $3,469.2 $2,644.3 ======== ======== Liabilities and Partners' Capital: Notes Payable $ 33.6 $ 49.6 Mortgages payable 2,343.7 1,720.6 Other liabilities 107.2 116.6 Minority Interest 10.8 10.8 Partners' capital 973.9 746.7 -------- -------- $3,469.2 $2,644.3 ======== ======== Year Ended December 31, 2003 2002 2001 ------ ------ ------ Revenues from rental property $433.5 $314.8 $209.4 ------ ------ ------ Operating expenses (121.9) (78.2) (52.9) Interest (140.1) (108.0) (74.5) Depreciation and amortization (68.0) (41.6) (31.0) Other, net (9.3) (4.5) (3.0) ------ ------ ------- (339.3) (232.3) (161.4) ------ ------ ------- Net income $ 94.2 $ 82.5 $48.0 ====== ====== ====== Other liabilities in the accompanying Consolidated Balance Sheets include accounts with certain real estate joint ventures totaling approximately $11.0 million and $5.3 million at December 31, 2003 and 2002, 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. The Company's maximum exposure to losses associated with its unconsolidated joint ventures is limited to its carrying value in these investments. As of December 31, 2003 and 2002, the Company's carrying value in these investments approximated $487.4 million and $390.5 million, respectively. 9. Other Real Estate Investments: Ward Venture - During March 2001, through a taxable REIT subsidiary, the Company formed a real estate joint venture, (the "Ward Venture") in which the Company has a 50% interest, for purposes of acquiring asset designation rights for substantially all of the real estate property interests of the bankrupt estate of Montgomery Ward LLC and its affiliates. These asset designation rights have provided the Ward Venture the ability to direct the ultimate disposition of the 315 fee and leasehold interests held by the bankrupt estate. The asset designation rights expired in August 2002 for the leasehold positions and expire in December 2004 for the fee owned locations. During the marketing period, the Ward Venture will be responsible for all carrying costs associated with the properties until the property is designated to a user. As of December 31, 2003, there were five properties which continue to be marketed. 74 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During 2003, the Ward Venture completed transactions on seven properties, and the Company recognized pre-tax profits of approximately $3.5 million. During 2002, the Ward Venture completed transactions on 32 properties, and the Company recognized pre-tax profits from the Ward Venture of approximately $11.3 million. Leveraged Lease - During June 2002, the Company acquired a 90% equity participation interest in an existing leveraged lease of 30 properties. The properties are leased under a long-term bond-type net lease whose primary term expires in 2016, with the lessee having certain renewal option rights. The Company's cash equity investment was approximately $4.0 million. This equity investment is reported as a net investment in leveraged lease in accordance with SFAS No. 13, Accounting for Leases (as amended). During 2002, four of these properties were sold whereby the proceeds from the sales were used to paydown the mortgage debt by approximately $9.6 million. During 2003, an additional four properties were sold whereby the proceeds from the sales were used to paydown the mortgage debt by approximately $9.1 million. As of December 31, 2003, the remaining 22 properties were encumbered by third-party non-recourse debt of approximately $73.6 million that is scheduled to fully amortize during the primary term of the lease from a portion of the periodic net rents receivable under the net lease. As an equity participant in the leveraged lease, the Company has no recourse obligation for principal or interest payments on the debt, which is collateralized by a first mortgage lien on the properties and collateral assignment of the lease. Accordingly, this obligation has been offset against the related net rental receivable under the lease. At December 31, 2003 and 2002 the Company's net investment in leveraged lease consists of the following (in millions): 2003 2002 ---- ---- Remaining net rentals $81.9 $94.8 Estimated unguaranteed residual value 59.2 65.2 Non-recourse mortgage debt (73.6) (86.0) Unearned and deferred income (63.6) (70.0) ------ ------ Net investment in leveraged lease $ 3.9 $ 4.0 ===== ===== Kmart Venture - During July 2002, the Company formed the Kmart Venture in which the Company has a controlling interest for purposes of acquiring asset designation rights for 54 former Kmart locations. The total commitment to Kmart by the Kmart Venture, prior to the profit sharing arrangement commencing, was approximately $43.0 million. As of December 31, 2003, the Kmart Venture completed the designation of all properties and has funded the total commitment of approximately $43.0 million to Kmart. In addition, the profit sharing arrangement commenced with the Company recognizing pre-tax profits of approximately $0.6 million. Kimsouth - During November 2002, the Company, through its taxable REIT subsidiary, together with Prometheus Southeast Retail Trust, completed the merger and privatization of Konover Property Trust, which has been renamed Kimsouth Realty, Inc., ("Kimsouth"). The Company acquired 44.5% of the common stock of Kimsouth, which consisted primarily of 38 retail shopping center properties comprising approximately 4.6 million square feet of GLA. Total acquisition value was approximately $280.9 million including approximately $216.2 million in assumed mortgage debt. The Company's investment strategy with respect to Kimsouth includes re-tenanting, repositioning and disposition of the properties. 75 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During 2003, Kimsouth disposed of 14 shopping center properties, in separate transactions, for an aggregate sales price of approximately $84.0 million, including the assignment of approximately $18.4 million of mortgage debt encumbering six of the properties. During 2003, the Company recognized pre-tax profits from the Kimsouth investment of approximately $12.1 million. During December 2002, Kimsouth sold its joint venture interest in a property to its joint venture partner for net proceeds of approximately $4.6 million and disposed of another property for net proceeds of approximately $2.9 million. Selected financial information for Kimsouth is as follows (in millions): December 31, 2003 2002 ---- ---- Assets: Operating real estate, net $125.7 $282.3 Real estate held for sale 95.5 9.4 Other assets 20.8 28.9 ------ ------ $242.0 $320.6 ====== ====== Liabilities and Stockholders' Equity: Mortgages payable $137.0 $185.0 Other liabilities 3.6 3.6 Stockholders' equity 101.4 132.0 ------ ------ $242.0 $320.6 ====== ====== Year Ended December 31, 2003 2002 ---- ---- Revenues from Rental Property $ 11.4 $ 17.6 Operating expenses (3.8) (5.3) Interest (9.7) (7.8) Depreciation and amortization (4.3) (6.6) Other, net (0.1) (8.6) ------- ------- Loss from continuing operations (6.5) (10.7) Income from discontinued operations 19.9 4.1 ------ ------ Net income/(loss) $ 13.4 $ (6.6) ====== ======= As of December 31, 2003, the Kimsouth portfolio was comprised of 22 properties aggregating approximately 3.2 million square feet of GLA located in six states. Preferred Equity Capital - During 2002, the Company established a preferred equity program, which provides capital to developers and owners of shopping centers. During 2002, the Company provided, in separate transactions, an aggregate of approximately $25.6 million in investment capital to developers and owners of nine shopping centers. During 2003, the Company provided, in separate transactions, an aggregate of approximately $45.5 million in investment capital to developers and owners of 14 shopping centers. Additionally during 2003, the Company received full payment plus incentive payments related to two preferred equity investments. As of December 31, 2003, the Company's net investment under the preferred equity program was $66.4 million relating to 21 shopping centers. For the year ended December 31, 2003 and 2002, the Company earned approximately $4.6 million and $1.0 million, respectively, from these investments. 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 sublet to retailers who lease the stores pursuant to net lease agreements. Income from the investment in these retail store leases during the years ended December 31, 2003, 2002 and 2001 was approximately $0.3 million, $0.8 million and $3.2 million, respectively. These amounts represent sublease revenues during the years ended December 31, 2003, 2002 and 2001 of approximately $12.3 million, $13.9 million and $16.8 million, respectively, less related expenses of $10.6 million, $11.7 million and $12.2 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, assuming no new or renegotiated leases are executed for such premises, for future years are as follows (in millions): 2004, $11.0 and $7.9; 2005, $10.3 and $7.7; 2006, $8.9 and $6.3; 2007, $6.6 and $4.4; 2008, $3.9 and $2.7; and thereafter, $4.5 and $2.8, respectively. 76 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued 10. Mortgages and Other Financing Receivables: During June 2003, the Company provided a five-year $3.5 million loan to Grass America, Inc. ("Grass America") at an interest rate of 12.25% per annum collateralized by certain real estate interests of Grass America. The Company receives principal and interest payments on a monthly basis. During December 2003, the Company provided a four-year $8.25 million term loan to Spartan Stores, Inc. ("Spartan") at a fixed rate of 16% per annum. This loan is collateralized by the real estate interests of Spartan with the Company receiving principal and interest payments monthly. During December 2003, the Company, through a taxable REIT subsidiary, acquired a $24.0 million participation interest in 12% senior secured notes of the FRI-MRD Corporation ("FRI-MRD") for $13.3 million. These notes, which are currently non-performing, are collateralized by certain equity interests and a note receivable of a FRI-MRD subsidiary. During March 2002, the Company provided a $50.0 million ten-year loan to Shopko Stores, Inc., at an interest rate of 11.0% per annum collateralized by 15 properties. The Company receives principal and interest payments on a monthly basis. During January 2003, the Company sold a $37.0 million participation interest in this loan to an unaffiliated third party. The interest rate of the $37.0 million participation interest is a variable rate based on LIBOR plus 3.50%. The Company continues to act as the servicer for the full amount of the loan. During 2003, the Company provided, in separate transactions, an aggregate $16.2 million of additional mortgage financing of which $11.5 million has been repaid. These loans have maturities generally ranging from 3 to 30 years and accrue interest at rates ranging from 7% to 12%. During March 2002, the Company provided a $15.0 million three-year loan to Gottchalks, Inc., at an interest rate of 12.0% per annum collateralized by three properties. The Company receives principal and interest payments on a monthly basis. As of December 31, 2003, the outstanding loan balance was approximately $13.3 million. During May 2002, in connection with Frank's Nursery & Crafts, Inc. ("Franks") emergence from Chapter 11 under the U.S. Bankruptcy Code, the Company received approximately 4.3 million shares of Frank's common stock in settlement of its pre-petition claim. The Company also provided exit financing in the form of a $15.0 million three-year term loan at a fixed interest rate of 10.25% per annum collateralized by 40 real estate interests. Simultaneously, the Company provided an additional $17.5 million revolving loan, also at an interest rate of 10.25% per annum. Interest is payable quarterly in arrears. As of December 31, 2003, the aggregate outstanding loan balance was approximately $32.5 million. As an inducement to make these loans, Frank's issued the Company approximately 4.4 million warrants with an exercise price of $1.15 per share and 5.0 million warrants with an exercise price of $2.00 per share. During 2003, the Company had written down the remaining carrying value of its equity investment in Frank's common stock and fully reserved the value of Frank's warrants with a corresponding adjustment in OCI. During September 2002, a $27.5 million loan to Ames Department Stores, Inc. ("AMES"), was restructured as a two-year $100.0 million secured revolving loan of which the Company has a 40% interest. This revolving loan is collateralized by all of Ames' real estate interests. The loan bears interest at 8.5% per annum and provides for contingent interest upon the successful disposition of the Ames properties. There was no outstanding balance on the revolving loan at December 31, 2003. 11. 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 $0.1 million at December 31, 2003 and 2002. 77 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. 12. Marketable Securities: The amortized cost and estimated fair values of securities available-for-sale and held-to-maturity at December 31, 2003 and 2002 are as follows (in thousands):
