KIM

Kimco Realty Corp. 10-Q Summary: Period Ended September 30, 2007

Business Context and Reporting Period

This is a Quarterly Report (Form 10-Q) for Kimco Realty Corporation, a Real Estate Investment Trust (REIT) and one of the nation's largest owners of neighborhood and community shopping centers. The report covers the three and nine months ended September 30, 2007. As of the reporting date, the Company held interests in 1,959 properties totaling approximately 183 million square feet of gross leasable area across 45 states, Canada, Mexico, Chile, and Puerto Rico.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Rental property revenues increased 16.2% to $501.8 million for the nine months ended September 30, 2007, compared to $431.9 million in the prior year. This was driven by property acquisitions, increased occupancy (95.7% vs. 94.5%), and rental rate growth.
• Net Income: Net income increased 21.4% to $359.8 million from $296.4 million in the prior year. Diluted EPS rose to $1.37 from $1.19.
• Expense Increases: Interest expense rose 25.6% to $157.8 million due to higher debt levels and interest rates. General and administrative expenses increased 37.8% to $77.0 million, largely due to personnel costs associated with growth in co-investment programs.
• Joint Venture Income: Equity in income of joint ventures increased significantly to $111.7 million (from $72.8 million), driven by profit participation and gains on sales from the KROP venture and the Albertson's investment monetization.
• Extraordinary Gain: The prior year period included a $50.3 million extraordinary gain from a joint venture purchase price allocation, which was not present in the current period.

Outlook, Commentary, and Risks

• Capital Strategy: Management intends to maintain a conservative capital structure with debt-to-total market capitalization at 50% or less (currently 27%). The Company recently established a new $1.5 billion unsecured U.S. revolving credit facility in October 2007.
• Development Pipeline: The Company has 59 ground-up development projects in progress. Capital commitments for 2007 are projected between $550 million and $600 million.
• Dividends: The Board declared a quarterly dividend of $0.40 per common share. The Company expects to continue paying regular dividends to maintain REIT qualification.
• Risks: Key risks include general economic conditions, tenant bankruptcy/insolvency, financing risks, interest rate volatility, and foreign currency exchange fluctuations (exposure in Canada, Mexico, and Chile).
• Unusual Items: The prior year included a significant extraordinary gain from the Kimsouth/Albertson's transaction. The current period saw a reduction in NOL valuation allowances providing a tax benefit of approximately $27.4 million.

Investor Verification Checklist

• Debt Maturities: Verify the schedule of debt maturities, particularly the $300 million senior unsecured notes issued in April 2007 and the utilization of the new $1.5 billion credit facility.
• Joint Venture Concentration: Review the specific performance and risk exposure of major joint ventures (KimPru, KROP, Kimsouth) which contributed significantly to equity income.
• Development Costs: Monitor actual capital expenditures against the $550-$600 million budget for ground-up development projects.
• Foreign Currency Exposure: Assess the impact of exchange rate fluctuations on Mexican and Canadian investments and the effectiveness of hedging strategies.
• Occupancy Trends: Track the sustainability of the 95.7% occupancy rate and rental rate growth in the core portfolio.