December 31, 2003 --------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value --------- ---------- ---------- ------------ Available-for-sale: Equity securities $18,513 $ 9,063 $ (272) $27,304 Held-to-maturity: Other debt securities 18,373 2,926 (30) 21,269 ------- ------- ------- ------- Total marketable securities $36,886 $11,989 $ (302) $48,573 ======= ======= ======= ======= December 31, 2002 --------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value --------- ---------- ---------- ------------ Available-for-sale: Equity securities $38,875 $ 5,038 $ (873) $43,040 Held-to-maturity: Other debt securities 23,952 2,002 (26) 25,928 ------- ------- ------- ------- Total marketable securities $62,827 $ 7,040 $ (899) $68,968 ======= ======= ======= =======
As of December 31, 2003, the contractual maturities of Other debt securities classified as held-to-maturity are as follows: within one year, $2.7 million; after one year through five years, $0.0; after five years through 10 years, $12.1 million and after 10 years, $3.6 million. Actual maturities may differ from contractual maturities as issuers may have the right to prepay debt obligations with or without prepayment penalties. 13. Notes Payable: The Company has implemented a 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 acquisitions, development and redevelopment costs, and (ii) managing the Company's debt maturities. As of December 31, 2003, a total principal amount of $757.25 million, in senior fixed-rate MTNs had been issued under the MTN program primarily for the acquisition of neighborhood and community shopping centers, the expansion and improvement of properties in the Company's portfolio and the repayment of certain debt obligations of the Company. These fixed-rate notes have maturities ranging from ten months to ten years as of December 31, 2003 and bear interest at rates ranging from 3.95% to 7.91%. Interest on these fixed-rate senior unsecured notes is payable semi-annually in arrears. 78 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During May 2003, the Company issued $50.0 million of fixed-rate unsecured senior notes under its MTN program. This fixed rate MTN matures in May 2010 and bears interest at 4.62% per annum, payable semi-annually in arrears. The proceeds from this MTN issuance were used to partially fund the redemption of the Company's $75 million 7 3/4% Class A Cumulative Redeemable Preferred Stock. During August 2003, the Company issued $100.0 million of fixed rate unsecured senior notes under its MTN program. This fixed rate MTN matures in August 2008 and bears interest at 3.95% per annum, payable semi-annually in arrears. The proceeds from this MTN issuance were used to redeem all $100.0 million of the Company's remarketed reset notes maturing August 18, 2008 bearing interest at LIBOR plus 1.25%. During October 2003, the Company issued $100.0 million of fixed rate unsecured senior notes under its MTN program. This fixed rate MTN matures in October 2013 and bears interest at 5.19% per annum, payable semi-annually in arrears. The proceeds from this MTN issuance were used for the repayment of the Company's 6.5% $100.0 million fixed-rate unsecured senior notes that matured October 1, 2003. During July 2002, the Company issued an aggregate $102.0 million of unsecured debt under its MTN program. These issuances consisted of (i) an $85.0 million floating-rate MTN which matures in August 2004 and bears interest at LIBOR plus 0.50% per annum and (ii) a $17.0 million fixed-rate MTN which matures in July 2012 and bears interest at 5.98% per annum. The proceeds from these MTN issuances were used toward the repayment of a $110.0 million floating-rate MTN which matured in August 2002. In addition, the Company entered into an interest rate swap agreement on the $85.0 million floating-rate MTN which effectively fixed the interest rate at 2.3725% per annum until November 2003. During 2003, the Company elected not to renew the interest rate swap on the $85.0 million MTN. At December 31, 2003, the rate on this MTN was 1.66% per annum. During November 2002, the Company issued $35.0 million of 4.961% fixed-rate Senior Notes due 2007 (the "2007 Notes"). Interest on the 2007 Notes is payable semi-annually in arrears. Net proceeds from the issuance totaling approximately $34.9 million, after related transaction costs of approximately $0.1 million, were primarily used to repay outstanding borrowings on the Company's unsecured credit facilities. Also, during November 2002, the Company issued $200.0 million of 6% fixed-rate Senior Notes due 2012 (the "2012 Notes"). Interest on the 2012 Notes is payable semi-annually in arrears. The Notes were sold at 99.79% of par value. Net proceeds from the issuance totaling approximately $198.3 million, after related transaction costs of approximately $1.3 million, were primarily used to repay outstanding borrowings on the Company's unsecured credit facilities. As of December 31, 2003, the Company has a total principal amount of $470.0 million, in fixed-rate unsecured senior notes. These fixed-rate notes have maturities ranging six months to ten years as of December 31, 2003, and bear interest at rates ranging from 4.96% to 7.50%. Interest on these fixed-rate senior unsecured notes is payable semi-annually in arrears. During June 2003, the Company established a $500.0 million unsecured revolving credit facility (the "Credit Facility") with a group of banks, which is scheduled to expire in August 2006. This Credit Facility replaced the Company's $250.0 million unsecured revolving credit facility. Under the terms of the Credit Facility, funds may be borrowed for general corporate purposes, including the funding of (i) property acquisitions, (ii) development and redevelopment costs, and (iii) any short-term working capital requirements. Interest on borrowings under the Credit Facility accrues at a spread (currently 0.55%) to LIBOR, and fluctuates in accordance with changes in the Company's senior debt ratings. The Company's senior debt ratings are currently A-/stable from Standard & Poors and Baa1/stable from Moody's Investor Services. As part of this Credit Facility, the Company has a competitive bid option where the Company may auction up to $250.0 million of its requested borrowings to the bank group. This competitive bid option provides the Company the opportunity to obtain pricing below the currently stated spread to LIBOR of 0.55%. A facility fee of 0.15% per annum is payable quarterly in arrears. Pursuant to the terms of the Credit Facility, the Company, among other things, is (i) subject to maintaining certain maximum leverage ratios on both unsecured senior corporate debt and minimum unencumbered asset and equity levels, and (ii) restricted from paying dividends in amounts that exceed 90% of funds from operations, as defined. As of December 31, 2003, there was $45.0 million outstanding under this Credit Facility. 79 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During October 2003, the Company obtained a $400.0 million unsecured bridge facility that bears interest at LIBOR plus 0.55%. This loan is scheduled to expire September 30,2004 with an option to extend up to $150.0 million for an additional year. The Company utilized these proceeds to partially fund the Mid-Atlantic Realty Trust transaction. Pursuant to the terms of this facility, the Company is subject to the same covenants and requirements as the $500.0 million Credit Facility described above. As of December 31, 2003, there was $329.0 million outstanding on this unsecured bridge facility. In accordance with the terms of the Indenture, as amended, 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 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 $26.0 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. During July 2002, the Company established an additional $150.0 million unsecured revolving credit facility. During December 2002, the Company paid down the outstanding balance and terminated this facility. The scheduled maturities of all unsecured senior notes payable as of December 31, 2003 are approximately as follows (in millions): 2004, $514.0; 2005, $200.25; 2006, $130.0; 2007, $195.0; 2008, $100.0 and thereafter, $547.0. 14. Mortgages Payable: During October 2003, in connection with the Mid-Atlantic Merger, the Company assumed approximately $181.7 million of individual non-recourse mortgages encumbering twenty properties, including an aggregate premium of $24.6 million related to the fair value adjustment of these mortgages in accordance with SFAS No. 141. As of December 31, 2003, the aggregate outstanding balance of these mortgages was $180.9 million with the Company realizing a $0.8 million reduction in interest expense related to the amortization of the mortgage premium. As part of the Company's strategy to reduce its exposure to Kmart Corporation, the Company had previously encumbered certain Kmart sites with individual non-recourse mortgages. As a result of the Kmart bankruptcy filing in January 2002 and the subsequent rejection of leases including these encumbered sites, the Company, during July 2002, had suspended debt service payments on these loans and began active negotiations with the respective lenders. During 2003, the Company reached agreement with certain lenders in connection with three individual non-recourse mortgages encumbering three former Kmart sites. The Company paid approximately $14.2 million in full satisfaction of these loans which aggregated approximately $24.0 million. As a result of these transactions, the Company recognized a gain on early extinguishment of debt of approximately $9.7 million during 2003, of which $6.8 million is included in Income from discontinued operations. During December 2002, the Company reached agreement with certain lenders in connection with four former Kmart sites. The Company paid approximately $24.2 million in full satisfaction of the loans encumbering these properties which aggregated $46.5 million and the Company recognized a gain on early extinguishment of debt of approximately $22.3 million. 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 2023. Interest rates range from approximately 6.10% to 9.75% (weighted average interest rate of 7.85% as of December 31, 2003). The scheduled maturities of all mortgages payable as of December 31, 2003, are approximately as follows (in millions): 2004, $8.7; 2005, $14.2; 2006, $53.1; 2007, $12.6; 2008, $43.1 and thereafter, $244.2. 80 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued One of the Company's properties is encumbered by approximately $6.4 million in floating-rate, tax-exempt mortgage bond financing. The rate on this bond is 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 the bonds in the event it is 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. 15. Construction Loans Payable: During 2003, the Company obtained construction financing on seven ground-up development projects for an aggregate loan commitment amount of up to $152.2 million, of which approximately $45.6 million was funded for the year ended December 31, 2003. As of December 31, 2003, the Company had a total of thirteen construction loans with total commitments of up to $238.9 million of which $92.8 million had been funded. These loans have maturities ranging from 3 to 34 months and variable interest rates ranging from 2.87% to 5.00% at December 31, 2003. These construction loans are collateralized by the respective projects and associated tenants' leases. The scheduled maturities of all construction loans payable as of December 31, 2003 are approximately as follows (in millions): 2004, $47.7; 2005, $30.1 and 2006, $15.0. 16. 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 reasonably approximate their fair values except those listed below for which fair values are reflected. The valuation method used to estimate fair value for fixed rate debt is based on discounted cash flow analyses. The fair values for marketable securities are based on published or securities dealers' estimated market values. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition of the Company's financial instruments. The following are financial instruments for which the Company's estimate of fair value differs from the carrying amounts (in thousands):
December 31, ---------------------------------------------------------------------- 2003 2002 ------------------------------- ------------------------------ Carrying Estimated Carrying Estimated Amounts Fair Value Amounts Fair Value ----------- ----------- ----------- ------------ Marketable Securities $ 45,677 $ 48,573 $ 66,992 $ 68,968 Notes Payable $ 1,686,250 $ 1,756,834 $ 1,302,250 $ 1,353,884 Mortgages Payable $ 375,914 $ 421,123 $ 230,760 $ 282,361
17. Financial Instruments - Derivatives and Hedging: The Company is exposed to the effect of changes in interest rates, foreign currency exchange rate fluctuations and market value fluctuations of equity securities. The Company limits these risks by following established risk management policies and procedures including the use of derivatives. The principal financial instruments currently used by the Company are interest rate swaps, foreign currency exchange forward contracts, cross currency swaps and warrant contracts. The Company, from time to time, hedges the future cash flows of its floating-rate debt instruments to reduce exposure to interest rate risk principally through interest rate swaps with major financial institutions. The Company had interest-rate swap agreements on its $85.0 million floating-rate MTN and on its $100.0 million floating-rate remarketed reset notes, which were designated and qualified as cash flow hedges of the variability in floating-rate interest payments on the hedged debt. The Company determined that these swap agreements were highly effective in offsetting future variable interest cash flows related to the Company's debt portfolio. 81 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued The swap agreement relating to the Company's $100.0 million floating-rate remarketed reset notes matured in August 2003. This agreement was not renewed as the Company elected to pay-off its outstanding $100.0 million floating-rate remarketed reset notes during August 2003. The swap agreement relating to the Company's $85.0 million floating-rate MTN matured in November 2003. The Company has elected not to renew this contract. For the years ended December 31, 2003 and 2002, the change in the fair value of the interest rate swaps was $0.6 million and $3.3 million, respectively, which was recorded in OCI, a component of stockholders' equity, with a corresponding liability reduction for the same amount. As of December 31, 2003, the Company had foreign currency forward contracts designated as hedges of its Canadian investments in real estate aggregating approximately CAD $184.6 million. In addition, the Company had foreign currency forward contracts and a cross currency swap with an aggregate notional amount of approximately $381.8 million pesos ("MXN") (approximately USD $34.0 million) designated as hedges of its Mexican real estate investments. In December 2003, the Company sold 50% of its Mexican investments and assigned approximately MXN $156.9 million of the MXN hedges in connection with the sale of the underlying investments that were being hedged. At December 31, 2003, the Company had remaining Mexican net investment hedges outstanding with a notional amount of approximately MXN $224.9 million. The Company has designated these foreign currency agreements as net investment hedges of the foreign currency exposure of its net investment in Canadian and Mexican real estate operations. The Company believes these agreements are highly effective in reducing the exposure to fluctuations in exchange rates. As such, gains and losses on these net investment hedges were reported in the same manner as a translation adjustment in accordance with SFAS No. 52, Foreign Currency Translation. During 2003, $25.1 million of unrealized losses and $0.2 million of unrealized gains were included in the cumulative translation adjustment relating to the Company's net investment hedges of its Canadian and Mexican investments. During 2001, the Company acquired warrants to purchase the common stock of a Canadian REIT. The Company has designated the warrants as a cash flow hedge of the variability in expected future cash outflows upon purchasing the common stock. The Company has determined the hedged cash outflow is probable and expected to occur prior to the expiration date of the warrants. The Company has determined that the warrants are fully effective. For the year ended December 31, 2003, the change in fair value of the warrants resulted in an unrealized gain of approximately $6.0 million, which was recorded in OCI with a corresponding increase in Other assets for the same amount. The following table summarized the notional values and fair values of the Company's derivative financial instruments as of December 31, 2003:
Fair Value Hedge Type Notional Value Rate Maturity (in millions) ---------- -------------- ---- -------- ------------- Warrants - cash flow 2,500,000 shares of CAD 9/06 $8.3 common stock $11.02 Foreign currency forwards - net CAD $184.6 million 1.4013 - 1/05 - 7/06 ($23.8) investment 1.6194 Foreign currency forwards - net MXN $142.5 million 11.838 - 10/04 ($0.5) investment 12.615 11/04 MXN cross currency swap MXN $82.4 million 7.227 10/07 ($0.2) - net investment Foreign currency forwards - fair value CAD $5.0 million 1.5918 4/05 ($0.6)
82 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued As of December 31, 2003, these derivative instruments were reported at their fair value as other liabilities of $25.1 million and other assets of $8.3 million. The Company does not expect to reclassify to earnings any of the current balance during the next 12 months. 18. Preferred Stock, Common Stock and DownREIT Unit Transactions: At December 31, 2002, the Company had outstanding 3,000,000 Depositary Shares (the "Class A Depositary Shares"), each such Class A Depositary Share representing a one-tenth fractional interest of a share of the Company's 7-3/4% Class A Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Class A Preferred Stock"), 2,000,000 Depositary Shares (the "Class B Depositary Shares"), each such Class B Depositary Share representing a one-tenth fractional interest of a share of the Company's 8-1/2% Class B Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Class B Preferred Stock") and 4,000,000 Depositary Shares (the "Class C Depositary Shares"), each such Class C Depositary Share representing a one-tenth fractional interest of a share of the Company's 8-3/8% Class C Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Class C Preferred Stock"). During June 2003, the Company redeemed all 2,000,000 outstanding depositary shares of the Company's Class B Preferred Stock, all 3,000,000 outstanding depositary shares of the Company's Class A Preferred Stock and all 4,000,000 outstanding depositary shares of the Company's Class C Preferred Stock, each at a redemption price of $25.00 per depositary share, totaling $225.0 million, plus accrued dividends. In accordance with Emerging Issues Task Force ("EITF") D-42, the Company deducted from the calculation of net income available to common shareholders original issuance costs of approximately $7.8 million associated with the redemption of the Class A Preferred Stock, Class B Preferred Stock and Class C Preferred Stock. During June 2003, the Company issued 7,000,000 Depositary Shares (the "Class F Depositary Shares"), each such Class F Depositary Share representing a one-tenth fractional interest of a share of the Company's 6.65% Class F Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Class F Preferred Stock"). Dividends on the Class F Depositary Shares are cumulative and payable quarterly in arrears at the rate of 6.65% per annum based on the $25.00 per share initial offering price, of $1.6625 per annum. The Class F Depositary Shares are redeemable, in whole or part, for cash on or after June 5, 2008 at the option of the Company, at a redemption price of $25.00 per depositary share, plus any accrued and unpaid dividends thereon. The Class F Depositary Shares are not convertible or exchangeable for any other property or securities of the Company. Net proceeds from the sale of the Class F Depositary Shares, totaling approximately $169.0 million (after related transaction costs of $6.0 million) were used to redeem all of the Company's Class B Preferred Stock and Class C Preferred Stock and to fund a portion of the redemption of the Company's Class A Preferred Stock. Voting Rights - As to any matter on which the Class F Preferred Stock, ("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 F 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 ($25.00 per Class F Depositary Share), 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. During June 2003, the Company completed a primary public stock offering of 2,070,000 shares of the Company's common stock. The net proceeds from this sale of common stock, totaling approximately $76.0 million (after related transaction costs of $0.7 million) were used for general corporate purposes, including the acquisition of interests in real estate properties. 83 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued During September 2003, the Company completed a primary public stock offering of 2,760,000 shares of the Company's common stock. The net proceeds from this sale of common stock, totaling approximately $112.7 million (after related transaction costs of $1.0 million) were used for general corporate purposes, including the acquisition of interests in real estate properties. During October 2002, the Company acquired an interest in a shopping center property located in Daly City, CA valued at $80.0 million through the issuance of approximately 2.4 million downREIT units (the "Units") which are convertible at a ratio of 1:1 into the Company's common stock. The downREIT unit holder has the right to convert the Units anytime after one year. In addition, the Company has the right to mandatorily require a conversion after ten years. If at the time of conversion the common stock price for the 20 previous trading days is less than $33.57 per share the unit holder would be entitled to additional shares, however, the maximum number of additional shares is limited to 251,966 based upon a floor common stock price of $30.36. The Company has the option to settle the conversion in cash. Dividends on the Units are paid quarterly at the rate of the Company's common stock dividend multiplied by 1.1057. The value of the units is included in Minority interests in partnerships on the accompanying Consolidated Balance Sheets. 19. Supplemental schedule of non-cash investing/financing activities: The following schedule summarizes the non-cash investing and financing activities of the Company for the years ended December 31, 2003, 2002 and 2001 (in thousands):
2003 2002 2001 ---- ---- ---- Acquisition of real estate interests by assumption of mortgage debt $ 180,893 $ 3,477 $ 17,220 Acquisition of real estate interest by issuance of convertible downREIT units $ - $ 80,000 $ - Acquisition of real estate through purchase of partnership interests $ - $ 6,638 $ - Investment in real estate joint ventures by issuance of stock and contribution of property $ - $ - $ 3,420 Disposition of real estate interests by assignment of mortgage debt $ 23,068 $ 28,747 $ - Proceeds held in escrow from sale of real estate interests $ 41,194 $ 5,433 $ - Notes received upon disposition of real estate interests $ 14,490 $ - $ 400 Notes received upon exercise of stock options $ 100 $ 555 $ 850 Declaration of dividends paid in succeeding period $ 65,969 $ 59,646 $ 57,345
20. Transactions with Related Parties: The Company, along with its joint venture partner provided KROP short-term interim financing for all acquisitions by KROP for which a mortgage was not in place at the time of closing. All such financing had maturities of less than one year and bears interest at rates ranging from LIBOR plus 4.0% to LIBOR plus 5.25% and LIBOR plus 4.0% and LIBOR plus 4.5% for the years ended December 31, 2003 and 2002, respectively. KROP had outstanding short-term interim financing due to GECRE and the Company totaling $16.8 million each as of December 31, 2003 and $17.3 million each as of December 31, 2002. The Company earned $1.0 million and $0.8 million during 2003 and 2002, respectively, related to such interim financing. 84 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued 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. Reference is made to Notes 8 and 9 for additional information regarding transactions with related parties. 21. Commitments and Contingencies: The Company and its subsidiaries are primarily engaged in the operation of shopping centers which are either owned or held under long-term leases which expire at various dates through 2087. 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 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 99% of total revenues from rental property for each of the three years ended December 31, 2003, 2002 and 2001, 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): 2004, $381.7; 2005, $352.2; 2006, $315.3; 2007, $280.5; 2008, $239.6 and thereafter, $1,477.2. 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): 2004, $11.3; 2005, $10.9; 2006, $10.2; 2007, $9.9; 2008, $8.9 and thereafter, $153.5. The Company has issued letters of credit in connection with the collateralization of tax-exempt mortgage bonds, completion guarantees for certain construction projects, and guaranty of payment related to the Company's insurance program. These letters of credit aggregate approximately $15.3 million. Additionally, the RioCan Venture, an entity in which the Company holds a 50% non-controlling interest, has a CAD $5.0 million (approximately USD $3.9 million) letter of credit facility. This facility is jointly guaranteed by RioCan and the Company and has approximately CAD $3.1 million (approximately USD $2.4 million) outstanding as of December 31, 2003 relating to various development projects. During 2003, the limited partners in KIR, an entity in which the Company holds a 43.3% non-controlling interest, contributed $30.0 million towards their respective capital commitments, including $13.0 million by the Company. As of December 31, 2003, KIR had unfunded capital commitments of $99.0 million, including $42.9 million from the Company. 22. Incentive Plans: The Company maintains a stock option plan (the "Plan") pursuant to which a maximum 18,500,000 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. In addition, the Plan provides for the granting of certain options to each of the Company's non-employee directors (the "Independent Directors") and permits such Independent Directors to elect to receive deferred stock awards in lieu of directors' fees. 85 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued Information with respect to stock options under the Plan for the years ended December 31, 2003, 2002 and 2001 is as follows:
Weighted Average Exercise Price Shares Per Share ------ --------- Options outstanding, December 31, 2000 5,538,795 $22.44 Exercised (1,694,227) $20.62 Granted 2,119,175 $30.71 Forfeited (54,390) $25.76 ---------- Options outstanding, December 31, 2001 5,909,353 $25.90 Exercised (307,831) $18.76 Granted 1,562,525 $31.27 Forfeited (61,974) $27.99 ---------- Options outstanding, December 31, 2002 7,102,073 $27.37 Exercised (1,078,203) $23.92 Granted 1,621,438 $43.34 Forfeited (89,503) $31.16 ---------- Options outstanding, December 31, 2003 7,555,805 $31.24 ========= Options exercisable - December 31, 2001 2,369,288 $21.98 ========= ====== December 31, 2002 3,298,417 $24.06 ========= ====== December 31, 2003 3,619,774 $26.47 ========= ======
The exercise prices for options outstanding as of December 31, 2003 range from $14.78 to $44.36 per share. The weighted average remaining contractual life for options outstanding as of December 31, 2003 was approximately 7.7 years. Options to purchase 5,109,883, 1,731,321 and 3,293,846 shares of the Company's common stock were available for issuance under the Plan at December 31, 2003, 2002 and 2001, respectively. The Company maintains a 401(k) retirement plan covering substantially all officers and employees which permits participants to defer up to the maximum allowable amount determined by the Internal Revenue Service of their eligible compensation. This deferred compensation, together with Company matching contributions which generally equal employee deferrals up to a maximum of 5% of their eligible compensation, is fully vested and funded as of December 31, 2003. Company contributions to the plan were approximately $0.8 million, $0.7 million and $0.7 million for the years ended December 31, 2003, 2002 and 2001, respectively. 23. Income Taxes: The Company elected to qualify as a REIT in accordance with the Code commencing with its taxable year which began January 1, 1992. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted REIT taxable income to its stockholders. It is management's intention to adhere to these requirements and maintain the Company's REIT status. As a REIT, the Company generally will not be subject to corporate federal income tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income as defined under the Code. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property and federal income and excise taxes on its undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state and local income taxes. Reconciliation between GAAP Net Income and Federal Taxable Income: The following table reconciles GAAP net income to taxable income for the years ended December 31, 2003, 2002 and 2001 (in thousands): 86 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
2003 2002 2001 (Estimated) (Actual) (Actual) ----------- -------- -------- GAAP net income $307,879 $245,668 $236,538 Less: GAAP net income of taxable REIT subsidiaries (12,814) (23,573) (29,063) --------- --------- --------- GAAP net income from REIT operations (Note 1) 295,065 222,095 207,475 Net book depreciation in excess of tax depreciation (40,781) 4,132 3,612 Deferred and prepaid rents (6,000) (5,944) (6,647) Exercise of non-qualified stock options (11,900) (2,151) (15,354) Book/tax differences from investments in real estate joint ventures (10,838) (18,994) (3,206) Book/tax difference on sale of real property (30,432) (13,346) 3,864 Book adjustment to property carrying values 4,016 33,030 - Other book/tax differences, net (3,600) 11,719 8,999 --------- -------- -------- Adjusted taxable income subject to 90% dividend requirements $195,530 $230,541 $198,743 ======== ======== ========
Note 1 - All adjustments to "GAAP net income from REIT operations" are net of amounts attributable to minority interest and taxable REIT subsidiaries. Reconciliation between Cash Dividends Paid and Dividends Paid Deductions (in thousands): Cash dividends paid exceeded the dividends paid deduction for the year ended December 31, 2003 and amounted to $246,301. For the years ended December 31, 2002 and 2001, cash dividends paid were equal to the dividends paid deduction and amounted to $235,602 and $209,785, respectively. Characterization of Distributions: The following characterizes distributions paid for the years ended December 31, 2003, 2002 and 2001 (in thousands):
2003 2002 2001 ---- ---- ---- Preferred Dividends Ordinary income $13,169 84% $17,935 96% $26,253 100% Capital gain 2,451 16% 764 4% - - -------- ---- -------- ---- -------- ---- $15,620 100% $18,699 100% $26,253 100% -------- -------- -------- Common Dividends Ordinary income $171,071 74% $208,040 96% $174,380 95% Capital gain 31,840 14% 8,863 4% - - Return of capital 27,770 12% - - 9,152 5% -------- ----- -------- ---- -------- ---- $230,681 100% $216,903 100% $183,532 100% -------- -------- -------- Total dividends distributed $246,301 $235,602 $209,785 ======== ======== ========
Taxable REIT Subsidiaries ("TRS"): Commencing January 1, 2001, the Company is subject to federal, state and local income taxes on the income from its TRS activities. Income taxes have been provided for on the asset and liability method as required by Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Under the asset and liability method, deferred income taxes are recognized for the temporary differences between the financial reporting basis and the tax basis of the TRS assets and liabilities. The Company's TRS income and provision for income taxes for the years ended December 31, 2003, 2002 and 2001, are summarized as follows (in thousands): 87 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
2003 2002 2001 ---- ---- ---- Net income before income taxes $21,328 $36,477 $48,439 ------- ------- ------- Less provision for income taxes: Federal 7,104 10,538 15,682 State and local 1,410 2,366 3,694 ------ ------- ------- Total tax provision 8,514 12,904 19,376 ------ ------- ------- TRS net income $12,814 $23,573 $29,063 ======= ======= =======
Deferred tax assets of approximately $11.0 million and $4.4 million and deferred tax liabilities of approximately $7.5 million and $1.7 million are included in the caption Other assets and Other liabilities on the accompanying Consolidated Balance Sheets at December 31, 2003 and 2002, respectively. These deferred tax assets and liabilities relate primarily to differences in the timing of the recognition of income/(loss) between GAAP and tax basis of accounting of (i) real estate joint ventures, (ii) other real estate investments and (iii) other deductible temporary differences. The income tax provision differs from the amount computed by applying the statutory federal income tax rate to taxable income before income taxes as follows (in thousands):
2003 2002 2001 ---- ---- ---- Federal provision at statutory tax rate (35%) $7,465 $12,767 $16,954 State and local taxes, net of federal benefit 1,049 2,010 2,422 Other - (1,873) - ------ -------- ------- $8,514 $12,904 $19,376 ====== ======= =======
24. Supplemental Financial Information: The following represents the results of operations, expressed in thousands except per share amounts, for each quarter during years 2003 and 2002:
2003 (Unaudited) ------------------------------------------------------------ Mar. 31 June 30 Sept. 30 Dec. 31 ------- ------- -------- ------- Revenues from rental property(1) $119,651 $114,988 $118,450 $126,575 Net income $70,961 $61,346 $91,504 $84,068 Net income per common share: Basic $.63 $.47 $.82 $.73 Diluted $.63 $.46 $.80 $.72 2002 (Unaudited) ------------------------------------------------------------ Mar. 31 June 30 Sept. 30 Dec. 31 ------- ------- -------- ------- Revenues from rental property(1) $107,574 $107,911 $105,937 $111,355 Net income $60,894 $61,055 $60,756 $62,963 Net income per common share: Basic $.54 $.54 $.54 $.56 Diluted $.53 $.54 $.53 $.56
(1) All periods have been adjusted to reflect the impact of operating properties sold during 2003 and 2002, and properties classified as held for sale as of December 31, 2003 which are reflected in the caption Discontinued operations on the accompanying Consolidated Statements of Income. Accounts and notes receivable in the accompanying Consolidated Balance Sheets are net of estimated unrecoverable amounts of approximately $9.7 million and $5.8 million at December 31, 2003 and 2002, respectively. 88 KIMCO REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued 25. Pro Forma Financial Information (Unaudited): As discussed in Notes 3, 4 and 5, the Company and certain of its subsidiaries acquired and disposed of interests in certain operating properties during 2003. The pro forma financial information set forth below is based upon the Company's historical Consolidated Statements of Income for the years ended December 31, 2003 and 2002, adjusted to give effect to these transactions as of January 1, 2002. 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, 2002, nor does it purport to represent the results of operations for future periods. (Amounts presented in millions, except per share figures.) Years ended December 31, 2003 2002 ---- ---- Revenues from rental property $530.3 $510.5 Net income $260.4 $269.0 Net income per common share: Basic $2.22 $2.29 ===== ===== Diluted $2.19 $2.27 ===== ===== 89 KIMCO REALTY CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS For Years Ended December 31, 2003, 2002 and 2001 (in thousands)
Balance at Adjustments to Balance at Beginning of Charged to valuation end of Period expenses accounts Deductions period ----------------- --------------- ------------------ ------------------ ---------------- Year Ended December 31, 2003 Allowance for uncollectable accounts $5,750 $5,800 $ - ($1,900) $9,650 ----------------- --------------- ------------------ ------------------ ---------------- Year Ended December 31, 2002 Allowance for uncollectable accounts $4,300 $2,750 $ - ($1,300) $5,750 ----------------- --------------- ------------------ ------------------ ---------------- Year Ended December 31, 2001 Allowance for uncollectable accounts $4,000 $3,400 $ - ($3,100) $4,300 ----------------- --------------- ------------------ ------------------ ----------------
90 KIMCO REALTY CORPORATION AND SUBSIDIARIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2003
INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- INVERNESS HEIGHTS MARKET $2,494,000 $ - $ 3,775,429 $ 2,494,000 $ 3,775,429 $ 6,269,429 FAIRFIELD SHOPPING CENTER 529,247 2,137,493 191,059 529,247 2,328,552 2,857,799 HOOVER 279,106 7,735,873 - 279,106 7,735,873 8,014,979 AVONDALE FIESTA 2,370,000 - 335,225 1,836,809 868,416 2,705,225 FOUR PEAKS PLAZA 3,150,780 - 15,238,151 3,015,887 15,373,044 18,388,931 GILBERT FIESTA DEVELOPMENT 1,683,843 - (1,225,050) 449,313 9,480 458,793 KIMCO MESA 679, INC. AZ 2,915,000 11,686,291 914,588 2,915,000 12,600,879 15,515,879 MARICOPA FIESTA 2,858,753 - 1,558,719 2,858,753 1,558,719 4,417,472 METRO SQUARE 4,101,017 16,410,632 491,895 4,101,017 16,902,527 21,003,544 PEORIA CROSSING 7,212,588 - 25,542,231 6,592,835 26,161,984 32,754,819 HAYDEN PLAZA NORTH 2,015,726 4,126,509 4,983,587 2,015,726 9,110,096 11,125,822 PHOENIX, COSTCO 5,324,501 21,269,943 213,315 5,324,501 21,483,258 26,807,759 PHOENIX 2,450,341 9,802,046 291,881 2,450,341 10,093,927 12,544,268 ALHAMBRA, COSTCO 4,995,639 19,982,557 - 4,995,639 19,982,557 24,978,196 MADISON PLAZA 5,874,396 23,476,190 72,166 5,874,396 23,548,356 29,422,752 CHULA VISTA, COSTCO 6,460,743 25,863,153 2,067,978 6,460,743 27,931,131 34,391,874 CORONA HILLS, COSTCO 13,360,965 53,373,453 711,720 13,360,965 54,085,173 67,446,138 LA MIRADA THEATRE CENTER 8,816,741 35,259,965 5,800 8,816,741 35,265,765 44,082,506 THE CENTRE 3,403,724 13,625,899 42,660 3,403,724 13,668,559 17,072,283 SANTA ANA, HOME DEPOT 4,592,364 18,345,257 - 4,592,364 18,345,257 22,937,621 SANTEE TOWN CENTER 2,252,812 9,012,256 778,545 2,252,812 9,790,801 12,043,613 WESTLAKE SHOPPING CENTER 16,174,307 64,818,562 850,530 16,174,307 65,669,092 81,843,399 VILLAGE ON THE PARK 2,194,463 8,885,987 203,886 2,194,463 9,089,873 11,284,336 AURORA QUINCY 1,148,317 4,608,249 176,871 1,148,317 4,785,120 5,933,437 AURORA EAST BANK 1,500,568 6,180,103 139,219 1,500,568 6,319,322 7,819,890 SPRING CREEK COLORADO 1,423,260 5,718,813 26,244 1,423,260 5,745,057 7,168,317 DENVER WEST 38TH STREET 161,167 646,983 - 161,167 646,983 808,150 ENGLEWOOD PHAR MOR 805,837 3,232,650 18,800 805,837 3,251,450 4,057,287 FORT COLLINS 1,253,497 7,625,278 - 1,253,497 7,625,278 8,878,775 HERITAGE WEST 1,526,576 6,124,074 101,887 1,526,576 6,225,961 7,752,537 WEST FARM SHOPPING CENTER 5,805,969 23,348,024 173,962 5,805,969 23,521,986 29,327,955 N.HAVEN, HOME DEPOT 7,704,968 30,797,640 225,056 7,704,968 31,022,696 38,727,664 WATERBURY 2,253,078 9,017,012 274,246 2,253,078 9,291,258 11,544,336 ELSMERE - 3,185,642 - - 3,185,642 3,185,642 DOVER 122,741 66,738 - 122,741 66,738 189,479 MILFORD COMMONS 964,948 3,171,336 - 964,948 3,171,336 4,136,285 BRANDYWINE COMMONS 4,863,568 15,984,316 - 4,863,568 15,984,316 20,847,884 ALTAMONTE SPRINGS 770,893 3,083,574 167,155 770,893 3,250,729 4,021,622 BOCA RATON 573,875 2,295,501 1,097,481 573,875 3,392,982 3,966,857 BRADENTON 125,000 299,253 333,571 125,000 632,824 757,824 BAYSHORE GARDENS, BRADENTON FL 2,901,000 11,738,955 350,110 2,901,000 12,089,065 14,990,065 CORAL SPRINGS 710,000 2,842,907 3,204,985 710,000 6,047,892 6,757,892 CORAL SPRINGS 1,649,000 6,626,301 157,502 1,649,000 6,783,803 8,432,803 EAST ORLANDO 491,676 1,440,000 2,879,632 1,007,882 3,803,426 4,811,308 FERN PARK 225,000 902,000 2,752,630 225,000 3,654,630 3,879,630 REGENCY PLAZA 2,410,000 9,671,160 169,799 2,410,000 9,840,959 12,250,959 SHOPPES AT AMELIA CONCOURSE 7,600,000 - 127,357 7,600,000 127,357 7,727,357 KISSIMMEE 1,328,536 5,296,652 1,767,960 1,328,536 7,064,612 8,393,148 LAUDERDALE LAKES 342,420 2,416,645 2,866,599 342,420 5,283,244 5,625,664 MERCHANTS WALK 2,580,816 10,366,090 368,803 2,580,816 10,734,892 13,315,709 LARGO 293,686 792,119 1,154,515 293,686 1,946,634 2,240,320 LEESBURG - 171,636 173,537 - 345,173 345,173 LARGO EAST BAY 2,832,296 11,329,185 1,121,122 2,832,296 12,450,307 15,282,603 LAUDERHILL 1,002,733 2,602,415 10,530,161 1,774,443 12,360,866 14,135,309 MELBOURNE - 1,754,000 2,920,178 - 4,674,178 4,674,178 GROVE GATE 365,893 1,049,172 1,139,954 365,893 2,189,126 2,555,019 NORTH MIAMI 732,914 4,080,460 10,754,642 732,914 14,835,102 15,568,016 TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- INVERNESS HEIGHTS MARKET $ - $ 6,269,429 $ 1,021,674 2003(C) FAIRFIELD SHOPPING CENTER 196,849 2,660,950 - 2000(A) HOOVER 793,596 7,221,383 - 1999(A) AVONDALE FIESTA - 2,705,225 1,241,430 2003(C) FOUR PEAKS PLAZA - 18,388,931 8,008,661 2001(C) GILBERT FIESTA DEVELOPMENT - 458,793 - 2001(C) KIMCO MESA 679, INC. AZ 1,775,882 13,739,997 - 1998(A) MARICOPA FIESTA - 4,417,472 2,496,344 2003(C) METRO SQUARE 2,354,027 18,649,517 - 1998(A) PEORIA CROSSING - 32,754,819 14,771,480 2000(C) HAYDEN PLAZA NORTH 892,095 10,233,727 - 1998(A) PHOENIX, COSTCO 3,022,240 23,785,519 - 1998(A) PHOENIX 1,570,403 10,973,865 7,495,685 1997(A) ALHAMBRA, COSTCO 2,831,757 22,146,439 - 1998(A) MADISON PLAZA 3,316,679 26,106,073 - 1998(A) CHULA VISTA, COSTCO 3,775,147 30,616,727 - 1998(A) CORONA HILLS, COSTCO 7,583,405 59,862,733 - 1998(A) LA MIRADA THEATRE CENTER 4,976,644 39,105,862 - 1998(A) THE CENTRE 1,443,354 15,628,929 7,739,844 1999(A) SANTA ANA, HOME DEPOT 2,580,313 20,357,308 - 1998(A) SANTEE TOWN CENTER 1,209,091 10,834,522 - 1998(A) WESTLAKE SHOPPING CENTER 1,941,605 79,901,794 - 2002(A) VILLAGE ON THE PARK 1,386,276 9,898,061 - 1998(A) AURORA QUINCY 712,105 5,221,331 2,428,536 1998(A) AURORA EAST BANK 946,947 6,872,944 - 1998(A) SPRING CREEK COLORADO 868,855 6,299,462 - 1998(A) DENVER WEST 38TH STREET 98,132 710,019 - 1998(A) ENGLEWOOD PHAR MOR 491,784 3,565,503 1,138,878 1998(A) FORT COLLINS 749,494 8,129,281 2,921,172 2000(A) HERITAGE WEST 937,243 6,815,294 - 1998(A) WEST FARM SHOPPING CENTER 3,260,856 26,067,099 13,044,337 1998(A) N.HAVEN, HOME DEPOT 4,336,001 34,391,663 - 1998(A) WATERBURY 2,374,198 9,170,139 - 1993(A) ELSMERE 2,843,951 341,691 - 1979(C) DOVER - 189,479 - 2003(A) MILFORD COMMONS 34,069 4,102,216 - 2003(A) BRANDYWINE COMMONS 129,751 20,718,132 - 2003(A) ALTAMONTE SPRINGS 634,908 3,386,714 - 1995(A) BOCA RATON 1,040,160 2,926,698 - 1992(A) BRADENTON 388,458 369,365 - 1968(C) BAYSHORE GARDENS, BRADENTON FL 1,718,187 13,271,878 - 1998(A) CORAL SPRINGS 1,168,911 5,588,981 - 1994(A) CORAL SPRINGS 1,041,717 7,391,085 - 1997(A) EAST ORLANDO 1,931,418 2,879,890 - 1971(C) FERN PARK 1,795,872 2,083,758 - 1968(C) REGENCY PLAZA 1,017,434 11,233,525 8,671,846 1999(A) SHOPPES AT AMELIA CONCOURSE - 7,727,357 - 2003(C) KISSIMMEE 1,337,734 7,055,413 - 1996(A) LAUDERDALE LAKES 3,508,502 2,117,162 - 1968(C) MERCHANTS WALK 623,567 12,692,142 - 2001(A) LARGO 1,620,019 620,300 - 1968(C) LEESBURG 224,520 120,652 - 1969(C) LARGO EAST BAY 4,098,961 11,183,642 - 1992(A) LAUDERHILL 5,667,807 8,467,502 - 1974(C) MELBOURNE 1,856,886 2,817,293 - 1968(C) GROVE GATE 1,562,771 992,248 - 1968(C) NORTH MIAMI 5,264,743 10,303,273 - 1985(A)
91
INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- MILLER ROAD 1,138,082 4,552,327 1,531,207 1,138,082 6,083,534 7,221,616 MARGATE 2,948,530 11,754,120 2,602,207 2,948,530 14,356,327 17,304,857 MELBOURNE 715,844 2,878,374 961,470 715,844 3,839,844 4,555,688 MT. DORA 1,011,000 4,062,890 116,171 1,011,000 4,179,061 5,190,061 ORLANDO 923,956 3,646,904 1,862,607 1,172,119 5,261,348 6,433,467 RENAISSANCE CENTER 9,104,379 36,540,873 3,928,942 9,104,379 40,469,815 49,574,194 SAND LAKE 3,092,706 12,370,824 1,182,395 3,092,706 13,553,219 16,645,925 ORLANDO 560,800 2,268,112 2,727,234 580,030 4,976,116 5,556,146 OCALA 1,980,000 7,927,484 3,409,972 1,980,000 11,337,456 13,317,456 POMPANO BEACH 97,169 874,442 1,234,339 97,169 2,108,781 2,205,950 PALATKA 130,844 556,658 1,046,540 130,844 1,603,198 1,734,042 PANAMA CITY 1,962,500 - 4,703,953 1,962,500 4,703,953 6,666,453 ST. PETERSBURG - 917,360 786,647 - 1,704,007 1,704,007 TUTTLE BEE SARASOTA 254,961 828,465 1,738,002 254,961 2,566,467 2,821,428 SOUTH EAST SARASOTA 1,283,400 5,133,544 3,405,338 1,440,264 8,382,018 9,822,282 SANFORD 1,832,732 9,523,261 5,498,867 1,832,732 15,022,128 16,854,860 STUART 2,109,677 8,415,323 436,777 2,109,677 8,852,100 10,961,777 SOUTH MIAMI 1,280,440 5,133,825 2,554,710 1,280,440 7,688,535 8,968,975 TALLAHASSEE - 2,431,659 23,506,501 - 25,938,160 25,938,160 TAMPA, FLORIDA 3,054,280 - 8,932,812 3,054,280 8,932,812 11,987,092 TAMPA 2,820,000 11,283,189 1,422,292 2,820,000 12,705,481 15,525,481 VILLAGE COMMONS S.C. 2,192,331 8,774,158 432,183 2,192,331 9,206,341 11,398,672 WEST PALM BEACH 550,896 2,298,964 582,219 550,896 2,881,183 3,432,079 THE SHOPS AT WEST MELBOURNE 2,200,000 8,829,541 2,281,164 2,200,000 11,110,705 13,310,705 JONESBORO RD. &I-285 468,118 1,872,473 53,114 468,118 1,925,587 2,393,705 AUGUSTA 1,482,564 5,928,122 1,785,371 1,482,564 7,713,493 9,196,057 MACON 262,700 1,487,860 1,562,098 349,326 2,963,332 3,312,658 SAVANNAH 2,052,270 8,232,978 676,374 2,052,270 8,909,352 10,961,622 SAVANNAH 652,255 2,616,522 385,802 652,255 3,002,324 3,654,579 CLIVE 500,525 2,002,101 - 500,525 2,002,101 2,502,626 SOUTHDALE SHOPPING CENTER 1,720,330 6,916,294 793,477 1,720,330 7,709,770 9,430,100 DES MOINES 500,525 2,559,019 37,079 500,525 2,596,098 3,096,623 DUBUQUE - 2,152,476 - - 2,152,476 2,152,476 WATERLOO 500,525 2,002,101 4,162 500,525 2,006,263 2,506,788 ADDISON - 753,343 1,446,475 - 2,199,818 2,199,818 ALTON, BELTLINE HWY 329,532 1,987,981 59,934 329,532 2,047,915 2,377,447 AURORA, N. LAKE 2,059,908 9,531,721 - 2,059,908 9,531,721 11,591,629 KRC ARLINGTON HEIGHT 1,983,517 9,178,272 (5,250,000) 1,983,517 3,928,272 5,911,789 BLOOMINGTON 805,521 2,222,353 5,155,864 805,521 7,378,217 8,183,738 BELLEVILLE, WESTFIELD PLAZA - 5,372,253 - - 5,372,253 5,372,253 BRADLEY 500,422 2,001,687 - 500,422 2,001,687 2,502,109 CALUMET CITY 1,479,217 8,815,760 63,363 1,479,217 8,879,123 10,358,340 COUNTRYSIDE - 4,770,671 35,625 - 4,806,296 4,806,296 CARBONDALE - 500,000 - - 500,000 500,000 CHICAGO - 2,687,046 56,256 - 2,743,302 2,743,302 CHAMPAIGN, NEIL ST. 230,519 1,285,460 49,327 230,519 1,334,787 1,565,306 ELSTON 1,010,375 5,692,211 - 1,010,375 5,692,211 6,702,586 S. CICERO - 1,541,560 149,203 - 1,690,763 1,690,763 CRYSTAL LAKE, NW HWY 179,964 1,025,811 270,416 180,269 1,295,922 1,476,191 BUTTERFIELD SQUARE 1,601,960 6,637,926 299,681 1,603,277 6,936,290 8,539,567 DOWNERS PARK PLAZA 2,510,455 10,164,494 242,902 2,510,455 10,407,396 12,917,851 DOWNER GROVE 811,778 4,322,956 1,664,058 811,778 5,987,014 6,798,792 ELGIN 842,555 2,108,674 1,829,451 842,555 3,938,125 4,780,680 FOREST PARK - 2,335,884 - - 2,335,884 2,335,884 FAIRVIEW HTS, BELLVILLE RD. - 11,866,880 1,781,567 - 13,648,447 13,648,447 GENEVA 500,422 12,917,712 14,927 500,422 12,932,639 13,433,061 MATTERSON 950,515 6,292,319 9,419,747 950,515 15,712,066 16,662,581 MT. PROSPECT 1,017,345 6,572,176 2,456,590 1,017,345 9,028,766 10,046,111 MUNDELIEN, S. LAKE 1,127,720 5,826,129 42,333 1,129,634 5,866,548 6,996,182 NORRIDGE - 2,918,315 - - 2,918,315 2,918,315 TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- MILLER ROAD 4,422,647 2,798,968 - 1986(A) MARGATE 3,400,420 13,904,437 - 1993(A) MELBOURNE 785,236 3,770,452 - 1994(A) MT. DORA 641,613 4,548,448 - 1997(A) ORLANDO 1,310,752 5,122,716 - 1995(A) RENAISSANCE CENTER 5,967,944 43,606,251 - 1998(A) SAND LAKE 3,242,470 13,403,454 - 1994(A) ORLANDO 707,751 4,848,395 - 1996(A) OCALA 1,436,813 11,880,643 - 1997(A) POMPANO BEACH 1,197,657 1,008,293 - 1968(C) PALATKA 688,777 1,045,265 - 1970(C) PANAMA CITY - 6,666,453 5,288,222 2002(C) ST. PETERSBURG 695,350 1,008,657 - 1968(C) TUTTLE BEE SARASOTA 1,600,241 1,221,187 - 1970(C) SOUTH EAST SARASOTA 2,587,919 7,234,364 - 1989(A) SANFORD 4,960,109 11,894,750 - 1989(A) STUART 2,114,739 8,847,038 - 1994(A) SOUTH MIAMI 1,483,973 7,485,002 - 1995(A) TALLAHASSEE - 25,938,160 21,500,000 2000(C) TAMPA, FLORIDA - 11,987,092 - 2001(C) TAMPA 2,098,873 13,426,608 - 1997(A) VILLAGE COMMONS S.C. 1,151,816 10,246,855 - 1998(A) WEST PALM BEACH 529,331 2,902,748 - 1995(A) THE SHOPS AT WEST MELBOURNE 1,363,921 11,946,784 - 1998(A) JONESBORO RD. &I-285 854,365 1,539,340 - 1988(A) AUGUSTA 1,271,556 7,924,501 - 1995(A) MACON 1,527,745 1,784,913 - 1969(C) SAVANNAH 2,265,657 8,695,965 - 1993(A) SAVANNAH 582,351 3,072,228 - 1995(A) CLIVE 406,410 2,096,216 - 1996(A) SOUTHDALE SHOPPING CENTER 912,228 8,517,873 4,658,834 1999(A) DES MOINES 508,473 2,588,150 - 1996(A) DUBUQUE 340,365 1,812,111 - 1997(A) WATERLOO 406,410 2,100,378 - 1996(A) ADDISON 1,273,852 925,966 - 1968(C) ALTON, BELTLINE HWY 652,463 1,724,984 - 1998(A) AURORA, N. LAKE 1,322,614 10,269,015 - 1998(A) KRC ARLINGTON HEIGHT 1,121,758 4,790,031 - 1998(A) BLOOMINGTON 3,584,237 4,599,500 - 1972(C) BELLEVILLE, WESTFIELD PLAZA 746,013 4,626,240 - 1998(A) BRADLEY 464,803 2,037,306 - 1996(A) CALUMET CITY 1,328,544 9,029,796 - 1997(A) COUNTRYSIDE 724,718 4,081,578 - 1997(A) CARBONDALE 64,103 435,897 - 1997(A) CHICAGO 426,114 2,317,188 - 1997(A) CHAMPAIGN, NEIL ST. 163,636 1,401,670 - 1998(A) ELSTON 790,262 5,912,324 - 1997(A) S. CICERO 269,468 1,421,295 - 1997(A) CRYSTAL LAKE, NW HWY 153,303 1,322,887 - 1998(A) BUTTERFIELD SQUARE 1,017,629 7,521,938 - 1998(A) DOWNERS PARK PLAZA 1,305,408 11,612,443 - 1999(A) DOWNER GROVE 812,517 5,986,275 - 1997(A) ELGIN 2,110,650 2,670,030 - 1972(C) FOREST PARK 374,123 1,961,761 - 1997(A) FAIRVIEW HTS, BELLVILLE RD. 1,680,618 11,967,829 - 1998(A) GENEVA 1,922,379 11,510,682 9,529,670 1996(A) MATTERSON 1,005,648 15,656,933 - 1997(A) MT. PROSPECT 1,086,800 8,959,311 - 1997(A) MUNDELIEN, S. LAKE 808,137 6,188,045 - 1998(A) NORRIDGE 461,680 2,456,635 - 1997(A)
92
INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- NAPERVILLE 669,483 4,464,998 70,678 669,483 4,535,676 5,205,159 OTTAWA 137,775 784,269 361,788 137,775 1,146,057 1,283,832 ORLAND SQUARE 1,601,960 6,425,253 8,021 1,603,564 6,431,670 8,035,234 ORLAND PARK, S. HARLEM 476,972 2,764,775 973,253 476,972 3,738,028 4,215,000 OAK LAWN 1,530,111 8,776,631 100,280 1,530,111 8,876,911 10,407,022 OAKBROOK TERRACE 1,527,188 8,679,108 2,932,327 1,527,188 11,611,435 13,138,623 PEORIA - 5,081,290 1,315,822 - 6,397,112 6,397,112 FREESTATE BOWL 343,723 1,129,198 - 343,723 1,129,198 1,472,921 SKOKIE - 2,276,360 9,488,383 2,628,440 9,136,303 11,764,743 KRC STREAMWOOD 181,962 1,057,740 181,885 181,962 1,239,625 1,421,587 WOODGROVE FESTIVAL 5,049,149 20,822,993 1,427,208 5,049,149 22,250,201 27,299,350 WAUKEGAN 203,427 1,161,847 37,012 203,772 1,198,514 1,402,286 PLAZA EAST 1,236,149 4,944,597 2,808,586 1,140,849 7,848,483 8,989,332 PLAZA WEST 808,435 3,210,187 624,109 808,435 3,834,296 4,642,731 FELBRAM 72,971 302,579 428,712 72,971 731,291 804,262 GREENWOOD 423,371 1,883,421 1,573,783 423,371 3,457,204 3,880,575 GRIFFITH - 2,495,820 (19,188) - 2,476,632 2,476,632 INDIANAPOLIS 447,600 3,607,193 2,421,883 447,600 6,029,076 6,476,676 LAFAYETTE 230,402 1,305,943 158,525 230,402 1,464,468 1,694,870 LAFAYETTE 812,810 3,252,269 1,096,559 812,810 4,348,828 5,161,638 KIMCO LAFAYETTE MARKET PLACE 4,184,000 16,752,165 197,152 4,184,000 16,949,317 21,133,317 KRC MISHAWAKA 895 378,088 1,999,079 642 378,730 1,999,079 2,377,809 SOUTH BEND, S. HIGH ST. 183,463 1,070,401 196,858 183,463 1,267,259 1,450,722 OVERLAND PARK 1,183,911 6,335,308 142,374 1,185,906 6,475,687 7,661,593 BELLEVUE 405,217 1,743,573 138,965 405,217 1,882,538 2,287,755 TURFWAY CROSSING 2,459,874 12,532,320 - 2,459,874 12,532,320 14,992,194 LEXINGTON 1,675,031 6,848,209 5,020,794 1,551,079 11,992,955 13,544,034 PADUCAH MALL, KY - 1,047,281 (123,196) - 924,085 924,085 BATON ROUGE 3,813,873 15,260,609 1,106,214 3,813,873 16,366,823 20,180,696 KIMCO HOUMA 274, LLC 1,980,000 7,945,784 111,866 1,980,000 8,057,650 10,037,650 LAFAYETTE 2,115,000 8,508,218 8,749,742 3,678,274 15,694,685 19,372,960 GREAT BARRINGTON 642,170 2,547,830 6,977,863 751,124 9,416,739 10,167,863 DEL ALBA 3,163,534 10,456,153 - 3,163,534 10,456,153 13,619,687 SHREWSBURY SHOPPING CENTER 1,284,168 5,284,853 4,496,351 1,284,168 9,781,203 11,065,371 CLUB CENTRE AT PIKESVILLE 1,630,003 5,354,041 12,532,320 1,630,003 5,354,041 6,984,043 FULLERTON PLAZA 2,618,771 8,606,702 10,456,153 2,618,771 8,606,702 11,225,473 GREENBRIER 7,700,000 20,204,386 12,532,320 7,700,000 20,204,386 27,904,386 HARFORD BUSINESS PARK 307,278 1,010,280 10,456,153 307,278 1,010,280 1,317,558 INGLESIDE 5,361,167 17,559,576 - 5,361,167 17,559,576 22,920,744 ROLLING ROAD PLAZA 1,931,564 6,348,068 12,532,320 1,931,564 6,348,068 8,279,631 ROSEDALE PLAZA 2,927,954 9,611,987 10,456,153 2,927,954 9,611,987 12,539,941 SECURITY SQUARE 4,440,048 14,559,678 12,532,320 4,440,048 14,559,678 18,999,726 WILKENS BELTWAY PLAZA 3,495,347 9,510,155 10,456,153 3,495,347 9,510,155 13,005,502 WILKENS OFFICE I 728,978 2,331,383 - 728,978 2,331,383 3,060,361 WILKENS OFFICE II 830,525 2,656,145 12,532,320 830,525 2,656,145 3,486,670 WILKENS OFFICE III 317,074 1,014,050 10,456,153 317,074 1,014,050 1,331,124 YORK ROAD PLAZA 4,545,332 14,913,514 - 4,545,332 14,913,514 19,458,846 PULASKI INDUSTRIAL PARK 2,755,963 - - 2,755,963 - 2,755,963 HARFORD INDUSTRIAL PARK 2,755,863 - - 2,755,863 - 2,755,863 WILDE LAKE 1,468,038 5,869,862 16,649 1,468,038 5,886,511 7,354,548 LYNX LANE 1,019,035 4,091,894 33,241 1,019,035 4,125,135 5,144,170 OAKLAND MILLS 667,165 2,663,081 - 667,165 2,663,081 3,330,246 CLINTON BANK BUILDING 141,964 466,369 10,456,153 141,964 466,369 608,334 CLINTON BOWL 39,779 130,716 - 39,779 130,716 170,496 ENCHANTED FOREST 12,500,000 18,890,448 12,532,320 12,500,000 18,890,448 31,390,448 SHOPPES AT EASTON 3,912,673 12,859,457 10,456,153 3,912,673 12,859,457 16,772,130 VILLAGES AT URBANA 3,190,074 6,067 - 3,190,074 6,067 3,196,141 GAITHERSBURG 244,890 6,787,534 197,041 244,890 6,984,575 7,229,465 GLEN BURNIE - 1,000,000 - - 1,000,000 1,000,000 ARUNDEL PLAZA 5,358,071 13,193,129 12,532,320 5,358,071 13,193,129 18,551,199 TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- NAPERVILLE 656,092 4,549,067 - 1997(A) OTTAWA 948,295 335,537 - 1970(C) ORLAND SQUARE 983,421 7,051,814 - 1998(A) ORLAND PARK, S. HARLEM 419,052 3,795,948 - 1998(A) OAK LAWN 1,349,109 9,057,912 14,632,890 1997(A) OAKBROOK TERRACE 1,350,807 11,787,816 - 1997(A) PEORIA 910,391 5,486,721 - 1997(A) FREESTATE BOWL 18,188 1,454,733 - 2003(A) SKOKIE 642,135 11,122,608 8,454,211 1997(A) KRC STREAMWOOD 150,043 1,271,543 - 1998(A) WOODGROVE FESTIVAL 3,019,250 24,280,100 - 1998(A) WAUKEGAN 146,737 1,255,549 - 1998(A) PLAZA EAST 1,328,325 7,661,008 - 1995(A) PLAZA WEST 675,544 3,967,187 - 1995(A) FELBRAM 502,303 301,959 - 1970(C) GREENWOOD 1,899,649 1,980,926 - 1970(C) GRIFFITH 381,512 2,095,120 - 1997(A) INDIANAPOLIS 3,789,661 2,687,015 - 1986(A) LAFAYETTE 1,197,997 496,872 - 1971(C) LAFAYETTE 699,985 4,461,653 - 1997(A) KIMCO LAFAYETTE MARKET PLACE 2,369,128 18,764,189 - 1998(A) KRC MISHAWAKA 895 276,753 2,101,056 - 1998(A) SOUTH BEND, S. HIGH ST. 150,080 1,300,642 - 1998(A) OVERLAND PARK 845,755 6,815,837 - 1998(A) BELLEVUE 1,697,973 589,782 - 1976(A) TURFWAY CROSSING 98,620 14,893,574 - 2003(A) LEXINGTON 2,976,612 10,567,422 - 1993(A) PADUCAH MALL, KY 213,844 710,241 - 1998(A) BATON ROUGE 2,508,177 17,672,518 - 1997(A) KIMCO HOUMA 274, LLC 857,164 9,180,486 - 1999(A) LAFAYETTE 2,159,626 17,213,334 - 1997(A) GREAT BARRINGTON 1,541,658 8,626,205 - 1994(A) DEL ALBA 81,191 13,538,497 7,898,381 2003(A) SHREWSBURY SHOPPING CENTER 668,412 10,396,959 - 2000(A) CLUB CENTRE AT PIKESVILLE 68,973 6,915,070 5,541,966 2003(A) FULLERTON PLAZA 51,296 11,174,178 - 2003(A) GREENBRIER 191,272 27,713,114 14,104,510 2003(A) HARFORD BUSINESS PARK 36,273 1,281,285 - 2003(A) INGLESIDE 176,919 22,743,824 15,110,724 2003(A) ROLLING ROAD PLAZA 86,187 8,193,444 - 2003(A) ROSEDALE PLAZA 72,237 12,467,704 7,967,499 2003(A) SECURITY SQUARE 104,906 18,894,820 12,032,580 2003(A) WILKENS BELTWAY PLAZA 113,599 12,891,903 - 2003(A) WILKENS OFFICE I 38,579 3,021,783 - 2003(A) WILKENS OFFICE II 43,953 3,442,718 - 2003(A) WILKENS OFFICE III 16,780 1,314,344 - 2003(A) YORK ROAD PLAZA 116,114 19,342,732 8,594,695 2003(A) PULASKI INDUSTRIAL PARK - 2,755,963 - 2003(A) HARFORD INDUSTRIAL PARK - 2,755,863 - 2003(A) WILDE LAKE 263,228 7,091,320 - 2002(A) LYNX LANE 183,075 4,961,095 - 2002(A) OAKLAND MILLS 119,297 3,210,949 - 2002(A) CLINTON BANK BUILDING 10,428 597,906 - 2003(A) CLINTON BOWL 4,464 166,031 - 2003(A) ENCHANTED FOREST 256,970 31,133,478 - 2003(A) SHOPPES AT EASTON 81,830 16,690,300 - 2003(A) VILLAGES AT URBANA - 3,196,141 - 2003(A) GAITHERSBURG 710,858 6,518,607 - 1999(A) GLEN BURNIE 76,923 923,077 - 2000(A) ARUNDEL PLAZA 119,353 18,431,847 12,489,722 2003(A)
93
INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- GLEN BURNIE VILLAGE 1,576,884 5,214,397 10,456,153 1,576,884 5,214,397 6,791,281 LITTLE GLEN 382,073 1,255,291 - 382,073 1,255,291 1,637,363 HAGERSTOWN 541,389 2,165,555 1,010,343 541,389 3,175,898 3,717,287 SHAWAN PLAZA 4,500,000 21,859,285 - 4,500,000 21,859,285 26,359,285 NEW RIDGE 1,318,416 - - 1,318,416 - 1,318,416 LAUREL 349,562 1,398,250 939,535 349,562 2,337,785 2,687,347 LAUREL 274,580 1,100,968 (3,820) 274,580 1,097,148 1,371,728 LARGO/LANDOVER 982,266 27,223,105 17,631 982,266 27,240,737 28,223,003 LUTHERVILLE STATION 4,500,000 15,501,140 12,532,320 4,500,000 15,501,140 20,001,140 ORCHARD SQUARE MEDICAL OFFICE 1,193,858 3,914,500 10,456,153 1,193,858 3,914,500 5,108,358 SOUTHWEST MIXED USE PROPERTY 403,034 1,325,126 - 403,034 1,325,126 1,728,160 NORTH EAST STATION 1,888,211 6,205,792 10,456,153 1,888,211 6,205,792 8,094,003 NEW TOWN VILLAGE 4,800,000 24,605,177 - 4,800,000 24,605,177 29,405,177 PERRY HALL 3,733,309 12,245,774 12,532,320 3,733,309 12,245,774 15,979,083 PERRY HALL SUPER FRESH 3,411,024 11,210,238 10,456,153 3,411,024 11,210,238 14,621,262 NORTHWOOD INDUSTRIAL PARK 1,045,491 - 10,456,154 1,045,491 - 1,045,491 RADCLIFFE @ TOWSON 4,200,000 20,137,496 - 4,200,000 20,137,496 24,337,496 TIMONIUM CROSSING 3,488,677 11,470,792 10,456,153 3,488,677 11,470,792 14,959,469 TIMONIUM SHOPPING CENTER 6,000,000 24,282,998 - 6,000,000 24,282,998 30,282,998 WALDORF BOWL 225,099 739,362 - 225,099 739,362 964,461 WALDORF FIRESTONE 73,127 240,625 10,456,153 73,127 240,625 313,752 WAVERLY WOODS 4,818,548 15,796,561 - 4,818,548 15,796,561 20,615,108 BANGOR, ME 403,833 1,622,331 93,752 403,833 1,716,083 2,119,916 CLAWSON 1,624,771 6,578,142 2,634,964 1,624,771 9,213,106 10,837,877 WHITE LAKE 2,300,050 9,249,607 1,389,807 2,300,050 10,639,414 12,939,464 FARMINGTON 1,098,426 4,525,723 2,082,904 1,098,426 6,608,627 7,707,053 FLINT 984,338 8,053,218 602,467 984,338 8,667,600 9,651,938 LIVONIA 178,785 925,818 645,865 178,785 1,571,683 1,750,468 MUSKEGON 391,500 958,500 813,805 391,500 1,772,305 2,163,805 LAKE CROSSING 5,064,943 - - 5,064,943 5,661,869 10,726,812 TAYLOR 1,451,397 5,806,263 235,289 1,451,397 6,041,552 7,492,949 WALKER 3,682,478 14,730,060 1,849,480 3,682,478 16,579,540 20,262,018 BRIDGETON - 2,196,834 - - 2,196,834 2,196,834 CREVE COEUR, WOODCREST/OLIVE 1,044,598 5,475,623 502,705 960,813 6,062,112 7,022,926 CRYSTAL CITY, MI - 234,378 - - 234,378 234,378 CAPE GIRARDEAU - 2,242,469 - - 2,242,469 2,242,469 HAZELWOOD, MO - - 324,258 - 324,258 324,258 INDEPENDENCE, NOLAND DR. 1,728,367 8,951,101 57,226 1,731,300 9,005,394 10,736,694 NORTH POINT SHOPPING CENTER 1,935,380 7,800,746 167,922 1,935,380 7,968,668 9,904,048 KIRKWOOD - 9,704,005 7,183,333 - 16,887,338 16,887,338 KANSAS CITY 574,777 2,971,191 246,276 574,777 3,217,467 3,792,244 LEMAY 125,879 503,510 245,339 125,879 748,849 874,728 GRAVOIS 1,032,416 4,455,514 10,418,245 1,032,416 14,873,759 15,906,175 ST. CHARLES-UNDER- DEVELOPED LAND, MO 431,960 - 758,855 431,960 758,855 1,190,815 SPRINGFIELD 2,745,595 10,985,778 4,567,016 2,904,022 15,394,367 18,298,389 KMART PARCEL 905,674 3,666,386 4,922,621 905,674 8,589,007 9,494,681 KRC ST. CHARLES - 550,204 - - 550,204 550,204 ST. LOUIS, CHRISTY BLVD. 809,087 4,430,514 892,293 809,087 5,322,807 6,131,894 OVERLAND - 4,928,677 161,877 - 5,090,554 5,090,554 ST. LOUIS - 5,756,736 216,173 - 5,972,909 5,972,909 ST. LOUIS - 2,766,644 43,298 - 2,809,942 2,809,942 ST. PETERS 1,182,194 7,423,459 5,636,695 1,182,194 13,060,154 14,242,348 SPRINGFIELD, GLENSTONE AVE. - 608,793 1,591,352 - 2,200,145 2,200,145 CHARLOTTE 919,251 3,570,981 1,036,008 919,251 4,606,989 5,526,240 CHARLOTTE 1,783,400 7,139,131 383,767 1,783,400 7,522,898 9,306,298 TYVOLA RD. - 4,736,345 1,912,767 - 6,649,112 6,649,112 CROSSROADS PLAZA 767,864 3,098,881 - 767,864 3,098,881 3,866,744 KIMCO CARY 696, INC. 2,180,000 8,756,865 383,993 2,256,799 9,064,059 11,320,858 HOPE VALLEY FARMS 3,977,412 - 8,396,843 3,579,498 8,794,757 12,374,254 DURHAM 1,882,800 7,551,576 1,130,056 1,882,800 8,681,632 10,564,432 LANDMARK STATION S.C. 1,200,000 4,808,785 120,291 1,200,000 4,929,076 6,129,076 TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- GLEN BURNIE VILLAGE 100,300 6,690,981 - 2003(A) LITTLE GLEN 27,404 1,609,960 - 2003(A) HAGERSTOWN 1,966,480 1,750,807 - 1973(C) SHAWAN PLAZA 239,308 26,119,977 14,381,403 2003(A) NEW RIDGE - 1,318,416 - 2003(A) LAUREL 605,545 2,081,802 - 1995(A) LAUREL 923,915 447,813 - 1972(C) LARGO/LANDOVER 2,792,415 25,430,588 - 1999(A) LUTHERVILLE STATION 127,110 19,874,030 - 2003(A) ORCHARD SQUARE MEDICAL OFFICE 56,713 5,051,645 2,909,374 2003(A) SOUTHWEST MIXED USE PROPERTY 67,605 1,660,555 - 2003(A) NORTH EAST STATION 52,420 8,041,582 - 2003(A) NEW TOWN VILLAGE 230,482 29,174,695 13,083,020 2003(A) PERRY HALL 147,354 15,831,729 6,039,755 2003(A) PERRY HALL SUPER FRESH 67,513 14,553,749 - 2003(A) NORTHWOOD INDUSTRIAL PARK - 1,045,491 - 2003(A) RADCLIFFE @ TOWSON 223,362 24,114,134 - 2003(A) TIMONIUM CROSSING 154,581 14,804,888 6,081,662 2003(A) TIMONIUM SHOPPING CENTER 463,017 29,819,981 11,154,139 2003(A) WALDORF BOWL 10,134 954,327 - 2003(A) WALDORF FIRESTONE 2,874 310,878 - 2003(A) WAVERLY WOODS 149,257 20,465,852 13,620,453 2003(A) BANGOR, ME 86,735 2,033,182 - 2001(A) CLAWSON 2,077,190 8,760,686 - 1993(A) WHITE LAKE 1,931,680 11,007,784 - 1996(A) FARMINGTON 1,466,711 6,240,342 - 1993(A) FLINT 3,482,094 6,169,844 - 2000(A) LIVONIA 579,337 1,171,131 - 1968(C) MUSKEGON 1,354,982 808,823 - 1985(A) LAKE CROSSING - 10,726,812 - 2003(C) TAYLOR 1,534,811 5,958,138 - 1993(A) WALKER 3,997,277 16,264,741 - 1993(A) BRIDGETON 352,088 1,844,746 - 1997(A) CREVE COEUR, WOODCREST/OLIVE 818,682 6,204,243 - 1998(A) CRYSTAL CITY, MI 31,111 203,267 - 1997(A) CAPE GIRARDEAU 347,533 1,894,936 - 1997(A) HAZELWOOD, MO 32,257 292,001 - 1971(C) INDEPENDENCE, NOLAND DR. 1,247,080 9,489,614 - 1998(A) NORTH POINT SHOPPING CENTER 1,024,881 8,879,166 7,124,760 1998(A) KIRKWOOD 1,379,675 15,507,662 - 1998(A) KANSAS CITY 490,528 3,301,716 - 1997(A) LEMAY 540,627 334,101 - 1974(C) GRAVOIS 4,590,679 11,315,496 - 1972(C) ST. CHARLES-UNDER- DEVELOPED LAND, MO 54,436 1,136,379 - 1998(A) SPRINGFIELD 3,049,843 15,248,546 - 1994(A) KMART PARCEL 258,475 9,236,206 3,163,588 2002(A) KRC ST. CHARLES 70,539 479,665 - 1998(A) ST. LOUIS, CHRISTY BLVD. 584,897 5,546,997 - 1998(A) OVERLAND 820,862 4,269,692 - 1997(A) ST. LOUIS 963,559 5,009,350 - 1997(A) ST. LOUIS 441,541 2,368,401 - 1997(A) ST. PETERS 1,148,781 13,093,567 - 1997(A) SPRINGFIELD, GLENSTONE AVE. 183,599 2,016,546 - 1998(A) CHARLOTTE 956,447 4,569,793 - 1995(A) CHARLOTTE 1,916,759 7,389,539 - 1993(A) TYVOLA RD. 4,367,494 2,281,619 - 1986(A) CROSSROADS PLAZA 277,838 3,588,906 - 2000(A) KIMCO CARY 696, INC. 1,295,527 10,025,331 - 1998(A) HOPE VALLEY FARMS - 12,374,254 7,596,360 2002(C) DURHAM 1,623,115 8,941,316 - 1996(A) LANDMARK STATION S.C. 526,580 5,602,496 - 1999(A)
94
INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- GASTONIA 2,467,696 9,870,785 1,041,564 2,467,696 10,912,349 13,380,045 HILLSBOROUGH CROSSING 2,750,820 - - 2,750,820 - 2,750,820 RALEIGH 5,208,885 20,885,792 2,124,607 5,208,885 23,010,399 28,219,284 WAKEFIELD COMMONS II 6,506,450 - 891,764 5,998,650 1,399,564 7,398,214 WAKEFIELD CROSSINGS 3,413,932 - (2,353,710) 825,006 235,217 1,060,223 EDGEWATER PLACE 3,150,000 - 6,331,691 3,150,000 6,331,691 9,481,691 WAKEFIELD COMMONS 1,240,000 5,015,595 31,120 1,240,000 5,046,715 6,286,715 SUTTON SQUARE 3,310,690 - 49,396 3,311,940 13,293,656 16,605,596 WINSTON-SALEM 540,667 719,655 4,988,159 540,667 5,707,814 6,248,481 WEBSTER SQUARE 5,885,087 20,351,967 4,094,468 5,885,087 24,446,435 30,331,522 ROCKINGHAM 2,660,915 10,643,660 10,048,902 2,660,915 20,692,562 23,353,477 BRIDGEWATER NJ 1,982,481 (3,666,959) 3,443,995 1,982,481 5,200,423 7,182,904 CHERRY HILL 2,417,583 6,364,094 1,057,869 2,417,583 7,421,963 9,839,546 MARLTON PIKE - 4,318,534 - - 4,318,534 4,318,534 CINNAMINSON 652,123 2,608,491 1,381,927 652,123 3,990,418 4,642,541 FRANKLIN TOWNE CENTER 4,903,113 19,608,193 76,632 4,903,113 19,684,825 24,587,938 HILLSBOROUGH 11,886,809 - (6,880,755) 5,006,054 - 5,006,054 HOLMDEL TOWNE CENTER 10,824,624 43,301,494 190,857 10,824,624 43,492,351 54,316,975 STRAUSS DISCOUNT AUTO 1,225,294 91,203 1,418,208 1,228,794 1,505,911 2,734,705 NORTH BRUNSWICK 3,204,978 12,819,912 12,855,289 3,204,978 25,675,201 28,880,179 PISCATAWAY TOWN CENTER 3,851,839 15,410,851 108,895 3,851,839 15,519,746 19,371,585 RIDGEWOOD 450,000 2,106,566 982,954 450,000 3,089,520 3,539,520 WESTMONT 601,655 2,404,604 9,687,180 601,655 12,091,784 12,693,439 SYCAMORE PLAZA 1,404,443 5,613,270 56,400 1,404,443 5,669,670 7,074,113 PLAZA PASEO DEL-NORTE 4,653,197 18,633,584 373,675 4,653,197 19,007,259 23,660,456 JUAN TABO, ALBUQUERQUE 1,141,200 4,566,817 296,800 1,141,200 4,863,617 6,004,817 COLONIE PLAZA 1,794,122 5,896,341 - 1,794,122 5,896,341 7,690,463 BRIDGEHAMPTON 1,811,752 3,107,232 22,498,471 1,811,752 25,605,703 27,417,455 TWO GUYS AUTO GLASS 105,497 436,714 - 105,497 436,714 542,211 GENOVESE DRUG STORE 564,097 2,268,768 - 564,097 2,268,768 2,832,865 KING KULLEN PLAZA 5,968,082 23,243,404 737,288 5,968,082 23,980,692 29,948,774 HAMPTON BAYS 1,495,105 5,979,320 113,495 1,495,105 6,092,815 7,587,920 HENRIETTA 1,075,358 6,635,486 1,597,189 1,075,358 8,232,675 9,308,033 IRONDEQUOIT 213,617 546,101 1,004,064 213,617 1,550,165 1,763,782 DOUGLASTON SHOPPING CENTER 3,033,190 12,179,993 - 3,033,190 12,179,993 15,213,183 ROSLYN SAVINGS BANK 244,064 981,225 - 244,064 981,225 1,225,289 MANHASSET VENTURE LLC 4,567,003 19,165,808 11,701,020 4,567,003 30,866,828 35,433,831 NANUET 798,932 2,361,900 2,786,008 798,932 5,147,908 5,946,840 AMERICAN MUFFLER SHOP 76,056 325,567 - 76,056 325,567 401,624 PLAINVIEW 263,693 584,031 9,644,772 263,693 10,228,803 10,492,496 POUGHKEEPSIE 876,548 4,695,659 12,592,263 876,548 17,287,922 18,164,470 COLUMBIA PLAZA 2,800,041 9,202,247 - 2,800,041 9,202,247 12,002,288 SYOSSET, NY 106,655 76,197 673,299 - 749,496 749,496 STATEN ISLAND 2,280,000 9,027,951 4,854,148 2,280,000 13,882,099 16,162,099 STATEN ISLAND 2,940,000 11,811,964 586,017 2,940,000 12,397,981 15,337,981 WEST GATES 1,784,718 9,721,970 (2,043,308) 1,784,718 7,678,662 9,463,380 YONKERS 871,977 3,487,909 - 871,977 3,487,909 4,359,886 AKRON WATERLOO 437,277 1,912,222 4,113,885 437,277 6,026,107 6,463,384 WEST MARKET ST. 560,255 3,909,430 210,155 560,255 4,119,585 4,679,840 ROMIG ROAD 855,713 5,472,635 7,781 855,713 5,480,416 6,336,129 AKRON, OH - 2,491,079 64,934 - 2,556,013 2,556,013 BARBERTON 505,590 1,948,135 1,511,962 505,590 3,460,097 3,965,687 BRUNSWICK 771,765 6,058,560 632,524 771,765 6,691,084 7,462,849 BEAVERCREEK 635,228 3,024,722 2,800,398 635,228 5,825,120 6,460,348 MEMPHIS AVE 696,495 4,048,722 - 696,495 4,048,722 4,745,218 CANTON HILLS 500,980 2,020,274 1,199,309 500,980 3,219,583 3,720,563 CANTON 792,985 1,459,031 4,482,484 792,985 5,941,515 6,734,500 CAMBRIDGE - 1,848,195 885,408 473,060 2,260,543 2,733,603 MORSE RD. 835,386 2,097,600 2,725,135 835,386 4,822,735 5,658,121 HAMILTON RD. 856,178 2,195,520 3,756,686 856,178 5,952,206 6,808,384 TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- GASTONIA 3,909,439 9,470,606 - 1989(A) HILLSBOROUGH CROSSING - 2,750,820 - 2003(A) RALEIGH 5,242,129 22,977,155 - 1993(A) WAKEFIELD COMMONS II - 7,398,214 5,392,976 2001(C) WAKEFIELD CROSSINGS - 1,060,223 - 2001(C) EDGEWATER PLACE - 9,481,691 4,417,984 2003(C) WAKEFIELD COMMONS 343,486 5,943,229 - 2001(C) SUTTON SQUARE 351,024 16,254,572 - 2003(A) WINSTON-SALEM 1,868,805 4,379,676 - 1969(C) WEBSTER SQUARE 1,029,110 29,302,412 - 2003(A) ROCKINGHAM 3,970,657 19,382,820 - 1994(A) BRIDGEWATER NJ 1,107,813 6,075,092 - 1998(C) CHERRY HILL 3,918,872 5,920,673 6,425,000 1985(C) MARLTON PIKE 812,032 3,506,502 - 1996(A) CINNAMINSON 447,748 4,194,792 - 1996(A) FRANKLIN TOWNE CENTER 2,772,406 21,815,532 12,024,220 1998(A) HILLSBOROUGH - 5,006,054 - 2001(C) HOLMDEL TOWNE CENTER 1,112,667 53,204,308 - 2002(A) STRAUSS DISCOUNT AUTO 6,366 2,728,339 - 2002(A) NORTH BRUNSWICK 5,032,590 23,847,589 - 1994(A) PISCATAWAY TOWN CENTER 2,183,170 17,188,415 - 1998(A) RIDGEWOOD 581,194 2,958,327 - 1993(A) WESTMONT 1,879,439 10,813,999 - 1994(A) SYCAMORE PLAZA 796,099 6,278,014 1,676,015 1998(A) PLAZA PASEO DEL-NORTE 2,645,310 21,015,146 - 1998(A) JUAN TABO, ALBUQUERQUE 648,117 5,356,701 - 1998(A) COLONIE PLAZA 68,932 7,621,531 - 2003(A) BRIDGEHAMPTON 8,561,043 18,856,412 - 1972(C) TWO GUYS AUTO GLASS 8,297 533,913 - 2003(A) GENOVESE DRUG STORE 43,544 2,789,321 - 2003(A) KING KULLEN PLAZA 3,899,965 26,048,809 - 1998(A) HAMPTON BAYS 2,709,758 4,878,163 - 1989(A) HENRIETTA 2,158,195 7,149,837 - 1993(A) IRONDEQUOIT 495,468 1,268,314 - 1993(A) DOUGLASTON SHOPPING CENTER 234,095 14,979,087 - 2003(A) ROSLYN SAVINGS BANK 18,840 1,206,449 - 2003(A) MANHASSET VENTURE LLC 2,026,091 33,407,741 - 1999(A) NANUET 2,059,485 3,887,355 - 1984(A) AMERICAN MUFFLER SHOP 6,117 395,506 - 2003(A) PLAINVIEW 3,047,131 7,445,366 - 1969(C) POUGHKEEPSIE 5,101,831 13,062,639 - 1972(C) COLUMBIA PLAZA 68,103 11,934,185 - 2003(A) SYOSSET, NY 112,302 637,194 - 1990(C) STATEN ISLAND 5,194,146 10,967,952 - 1989(A) STATEN ISLAND 1,868,579 13,469,402 3,076,898 1997(A) WEST GATES 2,549,291 6,914,089 - 1993(A) YONKERS 750,866 3,609,020 - 1998(A) AKRON WATERLOO 1,980,637 4,482,747 - 1975(C) WEST MARKET ST. 1,896,135 2,783,705 - 1999(A) ROMIG ROAD 2,399,877 3,936,252 - 1999(A) AKRON, OH 913,241 1,642,773 - 1999(A) BARBERTON 1,904,346 2,061,341 - 1972(C) BRUNSWICK 5,529,418 1,933,431 - 1975(C) BEAVERCREEK 3,618,189 2,842,159 - 1986(A) MEMPHIS AVE 1,861,420 2,883,797 - 1999(A) CANTON HILLS 659,205 3,061,358 - 1993(A) CANTON 3,037,025 3,697,474 - 1972(C) CAMBRIDGE 1,683,315 1,050,288 - 1973(C) MORSE RD. 2,060,944 3,597,177 - 1988(A) HAMILTON RD. 2,391,337 4,417,047 - 1988(A)
95
INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- OLENTANGY RIVER RD. 764,517 1,833,600 2,258,091 764,517 4,091,691 4,856,208 W. BROAD ST. 982,464 3,929,856 3,117,677 969,804 7,060,193 8,029,997 RIDGE ROAD 1,285,213 4,712,358 9,318,089 1,285,213 14,030,447 15,315,660 GLENWAY AVE 530,243 3,788,189 527,010 530,243 4,315,198 4,845,441 SPRINGDALE 3,205,653 14,619,732 5,358,223 3,205,653 19,977,955 23,183,608 EVERHARD RD 633,046 3,729,612 - 633,046 3,729,612 4,362,658 SOUTH HIGH ST. 602,421 2,737,004 22,343 602,421 2,759,347 3,361,768 GLENWAY CROSSING 699,359 3,112,047 849,796 699,359 3,961,843 4,661,202 HIGHLAND RIDGE PLAZA 1,540,000 6,178,398 141,991 1,540,000 6,320,389 7,860,389 SHILOH SPRING RD. - 1,735,836 1,937,453 - 3,673,289 3,673,289 OAKCREEK 1,245,870 4,339,637 4,047,657 1,245,870 8,387,294 9,633,164 SALEM AVE. 665,314 347,818 5,413,585 665,314 5,761,403 6,426,717 KETTERING 1,190,496 4,761,984 671,539 1,190,496 5,433,523 6,624,019 KENT, OH 6,254 3,028,914 - 6,254 3,028,914 3,035,168 KENT 2,261,530 - - 2,261,530 - 2,261,530 LIMA 695,121 3,080,479 795,668 695,121 3,876,147 4,571,268 MENTOR 503,981 2,455,926 1,189,489 503,981 3,645,415 4,149,396 MIDDLEBURG HEIGHTS 639,542 3,783,096 1,761,840 639,542 5,544,935 6,184,477 MENTOR ERIE COMMONS 2,234,474 9,648,000 4,612,982 2,234,474 14,260,982 16,495,456 MALLWOODS CENTER 294,232 - (496,786) 294,232 1,184,543 1,478,775 NORTH OLMSTED 626,818 3,712,045 35,000 626,818 3,747,045 4,373,862 ORANGE OHIO 4,800,143 - 2,308,415 3,771,137 3,337,422 7,108,559 SPRINGBORO PIKE 1,854,527 2,572,518 2,686,223 1,854,527 5,258,741 7,113,268 SPRINGFIELD 842,976 3,371,904 1,489,623 842,976 4,861,527 5,704,503 UPPER ARLINGTON 504,256 2,198,476 8,373,633 1,255,544 9,820,821 11,076,365 WICKLIFFE 610,991 2,471,965 1,390,343 610,991 3,862,308 4,473,299 CHARDON ROAD 481,167 5,947,751 50,724 481,167 5,998,474 6,479,642 WESTERVILLE 1,050,431 4,201,616 7,654,134 1,050,431 11,855,750 12,906,181 EDMOND 477,036 3,591,493 8,900 477,036 3,600,393 4,077,429 MIDWEST CITY 1,435,506 7,370,459 (3,397,576) 1,437,930 3,970,459 5,408,389 CENTENNIAL PLAZA 4,650,634 18,604,307 1,107,365 4,650,634 19,711,672 24,362,306 TULSA 500,950 2,002,508 11,500 500,950 2,014,008 2,514,958 TULSA - - 131,399 - 131,399 131,399 CHIPPEWA 2,881,525 11,526,101 91,020 2,881,525 11,617,121 14,498,646 SAUCON VALLEY SQUARE 3,609,206 11,830,713 - 3,609,206 11,830,713 15,439,919 CARNEGIE - 3,298,908 17,747 - 3,316,655 3,316,655 CENTER SQUARE 731,888 2,927,551 523,159 731,888 3,450,710 4,182,598 STONEHEDGE SQUARE 2,797,183 9,167,352 - 2,797,183 9,167,352 11,964,534 WAYNE AVENUE PLAZA 3,758,796 12,336,771 - 3,758,796 12,336,771 16,095,567 WEST MIFFLIN 475,815 1,903,231 724,416 475,815 2,627,647 3,103,462 EAST STROUDSBURG 1,050,000 2,372,628 1,075,684 1,050,000 3,448,312 4,498,312 EXTON 176,666 4,895,360 - 176,666 4,895,360 5,072,026 EXTON 731,888 2,927,551 - 731,888 2,927,551 3,659,439 EASTWICK 889,001 2,762,888 2,386,166 889,001 5,539,713 6,428,714 FEASTERVILLE 520,521 2,082,083 38,692 520,521 2,120,775 2,641,296 GETTYSBURG 74,626 671,630 101,519 74,626 773,149 847,775 HARRISBURG, PA 452,888 6,665,238 1,674,028 452,888 8,339,266 8,792,154 SIMPSON FERRY 658,346 6,908,711 316,435 658,346 7,225,146 7,883,491 HAMBURG 439,232 - 2,023,428 494,982 1,967,677 2,462,660 HAVERTOWN 731,888 2,927,551 - 731,888 2,927,551 3,659,439 OLMSTED 167,337 2,815,856 444,283 167,337 3,260,139 3,427,476 MIDDLETOWN 207,283 1,174,603 447,331 207,283 1,621,934 1,829,217 HOLIDAY CENTER 5,662,465 18,112,629 - 5,662,465 18,112,629 23,775,094 NORRISTOWN 686,134 2,664,535 3,374,215 774,084 5,950,800 6,724,884 NEW KENSINGTON 521,945 2,548,322 676,040 521,945 3,224,362 3,746,307 PHILADELPHIA 731,888 2,927,551 - 731,888 2,927,551 3,659,439 GALLERY, PHILADELPHIA PA - - 258,931 - 258,931 258,931 POTTSTOWN PLAZA 3,535,364 11,619,579 - 3,535,364 11,619,579 15,154,944 RICHBORO 788,761 3,155,044 11,736,134 976,439 14,703,500 15,679,939 SPRINGFIELD 919,998 4,981,589 1,612,375 919,998 6,593,964 7,513,962 TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- OLENTANGY RIVER RD. 2,146,063 2,710,145 - 1988(A) W. BROAD ST. 2,787,716 5,242,281 - 1988(A) RIDGE ROAD 2,155,159 13,160,501 - 1992(A) GLENWAY AVE 1,880,912 2,964,529 - 1999(A) SPRINGDALE 6,633,152 16,550,456 - 1992(A) EVERHARD RD 1,595,288 2,767,370 - 1999(A) SOUTH HIGH ST. 1,493,287 1,868,481 - 1999(A) GLENWAY CROSSING 289,878 4,371,324 - 2000(A) HIGHLAND RIDGE PLAZA 656,991 7,203,398 - 1999(A) SHILOH SPRING RD. 2,373,754 1,299,535 - 1969(C) OAKCREEK 4,051,540 5,581,624 - 1984(A) SALEM AVE. 2,074,603 4,352,114 - 1988(A) KETTERING 2,442,064 4,181,955 - 1988(A) KENT, OH 1,089,887 1,945,281 - 1999(A) KENT - 2,261,530 - 1995(A) LIMA 822,238 3,749,029 - 1995(A) MENTOR 1,568,544 2,580,852 - 1987(A) MIDDLEBURG HEIGHTS 1,666,542 4,517,935 - 1999(A) MENTOR ERIE COMMONS 4,898,092 11,597,364 - 1988(A) MALLWOODS CENTER 35,435 1,443,339 - 1999(C) NORTH OLMSTED 1,594,422 2,779,441 - 1999(A) ORANGE OHIO - 7,108,559 - 2001(C) SPRINGBORO PIKE 3,073,795 4,039,473 - 1985(C) SPRINGFIELD 1,772,656 3,931,847 - 1988(A) UPPER ARLINGTON 5,054,541 6,021,824 - 1969(C) WICKLIFFE 756,896 3,716,403 - 1995(A) CHARDON ROAD 2,100,113 4,379,529 - 1999(A) WESTERVILLE 3,500,704 9,405,477 - 1988(A) EDMOND 542,184 3,535,245 - 1997(A) MIDWEST CITY 939,380 4,469,009 - 1998(A) CENTENNIAL PLAZA 2,654,501 21,707,805 9,042,814 1998(A) TULSA 406,948 2,108,010 - 1996(A) TULSA 18,061 113,338 - 1997(A) CHIPPEWA 1,166,407 13,332,239 11,691,397 2000(A) SAUCON VALLEY SQUARE 95,501 15,344,418 9,533,821 2003(A) CARNEGIE 340,170 2,976,485 - 1999(A) CENTER SQUARE 550,481 3,632,118 - 1996(A) STONEHEDGE SQUARE 95,823 11,868,711 6,196,696 2003(A) WAYNE AVENUE PLAZA 137,129 15,958,438 9,566,627 2003(A) WEST MIFFLIN 612,031 2,491,431 - 1993(A) EAST STROUDSBURG 2,311,126 2,187,186 - 1973(C) EXTON 502,089 4,569,938 - 1999(A) EXTON 550,481 3,108,958 - 1996(A) EASTWICK 989,016 5,439,698 4,698,582 1997(A) FEASTERVILLE 381,935 2,259,361 - 1996(A) GETTYSBURG 702,827 144,948 - 1986(A) HARRISBURG, PA 3,910,481 4,881,673 - 2002(A) SIMPSON FERRY 2,744,171 5,139,321 - 2000(A) HAMBURG 88,293 2,374,366 2,618,713 2000(C) HAVERTOWN 550,481 3,108,958 - 1996(A) OLMSTED 2,540,403 887,073 - 1973(C) MIDDLETOWN 1,152,161 677,056 - 1986(A) HOLIDAY CENTER 40,636 23,734,458 - 2003(A) NORRISTOWN 3,334,199 3,390,685 - 1984(A) NEW KENSINGTON 2,732,802 1,013,505 - 1986(A) PHILADELPHIA 550,481 3,108,958 - 1996(A) GALLERY, PHILADELPHIA PA 5,923 253,008 - 1996(A) POTTSTOWN PLAZA 101,600 15,053,344 - 2003(A) RICHBORO 5,051,493 10,628,446 - 1986(A) SPRINGFIELD 3,941,615 3,572,347 - 1983(A)
96
INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- SHREWSBURY 3,245,475 11,068,862 - 3,245,475 11,068,862 14,314,337 UPPER ALLEN 445,743 1,782,972 173,253 445,743 1,956,225 2,401,968 UPPER DARBY 231,821 927,286 4,813,997 231,821 5,670,033 5,901,854 WEST MIFFLIN HILLS 636,366 3,199,729 7,038,936 636,366 10,238,665 10,875,031 WEST MIFFLIN 1,468,341 - - 1,468,341 - 1,468,341 WHITEHALL - 5,195,577 9,231 - 5,204,808 5,204,808 WAYNE HEIGHTS 786,298 2,584,269 - 786,298 2,584,269 3,370,568 EASTERN BLVD. 412,016 1,876,962 615,039 412,016 2,492,001 2,904,017 E. PROSPECT ST. 604,826 2,755,314 324,031 604,826 3,079,345 3,684,171 W. MARKET ST. 188,562 1,158,307 - 188,562 1,158,307 1,346,869 MARSHALL PLAZA, CRANSTON RI 1,886,600 7,575,302 408,786 1,886,600 7,984,088 9,870,688 AIKEN 183,901 1,087,979 69,601 183,901 1,157,580 1,341,481 CHARLESTON 730,164 3,132,092 4,651,878 730,164 7,783,970 8,514,134 CHARLESTON 1,744,430 6,986,094 4,130,753 1,744,430 11,116,847 12,861,277 FLORENCE 1,465,661 6,011,013 85,458 1,465,661 6,096,471 7,562,132 GREENVILLE 2,209,812 8,850,864 145,281 2,209,812 8,996,145 11,205,957 NORTH CHARLESTON 744,093 2,974,990 37,915 744,093 3,012,905 3,756,998 N. CHARLESTON 2,965,748 11,895,294 743,004 2,965,748 12,638,298 15,604,046 MADISON - 4,133,904 2,016,634 - 6,150,538 6,150,538 HICKORY RIDGE COMMONS 596,347 2,545,033 7,624 596,347 2,552,656 3,149,004 TROLLEY STATION 3,303,682 13,218,740 55,985 3,303,682 13,274,725 16,578,407 MARKET PLACE AT RIVERGATE 2,574,635 10,339,449 614,173 2,574,635 10,953,622 13,528,257 RIVERGATE, TN 3,038,561 12,157,408 2,772,124 3,038,561 14,929,532 17,968,093 CENTER OF THE HILLS, TX 2,923,585 11,706,145 304,976 2,923,585 12,011,121 14,934,706 ARLINGTON 3,160,203 2,285,377 - 3,160,203 2,285,377 5,445,580 DOWLEN CENTER 2,244,581 - 6,711,140 2,244,581 6,711,140 8,955,721 BURLESON 10,191,584 810,314 (3,147,550) 4,837,454 3,016,895 7,854,349 BAYTOWN 500,422 2,431,651 208,430 500,422 2,640,081 3,140,503 SOUTH TOWN PLAZA 5,553,000 - - 3,709,462 1,694,560 5,404,022 CORPUS CHRISTI, TX - 944,562 3,207,999 - 4,152,561 4,152,561 DALLAS 1,299,632 5,168,727 4,652,572 1,299,632 9,821,299 11,120,931 DUNCANVILLE 500,414 2,001,656 - 500,414 2,001,656 2,502,070 MONTGOMERY PLAZA 8,500,000 - - 8,500,000 1,005,268 9,505,268 GARLAND 210,286 845,845 - 210,286 845,845 1,056,131 GARLAND 500,414 2,001,656 - 500,414 2,001,656 2,502,070 SPRING CYPRESS, TX 2,261,557 - 7,646,795 2,261,557 7,646,795 9,908,352 CENTER AT BAYBROOK 6,941,017 27,727,491 60,255 6,941,017 27,787,746 34,728,763 HARRIS COUNTY 1,843,000 7,372,420 885,401 2,003,260 8,097,561 10,100,821 SHARPSTOWN COURT 1,560,010 6,245,807 214,917 1,560,010 6,460,724 8,020,734 CYPRESS TOWNE CENTER 6,033,932 - (1,465,857) 4,091,774 476,301 4,568,075 SHOPS AT VISTA RIDGE 3,257,199 13,029,416 75,901 3,257,199 13,105,317 16,362,516 VISTA RIDGE PLAZA 2,926,495 11,716,483 1,610,381 2,926,495 13,326,864 16,253,359 VISTA RIDGE PHASE II 2,276,575 9,106,300 18,600 2,276,575 9,124,900 11,401,475 SOUTH PLAINES PLAZA, TX 1,890,000 7,577,145 83,854 1,890,000 7,661,000 9,551,000 LAKE WORTH TOWNE CROSSING 11,750,000 - - 10,362,265 287,201 10,649,466 MESQUITE 520,340 2,081,356 724,043 520,340 2,805,399 3,325,739 MESQUITE TOWN CENTER 3,757,324 15,061,644 1,018,941 3,757,324 16,080,585 19,837,909 N. RICHLAND HILLS 1,000,000 - 80,837 1,065,837 15,000 1,080,837 NEW BRAUNSFELS 840,000 3,360,000 - 840,000 3,360,000 4,200,000 FORUM AT OLYMPIA PARKWAY 1,829,102 - 11,026,910 1,512,390 18,167,893 19,680,283 PLANO 500,414 2,830,835 - 500,414 2,830,835 3,331,249 WEST OAKS 500,422 2,001,687 26,291 500,422 2,027,978 2,528,400 MARKET STREET AT WOODLANDS 10,920,168 - 19,004,874 10,920,168 19,004,874 29,925,042 OGDEN 213,818 855,275 3,186,956 874,898 4,042,231 4,917,129 BURKE TOWN PLAZA 3,547,274 11,658,112 - 3,547,274 11,658,112 15,205,386 COLONIAL HEIGHTS 125,376 3,476,073 10,220 125,376 3,486,293 3,611,669 SPOTSYLVANIA CROSSING 3,116,847 9,267,319 - 3,116,847 9,267,319 12,384,166 HARRISONBURG 69,885 1,938,239 - 69,885 1,938,239 2,008,123 SKYLINE VILLAGE 2,319,115 8,203,325 - 2,319,115 8,203,325 10,522,440 MANASSAS 1,788,750 7,162,661 171,273 1,788,750 7,333,934 9,122,684 TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- SHREWSBURY 61,109 14,253,229 - 2003(A) UPPER ALLEN 1,703,316 698,652 - 1986(A) UPPER DARBY 879,477 5,022,377 3,691,743 1996(A) WEST MIFFLIN HILLS 5,120,836 5,754,194 - 1973(C) WEST MIFFLIN - 1,468,341 - 1986(A) WHITEHALL 976,947 4,227,861 - 1996(A) WAYNE HEIGHTS 20,600 3,349,967 - 2003(A) EASTERN BLVD. 1,786,294 1,117,723 - 1987(A) E. PROSPECT ST. 2,649,001 1,035,169 - 1986(A) W. MARKET ST. 1,071,917 274,952 - 1986(A) MARSHALL PLAZA, CRANSTON RI 1,153,707 8,716,982 - 1998(A) AIKEN 515,547 825,934 - 1989(A) CHARLESTON 2,461,485 6,052,649 - 1978(C) CHARLESTON 1,883,105 10,978,171 - 1995(A) FLORENCE 971,912 6,590,220 - 1997(A) GREENVILLE 1,358,210 9,847,747 - 1997(A) NORTH CHARLESTON 263,471 3,493,527 2,049,497 2000(A) N. CHARLESTON 1,717,240 13,886,805 - 1997(A) MADISON 3,873,160 2,277,377 - 1978(C) HICKORY RIDGE COMMONS 226,806 2,922,198 - 2000(A) TROLLEY STATION 1,782,321 14,796,087 10,796,971 1998(A) MARKET PLACE AT RIVERGATE 1,466,819 12,061,438 - 1998(A) RIVERGATE, TN 1,761,629 16,206,464 - 1998(A) CENTER OF THE HILLS, TX 1,646,210 13,288,496 - 1998(A) ARLINGTON 360,075 5,085,505 - 1997(A) DOWLEN CENTER - 8,955,721 6,093,549 2002(C) BURLESON - 7,854,349 - 2000(C) BAYTOWN 477,784 2,662,719 - 1996(A) SOUTH TOWN PLAZA - 5,404,022 - 2003(C) CORPUS CHRISTI, TX 254,254 3,898,308 - 1997(A) DALLAS 8,594,085 2,526,846 - 1969(C) DUNCANVILLE 406,317 2,095,753 - 1996(A) MONTGOMERY PLAZA - 9,505,268 - 2003(C) GARLAND 165,998 890,133 - 1996(A) GARLAND 406,317 2,095,753 - 1996(A) SPRING CYPRESS, TX - 9,908,352 - 2001(C) CENTER AT BAYBROOK 3,894,729 30,834,034 - 1998(A) HARRIS COUNTY 1,280,962 8,819,859 - 1997(A) SHARPSTOWN COURT 792,012 7,228,722 5,762,074 1999(A) CYPRESS TOWNE CENTER - 4,568,075 - 2003(C) SHOPS AT VISTA RIDGE 1,847,412 14,515,104 17,904,103 1998(A) VISTA RIDGE PLAZA 1,717,034 14,536,325 - 1998(A) VISTA RIDGE PHASE II 1,206,049 10,195,426 - 1998(A) SOUTH PLAINES PLAZA, TX 1,125,415 8,425,585 5,251,279 1998(A) LAKE WORTH TOWNE CROSSING - 10,649,466 - 2003(C) MESQUITE 561,156 2,764,583 - 1995(A) MESQUITE TOWN CENTER 2,152,695 17,685,215 - 1998(A) N. RICHLAND HILLS - 1,080,837 - 1997(A) NEW BRAUNSFELS 43,077 4,156,923 - 2003(A) FORUM AT OLYMPIA PARKWAY 494 19,679,789 - 1999(C) PLANO 520,602 2,810,647 - 1996(A) WEST OAKS 406,431 2,121,969 - 1996(A) MARKET STREET AT WOODLANDS - 29,925,042 2,797,014 2002(C) OGDEN 1,072,041 3,845,087 - 1967(C) BURKE TOWN PLAZA 96,305 15,109,081 - 2003(A) COLONIAL HEIGHTS 358,281 3,253,389 - 1999(A) SPOTSYLVANIA CROSSING 106,828 12,277,338 - 2003(A) HARRISONBURG 198,794 1,809,329 - 1999(A) SKYLINE VILLAGE 146,084 10,376,356 4,100,084 2003(A) MANASSAS 1,162,515 7,960,169 - 1997(A)
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INITIAL COST BUILDING AND SUBSEQUENT BUILDINGS AND PROPERTIES LAND IMPROVEMENT TO ACQUISITION LAND IMPROVEMENTS TOTAL ---------- ---- ----------- -------------- ----------- ------------ ----- SUDLEY TOWNE PLAZA 2,065,432 6,781,763 - 2,065,432 6,781,763 8,847,196 RICHMOND 82,544 2,289,288 280,600 82,544 2,569,889 2,652,432 RICHMOND 670,500 2,751,375 - 670,500 2,751,375 3,421,875 SMOKETOWN PLAZA 7,300,000 14,336,886 - 7,300,000 14,336,886 21,636,886 TRIANGLE MALL 9,203,517 7,376,483 (5,887,084) 5,513,791 5,179,125 10,692,916 HAZEL DELL TOWNE CENTER 9,340,819 - 3,604,337 9,340,819 3,604,337 12,945,156 RACINE 1,403,082 5,612,330 1,568,880 1,403,082 7,181,210 8,584,292 CHARLES TOWN 602,000 3,725,871 10,476,410 602,000 14,202,281 14,804,281 MARTINSBURG 242,634 1,273,828 628,937 242,634 1,902,765 2,145,399 RIVERWALK PLAZA 2,708,290 10,841,674 122,749 2,708,290 10,964,423 13,672,713 JUAREZ RETAIL CENTER 1,938,422 7,919,548 101,038 1,938,422 8,020,587 9,959,009 BALANCE OF PORTFOLIO 205,631 4,492,127 29,272,596 3,630,773 35,085,396 38,716,169 ---------------------------------------------- $785,934,642 $3,350,589,251 $4,136,523,893 ============================================== TOTAL COST, DATE OF ACCUMULATED NET OF ACCUMULATED CONSTRUCTION(C) PROPERTIES DEPRECIATION DEPRECIATION ENCUMBRANCES ACQUISITION(A) ---------- ------------ ------------ ------------- -------------- SUDLEY TOWNE PLAZA 51,410 8,795,785 - 2003(A) RICHMOND 87,860 2,564,573 - 1999(A) RICHMOND 422,487 2,999,388 - 1995(A) SMOKETOWN PLAZA 133,701 21,503,185 - 2003(A) TRIANGLE MALL - 10,692,916 12,158,466 2003(C) HAZEL DELL TOWNE CENTER - 12,945,156 - 2003(C) RACINE 2,938,940 5,645,352 - 1988(A) CHARLES TOWN 5,632,295 9,171,986 - 1985(A) MARTINSBURG 1,539,173 606,226 - 1986(A) RIVERWALK PLAZA 1,362,430 12,310,283 7,792,961 1999(A) JUAREZ RETAIL CENTER - 9,959,009 - 2003(A) BALANCE OF PORTFOLIO 13,469,785 25,246,384 - VARIOUS --------------------------------------------------------------- $568,015,445 $ 3,568,508,448 $ 468,697,788 ===============================================================
Depreciation and amortization are provided on the straight-line method over the estimated useful lives of the assets as follows: Buildings....................................................15 to 46 years Fixtures, building and leasehold improvements.................Terms of leases or useful lives, whichever is shorter (including certain identified intangible assets)
The aggregate cost for Federal income tax purposes was approximately $ 4.0 billion at December 31, 2003. The changes in total real estate assets for the years ended December 31, 2003, 2002 and 2001 are as follows:
----------------------------------------------------- 2003 2002 2001 ----------------------------------------------------- Balance, beginning of period ....................... $ 3,421,159,067 $ 3,201,363,929 $ 3,111,707,470 Acquisitions ..................................... 1,103,993,301 287,379,293 61,622,301 Improvements ..................................... 182,351,801 154,638,211 134,094,630 Transfers from (to) unconsolidated joint ventures. (237,421,088) 22,603,592 (38,139,367) Sales ............................................ (312,228,077) (200,957,621) (60,388,331) Assets held for sale ............................. (17,315,557) (10,837,674) -- Adjustment of property carrying values ........... (4,015,554) (33,030,663) -- Adjustment for fully depreciated assets .......... -- -- (7,532,774) ----------------------------------------------------- Balance, end of period ............................. $ 4,136,523,893 $ 3,421,159,067 $ 3,201,363,929 =====================================================
The changes in accumulated depreciation for the years ended December 31, 2003, 2002, and 2001 are as follows:
----------------------------------------------- 2003 2002 2001 ----------------------------------------------- Balance, beginning of period ..................... $ 516,558,123 $ 452,877,433 $ 391,945,913 Charged to accumulated depreciation .............. -- -- 3,445,686 Depreciation for year .......................... 82,590,580 72,791,420 69,901,342 Transfers from (to) unconsolidated joint ventures (4,124,181) 3,575,220 (1,810,541) Sales .......................................... (24,979,281) (9,771,567) (3,072,193) Assets held for sale ........................... (2,029,796) (2,914,382.25) -- Adjustment for fully depreciated assets ........ -- -- (7,532,774) ----------------------------------------------- Balance, end of period ........................... $ 568,015,445 $ 516,558,123 $ 452,877,433 ===============================================
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